Robo-funds are being heavily advertised. They're far simpler than normal investing but you're locked in to invest in a 'portfolio' of funds. We think this is somewhat restrictive. However, right now some of these robo-funds are offering cashback via special links when you invest, which'll get you a huge head start on other funds.
Without the cashback, they're fighting against other standard investments, and we'd always tell you to look for lower fees and a bigger choice. But as some of this cashback is equivalent to up to a 10% head start, other products would need to do very well to beat them.
MoneySavingExpert.com's speciality is not what to invest in – we only look at these as deals, as we can't tell you what is going to be a good or bad investment. So the most important thing to understand is:
We're not saying to go for these funds, we're just saying that if you're going to go for these anyway, then make sure you get the cashback.
Here are five things you need to know:
- With robo-investment firms you can't pick your own selection of funds. Instead, your money will be invested in a basket of funds selected by the robo-provider and based on your risk profile (the firm will ask you a number of questions when you sign up to assess the level of risk you're willing to take).
- Always keep an eye on fees. Because even small fees year after year can eat into your investment.
- The bigger the investment, the less cashback will matter. If you invest more than the minimum needed to receive the cashback, do remember that you'll be more reliant on market movements to boost your returns in relation to the cashback.
- ALWAYS remember the warning. As with any investments, the value of your funds can go down as well as up, and while it's unlikely, you could lose all your money.
- These deals are for both stocks & shares fund ISAs and ordinary investment plans. Remember, everyone in the UK over 18 has a £20,000 ISA allowance for 2017/18. For more options, see our Stocks & Shares ISAs guide. You can only open and contribute to one stocks & shares ISA each tax year.
If this is the first time you've considered any type of investing, it'll be worth reading our beginners' guide to investing to get a broader idea of what's involved.
Get £50 cashback if you invest £500 for 11 months
Wealthify is offering £50 cashback to the first 500 new customers who open and fund a stocks & shares ISA or ordinary investment plan via this Wealthify* link.
The £50 cashback will be paid after 11 months if you either make a minimum initial investment of £250 and then 10 subsequent monthly top-ups of £25 or more, or you could deposit the £500 in one go.
Either way, you need to keep the cash invested for at least 11 months or you'll lose the £50.
For anyone investing less than £15k, the total charges will be about 0.9% (management fees and fund manager charges), meaning if you were to invest the minimum £500 your fee – assuming the sum invested stays the same – will be about a fiver.
You'll be investing in a fully managed portfolio based on the level of risk you're willing to take (Wealthify will ask you a couple of questions to assess your risk profile.)
- Annual fees: £1-£15k at 0.7%, £15k-£50k at 0.6%, £50k+ at 0.5%
- Min deposit: Normally £1 but £250 + 10 payments of £25 to get the cashback. Alternatively, you could put in the full £500 from day one
- Exit fee: £0 if money kept invested for 11 months, otherwise £50 if exiting before
- Fund manager charges (estimated): 0.17%