Your portfolio
Moneybox
Two of the most difficult aspects of
investing are number one, getting
started, and number two, leaving
your portfolio alone for long enough
to grow. Moneybox aims to help with
both problems.
It works by connecting to your
everyday banking card and facilitating
“round ups”. If you buy a coffee for
£1.29, 71p is aggregated to a weekly
pot which is eventually invested into
a risk-targeted portfolio consisting of
low-cost tracker funds.
Equity exposure is provided by the
Fidelity Index World fund, property
via the iShares Global Property
Securities Equity Index ETF, a passive
portfolio of 300 property companies
– including the likes of British Land –
and fixed income via iShares’ Overseas
Corporate Bond Index and Overseas
Government Bond Index ETFs.
Moneybox’s “nudging” helps to get
investors going by linking something
as simple as spending to investing.
It also uses other crafty methods to
encourage you, such as through one-
off deposits and a somewhat basic
portfolio-monitoring function which
helps inexperienced investors forget
about the ups and downs of markets
and may stop them being put off.
Fees, for smaller pots, are the
downside. They are charged at a flat
FE TRUSTNET
[ FINTECH ]
20 / 21
Two of the most difficult
aspects of investing are
number one, getting started,
and number two, leaving
your portfolio alone for long
enough to grow
£1 per month, plus fund fees and a
0.45 per cent platform fee.
Freetrade
Fees are one of the most important
considerations for long-term investors,
owing to their capacity to compound at
the expense of returns. However, some
of the most popular retail investment
platforms such as Hargreaves
Lansdown, which has about £85bn of
private assets, are the most expensive,
charging £11.95 for a single trade.
Freetrade doesn’t offer a full suite
of investment products such as
open-ended funds, but does not
charge fees when buying securities
that are publicly traded such as
most investment trusts, ETFs, and
single stocks – both in the UK and
US. Orders are fulfilled at the end of
the trading day, but this means the
price you eventually pay may not
be as attractive as when you placed
the trade. Other downsides include
a reduced range of investable stocks
and a less intuitive user experience
compared with the larger platforms.
Its premium version, which costs £1
per trade, operates instantly. ISAs are
currently also free but are touted to
cost £3 per month from 2020.
Funding Circle
Peer-to-peer lending was one of the
first areas of disruptive finance to
emerge after the financial crisis.
The idea is a simple one. Investors
allocate their money to borrowers
via a digital platform and receive an
interest rate return that beats cash.
The risk is that the borrower defaults
and you lose your money.
Funding Circle is the largest peer-to-
peer lending platform in the
UK, having originated
more than £8bn
worldwide, focusing
on loans to small-
and medium-sized
businesses. Loans are
unsecured, meaning
there is no collateral in
the event of default, but
Funding Circle now spreads
out investors’ lending
across the market as
standard. The platform
says that a £2,000
portfolio will be
spread between
at least 200
different
businesses.
Investors can choose between a
balanced or conservative portfolio.
The former targets returns of 4.5 to
6.5 per cent a year after fees, while
the latter targets 4.3 to 4.7 per cent.
Returns can also be shielded from tax
via an ISA wrapper.
For disruptors and traditional
players, the same rules apply. What
really matters for investors are
returns and trust that their money is
safe. It is fair to say both are difficult
to win but easily lost and the real test
won’t arrive until the next crisis hits.
trustnet.com