Plum vs Moneybox: Best Automated Investment App for Beginners?

It’s getting easier and easier to save money and to make smart investments from your phone. However, with all the platforms on offer, it can sometimes get confusing which options are worth the price of admission, and which aren’t. Some of the most popular automated savings and investment services available to users in the UK right now are money management apps. Plum and Moneybox are examples of apps that help you manage your money better. Both offer similar services – but which is the best choice for you?

Let’s take a quick look at Plum vs Moneybox, and see if we can reach a firm conclusion.

Plum vs Moneybox: Quick Summary

• Plum & Moneybox let you save and invest money automatically.
• Both Plum and Moneybox are free to use, but they also offer premium versions providing more features to manage your money.
• Both premium versions of these services offer a savings account and the option to invest in various investment funds.
• Both services are FCA-regulated and are fully encrypted.
• With Plum, you connect your bank account(s) and credit card, with Moneybox, you connect a card you make payments from.
• Plum is rated 4.5 stars on Trustpilot.
• Moneybox is rated 4.6 stars on Trustpilot.

Please note: as with all investments, your capital is at risk.

What is Plum?

Plum is a money management app which has been around since 2016. In that time, it has built itself up as a leading platform in this space. Plum effectively can view your money and income via your bank accounts (and or credit cards) and adapts smartly to you so that it can make worthwhile savings on your behalf. It’s a great way to automate money you want to save and invest without taking too much time out of your day.

How Does Plum Work?

Plum offers a pretty simple service. Essentially, it works by accessing your bank account – securely through Open Banking – before calculating how much you can set aside every few days. It’s worth noting that you can add multiple bank accounts and even credit cards. Then, it will act as your complete money manager. It will automatically move money across to your Easy Access Interest Pockets so you don’t have to.

You’ll even be able to communicate with the service through a sophisticated chat bot. It’s here where Plum will tell you what you’re setting aside and how well you’ve performed for the week. You can even use this service to ask for money to be taken out, or for the amount you’re depositing to be increased, for example.

Your savings with Plum are either stored in an e-wallet (the Primary Pocket) or they are stored in Easy Access Interest Pockets offering 1.01% AER for basic accounts and 1.40% AER for Plus and other higher tier paid accounts. To gain access to the 1.40% AER on your savings, you’ll need to upgrade to a paid tier with one of either Plus (fee of £1 per month), Pro (£2.99/mo), Ultra (£4.99/mo), or Premium (£9.99/mo).

These interest accounts are provided by Investec bank, who do have the right to change the rate at any time.

How Does Plum Know How Much Money to Save?

Plum work using AI algorithms, meaning that they apply complex equations to work out exactly how much to save based on your income and outgoings, as well as your extended goals. To get the ball rolling, you’ll need to fill in a few details, and to let Plum know what you’d like to save for, and how much you spend on a regular basis. You can tweak and maintain the sensitivity of either app by choosing from one of several ‘levels’ of saving.

Plum’s savings levels go from ‘shy’ to ‘beast’ level. As an example, the ‘shy’ level allows you to save 50% less than normal, while ‘beast’ allows you to save up to 75% more. These settings help your app to work out how much you are physically comfortable with putting to one side.

That’s because, ultimately, even the best algorithms aren’t clairvoyant! Your circumstances and financial demands might change. Therefore, it really does make sense to give Plum the heads up.

Plum Savings Account Options

Plum, offers five different levels of account, with their free account (Basic Plum tier) offering a base rate of 1.01% on all money you invest. The table below summarizes Plum’s offerings on the savings side of the story.

Plum offers a variety of ways to save. Frankly aside from the low interest rate, the Basic offering is decent. If you want more control over how you save, the Pro offering is the best choice here. The Ultra and Premium are only useful if you want enhanced access to their various investment offerings which I have discussed further below.

Let’s have a quick look at what the various saving strategies are:

• Automatic Saver: An automatic AI-based savings algorithm to calculate how much you can safely save
• Round Ups Saver: Round up your transactions from each week to the nearest whole number and allocate that extra amount to savings.
• Paydays Saver: Configure a fixed amount to automatically assign to your savings on the day you get paid.
• Rainy Days Rule: Sets a little money in to your savings account each day it rains where you live
• 52-week challenge: Starts with £1 per week of saving and ups that by £1 each week, so you save £2 in week 2, £3 in week 3, and so on. Over the course of a year, which is 52 weeks, you end up saving £1,378. Not bad!
• Interest Pockets: Little buckets, or pockets, of cash where you notionally save money for different goals such as a vacation, car, home, etc.

Plum also offers some enhanced options for their Ultra & Premium accounts like Money Maximizer, a boosted savings function, and the Plum card.

