Moneybox was my personal gateway to investing. Within 18 months I had invested £1,500 without really noticing. It was my first investing love and I owe it so much. But ultimately, we drifted apart. This is my full Moneybox review and an account of our dalliance. Read on if you are flirting with the idea of investing and want something quick, simple and easy to understand.
So, what is Moneybox?
Moneybox is a micro-investing, app-based platform that makes your investment decisions for you. As a result, it is simple, quick and easy. In fact, you may not even notice it.
Here are the highlights:
- Driven through your smartphone app (there is also a website)
- Open an ISA from the app in less than 10 minutes, all from your sofa
- Perfect for investing beginners
- Open account with only £1.00
- No committed monthly direct debit
- Friendly and intuitive interface
And what’s Micro investing?
Micro-investing is where you invest small but regular amounts that by the power of compounding, over time add to up to make a big difference. It may be just a few pounds a week, or the spare change you have left at the end of the day. But when you do this consistently and over a long enough period of time, you’ll have saved more than you realise.
What Moneybox does so brilliantly is to harness the micro-investing method to train the mind and get you in the habit of investing, without even really noticing.
Making investing easy
The world of Investing is chock full of jargon and TLAs (Three Letter Acronyms……get it?). This makes it confusing, intimidating and puts a lot of people off. It did me, for sure.
The Moneybox platform was originally created to encourage millennials to invest. It did this by being app-based, with an intuitive interface full of friendly icons that made it jargon-free and accessible. And it works.
Moneybox is a perfect gateway for anyone toying with the idea of investing but not sure how.
How does Moneybox work?
At its core, it is a Stocks and Shares ISA (S&S ISA) wrap, within which Moneybox makes investment decisions for you based on the risk profile you select.
Be aware, therefore, there are considerations that apply to S&S ISAs, including:
- the maximum you can invest in a single tax year in £20,000
- you can only pay into one Stocks and Shares ISA per tax year
- you may get back less than what you put in
For this reason, to reduce the risk and realise the true benefits of this product, you need to take a medium to long term view to make it really work. Think a minimum 10 years before you use this money, and ideally longer.
ISAs can provide you with a great tax-effcient wrapper for your investments to ensure you don’t lose any of your gains to the taxman. If you want to go deeper, check out the Complete ISA Guide and the Stocks & Shares ISA Guide that will give you everything you need to know.
How does it help you invest?
There are three key ways in which you can save:
1. Moneybox Roundups
Roundups are the main principle upon which saving is built and what the platform became known for. It works by automatically rounding up your digital spare change.
If you want to get your geek on, the underlying principle is Richard Thaler’s Nobel prize-winning ‘nudge theory’. His book ‘Nudge: Improving Decisions About Health, Wealth and Happiness’ is an interesting read.
For example, if your morning latte costs £2.40, then Moneybox will round this up to £3.00 and invest the £0.60 difference.
It might only be 50p here, 20p there. But over the month, they all add up without you even really noticing.
2. Quick Adds
In addition, you can also make ‘Quick Adds’. Perhaps it’s been a good month and you’re feeling flush. With one click, you can instantly add £20, £100 or any amount you like into your account.
Usually at Eat.Sleep.Money, we are wary of these endorphin-firing quick-press buttons within apps, as they usually make you spend money you shouldn’t. But in this case, this dark power is being used for good.
3. Weekly Deposits
Finally, you can also set up regular Weekly Deposits which are a good habit to get in to, particularly when you use the forecasting tab to show what an incredible difference they make in the long run.
Personally, I found that when I used all three together (though I mainly used the roundups and weekly deposits), the effect was hugely powerful. They really amped up my motivation and as a result, my savings rate.
Are you cautious, balanced or adventurous?
One of the conundrums of investing is deciding what to invest in. It is a literal minefield out there. Moneybox simplifies this into three risk categories and adjusts the investment portfolio for you automatically.
- Cautious – 15% in global shares, 40% in cash and the rest spread across property and bonds.
- Balanced – 65% in global shares, 10% in property and 25% in corporate bonds.
- Adventurous – 80% in global shares, 15% in property and 5% in corporate bonds
This is going to be very much a personal decision based on your appetite for risk, what you have in mind for this pot of money and your personal circumstances. If in doubt, go with your gut.
Being in my thirties and having no intention to use this money in the next 20 years, I plumped for Adventurous.
Which funds does Moneybox use?
Whether you choose Cautious, Balanced or Adventurous, these profiles simply apply different allocations across three main investment categories, each run by a different fund manager:
- Global shares – Vanguard Global Equities
- Cash fund – Janus Henderson
- Property shares – BlackRock global
All three are considered major global players, so no red flags here.
The Moneybox App
This is a key feature and deserves some special attention. Even in a world where the traditional and challenger banks alike are massively upping their digital game, this app holds it’s own.
- Friendly interface – everything about the app is intuitive, simple and user-friendly icons.
- Blog – a nice, digestible monthly money news roundup.
- Incentives – get exclusive access to offers and discounts on products ranging from genetic testing to shaving subscriptions.
- Time Machine – a visual tool clearly shows you the powerful effects of compounding on your personal investments. For example, simply upping your regular weekly deposit from £10 to £20, increases your investment value by about £7,000 over 10 years, including £5,000 of gains.
I found the Time Machine feature was hugely motivational and encouraged me to save more and more.
As you learn more and more about investing, it becomes apparent that minimising your fees makes a huge difference. Half a per cent may not sound like much, but over the course of 10, 20 or 30 years, it can make a huge difference to the value of your investment.
