Nutmeg

review: is it any good?

Updated on
November 28, 2022

In a nutshell

Nutmeg is a good digital wealth manager – their experts will handle everything for you. However, the investment track record isn’t the best, and they’re one of the most expensive. Plus, they’re the furthest you’ll get from socially responsible investing. There’s better options out there.

Our rating

Nutmeg rated 3 stars
Nutty

Nutmeg

cracked open 🥥

Nutmeg. How does it work? Are they any good? Is my money safe? And are there better options?

Nutmeg is one of the larger ‘digital wealth advisors’ in the UK. That means a mobile phone app and website that invests your hard earned money for you – putting your savings to work and making you more money as you go through life. If you don’t do this already, you should be!

Nutmeg app

All you have to do is simply choose the type of savings account you’d like. These range from a Junior ISA to a pension and everything in between. Add your money, select an investment style (more on that later), and done! Sit back and watch your money grow.

But is it right for you? Let’s find out.

We recommend Moneyfarm

Moneyfarm has a better record of growing money, is cheaper, and you can chat with expert advisors.

Visit Moneyfarm¹Visit Moneyfarm¹

About Nutmeg

Nutmeg has been around for a while now, since 2012 in fact. And have over 150,000 customers. Pretty popular! And a combined amount invested of over £2 billion.

They started with a mission to make investing a ‘clear and straightforward experience’. We love that. And it’s what Nutmeg built with their app and website. You’ll always be able to see how your investments are performing, and have the flexibility to change how and where your money is invested.

However, unfortunately in 2021, Nutmeg was taken over by the big bad American bank J.P. Morgan Chase.

They’ve got an extensive history of mis-dealings such as stock market manipulation, and ruthless profiteering, but more importantly, they are the biggest bank investing in fossil fuels by far – devastating the environment and communities around the world.

Nutmeg is now owned by J.P. Morgan Chase

We’re not aligned with that at all at Nut About Money. We’re here to help people better understand money, so they can become more confident and grow their money, leading to happier lives without the stress of money worries. And doing so without damaging the environment and harming others.

Apart from the corporate greed, there’s a lot to love about Nutmeg, making investing far easier, and transparency over your investments. But by being a customer you won’t be supporting a growing UK business anymore, you’ll be funding a mega corporation.

So, if you’re like us, we don’t recommend using Nutmeg. You can check out our best expert-managed investment platforms, and in particular Moneyfarm¹ (here’s our Moneyfarm review). 

Moneyfarm is a digital wealth manager just like Nutmeg – except they’re cheaper, have a better history of making money for customers, and provide you with a free personal advisor – someone by your side, to help with your investments and any questions you might have.

However, if you’d still like to learn more about Nutmeg, we’ve got an honest review below.

Is Nutmeg good for beginners?

Yep, it’s a good option for beginners, mostly because you don't need any previous knowledge or experience in investing. It’s all managed for you by professionals, you can just sit back, relax and watch your money grow.

However, you do need to add a minimum of £500 to open your account (£100 for Lifetime ISAs).

If you want to start with less than this, check out Chip¹, they automatically save and invest for you, and you can start with £1. Or, check out the best budgeting apps (UK) for all your options.

Investment options

Nutmeg offer the full range of investment account options in the UK, which are:

  • General investment account (GIA)
  • Stocks & Shares ISA
  • Lifetime ISA
  • Pension
  • Junior ISA

You’ll always be able to see how your investments are performing and you get the flexibility to change how and where your money is invested, and how much risk you want to take (more on this later).

Let’s dive into each one briefly:

General investment account (GIA)

This is a ‘normal’ account with no tax-free benefits. You’ll pay Capital Gains Tax, which is 10% or 20% (depending on your income), on any money you make over £12,300 (learn more with our guide to Capital Gains Tax).

This is from all of your investments, not just with Nutmeg (except investments in an ISA).Here’s where to learn more about General Investment Accounts.

