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:
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 it provides. However, there must be a better way rather than penalising those with smaller balances and are just starting out.