Moneyfarm and alternatives

socratez

I am currently investing a monthly amount into funds via HL (approximately £400 pm), and some into cash savings. I can only invest a minimum of £100 a time into my funds and so I am looking for somewhere I can invest in smaller amounts when I have the odd £10 or £20 extra in my current account. I am looking into setting up a Moneyfarm account for this as looks easy, the charges are reasonable and I can drip feed money into it. Is this a good idea or are there better alternatives?

dunstonh

I am looking into setting up a Moneyfarm account for this as looks easy, the charges are reasonable and I can drip feed money into it. Is this a good idea or are there better alternatives?

Plenty of better alternatives. Dont fall for the marketing on their website.

Their fees are actually quite high. 0.7% for moneyfarm and 0.3% for the ETFs puts you at 1.0%. That is higher than an adviser doing it (not that an adviser will do small amounts unless you already have a family adviser and they put it through for that reason).

The whole point of DIY is to save money. Paying 1% p.a. is not saving money. Lots of DIY options cheaper and better than that.

Plus, with you using HL, that probably means they have the ISA. So, you would be investing unwrapped in alternatives. That means you need to log the purchase of every single fund made until you sell them. Saving up for a few months and then putting more into HL would be better.

socratez

Hi Dunstonh

Thanks for the reply. What DIY alternatives would be better? I understand with Moneyfarm the 1st £10K is managed free (I wouldnt have more than £10k in there, I would only be dripfeeding small amounts), meaning just the ETF charge would be payable?

That's right my HL funds are wrapped in an ISA. Why would I need to log purchases outside of this? I am still relatively new to all this!

Alexland

First £10k no longer free to new customers and you would have had to pay the 0.3% ETFs average OCF anyway. The management fee is 0.7% so 1% total.

This compares to investing in a similar Vanguard LifeStrategy fund on Vanguard Investor for a total of 0.37% (0.15% platform + 0.22% OCF).

0.63% difference might not sound much but over the years it acts as a real drag on returns.

We did Moneyfarm for the TopCashBack then closed our accounts as it was nothing special.

Alex

socratez

Hi Alexland, I have a free code giving me the management fees free for a year, meaning that I only pay the ETF fees of 0.3%, then after the first year I would move the money elsewhere, would that then make it a more appealing service to use?

Alexland

Well even then you are only saving 0.07% for that first year then your money is out the market while you transfer. Given the average market direction is upwards there is the opportunity cost to not being invested...

Alex

Lungboy

socratez wrote: »

That's right my HL funds are wrapped in an ISA. Why would I need to log purchases outside of this? I am still relatively new to all this!

You can only contribute to one s&s ISA a year, so if you're going to continue to invest in your HL ISA then your Moneyfarm account would need to be a general investment account and therefore be outside the ISA tax wrapper so it would then be subject to capital gains tax so you'd need to keep a detailed record of purchases, dividends etc.

MallyGirl

Alexland wrote: »

We did Moneyfarm for the TopCashBack then closed our accounts as it was nothing special.

Alex

I am just waiting for the TCB payment to appear and then doing the same.

cjv

MallyGirl wrote: »

I am just waiting for the TCB payment to appear and then doing the same.

Me too! mine should be paid into TCB before the end of next week, then my Moneyfarm balance will be withdrawn and put into my LISA for next tax years bonus. Easy money

jimjames

socratez wrote: »

I am currently investing a monthly amount into funds via HL (approximately £400 pm), and some into cash savings. I can only invest a minimum of £100 a time into my funds and so I am looking for somewhere I can invest in smaller amounts when I have the odd £10 or £20 extra in my current account. I am looking into setting up a Moneyfarm account for this as looks easy, the charges are reasonable and I can drip feed money into it. Is this a good idea or are there better alternatives?

Why bother adding small amounts, wait until you have £100 and put that into your existing account? It seems a bit pointless messing around with small amounts in different places when you already have an account open and available to use. Even better option is to move the £10 or £20 into a high interest paying current account and get paid on that before you move it into the ISA.