| Real Life Strategies for Building Wealth


Have you been asking yourself whether it is worth investing with Nutmeg? Then keep reading this Nutmeg review – after investing with Nutmeg since 2013, and experimenting with other digital wealth managers, we are certainly well placed to help you make up your mind.

Before we go any further, this Nutmeg review is entirely independent, and our only aim is to help you make up your mind about the match, or mismatch, between you and Nutmeg.

Were you to decide to open an investment account with Nutmeg while, or after, reading this review, you can do so using the links included in this post – joining through The Money Principle will give you six months investing with no management fee, and it will give me a small commission.

Nutmeg is one of many digital wealth managers. While these wealth managers opened investing to ordinary people – people who are not obscenely wealthy, who don’t get off on reading the company listings in the Financial Times and who don’t wear pinstripe suits –  it is also rather difficult to select the one that meets your specific investment needs.

Come in, Nutmeg investment review!

This review will help you decide whether investing with Nutmeg is a good match for you by:

  • Offering you an overview of how Nutmeg investing works (and your part in it);
  • Reviewing Nutmeg investment portfolios and instruments;
  • Helping you decide on the level of risk you are prepared to take; and
  • Answering some frequently asked questions about investing with Nutmeg.

Table of Contents

Nutmeg Review in a nutshell

Usually, reviews end with the reviewer’s verdict on performance. I’ll break with tradition somewhat: our appreciation of Nutmeg financial is well known, and we wrote one of the early reviews of Nutmeg, so I may as well start this review by telling about what I love about them.

After I tell you what Nutmeg financial is, of course.

What is Nutmeg financial?

Nutmeg is a digital wealth manager operating in the UK, aiming to democratize wealth management and investing by building and managing sophisticated global, diversified investment portfolios. These portfolios are built by Exchange Traded Funds (ETSs) and carry different levels of investment risk.

Nutmeg is currently the largest and fastest-growing digital wealth manager in the UK. Betterment in the US, acknowledged to be one of the best digital wealth managers for beginners, is Nutmeg’s ‘sister’.

Things we love about Nutmeg investing

We have been investing with Nutmeg since 2013 and have stayed faithful to them through thick and thin.

I have never made a secret of my love for Nutmeg, even when experimenting with other digital online managers. My love for Nutmeg investing, however, is not the blind romantic infatuation of youth. Rather, it is the more pragmatic love of our later years.

There are two key reasons we love investing with Nutmeg:

  • Simplicity; and
  • Nutmeg investment performance.

Nutmeg investing is easy. Onboarding takes five-ten minutes (if that). Deciding on your acceptable investment risk level is straight forward – you complete a quick test, and it works.

Once you’ve done that, all you do is make contributions – the Nutmeg team does everything else for you.

Nutmeg investment performance is also something I find irresistible.

Do you want to know how much my portfolio has made over the years?

Patience, friend, I’ll get there.

Still, the ultimate test of digital wealth managers, and any wealth managers, is not how much they’ve made but how much they lost in times of troubled markets.

Below is a snapshot of my Nutmeg investment portfolio since October 2013.

Nutmeg investment portfolio

(To create a Nutmeg investing account saving six month management fee, click on the image above.)

What do you see?

Yes, my investment portfolio has gone up and down. It dipped slightly (less than 1%) under what I invested on three occasions:

  • August 2015 (S&P500 index down 6.3%);
  • February 2016 (S&P500 index down 10.5%); and
  • December 2018 (S&P500 index down 9.6%).

For me, not losing money in times of serious stock market corrections is a good performance. (It also recovers very fast; not unusual with corrections.)

Oh, and the time-weighted return on investment on my Nutmeg investment account is over 5% annually after fees and other charges.

Nutmeg investment portfolios

Two characteristics define Nutmeg investment portfolios:

  • Level of risk; and
  • Type of Management.

Level of risk

Nutmeg offers ten different portfolios according to the level of risk acceptable to you. Level 1 is the lowest risk portfolio, and Level 10 the highest.

