Scottish Friendly, one of the UK's leading friendly societies, provides savings plans that allow you to make the most of your tax-free allowance. The Government lets you invest up to £25 a month tax-free with a friendly society, even if you already have an ISA. You can save for a rainy day via the Scottish Bond or start building for your child's future through the Child Bond.

Scottish Friendly has roots stretching back to 1862 and today operates as a financial services group dedicated to the efficient provision of a wide range of financial products and services. As a mutual organisation, they have no shareholders, so profits are distributed with profits policyholders in the form of bonuses.

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What does the Child Bond offer?
Children grow so quickly, which means it's important to start thinking about their future when they're young. By saving from just £10 to £25 a month with Scottish Friendly's Child Bond now, you could make all the difference when they're older. For instance, helping to pay for university fees or for the deposit on a first home. The Child Bond isn't just for parents to invest in. Whether you're a grandparent or an aunty, you can take out a Child Bond for any child you care about.

The Child Bond is a with-profits investment which runs for a minimum of 10 years and offers two valuable tax benefits:

The money invested will grow free of Income Tax and Capital Gains Tax under current law through the addition of potential annual bonuses. Although bonuses are not guaranteed, once added, they cannot be taken away, provided you keep up payments for the full term.

When the bond matures, your child will receive a guaranteed minimum cash sum, which protects part of the total amount invested. The value of the guaranteed sum is based on the term of the plan and how much is paid in.

Your money will be invested in the Scottish Friendly With-Profits Fund, over 10 years or more. This invests in stocks and shares, fixed interest funds and cash for long term growth as well as a degree of security. If the bond is cashed in before the end of the term, the child may not get back as much as has been paid in.

Life cover for the child is also included with this plan so you should consider if this is appropriate.

How much can I save?
There are two options for saving:

Regular saving
You can save between £10 and £25 a month or between £120 and £270 a year.

Lump sum saving
This provides a way for you to take care of all your premiums at once and is especially popular with grandparents who like the reassurance of knowing all premiums for the full term of the plan are taken care of. It works by using your lump sum to set up a funding plan which invests in Scottish Friendly's taxable fund and guarantees to pay the annual premium into your tax-exempt Child Bond.

If you invest the maximum lump sum of £2,340 for a 10 year period, this actually invests £270 a year into the Child Bond - a total of £2,700. The minimum lump sum of £1,040 provides £120 a year for 10 years - a total of £1,200.

What does the Scottish Bond offer?
The Scottish Bond is a great way to make the most of your tax-free allowance. The Government lets you invest up to £25 a month tax free with a friendly society. You can use this tax-free savings allowance even if you already have an ISA. If you don't use it, you simply lose it.

The Scottish Bond is a 10-year investment for anyone aged between 16 and 64. Just set aside an affordable amount each month so that you could have a sizeable lump sum to look forward to. Just imagine, it could help pay for a car or the holiday of a lifetime. However, if you cash in early you may not get back as much as you have paid in.

When you invest with the Scottish Bond, you're saving tax-free in two ways.

First, unlike most investments and savings accounts, your money grows free of capital gains and income tax. However, the fund cannot claim back tax from dividend income it receives from investments in shares in UK companies.

Second, you don't pay tax on the payout when your Bond matures. Your money is invested in the Scottish Friendly With Profits Fund, which invests for long term growth, as well as a degree of security, in the stock market, Government and company bonds and cash.

How much can I save?
You can choose to save £15, £20 or £25 a month or £180, £225 or £270 a year.

How could the Bond grow?
The Scottish Bond offers a convenient way of building your savings and your payout is made up of two parts:

Firstly, you have the reassurance of a minimum cash sum that is guaranteed when your Bond matures, giving you security and automatic life cover. The guaranteed minimum cash sum, which protects a part of the total amount invested, will depend on your age and the amount you pay each month for the whole term.

Secondly, your main long-term growth comes from the potential addition of both annual bonuses and a final bonus on maturity. The value of these bonuses depends on the profits of Scottish Friendly and how they decided to distribute that profit back to you. Because they are a mutual organisation, there are no shareholders to take a cut - so all their profits go to their policyholders. Whilst bonuses cannot be guaranteed in advance, once a bonus is added, it's yours to keep at the end of the term, provided you keep up payments for the full term.