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Moneyfarm Vs Vanguard: Which Is Best?

Want to know the pros and cons of Moneyfarm vs Vanguard?

Whether you’re investing for a rainy day or saving for your retirement, it’s never been easier and cheaper to make your money work harder with investment platforms such as Moneyfarm and Vanguard.

Investing money in Moneyfarm vs Vanguard

Even though interest rates are starting to creep up, keeping your money in a traditional bank account often means that over time your wealth will be eroded by inflation, ie you’ll have the same amount of cash but it will buy you less.

Which is why a lot of people choose to invest in stocks and shares, also known as equities.

Years ago this was mainly done through a broker or bank, but now anyone can use one of the many easy access investment platforms that have sprung up in recent years, such as Moneyfarm or Vanguard.

Both offer low-cost access to a range of investments which could grow your wealth more than a savings account. But which platform is best? And which is cheapest?

I’ve used both Moneyfarm and Vanguard and while there are many similarities in what they offer, there are some key points that set them apart.

Remember, investing in stocks and shares might seem daunting, but if you already have a pension then you’re already invested in them!

This article will break down the differences and similarities of Moneyfarm vs Vanguard, plus help inform you so you can make a decision on which is best for you.

Moneyfarm summary

Let’s start by taking a look at Moneyfarm, which was founded in 2011 in Italy and now has offices across Europe, including London. 

Moneyfarm website

You might have found yourself with a Moneyfarm account if you were a previous Wealthsimple customer. Moneyfarm bought its competitor’s UK customers back in 2021 and transferred them over to its platform.

If you’re new to Moneyfarm then you’ll find setting up an account incredibly easy. 

After you’ve answered some basic questions and provided ID, you’ll be asked to choose the account you wish to open. The main options are:

  • A general investment account (GIA)
  • A stocks and shares ISA (tax free, but deposits capped at £20,000 annually)
  • A Pension (new or transferred in)
  • A Junior ISA

You’ll need at least £500 to start investing in Moneyfarm, although it’s suggested that you start with more to enable the investment team to diversify your portfolio further.

When it comes to steering you towards the investment that’s right for you, Moneyfarm acts as a restricted financial adviser, ie one that can recommend specific products. This is different to an Independent Financial Adviser (IFA) which can look at the whole market.

You’ll be asked a series of questions about your attitude to risk when it comes to investing to help Moneyfarm’s ‘robo adviser’ decide which is the best portfolio for you.

You can change this at a later stage, but most people will be content with what is selected for them.

Vanguard summary

Vanguard is a behemoth when it comes to investing and currently manages $7 trillion in assets globally.  Quite a leap from its early beginnings in 1975!

Vanguard website investment platform

Setting up an account is remarkably straight forward, and you’ll be able to start investing within a matter of days. 

You’ll also need a minimum of £500 as a lump sum payment to start investing with Vanguard, or you could opt for monthly installments at £100 per month.

The accounts on offer at Vanguard are the same as Moneyfarm:

  • A general investment account (GIA)
  • A stocks and shares ISA
  • A Pension (new or transferred in)
  • A Junior ISA

With Vanguard it’s down to you to pick your own investments and there’s nearly 100 to choose from which might be confusing for some.

However, I’ve found the five LifeStrategy Funds a good starting point for most people looking to build a portfolio, or the Target Retirement Funds for those saving for later life.

These funds work by allocating a split between shares and bonds depending on your appetite for risk. 

The more shares in the fund you choose, the greater the risk involved. You can choose from 20% all the way to 100% equity, with the latter being the most risky, but potentially offering the greatest returns.

It’s okay for younger people to take more risk at the start of their investment journey as there’s more time to recover any losses that may occur. 

However, as people get older and approach retirement they tend to de-risk their portfolios and move more of their money into bonds and cash as they have less time to boost their portfolio if there’s a market downturn.

You’ll need to choose what’s best for you in terms of how much risk you’re willing to take, but if you get stuck, there’s a simple questionnaire you can take on the Vanguard website to help you decide.

Vanguard gives you more freedom to mix and match funds at any time depending on how you want to invest, although some people may find this daunting. Moneyfarm does it all for you.

Moneyfarm vs Vanguard: Which is easier to use?

I personally find Moneyfarm much easier to use than Vanguard even though I’m a confident investor.

There are fewer options on Moneyfarm and a lot of the complicated stuff is handled for you behind the scenes.

With Vanguard you need to take a more hands-on approach to investing which may put a lot of people off.

Topping up your investments is also much easier on Moneyfarm, whereas on Vanguard the process feels clunky and it’s harder to navigate around the website.

Moneyfarm holds your hand through the entire investing process and does the hard work for you, while Vanguard is more likely to appeal to those with previous investing experience.

With Moneyfarm you can see how your portfolio’s performing using the easy-to-use app. Vanguard has yet to embrace mobile technology in this way so you’ll have to login to the website to view your holdings.

Moneyfarm vs Vanguard: Which is cheaper?

Both Moneyfarm and Vanguard are competitively priced and demonstrate just how far the investing industry has come since the old days of stock brokers and pin-striped suits.

The fee structures can be complicated as you’ll need to factor in costs such as management fees and fees on the actual investments, which can vary from product to product.

But overall Vanguard works out slightly cheaper than Moneyfarm, but you could argue that the latter is doing more work for you during the investment process so you’re paying for this service.

Small differences in fees can add up over the long run, especially if you’ve got a large pot of money, so you’ll need to balance paying a little more against how much effort you want to put in when it comes to choosing your investments.

Do Moneyfarm and Vanguard offer ethical investing?

Yes, both Moneyfarm and Vanguard offer ESG (environmental, social, governance) investments.

Moneyfarm makes ESG seamless while you’ll need to do a bit more digging around on Vanguard to find these funds.

However, both platforms are clearly committed to growing ESG investing which has seen a surge in investor interest in recent years.

Moneyfarm vs Vanguard: Which is best overall?    

While Moneyfarm is definitely easier to use, Vanguard offers greater flexibility and more investment options, plus it’s also slightly cheaper.

I personally think that Moneyfarm is the ideal place to begin if you’re just starting out on your investment journey, especially if you’re short on time.

With Moneyfarm, you can start investing with minimal effort, set up a direct debit and pretty much sit back and forget about it. 

With Vanguard you need to be a little more hands-on which may put a lot of people off. The flip side to this though is that you’re given access to a wider range of funds and potential opportunities to increase your returns. 

Another big downside with Vanguard is that it doesn’t have an app and its website feels very dated and clunky.

I do nearly all of my banking and investing on a smartphone using apps and while I’m happy to occasionally log into the Vanguard website, this could be a deal breaker for some. 

In terms of which platform wins overall, I feel that on balance Moneyfarm is the better option for most people.

Vanguard needs to update its image and streamline its investing process to make it more approachable for those who are new to investing.

Moneyfarm has pitched its service perfectly for a new breed of investors who want a simple, low-cost way to boost the returns on their hard-earned cash.

Moneyfarm vs Vanguard which is best