Understanding the portfolios’ level of risk is straight forward – higher proportions of the portfolio invested in equities (stocks and shares) carry a higher level of risk (and higher expectations of returns). For example, Level 9 Nutmeg portfolio is approximately 87% equities, 12% bonds, and less than 1% cash. (My portfolio is at this level of risk.)

Please note that the risk levels of fixed allocation portfolios are slightly different while following the same rule – ‘cautious’ is the lowest risk level containing over 80% bonds and ‘adventurous’ the highest risk level with 99% equities.

Type of investment portfolio management

Nutmeg financial offer three types of portfolios:

  • Fixed allocation portfolios are automated and reviewed manually only once a year. Put simply, this means rebalancing your portfolio, and dividend reinvestment are fully automatic. Naturally, the fees are lower than those of the managed portfolios. One issue with fixed allocation portfolios is that pre-empting trouble is hard, and profitability depends on high diversification and statistics.
  • Fully managed portfolios are actively managed by the experienced Nutmeg team, who make strategic adjustments aiming to protect against losses and boost returns. For example, recently the Nutmeg team reduced the proportion of equities in fully managed portfolios to ward off potential risks resulting from the trade war between the US and China. (This is the portfolio I have.)
  • Socially responsible portfolios are managed and designed with social responsibility in mind. These investment portfolios are continuously monitored and adjusted to balance ethics and investment performance. All Nutmeg investment portfolios are regularly scored according to environmental, social and governance criteria. For instance, my Nutmeg portfolio scores 5.5 on a ten-point scale. (This reminds me to do something about it.)

Nutmeg investment portfolios at a glance:


Level 1 (Cautious) L2 L3 L4 L5 L6 L7 L8 L9 Level 10 (Adventurous)
Fixed allocation
Fully managed John’s ISA Maria’s ISA
Socially responsible


(Use this table as tool to select the portfolio for you. It can be in any square of the table.)

Nutmeg investing instruments

Now that we’ve discussed Nutmeg investment portfolios let’s move to discuss the investment instruments Nutmeg offer. These are Nutmeg ISA, Nutmeg Lifetime ISA, Nutmeg General Investing Account and Nutmeg pension.

Nutmeg ISA

Let’s start with Nutmeg ISA.

Nutmeg financial offer stocks and shares ISA that carries all advantages of stocks and shares ISAs. Recently, Nutmeg started offering the possibility to keep 100% cash in your stocks and shares ISA. Please note, this doesn’t make it a cash ISA; the cash you store in it is supposed to drip-feed your investments.

What is specific about Nutmeg ISA?

Here are the main characteristics of the stocks and shares ISA Nutmeg offer:

  • You can open a stocks and shares ISA with Nutmeg with £500.
  • You can start with cash and drip feed it into equities and bonds.
  • You can select the type of management portfolio.
  • You can select the level of risk acceptable to you (this is easy to change).
  • You can set regular monthly contributions or transfer funds manually.
  • Nutmeg has some nifty tools to set financial goals and follow progress.
  • Everything is transparent, and you can check your investments, investment allocation by asset class, location and sector, fees, etc.

Nutmeg General Investing Account (GIA)

Nutmeg’s general investing account shares the key characteristics of Nutmeg stocks and shares ISA. It doesn’t have the tax advantages that ISAs offer, however.

Hence, you can use GIA as an ‘overflow’ account – you contribute to it only after you have maxed out your ISA allowance (currently £20,000 per year) and your partner’s ISA.

Nutmeg Lifetime ISA

Nutmeg Lifetime ISA, stocks and shares, is a somewhat different instrument and is to help investors buy their first home or towards retirement.

You can open a Lifetime ISA with £100 if you are a British resident aged between 18 and 39. You can contribute a maximum of £4,000 per year till you reach 50 and the Government will add a 25% bonus, or up to £1000, per year. Like ISA, Lifetime ISA has tax advantages, and you won’t pay tax on capital gains and withdrawals.

Nutmeg Lifetime ISA can be used to save for buying a home or for retirement. It can be used to buy your first home or a home that costs over £450,000.

It can also be used to complement your retirement savings (I wouldn’t recommend that you substitute contributing to a pension with this ISA, but the decision is far from simple).

