There’s a giant blind spot in this country when it comes to money: the many benefits of investing rather than saving.
The majority of the population do not look into this blindspot at all, instead choosing, like gambling addicts in front of slot machines in Vegas, to keep dropping their pennies into unrewarding savings accounts paying less than 1 per cent interest.
Thankfully, some clever fellows at Moneybox, a new “micro investing” app, have spotted the marketing opportunity and developed a way to round up your individual spends to the nearest pound (or add £1 if your spend is a round number), and then transfer the rounded up amounts or “round ups” into an investment account.
I have been trialling the app and got details of my first round-up yesterday. Moneybox rounded up £14 from my regular spending (over a week, that’s actually pretty high – it reckons an average user will round up £37 by the end of a typical month).
The app then puts that cash straight into an “adventurous” investment account for me – money I’ll hardly notice is missing but by the end of the month, will be a nice £56 ish and by the end of the year – maybe enough to pay for the Christmas food shop.
Most users of this app are likely to be tech savvy millennials who see that saving is pointless, reckon they spend quite a bit but also reckon they don’t have enough to start investing proper.
Those who do not already have a stocks and shares ISA are likely to choose to invest their round ups in an ISA; those that do already have a stocks and shares ISA elsewhere (me included) will not be able to invest tax-free in Moneybox too, although they could transfer their other ISA over to Moneybox if they wanted.
The site earns money by taking a £1 a month subscription fee, plus a 0.45 per cent platform fee every year.
Is it investing responsibly?
Investors are given three portfolios: cautious, balanced and adventurous. The three asset types are cash, property and global shares. The cautious fund has more cash and less global shares, the adventurous more global shares and less cash.
Moneybox says this gives investors access to more than 6,000 companies including well known names such as Apple, Facebook, Nintendo, Disney.
Naming such companies makes it sound a little more exciting than it is. The cash fund is run by Henderson, the property fund by BlackRock and the global shares fund by Vanguard. These are all low cost funds. The BlackRock and Vanguard funds are index trackers – they don’t pick stocks but are instead “passive”. This also makes them totally morally neutral and as likely to invest in oil and gas as insulation companies.
Both BlackRock and Vanguard were this week accused of hypocrisy by backing the removal of fossil fuel subsidies and investing in companies addressing climate change, while investing in Exxon Mobil, one of the world’s worst polluters.
Even though the funds that Moneybox customers’ money is going into are low on values, I still like this app for bringing investing into the mainstream and making it as normal as buying a flat white. Maybe one day, a sustainable option will be added to the mix.
Until then, if you are as into your responsibility as we are at Good With Money, I’d suggest investing your ISA into sustainable or social funds on investment platforms and using Moneybox round-ups as a nice bit of bonus investing. Particularly if like me, you happen to be a big spender too.