General investment account (GIA)
Here’s what I have to say about the GIA:
Moneybox is a good option for anyone who is totally new to investing, struggles to save a decent starting pot, and would like access to hands-off, ready-made portfolios that are diversified but have historically performed well, indicating that they are well managed by professionals.
However, if you fit this bill, then the likelihood is that you haven’t invested before, which means it is safe to assume that you don’t already have an ISA.
Investing into an ISA effectively shields your gains from any tax, meaning you get to keep more of what you earn from your investments. Given that the ISA at Moneybox offers access to all the same features and investments as the GIA at the same cost, this would be a better option.
Stocks and shares ISA
This isn’t the cheapest ISA on the market but according to our independent research, this is the best-performing ready-made ISA for the last 5 years, net of fees (for more information on the performance, scroll down in this review). For a beginner who lacks the confidence to pick and choose their own assets, this is a very compelling reason to pick this ISA. Also, the access this ISA grants to the other products and services at Moneybox means that this really is a good, all-around option.
Of course, you do need to pick your own portfolio, but given the lack of choice and the fact that they have performed well in every category, I don’t see this as an issue.
If a ready-made portfolio isn’t for you and you would rather take more control of where your money is invested, then there are a range of tracker funds, exchange-traded funds, and US stocks to choose from. I’ll go into more detail on this below.
Read more about ISAs
Junior stocks and shares ISA
What’s unique about the Moneybox Junior ISA is the 3.8% AER on any uninvested cash. However, the Junior ISA is only available to those who already have an account with Moneybox.
So how does this account stack up against the competition in terms of how the portfolios have performed for the past 5 years? The average across all the Moneybox portfolios available via the Junior ISA is 54.2% for the past 5 years, net fees. To put this into perspective, the next highest average score achieved by any other platform offering a Junior ISA is Saxo Bank, whose previous 5-year return, net fees, amounted to 35.4% and the average 5-year returns of any ready-made portfolio in a Junior ISA, net of fees, were 24.4%.
So, again, if you are new to investing and would rather set it and forget it, then this is a great option. However, it’s important to point out that a simple index fund tracking the S&P 500 would have returned more in the same time frame. That being said, many of these types of funds require a higher initial investment and therefore may not be accessible to investors who are just starting out.
Lifetime ISA
There are not that many platforms offering a Lifetime ISA in the UK so Moneybox has even less competition on their ready-made portfolios for this account. This is a hugely underutilised account for those saving for a first home, although the limit is much lower than a standard ISA at £4,000 a year.
This is still a great option and the combination of the high-performing portfolios and the 25% government bonus means that if you were to deposit the annual limit for five years and add the average historical returns across all the Moneybox portfolios, you would have amassed £29,930, with your total deposits amounting to £20,000. Not bad!
Read more about Lifetime ISAs
Cash ISA
At 5.16% AER, this is the leading rate for any cash ISA for the first 12 months after opening your account. But be warned, once that 12-month period is over, your rate will automatically decrease by 0.96%. In addition, balances of under £500 will be subject to a very low rate of 0.75% so this wouldn’t be a suitable product for small amounts.
In addition, make four withdrawals from this account in a 12 month period and you will be subject to a low rate of 0.75%.
Personal Pension
It’s important to note that the Moneybox pension account offers access to four funds, which differ from the ready-made portfolios offered via their other accounts. That is because these funds are specifically designed to help people achieve their retirement goals. The Blackrock LifePath fund makes adjustments to your investments, reducing your exposure to risk automatically as you approach retirement age.
There aren’t a lot of options here. Outside of the Blackrock and Fidelity funds, the only other options are the ESG fund and the Islamic fund. However, this lack of choice may suit some new investors. Still, it’s important to know whether these funds are working hard towards growing your money. Here at Investing Insiders we have conducted some preliminary analysis into Starter Pension Funds across the industry. These are funds which are specifically recommended by the platforms for beginners looking for an easy entry point. Looking at the 5-year returns provides more insight into the long-term historical returns, and in this respect, only the Fidelity World Acc fund had enough historical data. However, I can tell you that the cumulative returns for this fund over the past 5 years has been 80.4% which is still represents one of the best returns out of any Starter Pension Fund we have analysed to date. In fact, the 5-year average performance across all Starter Pension Funds in the industry came to 30.5%, which shows how strong the performance of this fund has been.
