Keen to start saving and investing your hard earned money? Great decision – your future self will really appreciate it. And using a robo-advisor is a great idea. Just in case you didn’t know, they’re not actually robots, there’s real expert investors looking after your cash – you just use a website or app to invest, and watch your money grow.
Anyway, without further ado, let’s run through the best UK robo-advisors – and then we’ll cover how we determined the best advisors, and how best to save and invest for your future.
Best robo-advisors for investing
Best robo-advisors for pensions
Best robo-advisors for a Lifetime ISA
Our criteria for determining the best robo-advisor (UK)
There’s a fair few robo-advisors (investment apps) out there in the UK, which is great. The more choice you have, the better it is for you – they’ll compete with lower fees, easier to use websites and apps and better investment options.
To determine the best, here’s the 5 criteria we’ve used:
- Ease of use
- Fees
- Investment track record
- Experience
- Customer reviews
The robo-advisors we’ve listed above are the ones we’re happy to recommend, and use ourselves here at Nuts About Money. They’re all pretty great, and you can’t go wrong with any of them, they’re all super easy to use and will help grow your savings and investments over time.
However, if you’re not quite sure which to use, our recommendation is Moneyfarm¹ for investing, and PensionBee¹ for pensions – they’ve both got low fees and a great record of growing money over time (plus easy to use).
We’ll run through investing and pensions below too, so you know when you use each – and of course you can (and should) save in both types of accounts!
What is a robo-advisor?
Not quite sure what a robo-advisor actually is? No worries. We’ll run through it.
A robo-advisor isn’t actually anything to do with robots – that’s actually a reference to the technology used, which is a website and/or phone app to get started with investing, and to manage your money over time.
So, you can use a phone app to sign up, deposit money, select which investment option you’d like (don’t worry, it’s all explained), and then view your investments and manage your money whenever you like – for instance add more, or withdraw it. Pretty simple right?
The advisor in ‘robo-advisor’ is where the experts look after your money and grow it safely and sensibly over time, according to the investment option you choose (we’ll cover those in a bit more detail below).
It’s a reference to human financial advisors – who would traditionally look after people’s money for them and help them make the right investment decisions. They still exist, and are a great idea, but more suited to those with a fair bit in savings. You can find the best financial advisor for you with Unbiased¹.
So, there you have it, basically a financial advisor using technology, a robo-advisor!
Why use a robo-advisor?
Using a robo-advisor, or more specifically, letting the experts handle your investments (and pension) is highly recommended. And combined with a great website or phone app to view your investments (your investment portfolio) is a great idea.
The experts know how to grow money over time, and they’re very good at it. They’ll decide the right mix of investments to build the right investment portfolio suited to your goals – which can be simple things like saving for retirement, or a big purchase.
The investments they’ll buy can be a wide range of investments, which we’ll cover below in more detail.
It’s very hard to do this yourself, and can take years to learn – for most people it’s often simply not worth it. Even the professionals leave most of their money to the experts (also called fund managers).
A great option for long-term saving and investing is to use a robo-advisor for the majority of your savings – within a Stocks and Shares ISA or personal pension (both have great tax-free benefits – more on those later), and then make your own investments alongside this, if you want to, which you can do on a self-managed investment platform, also called a stock broker.
Types of investments
Stocks and shares (equities)
Stocks and shares are where you own a part of the company, you own a share of the company (the business). And these can go up in value if the company does well, or down in value if the company doesn’t do so well. Companies can also pay out their profits to shareholders, which are called dividends.
Exchange-traded funds (ETFs)
ETFs, or exchange-traded funds, are groups of investments all pooled together into a single investment – so it’s much easier to buy and sell. Often, these are groups of shares, but they can be anything. And often, these are groups of similar things (themes), such as electric car companies, or green energy companies.
ETFs can be bought and sold on a stock exchange (just like shares) – they’re the most popular type of investment fund (group of investments).
Bonds
Bonds are where you essentially loan your money to a government or large corporation in return for interest payments. These are often seen as lower risk.
Property
This is typically commercial property, such as offices and shops, that pay rent and so provide an income.
Should I invest within a Stocks & Shares ISA?
If you’re asking yourself this, the answer is almost definitely yes! A Stocks and Shares ISA is an investment account where everything you make is completely tax-free, forever.
That means you won’t pay any Capital Gains Tax, Income Tax or Dividend Tax on any of your investments. If you were investing outside of this, for instance in a General Investment Account (GIA), you may have to pay some taxes if you start making a fair bit of cash each year (profit).
For instance, if you made over £6,000 in profit from your investments (when you sell), within a tax year (April 6th to April 5th the following year), you might have to pay Capital Gains Tax.
Capital Gains Tax is 10% if you’re a basic rate taxpayer (earn less than £50,270 per year in income, e.g. your salary), and 20% if you’re a higher rate taxpayer (earn more than £50,270 per year).
The downsides are that there’s a limit of £20,000 per year (although this is very high for most), and you can only pay into one Stocks and Shares ISA per year – so pick wisely!
This isn’t your only option though, you can still invest outside of a Stocks and Shares ISA, with a General Investment Account (GIA)...
General Investment Account (GIA)
If you already have a Stocks and Shares ISA, it’s not the end of the world investing outside of one – remember you’ll only pay tax on your profit when you sell your investments.
A General Investment Account is a great option to invest with outside of your ISA, and for trying out new investment platforms and robo-advisors before you want to commit to getting an ISA with them.
You can have as many GIA’s as you like, with as many investment platforms as you choose.
What’s a Lifetime ISA?
A Lifetime ISA is an investment account that helps you save for your first home. You’ll be able to save completely tax-free, and you’ll even get a 25% bonus from the government on everything you put in. Pretty great right?
