The Moneybox app makes investing in the stockmarket as easy as falling off a log – at a price.
Moneybox offers a slick, easy to use saving and investing app, where you can start with as little as £1.
It’s marketing of ’round ups’ really caught the imagination.
Basically, the app rounds up your spending to the nearest pound and invests the difference.
Buy a coffee for £1.75, and Moneybox will ’round up’ the purchase to £2 and siphon off the extra 25p into the stockmarket. Shell out £21.98 on Amazon and the app will invest the extra couple of pennies.
In practice, you won’t see 3p disappearing here and 33p there. It tots up a running total to remove from your bank account once a week.
But does the odd penny here or there add up to much? What does it actually invest in? And how much do you pay for the privilege?
As a personal finance journalist, I wanted to find out if I could actually recommend this app.
After using Moneybox for three years, with £10 to £20 slipping out of my account every week, I’ve ended up with just over three grand. Bonus.
Here’s my (independent, unpaid) Moneybox review.
Simple to get started with Moneybox
If you use Moneybox for investing, you don’t have to pick and choose between gazillions of different funds and shares.
After downloading the app, Moneybox strips it down to three choices:
- Which account?
- For investing: stocks and shares individual savings account (Isa), stocks and shares Lifetime Isa (Lisa) or general investment account (GIA).
- It also offers savings accounts, a cash Lisa and a pension
- Which starting option?
- Cautious, balanced or adventurous
- How much?
- Because round ups are not the only option. You’re also encourage to add a lump sum at the start, make weekly deposits, set up monthly ‘payday boosts’ and even double your rounds ups
Then link up your bank account/debit card/credit card, and er, that’s it.
It’s a ‘set and forget’ approach to investing.
Once you’ve signed up, Moneybox keeps taking payments without you lifting a finger. It also does all the hard work keeping your investments at the risk level you chose.
Cautious, balanced and adventurous – say what now?
Moneybox doesn’t offer financial advice. It’s up to you to pick between cautious, balanced and adventurous starting options, weighing up the risk of losing money against the hope of growth.
Here’s how Moneybox describes your choices, and my view:
Cautious: aims for modest growth while minimising risk.
Moneybox says: ‘protecting your money is important to you, but you want to dip your toe into investing’
I say: This has pretty teeny 15% in global shares, and a whopping 40% sitting in cash. The rest is spread 5% in global property shares, 20% in corporate bonds and 20% in government bonds. I can safely say you won’t lose much with this option – but any growth is unlikely to shoot the lights out either.
Balanced: aims for more growth by accepting more risk
Moneybox says: ‘growth is important to you and you’re aware that will come with some ups and downs along the way’
I say: This has a heftier 65% in global shares, 10% in global property shares and 25% in corporate bonds. Solid.
Adventurous: aims for higher growth by accepting a higher level of risk
Moneybox says: ‘growth is a high priority and you’re willing to accept more volatility in pursuit of greater returns’
I say: Distinctly more frisky, with 80% in global shares, 15% in global property shares and 5% in corporate bonds.
Where does Moneybox invest your money?
I went straight for ‘adventurous’, as I’m stashing money away for a good 10 years before retirement.
You can see my holdings after three years in the screen grab above.
I think the £7 odd in Vanguard LifeStrategy 100% is just because when I started Moneybox used Vanguard for their global shares, before switching to Fidelity.
The bulk of my investments are split between:
- Fidelity Index World Fund (fees 0.13% a year, ISIN GB00BJS8SJ34)
- iShares Global Property Securities Equity Index Fund (fees 0.25%, ISIN GB00BPFJCF57)
- iShares Overseas Corporate Bond Index Fund (fees 0.2%, ISIN GB00B58YKH53)
The balanced portfolio uses the same funds, just in different proportions.
The cautious version adds another couple, mixing in government bonds and cash:
- iShares Overseas Government Bond Index (fees 0.1%, ISIN GB00B849C803)
- Legal & General Cash Trust I Accumulation (fees 0.12%, ISIN GB00B0CNHB64)
Basically Moneybox takes a textbook approach to diversifying your portfolio, splitting your money between shares, bonds and property, plus cash for the cautious.
The portfolios are pared down to a single fund for each asset, so a grand total of three funds for balanced and adventurous, albeit in different proportions, and a whole five for cautious. The funds themselves come from well-known, long established asset managers.
Admittedly, as each of the funds is an index tracker, you end up owning teeny fractions of more than 1,600 companies round the world, more than 300 property companies and bonds issued by over 4,000 companies.
Moneybox’s marketing boasts that you’re investing in big name companies such as Apple, Amazon, Facebook and Netflix – which you are, just alongside thousands of other companies too.
I do wonder if many Moneybox users look beyond the colourful cartoon characters to see where their money is actually invested.
Certainly, the first few tabs on the Moneybox app focus more on round ups from my spending, and cashback and discount offers.
However, click on your account in the ‘Accounts’ tab, and you’ll find your fund list, and can even click through to see the key investor information sheets.
Does Moneybox offer ethical investing?
If you’re keen on green/ethical investing, you can switch your Fidelity global shares fund to a socially responsible alternative, the Old Mutual World ESG Index Fund.
This fund considers environmental, social and governance factors when selecting companies. The fees are slightly higher, at 0.18% compared to 0.12% for the ordinary global shares fund.
In practice, it invests in massive global companies that aren’t obvious baddies, rather than knit-your-own-yogurt uber ethical options.
To give you an idea, the biggest holdings here are Microsoft, Johnson & Johnson, Alphabet (aka Google), Tesla and Procter & Gamble.
There are no ethical alternatives for the bond, property and cash funds.
Previous post: what is ethical investing?
How has Moneybox performed?
