Is Moneybox a Good Investment App? Passive ISA Investing


Moneybox is one of the best passive ISA investing apps on the marketplace in the UK. Offering a multitude of accounts of which people can invest as little as £1, they have taken over the passive investing niche in the UK.

For young investors, or people on lower incomes, the Moneybox app is perfect for long term savings, or building a small investment portfolio. The idea behind the app is outstandingly simply, and very easy to do. By saving a little everyday, it takes away the need to store away large sums of cash.

The Moneybox app was created in August 2016 with the goal of providing investment vehicles to the mass public of the UK. It works the same way your penny jar does. If you spend £2.60 on a coffee or some snacks, you can choose to invest the 40p change in an ISA account or private pension.

Moneybox Review 900x900

Is Moneybox any Good?

First things first… I use Moneybox’s Stock & Share ISA account for my personal savings. The account has been open for a little over 6 months and you can see the results here:

I use this account to keep low risk savings that I will hopefully build throughout the next decade.

It is a passive account, I don’t choose anything. I just set my weekly deposit amounts, and round up any pennies that I want, then Moneybox does the rest.

The main features that I think have boosted Moneybox to the top of the investing app list are:

  • You can open an account from as little as £1: This is applicable for all Moneybox accounts, it’s just a great way for young people to get started with savings money.
  • Moneybox has a multitude of accounts you can choose from: You can choose between a Stocks & Shares ISA, Cash ISA, Junior ISA, Lifetime ISA, or either of the 45/90 day notice savings accounts.
  • Earn interest above the base rate: Because Moneybox is primarily an investment company, they offer above base interest rates on all savings accounts. You’ll get a better rate with Moneybox than the high street banks. This allows you to get the leg up on inflation!
  • Round up spending ability: Moneybox understands that it is hard to set aside hundreds of pounds every month, so you can simply round up your spare change from purchases made from your current account, and Moneybox will collect them through a direct debit. (You can choose which transactions you round up in the app).
  • See where you will be in the future: Moneybox uses fantastic calculators and estimations to predict the value of your account based on your chosen regular deposits. You can also alter a few figures to give you an idea of the amount of interest you will earn from the account as well.
  • FCA Regulated: Moneybox is registered and regulated by the Financial Conduct Authority (FCA).
  • FSCS Protected funds: Funds invested with Moneybox are protected up to the value of £85,000 against fraud or other criminal activity. This does not apply to investment losses.

I believe Moneybox to be one of the best passive investing apps out there. It is easy to use, you can save while you spend, and you don’t need to be a financial expert to open an account.

This virtual savings jar is perfect for anyone in the UK. Pennies can stack up over the course of the year, and you also stand the chance of earning a little income from the money you put away.

How does Moneybox Work?

The Moneybox app is one of the easiest investment apps I’ve ever used. It’s passive, easy to navigate, and support is just a click away. So if you want to invest using Moneybox this is what you have to do.

You need to be over 18 to open a Moneybox account. You will also need a UK National Insurance number to open ISA or pension accounts. Non UK citizens can open general investment accounts only.

If you want to open an account for a person under the age of 18, there is a separate app for Junior ISAs.

Once you have made the decision to download the Moneybox app, you will have 3 things to setup, then you can sit back and relax.

#1. Choosing an Account on Moneybox

Ok… Once you have the app downloaded on your phone and you’ve signed up for Moneybox, it will ask you what account you want to open. These options are:

  • Stocks & Shares ISA
  • Cash ISA
  • General Investment Account
  • 45/90 Day Notice Savings Account
  • Limetime ISA
  • Retirement Account

What a lot of people don’t realise is… You can have more than one of these accounts inside the same app. So you can have your stocks and shares ISA, and a 45 day notice savings account, then also have a pension account. Then when you open the app, you will see a total value of your savings, then you can view it broken down into the separate accounts.

You will be told the average returns of all these accounts in app, which is calculated based on the prior 10 years performance. These returns are not guaranteed, however it is an indication of typical returns from each account.

#2. How Will your Money be Invested?

