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

26 min Read Published: 20 Oct 2021

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'. Originally Plum worked using a Facebook messenger chatbot but has since developed into stand-alone iOS and Android apps.

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 week. You determine how much you want Plum to save and can ask it to stop saving at any time. To sign up to Plum you need to be a UK resident and have a UK current bank account.

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
  • Savings Pockets - choose between a primary pocket or one that pays interest. Money can be withdrawn from the primary pocket instantly, interest-paying pockets require 1 days notice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 (Plum Pro users only)
  • 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'
  • Lost Money alerts (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
  • Save for retirement - Plum is in the process of introducing a Self Invested Personal Pension (SIPP) so you can save for retirement and consolidate other pensions in one place. You can sign up for advanced access here*

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 or via the home page. If you want to withdraw money from your Plum account you can also do this via the app. If you request to withdraw money from your instant access primary pocket it should be in your bank account within 30 minutes.

Where are my savings kept?

Funds are kept in 'pockets' and you can choose between a 'primary pocket' which provides instant access to your money or an 'easy-access pocket' where you'll need to provide 1 days 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 (FSCS). Money held in easy-access pockets pay up to 0.40% 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 Primary pocket Plum Easy Access Savings (Basic accounts)  Plum Easy Access Savings (Plus, Pro and Ultra accounts) 
Plum account cost (monthly)  Free Free £1/£2.99/£4.99
Interest paid 0.00% 0.25% 0.40%
Instant Access tick cross cross
Notice Required* No notice required 1 day 1 day
FSCS protection cross tick tick

*If requested before 3pm on business days it may be completed the same day

Investing with Plum

You can invest in a Stocks and Shares ISA or 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). Bear in mind that your capital is at risk when investing.

Invest with Plum

Plum provides a choice of 10 funds that you can invest in with varying levels of risk as shown below. These are provided by a number of third-party investment houses and include the extremely popular Vanguard Lifestrategy fund range. The table below shows the investment type alongside the current 5-year total return. Where the number is green it means that the fund outperformed the average of its peer group. Where it is red it means that it underperformed. A "n/a" means that the fund has not been in existence for five years. The latest performance figures and yearly breakdowns for each fund can be found on the Plum website.

Investment type 5-year return  Risk level 
Tech Giants Technology shares 211.62% High
Clean & Green Socially responsible companies 57.19% Medium
Rising Stars New companies in Asia & Africa 58.21% Medium
American Dream Shares of the 500 largest public companies in the USA 101.37% Medium
Best of British Shares of the 100 largest public companies in the UK 28.94% Medium
European Essentials Shares of the large and mid-size companies in Europe 56.07% Medium
Medics Healthcare, Pharmaceuticals & Biotechnology companies 63.10% High
Slow & Steady 20% shares and 80% bonds (Vanguard Lifestrategy) 21.20% Low
Balanced Bundle 60% shares and 40% bonds (Vanguard Lifestrategy) 41.02% Medium
Growth Stack 80% shares and 20% bonds (Vanguard Lifestrategy) 51.82% 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

Plum Self-invested Personal Pension (SIPP)

Plum recently launched a Self-invested Personal Pension (SIPP) to help you to prepare for retirement. The Plum SIPP is provided by Gaudi Regulated Services Ltd and is covered by the Financial Services Compensation Scheme (FSCS). You can choose to consolidate existing pensions into a Plum SIPP or start a new Plum Pension altogether. Whilst Plum lets you save into a pension it does not currently allow you to draw an income - often referred to as pension drawdown - and so you would need to transfer your Plum SIPP to another provider when you want to access your money.

You can contribute to a Plum Pension via regular contributions from your Plum auto-savings that can be increased or reduced to suit your budget. You can also make one-off contributions to the Plum pension from your connected bank account or your Plum Balance.

