From hot stock picks to passive and active funds, ETFs, FTSE trackers, investing is riddled with buzzwords and complexity.
It’s therefore not surprising that most people don’t invest and are stuck with dismal savings accounts that can’t even keep up with inflation.
Moneybox is a smartphone app that attempts to take investing back to basics.
It takes money out of your bank account or credit card and automatically invests it in tracker funds, to hopefully get you a better return on your money than a savings account.
It’s not the first-time investing was done on a smartphone app, and many investment platforms are ploughing money into increasingly slick apps.
But as this review explains, Moneybox really is a product of the smartphone age – it’s got colourful icons, works on a screen a couple of square inches and demands just a few seconds of your attention.
How does it work?
Moneybox links to your current account or credit card.
You then choose a risk appetite, from conservative, balanced or adventurous, which decides in which tracker funds your money will be invested. It’s similar in this respect to robot advisors such as Nutmeg or Wealthsimple, except that your funds won’t be automatically rebalanced.
You can rebalance funds manually by changing your starting option, as illustrated below.
You can choose to manually add money – there’s just a £1 minimum initial deposit, unlike most platforms – including a £10 ‘Quick add’ button. You can also choose to start a weekly deposit or monthly deposits on your payday.
What’s really attracted attention to Moneybox is its round-up function: you can choose to round up your debit or credit card payments to the nearest pound.
For your daily £2.40 coffee would appear as £3 on your bank statement, with Moneybox investing 60p. Small fry admittedly, but over a year that’d be close to £150 invested.
The amount you round up can be doubled within the settings.
You can withdraw the funds using the app, although the money takes two to three weeks to reach your bank account.
Who can get the Moneybox app?
Any adult with a smartphone and current account in the UK.
However, it’s important to keep in mind that you could lose your money and investing is a long-term activity: most experts recommend you put your money away for five years to deal with fluctuations in the market.
Also make sure you have enough leeway in your bank account or credit card limit, as the Moneybox app could push you into overdraft or missed payments.
What we like
Getting started in investing has never been so easy – it all happens on the app, with no physical paperwork or printing off required. It took less than 10 minutes.
You’ll need your online banking or credit card log-in details to hand and your national insurance card if you're getting an ISA.
These round-ups mean that you can forget about the app because there’s no need to manually deposit or even commit to the discipline of affording a weekly deposit.
It makes Moneybox great for those who’ve never saved, struggle to do so, or don’t have time to check their savings.
Chat function within the app
Although robot-driven Moneybox is the opposite end of the spectrum from traditional financial advice, there’s a chat function for dealing with problems with pictures of more-or-less real-looking people in it.
Real funds and documentation
The app is so simple it’s easy to forget you're invested in real funds from well-known providers.
I selected the ‘balanced’ option and was allocated Vanguard’s popular 100% Life Strategy Fund and iShares Global Property Securities Equity Fund, as well as a cash fund.
Supports credit cards
You’ll do most of your day-to-day spending on this card, which is why it’s really helpful that Moneybox can do round-ups from major brands including American Express, MBNA and Capital One.
Other automatic savings apps struggle with credit cards, as they only see one big repayment on your bank statement per month, not individual payments.
What we don’t like
Fees on small balances
With Moneybox you’ll pay a £1 a month fee (although this is waived for three months), a 0.45% platform fee and fund fees ranging from 0.22% to 0.24%.
These add up to fairly hefty fees if you’ve got a small investment: with my balanced allocation option, on £100 invested, charges would have amounted to 12.68%.
If I had invested £20,000 – the ISA maximum – fees would be equivalent to 0.74%.
Still, it’s a shame that Moneybox, which seems so suited to those who can save only a little, charges less wealthy customers such high fees.
Limited allocation options
Having just three risk-related allocation option keeps it simple, but excludes those who’d prefer ethical investments, for example, or ex-UK investments.
Moneybox says they’re working on introducing ethical options given customer demand.
The lag time
It takes over a week from money to go from your bank or credit card to your investments - a lifetime for the smartphone generation.
There’s not a huge amount that Moneybox can do about this, admittedly, due to legal obligations around direct debits and how funds are bought.
Having a third-party smartphone app pluck money from your bank account or credit card may seem strange to many, but there are several reasons to be reassured.
The Moneybox needs a password or fingerprint to access, but even if a crook got access, they wouldn’t be able to do much.
That’s because it operates with a closed loop: you can only withdraw money to the current account or credit cards you used to deposit money.
Your deposits are held within a Barclays client money account and protected by the FSCS up to £50,000 (this doesn’t cover a decline in the value of your investment).
If you're unsure about the security of Moneybox and similar apps, read our guide to open banking.
Our final verdict
Moneybox is by far the easiest way to get started in investing.
Investments are of course a serious business and Moneybox should be treated as a long-term solution and not an alternative to a savings account.
If you’ve got a large lump sum to invest or more confidence, you may want to look for a platform with lower fees or higher potential returns.
Moneybox, nevertheless, is a huge leap in taking the fear-factor and the jargon-factor out of investing.
What do you think?
Have you got the Moneybox app? Please share your experience and opinion in the comments below.