MoneyBox Review - September 2019
A great app to get started with investing for the young, old and even millenials.
Woke👌 A good way to get going with investing. Simple and uncomplicated and just the right amount of 'nudges'.
Broke 🙁 Fees could be lower for smaller pots. Portfolio monitoring could be more fun, interactive and transparent.
Time in the market is more important than timing the market (as the old saying goes) and Moneybox is an excellent way to combat one of the biggest challenges in investing: getting started and keeping going. Being an active investor who thinks they know better than the market, can pick future winners both in single stocks, specific markets and funds; on the face of it I should not like Moneybox... Or at least it shouldn’t appeal to me. I check my Hargreaves Lansdown ISA portfolio far too often 😞. The truth, however, is that it is hard not to see how useful Moneybox can be in building up a pot, forgetting about it and letting the market do the rest. The downside is that it is a bit limited in terms of understanding the performance of your investments as well as accessing a wide pool of investment vehicles. Its fees when taken at face value are relatively uncompetitive until you reach about £2k.
Setting Up (4/5)
Moneybox is easy to set up. You download it, connect to your bank/spending card and wait for the weekly harvesting of your ‘rounds ups’ to find their way into index tracking funds. The app has a sleek and easy to use functionality that I mostly like and three options for your investment portfolio.
You can either opt for a General Investment Account (GIA), an Individual Savings Account (ISA), a Personal Pension or the Lifetime ISA.
Moneybox is effectively a way to save up a pot of money that can either sit in cash or be invested in a portfolio of different assets. The crucial thing is ‘how’ this is done: through ‘round-ups’. Let’s take a step back and unpack how Moneybox and its ‘rounds ups’ feature works both literally and more subtly. You go around spending your pennies as you do normally with your bank card/Apple Pay and then magically this ends up being invested in a mixture of stocks, bonds and property via some well known and inexpensive passive open-ended funds and ETFs. Portfolios can be tallied to risk appetites.
You spend £2.35 on a sandwich from Pret a Manger, 65p will eventually head for your Moneybox portfolio. Your bank is debited with £3. I also have been adding a weekly ‘top-up’, a normal direct debit, as well as the odd “Quick Add” which is one of my favourite features. This feature sort of represents the best and worst of Moneybox’s proposition: its psychological framing.
There is no real difference, you could argue, between roundups and a weekly direct debit but it does sometimes feel different. I also love that you can just quickly add some cash to the pot when you’re feeling parsimonious and before you go and spend it all on sandwiches. It makes it easier to build up a pot with these sort of behavioural ‘nudges’.
Portfolio Monitoring (2/5)
I am conflicted to give Moneybox such a low rating in this category. Let me explain why. Breakdowns of what your pot is invested in are reasonably clear but I would like to see a better way to monitor my investments. More granularity as to when my 'round-ups' entered the market, how each fund is performing and its profit/loss over time would be nice.
Now, this is a double-edged sword. There is a very strong argument to stay locking up your cash and throwing away the key (to a certain extent) helps drive long term returns, particularly when investing in passive funds which are likely to fall in line with the market. Too much scrutiny of a portfolio can lead to overconfidence or underconfidence in your abilities and lead to overtrading and/or missing rebounds after corrections which destroy long term returns. Messing about too much rarely ends well when it comes to investing in passive funds.
However, it would be great to have a bit more clarity on investment returns as well as a deeper understanding of the fund's underlying holdings as well as the potential to pick investment trusts and single stocks. More on this below.
Customer service (5/5)
Customer service is through the app’s help section. I tested it out with a 4pm question, not overly complicated, a got a response by 6pm the same day. I can't really fault it all.
My biggest gripe with Moneybox is its fees. Moneybox charges £1 per month as a flat fee for using its services after a 3-month fee-free period. Unless you build up a pot very quickly this means an annual fee - including fund fees and its 0.45 per cent platform fee that can be over 2.5 per cent all-in quite easily in your first year. Of course, this depends on how much you spend and how much you add in per week.
Going directly to low cost fund providers like Vanguard is likely to be cheaper, of course, but I do also think Moneybox deserves credit for its ‘nudging’ which makes investing easy to get going with.
It is fair to say that Moneybox offers something unique. Round ups are available at a number of digital banks for free including Monzo,Starling and Revolut but these don't offer investment portfolios. Also, there is something to be said for silo-ing away your pot so as to avoid the temptation to empty it! Being in a different app, although Starling does have a Moneybox integration seems to have value.
I would be happy to go with 5/5 for this section if fees were capped at say 1 per cent until you hit c.£2k. Although, I see the argument that it offers a good service that is not offered elsewhere.
The Grab Bag is stuff that doesn’t quite fit anywhere else in our review.
Moneybox has an education section and also partner offers from various consumer brands. However, I feel that they could offer more on this front, particularly on education, evergreen guides to understanding investments. There are a few videos from the likes of Fidelity but over time it would be great to see Moneybox have a huge swathe of education content. The main channel, it's Discover tab, feels both a bit more of a corporate development blog than a knowledge centre.
Choice of investment vehicles. My preference would be to be able to access a wider range of investments than currently offered including investment trusts, single stocks and open-ended funds. There are some great options from the likes of Baillie Gifford that I would like to access and make me keener hold my long term ISA pot with the likes of Hargreaves Lansdown and Freetrade. Sure well known passive funds are cheap but so too can some investment trusts and with the likes of Freetrade popularising shares among fintech enthusiasts, it seems wise for Moneybox to follow suit.
Of course, there is an argument that Moneybox should not look to become too jazzy. Perhaps it should be even aiming to be a bit boring and not encourage to much of your attention. That way it can focus on smaller 'nudges' to keep you building a pot rather than dipping into it or gambling on certain markets or companies.
Moneybox offers General Investment Accounts as well as Stocks & Shares ISAs, Lifetime ISAs and a Personal Pension Plan and will shortly offer a competitive Savings Account. This is good but to make it my main home for my investment pennies I would need greater access to more options to build a diversified portfolio.
Despite an imperfect fee structure, portfolio monitoring functionality and investment vehicle options Moneybox is really solid way to get going with investing or continuing to build up a fairly decent portfolio.
I would recommend it to anyone looking to quietly build up an ISA, Lifetime ISA or just a pot of cash but I am yet to be convinced it is right for much bigger portfolios.
Portfolio Monitoring (2/5)
Customer Service (5/5)
Overall score: 3.5/5