Moneyfarm Review – The right investment for 2018?

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In this Moneyfarm review, you will find answers to all of the important questions you may have about the Moneyfarm service, to help you decide if this is the right investment platform for you. We look at Moneyfarm’s fees, their minimum investment amount, their Stocks and Shares ISA and pension offerings and also the past performance of their funds. We’ll also see how Moneyfarm compare to some of the other UK robo-advisors on the market – including details of a special offer we’ve secured for Money Bulldog readers with one of them.

Who Are Moneyfarm?

Moneyfarm are a digital wealth manager who started off life in Italy but after fast growth and demand for their service, launched in the UK in 2011. They were one of the early players in the phenomenon of robo-advice and they are fully regulated by the Financial Conduct Authority. Robo-advisors like Moneyfarm*, Nutmeg* & Wealthsimple* have become very popular in recent years, as they enable people to invest in the stock market in a truly hands-off way and with very low fees attached. Once you have answered a few initial questions, Moneyfarm will then invest your money into a variety of low-cost ETFs (exchange traded funds) to build a portfolio on your behalf, which matches your own appetite for risk. While Moneyfarm’s service may be great for those who would like to invest in the stock market but who may have little experience, many experienced investors are also now investing with Moneyfarm due to the low fees charged and the hassle-free approach. Many are finding that this is helping their investment to grow at a much faster pace, as less of their investment gains are being eaten up by high management fees and charges.   

Moneyfarm Fees

As we’ve already mentioned, one of the biggest things which attracts investors to a platform like Moneyfarm are the low fees charged by the company. So, what are the fees exactly and how do the company keep them so low?

The first thing to note about Moneyfarm* is that their management fees have recently changed and they now gradually reduce as you invest higher amounts of money. So, if you invest anything up to £20,000 then their management fee is 0.7%, when you invest between £20,000 and £100,000 it’s 0.6%, for £100,000 to £500,000 it’s 0.5% and for anything over £500,000 it’s 0.4%. You will also need to factor in the costs associated with the underlying ETFs, which average around 0.3% per annum. This is very low when compared to investing in something like a mutual fund and is even lower when compared to investing with a typical wealth manager.

Moneyfarm New Fees

It’s worth noting here that Moneyfarm’s management fee includes all costs associated with the operation of your portfolio, meaning that there are no extra trading fees and there are also no setup, withdrawal or exit fees. You can find even more details about what’s included on the FAQ section of the Moneyfarm website*.

How Much Can You Invest With Moneyfarm?

Moneyfarm do not have a minimum investment amount and they make no mention of an upper limit on their site either. This means that you can invest with Moneyfarm with just £1 if you want to. Moneyfarm do recommend that you invest more, though, so that they can build a truly balanced portfolio on your behalf. If you choose to invest with Moneyfarm via their Stocks and Shares ISA, then you should remember that your ISA allowance limits will apply. This means that, while you can still invest as much as you like with Moneyfarm, you will only receive tax protection on £20,000 of the money you invest within each tax year, assuming you haven’t invested in any other ISAs, of course, such as a cash ISA.

Moneyfarm Stocks and Shares ISA Review

As we’ve just discussed, Moneyfarm also offer a Stocks and Shares ISA. The Moneyfarm Stocks and Shares ISA* operates in much the same way as their general investment account apart from the fact you can invest up to £20,000 in each tax year without paying income or capital gains tax. You can start an ISA with Moneyfarm in less than 10 minutes and you can also transfer an existing ISA to Moneyfarm – no transfer fees are charged. The Moneyfarm Stocks and Shares ISA is a particularly attractive ISA, as there is no minimum initial or monthly investment amount. For more on Moneyfarm’s Stocks and Shares ISA fees, please scroll back up to the ‘fees’ section of this Moneyfarm Review, as the same fee structure applies to their Stocks and Shares ISA.

