Do you find it a struggle to put money away every month? What if there was a way to save money automatically in such small amounts that you would hardly notice? Take a look at this Plum review to see how it helped me save over £1000.
Let’s be honest, for the majority of us, saving money can be tough. We often start with good intentions, but by the end of the month, your account is hovering around the 0 mark. You think that you’ll give it a try the following month only for the same thing to happen.
It’s quite scary when you think that over 25% of UK adults have no savings at all. What do you do if you have an unexpected bill? Or the worst case scenario… how long could you stay in your house if you were to lose your job?
This is why it’s so important to have some money saved away. Retirement may be 30 or 40 years away, but you never know what’s around the corner.
Start saving
Don’t think that you suddenly have to put £100’s into an account straight away and give-up eating for several months. One great trick to start your saving is by doing it in small amounts.
A couple of pounds here and there every week is something you will probably not notice. And within a couple of months, you’ll soon have a nice little sum growing. This is what Plum is all about.
What is Plum?
Plum is run by a Plum Fintech Limited and is based in London and has been operating since 2016.
Taken from their website:
Our mission is to help people save money without even lifting a finger.
We’ve always hated saving money, but we wanted to change that. We decided to make Plum so that there would be an easier way to save money to spend on things we want, rather than the things we need.
How does Plum work?
Plum is a free app for both Apple and Android users. All you need to do to get started is to visit the Plum website and download. From there you will need to fill out some personal details and then connect your bank account and you’re ready to start saving.
Plum analyses the money going in and out of your account to determine how much you can afford to save. Plum guarantees that you will never go into your overdraft when they transfer the money into your savings account. However, if that did happen, they promise to refund any fees. Unfortunately, they won’t refund fees if you go on a big spending spree after the money leaves your account.
With a click of a button (or a push of a finger) you can tell Plum whether you want to increase or decrease the amount you’re willing to save.
Plum also provides some handy insights about your current account. You can get summaries for how much you have spent over the last week, month or by category.
Another option to help save is by turning on Round-ups. Every time you make a purchase from your current account, Plum will round this amount up to the nearest pound which is then transferred to your Plum account.
For example, spend £2.40 on a coffee and 60 pence will be sent to Plum.
In just under 1 year, having Plum linked to my current account helped me put away over £1000. Something that I could never have done without it!
How much does Plum cost?
Using the basic savings functions with Plum is absolutely free.
But there are 2 chargeable features – Plum Pro and investing. More on these below.
Is Plum safe?
Taken from Plum’s FAQ’s
When you deposit money in a bank, the bank will usually lend out (part of) your deposits. This is how a bank makes most of its money! What this means is that your money is effectively “at risk” if the bank goes bankrupt, hence there is a need for deposit insurance, commonly known as FSCS, for up to £85,000.
Your Plum deposits are transferred in a secure account and held as e-Money by Payrnet, our e-Money provider. This means your money is ring-fenced and cannot be lent out by the bank. It also cannot be claimed by any of Payrnet’s creditors.
This means if the holding bank, our e-Money provider, or ourselves go bankrupt you will not lose any of your money. This is very important to us and will always be the case with your Plum deposits.
In a nutshell, the money is equally safe – if not safer – with Plum vs your bank.
It’s quite a bold claim to say that your money could be safer with Plum. FSCS means that your money is protected by the government and I don’t think you can get much safer than that. Still, it would take a lot to go wrong for you to lose your money.
Which banks does Plum work with?
Unfortunately, Plum won’t work with every bank, but most of the big players are available. However, this is for personal bank accounts only and doesn’t cover joint accounts and business accounts.
Supported accounts are:
NatWest
RBS
Santander
HSBC
M&S
Lloyds
Barclays
First Direct
Halifax
Nationwide
TSB
Bank of Scotland
Ulster Bank
Post Office Bank
Monzo
Starling
Danske Bank
What interest rate do you get on your savings?