In addition to the ready-made portfolios, Moneybox provides access to tracker funds and some US stocks. It’s by no means a comprehensive offering of investment options such as those you would find at Hargreaves Lansdown or Trading212; however, that can end up being overwhelming for beginners, and there are some decent options here for growing your wealth.
Read more about SIPPs
Tracker funds
Tracker funds (also referred to as index funds) are designed to track the performance of a specific market or index, usually by mimicking the assets within the index. In this way, they also replicate the performance, aiming to expose the investor to the entire index at a fraction of the cost. Tracker funds focus on financial growth, stability and diversification.
It’s important to note that tracker funds are a passive type of investment and are therefore not designed to beat the market. However, not many actively managed funds do succeed in beating the market, so this is still a solid option when it comes to returns.
There isn’t a massive range of tracker funds at Moneybox; however, there are some good options, including the S&P 500 ETF by Vanguard and some decent ESG options.
ETFs
ETFs provide another affordable way of gaining access to a large basket of assets that have been diversified. Moneybox provides access to a small number of ETFs managed by the likes of Legal & General, iShares, Vanguard and JP Morgan, to name a few.
Read more about ETFs
US stocks
Moneybox provides access to a selection of US stocks but only via the ISA. It’s important to remember that when you buy US stocks, you will incur an FX fee. At Moneybox, the FX fee is set at 0.45%, which is fairly standard (I have come across FX fees as high as 1.5% at eToro and as low as 0.002% at Interactive Brokers).
One of the things that makes Moneybox stand out is its access to fractional shares. There are actually not many ISAs that offer fractional shares due to a lack of clarity when it comes to legislation surrounding fractional shares. However, in November 2023, the UK government officially announced their intention to make this officially permissible.
Moneybox also offers a tool called Weekly Stocks. This allows you to invest a set amount of money every week into the stocks of your choice rather than just investing a lump sum at the start. Effectively, this means you will be drip-feeding your money into the market, which can help smooth out market volatility and avoid buying shares when the price is high.
Socially responsible investing (ESG)
Moneybox offers two ways to invest in line with your values. One is to buy into one of their socially responsible Starting Options (there are three available, one in each risk category) or you can take the initiative to build your own ESG portfolio from their range of funds.
Savings accounts
In addition to their range of investment products, Moneybox has a good range of savings accounts, which includes the Cash ISA with the second highest rate in the UK (true at the time of writing this review; please check the Moneybox website for up-to-date rates) after Plum who just manage to take top spot with a rate of 5.19%.
Rates are as follows:
It is important to note that the Cash ISA rate of 5.16% is only applicable for the first 12 months of opening your account, after which time the bonus rate of 0.91% is lost and your rate will drop to 4.25%.
In addition, while testing the platform I noticed that the rate on my cash ISA changed to 5.19% which is obviously more than the rate advertised to new customers.
Money-saving tools
As mentioned previously, Moneybox is aimed at those who historically struggle to save (there are enough of us out there). They have a range of tools designed to make saving painless, including round-ups where each time you spend, the app rounds up the transaction to the nearest pound and puts this amount to one side. There is also a payday boost option where you select an amount and date to automatically leave your account.
I’m going to be honest; if this is your primary reason for using this account, then I personally prefer the algorithms used at Plum, which use AI to determine an amount based on your income and expenditure. This ensures you are never left short and you won’t notice the small amounts leaving your account. However, you won’t get all the products and investments at Plum (that’s not to say there aren’t very decent investment options there) that you can access at Moneybox, in particular the LISA.
Ready-made portfolio performance
As mentioned, Moneybox’s ready-made portfolios have performed well when compared to their robo-advisor counterparts. So if you are looking for an uncomplicated way to start investing, with a low minimum starting amount and handy tools to help you grow your pot quickly, then this is a decent option. But just remember that this data looks great when compared to other robo-advisors; however, when you compare the same data across the whole market and even simple tracker funds, the results are less favourable.
Lowest risk portfolio for cautious investors – 5-year average 10.8%
Medium risk portfolio for confident investors looking for a balanced portfolio – 5-year average 22.8%
High-risk portfolio for adventurous investors – 5-year average 44.4%
Missing from this data is InvestEngine, as despite our best efforts, InvestEngine was unwilling to release any data relating to the past performance of their portfolios.
Here’s how the ESG Starting Options have performed in recent years:
This is in line with the performance of their non ESG funds and represents decent returns for ready-made portfolios.
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