Review of Moneyfarm’s Past Performance

The good news for you as a potential investor with Moneyfarm, is that they are transparent when it comes to their performance over the past couple of years and you can easily see how they’ve done on the ‘performance’ page of their website. Returns on investments of varying levels of risk are shown on easy to read charts and they all typically show that from the start of 2016 none of these funds have lost money. While this is great news, it should be pointed out that the FTSE 100 as a whole did drop for a few months prior to this date, so a longer term look at performance may be beneficial. As a whole, though, it is good to see that Moneyfarm has performed well during some particularly turbulent political events over the past couple of years, namely Brexit and Trump.

Please note: Past performance is not a reliable indicator of future performance and investments can rise as well as fall, meaning your initial capital investment could be at risk.

Do Moneyfarm Offer a Pension Plan?

Until recently, Moneyfarm did not offer a pension product. This has now changed, however, and you can now set up a Moneyfarm pension via their website*. If you are looking for other robo-advisors who also offer a personal pension, then you may want to check out Nutmeg*

Is Moneyfarm Safe?

One major concern for any investor is whether their money is protected and safe. The good news here is that, as Moneyfarm are regulated by the Financial Conduct Authority, they are forced to keep client funds separate from their own and your investment is also covered by the FSCS (Financial Services Compensation Scheme) for up to £50,000 for extra protection, in case the company is for any reason unable to repay money or investments.

Moneyfarm also make a point on their website of highlighting that they go to special lengths to protect your personal data too, and that as stated on the site ‘Your personal details and your account data are always encrypted and stored on secure servers.’

Moneyfarm Alternatives

Now that you know all you need to know about Moneyfarm*, you might be wondering if there are any UK alternatives to Moneyfarm and also how they compare to what Moneyfarm have to offer? While the UK robo-advisor market is growing and new alternatives are entering the market, two companies that are probably the most similar to Moneyfarm right now and whom you might have heard of already are Nutmeg* and Wealthsimple*, the latter of whom we’ve managed to secure a ‘new investor offer’ with for Money Bulldog readers which you can read details of below.

So, how do Nutmeg and Wealthsimple compare to Moneyfarm?

Nutmeg vs Moneyfarm

The first point of note that will be of most interest to those looking to start off investing small amounts of money, is that Nutmeg* have a minimum investment amount of £500 to start investing with them. As we’ve already discussed, Moneyfarm* have no minimum investment amount. Nutmeg’s fees are also higher when investing between £20,000 and £100,000 at 0.75% for a fully managed portfolio but lower than Moneyfarm when investing over this amount at 0.35%.

As we can see from this comparison, the Moneyfarm fees and charges are very competitive in comparison to other UK robo-advisors.

Wealthsimple vs Moneyfarm

Another robo-advisor who have been huge in Canada and the US for some time now and who are now offering their services to UK investors are Wealthsimple*.  Like Moneyfarm, Wealthsimple also don’t have a minimum investment amount. They have a simple fee structure in that they charge a management fee of 0.7% annually on any investments up to £100,000. If you invest more than £100,000, then this drops to 0.5%. On the Wealthsimple website they also state that the underlying fund fees charged by the ETF providers they use are expected to be around 0.2% per annum.

As we mentioned earlier in this post, we’ve also secured a special new investor offer for Money Bulldog readers who sign up with Wealthsimple* using one of the links in this post. Put simply, Money Bulldog readers will get their first £5,000 of investments with no management fees for a year when they sign up for their first account at Wealthsimple.

Is Moneyfarm Right For You?

Having read all of the above, you will hopefully have a good idea by now of whether Moneyfarm is going to be the right investment option for you. If you are still deciding, then here are a few final points to recap and consider.

If you’re looking to find a killer share or stock which is going to make you filthy rich in a matter of a few years, then Moneyfarm probably isn’t for you and you may want to check out the DIY Stocks and Shares ISA from Hargreaves Lansdown* instead. If, however, you are looking for a truly hands-off investment option with low-fees/charges and which should hopefully deliver steady and consistent growth for years to come, then Moneyfarm* could well be a good option for you. Add on to this the tax benefits involved with investing via the Moneyfarm Stocks and Shares ISA and we can see that Moneyfarm has a lot to offer to both the average and seasoned investor.

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