There are tons of investment apps in India. Here’s another one, called MoneyJar.
For the past few weeks, I’ve been testing the MoneyJar app – a “Jargon Free “mutual fund investment platform for beginners.
Here’s a full MoneyJar review to help you decide whether you should start investing via this platform or not.
What is MoneyJar?
- It is assisted – you get help with your investment and there are fund portfolios curated by MoneyJar based on multiple factors including risk, sector and liquidity.
- MoneyJar acts as an advisor – You don’t have to monitor your mutual funds regularly if you don’t want to – MoneyJa will rebalance your portfolio for you (this is applicable only if you authorize)
While MoneyJar assists you with your investment strategy, they are still a commission-free mutual fund investment platform. You don’t have to pay any charges for their services.
Their core mission is to ” create a financial ecosystem that is easy to use and rewarding for everybody.”
It was founded by Rohan Agarwal and Shrenik Patel back in 2017 (Their actual platform went live in 2018 though).
They’ve since improved a lot. Their web platform has become much more intuitive and the overall Signup-to-investment friction has reduced a lot.
Let’s talk about MoneyJar’s Investment Jars – Their flagship product. Then we’ll discuss if you should start investing with MoneyJar.
Investment “Jars” by MoneyJar
Jars are a collection of multiple mutual funds curated in one investment instrument by MoneyJar experts. There are multiple Jars based on different themes such as :
- Safe Jar
- No Stress jar
- Adventurous Jar
- Tax Saver Jar
- Starter SIP Jar
Jars are categorized into specific categories such as Essential, Thematic, Advanced and MoneyJar picks. Each Jar consists of multiple mutual funds for the diversification of assets.
MoneyJar experts pick mutual funds across all Jars. You can’t switch between funds yourself.
Each quarter the funds in each Jar are re-evaluated and rebalanced if deemed necessary. Services like rebalancing between funds are normally charged by firms, platforms and managers.
Given that MoneyJar doesn’t charge for any of their services, this is great.
You can choose more than one Jars and start SIPs or simply invest one time. To know more about the objective of a Jar, funds inside it, capital growth projection and more, you need to click on the More Info link.
A popup will appear, like this:
The Jar information popup contains essential data about the past performance of the funds inside, and why MoneyJar experts recommend it.
How to start investing with MoneyJar?
To make an investment through MoneyJar, here are a few steps you’ll need to follow.
Step 1: Visit MoneyJar.in and create an account.
Step 2: Complete your KYC. Then click on Create a Jar.
Step 3: Once you approved, you’re ready to select a Jar. Choose a Jar you think would suit your risk assessment. For instance, if you’re a salaried employee, don’t have time or desire to study the market, and simply wish to grow a portion of your money, you choose a growth fund or an Index fund.
Step 4: Enter the amount you wish to invest. Choose the investment frequency, if you want to start a SIP, choose every month. Else, select one time. Unless you’re investing in an ELSS fund to save tax, it doesn’t make any sense to invest one time in mutual funds.
Step 5: Check the projection graph.
You can see how your investment is going to grow throughout the years. Understand this data isn’t a very good indicator of a fund’s performance. Scroll down the projection graph and you can see the particular mutual funds you’re investing in.
Step 6: Whenever you’re ready to start your SIP, click on the Invest button at the top.
You’ll notice a confirmation popup, informing you about the SIP amount deduction date and other important terms and conditions.
MoneyJar Investment Strategy
MoneyJar utilizes the Modern Portfolio Theory as an integral part of its investment strategy. This strategy is used in creating these Jars for you, and your money.
Modern Portfolio Theory emphasizes three core investment rules:
- Risk to return assessment
- Being a rational investor
The ideology behind this theory is to minimize risk and maximize returns. Which is a euphoric term for new investors. A better way to describe it would be: Risk took = Returns.
MPT helps you maximize returns by suggesting diversification, reinvesting gains and taking rational decisions without compulsive emotions. In the end, the returns might not beat a MEME stock, but it’s a solid way to build wealth and the chances of you losing a significant portion of your capital are very low.
What does this mean for you as an Investor?
Since MoneyJar prepares its investment strategy based on MPT, you should be able to make consistent income without getting too much exposure to one specific sector. So you should be able to get by sudden market turmoils and thematic crashes.
You won’t be investing in risky investment instruments and you wouldn’t have to worry about losing your capital. Since you are investing in mutual funds that directly trade in equity, there’s always a risk of losing money. However, it’s very rare that a good mutual fund goes defaults on its investors.
However, if you invest in the wrong mutual funds which don’t diversify enough, take unnecessary risk and involve in shady insider favors, you might lose a significant sum.
A good example would be the DHFL crisis and its effect on debt mutual funds. Keep in mind, Debt funds are considered a lot safer than equity funds.
Get Overdraft Loan Against Your Mutual Funds
You can also take a loan against your investments using Moneyjar. You don’t have to invest via MoneyJar to get a loan, but you will need a mutual funder managed by CAMS and an HDFC bank account.
A loan against mutual funds is an overdraft loan, the kind you get on FDs. The equity margin for overdraft loans on mutual funds is 50% and 70% on debt funds.
Once you are approved an overdraft limit, you can treat this loan as a credit line. You don’t have to pay the interest on the total overdraft limit. The interest is only applicable to the money you withdraw from your overall overdraft limit.
On my first visit to the MoneyJar website, this section made me think it would provide some sort of assisted mutual fund investment ideas. Or at the very least, understand my risk assessment and recommend suitable plans based on “MY” needs.
The above section says “Answer a few simple questions. Based on what you tell us, we’ll figure out the best investments you can make.”
However, the moment you signup and start looking around the dashboard, you don’t see any questionnaire. There’s nothing to help you understand your risk appetite. This also means there is no recommendation for you.
Note that they don’t explicitly say they are going to recommend you any mutual fund (or a set of funds). You can choose from many Jars available – but you have to know what you want – conservative, moderate or aggressive growth.
But the message “Based on what you tell us, we’ll figure out the best investments you can make.” somewhat misleads. Beauce you can tell them anything since they don’t ask.
For instance, if you signup for Vested or INDMoney, you get a detailed questionnaire that helps these platforms understand your risk assessment. How aggressive or conservative you wish to be with your investments. Then they offer separately curated portfolios for different risk profiles.
INDMoney has Baskets – similar to what MoneyJar offers. You create a goal in the INDMoney app and depending on the nature of your goal, total amount, your income, time to reach the goal you’re offered a specific basket of Mutual Funds. And then you can also predict how fast you’re going to reach your goal, if there will be a shortfall, how much tax, expense ratio you need to pay and more. It’s over a much better experience if you’re willing to spend some time learning.
If you’re someone who simply needs to start investing in Mutual Funds and minimize the overall risk of losing money by choosing the wrong funds, MoneyJar is a perfect platform.
Or maybe if you have a short-term goal in mind.
It’s simple. That’s the biggest advantage of MoneyJar.
You signup, wait for a few minutes to get your account approved and you’re ready to choose from tens of different Jars. Each Jar is dedicated to fulfilling a goal and you’re free to choose any.
In a few clicks, your SIPs are initiated. Since it’s an advisory platform, you can even choose to authorize rebalancing of your portfolio so you don’t have to actively worry about your mutual funds. Which sounds just right. Because if you are going to spend time even thinking about the money you invest in Mutual Funds, you should better start understanding the stock market.
MoneyJar really impressed me with the selection of the Mutual Funds in their Jars. Even when you choose from some of the aggressive (Growth) Jars, the funds you’re money is allocated to are very solid, low risk and have a low volatility rate. They beat INDMoney in this regard.