Nutmeg pension

Nutmeg financial also offer a private pension. You can start a pension pot with an initial investment of £500 and receive a 25% top-up from government. (There are pension rules including how much you can invest in a pension per year; few of us reach the upper limit.)

As with all pensions, you can’t draw this down before you are 55, and Nutmeg offers prudent advice on that.

Nutmeg investment fees

One big strength of Nutmeg is that they are very transparent about fees.

Here are the fees charged for different portfolios:

[here a screen shot of the fees]

Importantly, just like any other digital wealth manager, Nutmeg charges three kinds of fee:

  • Nutmeg portfolio management fees;
  • Investment fund fees; and
  • Market spread fee.

Hence, what makes the socially responsible portfolio a bit more expensive are not Nutmeg but investment fund fees.

Nutmeg fees compare well to the fees other digital wealth managers charge (and two of their portfolios are fully managed ones). Investing in Vanguard can work out cheaper depending on the funds you select.

And here is the thing: were you to invest in Vanguard low-cost index funds, you must select the funds. When you invest with Nutmeg, fund selection is made for you by world-class investing experts.

Nutmeg financial instruments and portfolios at a glance

Here is what Nutmeg investment offers at a glance.

Nutmeg investing portfolios

Note on fees: Please note that all providers charge investment fund costs and market spread fees. On top of the portfolio management fees in the table, Nutmeg charge 0.17%, 0.19%, and 0.32% investment fund fees for their fixed, managed, and socially responsible portfolios (respectively) and 0.06% market spread.

Selecting the Nutmeg investment account for you

Are you thinking of opening a Nutmeg investment account?

Here is what you must think about to make sure that your investments are the ones appropriate for you.

Which Nutmeg financial instrument?

Do you open an ISA or a Lifetime ISA? How about a pension?

A decision in this respect depends on your investment goals and the tax – and other – benefits with which each of these instruments comes. (You must also think about the limitations of the instruments.)

I make no secret of my belief that stocks and shares ISAs are a very good investment. These must be used as a long(er) term wealth building instruments, however. If you mean to invest regularly, not drawdown for a decade or more, and are happy to delegate the technical choices around investing to a team of experts, you should consider opening a Nutmeg ISA.

If you are saving for a house or boosting your retirement income and are between 18 and 39 years old, you may prefer to open a Lifetime ISA. Please note that the choice between opening Nutmeg stocks and shares ISA and a Nutmeg Lifetime ISA is not an ‘either-or’ one. You could have both.

I’d be very careful about opening a Nutmeg personal pension account. I’d be careful not because there is something wrong with what Nutmeg offer but because pensions, and pensions regulation, are very complex. Furthermore, if you are employed your workplace likely offers a better pension (if only because employers match pension contributions). Worth checking with a pensions expert before you make up your mind.

Invest in a GIA account only after you’ve maxed all other options.

In summary, I believe that investing in Nutmeg stocks and shares ISA must be your first call, followed by Lifetime ISA, Personal Pension and GIA.

Which Nutmeg portfolio?

Selecting a Nutmeg portfolio is about deciding between managed, fixed, and socially responsible portfolios and deciding the level of risk you can reasonably take.

How to select a type of Nutmeg investment portfolio?

My Nutmeg ISA is a fully managed one. I selected this portfolio because I’d rather pay a bit higher fee and have recognized investment experts rebalance my stocks and shares ISA account regularly; after all, we live in volatile times and I still believe the judgment of knowledgeable people more than I trust the statistics that relying on diversification and algorithms entails. (I started investing with Nutmeg long before they had socially responsible portfolios; thinking seriously about changing.)

To select the Nutmeg investment portfolio appropriate for you ask yourself:

  • How important to me are more aggressive investment returns?
  • How important to me is to keep costs down?
  • How important to me is social responsibility in investing?

If keeping investment costs down is more important to you than aggressive returns, you may be better starting a fixed allocation portfolio. (In this case, I’d probably have a look at possibilities with Vanguard.)

If more aggressive returns trump costs in your investment strategy, you should choose the fully managed portfolio option. (This is Nutmeg’s real strength, I believe.)

Lastly, if socially responsible investing is more important to you than costs, and even aggressive returns, you must consider the socially responsible portfolios.

