Plum Review – Is ‘AI’ the best way to save and invest?

21 min Read Published: 18 Nov 2020

Plum review - Is AI the best way to save and invest?

Building up a savings pot and putting away a regular amount each month is something that most Britons find difficult and this is proven by the fact that almost 50% of the UK has savings of less than £1,500. Living standards have been hit in recent years due to weak wage growth and rising prices, making the difficult task of saving money even harder.

There are many ways to start saving and investing, but what is the best way and how can you get started?

What is Plum and how does it work?

Plum is a savings and investment 'robot' for your phone that analyses your spending and automatically saves your money for you, so you don't have to. Plum decided to make saving money seem less of a chore and easier by allowing us to spend on 'things we want, rather than things we need.'

Plum was founded by Victor and Alex, two Cypriots living and working in the UK, who decided to challenge each other to save. This, in turn, resulted in Alex coming up with an algorithm that monitored his spending, putting aside the amount he could afford to save each month. This process allowed him to automate the savings process without having to alter his spending habits.

Plum works by linking to your bank account (it supports all major UK banks) and analyses your spending and transactions to work out the best amount to put away every few days. You determine how much you want Plum to save and can ask it to stop saving at any time. Plum can be used via an iOS and Android app, as well as via Facebook Messenger.

To sign up to Plum you need to be a UK resident and have a UK current bank account. Interestingly, despite Plum using Facebook Messenger to communicate, you do not need a Facebook account to sign up to Plum.

With Plum not only do you have the opportunity to build up a savings pot, but you can also invest your savings for a small monthly fee.

Plum features

  • Automatic saving using Artificial Intelligence - Plum uses AI to analyse your spending and save an affordable amount each month
  • FCA regulated - Plum is an appointed representative of Resolution Compliance Limited
  • Savings Pockets - choose between a regular pocket or one that pays interest. Money can be withdrawn from the primary pcoket instantly, interest-paying pockets require 1 day notice
  • Option to invest your money - invest in a Plum Stocks and Shares ISA or a General Investment Account
  • FSCS protection - your money is protected by the Financial Services Compensation Scheme if your money is held in easy-access savings pockets or if you invest with Plum
  • Roundups - save by rounding up last week's transactions to the nearest £1
  • Invest from £1 - open an investment account with Plum from as little as £1
  • Payday saving - choose a set amount to save or invest every time you get paid
  • 52 Week Challenge - take part in the 52-week challenge and save money every Monday starting with £1 and increasing by £1 each week (Pro users only)
  • Rainy Day feature - Plum will save or invest money every time it rains
  • Privacy mode - show your friends how Plum works without sharing your personal account details
  • Adjustable moods - change how much you save each month with adjustable moods ranging from 'Shy' to 'Beast Mode'
  • Switch to cheaper bills - When analysing your spending if Plum notices you may be being overcharged for a financial product it will notify you and help you switch
  • Link multiple accounts - Plum allows you to link more than one bank or credit card
  • Overdraft savings - If you regularly use your overdraft Plum allows you to save whilst you are in your arranged overdraft. This feature has to be turned on as it isn't an automatic feature.

Saving with Plum

Plum helps you to save by using its algorithm and artificial intelligence to analyse your spending to save you money automatically. You can decide how much money you save with Plum based on the moods shown in the image below as per Plum's website (the standard saving setting for Plum is 'Normal'):

Plum Saving

 

You can change your mood in the app via the home page or by typing 'mood' in your messenger. If you want to withdraw money from your Plum account you can do so via the app or by typing withdraw in the messenger app. If you request to withdraw money from your instant access primary savings pocket it should be in your bank account within 30 minutes.

Where are my savings kept?

Savings are kept in savings 'pockets' and you can choose between a 'primary pocket' which provides instant access to your savings or an 'easy-access pocket' where you'll need to provide 1 day notice in order to access your savings. Primary pockets do not pay any interest and the money is held as e-money and so is not protected by the Financial Services Compensation Scheme. Money held in easy-access pockets pay up to 0.55% interest (depending on the Plum plan you are on), and are protected by the FSCS.

We provide a useful table below which explains which pockets are available, as well as the main features.

Plum Pocket Interest Paid Instant Access Notice Required FSCS protected Cost
Primary 0.00% Yes N/A No Free
Easy Access Plum Basic 0.35% No 1 day Yes Free
Easy Access Plum Plus 0.55% No 1 day Yes £1 per month
Easy Access Plum Pro 0.55% No 1 day Yes £2.99 per month

 

Investing with Plum

You can invest in both a Stocks and Shares ISA and a General Investment account with Plum from as little as £1. Set how much you want to invest and Plum will automatically do this for you. With a Plum investment account, you can deposit and withdraw money as little or as often as you would like (withdrawals can take between 5-7 working days).

