Are your savings looking a little on the poor side? How about using an app that will do the hard work for you? Take a look at this Moneybox review to see why I think there are better alternatives.
10-second Moneybox review
The app certainly gives you a lot of options when it comes to saving and investing. However, because of the fees, it’s only really suitable for somebody willing to put a bit more money away.
I have actually lost count of the number of personal finance apps I have signed up for. In all honesty, they have all been useful in their own way, but some are better than others. The latest for me to review is Moneybox.
What is Moneybox?
Moneybox is an app that will help you save money in small amounts, so you will hardly notice it leaving your account. Once you have some cash stashed away, you can then decide whether you want to place your money into a savings account or invest. There is also access to a pension and a Lifetime ISA.
Taken from their website:
Moneybox is an investing app that makes it simple and easy for everyone to start. You can begin investing with as little as £1. You can round up your everyday purchases to the nearest pound and invest the change into thousands of global companies via tracker funds. You can also deposit money into your account on a weekly or monthly basis.
Is Moneybox safe?
Moneybox is owned by Digital Moneybox Limited, a UK company based in London and incorporated in 2015 and is regulated by the Financial Conduct Authority (FCA) and is registered as a Data Controller with the Information Commissioner’s Office.
The app went live in 2016 and uses 256-bit, bank-level encryption for the transmission of sensitive financial and personal data and will not directly access or store online banking login details
The investments and savings accounts are covered by the government’s Financial Services Compensation Scheme. That means if something should happen to Moneybox, your savings will be covered by up to £85,000.
How does Moneybox work?
You have several options to fund your Moneybox account.
- Round ups – if you have a compatible bank account (see below), you can ask Moneybox to ’round up’ every time you make a purchase. So, if you spend £4.80 on lunch, this figure is rounded up to £5 and that spare 20 pence is sent to your Moneybox account at the end of the week. According to Moneybox, users so far are making around 30 transactions per week with an average round up of about 28p. This results in £8.41 savings
- Weekly deposit – arrange a set amount of cash you are willing to transfer over to your account each week. This will also tell you your projected earnings over a 10-year period.
- Payday boost – arrange for a set amount to be transferred close to payday.
- Super round ups – if you find that round ups aren’t enough, you can double their value with this option.
- One-off deposit – or, if you find yourself with a bit of extra money, make a one-off transfer.
What banks does Moneybox work with?
If you want to use the Round up option, Moneybox currently connects to the following banks:
- Bank of Scotland
- First Direct
Where can I invest and save?
There are plenty of options once you have moved your money over to Moneybox. A potential for greater returns is through investments. Here, a fund manager pools money from different sources all together and invests in a range of funds. Investing this way reduces the risk to you as investing all your money in one company could result in you losing everything if they were to go out of business.
Before you invest, you will be asked about your attitude to risk. There are three starting options – Cautious, Balanced and Adventurous. All you need to do is pick one based on your attitude to risk and return. The riskier an investment is, the higher the reward can be.
But remember, investments can go down as well as up.
General Investment Account
The Moneybox General Investment Account lets you invest in thousands of global companies via a range of tracker funds. Although you don’t receive tax relief, you only pay tax on gains above £12,300 as long as you don’t have investments elsewhere.
You can choose the funds that appeal to you, based on past performance, expected returns or if you prefer, opting for a socially responsible fund.
Stocks and shares Lifetime ISA
This is an account only available to be opened by the under 40’s. You can deposit up to £4,000 per year and the government will add a 25% bonus up until you reach 50. And remember, you do not have to pay tax for money earned in an ISA. The money can be withdrawn when you purchase your first home or reach 60. If you withdraw for any other reason, you will lose your bonus and be hit with a penalty.
Again, where your money is invested depends on your attitude towards risk.
This type of account is meant to be used for the long-term and is more suited to people who are willing to take some risks with their investments.
Stocks and shares ISA
You can invest up to £20,000 into a stocks and shares ISA each year and again, you don’t have to pay tax on the earnings. But unlike the Lifetime ISA above, you don’t receive a 25% from the government. On the flip side, you can withdraw your money without penalties.
When you open your account, you can make an initial payment and then arrange a monthly standing order.
No risk savings
Some of us are more adverse to risk and prefer not to put hard-earned money on the line. If that’s the case, then investing probably isn’t for you. Instead, Moneybox has a selection of accounts that may be more suitable.
There are 2 options available. The 95 Day Notice account offers a higher interest and allows you to save £85,000 with a weekly deposit limit of £20,000. To withdraw, you need to give 95 days’ notice. The 45 Day Notice account offers slightly less in the way of interest, although you only need to 45 days’ notice to make a withdrawal. Again, you can save up to £85,000.
