Mobile app Moneybox has launched with the aim of allowing users to easily save and invest with as little as Â£1.
In order to save, the app enables users to round up everyday card purchases to the nearest pound. For example, if you buy a pasty for Â£2.60, you can choose to round up to Â£3 andÂ invest the remainingÂ 40p. Acorns, a similar service in the US, has done this for a couple of years.
You can also setup regular weekly deposits and make one-off deposits into Moneybox to top-up your investments. All your savings are collected once a week through a DIrect Debit and the investment is made a few days later.
As for the investment element of the app, Moneybox offers three tracker funds to choose from, with varying levels of risk, and available either within an ISA, or outside an ISA. These can be opened from your mobile phone.
To use Moneybox, you’ll pay Â£1 per month (you do get 3 months free to get started though), plus 0.45% of your investment holding per year.
Given the charges, if you’re only investing a small amount, the charges will form a high percentage compared to your investment.
For example, if you invest Â£100 in your first year, you’ll pay Â£9 + (Â£100 x 0.45%) = Â£9.45. That’s an annual charge of 9.45% – you’re going to have to hope forÂ some exceptional growth in your fund to not lose money – and don’t forget, you’ll be paying a total of Â£12.45 the next year, as you’ll be paying for the whole 12 months.
Naturally, if you expect to invest significantly more, then the charges become less significant. For Â£500, you’ll pay Â£11.25 in the first year, or 2.25% of your investment.
You can withdraw your money at any time, free of charge.
I love how simple Moneybox is trying to make saving and investing; but for those starting out with small investments, the charges will be an issue (as it is with other services with low minimum investment amounts), and without high growth, you’ll see your investment lose value.
The app is currently available to download for iOS devices in the app store; if you’re an Android user, you can sign up to be notified of a version for your device on the Moneybox website.
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