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. Let’s start by giving you a little background to the company.

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* 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 they don’t charge any management fees on your first £10,000 invested with the company. This is a fairly unique offering among UK robo-advisors and is obviously a very attractive proposition for those looking to dip their toes into robo-investing without committing a lot of money right away. If you’re investing below £10,000 the only fees you will pay will be those which are 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.

If you are looking to invest more than £10,000 then Moneyfarm do start to charge management fees at this point, but they are still very low when compared with other investment options. Moneyfarm charge a low management fee of 0.6% per annum for any investment amount between £10,000 and £100,000. This management fee then drops to 0.4% on anything you invest over £100,000 up to £1,000,000, and there are no management fees at all on any amount over £1,000,000. Don’t forget that the underlying ETF charges of around 0.3% will always apply.

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. They also don’t charge any management fees on the first £10,000 of your investment. 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?

While Moneyfarm do not currently offer a Pension Plan, they do have plans to launch one in the very near future. If you are interested in taking a closer look at the Moneyfarm Pension when it arrives, then you can register your interest on the Moneyfarm website* and we will also be writing a review when it is launched too, so be sure to check back in here when it arrives for an in-depth review.  

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, the company that are probably the most similar to Moneyfarm right now and whom you might have heard of already are a company called Nutmeg. So how does Nutmeg 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 up to £100,000 at 0.75% for a fully managed portfolio vs Moneyfarm’s fee of 0.6%. Don’t forget that Moneyfarm also don’t charge any investment fees on the first £10,000 you invest, this is something that Nutmeg don’t offer.

For money invested over £100,000, Nutmeg’s fee is slightly lower at 0.35% vs Moneyfarm’s 0.4%, but I would imagine that most if not all of the gain here would be offset by the higher fee on lower investment amounts. If you are a high net worth investor, then it’s also worth remembering that Moneyfarm don’t charge any management fees on any money invested over £1,000,000, again this is not something that Nutmeg offer.

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

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 might want to read our review of the Hargreaves Lansdown Stocks and Shares ISA 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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