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Plum Investment App Review – Can It Help?

What is Plum?

Plum is a budgeting app that aims to simplify saving and investing. The app analyses your spending, and allocates amounts towards your saving budget, which it then moves automatically from your bank account into Plum, so it can be saved or invested.

A huge amount of people in the UK find it hard to save. Plum uses Open Banking* technology to simplify and open up the opportunities of saving and investing to more people. In 2020, Plum claimed that over 1 million users in the UK were using their app.

* Open Banking refers to the new mandates from the government that came into force in 2018, that instructed the biggest banks to open their data to new financial technology companies, so that people can use technology to better manage their finances, and get better deals on financial products. Read more

Plum was formed in 2016, which was before Open Banking came into force in the UK. However, Plum now utilize the Open Banking framework to link to your bank account and get the data so they can analyse your spending activity, thus making their product simpler to use, and more secure.

As Plum also offers investments as well as savings, it can be a way for people who are new to investments to dip their toes in the water and understand more about how investing works, as well as ideally, growing their money.

How to save money with Plum | Picture: iStock.com | Anastasiia Boriagina

Contents

How does Plum work?

Plum links to your bank accounts, then uses it’s algorithm to analyse your spending, and calculates the amount that you can save each week. You can then, via the settings on the app, tell it how to take these amounts from your account. It then offers various saving and investing options so you can grow the money that you save, and various gamified budgeting options that help you to save more. Because the amounts taken from your account are automatically taken, users can often not notice, and this helps saving as the amounts are not sitting there in your day-to-day balance, and therefore, the temptation to spend it is less!

Plum Features

Below are the key features of Plum. Plum have different tiers of account, so we have indicated which feature is available on which tier.

Earn Interest on savingsAvailable on all tiers
Automated SavingsRound-ups and other ways to automatically send money into Plum – Available on all tiers.
Lost MoneyPlum will detect when you are overpaying for utilities and facilitate changing suppliers – Available on all tiers.
Unlimited WithdrawalsWithdraw any amount at any time, without any charge – Available on all tiers.
PocketsCreate multiple Pockets for different saving areas – 2 Pockets on Basic and Plus, 15 Pockets on Pro and Ultra.
InvestingAccess various investment types and funds – Available on Plus, Pro and Ultra.
Gamify SavingVarious challenges to help you save, such as the 52 Week Challenge – Available only on Pro and Ultra.
GoalsAdd targets to each of your savings Pockets – Available only on Pro and Ultra
CompareHave your spending analysed and compared anonymously with other Plum users – Available only on Ultra.
Money MaximiserAI driven tool that analyses your account activity and gives recommendations – Available only on Ultra

Savings

Plum have 3 levels of saving Pockets:

Instant Access

This pocket does not pay interest, and is the first place that any funds from your bank goes to. Money within this pocket is not covered by the FSCS.

Easy Access – 0.25%

This pocket is available to users of the free Plum Basic account, and pays 0.25% interest annually on your pocket balance. Funds can be withdrawn within 1 day. Funds are covered by the FSCS.

Easy Access – 0.40%

This pocket is available to users on the Plus, Pro and Ultra account tiers, and pays 0.40% interest on your balance. Funds can be withdrawn within 1 day. Funds are covered by the FSCS.

Investments

Plum offer 2 different types of investment account:

ISA

With the Plum Stocks and Shares ISA, you can invest in various different funds with different risk levels, and take advantage of the tax benefits offered with ISAs.

GIA

A General Investment Account (GIA), is essentially the same as the ISA, but without the tax benefits, this is an investment account that allows you to put your savings into investment funds.

Pensions

Plum SIPP

Plum SIPP allows you to add all of your existing pension amounts into one, and then invest the amount in a variety of different funds.

How much does Plum cost?

Monthly Paid Tiers – Plum has 4 levels of account:

Plum BasicFree
Plum Plus£1 per month
Plum Pro£2.99 per month
Plum Ultra£4.99 per month

Essentially, the more you pay each month, the more Plum features you unlock (as detailed above).

Fees

Savings

Customers on all tiers on Plum can use the savings Pockets function, and there are no charges for savings. Do bear in mind that the annual interest rate on your savings is currently higher on the paid tiers than on Plum Basic!

Investments

Investments are not available to customers on the free Plum Basic tier. They must subscribe to at least the Plum Plus product at £1 per month to unlock access to this feature.

With investments, they also have a platform and fund provider fee, which varies depending on which funds you invest with. However, Plum state that the current average fee level is 0.48% annually. Therefore, if you had £10,000 investment in Plum’s funds, you would be charged £48 per year.

Pensions

Plum’s pension offering is called Plum SIPP. All customers, including on the free Plum Basic tier, can access the pension feature. Cost-wise, Plum charge a Product Provider Fee of 0.45% per year. In addition, you will be charged a Fund Management Fee, which depends on which fund you invest with. However, the charges currently range from 0.24% to 0.30% annually.

Therefore, you will be charged between 0.69% and 0.75% of your pension balance annually, which would equate to between £69 and £75 per year on a total balance of £10,000.

Who is Plum for?

Plum is currently available for residents of the UK, Ireland, France and Spain, and you must be over 18 years old to apply for an account.

For Plum to work for you, you will need to bank with a bank that is integrated with Plum, so that they can link to your account and analyse your spending. As of October 2021, Plum was integrated with the below 18 banks, which cover all of the biggest banks in the UK:

BarclaysLloydsRevolutTesco
Danske BankM&SRBSTSB
First DirectMonzoSantanderUlster Bank
HalifaxNationwideBank of Scotland
HSBCNatwestStarling

In general, Plum is aimed at people who have found it hard to save before, and need a little help, which the Plum features are configured to provide.

Plum can help with building up an emergency fund for a rainy day. Read our guide here.

Is Plum safe?

FSCS

Plum is not a licensed bank, but rather an E-Money provider. That means that any funds held within your main Plum Pocket is not protected under the Financial Services Compensation Scheme (FSCS). However, this only applies to the non interest paying Pockets. Once you transfer your funds into either a savings or investment Pocket, your money is then being held by a licensed UK bank, so is then covered by the FSCS. As the whole idea of Plum is that you save or invest your money, in practice, the majority of funds will be covered by the FSCS.

Security

Some users may be concerned about giving Plum access to the transactions within your bank account. Thanks to the Open Banking protocols, there is no need to worry, as Plum connects directly to your bank’s data, and never have your banking login details. In addition, Plum only have read-only access to your data, so if they did have a security issue, it would be impossible for any funds to be taken from your account. Finally, Plum encrypt all of your data.

Investing

Plum have the option of investing your money via them. Therefore, all usual warnings in regard to investments apply i.e. be very cautious when making investments, and be aware that your investments can go down as well as up!

Plum Reviews – what are people saying?

Plum currently have a rating of 4.5 out of 5 – Excellent – on Trustpilot. 77% of reviewers gave Plum 5 out of 5, and love how easy it is to save with the app, with many saying how hard they found it to save before they used Plum. 9% of reviewers were dissatisfied, giving Plum 1 out 5, with many of these users complaining about difficulties withdrawing funds from the app, and problems with customer services.

Plum Alternatives

There are multiple different budgeting, saving and investing apps available today. However, the closest to Plum in terms of features are:

In addition, there are several challenger banks that offer effective money management tools as part of their product, including pockets (or their equivalent) and round-ups.

Conclusions:

Plum have created an interesting and compelling financial product, that appears to have appealed to many people looking to save more, and to get introduced to the world of investing. If you struggle with saving, then it could be the thing that finally gets you going with the world of saving and investments.