Moneyfarm is an investment app that’s designed to make invest ing easy. It has 3 products and a simple questionnaire which recommends a portfolio for your investment needs. Find out if you can make hay while the sun shines with this simple app, some pros and cons of Moneyfarm and what we thought.
What is Moneyfarm?
Moneyfarm is an online and app-based platform for investing. It’s a type of platform called a “robo-advisor”, which means that it takes your money and invests it for you. Moneyfarm aims to make investing easy, accessible and cheap.
Moneyfarm has 3 main products: a stocks and shares ISA, a general investment account and a pension. There’s a minimum investment of £1,500.
There are plenty of other options if you want to start small – we’ve covered alternatives on our stocks and shares ISA comparison table.
No matter what product you choose to go with, there is an in-house risk assessment. This is a questionnaire designed to match you to a risk portfolio that reflects your financial knowledge, your intended timeline and your knowledge of investing.
Which portfolio you go with is entirely up to you. You’ll be presented with all of the options and Moneyfarm will tell you which one it recommends for you, but you do not have to choose this option.
Moneyfarm’s main features include:
- Choice of 3 products. Choose between a general investment account, stocks and shares ISA, and pension.
- Portfolios matched to you. Moneyfarm has a handy quiz that helps you choose a portfolio that suits you.
- Investment advice. Moneyfarm offers digital investment advice and gets you access to a personal investment consultant.
- Investment strategy. Moneyfarm helps you to create an investment strategy that works for you.
What products does Moneyfarm offer?
- General investment. Moneyfarm’s general investment product allows you to invest with the flexibility to withdraw whenever you want. As your investments aren’t in an ISA, you may have to pay capital gains tax on any profits that you make.
- Stocks and shares ISA. The Moneyfarm Stocks and Shares ISA allows you to invest tax-free with the flexibility to withdraw your money at any time. Adding money to the ISA is simple, with either a direct debit or a lump sum. You can also transfer an existing ISA to Moneyfarm, if you already have one open with another provider.
- Pensions. Moneyfarm’s pension allows you to invest for your retirement. As with all pensions, you receive tax relief on the contributions paid in. Moneyfarm offers the opportunity to transfer your pensions into it, bringing them all into the same pot.
Moneyfarm general investment account (GIA)
Moneyfarm’s general investment account is its standard investment account. You receive the same hands-on support and advice that you receive with the ISA and the pension. As you get a tax-free allowance when investing in a stocks and shares ISA, you’d generally only go for this option if you have used up your ISA allowance but wish to continue investing.
Unlike with the stocks and shares ISA, there aren’t any limits to how much you can invest (except the minimum of £1,500). Any tax on gains will depend on how much you make in profit and the capital gains tax allowance for the year. The allowance for the 2022/2023 tax year is £12,300. This means that you have to pay tax on any profits you make over £12,300 in each tax year.
Stocks and shares ISA
With the Moneyfarm ISA, you can make use of your annual ISA allowance, which lets you invest up to £20,000 in each tax year without paying any tax on your profits.
Moneyfarm’s ISA is fully managed by Moneyfarm’s investment advisers. They also alter your investments based on performance and your risk appetite.
You can transfer an existing ISA over to Moneyfarm by filling out a form. Moneyfarm deals with your existing ISA provider, closes your account and transfers your funds over for you.
This takes between 15 and 30 days.
As with the general investment account and the stocks and shares ISA, your pension is invested with a recommended portfolio based on how you answer its risk questionnaire.
You are asked about:
- Your savings goal
- Your risk appetite
- When you plan to retire
- How much you plan to invest
Moneyfarm has a handy pension calculator that helps you calculate how much you need to contribute based on your age, when you want to retire and how much you want to have at retirement.
Can you transfer existing pensions into Moneyfarm?
Yes. If you have several pensions, you can combine them with Moneyfarm. This makes them easier to keep track of and could save you money.