Feast your eyes on the screengrab above showing my contributions, investment gains and fees after three years with Moneybox.
I actually opened my account on 8 February 2018 and signed up for a £100 initial payment, round ups and a tenner a week deposit.
It took a while for everything to be processed.
Moneybox logged the total £121 payment on 14 February, but the money only left my bank account on 19 February, and took even longer to get invested. It normally seems to take 10 days between bank debits and the investments being settled.
Over the three years to 14 February 2021, I’ve paid in £2,654.
This was split between:
- £100 initial deposit
- £904 in round ups
- £1,560 in my tenner-a-week deposits.
So basically the round ups haven’t amounted to all that much, and I’m glad I signed up for weekly deposits too.
The £15 in ‘Moneybox+ rewards’ refers to the time I used a Moneybox offer, where I took advantage of a Moneybox offer to buy a bunch of Bloom & Wild flowers, and they added £15 to my balance. Seems slightly strange this counts as earnings rather than a contribution.
Fees of £51.59, which is about 1.7% of my current balance, don’t look too bad over three years.
The growth, or ‘earnings performance’ of 18.41% is over the whole three years, so roughly 6% a year. That’s certainly way better than I would have earned in a savings account. However, for context, Vanguard’s LifeStrategy 80% fund is currently up quite bit higher, at 28% over three years.
Chunky charges on small balances
Moneybox bangs on about squirrelling away spare change, but the charges are pretty high on small investments.
The fees sound relatively painless on the investing side:
- 45% a year as a platform fee
- 12% and 0.3% a year as fund charges
- £1 a month subscription on investment accounts, free for the first three months.
But the ‘pound a month’ is the real sting in the tail.
The fee example in my Moneybox welcome document is based on a hefty £10,000.
Altogether, the charges totted up to £79.35 a year on the balanced option, which is 0.793% of a £10,000 investment.
That’s pretty good.
Cheaper than some other robo advisers around the 1% mark, if a bit more expensive than the likes of Wealthify, which can also be opened with £1, at 0.76%, or using ‘Vanguard with a LifeStrategy fund’ at around 0.41% all in.
But on a smaller £1,000 balance, the £1 a month subscription fee pushes total charges up to 1.79% a year, once your first three months without subscription fees finish.
On a £100 balance, you’re looking at an eye-watering 12.59% a year.
Bear in mind that you can open a Moneybox account with just £1, and after three years I still haven’t reached £1,000 in round ups alone, and smaller investors could see much of their money eaten up by fees.
Even now my balance has topped £3,000, that £12-a-year nearly doubles my platform fee.
So investing with Moneybox is more cost effective when investing a larger sum at the start, or adding weekly deposits or payday boosts to the round ups. A £10,000 balance from round ups alone would require Kardashian-style spending.
Thankfully, the £1 a month subscription fee does not apply on savings accounts (zero fees) or on the Moneybox pension (same 0.12% to 0.3% fund fees, plus 0.45% platform fee on balances up to £100,000 and 0.15% on balances over that).
Decent rate on savings
Moneybox has expanded from investing to include a pension, lifetime Isas and surprisingly competitive savings accounts.
Currently, Moneybox pays 0.6% a year interest on a 95 day notice account (from Investec) and 0.45% on a 45 day notice account (from Charter Savings Bank). There are no fees on the savings accounts and you can deposit up to £85,000 in each.
I asked Anna Bowes, a savings expert from Savings Champion, for her views, and she said: “The Investec account at 0.6% is very competitive, and quite straightforward to open through the app. The other, at 0.45% on a 45 day notice account, is OK but you could do better.”
Check the highest rates on notice accounts over at Savings Champion.
But is it safe?
Moneybox ticks all the boxes on the regulatory and security fronts.
It’s authorised by the Financial Conduct Authority and it’s covered by the Financial Services Compensation scheme. Your savings or investments are held in separate accounts with bug guns Santander and Winterflood, respectively, and it uses bank level 256-bit TLS encryption.
The risky part is investing at all, as your balance could plummet if stock markets fall, and you may end up with less money than you put in. Hopefully you will, but with investing there’s no guarantee.
Moneybox: Overall review
Moneybox makes starting to invest super simple.
It takes minutes to set up, and is easy to use.
You don’t need to know anything about shares or funds, just plump for cautious, balanced or adventurous, hand over payment details, and away you go.
You don’t even have to decide how much you can afford to invest, if you let Moneybox whip out round ups.
The fundamentals are all fine. Safety, security, ethical option – all present and correct. Mixing shares, property, bonds and cash is textbook sensible investing. Using tracker funds is a great low cost way to spread your money to the winds, although the portfolios are pared back to a single fund for each asset.
In fact it’s sufficiently simple, you could set it up yourself on an investment platform and avoid the £1-a-month subscription fee.
However, you’d then have to rebalance your own investments. The whole point of Moneybox is that it’s a ‘do it for you’ service, rather than a DIY platform. If you’re fired up about choosing your own investments and monitoring your own portfolio, look elsewhere.
My main problem with Moneybox is that for the smaller investors it targets, with its £1 minimum investment and focus on spare change, the charges are painful.
If you do go for Moneybox, make it more cost effective by whacking in more than just round ups. Or use this investing app for a surprisingly competitive rate on your savings instead.
On my side, I hardly noticed £10 to £20 slipping out of my account each week, yet after three years I’ve now built up a balance of over £3,000, boosted by nearly £500 in investment growth. Yet I suspect I’d have done better with the similarly simple Wealthify (referral link) or if I’d stretched to the £100 month required by Vanguard.
Now – over to you. Would you use Moneybox, or would you look elsewhere? Do share in the comments, I’d love to hear!