Invest with Plum

Plum has a choice of funds that you can invest in with varying levels of risk:

Investment type Average annual return Risk level
Tech Giants Technology shares 29.54% High
Clean & Green Socially responsible companies 3.07% Medium
Rising Stars New companies in Asia & Africa 1.84% Medium
American Dream Shares of the 500 largest public companies in the USA 16.43% Medium
Best of British Shares of the 100 largest public companies in the UK 2.98% Medium
European Essentials Shares of the large and mid-size companies in Europe 8.98% Medium
Medics Healthcare, Pharmaceuticals & Biotechnology companies 11.53% High
Slow & Steady 20% shares and 80% bonds 5.69% Low
Balanced Bundle 60% shares and 40% bonds 8.45% Medium
Growth Stack 80% shares and 20% bonds 9.78% Medium

 

Remember: You can hold as many stocks and shares ISAs as you like across multiple providers, however, you can only contribute the current tax-year allowance into one stocks and shares ISA with one provider and so make sure you check before you commit to a PlumISA

Should I invest with Plum?

It is important to remember that any type of investing comes with a certain level of risk meaning it is possible to get back less than you put in.

If you invest in tech and growth funds with Plum your money is held in an investment account with Gaudi Regulated Services LTD, which is FCA regulated and your money is FSCS protected. If you invest in other funds with Plum you do not have FSCS protection.

How much does Plum cost?

Plum offers three types of accounts and they are summarised in the comparison table below:

Plum Basic Plum Pro Plum Plus
Cost FREE £1 per month (first month free) £2.99 per month (first month free when upgrading from Plum basic)
Primary Pocket and Easy-access pocket (0.35% interest)
Easy Access pocket  (0.55% interest)
Investing
Automatic deposits
Roundups
Multiple Pockets
Goals
Rainy Days
52 Week challenge
Cashback
Pay Days
Diagnostics
True Balance

 

Plum Basic

Plum's basic account is free and uses artificial intelligence to analyse your spending and automatically save an amount that you can afford every 4-5 days. You can control how much Plum saves for you based on your mood and you can withdraw your money within 24 hours (however, Plum says the money is usually in your account within 30 minutes). Plum's basic account also allows you to save by rounding up your spending to the nearest £1 as well as being able to switch your household bills within the app. You can choose to save your money in the primary pocket which provides instant access to your savings, or you can choose an easy-access pocket where you can earn 0.35% interest, however, you have to give 1 day notice in order to access your savings. Money held in the primary pocket is held as e-money and so is not protected by the Financial Services Compensation Scheme (FSCS) whereas money held in the easy-access savings pocket is protected by FSCS.

Plum Plus

Plum Plus includes all of the features of a Plum Basic account plus you can invest your savings for a £1 monthly fee (the first month is free). The monthly fee charged by Plum is taken from your account via direct debit each month. If you invest with Plum Plus you'll have to pay additional fund management fees of 0.15% and fund fees of 0.08% - 0.90%. These fees are not reflected as a cost in the statements you receive, the funds are simply adjusted each day to account for the fees.

You can split your savings and investments using the 'Splitter' function via Plum plus, although it only currently applies to automatic savings and not any money that is saved manually.

As a Plum Plus (and Plum Pro) subscriber, you can earn 0.55% interest on your savings if you choose to move it into the easy-access savings pocket. Money held in the easy-access savings pocket is protected by FSCS however, you'll need to give 1 day notice to access your savings.

Plum Pro

Plum Pro offers all of the features of the Plum Basic and Plus account but has additional savings features built-in. Plum Pro automatically includes access to Plum's investing service (which usually costs £1 per month) and the £2.99 monthly fee gives users access to a host of new features for 'Super Savers' which include:

  • Pockets - new saving spaces to dedicate to savings goals
  • Goals - set savings goals amongst your savings pockets
  • Rainy Day savings - save more money in your account every time it rains in your local area
  • 52-week savings challenge - add a pound to your savings every week and save a total of £1,378 a year
  • Cashback - Earn up to 11% cashback when shopping with a partner brand (iOS only)
  • Pay Days - automatically save or invest money every time you get paid (iOS only)
  • Diagnostics - receive a monthly report containing your spending data (iOS only)
  • True Balance - true balance tells you the exact amount you have free to spend as it accommodates for any regular payments due to come out before your next payday
  • Interest Account - earn up to 0.60% interest in an easy-access account with more accounts due soon

Is Plum safe to use?

