Moneybox was my personal gateway to investing. Within 18 months I had invested £1,500 without really noticing. It was my first 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.
What is Moneybox?
Moneybox is a micro-investing, app-based platform that makes investing simple, quick and easy.
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
Making investing easy
The world of Investing is chock full of TLAs (Three Letter Acronyms……get it?). This makes it confusing, intimidating and puts a lot of people off. It did me, for sure.
The 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.
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
For this reason, to 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.
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 has become known for. They work by essentially 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. You’re feeling flush and it’s been a good month. With one click, you can instantly add £20, £100 or any amount to your account.
Usually, at ESM, we are wary of these endorphins-firing quick press buttons within apps, as they usually make you spend money you shouldn’t. But in this case, it’s a good thing.
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 powerful and really amped up my motivation and 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 automatic 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.
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
What are the fees?
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 ten, twenty, thirty 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. Here, 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 cheaper options out there, but you will have to work harder to invest.
Moneybox needs to make money for the service they provide, 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 – made saving / investing easy without really noticing
- Time Machine – was 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 like Vanguard or Hargreaves Lansdown
What products does Moneybox offer?
Originally there were two main products:
- Stocks and Shares ISA – tax wrapper so no tax is paid on the income made. Maximum investment of £20,000 per tax year
- General Investment Account – a simple place to hold investments. No tax relief but no limits on investments
Moneybox has since added two more products to its portfolio, both of which are ISA tax-wrappers:
- Lifetime ISA (LISA) – used for save for first time home purchase or retirement. Government contributes 25% of what you save
- Junior ISA (JISA) – tax-free wrapper for children
Each one has its own set of specific circumstances that make it appropriate so you need to do your research, but it’s handy to have them all in place.
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. It made it 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 low-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.
EatSleepMoney.co.uk does not offer financial advice and is intended for reference/information only. Remember, you should always carry out your own research and/or take specific professional advice before choosing any financial products or services or undertaking any business or financial venture. Investments may go up as well as down and you may get back less than you put in.
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