Cash Lifetime ISA
Like the stocks and shares Lifetime ISA, this account attracts a bonus of 25%, up to a maximum of £1000 per year. You will receive a set amount of interest each year and is more suited if you plan to use your LISA for a house purchase or you want to eliminate all risk.
|Account type||45 Day Notice||90 Day Notice||Cash Lifetime ISA|
|Rate||0.45%||0.60%||0.5% (+0.6% bonus for 1st year)|
|Features||45 days’ notice to withdraw||90 days’ notice to withdraw||25% government bonus|
The Junior ISA is meant to encourage parents to save for their child’s future. The account is only available to under 18’s and to a Moneybox Junior ISA, you must have parental responsibility and be over 18 years old. Your child must live in the UK and not already have a Child Trust Fund or another Junior ISA (if they do, you must be willing to transfer the existing account over to Moneybox).
There are two types of Junior ISA – stocks and shares and cash. They come with the same benefits and warnings of the adult accounts above. You need to consider whether you want the safe and steady return with cash or opt to invest for better returns but a risk of losing some of your investment.
How much does Moneybox cost?
The first 3 months are free. After that, you need to pay a £1 per month subscription fee. This is a blanket fee and it doesn’t matter how many investments you have. There are no fees for the savings accounts.
On top of the £1 charge, you need to pay the following:
0.45% of the value of your investments per year. This fee accrues daily but is charged monthly by selling down your largest holding.
In addition, you will also pay the fund management charges levied directly by the fund providers. These fees range from 0.12% to 0.30% per year and are incorporated into the daily fund valuation.
There are a few other features that come with Moneybox that go beyond saving and investing.
Many of us change companies regularly, which means that we often have various pension pots that are easy to lose track of. Through Moneybox, you can bring them all together. They have a dedicated team to help you transfer your old pensions and offer you a range of investment options.
If you have used cashback sites or many of the other financial apps on offer, you’ll have seen this feature before. There are dozens of shops on Moneybox+ that will give you cashback when you shop with them. All you have to do is click on a link on the Moneybox app for the store you wish to buy from. Then, make a purchase, and the cashback will be in your Moneybox account within 30 days. Rates usually range between 1% – 7.5%.
Some of the major shops listed include
- John Lewis
The Moneybox app has a highlights section, which is great for breaking down how much you have saved over the week, month and year. It also shows you how much you are putting aside with each savings method. There is also a ‘Time Machine’, which allows you to calculate how much your investments could be worth in 10 years time if you make a set contribution.
The app is an interesting way for novices to start their investment journey. It’s easy to follow well laid out and has minimal jargon.
And if you don’t fancy investing, the interest rates on the savings accounts are very competitive, especially versus the major banks.
Although I said that Moneybox should be of interest to novice investors, it’s not the cheapest way to start. Because Moneybox is acting as an intermediary between you and the investment provider, it means you have to pay two lots of fees. That means you’re not getting the best value for your money. To make investing worthwhile with this app, you need to be saving a decent amount each month so the money you make outweighs the fees. And with investing, you always need to be aware that your money can go down as well as up and your capital is at risk.
And remember, investing should only be done over the long-term. That means that Moneybox is not suitable for people that just want to squirrel away some money for a holiday or as an emergency fund. There are other apps that are more suitable for that.
You can withdraw from an investment account, but it can take several weeks for the money to hit your bank account. And if you withdraw money from a Lifetime ISA before reaching 60 or if you’re not using the money to purchase your 1st house, you have to pay a penalty fee which means you will actually lose cash.
Although it’s only a small matter, Moneybox+ doesn’t pay as much as some of its rival cashback sites. For example, purchase a monthly life insurance policy from Beagle Street costing £150 and you’ll receive £357 into your Moneybox account. Purchase the same policy from TopCashback and you’ll receive £750!
My Moneybox review conclusion
I like Moneybox but… there are plenty of rivals out there that I think do a better job. My main issue with Moneybox is the fact that any savings you make go straight into an investment account. That means (after your 3-month trial ends) you are paying a £1 per month fee. And if you’re not saving a decent amount each month, it isn’t really worth it.
There are rival apps, such as Plum, that use an algorithm to calculate how much you can afford to save. I find that a much easier way to put money away, rather than trying to calculate my own direct debits. Plus, any money deposited into Plum goes straight to a holding account. It’s only invested if you choose it to be, meaning you don’t have to pay a fee and withdrawing money only takes around a day.
If your phone is lost or stolen, contact Moneybox to transfer your account to your new phone.
Micro investing is investing small amounts as often as you can. Doing this consistently over a long period will soon build up your balance. Moneybox is an app that allows you to micro invest.
Because Moneybox acts as an intermediary between you and the investment company, their fees are high compared with going to the investment company directly.
Your savings are collected at midday on Wednesday and will be invested the following Thursday (ie 8 days later).
Withdrawing from a stocks & shares ISA or GIA usually takes between 2 to 3 weeks. You can only request one withdrawal at a time.