When it comes to making investments, apps seem to be taking over! They’re great at helping us make instant investments and building tailored portfolios. And, as investing has become increasingly available to the general public, more and more apps have found their way onto our phones.
When it comes to the best investment apps UK users have available, Moneyfarm and Moneybox always seem to pop up in people’s lists of favourites. But, what makes them different, what are their pros and cons, and ultimately, which one is the best wealth manager to invest with?
I’ve looked at both in previous match-ups here at PFF – but today, it’s about time to put the leviathan battle of Moneybox vs Moneyfarm to the test.
Moneyfarm Summary
A robo advisor which provides its users with customized investment portfolios based on individual risk preferences and investment goals.
If you are looking for an advisor-led model, then Moneyfarm is the best option. Fee-scaling means your fee rate will decline as your account grows.
Pros
Cons
Moneybox Summary
A savings-led service that is targeted towards beginners. It allows you to invest in range of different investment and savings accounts.
If you’re looking for a self-managed and savings-led approach, then Moneybox is a great option.
Pros
Cons
What is Moneyfarm?
Moneyfarm is an online wealth management platform that has been running since around 2016 in the UK.
Moneyfarm creates investment portfolios for its users based on their personal investment goals, risk comfort level, and financial situations. It does this with the assistance of robo advisors, meaning much of the service is automated.
One of the best things about Moneyfarm is that if you choose the Actively managed portfolios (more on that below) it doesn’t rely solely on an algorithm. It also uses actual human expertise to make the most informed and reliable decisions possible.
The only slight catch overall is you will need to make a minimum investment of £500 to get started. While there are no subscription fees, this is definitely not small change!
What’s great is that instead of a set subscription fee, Moneyfarm will charge you a management fee based on the size of your portfolio, so what you pay will most likely not be the same as what your friend on the same app pays.
This varies from 0.35% to 0.75% – and the more you invest, the less you pay each year (in terms of percentage). The more you invest, the lower your fees.
It is important to note that – while this may seem like a lot – these fees are well spent! You’ll trust this app with managing, monitoring, and, when needed, rebalancing your portfolio, which is no small task.
And, don’t worry about going into it blind. The app also provides educational tools to help you make the best decisions about your investments at the time of investing.
You can rest assured that you’ll be working with a trustworthy app, as it is monitored by the FCA (Financial Conduct Authority).
How does Moneyfarm work?
When you sign up for Moneyfarm, you will be asked to complete a questionnaire. This will be to assess your investment goals, risk choices, and general financial habits.
Then, once you’ve completed the questionnaire, Moneyfarm will recommend seven different portfolios, classified based on risk, for you to choose from.
From here, you will need to make a minimum investment of £500 to start investing within the app.
You can ask for support or assistance in your choice, and the app will use genuine human professionals to help you make the best decision possible for your financial goals.
What account options does Moneyfarm offer?
Moneyfarm offers stocks and shares ISAs, junior ISAs, SIPPs, and GIAs as account options.
What portfolio options does Moneyfarm provide?
Moneyfarm’s portfolio options are weighted along a numbered scale, running from one to seven.
‘Portfolio 1’ offers the most protection and lowest growth potential, while ‘Portfolio 7’ provides the biggest growth opportunities at a much higher risk of financial loss.
Moneyfarm offers a huge amount of data to help show you which portfolio option is likely to fit your investing needs the closest. They match you to a portfolio using your ‘investor profile’ – a smart way to automate your portfolio choice without having to worry about digging into the minutiae.
Moneyfarm’s portfolios arrive managed by experts, and you can also reach out for a consultation with an expert if you’re unsure of what options suit you best.
You’ll have a pick of passive ETFs (exchange traded funds), but you can also select from fixed allocation portfolios if you’d like to save more money along the way.
What are Moneyfarm’s Fees?
Moneyfarm has a sliding fee scale, which means that the management rate charged goes down as your account value goes up. This is true of both the Fixed allocation and the Actively Managed accounts.
The fee ranges are structured in the following manner:
- Fixed Allocation: 0.45% (starting at £500) to 0.25% (for accounts over £500k)
- Actively Managed: 0.75% (starting at £500) to 0.35% (for accounts over £500k)
As you may notice, with the Fixed Allocation accounts (which would be somewhat similar to what Moneybox provides) the fees are the same or lower with Moneyfarm.
The Actively Managed accounts, which in theory should deliver better returns, naturally do charge more for the human expertise. Regardless though, even with those accounts you’re at or below Moneybox’s fee levels once you cross £100k in assets.
We’ve separately covered the topic of Moneyfarm’s fees in much greater detail, so please do take a look.
Moneyfarm
If you are looking for an advisor-led model, then Moneyfarm is the best option. Fee-scaling means your fee rate will decline as your account grows.
I wouldn’t call this article “Moneybox vs Moneyfarm” if we didn’t consider the other combatant in this breakdown – so let’s take a look at what the other platform has to offer.
What is Moneybox?
Moneybox has been around for quite some time now, and is known for being a pretty reliable and easy-to-use app. More specifically, it is a savings and investment app that allows you to round up your everyday purchases to invest whatever spare change you have left over into one of three different investment options.
For example, if you spend £9.22 on food shopping, Moneybox will save the 78p that’s left from the whole last pound. You can then either put that money into a cash savings account, a lifetime ISA, or in a stocks and shares ISA.
One of the great things about Moneybox is that you can either set it up to make regular deposits into your app account or simply put money in whenever you can.
