Nude Lifetime ISA Review – The costs of saving for your first home laid bare

Nude Lifetime ISA Review

Name: Nude

Description: Nude is an app-based savings and investment Lifetime ISA account which gives you a 25% top up bonus from the Government. You can split your money for your first home or retirement between an interest-paying savings account or an ESG fund that tracks the performance of the stock market.

Our view:

One of the easiest Lifetime ISA apps to use to help save for buying your first house or invest for retirement.

Pros

• Easy to use
• Simple investment options
• Save or invest

Cons

• £2 monthly fixed fee
• App only, no website platform

• Pricing
  (3)
• Market Access
  (3)
• Online Platform
  (5)
• Customer Service
  (4.5)
• Research & Analysis
  (5)

Overall

4.1

Nude Lifetime ISA Expert Review

In this review we:

• Give our ratings based on their nearest peers
• Tell you what we think of them after testing the app
• Highlight the key costs, facts and figures of their accounts

A while ago, The Times wrote a very mean article about Nude titled “The Savings App that loses you £19 a year“. The previous year I had interviewed the Nude founder Crawford Taylor and my first thought was “oh come on, that’s a bit harsh”. Yes, it’s true that it costs £24 a year to have a LISA with Nude (plus 0.35%) and if you invested £1,000 instead in the same fund with Hargreaves Lansdown it would only cost you £4.50 (excluding fund charges).

But I think the title was misleading clickbait.

To be fair, it’s not often you hear Hargreaves Lansdown applauded for their low fees, but in this case, they are cheaper. As it always is to do things yourself. If you want a little help, you have to pay a little bit more. It’s basic supply chain economics. It’s cheaper to buy flatpack furniture from Ikea, than have the nice people at John Lewis deliver and build it for you.

In fact, if you have the time and inclination and want to do your homework, you can invest in any managed fund, robo-adviser or ETF cheaper by replicating the portfolio elsewhere.

The steps are as follows:

1. decide which app or platform you don’t want to invest with
2. click on the key facts document that shows you what the fund you are thinking of investing in holds
3. go to the fund managers website (in this case Blackrock’s MyMap 5 Select ESG Fund which charges 0.12% a year)
4. Then find a low cost ETF platform that offers a Lifetime ISA account and buy it through them

Below are the ETFs and their weightings included in Blackrock’s MyMap 5 Select ESG Fund which is what you invest in on Nude. You will need to buy these to replicate the majority of the fund’s portfolio are:

• ISHARES MSCI USA ESG ENHANCE USD A 18.87%
• ISHARES MSCI USA ESG SCREENE CACC 13.91%
• ISHRS 100 UK EQ IDX FD (UK) X ACC 10.7%
• ISH $ TRES BND 7-10 ETF $ DIST 9.46%
• ISHS GBP ULTRASHORT BOND ESG GBP D 5.77%
• ISHARES EMERGING MARKETS EQU CLX 5.44%
• ISH MSCI USA SRI ETF USD ACC 4.83%
• ISHARES CONTINENTAL EUROPEAN CLX 4.3%
• ISHARES JAPAN EQUITY ESG IND CLX 3.74%
• ISHR UK GLT ALL STKS IDX(UK) X ACC 3.63%

Or if you wanted to take it a step further and reduce your ETF fees, you could go to the exchange-traded fund providers website and take a look at the holdings of the underlying fund holdings name & percentage weightings

Just taking the first ETF in that list (ISHARES MSCI USA ESG ENHANCE USD A ) the stocks and their percentage weighting it holds are:

1. AAPL – APPLE INC – 6.61%
2. MSFT – MICROSOFT CORP – 5.32%
3. AMZN – AMAZON COM INC – 2.59%
4. KO – COCA-COLA – 1.77%
5. GOOG – ALPHABET INC CLASS C – 1.76%
6. NVDA – NVIDIA CORP – 1.58%
7. TSLA – TESLA INC – 1.41%
8. GOOGL – ALPHABET INC CLASS A – 1.33%
9. JNJ – JOHNSON & JOHNSON – 1.3%
10. UNH – UNITEDHEALTH GROUP INC – 1.19%

You’ll need to buy the correct amount of each of those shares, and then manually rebalance the weighting along with the fund manager. You’ll also need to find an investing app that does not charge commission for holding or buying ETFs.

But what if you don’t want to? What if you don’t know the difference between an ETF and an accumulation fund? What if you don’t want all the bells and whistles that come with a full on stock brokerage account? What if you don’t want the temptation to time the market by punting on Tesla shares? What if you just want to take advantage of the Government’s very kind 25% top-up bonus to help get you on the housing ladder. What if you want some in a savings account earning 3% interest with zero risk, and some in the stock market taking on a little bit more risk with the hope of making some money. Or what if you don’t want anything at all in the stock market because you’re worried it’ll crash.

This is where apps like Nude come in. A single product for a single goal. Keeping you focussed on getting on the property ladder because as the founder said when I spoke to him:

…9 out of 10 young people would like to own a home, renting is more expensive than buying, there’s a greater level of wellbeing if you manage to own rather than rent and there’s little help available. Nude provides a solution to a problem.

I try all sorts of investing apps and some make it hard some make it easy. Reverting to our old friend HL, it’s actually a bit of a faff opening an account. But Nude makes it easy, and sort of salamni tactics you into going through the process. Initially by showing you how much quicker you can save for a house deposit with their LISA. Then the process almost propels you along, and with all the educational content on the app geared towards Lifetime ISAs, there is no chance of getting lost in the malaise of all the other investment products available.

It’s the sort of thing I wish was around when I was in my 20’s, but back then they barely had mobile phones…