When investing in the Plum SIPP you can choose from three investment fund types:

  • Target Retirement Date Fund - this fund changes what it invests as you approach retirement age starting with higher-risk investments and changing to lower-risk investments as you near your retirement date
  • Global Equity Index Fund - this fund invests in a range of worldwide company shares
  • Future World Climate Change Equity Factors Index Fund - according to Plum this fund invests in 'shares of companies that meet positive carbon and environmental criteria'

Plum SIPP fees

The fee for a Plum SIPP is 0.45% a year which is broken down into a 0.35% administration charge and a 0.10% custody service charge. The fee is payable at the end of the month and is deducted from your Plum SIPP balance. In addition, a fund management fee is charged, ranging from 0.24% - 0.30%, depending on the fund you choose to invest in.

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 also have FSCS protection.

How much does Plum cost?

Plum offers four types of plan and they are summarised in the comparison table below:

Plum Basic Plum Plus Plum Pro Plum Ultra
Cost FREE £1 per month (30 days free) £2.99 per month (30 days free) £4.99 per month (30 days free)
Instant Access saving account
Easy Access saving account (AER)  0.25% 0.40% 0.40% 0.40%
Unlimited free withdrawals tick tick tick tick
Automatic saving
Roundups
Lost Money
Pay Days
Pockets 1 1 15 15
Investing
Pension (Beta)
Goals
Rainy Days
52 Week challenge
Cashback
Diagnostics
True Balance
Money Maximiser

Plum Basic

Plum's basic account* is free and uses artificial intelligence to analyse your spending and automatically saves an amount that you can afford every week. 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. IOS users can also take advantage of the paydays feature that allows users to move a set amount to savings each payday. You can choose to put your money in the primary pocket which provides instant access to your money, or you can choose an easy-access pocket where you can earn 0.25% interest, however, you have to give 1 days 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 0.06% - 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 and Plum Ultra) subscriber, you can earn 0.40% 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 days 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
  • 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 0.40% interest in an easy-access account with more accounts due soon

Plum Ultra

Plum Ultra offers all of the features of the Plum Pro account but with the added feature of the 'Money Maximiser' which is Plum's new money management tool. The Money Maximiser is designed to help you maximise your savings by moving money that is just sitting in your account into an Easy Access pot so you can earn 0.40% interest. When you need the money to pay bills, Plum moves your money back into your everyday account in time for the bills to come out. Any money that is not needed in your account will be moved into the Easy Access saver and then divided and repaid to your everyday account on a weekly basis. Whilst the 'Money Maximiser' is a great new feature there are some app-only banks such as Monzo that offer similar features at no additional cost.

With a Plum Ultra account, you may also benefit from boosted cashback rates when shopping with partner brands.

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 primary 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 'Excellent' on Trustpilot scoring 4.5 out of 5.0 stars from over 2,000 reviews. 77% of users rate it as 'Excellent', with most commenting on how great it is at helping them to save money and great customer service. 9% 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

Plum vs 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.

Plum vs 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.

Plum vs 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, Simple saver and 95-day notice account.

For more information on Moneybox, read our Moneybox review.

How does Moneybox compare to Plum?

In the following comparison tables, we compare Plum and Moneybox saving and investment accounts.

Plum investments vs Moneybox investments
Plum Moneybox
Minimum investment £1 £1
Monthly fee £1 £1
Platform fee 0.15% 0.45%
Fund provider fees 0.06-0.90% 0.12-0.58%
Investment types Stocks and Shares ISA, General Investment Account Stocks & Shares ISA, Stocks & Shares LISA, Pension, Junior ISA, General Investment Account
FSCS protection
FCA registered
Plum savings vs Moneybox savings
Plum Easy Access Savings (Basic) Plum Easy Access Savings (Plus/Pro/Ultra) Moneybox Simple Saver  Moneybox 95 day Notice account
Cost Free £1/£2.99/£4.99 Free Free
Notice required 1 day 1 day 1 day 95 days
Interest paid  0.25% 0.40% 0.25% 0.60%
FSCS protection 
FCA registered

Pros and cons of Plum

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 a primary pocket 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

Summary

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 regulated by the FCA and any money held in savings (i.e not in your primary pocket) or investments are covered by the FSCS. 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 2021.

 

 

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