Because of that, we always take a close look at any fee structure. This breaks down into three areas:
|Platform fee||0.45%||No trading or transaction costs|
|Fund provider fees & costs||0.12 – 0.3%||No withdrawal costs|
|Subscription fee||£1 month||Free for first three months|
The subscription fee, in particular, needs to be considered carefully. £1 may not seem a lot, but it can make a big dent in smaller balances, making it quite expensive.
On a £100 balance, you would incur platform fees of £0.45 (0.45%) plus fund fees of up to £0.30 (0.3%) and subscription fees of £12. This means the fees could be as high as 12.75%. The subscription fee is the cost of the app and the nudges and rounding that make investing easier.
By comparison, Hargreaves Lansdown has a similar platform and fund fees but no monthly subscription, making the annual cost usually less than 1%. Vanguard is even cheaper than Hargreaves Lansdown, but with a limited choice of funds.
The bigger your balance, the less impact the £1 subscription fee has.
If you invested £20,000 (the annual maximum for an ISA), the fees would be more like 0.75%, which is much more competitive. Again, there are cheaper options out there, but you will have to work harder to invest.
Moneybox needs to make money for the service they provide, of course. However, there must be a better way rather than penalising those with smaller balances and are just starting out.
What did we like about Moneybox?
There is much to like about this service:
- Easy setup – being able to open an ISA from an app within 10 minutes, whilst nursing an espresso, made it a simple and stress-free affair.
- Round-ups – makes saving / investing easy without really noticing.
- Time Machine – is hugely motivational by showing you what your money will be worth in 10 year’s time.
- Customer service – whilst all driven through the chat function, the quick response at any time of day and day of the week was impressive.
- Blog – this is a nice touch. Not everyone will use it, but if you like easy-to-digest peaks into the world of investing and global events such as International Women’s Day, then you’ll like this.
- Discounts – you can get access to exclusive discounts on services ranging from DNA testing to shaving subscriptions.
What didn’t we like about Moneybox?
There are some things that could be improved:
- Investment delay – the time it takes money to go from your account to actually being invested can take several weeks. This can be frustrating and feels like a missed opportunity.
- Expensive fees on smaller balances – Moneybox needs to make money for its service, but it should be able to find a better way than penalising the very customers it’s trying to attract.
- Limited fund choice – it could be argued that there is little choice in where to invest your money. But that’s the very point of this product – it makes those decisions for you. If you want more control over where your investments go, then check out other, more manual platforms such as Vanguard or Hargreaves Lansdown
What products does Moneybox offer?
Originally there were two main products:
A tried and tested tax wrapper, where no tax is paid on the income you make. Maximum investment of £20,000 per tax year.
A simple place to hold investments. No tax relief but also no limits on investments.
If your maxing out your £20,000 annual ISA limit, this is your next stop, you legend.
If you need more information on ISAs and how they work, why not check out our Complete ISA Guide.
Moneybox has since added many more products to its portfolio, the first two of which are other types of ISA tax-wrappers:
- Used for save for first time home purchase or retirement. Government contributes 25% of what you save.
Tax-free saving wrapper for children. Beware though, they get full entitlement at 18, so make sure you educate them on the ways of healthy finance beforehand!
A way of bringing together you previous old, stranded pensions and manage them from one place. Pick from a simple range of options, including socially responsible funds.
What can be better than having your old pensions all in one app where you can track their progress. Plus, you get tax relief on contributions and no capital gains on growth.
Fee wise, you’re looking at 0.45% for the first £100,00, then a slim 0.15% on balances above that. In addition, you have annual fund manager fees of between 0.12% and 0.21%, depending on the fund selected.
Remember though, this is where your previous pensions come to live……and die. You cannot transfer your current workplace pensions or employer contributions to here.
Furthermore, there is no early draw-down facility. You cant touch this account until the young age of 55.
This is a 95 day notice Savings Account, offering a 0.6% AER variable interest rate and can be opened with as little as £1.
Not bad, at the time of writing, but in return you cant get at your money in that account without giving 95 days notice.
Important note – at the time of this update, August 2020, this account is currently closed to new customers.
How do I open a Moneybox account?
Opening an ISA used to mean donning your finest suite tails, adjusting your coiffure and booking a meeting with your bank manager. OK, so it’s not the 1950s, but it did mean you had to physically go into a branch, which frankly was a faff.
Opening a Moneybox Stocks and Shares ISA is incredibly quick and requires three simple steps.
Open a Moneybox account in three simple steps:
Step One – choose between General Investment account or Stocks and Shares ISA
Step Two – select your risk profile: Cautious, Balanced or Adventurous
Moneybox was responsible for getting me into investing. At first a foray, a dalliance. eventually, my first love. It made investing easy, simple to understand and accessible. However, in a way, it became a victim of its own success. By whetting my appetite and encouraging me to learn more, I started exploring other platforms, researching lower-cost products and wanting to take more control over how my money was invested. As a result, we are no longer together but it will always be my ‘first’ and for that, it will always have a special place.
Interested in Investing? Check out our reviews below for some of the best investment accounts available:-
- Hargreaves Lansdown – Best platform & App, competitive fees and access to the widest range of investments
- Fidelity International – Access to a wide range of investments with cheaper fees than Hargreaves Lansdown.
- Vanguard Investor – Lowest Fees but limited to Vanguard funds only (no picking Apple or Amazon stocks here)
If you are looking for a better way to manage your finances why not check out our Financial Fitness Programme. The fitness programme provides a six-step guide to managing and automating your finances. It gives you the tools and resources to get yourself financially fit and reduce your money worries. This link explains more.
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