0%. That’s right nothing. If you want to start earning some returns, you will need to start investing with Plum. Investing is purely optional though. Some people prefer just to save for short stints and then withdraw their money at the end of the month.
Plum offers several options for you to earn a return on your money, mainly through investing in stocks and bonds. There are several funds in which you can invest, all offering different rates of return in the region of 5-23%. This is pretty impressive when you think of the interest you would get if you placed the money into a cash ISA.
Plum doesn’t invest the money themselves but uses Vanguard investment funds which are an investment manager with more than $5.1 trillion worth of funds.
However, as with any kind of investment of this type, these returns aren’t guaranteed and there is a chance you could lose your investment. Generally, the bigger the return, the higher the risk.
Another way to earn money from your Plum account is through lending. Plum works with RateSetter which is a peer-to-peer (P2P) lender. In short, they lend your money to other people and you should see around a 3% return. Before you jump straight in though, you need to consider that there is no FSCS cover which means any money you put in could be at risk.
*Please note that the RateSetter option was removed by Plum in October 2019.
Is it worth investing with Plum?
I am not a Financial Advisor, so I can’t give you any advice. However, I have invested and seen better returns than I would from an ISA. My dad always told me not to invest more than I can afford to lose, so this is the mentality I have adopted with Plum.
I have managed to save over £1000 without noticing the money missing from my current account and made £438.13.
In % terms, that’s just over 33% return on my investment. But don’t expect returns to always be quite so good.
There are a couple of negatives you need to be aware of though.
The drawback to investing with Plum is that it’s not free. There is a charge of £1 per month for investing, a 0.15% fee on the value of your fund investments and a fund-specific management charge of up to 0.9%.
You see, Plum pass on the fees to you that Vanguard charge for managing your money, plus they add their own. You will get better value for your money if you invested directly with Vanguard.
Because of the money Plum charges, you don’t want to just put £10 in and leave it, as the fees will soon see your investment wiped out. Because of this, you need to make sure you’re investing a decent amount each month.
The investing process is a little slow too. It usually takes around 4-5 days for your money to leave your current account and reach Plum. And if you decide to invest, it usually takes another 4 days for the money to leave Plum savings and enter your investment account.
Plum has promised to speed this process up, so fingers crossed they won’t take too long.
Other problems with Plum
There is another issue I have found with Plum. The link between your bank account and the app can be temperamental. TSB and Barclays seem to provide the biggest problems, but recently my Santander account lost all contact.
I would like to blame the banks, but I have never had problems with other apps such as Chip and Tandem. I’m hoping this isn’t a long-term issue.
What is Plum Pro?
Plum Pro offers several more benefits over the free version:
True Balance – Giving you spending limits so you don’t overspend before pay day.
Rewards – Earn cashback when you shop at your favourite retailers.
Goals – Set yourself a target amount.
Diagnostic reports – allows you to compare yourself with other Plum users in a similar position.
Pockets – Separates money into different savings pots
Exclusive deposit rules – Allows you to create different saving rules.
How much does it cost?
Currently, Plum Pro membership (June 2020) costs £2 per month. However, you can trial Pro for 30 days for free.
Is Plum Pro worth it?
If you want to keep a much closer eye on your finances, then Pro could be a good option for you. However, I’m not really sure the £2 is really worth it. The cashback isn’t a great feature either as you can find the deals elsewhere and for free.
My Plum review conclusion
Plum really is an excellent method to use if you struggle to save and very easy to use. Yes, you can get better value investments elsewhere, but this is a great way for novice investors to get started.
And it’s certainly worth signing up for, even if you don’t want to invest.
There’s even an active Facebook page for investors and savers to discuss all things Plum. And if you manage to refer 3 friends to sign-up to Plum and you can earn yourself £25.
Click the sign-up button below to find out more. It’s free to join, so you have nothing to lose!
If my Plum review hasn’t convinced you, why not take a look at the best personal finance and savings apps.
Please note that this post contains an affiliate link to Plum. All views are my own.
Not one I’d come across before so thanks for this – will take a gander!