Good With Money has just published a FREE guide to millennial money. Download it here, read it at your leisure.
If you’re a millennial, you’ll be pretty used to living your life online. Bound to your smartphone, it might be difficult to imagine your life without all the apps you’ve come to rely on for entertainment, ordering food, getting a cab.
Without these must-have tools, how did our parents, like, survive, you may ask yourself.
But have you ever asked yourself how many of these apps are actually making or saving you money, rather than simply helping you spend your hard-won cash more quickly?
According to research nearly 90 percent of millennials are actively using two to three devices a day, and roughly half are using social media or other internet-based tools to interact with their networks or influence buying decisions. But apart from accessing internet banking via an app, what else can you do with money on your phone?
Banking apps have been around for a while. But as far as the progress of financial services in the digital age goes, this has been pretty much it. Until recently. There’s a rebellion going on in financial services. Many of the “fintech”, or financial technology that is transforming the banking industry via “disruptor” or “challenger” companies is focused on delivering apps to you that are actually useful, using data about your spending and saving to help you manage your money better (rather than selling it on to the highest bidder), sending you text and facebook messages as prompts and generally acting like a non-judgmental, benign authority figure in your finances.
There are now online wealth managers (don’t be put off by the word “wealth” just because you haven’t got much yet) such as Nutmeg and Moneyfarm, which have apps and offer low minimum investments and low charges, helping to make investment more simple and more accessible to younger people who might have felt that it wasn’t for them before.
They are democratising access to investing, but if you are bothered about where your money goes, they might not be for you, because they just plonk your cash in a generic “tracker” fund, which tracks the performance of the wider stock market, rather than singling out companies that are doing good. Some platforms enable investment from as little as £100 (although it’s sometimes more like £1,000), making it easy, convenient and even fun to invest regularly.
One app – Moneyboxapp, rounds up what you spend to the nearest £1, and invests the difference weekly on your behalf into a tracker fund.
What about the robots?
They don’t actually like being called robo-advice, but rather than meaning an actual robot giving you advice, the term just refers to online wealth managers who ask you a bit about yourself, your attitude to risk, your goals, age, income, etc; stick all that info into an algorithm, then produce a portfolio of investments for you based on all the info you gave them.
The idea is that this is cheaper than full-on financial advice from advisers, and takes the pressure of those who do not want to manage all their own investments. The technology behind them is ace and they do encourage you to get interested in what your money is doing. Transparency is a priority for these sites – so they can show off how much they save you over time by charging such very low fees, but also by making it clearer what is happening to your money at all times.
Despite this focus on transparency, we only know of one – EQ Investors – that offers a positive impact portfolio. The rest are mostly passive index-tracker funds, which are low cost, but just track the market rather than backing good companies and telling bad ones to f’off.
It’s hard to choose between the platforms as their fees are all quite low and the way they choose to invest your money, quite similar. Here’s a handy list of some of the robo-advice platforms you could choose from (for a more comprehensive overview of charges etc, check our blog):
- EQ Investors – see article in our full guide
- Nutmeg. Super-whizzy, great tech, been around few years now. It has lots of useful guides for newbies
- Moneyfarm. As above – and your first £10,000 invested is free of charge. Good goal.
- Flying Colours. What we like about this one is the friendly adviser who pops up in the corner. It’s a bit more hands on and closer to advice than robo.
- Wealthify – this one is very much targeted at millennials and very hand-holdy for those new to investing.
How to make the most of the digital money revolution?
- Try banking services from one of the new providers, such as Loot and Starling Bank (see their full article in our guide). One of the USPs of the new breed is that they use data about your income, saving and spending habits over time to help you manage your money. Loot even hopes to offer customers discounts at their favourite shops and cafés. Tandem and Mondo are other “challenger” banks that promise a much more millennial friendly user experience than the big banks.
- Give crowdfunding a go. It sometimes involves taking on more risk (depending on what you are investing in), and for this reason, you usually have to declare that you are a sophisticated investor for some big sites such as Seedrs. But others, like Abundance, offer investments that are not quite as risky (because they are loans rather than equity shares) and start at just £5, so you can dip in without risking your life savings.
- If you love to crowdfund and invest in things like community shares here and there, you’ve probably got £50 investments all over the place. Even if you haven’t, you might soon have a few money apps on the go and several different types of insurance policy. You might try consolidating all of your financial information in one place using an app like This is Bud or a friendly money management tool such as Cleo, a lifestyle money assistant.
- Try a bit of robo-advice if convenience is your number one goal for your cash.