Stocks & Shares ISA

This is the most popular account for investing. You can invest £20,000 per year (your ISA allowance), and all the money you make in the future is completely tax free!

We’ve got a great guide to Stocks & Shares ISAs if you want to learn more.

Lifetime Stocks & Shares ISA

This is Stocks & Shares ISA on steroids! Not only is everything you make completely tax-free, but you’ll also get a 25% bonus from the government on all the cash you put in.

Lifetime Stocks & Shares ISA

There is a £4,000 per year limit though, and it’s only for buying your first home, or saving for later in life (not as a replacement for a pension).

Learn more about Lifetime ISAs here.

Junior Stocks & Shares ISA

These are perfect for saving for your children. You can save up to £9,000 per year, completely separate from your own £20,000 ISA allowance. It will all be in your kids name, and they’ll get access to it when they turn 18.

Junior Stocks & Shares ISA

Learn more about Junior ISAs here.

Pension

You can create a personal pension with Nutmeg. A personal pension gives you control over where your pension money is invested, and you get a bonus from the government of 25% for everything you pay in.

We cover the Nutmeg pension more below.

Withdrawing your money

You can remove your money whenever you’d like, you can do it online, and it takes a few working days to transfer back into your bank account.

There’s also no fees to take your money out either, often called ‘exit fees’, which many investment companies charge as hidden fees.

The investments

Nutmeg invests your money in exchange-traded funds (ETFs). This means your money is invested in a wide range of good companies, all grouped into a ‘fund’. This helps manage risk and makes it much safer than investing directly into one or a few companies.

ETF compared to shares

Which ETFs your money goes into is decided by the experts at Nutmeg, who then use technology to buy and sell shares. Your money is in safe, human, hands. Well, all except for one investment style, where the robots reign! (More on that below).

ETFs are low cost, transparent and flexible, so you get low fees and transparency using Nutmeg too. They typically track markets, such as the top companies in the UK (called the FTSE 100), rather than try and make as much money as possible – which is often much riskier. Essentially, they are a safer way of growing money over a long period of time.

Note: you can't buy things like crypto or individual stocks and shares. If you're looking for that, here's how to buy bitcoin (UK) and the best investment platforms (UK).

Types of investment styles

There’s four ‘investment styles’ you can pick from when opening your Nutmeg account. It's how you’d like to invest your money on the platform, so your options are:

Fully Managed

This investment style is where the experts at Nutmeg are looking at news, data and analysis to manage your money day-to-day and decide where to put your money.

Smart Alpha

So this is where it gets a little confusing. ‘Alpha’ in finance is a measure of how much an investment has ‘beaten the market’ i.e. how much it has beaten investing in all of the companies within a stock market (called an index).

Nutmeg Smart Alpha

What this means for Nutmeg, is the Smart Alpha investment style aims to return more than just investing in an ETF that tracks the stock market. They do this by following an investment strategy by J.P. Morgan’s global research team.

Fixed Allocation

This is very similar to the ‘fully managed’ investment style, with experts selecting which investments (ETFs) to put your money into, however the ‘robots’, aka the technology, will decide when to make changes to the investments, rather than the human experts. And as a result, this style is actually cheaper for you.

Socially Responsible

Conscious about the environment and climate change? We are too! This investment style will only invest in environmental and socially responsible businesses, so no fossil fuels or tobacco companies, or anything that has a negative impact on the environment or society.

However, just because there’s one option to be socially responsible, doesn’t mean Nutmeg, or their parent company, J.P. Morgan Chase is socially responsible. In fact, they're the biggest investors in fossil fuels out there.

Don’t forget the risk level

So the above is about investment styles, but within these styles, there are comfort levels of risk (meaning how you feel about keeping your money safe vs risking some for more money) you can choose from, on a scale of 1-10 (10 being most risky).

Typically, as in almost all investments, the higher the risk, the higher reward you can expect. Although it doesn't mean you will actually get a higher return, it depends on the success of the investments.

