Monneybox anyone?

Steve_GP220

bowlhead99 said:

Thanks for coming back with comments as it's always good when people revisit their own threads to let us know the outcome. 

The returns (ignoring the fees, which we told you would have been quite a lot less by going elsewhere, but are only about half a percent of the total amount of money you now have in there) are not too surprising. 

Investing is a long term game, and you are only two years into it. What you have been doing is increasing your investments as you went along - which is something that all of us who are saving from monthly salaries etc will do - but it means that most of your money has not been invested for two years.  The first £1000, yes, that's been invested for nearly two years, but the last £9000 hasn't, because you only fed it in bit by bit. You told us that you built it up over the two years, so you didn't put it in at the beginning. There will be thousands of pounds that you put in during the second half of 2019 when markets were pretty flat, or early 2020 when prices for shares went a bit higher, which did not get any real time to grow and then went through a big crash down in values this March. Much of that has recovered since, back towards where it was in Feb, but if you look back a year from now there hasn't been much growth on a typical mixed asset fund. 

So if you split your money into chunks, and some of the money at the start has grown a bit (but that was only a small amount of money), and the money put in the middle is pretty flat because it went up but then down again, and the money put in six months ago went in when shares were at high prices and didn't go up at all, going down instead... then overall you could be at a loss overall, or at least from where you were a year ago.   

That's not necessarily a fault of Moneybox, just a consequence of phasing your investment so that the amount of money that had been put in the account to be invested by Moneybox for you was the highest during the most recent year (when markets were doing badly), and the lowest in the previous year (since when markets have done OK, but most of the money wasn't with Moneybox then, it was in your own bank account or potentially in your employer's bank account because you hadn't even earned the money two years ago let alone invested it with Moneybox).

Example: - if I have £1000 that grows by 5% a year for two years I would make over £100 on it, but if I have another £9000 that falls by 1.5% over a year I will lose more than I had gained on the initial investment. When you keep going with the £10,000 ish from todays values for another decade, you will have given it enough time for all the money to get a mix of the up years, down years, and nothing years, so overall you would expect to make money, but you can't really say after a short time period that it's not what you would expect - you know that you had a lot of invested during a bad time for markets, and a relatively small amount invested during a better time for market, so you wouldn't expect a spectacular overall return.

For example, just to make the point more obvious, you mention the fees so far have been £61. We know it is £1 a month flat fee and you've been going about 20 months, so that means about £41 has come from the percentage-based fees of 0.45% a year on your asset value.  So we could work backwards and try to figure out how long each pound of your cash has really been invested, on average...

We could say that to pay £41 on what is now £10,000 at 0.45% a year, then although the headline amount invested is £10,000 it must have only been 'at work' for less than a year - something like 11 months (because £10,000 x 11/12 x 0.45% would produce £41 of charge). Investing £10k for 11 months over a period when markets went up for a bit and then had a massive crash and are now not really any higher than they were before, is not going to give you great gains. While you think you ought to have had some gains by now, unfortunately you have not, and we can understand why. Bad luck with the timing of when you were investing.  By the time the money has been invested for 11 years, rather than 11 months, it will hopefully have more growth.

That doesn't mean the rest of the years it needs to stay where it is though - you could relatively easily move it elsewhere.

Steve_GP220 said:

So Now, I'm in a dilemma. I don't think my dilemma is anything covered by this thread when I started it back in 2018. I think on reflection MB is a company operating on outdated banking practices which in this day and age is pretty close to unforgivable - but I don't distrust them. But do I take the cash out and put it somewhere else, do I change to the new set of risks within the app?  I know I know, I can hear MB customer service saying "I'm sorry we do not give financial advice." But something is niggling at me and I can't pin it down. It could be a general investment thing as opposed to MB so don't want to be unfair to them. Still.... I am pondering.

As was mentioned earlier, it is not a particularly cheap platform and doesn't offer a wide selection of investments. That suits some people who don't want to have to make a lot of choices on their investments, but it is still better to use cheaper options if you can (this is a money saving expert site, after all). Your platform fees were costing £1 a month and 0.45% a year. Vanguard's investment platform costs £0 a month and 0.15% a year, so instead of costing £62 it would have been under £15 to use the platform, and although they don't use the 'round up gimmick' you now know you are not really bothered about that gimmick anyway, you just want to focus on investing real money. 

Changing the fees to <£15 instead of £62 is not the sort of thing that would have made your investment a success or not, though it can help. Ultimately whether you move elsewhere or stay, the success comes from whether you are choosing to invest more conservatively or more adventurously and whether the markets are going up (when adventurous = good) or down (when cautious = good) and you will of course get up and down periods over the decade so you just need to keep plugging your money in at a risk level you're comfortable with, and cross your fingers, and check back in a decade (which is why you don't really need somewhere with an app to monitor daily). 

Hey, good response this so thank you. Thank you for explaining the finer detail. I guess whichever platform is used, for the long term, ie 10 years, just have to stick with it and keep fingers crossed. There's always the option of cashing out at any time!