Beanstalk JISA Review – Lay Your Children A Golden Egg

Beanstalk JISA Expert Review

We quite often go to the ponies as a family, and if there is more than a single page of horses on the card for a race we always let the children have a little bet to cover more of the field. The other day we were at Sandown, it was the last race of the day, and Hugo, my youngest chose a horse based on the only sensible strategy available to a two-year-old, he picked one at random. As luck would have it, it was a rank outsider, a 13-year-old with an exceptional track record that was now a little bit long in the tooth. But, he wished and he hoped and Wishing and Hoping romped home to win at 50-1, after leading the pack the entire race.

ITV Racing caught us trackside on the TV as the owner burst into floods of tears and the trainers were whooping away. That’s us on the left…

We didn’t get 50-1, we got 34-1 because we only bet with the bookies at the track, in particular, we like a chap called Barry, who wears a Fedora.

A tidy return nonetheless, but what to do with it? Usually, we’d all go out to dinner to celebrate, but because it’s Dry January, we just went home. And because we’re trying to be more responsible parents, we thought we’d invest his winnings. Let it ride as it were, on the biggest bet out there, the stock market.

Last week, we invested one of my other children’s birthday money through GoHenry, but as Hugo is too young to get pocket money, I chose Beanstalk for him.

But is now a good time to be investing for your children’s future? I hear you ask. The stock market is coming off five-year highs, we are in a recession, the world is nearly at war and the tech giants who have historically created massive shareholder returns are laying people off left right and centre.

• Related guide – How to invest in a recession

Well, here’s the thing, there is always a disaster around the corner, and actually now is the best time to start investing, because it is in fact, now. When it comes to long-term returns (Hugo can’t access money in his JISA until he is 18), the best time to invest is as soon as possible.

When I interviewed Julian Robson, the co-founder of Beanstalk last year, he told me that one of the inspirations for setting up the Beanstalk JISA was a chart that was on the wall in his old boss’s office. It was a chart of the stock market going back to the 1900s. His point was that if you look at a long-term chart of the stock market, you can’t see 1987’s Black Monday, The 1930’s Great Depression, or any other major stock market crash. In general, it just goes up.

Here is a good example of the Covid market crash that Cem Eyi (Beanstalks other co-founder highlighted on LinkedIn recently (the fund is Fidelity World Index).

What does the Beanstalk JISA invest in?

When you invest in a Junior stocks and shares ISA with Beanstalk, you are essentially making two investments (three if you want to include your child’s future), the Legal & General Cash Trust fund and Fidelity Global Index fund. The first tracks interest rates and keeps your money as cash, the second tracks the stock market, and holds big profitable companies like Apple, Microsoft and Johnson & Johnson (you can see the full portfolio breakdown here). It’s a standard diversified portfolio.

How much does the Beanstalk JISA cost?

It costs, 0.5% of the balance of your portfolio for a Beanstalk JISA, but if cost is your only concern, you can buy these funds individually with a DIY platform like AJ Bell (0.25%), Hargreaves Lansdown (0.45%) and Interactive Investor (JISA is free with a £9.99 per month trading account). Regardless of who you invest with you will still have to pay the 0.12-0.15%. charges levied by L&G and Fidelity for managing the fund.

Why invest with a Beanstalk JISA then?

Where Beanstalk earns its money is that you can very easily switch between what percentage of cash and stocks are in your child’s portfolio. There is a handy slider, which also shows what the historic returns would have been depending on the allocation.

So, if you think the market is going to crash you can switch to more cash and interest, rather than stock market investments. But remember, a general rule of thumb when it comes to investing is that the younger you are, the more risk you should take. If you are old, the closer to retirement you are the lower risk your investments should be. So, when your child comes close to 18, you can tune down the risk so that you don’t get bitten by a shock stock market crash the week before they get their money.

I’m not suggesting for a second that you bet on horses to kickstart your children’s financial literacy, that would be idiocy. But, if you have a few pounds sitting around, pick up your phone, download the app, and start investing for your children’s future. If you’re looking to bet on a winner, that’s a sure thing.

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Beanstalk Junior ISA Video Review

Watch as we invest live in a Beanstalk JISA and explain the pros and cons of the app versus traditional investment platforms.

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