Plum is authorised and regulated by the Financial Conduct Authority to carry out payment services activities as a Registered Account Information Service Provider, under the Payment Services Regulations 2017.

If you choose to hold your money in an instant-access primary pocket then it is held as e-money. Plum uses an e-money provider that maintains a specific UK bank account and so it says your money is protected by the E-Money Safeguarding Rules. It is important to note that money held in an instant-access pocket is not protected by the Financial Services Compensation Scheme (FSCS).

However, if you choose to hold your money in an easy-access pocket, then your money is protected by the Financial Services Compensation Scheme (FSCS).

Plum reviews

Plum is rated as 'Great' on Trustpilot scoring 4.4 out of 5.0 stars from over 1,000 reviews. 75% of users rate it as 'Excellent', with most commenting on how great it is at helping them to save money and great customer service. 13% of users rated it as 'Bad' with some users complaining about how long it takes for their money to transfer back into their account.

Alternatives to Plum

App-only banks

Monzo and Starling Bank are app-only banks that can help you to save with round-up spending. When you spend with Monzo and Starling you can opt to round up your change, putting it into a savings pot. By setting up automatic saving you save every time you spend and while it may not seem like much, it quickly adds up.

For more information read our reviews of Monzo and Starling Bank.

Chip

Chip allows you to save automatically by using open banking to analyse your spending habits. Chip works in a similar way to Plum in that it saves your money for you and moves it into your Chip account.

Like Monzo and Starling Bank you can set savings goals and track your progress to achieving those goals. Chip is FCA regulated and your savings are stored in a ring-fenced Barclays account, however, it does not offer FSCS protection.

For more information on Chip, read our Chip review.

Tandem

Tandem is an app that can also help you to save money by automating the saving process. It has a similar feature to Plum, analysing your spending, moving money into a separate Tandem savings account, using its 'Safe to Save' feature.

Tandem also offers a round-up feature similar to Monzo and Starling Bank and allows you to transfer savings into your account at the touch of a button. Tandem is different from Monzo and Starling in that it does not operate as a fully-fledged bank, despite having a banking licence.

For more information on Tandem, read our Tandem review.

Moneybox

Moneybox is another savings app that allows you to invest the money you put away. Moneybox helps you to save by rounding up your spare change and you can invest the money you save into a variety of savings products such as a Stocks and Shares ISA, Stocks and Shares Lifetime ISA, Pension, Junior ISA, General Investment Account, Socially Responsible Account, Cash Lifetime ISA, 45-day notice account and 95-day notice account.

For more information on Moneybox, read our Moneybox review.

How does Moneybox compare to Plum?

 

The table below compares Plum v Moneybox investments

Minimum investment Monthly fee Platform fee Fund provider fees Investment types FSCS protection FCA registered
Moneybox £1 £1 0.45% 0.12-0.30% Stocks & Shares ISA, Stocks & Shares LISA, Pension, Junior ISA, General Investment Account
Plum £1 £1 0.15% 0.08-0.90% Stocks and Shares ISA, General Investment Account

 

The table below compares Plum v Moneybox savings

Cost Notice Required Interest Paid FSCS Protection FCA Registered
Plum Basic Free 1 Day 0.35% Yes Yes
Plum Pro £1 per month 1 Day 0.55% Yes Yes
Moneybox 45 Day Notice Free 45 Days 0.45% Yes Yes
Moneybox 95 Day Notice Free 95 Days 0.60% Yes Yes

 

Conclusion

Pros of Plum

  • Automatic saving
  • Invest from £1
  • Easy to set up
  • Can message to save more or less money
  • FCA regulated

Cons of Plum

  • Money in instant savings pockets isn't protected by the Financial Services Compensation Scheme (FSCS)
  • Investing charges are expensive if only investing small amounts
  • Have to pay to get some features that other apps offer for free

 

Overall, Plum is a useful tool for those who have trouble saving and I like the feature that allows you to change how much you want to save each month by selecting your mood. Plum is now regulated by the FCA and if you decide to invest with Plum, you can take comfort from the fact that the provider that Plum invests your money with (Gaudi Regulated Services LTD) is also FCA registered. If you want to compare it to other personal finance apps you can do so in our article, The best money apps you should have in 2020.

 

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