It’s up to you which risk level you choose, however it’s often dictated by your age. As investments are a long term strategy, if you’re younger, time’s your oyster and you can have a higher risk strategy as you shouldn’t need the money any time soon and so can hold out if your investments drop in value over the short term (1-5 years).

Whereas if you think you need the money back at some point soon, such as for a large purchase or even retirement, you might consider a lower risk investment strategy which aims to steadily increase your investment.

Nutmeg pension review

You may be thinking the pension is different to the above investment options – it's not! You simply invest via these options within a personal pension account.

The Nutmeg pension account works the same as every other personal pension, which means it's all managed by you, you decide how much to invest, and ultimately where it's invested (with Nutmeg in this case).

You also get an awesome 25% bonus on everything you put in, as you do with every pension, and if you're a higher rate or additional rate taxpayer, you might be able to claim some tax back at those rates too (40% and 45%).

However, using these investment options with Nutmeg means your pension isn't managed by pension experts, just investment experts – they won't personalise the investments based on your age and things unique to you (and, as you'll see below, Nutmeg's investment performance hasn't been great for lower risk options, which are common options for pensions).

We recommend using a pension specific pension provider, like PensionBee¹ or Penfold¹ (both rated 5 stars). They only do pensions so the investments are tailored to building up a nice pension pot when you retire, rather than general investing. Plus, they're actually cheaper (and by quite a bit – more on fees below). Here's our PensionBee review and Penfold review to learn more – or check our our best personal pensions.

What’s the investment performance been like?

The recent downturn in the markets has really affected Nutmeg's investment performance. So much so, that even the lowest risk options have actually lost money as an average over the last 5 years.

If we look at the average risk level option, over 5 years it has only returned 3.7% in total. And over 10 years, it has returned 37.5%.

And according to Nutmeg's own analysis, they have performed worse than their ‘peers’ over 5 years (3.7% vs 5.8%) and 10 years (37.5% vs 41.6%).

If we compare with Moneyfarm, another popular digital wealth manager in the UK, and using a similar risk level as we have used for Nutmeg, over the last 5 years, they have grown 12.9%. That’s pretty amazing considering the current economic climate, but it’s also 3 times more than Nutmeg.

And if you had invested with the highest risk option over the last 5 years – with Moneyfarm you would have made 33%, and with Nutmeg 26.7%.

Now remember, investing is very difficult, that’s why we recommend using expert managed investment platforms. And Nutmeg, or any investment app is never going to be the best investor out there – they’re here to use tried and tested investment strategies to grow your money over the long term. And Nutmeg does that.

However, as a trend, it does appear that other providers might be growing their customer’s money a bit more. And over the long-term those small differences can add up to a big difference in your total balance.

Here’s what it would look like if you had invested £10,000, 5 years ago with both Nutmeg and Moneyfarm (in the average risk level option):

Provider Total after 5 years
Nutmeg £10,370
Moneyfarm £11,290

That’s a massive difference of £920 that you’d have missed out on if you had invested with Nutmeg instead of Moneyfarm. And imagine if you had more than £10,000 invested...

Here’s the important part, you’re losing even more money each year going forward, as with Moneyfarm you now have £11,290 invested, compared to £10,370 with Nutmeg.

Let’s say both providers make 10% next year. With Moneyfarm, you’ll earn £1,129, and with Nutmeg you’d only make £1,037, a difference of £92, and the difference will keep getting bigger and bigger each year.

This is called compound interest, it’s your money, making even more money over time. And it’s a really big deal.

Compounding interest chart

Nuts About Money tip: keep on top of how well your investments are performing and be prepared to switch ISA providers if you think they’ll perform better.

If you want to learn a bit more about Moneyfarm, here’s our Moneyfarm review, and the Moneyfarm website¹.

Nutmeg fees

As Nutmeg is built on exchange-traded funds (ETFs) that are relatively cheap fees wise, it means Nutmeg can offer you low fees too.

