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, sometime these robo-funds offer cashback via a special link 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 has been 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.
- The deal below is 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 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 £125 cashback if you invest £1,200 for a year
Here from the weekly email? Our Moola deal proved popular and has now run out, though we've left the details here so you can see the kind of offer that runs.
Until 11.59pm on Sun 22 April, or when 500 people have signed up, new customers to Moola applying via our link can get £125 cashback if they invest a min of £1,200 for 12 months in either a stocks & shares ISA or general investment account.
You can invest the £1,200 any way you like eg, in one go or £100 monthly payments, but the total amount invested must be at least £1,200 after a year from your first investment - and to get the cashback you can't withdraw any of it in that time.
When applying it should automatically enter the promo code 'MSE1' just before you invest. The cashback will be paid into your Moola account on or before 30 April 2019 and invested, though you can withdraw it straightaway.
You choose from three different risk levels - Moola will ask you a couple of questions to assess your attitude to risk.
The total charges will be about 0.9%/yr if you choose a standard portfolio (platform fees and fund manager charges), meaning if you were to invest the minimum of £1,200 your annual fees would be around £11.
- Annual platform charge: 0.75%
- Fund manager charges: 0.15-0.16% (standard portfolios), 0.2%-0.31% (ethical portfolios)
- Min ISA deposit: 12 monthly £100 payments to get cashback
- Transfer out fee: £0