Deal of the week: Fee-free investing for children

Published by Tom Wilson on 04 November 2016.
Last updated on 04 November 2016

ETFmatic

Even the most modest-sounding percentage based charge can have a hugely erosive effect on our wealth over time, so if you’re looking to invest for children you might want to consider ETFmatic, a robo-adviser that’s promising to waive all platform charges on its children's accounts. 

What’s the deal?

ETFmatic, like other robo-advisers, will strive to build you a low-cost, low maintenance portfolio that’s been built to match your willingness to take risks with your investments.

The service normally charges 0.5% of your portfolio each year, but ETFmatic is promising to waive these fees for younger investors, until they turn 18 – at which point the 0.5% fee will kick in.   

Why should I care?

Fees can skim off thousands of pounds from your portfolio over the long term.

If you invested £100 per month, for 18 years, and your investments grew at 5% a year after all (both platform and fund) charges, you’d end up with £34,257.

But if you can side step the platform fees (of 0.5% in the example of ETFmatic), your returns after charges will rise to 5.5%, and you’d end up with an extra £3,655.

What’s the catch?

Though ETFmatic is waiving its platform charges, these are only some of the costs of investing. You’ll still need to pay fees for the underlying investments, but these are low-cost ETFs (a type of tracker fund), which have ultra-low annual charges of 0.1%-0.2%.

 

What are my other options?

Plenty of Robo-advisers offer childrens accounts, many of which have modest fees. Wealthify lets people set up accounts with just £250, while you can join Nutmeg with £500 or more.

Where can I find out more?

See etfmatic.com for full details of the offer.  

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