What level of Nutmeg portfolio risk can you accept?

People often ask me how to decide the level of risk they can accept.

Here the easy answer is ‘fill in the questionnaire that Nutmeg has prepared.’ It helps estimate the acceptable level of risk for you.

There is also a longer answer.

Think of the level of risk you can take in terms of the urgency with which you may need to use the money you are investing.

You may remember that the stock market has a ‘natural’ rhythm of ups and downs:  market corrections of different magnitude occur regularly. For instance, looking at stock market data shows that losses of 10% occur at least once a year, and corrections of up to 40% (bear market) must be expected every four years or so.

Here is the thing, though. Corrections of 10% recover within a couple of months; bear market losses recover within eighteen months or so.

In simple terms, this means that your investment in the stock market – or high level of exposure to equities-based ETFs in terms of the Nutmeg risk levels – is overall safe(er) if you can wait out the inevitable market corrections.

To select the level of risk that you can take, ask yourself the following:

  • At any point in the future, could I wait for up to two years before I draw down my Nutmeg investment?

An affirmative answer means that you can set a higher level of risk. (This is why my portfolio is risk Level 9 – I know this is money I don’t need to drawdown urgently.)

A negative answer means that you should set a lower level of risk for your portfolio. (For example, when I retire properly this may be an option.)

How to set up a Nutmeg investment account?

Now that you have decided on the Nutmeg investment instrument, portfolio, and level of risk, you are ready to set up your Nutmeg account.

As I mentioned before, this is easy and will take you approximately 10 minutes.

Here is a step by step guide on how to open a Nutmeg investment account:

Step 1: Go to the Nutmeg home page.
Step 2: Select a Nutmeg investing instrument

Nutmeg review

(To create a Nutmeg investing account saving six month management fee, click on the image above.)

Step 3: Let’s say you want to open a stocks and shares ISA. Click here

Nutmeg investment ISA

(To create a Nutmeg stocks and shares ISA saving six month management fee, click on the image above.)

Step 4: Select the purpose of your saving and name your investment pot (mine is called ‘Freedom Pot’; call me optimistic.)
Nutmeg review
Step 5: Specify how many years you plan to invest

Nutmeg investing


Step 6: Specify how much you’ll invest initially (minimum amount is £500 for ISA) and how much you’d invest per month

Nutmeg investment review

Step 7: Select the investment style of your portfolio

Nutmeg investment review


Step 8:Select the level of risk with which you can easily cope
Nutmeg investment reviewStep 9: You’ll be able to see projections for your portfolio. Check these and click on the green button to confirm and create your Nutmeg investing account

Nutmeg investment review

(To create a Nutmeg investing account saving six month management fee, click on the image above.)

This is all – you are set.

Transferring money in your Nutmeg investing portfolio is easy with Open Banking

In July 2020, Nutmeg started using open banking – a money flow arrangement that makes money transfers safer, faster, error free and much less time and energy consuming for you.

Money Dashboard, the money management app we reviewed, uses open banking; Yolt also uses it. This system allows Nutmeg to initiate payment by using a third-party payment initiator. You don’t provide your bank account credentials to Nutmeg – you just log into your bank account when asked and boom – transfer is made within minutes rather than days.

I like it and it is safer than your credentials being with many platforms.

You know, the easier it is to do something, the more likely it is that you do it. Nutmeg just made it easier for you to feed your stocks and shares account.

Nutmeg investment performance

When it comes to the performance of digital wealth managers, people usually give you second-hand information.

Let’s start with that: according to Nutmeg financial, their risk level 6 portfolio has returned 46% in the period 30 September 2012 – 31 October 2019. This is 5.5% per year.

Nutmeg investment performance

Over the last five years, the same portfolio has returned approximately 24% or 4.4% per year.

Now, let’s test these claims using real portfolios – mine and John’s.

You remember that My portfolio is risk level 9 and John’s is on risk level 8. We must allow for some ‘smoothing’ because these portfolios have changed over the six years we’ve invested with Nutmeg. (John increased his level of risk because his portfolio was too conservative for our situation.)

One thing that I know is lower-level risk portfolios are less volatile and return approximately 1% less per year than the next higher level of risk.