As with the ISA, there’s a form you need to fill out in order to do this and Moneyfarm will handle the rest. It deals with your current providers on your behalf to transfer your pensions to your Moneyfarm account. Moneyfarm will cover any fees that your old provider charges you to leave.
The transfer takes between 3 and 4 weeks.
Moneyfarm pension drawdown options
Pension drawdown is the option to access your pension during your retirement.
You have the choice to:
- Withdraw lump sums
- Have a steady income
- Choose to do both, as and when
You can withdraw up to 25% of your pension pot tax free. The rest remains in investments giving it the opportunity to grow even more.
You can access this service after you turn 55.
What pension drawdown options are there?
Here are some of the pension drawdown options available:
- Pension commencement lump sum (PCLS). Where you withdraw up to 25% of your pension as a lump sum or in instalments and leave the rest invested. You have 6 months to start taking the rest of your pension.
- Flexi-access income drawdown. Access your pension as a taxable income and adjust the amount and schedule of the payments as and when you need to and leave the rest of your pension invested. You can combine this with the PCLS.
- Uncrystallised funds pension lump sums. Withdraw lump sums out of your pension pot as and when you choose to do so. Up to 25% of each withdrawal is tax free, while the other 75% is subject to income tax. You leave the rest of your pension invested so it has the opportunity to keep growing. This option can’t be paired with the PCLS.
Pension drawdown costs
- No charge to enter drawdown
- No administration charges
- No withdrawal charges
- No charges for switching your fund
Inheritance tax benefits
Pension drawdown comes with some inheritance tax benefits after you have died. Any funds that are left in your pension are passed to your beneficiaries without any inheritance tax. They can continue to use the drawdown as you could. They may incur income tax on the payments if you die over the age of 75.
Moneyfarm ready made portfolios
One of Moneyfarm’s best features is that it matches you to an investor profile based on your investment needs and your risk appetite. The first step of registration is a short questionnaire about your financial background, your investment goals, your investment knowledge and your comfort levels with value fluctuations.
There are 7 different portfolios measured from low risk to high risk. Your recommended portfolio will depend on your answers. We’ve detailed what investments each portfolio is made up of below, you can find out more about the portfolios and how they have performed in the past on the Moneyfarm website.As you can see from the graph above, your portfolio will always have a mix of investments. This helps to smooth out your returns, not putting all your eggs in the same basket, so to speak. Moneyfarm’s experts manage the portfolios and make changes when necessary using their knowledge of the market.
The more risk you take on, the higher your likely returns are going to be, but keep in mind that stocks and shares are moving all the time, so there’s no guarantee that they will succeed and you may get back less than what you invest.
Moneyfarm investment advice
Moneyfarm is authorised to give advice on your investments. It uses algorithms alongside expertise to choose a portfolio suited to you, with the aim of giving your money the best chance at growing. Moneyfarm guarantees that you’ll always be investing in a portfolio that’s suitable for you, your investment needs and your timeframe. It has an advice centre to give you more information about where your money is invested.
Additionally, an algorithm runs monthly to ensure that the portfolio that you’re invested in remains suitable for you. If anything changes, you can update your goals and risk appetite at any time.
Moneyfarm’s investment strategy
Moneyfarm aims to meet your goals in 3 ways:
- Diverse assets and geography. By selecting a diverse range of assets and covering a wide range of countries, Moneyfarm aims to minimise risk and maximise your growth. One of the ways that Moneyfarm does this is by using exchange-traded funds (ETFs). You can find out more on this in our guide to ETFs.
- Management costs. Moneyfarm keeps its costs low to maximise your returns.
- Look ahead. Moneyfarm plans for the future and stays on top of fluctuations with a combination of tactical adjustments and strategic allocation.