Once you choose your account, will get the options of how you want your money invested. Based on your attitude to risk and return, you can choose one from of the options below:

Let’s have a look at some numbers… Based on Moneybox’s investment options, from 2010 to 2019 these are the returns you would expect to see:

If you invested £1,000 in 2010, then followed it up with monthly contributions of £50, this would the value of your account in 2019. (Total funds deposited = £7,000)

YearCautiousBalancedAdventurous
20105.6%13.6%15.5%
20110.3%-4.0%-6.2%
20122.1%8.8%10.1%
20130.7%13.0%16.9%
20145.9%11.7%12.6%
20151.2%3.1%3.7%
201616.2%27.2%27.6%
20171.1%7.3%9.1%
20180.6%-2.5%-3.5%
20197.6%18.4%20.9%
Account Balance£9,055£12,511£13,720

So in 10 years, you would have invested at total of £7,000. The results are amazing even from the cautious account.

Just to add, you can also choose Moneybox’s socially responsible investing, where your money will only be invested in companies that are socially responsible.

#3. Funding your Moneybox Account

To invest with Moneybox all you need to do is link your bank account. Then the app will import your bank statement, and ask you which purchases you want to ’round up’, then the spare change will be invested.

Another way to boost your savings is to set a weekly amount to be taken from your account by direct debit, this amount can be as little as £1 and as much as £1,000. This will be taken alongside your spare change.

You can alter this amount anytime you want, and you can boost your deposits with ‘pay-day boosts’ or one off deposits.

After this, you can just put a reminder on your phone to check the account every months or so… But you can relax.

Does Moneybox Cost Anything?

Because Moneybox is a passive investing app, they do charge a fund management fee for all accounts that require it.

Fees on Moneybox Savings Accounts

45 Day Notice Savings Account90 Day Notice Savings AccountCash Limetime ISA
Interest Rate0.45%0.60%1.10%
Fees0%0%0% as long as withdrawals are made to buy your first home

At the minute Moneybox only offers these three savings accounts, but promises have been made that more are on the way!

Fees on Moneybox Investment Accounts

Account TypeVarious ISA AccountsGeneral Investment AccountsPension Accounts
Moneybox Fees£1 Monthly Subscription & 0.45% Platform Fee£1 Monthly Subscription & 0.45% Platform Fee0.45% Platform Fee up to £100,000 invested. Reduced to 0.15% for account balances over £100,000
Fund FeesFund fees range between 0.12% & 0.30%Fund fees range between 0.12% & 0.30%Fund fees range between 0.12% & 0.30%

The added fees for investment accounts is for the management of your money. To pay for the cost of buying and selling assets in your account.

The added fund fees are charged because Moneybox generally invests in low cost index funds, which charge a fee to own shares.

How does Moneybox Manage your Money?

When you invest using Moneybox, your money will be involved in one of 3 portfolios:

  • Cautious
  • Balanced
  • Adventurous

We’ve already talked about these options in the section above. But for a little extra knowledge, these 3 portfolios are made up from a mix of low cost tracker funds and index funds.

The portfolios use five tracker funds:

  • Fidelity Index World Fund
  • iShares Global Property Equity
  • iShares Overseas Corporate Bond Index
  • iShares Overseas Government Bond Index
  • Legal & General Cash Trust

As per the picture above, the allocations to each of these funds depends on which portfolio you choose.

The other way you can choose how Moneybox invests your money is through their Socially Responsible investing. They can do this by using the Old Mutual World ESG Index Fund, which only holds shares in global companies which are selected based on MSCI’s environmental, social and governance approach.

The funds Moneybox selects are chosen based on cost, how well the fund tracks its index, and the reputation of the provider. These funds are reviewed annually, and adjusted if necessary.

Pension Management

Moneybox manages your pension slightly different to general investment or ISA accounts. They don’t offer the cautious or adventurous options, they adjust your investment risk depending on how close you are to retirement age.

These options consist of the Fidelity World Index Fund, Old Mutual World ESG Index Fund, and the BlackRock LifePath Fund.

Moneybox is quite smart when it comes to pensions. At the beginning of your pension, you will be entered into a balanced portfolio where you will gain returns with mild risk. Then as you get closer to retirement age, Moneybox will change your portfolio to a more cautious approach to protect your funds as you draw from the account.

This is the best way to maximise your earnings early in life, then growing your account safely as you reach retirement. Even as you draw funds from your account, your savings will continue to grow.