Now the big reveal:

Since opening our Nutmeg stocks and shares ISAs (John’s in April 2013 and mine in October 2013) they have returned 4.69% and 5.12% per year, respectively.

Please note that I’m talking about real investment returns after fees and VAT.

You can tell me that this doesn’t rock your boat, and you want higher returns. Look around, please.

You are unlikely to find a better, managed portfolio that is so little hassle to yourself.

(Now is the time to remind you that past performance is no guarantee for future profit. Loss is always a possibility.)

What are the risks when investing with Nutmeg?

Talking about investment loss, let’s see what risks are associated with investing in Nutmeg financial.

There are two levels of risk:

  • Risk stemming from the inherent volatility of stock markets; and
  • Risk stemming from Nutmeg.

Investment risk and stock market volatility

We already discussed these but to recap:

Stock market corrections are to be expected at least once a year. Bear markets occur roughly every four years (a mini-bear market happened in December 2018).

There are ways to hedge against extreme stock market volatility, including diversification and making sure you can ‘sit out’ the downturn.

Investment risk and Nutmeg financial

These are usually about how the company is run and managed. As far as we can judge, investing with Nutmeg is no riskier than investing with other companies. To be fair, judgment is difficult because our knowledge of company management is never direct.

Hence, the more interesting questions are about how is Nutmeg financial regulated.

Nutmeg is authorized and regulated by the Financial Conduct Authority (FCA). Furthermore, Nutmeg is covered by the Financial Services Compensation Scheme (FSCS); this means that you are entitled to compensation up to £85,000 per person per firm if Nutmeg fails.

(Please note that ‘firm’ refers to the backing bank; check your other accounts to ensure that the ‘firms’ are different.)

I believe it won’t come to that but still nice to know.

Frequently asked questions to help you decide whether to invest with Nutmeg

Now let me turn to some questions asked about investing with Nutmeg.

Q1: Is Nutmeg protected by the FSCS?

Yes, Nutmeg is covered by the FSCS, and were they to fail to meet their obligations to you, you are entitled to claim up to £85,000 per person.

Q2: How easy it is to use the Nutmeg website?

Easy. Nutmeg has worked on the website – and the Nutmeg app – hard since the company opened in 2012.

Now, the Nutmeg website is easy to navigate, and it is clean, clear and transparent. Nutmeg has also developed several tools that are easy to use and helpful to your investment strategy.

Q3: How do I know where Nutmeg has invested my money?

Did I mention that Nutmeg is very transparent in all they do?

Yes, I did. Don’t worry, though – I’m repeating myself not because I’ve run out of things to say but because the things that are repeated are very important.

Yes, you can see where and in what your money has been invested.

Nutmeg investment review

Click on ‘Allocation,’ and you can see the asset classes, sectors and countries in which you are invested.

Click on ‘Investments, fees, and more’ and you will see a list of the ETFs in your portfolio.

Q4: Can I choose where my money with Nutmeg is invested?

Yes, by using the socially responsible investing portfolio.

Otherwise, influencing the process of rebalancing your portfolio seems to me to defeat the purpose of investing with Nutmeg – leaving these decisions to the experts or algorithms.

Q5: Can I withdraw my money with Nutmeg?

Yes, of course, you can.

However, if your money is in an ISA, Nutmeg ask you to answer some questions. These are more for their information and for you to consider your actions.

Mind the funds could take up to 30 days to reach your account (this is completely in line with the time it takes to withdraw money with other providers).

Nutmeg review: the verdict

Our conclusion from this independent Nutmeg review is that it is a near-perfect match for investing maidens with little or no experience whose wealth-building strategy is to compound over a long time moderate, sustainable investment returns (in other words, getting wealthy slowly and surely). Investing with Nutmeg will also suit investors who wish to take advantage of managed investment portfolios at low cost.

We have many positive comments about Nutmeg financial, and we’ve shared most of these. However, there are two features we find truly admirable, e.g. the simplicity of investing with Nutmeg and the transparency they demonstrate.

Now that you know most there is to know about Nutmeg, are you ready to start investing?


Open a Nutmeg investment account