Moneyfarm review

Can you make hay while the sun shines with Moneyfarm’s investment app?

Updated

Fact checked
Moneyfarm
We say
★★★★★
Finder expert rating
You say
★★★★★
Customer satisfaction
Investments experts buy and sell shares on your behalf
Not the best returns
Promoted
Moneyfarm

‎Open a stocks and shares ISA with Moneyfarm today

Capital at risk

  • Access account any time using the app
  • Get investment advice to help grow your money
  • Transfer and withdraw money with no fees
  • Set up your ISA in minutes

What is Moneyfarm?

Moneyfarm is an online and app-based platform for investing. It aims to make investing easy, accessible and cheap. The company offers three main products: a stocks and shares ISA, a general investment account and a pension, and 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.

All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Capital is at risk.

How does Moneyfarm work?

Moneyfarm has three products to choose from and a number of features that help you make the most out of your money and investments.

No matter what product you choose to go with, there is an in-house risk assessment. This is a questionnaire that is 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 – Moneyfarm will tell you which one it recommends for you, you do not have to choose this option, though.

Moneyfarm’s main features include:

  • Choice of three products (general investment account, stocks and shares ISA, and pension).
  • Portfolios matched to you
  • Investment advice
  • Investment strategy

Is Moneyfarm good?

Moneyfarm is a good option if you don’t have experience managing investments yourself. It’s a low-cost option that doesn’t require you to put a whole lot of effort in. If you know how to manage investments and make adjustments yourself, you might prefer to go down another route.

It also wins points for the lack of withdrawal and exit fees, giving you the flexibility to withdraw at any time.

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.

General investment account

Moneyfarm’s general investment account allows you to invest at a low cost. 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 2019/2020 tax year is £12,000.

Stocks and shares ISA

A Moneyfarm ISA differs slightly from other ISAs in that you don’t choose the investments in your account. Instead, Moneyfarm’s investment advisers fully manage your portfolio, and alter your investments based on performance and your risk appetite.

Transferring your ISA

Transferring your existing ISA to a Moneyfarm ISA requires you to fill out just one form. Moneyfarm deal with your current ISA provider, close your old account and transfer the funds over.

This takes between 15 and 30 days.

Moneyfarm pension

As with the general investment and the stocks and shares ISA, your pension is invested with a recommended portfolio based on your savings goal, risk appetite, planned retirement date and planned in investment amount. Moneyfarm has a handy pension calculator on the website to help you calculate how much you need to contribute based on your age, desired retirement age, and desired pension value.

Transferring your pensions into Moneyfarm

If you have several pensions, you can combine them through 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 provider(s) 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.

Pension drawdown

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?

Pension commencement lump sum (PCLS)
A pension commencement lump sum is where you withdraw up to 25% of your pension as a lump sum or in instalments and leave the rest invested. You have six months to start taking the rest of your pension.
Flexi-access income drawdown
This option allows you to 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
This option allows you to 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.

Portfolios matched to you

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 seven different portfolios measured from low risk to high risk. Your recommended portfolio will depend on your answers . If you’re interested in finding out more about any of the portfolios and how they have performed in the past you can look at the Moneyfarm website.

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’ll succeed and you may get back less than you invest.

Investment advice

Moneyfarm is authorised to give advice on your investments. It uses algorithms alongside expertise to 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.

Investment strategy

Moneyfarm aims to meet your goals in three 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). More on this in our guide to ETFs.
  • Management costs. Moneyfarm keeps its costs low to maximise your returns.
  • Look ahead. Moneyfarm plan for the future and stay on top of fluctuations with a combination of tactical adjustments and strategic allocation.

Fees and charges

The fees you’re charged depend on the amount that you invest, also known as your assets under management (AUM). Smaller investments incur a higher percentage fee. The charges are detailed below.

Investment amount Charge
£0 – £10,000 0.75%
£10,001 – £50,000 0.60%
£50,001 – £100,000 0.50%
Over £100,000 0.35%

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%

Moneyfarm performance

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 13 October 2019, 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.