You can save up to £4,000 per year (so up to £1,000 free each year), and you can only pay into one Lifetime Stocks and Shares ISA per tax year.
If you don’t use it for your first home, you’ll have to pay a fairly hefty fee of 20% to get your cash out (which works out as more than the free cash), or wait until you are 60 years old.
Should I invest within a pension?
A personal pension is a great way of saving for your future and retirement. In fact, you can’t really beat it.
A personal pension is a type of private pension – that’s a pension that’s all in your name, and you choose how much you want to pay into it. Another type of private pension is a workplace pension – automatically set up by your employer if you’re employed.
There’s also the State Pension (government pension), which you’ll get at State Retirement age (66), if you’ve paid enough National Insurance contributions (at least 10 years, but 35 years to get the full amount).
Personal pensions are great additions to these pensions – and will seriously boost your total pension pot and retirement income later in life. Highly recommended!
Why? Your money will grow tax-free, and you’ll also get a 25% bonus from the government on everything you save. Yep, we’re not joking! And it’s all automatically added to your pension as you save.
And if you’re a higher rate taxpayer (40%) or additional rate taxpayer (45%), you can claim some of this tax back too – all done on your Self Assessment tax return.
You can save as much as £60,000 per year, or as much as your total income (e.g. your salary), whichever is lower.
You won’t be able to withdraw your cash before you turn 55 (57 from 2028), however it's not recommended that you do, as it's for your retirement!
When you do want to start withdrawing cash from your pension, the first 25% will be completely tax-free, and you can take this as a tax-free lump sum if you like. The remaining 75% will be liable for Income Tax, just like your salary now, and how much tax you’ll pay will depend on how much your income is at the time.
If you’re not already, we highly recommend saving for your retirement. Here’s how much you should be paying into your pension, and here’s the best pension providers to get you started.
Junior ISA
If you’ve got kids, you can also save for their future with our recommended robo-advisors. Just open a Junior ISA, you can save completely tax-free, all in their name – they’ll be able to access it when they turn 18.
Note: you can save as much as £9,000 per tax year too. Separate to your own £20,000 ISA allowance.
Which UK robo-advisor is best for beginners?
If you’re not quite sure about investing, and it’s all going over your head a bit – don’t worry. That’s exactly what robo-advisors are for!
However some are a bit more simple than others. For beginners, we recommend getting started with ¹. Not only is it super simple to use and get started, but there’s also expert consultants on hand to help guide you through the process and decide which investment options are best for you. They’ll also help with any general questions you might have too. It’s a pretty great service.
If you just want to save within a pension, you could also check out PensionBee¹ – it’s super easy to use and get started, and they’ll take care of everything for you.
Which robo-advisor is best for low balances?
With most UK robo-advisor investment platforms, the minimum investment you can start with is normally £500. This is quite a lot if you’re just starting out, so if you want to invest less than this, check out Wealthify¹ – they're great too, and you can start with just £1.
The key is to start investing as soon as you can. It really will add up over time, and have a huge impact on your financial future!
Which is the cheapest robo-advisor?
Although generally UK robo-advisor platforms are much cheaper than human financial advisors (experts who give advice on your money and often look after your investments too), the price (fees) can vary across platforms, although not often by too much.
It’s not necessary the best idea to simply go with the cheapest – go with the one you think suits you best. Whether that’s experts on hand to guide you through the process and answer any questions you have, or one that has the type of investments you might want, such as socially responsible investments (e.g. no fossil fuels).
Having said that, the cheapest is InvestEngine¹ – it’s so cheap, there’s actually no fees to make your own investments, and for their experts to manage things for you it’s only 0.25% per year (of your total investments).
That’s super low, in comparison with most other robo-advisor platform fees (which are also still low cost), expect to pay around 0.75% per year as an annual management fee. This is the standard fee with Moneyfarm¹ and ¹ (this fee reduces as you save more).
Is investing with a robo-advisor safe?
Yep! It’s perfectly safe to invest with a robo-investor in the UK. Every financial services firm has to be reviewed and approved by the Financial Conduct Authority (FCA), before they can start accepting customers. They’re the people who make sure that your money and investments are properly looked after.
You can also check if they’re FCA approved by checking the FCA register.
It also means you are protected by the Financial Services Compensation Scheme (FSCS). That means if something happens to your robo-advisor, such as going out of business (highly unlikely), you’ll get up to £85,000 back.
However, you have more protection than that – as your money and investments are always held with a large bank, rather than the robo-advisor themselves, and the investments are held all in your name, and can only be returned to you.
What is a managed portfolio?
A managed investment portfolio is simple where the experts handle things – they’ll build a portfolio of investments to suit a goal, such as grow your money over time, or build a big pension pot, or simply provide an income (income portfolios). The experts manage things, rather than you.
Managed portfolios are effectively the investments behind most robo-advisors, but they aren’t necessarily exclusive to robo-advisors – there’s lots of managed portfolios out there which you can invest in via a self-managed investment platform or a stock broker. These are often called ready-made portfolios, managed portfolios, or smart portfolios too.
Let’s recap robo-advisors
And there we have it – the best robo-advisors in the UK. There’s lots of different robo-advisors and we recommend different ones depending on if you want to invest generally (within a Stocks and Shares ISA), or invest for your retirement via a pension.
It really will make a big difference to your financial future if you can start saving as early as possible, and keep saving regularly. Over time, small amounts can turn into very large amounts!
As a recap, here’s the best robo-advisors for investing:
- Moneyfarm – best overall
- &me – best for expert help
- InvestEngine – best for low fees
And the best robo-advisors for pensions:
- PensionBee – best for pensions overall
- Moneyfarm – great for pensions
- Penfold – great for pensions
And that’s all there is to it. All the best saving, your future self will really thank you.