It’s an award-winning app that will certainly be worth the £1 monthly subscription fee if you want to save yourself some money and invest wisely.
How does Moneybox work?
Once you download the app and pay the first £1 subscription fee, you’ll then be able to add the debit or credit card you usually use to make payments. (Psst – for your first three months, you won’t pay a penny!)
That way, whenever you use the card in a shop or online, the app will automatically know of the purchase and use it to make investments.
However, you do not have to choose the round-up savings option by default. Moneybox also allows you to make set weekly deposits, a monthly payday boost, or general one-off payments.
One of the key features of this app that I absolutely love is that you don’t have to dive in headfirst. You get to choose from three set up levels.
That way, if you’re unsure about using the app, you can go at a slower pace, and learn how to use it properly and how it works, before committing yourself to it.
Then, the money you’ve saved or deposited can be invested via the app – nice and easy!
Keep in mind, Moneybox will also charge some fees per month depending on investments that enter your account. The representative platform fee, for example, is 0.45%.
What account options does Moneybox offer?
Moneybox offers multiple account options – you can choose from simple savers, ISAs, LISAs, SIPPs, GIAs, or cash lifetime ISAs.
What portfolio options does Moneybox provide?
If you’d prefer to invest with Moneybox, the great news is the service is highly flexible. You’ll get a choice between three different ‘starting options’ – which are labelled Cautious, Balanced, and Adventurous.
All three allow you to customise your investments however you wish, but are weighted based on your attitude to risk and potential savings goals. You’ll start with a range of different tracker funds, and you can also choose to make your portfolio socially responsible if you prefer.
The Cautious option is great for low risk, but growth tends to be a little slower than you might expect. Balanced gives you the best of risk protection and growth potential, while Adventurous is the riskiest route – but you’ll stand to get the highest rate of growth.
Moneybox will also support custom allocations, meaning you can build your own portfolio from scratch from a range of different funds and international stocks.
What are Moneybox’s Fees?
Moneybox has a two tier fee structure – a subscription and a management fee. This fee is charged for investment accounts – Stocks & Shares ISA, General Investment Account, and Stocks & Shares Lifetime ISA.
The first tier is the monthly subscription fee of £1, which works out to £12 per year. I’m not sure what the purpose of charging such a fee is considering that they charge a management fee anyways. If your account balance is small (<£1,000), it’s important to keep in mind that this fee works out to 1.2%. At this point, you’re already paying more for this service than you would be even with Moneyfarm’s Actively Managed accounts. And this is before you pay the management fee.
The second fee is the 0.45% platform fee. This is charged for the total assets under management. As I’ve mentioned earlier, when comparing apples-to-apples with Moneyfarm, it seems Moneybox is much more expensive.
Let’s take a look at a simple situation: an account with a value of £5,000. Moneybox’s annual subscription fee is equivalent to 0.24%. Combined with their platform fee of 0.45%, you’re paying a total of 0.69%!
Note that this is before paying the underlying fund fees and market spread costs which would be roughly equivalent for both Moneyfarm and Moneybox.
Moneybox
If you are looking for a starter option that is savings-led and self-managed, then Moneybox is a decent option.
Moneybox vs. Moneyfarm: Which is better?
The battle between Moneybox vs Moneyfarm, isn’t as cut-and-dried as you might expect. Both Moneybox and Moneyfarm have different customers and services tailored to different needs – and, as mentioned above, either option is only really worth the platform fee if you’re willing to make the most out of them.
If you are looking for an advisor-led model, then Moneyfarm is the best option. Fee-scaling means your fee rate will decline as your account grows.
It’s tailor-made to support new investors and old hands alike. And, should you ever require professional assistance, you can find it directly in the app with approved professionals.
On the other hand, if you’re looking for help to get started with saving money and investing it, and you’re looking for a self-managed approach, then Moneybox is a great option.
It is only worth the subscription fee if you use it frequently, but, as long as you do, you can keep track of your purchases, savings, and investments all in one place.
Before You Go…
I hope you’ve found my rundown on Moneybox vs Moneyfarm useful!
Whether you’re saving £2,000 a month or just need some financial or investment advice from a top app, there are numerous options out there.
If you’re perusing the wider app scene and want to know my thoughts on other round ups, take a look at what I have to say about the other services on offer in the UK:
FAQs
Don’t head to the app store just yet – here’s some final thoughts on Moneybox and Moneyfarm you might want to keep in mind.
Is my money really safe with Moneyfarm?
Yes. Moneyfarm receives protection from the FSCS, or Financial Services Compensation Scheme. That means any money you invest through the service receives protection up to a total of £85,000.
How risky is Moneybox?
Moneybox receives protection from the FCA (Financial Conduct Authority) which means they’re regulated strictly to ensure users get fair financial guidance.
Moneybox also offers three different levels of portfolio options weighted at risk levels depending on what you’d like to gain from your activities. Therefore, you don’t have to risk all your capital on a high-growth, low-protection strategy.
I’d also suggest you take a look at some customer reviews for Moneybox and see if your investment journey measures up with anyone else’s.
What’s the average return on Moneyfarm?
Moneyfarm could return as much as 9% on your portfolio, which is high above the industry average. However, this is subject to a variety of different factors, and as with all investment options, there will always be a modicum of risk involved.
That said, there are other things to measure than just return. Look at customer satisfaction and investment products across the board, too.
by Jon Craig
I am the creator of Project Financially Free and I started this journey to both educate myself and share my insights on personal finance. I’m passionate about financial literacy and I invite you to join me on this transformative path. See more.
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