Portfolio Percentage return
1 10.9% (+2.8% annualised return)
2 18.3% (+4.5% annualised return)
3 29.7% (+7.1% annualised return)
4 31.4% (+7.5% annualised return)
5 34.9% (+8.2% annualised return)
6 38.5% (+9.0% annualised return)
7 50.1% (+11.3% annualised return)

*This portfolio has only been offered to customers since 16 May 2019, but the return has been simulated from 1 January 2016.

Should I invest with Moneyfarm?

Investing is always risky – that’s why the potential returns are so high.
Moneyfarm would be a suitable investment platform 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

Is Moneyfarm safe?

Moneyfarm is authorised and regulated to give investment advice by the Financial Conduct Authority.

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 whether you invest with the ISA, General Investment account or pension 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 tax year 2019/2020 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 £12,000 in 2019/20, 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 4-5 stars out of 5 on four 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 July 2020.

Moneyfarm customers like that they have experts looking after their investments and find it flexible and easy to use. They found that the customer service staff were helpful and friendly.

Some users feel that they get smaller returns than they have with other providers.

Pros and cons of Moneyfarm

Pros

  • Moneyfarm manages your portfolio for you, no need to worry about making adjustments.
  • Free withdrawals
  • No exit fees
  • Stocks and Shares ISA available

Cons

  • Not very hands-on. If you’re looking for DIY this might not be for you.
  • Minimum of £1500 needed to start investing.
  • Only 7 portfolios. other platforms tend to have more options

The verdict

Moneyfarm is a great option for anyone planning to take investing more seriously. It’s a nice all-rounder with its three products to choose from. By far their 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 £1500 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.

Promoted
Moneyfarm

‎Open a stocks and shares ISA with Moneyfarm today

Capital at risk

  • Access account any time using the app
  • Get investment advice to help grow your money
  • Transfer and withdraw money with no fees
  • Set up your ISA in minutes

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Data indicated here is updated regularly
Name Product Minimum deposit Maximum annual fee Price per trade Brand description
Moneyfarm stocks and shares ISA
£1500
0.75%
£0
Hargreaves Lansdown stocks and shares ISA
£100
0.45%
£11.95
Hargreaves Lansdown is the UK's biggest wealth manager. It's got everything you'll need, from beginners to experienced investors. Capital at risk.
Interactive Investor stocks and shares ISA
Any lump sum or £25 a month
£119.88
£7.99
Interactive Investor offers everything most investors need. Its flat fees makes it pricey for small portfolios, but cheap for big ones. Capital at risk.
Saxo Markets stocks and shares ISA
No minimum deposit requirement
0.12%
£8.00
Saxo Markets offers a wide access to a range of stocks, ETFs and funds. Capital at risk.
AJ Bell stocks and shares ISA
£500
0.25%
£9.95
AJ Bell is a good all-rounder for people who to choose between shares, funds, ISAs and pensions. Capital at risk.
Fidelity stocks and shares ISA
£1000 or a regular savings plan from £50
0.35%
£10.00
Fidelity is another good all-rounder, offering a good package at a decent price. Not suited for trading shares. Capital at risk.
Nutmeg stocks and shares ISA
£100
0.75%
£0
Nutmeg offers three types of portfolios. Choose the one that goes with your investment style. Capital at risk.
Legal & General stocks and shares ISA
Legal & General stocks and shares ISA
£100 or £20 a month
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N/A
Legal & General is a big financial services company which offers insurance, lifetime mortgage, pensions and stocks and shares ISAs. Capital at risk.
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Data indicated here is updated regularly
Name Product Minimum investment Choose from Annual fee Brand description
Moneyfarm Pension
£1,500 (initial investment)
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AJ Bell Pension
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No minimum
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0.5% - 0.95%
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Hargreaves Lansdown Pension
£100 or £25 a month
2,500 funds
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Interactive Investor Pension
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Over 3,000 funds
£10/month
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Saxo Markets Pension
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Moneybox Pension
£1
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0.15% - 0.45% charged monthly
Manage your money with an easy-to-use Moneybox app. Capital at risk.
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All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Capital is at risk.

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