The fees you’re charged depend on the amount that you invest. Smaller investments incur a higher percentage fee. The charges are detailed below.
|£0 – £10,000||0.75%|
|£10,001 – £19,999||0.70%|
|£20,000 – £49,999||0.65%|
|£50,000 – £99,999||0.60%|
|£100,000 – £249,999||0.45%|
|£250,000 – £499,999||0.40%|
There are two other fees, as well as the charges outlined above:
|Fee name||What’s it for?||Fee amount|
|Fund fee||This is the fee charged by the providers of the ETFs.||0.20%|
|Market spread||This is the difference between what you’re willing to sell for and what the buyer is willing to buy for.||Up to 0.09%|
Past performance does not indicate future results, and your potential returns will vary based on the profile portfolio you select and how much you invest.
It’s also worth keeping in mind that a higher portfolio risk level doesn’t guarantee a higher return, and you may find that the performance of a specific portfolio varies dramatically over time.
Moneyfarm portfolio performance over time
The table below outlines the simulated past performance of each Moneyfarm portfolio between 1 January 2016 and 17 May 2021, with portfolio 1 representing the lowest level of risk and 7 representing the highest level of risk. These figures do not include the Moneyfarm management fee which would normally be deducted from your portfolio.
Should I invest with Moneyfarm?
This is up to you. You should know that investing is always risky, that’s why the potential returns are so high. You should make sure you’re aware of the risks involved and understand the types of investments in the portfolio and why some are riskier than others.
Moneyfarm would be a suitable investment platform for you if:
- You plan to start with £5,000 (or £1,500 with £100 invested monthly as a direct debit)
- You want the flexibility to withdraw your money at any time.
- You want to invest in ETFs
- You want to invest in a stocks and shares ISA
- You don’t want to choose individual stocks and shares yourself
Is Moneyfarm safe?
Moneyfarm is authorised and regulated to give investment advice by the Financial Conduct Authority (FCA).
Your money and investments are ring-fenced in a separate account. Moneyfarm does this by appointing a custodian bank to hold your money and investments. It is also covered by the Financial Services Compensation Scheme which means that up to £85,000 of your investments are covered if Moneyfarm was to go bust.
Will I have to pay tax on my profits?
Whether you pay tax and how much you pay will depend on the type of account you choose and how much profit you make.
- ISAs. For ISAs you invest tax free if it’s within your allowance. The tax-free allowance for the 2022/2023 tax year is £20,000.
- General investment accounts. Yes, you may need to pay capital gains tax (CGT) on any profits that you make. You have an annual CGT tax-free allowance of £12,300 in 2022/2023, so you’ll only need to pay tax on any gains above this.
You can find out more about CGT on the gov.uk website.
- Pensions. Contributions to your pension are tax free. If you opt for the pension drawdown then you may need to pay income tax depending on the option that you choose.
Moneyfarm customer reviews
Customers seem to be showing their love for Moneyfarm across multiple review platforms. The service has received a 4.5/5- star rating on 4 different sites, including a rating of “Excellent” on Trustpilot, based on more than 200 reviews.
Positive reviews praised the ease of use and range of risk levels on offer, while negative reviews typically cited the poor performance of a fund as the reason for discontent (updated 23 March 2020).
We carried out a customer satisfaction survey in December 2020.
Moneyfarm customers found that it was easy to use, had good fees and that they got good performance. Others like that they have experts looking after their investments and find it flexible. They found that the customer service staff were helpful and friendly.
Pros and cons of Moneyfarm
- Moneyfarm manages your portfolio for you, no need to worry about making adjustments.
- Free withdrawals.
- No exit fees.
- Stocks and shares ISA available.
- Not very hands-on. If you’re looking for DIY this might not be for you.
- Minimum of £1,500 needed to start investing.
- Only 7 portfolios. Other platforms tend to have more options.
Our verdict: Is Moneyfarm any good?
Moneyfarm is a great option if you’re planning to take investing more seriously but don’t have experience managing investments yourself. It’s a nice all-rounder with its 3 products to choose from. By far its best feature is the bespoke portfolio. As Moneyfarm is authorised and regulated by the FCA to give investment advice, you know that the recommendations are specific to you and your financial goals.
The main downside is that you can’t start with a small amount. You need to deposit at least £1,500 into your account before you can start investing. This means that if you are only starting out in investing, this might not be for you.
Frequently asked questions
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