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  4. Moneybox vs Moneyfarm: Comparing the Best Savings Apps in the UK


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Mr A
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Overview


Moneybox and Moneyfarm are two popular savings and investment apps in the UK, offering users the opportunity to save and invest money with ease. With their easy-to-use interfaces and clear goals, these apps have gained a considerable user base. In this article, we will take an in-depth look at both Moneybox and Moneyfarm, comparing their features, fees, account types, and performance to help you make the most informed decision.

Moneybox


About Moneybox


Moneybox is designed to make saving and investing simple, even for complete beginners. The app lets you save money by rounding up your everyday purchases to the nearest pound and automatically invests the difference. You can also make one-off deposits, set up a regular direct deposit, or save money in various investment and savings accounts.

Features


  • Round-ups: Automatically save and invest the spare change from your transactions when you link your bank account to the app.
  • Direct deposits: Set up a weekly or monthly direct deposit, to consistently contribute to your savings and investments.
  • Flexible investment options: Moneybox offers three different portfolios—Cautious, Balanced, and Adventurous, catering to different risk preferences.
  • Individual Savings Accounts (ISAs): Invest in a variety of ISAs such as the Stocks and Shares ISA, Lifetime ISA, and Junior ISA.
  • Pensions: Consolidate your old pension pots and invest in a new, simple pension plan through Moneybox.

Fees


Moneybox charges two main types of fees: a subscription fee and a management fee. The subscription fee covers the use of the app, customer support, and ongoing customer maintenance. The management fee covers the costs of managing your investments.

  • Subscription fee: £1 per month
  • Platform fee: 0.45% annual platform fee (charged monthly and based on your account balance)
  • Fund management fees: 0.12-0.30% per annum (charged directly by the fund providers)

Account Types


Moneybox offers several account types for investing and saving:

  • Stocks and Shares ISA: Invest up to £20,000 per year tax-free
  • Lifetime ISA: Save up to £4,000 per year towards your first home or retirement, with a 25% government bonus
  • Junior ISA: Save for your child's future and invest up to £9,000 per year, tax-free
  • Pension: Consolidate, invest, and manage your pensions

Performance


The performance of Moneybox investments will depend on the portfolio you select and market conditions. According to their website, as of June 2021, the average annualised returns since Moneybox launch in 2016 are:

  • Cautious portfolio: 4.534%
  • Balanced portfolio: 5.478%
  • Adventurous portfolio: 6.052%

Moneyfarm


About Moneyfarm


Moneyfarm is a robo-advisor platform that simplifies investing by creating a personalised portfolio for you based on your risk appetite and financial goals. Moneyfarm selects a combination of low-cost, diversified exchange-traded funds (ETFs) and manages your investments on your behalf.

Features


  • Personalised portfolios: A unique investment portfolio based on your risk appetite and financial goals.
  • Rebalancing: Moneyfarm automatically rebalances your portfolio to align with your goals and changing market conditions.
  • Diversification: Moneyfarm uses ETFs to diversify your investments across asset classes and geographic locations.
  • Customer support: Access to qualified investment advisors for guidance and support.
  • Simplicity: An easy-to-use platform that requires minimal input from the user.

Fees


Moneyfarm has a tiered fee structure based on the amount you invest:

  • Up to £10,000: 0.75% annual fee
  • £10,000 to £50,000: 0.60% annual fee
  • £50,000 to £100,000: 0.50% annual fee
  • Over £100,000: 0.35% annual fee
Additional fund management fees vary between 0.17% and 0.30% per annum, charged directly by the ETF providers.

Account Types


Moneyfarm offers a variety of investment accounts:

  • General Investment Account (GIA): Invest without annual limits, but with no tax benefits.
  • Stock and Share ISA: Invest up to £20,000 per year tax-free
  • Personal Pension: A low-cost, flexible pension to consolidate and manage your pension savings.

Performance


The performance of your Moneyfarm investments will depend on the portfolio you are assigned based on your risk appetite and goals. Based on historical data from Moneyfarm's website, these are the estimated average annualised returns over a 3-year period:

  • Low-risk portfolio: 5.3%
  • Medium-risk portfolio: 7.1%
  • High-risk portfolio: 8.6%

Comparison: Moneybox vs Moneyfarm


Purpose: Moneybox is geared towards easy, regular saving through round-ups, direct deposits, and multiple account types. Moneyfarm, through its robo-advisor model, focuses on creating personalised, low-cost portfolios based on user risk appetite and financial goals.

Fees: Moneybox charges a subscription, platform, and fund management fees, while Moneyfarm has a more streamlined tiered fee structure based on the amount you invest.

Account Types: Both apps offer Stocks and Shares ISAs and Pension Accounts. Moneybox additionally provides Lifetime and Junior ISAs, while Moneyfarm offers a General Investment Account.

Performance: Returns for both apps depend on the chosen portfolio and market conditions. Historically, Moneyfarm shows higher average annualised returns, but past performance is not a guarantee of future results.

Conclusion


Moneybox and Moneyfarm are two excellent savings and investment apps for different purposes. Moneybox is suitable for those looking to save small amounts regularly, while Moneyfarm caters to those seeking personalised investment management. To decide which app is right for you, consider your investment goals, risk appetite, and financial needs. Keep in mind that the value of your investments can go up and down, and you may get back less than you invested. You should consider seeking financial advice before making any investment decisions.


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