Beanstalk: Not an investing giant, but a great place to get growing

• Absolute investing beginners or those looking for a very simple way to get into investing for themselves or for children

Beanstalk does not provide any investment advice service so although it’s intended for beginners, it is only suitable for those who are comfortable making a decision about their money without seeking professional financial advice.

Accounts

With Beanstalk, you can open a:

• Sometimes called an investment ISA, a stocks and shares ISA is an individual savings account that allows you to invest in shares, unit trusts, investment funds, and bonds. You will not need to pay tax on any income or capital gains earned on investments within an ISAStocks and shares ISA
• Junior ISAs (Individual Savings Accounts) (JISAs) are tax-free savings accounts for children under the age of 18. Only a parent can open a JISA but anyone can contribute. You can choose to save for your children through either a cash Junior ISA where you will earn interest on any cash in the account, or a stocks and shares Junior ISA where you will invest your child’s savings on their behalfJunior ISA (JISA)

Beanstalk is therefore only for people wanting to invest through an ISA. There is no general investment account.

With an investment ISA, you can put up to £20,000 (for an adult ISA) or £9,000 (for a Junior ISA) per year into investment markets without needing to pay tax on any gains or income you make.

The Beanstalk adult ISA is a If an ISA is flexible, you’re able to withdraw money and pay it back in, without it counting twice within your annual ISA allowance. It must be repaid within the same tax year it’s withdrawn to be eligible, however.flexible ISA. That’s really handy if you feel you might need to access the cash in your ISA in an emergency. It can be withdrawn, and then paid back within the same tax year, without it counting as two separate contributions. That helps protect your annual allowance.

In other good news, Beanstalk’s Junior ISA accepts transfers from Child Trust Funds. Not every provider offering Junior ISAs does this. It also facilitates a regular investment service allowing you to set up automatic deposits into your Beanstalk account every month. Slightly annoyingly though, they don’t let you choose the date you want the transfers to happen – it’ll happen automatically on the 18th of each month.

If you want to compare Beanstalk with other providers, we’ve got a handy list of our top-rated stocks and shares ISAs and top-rated junior ISAs.

And if you’re a beginner and you’re not sure what ISAs are all about, try our Guide to ISAs for starters.

Account benefits

There are a few nice features with a Beanstalk account which make it stand out from other Junior ISA providers.

The company behind Beanstalk – KidStart – has linked up with 2,500 retailers to provide cashback at stores such as John Lewis, Amazon, Sky and TUI, meaning you can turn your family spending into added investment income. Any cashback you earn goes directly into your child’s JISA.

In addition, as a Beanstalk user, you can invite family and friends to gift money into your child’s JISA account. They’ll receive an email invitation, which they can accept or decline through their own app. If they accept, then they can make a contribution through their app – handy for grandparents or other friends or family members who want to give donations for birthdays, Christmas or a christening, for example.

For both JISA and ISA users, there’s a round up tool which uses the Government-backed Open Banking initiative to allow you to opt into seeing your bank data through the app and, where you want to, round-up any of your purchases, with the spare change going into your investment account.

Assets

Beanstalk offers a choice of two funds from well-known providers. You can allocate how much you want to save into each. The two funds are:

• A shares fund (Fidelity Global Index fund) which is a Tracker funds are ‘passive’ investments as they simply aim to mirror the performance of a benchmark, such as the FTSE 100. They are run by computer algorithms rather than fund managers, so they’re cheaper than actively managed funds, but still ensure you get a diversified portfolio. A tracker can never outperform the market or index it is linked to – it will only ever follow it. An Exchange Traded Fund (ETF) is an example of a tracker fund.tracker fund and therefore aims to track the performance of global stock markets. It includes large companies such as Amazon, Facebook, Google and Johnson & Johnson. This fund has a risk rating of 5 out of 7 which is much higher than the Legal and General Cash Trust Fund but which is what you’d expect with a fund aimed at higher rates of return.
• A cash fund (Legal & General Cash Trust fund) which aims to provide returns in line with money market rates by investing in short-term deposits and UK government bonds that are generally seen as less risky than stocks and shares.

Just two funds means very limited choice when compared to other providers. However, that may suit your needs perfectly if your goal is get investing and you’re likely to be put off even getting started by anything that requires complex and time-consuming investment decisions. With Beanstalk, a well-diversified equities fund and a popular cash fund have been selected for you.

That said, you do still have some element of choice as you’ll need to decide how much of your money is allocated to each fund. You can choose to have 100% of your money in the stocks and shares fund, or, for example, 60% in stocks and shares, and 40% in the cash fund. However, it isn’t possible to hold more than 80% of your money in the cash fund. If the relative safety and security of a cash fund is what you want, you may be better off looking at a A cash ISA is a type of individual savings account where you can earn tax-free interest on your saved cashCash ISA.

Fees for using Beanstalk are very straightforward. You’ll just be asked to pay:

• Annual fees: 0.5% of the value of your account, deducted on a monthly basis
• Fund fees: 0.12% for the shares fund / 0.15% for the cash fund

And that’s it. There are no fees for using the app, doing round-ups or making contributions. It’s a welcome change from some of the more complex fee structures employed by other providers. However, much of this simplicity is owing to the fact that Beanstalk only offers two funds, so variations on cost are limited.

How do these fees compare with Beanstalk’s competitors?

Beanstalk’s annual fees are far from the cheapest, however, there are no dealing fees to consider on top and the two fund costs are low so total costs for using Beanstalk could end up being lower than many of Beanstalk’s competitors.

Have a question about Beanstalk that we haven’t covered? Ask it here and we will get back to you as soon as possible!