[This content first appeared on Instagram as a sponsored post]
Hands up if you've got a Child Trust Fund.
If your child was born between 1st September 2002 and the 2nd January 2011, you would have been given a £250 voucher by the government, along with the your bounty bag of freebies when your baby was born.
Many of us – including me – put that money with an institution, much ending up with Foresters or One Family. At the time the fees were capped by the government at 1.5%, but this meant that most of them simply charged fees of 1.5%. I've got my money with Foresters, and yes, they have been charging me 1.5% of the balance every year in fees.
So, I've now got to the point where after 13 years I've got £2,000 in one CTF and I've got £1,500 after 11 years in another. They’ve grown over time because my children’s CTFs are invested in stocks and shares. And, but the fees are absolutely horrendous.
What Beanstalk helped me do initially was compare the fees from Foresters, to what they were charged if I move my money into a Junior ISA with them using their simple Switch & Save Calculator.
Because Beanstalk’s JISA fees are just 0.5% (compared to 1.5% the CTFs), I will save £100 in fees between now and when my 13 year-old turns 18 simply by switching; on the second CTF, which has 7 years left to mature, I’ll save £105 in fees alone.
There's big savings to be had by switching fees. 1.5% in fees is very high and far above the norm for any kind of investment products; and certainly, I'm not comfortable paying that much.
That made the decision for me, and I've switched the CTF money over to Beanstalk.
The process of transferring was very simple. After downloading the Beanstalk app, in just a couple of minutes I’d set up accounts for each of the children and kicked off the transfer process. I then filled in some basic details on a form Beanstalk sent me, such the current CTF account numbers, sent the form back to Beanstalk free post and they did everything for me.
Three weeks later, the money was all transferred into my Beanstalk accounts, and the money is now all set in there, paying much lower fees. Yay!
The app itself is really intuitive. It allows you to do lots of really clever things with your children's money. It's really easy to set up top-ups and regular contributions, so if you want to put in regular amounts each month, or just make one of contributions as and when you can, it's fine.
A lot of stocks and shares Junior ISAs require you to put in a set amount of money each month, or you have to open these accounts with a certain amount of money.
There's no sort of rules like that with Beanstalk, which I quite like because you might set up a direct debit now for £10 pounds but then find you’re not able to afford that in a year's time, so I like the flexibility of that.
You can also set up other people to make contributions. If the children get Christmas presents from family or grandparents, then you can them put the money straight into the JISA, which is great.
You can also connect it to their sister company KidStart, where you can get cashback on online purchases and have it paid straight into the Junior ISAs for your children.
You can also do < href="/article/how-round-ups-work">Round Ups – which is something you might be familiar with if you've got a Starling or a Monzo account – where you can round up transactions by connecting the Beanstalk app to your bank account using Open Banking. You can then choose whether to round up to the to say pound or £10, and the difference between the transaction and the round up goes over into your Beanstalk account. That's very clever.
Finally, I just want to talk about how I feel about it.
I just feel so much better that firstly I'm paying 1% less in fees. I'm going to get 100 quid extra over the next few years for the two accounts I've got.
I can access everything by the app, including how much is in the accounts at any time. Now, I don't want to be doing that every day, because I'm not sure you should check things like investments every day, but it's there when I need it. I don't have to call somebody up or log into a complicated online account. I never knew how much money was in the old CTF accounts.
I'm feeling reassured and happy. I know where my children's long-term savings are and how they are maturing.
And if you have a Child Trust Fund with high fees then just have a think about switching them over, because I don't want anybody to be paying 1.5% fees on their children's money.
I’ve written more in a blog post on my website, where there's more detail about a lot of things I've talked through in here – so head over there and have a look. Finally, thank you to Beanstalk for collaborating with me on this post.