Plum Investment Options

Plum lets you start investing money from £1. Plum also gives you the option to invest your savings. You can do this within the tax free (up to £20,000 per tax year) wrapper of a Stocks & Shares ISA (also known as an Investment ISA). Or in a generic General Investment Account (GIA) if you already have a Stocks & Shares ISA elsewhere.

In terms of where your money is invested, Plum has a nice and simple approach to investment options and risk levels which will likely appeal to beginners. You can invest your money in various ‘themes’ where various stocks and bonds are grouped into funds. A few examples of these ‘themes’ are ‘Tech Giants’ (think Apple, Facebook, Google etc.), ‘Clean & Green’ (Socially Responsible Companies) and ‘American Dream’ (which is basically the S&P 500).

There’s also a simple 3 option risk level to choose from which vary in levels of risk based on the breakdown of stocks vs bonds within the selected portfolio; Slow & Steady, Balanced Bundle or Growth Stack. Interestingly enough, Plum invests with Vanguard and deploys the various flavours of Vanguard’s LifeStrategy funds in the backend. For example, the Balanced Bundle invests in LifeStrategy 60% Equity Fund.

Continuing with Plum’s themes of offering many different tiers, we see the same tiers continued over from the savings account. Again the important note here is that the fees are for the combined savings and investment account. You do not pay a separate fee for the savings account and another fee for the investment account.

What Fees do Plum Charge?

Here’s the best part – Plum is absolutely free to use from the word go if you are just looking to set money aside. That’s likely to appeal to anyone new to a money management app. What’s more, there are no restrictions on how much you can deposit and withdraw. 

Depending on the investment product you choose, of course, separate fees will apply. The average annual fund management and provider fee is 0.51%. This means you’ll pay just £1 each month for access to Plum Plus’ investment services, and there’s a max rate of 0.9% fund provider fee and 0.15% fund management fee on the subscription fees you pay annually. Plum Pro is £2.99 a month. Both subscription tiers are free during the first month and you can cancel anytime during your trial. Although again, please remember that as with all investments. your capital is at risk.

Is Plum Safe?

Yes, absolutely. Plum is safe. If you save money in Interest Pockets with Plum, your money will be covered under the FSCS scheme for up to £85,000. This is because Plum in turn deposits the money with a regulated bank in the UK, such as Investec Bank Plc.

If you invest via Plum, you will take on market risk, as you would with any other investment strategy.

You’ll also benefit from read-only bank integration, along with AES and 256-bit encryption to keep your data safe. You also log into the app with biometrics (fingerprint ot face ID) or a PIN, similar to most mobile banking apps.

What is Moneybox?

Moneybox has been around just as long as Plum, meaning it should offer a similar level of confidence. It’s a savings and investment app tour de force, which means that it actively rounds up purchases to the nearest pound, and saves any change you make. Therefore, if you were to spend £4.33 in a shop, Moneybox would save 77p for you. The service also offers some interesting investment opportunities, too, meaning it’s well worth dipping further into.

How Does Moneybox Work?

To start saving money with Moneybox (you just need £1 to get started), you’ll need to set up a credit card or debit card that you make payments with. This means that, each time you pay for something on that card in public or online, the app will detect change and set it to one side.

Apart from the round up option, Moneybox offers a couple of other ways to save your cash:

• Weekly deposit: Set an amount that you want to set aside every week
• Monthly payday boost: Set an amount that gets set aside with each payday
• One-off deposit: As the name suggests, you can set aside a chunk of cash if you find yourself with a bit extra at any given point.

You can choose from one of three setup levels, too, meaning that if you’re unsure if you want to throw yourself right into the app, you can take things at a slower pace if need be. You’ll also be able to login and invest money through various options.

Moneybox Savings Options

Moneybox offers one savings account, but with multiple different deposit terms. As of writing, the Simple Saver option offers a 1.40% AER interest rate option. If you wish to get higher rates, you can choose terms from 32-day notice to 120-day notice. In the 32-day notice option, you get an interest rate of 2.22% AER which then goes up to a slightly higher 2.28% AER rate for the 120-day notice.

Given the small difference in the rate between the 32-day and the 120-day notice option, it probably makes sense for most to stick with the 32-day notice. You’re not going to notice that 0.06% difference in interest rates!

Currently Moneybox works with Shawbrook Bank and Charter Savings Bank to offer the savings options. In both cases, the money is protected by FSCS coverage, meaning you’re covered up to £85,000.

Moneybox Investment Options

Moneybox offers some great choices for the curious investor. You can set up a pension pot through the app, as well as a general investment account GIA. A GIA is likely to be your best default option if you are completely new to investing and are not likely to be saving huge amounts of money.

