How to Set Up a Stocks & Shares ISA – Moneybox vs Moneyfarm

moneybox vs moneyfarm
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Stocks and shares ISA is a must-have if you want to grow your money tax-free over time and generate compound interest. The first step is to find an ISA provider who matches your investment style and goals. Moneybox and Moneyfarm are some of the best platforms in the UK, especially for new investors and those who prefer a passive approach to investing. How do they compare, and where do you begin? Read on to learn more. 

Moneybox

  • Low minimum investment starting at £1
  • FCA regulated
  • FSCS protection for investments up to £85,000
  • Simple to set up and use
  • Mobile first
  • Invest spare change automatically

Download Moneybox now

Source: www.moneybox.com

Moneyfarm

  • FCA regulated
  • Segregates customer and company funds (protected by Saxo Bank)
  • FSCS protection for investments up to £85,000
  • Experienced investment experts on-hand to help
  • Actively managed account
  • Minimum investment from as low as £500

Visit Moneyfarm now

What Is an ISA? 

ISA stands for Individual Savings Account. Unlike other types of savings and investment accounts, the interest or capital gains from an ISA are not taxed. Because of the tax benefits of ISAs, the government sets a limit (called the ISA allowance) on how much you can put into these accounts each tax year (April 6th to April 5th of the following year). The current ISA allowance is £20,000 per year, which resets at the start of the following tax year.

Types of ISAs

There are four types of ISAs:

  1. Investment ISAs or stocks and shares ISA
  2. Cash ISAs
  3. Innovative finance ISAs
  4. Lifetime ISAs

This guide will focus on the stocks and shares ISA, which allow you to put your ISA allowance to work in various investments: shares, funds, investment trusts, and bonds. When you’re within the annual £20,000 limit, you don’t pay tax on profits, dividends, and capital gains which helps maximise your returns.

How Many ISAs Can I Have?

You can open all the ISAs you are eligible for and deposit your annual £20,000 allowance in one or spread it across various ISA accounts throughout the year. However, for every type of ISA, you can only contribute to one account per tax year. For instance, you cannot fund more than one stock and shares ISA at a time. 

If you find a better ISA provider for your investment needs later, you can transfer your funds to the new stock and shares ISA in the following tax year. In other words, you can have multiple stocks & shares ISAs open simultaneously, but you can only fund one at a time with your current tax year allowance.

Moneybox vs Moneyfarm Stocks and Shares ISAs

Moneyfarm and Moneybox are two of the UK’s most popular stocks and shares ISA platforms. If you’re a beginner or an experienced investor who prefers the “set it and forget it” investment approach, you’ll have a lot to love about these platforms. But they aren’t created equal. So the best ISA provider for you will depend on your investment approach and goals.

Below we compare the most important features of Moneyfarm and Moneybox to help you out.

Platform Features MoneyfarmMoneybox
Minimum initial investment £500£1
FeesOne simple fee overall depending on invested amount 0.75% from £500 0.70 from £10k  0.65% from £20k 0.60% from £50k 0.45% from £100k 0.40% from £250 0.35 from £500k Monthly subscription fee: £ 1 (free the first three months) Platform fees: 0.45% of your investment value per year Annual fund provider fees: 0.12% – 0.58% Currency conversion fee: 0.45%
Available investment vehiclesEquities, bonds, cash 20+ index funds, ETFs, and individual US stocks
Transfer an ISAYesYes 
Regulated by the Financial Conduct AuthorityYesYes
Protected by the Financial Services Compensation Scheme (FSCS)YesYes
PlatformWeb-based and mobile appMobile app

How Moneybox Stocks and Shares ISA Works

Moneybox’s low £1 minimum investment makes it an excellent choice for anyone looking to begin investing a few pounds each week or month. On Moneybox, you can invest in two ways:

  1. Starting Options
  2. Customise Allocations

The Starting Options are three ready-made portfolios in which you can invest based on your risk tolerance. Each portfolio contains a diverse selection of index funds. This makes the option ideal for new investors and those who prefer to keep things simple. These portfolios are:

  1. Cautious (low risk)
  2. Balanced (medium risk) 
  3. Adventurous (higher risk) 

Customise Allocations lets you create your portfolio from the available funds. This makes the option ideal for investors who want to choose where their money is invested among tracker funds, ETFs, and US stocks.

How To Set Up a Moneybox Stocks and Shares ISA

You must be over 18, a UK tax resident, and a non-US citizen to open a Moneybox stocks and shares ISA account. Follow these steps to create your account in less than five minutes:

  1. Download and install the Moneybox app
  2. Sign up by submitting your details (name, email, password, phone number, and date of birth)
  3. Verify your email
  4. Link your bank account
  5. Follow the prompts to choose a portfolio and account funding frequency.

How Moneyfarm Stocks and Shares ISA Works

Moneyfarm is a Robo-ISA platform designed to simplify investing. You cannot select your investment allocations. Instead, the platform offers seven ready-made portfolios with varying risk profiles. Not sure what your risk tolerance is? Moneyfarm starts by giving you a brief questionnaire that covers your investment goals, knowledge, market volatility, comfort levels, and financial background. 

Moneyfarm recommends the best portfolio for you based on your answers. You can confirm the composition of each portfolio and past performance from the Moneyfarm website. Remember, you cannot customise your recommended portfolio. The company builds, manages, and rebalances the portfolio for you. If you don’t think you’re matched with the right portfolio, you can contact the personal investment advisors at the company for more help. This makes Moneyfarm ideal for investors who prefer a completely hands-off investment approach.

How To Set Up a Moneyfarm Stocks and Shares ISA

Creating a Moneyfarm stocks and shares ISA account is simple. Below are the required steps:

  1. Visit the official Moneyfarm website and click the “Get started” button.
  2. Enter your email, create a password, and hit the “Sign up” button.
  3. Click the “Discover your investor profile” button and complete the questionnaire.
  4. Follow the onscreen instructions to create your recommended portfolio.
  5. Review the details of your recommended portfolio and accept if it works for you.
  6. Proceed to add the required personal details.
  7. Link your bank to transfer funds when you’re ready or transfer an existing ISA.

Pros and Cons of Using Moneybox vs Moneyfarm

Every platform has its pros and cons, which you should weigh to determine which one works best for you. Below is an overview of the pros and cons of using Moneybox vs Moneyfarm.

Pros of MoneyboxCons of Moneybox
FSCs-protected and FCA regulated Higher fees for low-value accounts
Responsive customer supportDoesn’t offer investment advice
High-quality research, analysis, and educational materialsSome banks aren’t compatible with the platform
Transparent fee structureOnly accessible to UK residents
Low minimum investment of £1 
Excellent user experience for both beginners and experienced investors 

Pros and Cons of Moneyfarm

Moneyfarm ProsMoneyfarm Cons
Designated personal investment advisorsHigher minimum investment of £500
Fully actively managed accountsHigher platform fees for smaller portfolios 
Regular portfolio rebalancing (3-5 times annually)Cannot select or customise own portfolio
Reduced platform fees for larger portfolios 
One simplified fee structure 

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