Is Moneybox Safe?

Moneybox is regulated by the UKs Financial Conduct Authority (FCA) so they have to abide by rules on transparency and treating customers fairly. As well as these rules Moneybox must keep all customer details secure and all data is stored by Moneybox and its third party provider of Open Banking Technology.

If your invest with Moneybox, the FSCS also protects your funds up to the value of £85,000 if the fund or savings account provider goes bust, or the company is involved in any fraudulent activity.

Finally, as with all investment apps, the software used when logging into your account needs to be inline with Government regulations. The cybersecurity involved in these apps are more powerful than most banks, they use a 256-bit encryption for protecting your personal details.

Other Features from Moneybox

Other than the round ups, multiple accounts, and passive investing features, Moneybox offers users the opportunity to take advantage of some of these:

  • Cash back when shopping online.
  • Free withdrawals from accounts (if not in breach of Government regulations).
  • Pension consolidation, so all of your pensions are in the same place.

These features pretty much explain themselves, and are available to all users with an account on Moneybox.

I won’t go into details about the added features, however you should be aware that moving pension funds should be taken with care, and you should always get advice from a financial advisor.

Pros & Cons of Moneybox

Pros

  • The app is simple and easy to use, great for beginner investors.
  • You can gain a better return than the high street bank accounts.
  • You are able to control your risk.
  • You can withdraw your funds with no cost, as long as the amounts are settled.
  • Secured by the FCA & FSCS as well as 256-bit encryption.
  • You can invest from as little as £1.

Cons

  • Your capital is at risk, as with most investment apps.
  • Over long periods of time, the fees can amount to a lot of money.
  • It can take time to gain returns using the app.
  • Withdrawals usually take around 1-2 weeks.

What Other Apps are Out There?

Moneybox is not the only passive investment app out there. However, I do believe it to be the best for young people, and those just getting started with saving money or investing.

If you want to check out the alternatives to Moneybox, I have included in the list below, those which I believe to be the most similar to Moneybox:

  • Squirrel: This is a budgeting app used to help people save short term funds. It is used mostly for planning your monthly expenses, and building a safety net for unexpected bills. Plans start from £3.99 per month.
  • Nutmeg: Nutmeg is a Robo wealth manager geared towards investors rather than savers. They don’t offer savings accounts, but they do have all ISA options and retirement accounts. The biggest issue with Nutmeg is that you need a minimum of £500 to open an account, and the fees start at 0.75% of your investment value for fully managed accounts.
  • Plum: This app only offers high yield savings accounts, and ISAs. However, such like Nutmeg, the ISA are expensive to invest in, starting at £1 per month & 0.51% management fee, then a 0.15% fund fee. The savings accounts a free.
  • Moneyfarm: Another Robo advisor meant for investors, Moneyfarm offers a wealth of ISA accounts and has more options for money management. However, unlike the competition, you will need £5,000 to open an accounts with Moneyfarm. Alternatively, you can open an account with £1,500. But you have to commit to £100 monthly deposits.

You can see how Moneybox has cornered the market with their cheap accounts and easy access funds. But I think the main thing to take away from this section is that you don’t need a lot of money to get the full value from Moneybox.

Final Thoughts on Moneybox

As throughout this article, I believe Moneybox to be above and beyond the competition for passive investment apps in the UK.

Going to a high street bank for an ISA used to be a good idea, but with interest rates not being as high as people want, you can see a much better return from companies such as Moneybox. The main reason for this is… Main stream banks have other revenue streams, whereas apps like Moneybox focus on customer savings accounts.

The only match on the market today for similar service to Moneybox is probably Nutmeg, however the fees on ISA accounts are a touch expensive for me… Remember, if you have your money tied up in one of these accounts for 5 years. The fees add up!

I think in the current climate, having a savings account or ISA account needs to be a priority. Planning for the future for young people in the 21st century is almost none existent. People under 30 need to be investing in savings accounts such as this before it’s too late.

Chris Race

I am an accountant from the U.K. specialising in Management Accounting, Personal & Business Tax, Financial Analysis, and Wealth Management. My passion for learning is what lead me to creating this blog. Stock market investing has always been a interest of mine, and since I was 18 years old... This interest has become a source of income for me and my family.

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