You might also want to invest up to £20,000 a year into a stocks and shares ISA, or £4,000 in a stocks and shares LISA, before you have to worry about paying for tax. Although do keep in mind that a lifetime ISA (LISA) will count towards your total annual ISA limit of £20,000. You can even set up a junior ISA to manage cash and investments for your children’s future.

In terms of portfolio options Moneybox have a simple approach. Ideal for those who don’t want to get involved in picking funds and just need a passive investment option. The three portfolios on offer are based on risk level – Cautious, Balanced and Adventurous.

For those that want to customise their portfolio, Moneybox does offer more choices. There are a range of thematic funds offered by the likes of Legal & General, iShares, HSBC, etc. which offer either geographic selection, theme selection – like clean energy or automation & robotics, or a choice between bonds and equity. You can buy these funds in either your GIA or your stocks & shares ISA account.

Finally, for investors who want the ultimate choice and want to invest in stocks directly, Moneybox does allow you to buy US stocks in their stocks & shares ISA account. Like many other services, Moneybox allows you to buy either full or fractional shares. The latter is nice when you’re just getting started and some of the share prices are simply too large to buy!

Is Moneybox Safe?

There are always going to be some risk with any investment, and thankfully, Moneybox is backed by the FCA. This means that you will benefit from plenty of protection up to £85,000. As with Plum, the service also benefits from 256-bit encryption standards.

What Fees do Moneybox Charge?

Moneybox is, like Plum, free to begin with. Moneybox will charge you £1 a month after your trial period. There is also a flat 0.45% platform fee which applies each year. You’ll also be charged 0.3% max for fund provision each year, though expect to pay this each month.

There are other fees like currency conversion (when converting between USD and GBP) to the tune of 0.45%. Moneybox does not charge a commission.

Plum vs Moneybox: Pros and Cons

So – it’s time to break things down even further. What are the pros and cons of each service?

Plum Pros and Cons

Pros

• Plum is free to use for the savings and basic money management aspects with the option of paid premium accounts to get into investing and additional money management features.
• Plum will actively set aside money for you so you don’t have to remember to do it yourself.
• The in-app notifications are great and keep you well informed about your finances.
• Plus and Pro accounts are great paid upgrade options at just £1 and £2.99 per month respectively.
• Plum offers a roundup, 52 week challenge, rainy days and payday options as well as the core service of automated savings.
• Plum offers you easy in-app switching for bills and utility providers which are overcharging you.
• There is some concern over customer service availability in that there’s no 24 hour coverage, although that’s unlikely to be a major issue for most.
• FCA regulated with plenty of encryption.

Cons

• Interest rates don’t grow beyond 1.01% in free tier and 1.4% in paid tier, which are both lower than other players like Chip.
• Plum offers too many account levels in my opinion – five account levels. Up to 3 or maybe even 4 is okay. This is too confusing!
• There is some concern over customer service availability in that there’s no 24 hour coverage, although that’s unlikely to be a major issue for most.

Moneybox Pros and Cons

Pros

• Moneybox offers a huge range of investment options, including personal pension services.
• Fund charges are very reasonable, as are annual rates.
• Investments are free to get into for the first three months.
• It’s extremely easy to use and get used to.
• FCA-backed with plenty of encryption.
• Withdrawals are quick and easy, and very flexible (although granted Plum are even quicker).

Cons

• Moneybox’s fees may not be a great fit for anyone looking to invest very small amounts.
• Moneybox savings functionality is not as advanced as Plum – it does not offer automatic savings option to help you maximize savings beyond just rounding up purchases.

Can I get a higher interest rate than Moneybox and Plum’s rates?

Yes, you can get a higher interest rate than both Moneybox and Plum. The current going rate is as high as 2.1% for no-notice accounts and 2.9% for 90-day notice accounts. However the trade off is that these are merely “dumb” savings accounts. They do not offer the advanced functionality that Moneybox or Plum offer with regards to automated savings and investing.

If you want to go for the highest possible interest rate, then you would have to opt for a 5-year fixed deposit. Your money is locked in for 5 years, but you can get rates upwards of 5%!

Plum vs Moneybox: Which is Better?

Both Plum and Moneybox offer a great range of services, but both work on fairly different sides of the investing and saving coin. Plum is great if you have trouble saving on the whole and want a simple no fuss solution, whereas Moneybox has a larger range of accounts such as a personal pension.

In terms of investment options Plum offers more fund options and is cheaper overall. So if you are looking for more focus on starting to save money and smart ways to do so, and potentially looking to make a start with investing then Plum is likely to be the best choice for you. As an added bonus if you sign up to Plum you can get a free 30 day trial to try out Plum Pro (then £2.99 per month).