Micro Investing

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  • (Mind you, I think eventually I'll open that s&s ISA)
    Giant London-sized mortgage (started July 2017) £472,561 /£499,000 Current LTV 85%
    S&S ISA £947
    EF: £15,000£15,000 100% to goal
    Renovation fund: £7,275/£10,000 72.5% to goal
    Car savings fund: £9,580/£13,000 73.6% to goal
  • jimjames
    jimjames Posts: 17,532
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    edited 13 February 2017 at 10:46PM
    lessavyfav wrote: »
    I have Moneybox! I just got the app a few weeks ago. I think it's a fun/easy way to put money aside without thinking about it or doing much, and you can top up extra when you like so that £1 fee doesn't feel like such a big percentage (also I'm pretty sure the first three months are free).

    If you're looking at larger amounts then go for a standard S&S ISA. The whole concept seems a pointless gimmick to me. If you want an easy way to put money aside then using a savings account and wait till you can put £25 plus into a S&S ISA.
    Remember the saying: if it looks too good to be true it almost certainly is.
  • AnotherJoe
    AnotherJoe Posts: 19,622
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    lessavyfav wrote: »
    I have Moneybox! I just got the app a few weeks ago. I think it's a fun/easy way to put money aside without thinking about it or doing much, and you can top up extra when you like so that £1 fee doesn't feel like such a big percentage (also I'm pretty sure the first three months are free).

    I've been saying for at least a couple of years I'll open a stocks and shares ISA and not done anything - my spare change slips through my fingers at the end of the month, so it works for me!

    But its not spare change, its entries in a bank account and you could get the exact same effect with no losses by just setting up a standing order to pay into an S&S ISA.

    Its easy but whats fun about it when the money is automatically taken?
  • Anthorn
    Anthorn Posts: 4,362
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    edited 18 March 2017 at 4:42AM
    AnotherJoe wrote: »
    But its not spare change, its entries in a bank account and you could get the exact same effect with no losses by just setting up a standing order to pay into an S&S ISA.

    Its easy but whats fun about it when the money is automatically taken?

    In Moneybox, it's only automatically taken if the user decides that. One can just invest from £2 a week by direct debit without investing any "spare change" at all.

    The almost ubiquitous promotional phrase used in Micro-investing is, "Look after the pennies and the pounds will look after themselves" and that very aptly describes it.

    Moneybox is actually an established platform almost identical to the very popular "Acorns" in the U.S. Basically aimed at "Millennials" (those who reached adulthood in the year 2000) but can be used by anyone who is cash poor with money tied up elsewhere.

    I have Moneybox in it's stocks and shares variant and find it very useful and very easy to use. It's also a lot cheaper than paying dealing fees and commissions on a regular stocks and shares ISA. In Moneybox there is also the General Investment variant for those who already have a S&S ISA or who don't want one.
  • JohnRo
    JohnRo Posts: 2,887
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    edited 18 March 2017 at 12:17PM
    Anthorn wrote: »
    The almost ubiquitous promotional phrase used in Micro-investing is, "Look after the pennies and the pounds will look after themselves" and that very aptly describes it.

    That's fine except that using moneybox isn't doing that, it's wasting pounds on pennies, costing a lot more in fees than would otherwise be the case.

    If you're prudent and understand the slogan quoted and the need to save wisely then you wouldn't be using 'micro investing' for the very reason you've sited as it's main advantage.
    I have Moneybox in it's stocks and shares variant and find it very useful and very easy to use. It's also a lot cheaper than paying dealing fees and commissions on a regular stocks and shares ISA. In Moneybox there is also the General Investment variant for those who already have a S&S ISA or who don't want one.

    As stated up thread, it's a gimmick.

    £12 a year plus another 0.45% p.a. on whatever you've managed to squirrel away is very expensive.

    The alternative is to save in an interest bearing account, perhaps at 3% interest, then transfer into an ISA at a percentage broker for a total cost of typically 0.25% p.a.

    I'd also question the size of their various Blackrock Property Securities Equity Tracker allocations. 35% seems more than just adventurous.
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
  • Plus
    Plus Posts: 433
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    I don't like the psychology. It's designed to make you think 'oh, I'll buy that coffee, it's doing me good' - when in fact the best good is done by not buying the coffee and saving the money you would have spent (as argued by eg the MSE Demotivator).