However, you’ll also be paying a fee on the investment funds your money is in (ETFs), and what’s known as market spread, which is a cost to buy and sell these funds.

So, add all the fees together and that’s what you’ll ultimately pay. Just over 1% per year. Which is good. 

If you invested with an investment advisor (a real person) instead of Nutmeg, you’d be looking considerably more, as much as 5% on your initial investment and then ongoing management fees.

Here’s a full breakdown of the fees for each investment style:

Investment style Nutmeg fee Fund cost Market spread
Fully Managed 0.75% up to 100k, 0.35% after. 0.20% 0.07%
Smart Alpha 0.75% up to 100k, 0.35% after. 0.25% 0.07%
Fixed Allocation 0.45% up to 100k, 0.25% after. 0.22% 0.07%
Socially Responsible 0.75% up to 100k, 0.35% after. 0.28% 0.07%

However, in comparison with other digital investment providers, Nutmeg is one of the most expensive.

With Moneyfarm, fees start the same at 0.75% per year, but scale down as you save more, for instance if you have £20,000 saved, the fee is 0.65%, and this is applied to your whole balance. The fees also go as low as 0.35%.

With Nutmeg, you have to save £100,000 before fees reduce, and they only reduce on the amount above that.

We go into this in a lot more detail in our review of Moneyfarm vs Nutmeg, and they’ve even got a fee calculator on the Moneyfarm website¹.

And with PensionBee, who just do personal pensions. The total fee is 0.75%, which includes all the investment fees too. Which is a very good deal. You can learn more about them with our PensionBee review, or check out the PensionBee website¹.

Is Nutmeg safe?

Yep! It’s perfectly safe to use Nutmeg. They are authorised by the Financial Conduct Authority (FCA), which means they’ve been approved and trusted to look after your money.

Your money is also protected by the Financial Services Compensation Scheme (FSCS). This means that should anything bad happen to Nutmeg, such as going out of business. You’ll get up to £85,000 back.

However, your money is actually held in the investments themselves, and these have extra protection. They’re held with the bank, J.P. Morgan, and are all in your name, and can only be returned back to you.

Nutmeg pros and cons

Here’s a recap of Nutmeg, and the pros and cons:

Pros

  • Easy to use
  • Simple investment options
  • Experts handle everything

Cons

  • Poor investment record
  • Not the cheapest
  • Not socially responsible

Nutmeg customer reviews

Nutmeg is rated 3.6 out of 5 on Trustpilot, the popular reviews website, from over 1,000 reviews. That’s not great.

There’s a lot of complaints about customer service and the poor track record of investing. However the app itself is good, and gets good reviews.

Our thoughts

What we really like about Nutmeg is it gives everybody the chance to invest their money, and build up their savings easily, simply and automatically. And everybody should!

But more than just the ability to invest, it has a great phone app and website to easily manage your accounts – providing easy access, and transparency to see how your money is performing over time.

The price is okay, and fees are transparent. Although there are cheaper options, such as Moneyfarm.

However, we’re knocking it down a star for its poor investment track record, especially against other investment platforms. 

And another star for the socially responsible investment options (or lack of), they’re not as strict in terms of the investments having a positive impact on the world, and our major issue is that it’s owned by J.P. Morgan Chase, the big bad bank. We’re not a fan of pure corporate greed – destroying the environment and communities around the world chasing profit. They’re also the leading investor in fossil fuels. We don’t think you can be socially responsible while also investing £100 billions into fossil fuels.

There’s better choices out there, ones that have a better track record of investment, and are cheaper, and have better socially responsible investment options.

Here’s the Nutmeg website if you’d like to learn more and get started.

Our favourites are Moneyfarm¹ for investing and PensionBee¹ for pensions. We recommend checking them out! Here’s our Moneyfarm review and Pensionbee review too.

We recommend Moneyfarm

Moneyfarm has a better record of growing money, is cheaper, and you can chat with expert advisors.

Visit Moneyfarm¹Visit Moneyfarm¹

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