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.
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 owned by Digital Moneybox Limited, a UK company based in London and incorporated in 2015.
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?
Your investments 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.
What banks does Moneybox work with?
Moneybox currently connects to the following banks:
- Bank of Scotland
- First Direct
How much does Moneybox cost?
The first 3 months are free. After that, you need to pay a £1 per month subscription fee. On top of this, you will need to pay a platform fee. This is 0.45% of the value of your investments per year.
And… you also have to pay a fund management charge. You see, Moneybox doesn’t actually invest your money itself but uses the likes of Vanguard and Fidelity to do it for you.
Like all the finance apps I have joined before, signing up is a simple process and took just a few minutes. You will need to provide your mobile number and an email address to help keep your Moneybox account secure. Then, you will need to link your bank account so Moneybox can take your hard-earned cash.
Once the money hits your Moneybox account, it goes into an investment account. There are 3 account types available.
Stocks and Shares ISA
All have their plus and minus points, so it’s up to you to decide which is most suitable.
Moneybox has also started to offer a savings account with a competitive rate of 1.65% (correct September 2019). However, you will need to give 95 days’ notice before you can withdraw.
This is a great way to start saving. Because Moneybox only takes small amounts from you each time, you’ll hardly notice the money leaving your account. There are plenty of other ways to save, depending on what is best for you.
You can set-up a weekly deposit from your bank, add money on payday or use their round-up feature. 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. You can even add money to your Moneybox account with the touch of a button if you feel you’ve got a bit extra to spare.
And the great thing about investing is that generally, over the long-term, it will earn you more compared to a cash savings account or ISA. There’s also an option to invest in Socially Responsible global share funds. Your money can go towards ethical and sustainable investments, as well as earn you a return!
I know I said that Moneybox is a great way to start investing, but this 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.
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.
And then there’s the cost that comes with investing. Because Moneybox is acting as an intermediary between you and the investment provider, it means you have to pay 2 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.
There is also a section in the app called Moneybox+. Make a purchase through a link and you’ll receive some money back into your Moneybox account. This works exactly the same as cashback sites but doesn’t seem to pay quite so well.
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.