    That said, if you ignore the 'round-ups' gimmick, an app that allows you to make micro-contributions into a S&S ISA isn't a bad thing - and allows you to incentivise yourself. For instance, every time you walk home, tap the app and invest the £10 you would have spent on a taxi.

    So I think it has value as a 'gateway drug' into more serious investing. As their customers aren't going to have multi-million portfolios, it's not hugely surprising it's more expensive. The actual percentage costs aren't too bad (0.45% of £1000 is £4.50pa), it's the £12 fee that's going to drag on returns (and potentially turn off users)

    The asset allocations are just strange though. They have no bonds at all?
  • JohnRo
    JohnRo Posts: 2,887
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    It is not aimed at prudent savers then but at fe.ckless spenders. Designed primarliy to take advantage and profit from their fe.ckless spending in the guise of an investment platform.
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
  • Anthorn
    Anthorn Posts: 4,362
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    edited 18 March 2017 at 1:31PM
    JohnRo wrote: »
    That's fine except that using moneybox isn't doing that, it's wasting pounds on pennies, costing a lot more in fees than would otherwise be the case.

    LOL we've already had this in the Moneybox thread in which I posted. The fees are a flat fee of £1 per month plus 0.45% platform fee per year. If I were to do the same as suggested in this thread and save into a S&S ISA I would be subject to dealing fees of around £5.95p plus a platform fee, depending on the ISA provider, possibly every month in the case of regular savings into an ISA. That will reduce a regular £20 per month considerably more than the moneybox app at a flat £1 per month.

    The rest of your post repeats what you've already said to which I've already replied above. You obviously don't understand what it is you are attempting to discuss. For example you say that £12 a year is very expensive on whatever is squirelled away with knowing or even considering how much is squirrelled away. Personally, I squirrel away at least £80 per month almost entirely from rounding up purchases to the next full pound.

    However there is an alternative which doesn't charge a fee for a balance under £10k. That's moneyfarm and that too is micro-investing:
    https://www.moneyfarm.com/uk/
  • TrustyOven
    TrustyOven Posts: 746
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    Anthorn wrote: »
    LOL we've already had this in the Moneybox thread in which I posted. The fees are a flat fee of £1 per month plus 0.45% platform fee per year. If I were to do the same as suggested in this thread and save into a S&S ISA I would be subject to dealing fees of around £5.95p plus a platform fee, depending on the ISA provider [...]

    Wowzer!
    There are cheaper platforms, you know.
    Why would you go for a platform that charges a flat fee for each deal unless you had more in your portfolio than the threshold for going to the fixed fee platforms? And if that was the case, why would you even bother with the micro-investing gimmick?
    Goals
    Save £12k in 2017 #016 (£4212.06 / £10k) (42.12%)
    Save £12k in 2016 #041 (£4558.28 / £6k) (75.97%)
    Save £12k in 2014 #192 (£4115.62 / £5k) (82.3%)
  • JohnRo
    JohnRo Posts: 2,887
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    edited 18 March 2017 at 2:52PM
    Anthorn wrote: »
    You obviously don't understand what it is you are attempting to discuss.

    One of us doesn't.

    Saving into a percentage based ISA platform typically has zero cost upfront.

    That's zero cost in case you didn't understand, as in absolutely nothing.

    When you've applied for and opened the ISA account and moved money in there is zero cost again.

    Then when you choose to buy an investment fund you'll pay zero cost again, keeping track.. that's zero so far.

    Only when you've purchased the fund do you then start to pay a platform fee charged monthly in arrears typically around 0.25% each year of whatever investment value you hold.

    Contrast that with
    Anthorn wrote: »
    I squirrel away at least £80 per month almost entirely from rounding up purchases to the next full pound.

    your current ~1.25% p.a. £1 monthly charge and additional 0.45% p.a. charge.

    You're screwed either way, the more you squirrel away the greater the damage inflicted by the 0.45% charge is, in absolute terms. The less you squirrel away the greater the damage the £1 overhead inflicts in percentage terms.
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
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