My parents used to have five-gallon glass jugs that they would put all their extra change into. Once or twice a year my mother would empty them for my sister and me to sort and roll into paper wrappers.
That was before we could take them into our bank and use the change counter.
Anyway, after all the counting there was easily $300 or $400 dollars saved.
These days, those giant change jars are a little sparse because most of our money is now just electronic numbers on a screen.
So as a result, that change jar savings is a thing of the past.
I found an app that takes all that digital spare change and not only saves it but invests it into the stock market so that it can grow!
Acorns is an automated investing app that rounds up purchases made with your credit or debit card.
It then automatically invests that money into a portfolio that matches up with your goals.
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What Is Acorns?
Acorns is a robo-advisor working on a micro-investing platform.
In other words is a computer managed investment portfolio that will be automatically working in the background of your life.
When you download the app they have you answer a few questions. From there they recommend a portfolio that best fits your goals.
There are five different “smart portfolios,” built with the help of Harry Markowitz, father of the Modern Portfolio Theory.
These five different portfolios vary on a scale of conservative to aggressive.
The conservative option has mostly bonds.
The aggressive option has all stocks and real estate.
And the middle three options fall in between.
Here are the investments that Acorns uses.
- Vanguard Small-Cap Index Fund ETF Shares | VB
- Vanguard REIT Index Fund ETF Shares | VNQ
- iShares 1-3 Year Treasury Bond ETF | SHY
- Vanguard 500 Index Fund ETF Shares | VOO
- iShares iBoxx $ Investment Grade Corporate Bond ETF | LQD
- Vanguard Emerging Markets Stock Index Fund ETF Shares | VWO
- Vanguard FTSE Developed Markets Index Fund ETF Shares | VEA
At different times Acorns may switch these up a bit, but they will always use an EFT that tracks the same index.
How Does Investing With Acorns Work?
This investing app makes it easy to invest your extra change using a system they call “roundups.”
The app monitors your bank accounts and automatically invests the spare change from your normal daily purchases.
So let’s say you buy lunch one day for $8.55. Acorns will round up that purchase to $9.00 and invest that $.45.
Once you have chosen the portfolio that you want to use, you will link up your debit or credit card to the Acorns app.
You have the ability to link up multiple cards so you can be investing even more.
When you make a purchase on any of the linked cards, Acorns will “round up” the purchase to the nearest dollar.
These round ups are put into a holding account. When that holding account reaches $5, Acorns automatically invests that money into your portfolio.
Features of Investing With Acorns
There’s no minimum to open an account, but the service requires a $5 balance before it will be invested into one of Acorn’s five pre-built portfolios.
This is a great feature when investing with acorns. Essentially you can invest your roundups x2, x3,…x10. So say that $.45 round up from earlier could become a $.90 round up if you wanted a 2x multiplier in place. A 3x multiplier would make that round up $1.35. And a 10x multiplier would be $4.50.
With Acorns, you can set up additional recurring investments. You could choose $10 per day or $25 per week. You can choose to make these recurring each day, week, or month.
This is essentially using a cashback platform and investing with acorns. Similar to other cashback sites like Ebates, Acorns Found Money partners with retailers to give you a kickback from purchasing from them. Acorns has partnered with more than 100 companies — including Apple, Nike, Blue Apron and Walmart— to give you cash back when you use a linked payment method at one of the partners.
There is nothing better than building your investment account with someone else’s money!
Acorns recently created a debit account that pulls right out of your investment funds. The advantages of Acorns spend are the unlimited ATM reimbursements, no minimum balance, and no overdraft fees. Acorns Spend costs $3 per month which is quite a high fee when compared to other debit cards.
Free for College Students
Acorns encourage colleges students to start investing my waiving all the management fees for college students who register with a .edu email address. This is great as college students can start investing with acorns for free and after four years they will have a nice sum of money.
Acorns now can support traditional IRAs, Roth IRAs, and SEP-IRAs (for self-employed people). If you are eligible to contribute to Acorns in a tax-advantaged account is a great way to start investing for retirement, even if you can’t afford to max out contributions just yet. The cost for Acorns Later is $2 per month.
The Acorns website is easy for new investors to navigate and learn important key investing terms. Acorns also publishes Grow Magazine, an online personal finance site geared toward millennials with advice about side gigs, credit card debt, student loans, and other financial topics.
Acorns Gift Cards
They offers gift cards that you can purchase and give to a friend, sibling, or coworker who is ready to start investing. Gift cards start at $25 and that will give them a jump on investing with their extra change.
This is the coolest feature of the Acorns Dashboard. The future projection calculator takes your current saving settings and projects how much you will have in the future.
It factors in an average 6% return per year. You then can adjust the setting to see how any changes would affect you much money you would have in the future.
It is easy to see how small adjustments can have a huge impact on your future finances.
How Much Does Investing With Acorns Cost?
So this all sounds great right, but what is the catch? Acorns won’t manage all your investment for free right?
Acorns charges a fee of $1 per month on accounts up to $1 million.
If you’re under age 24, and you have a valid .edu email address, Acorns will waive your management fee for up to 4 years.
Aside from the management fee, Acorns does not charge transaction fees. That means you can deposit a lump sum (up to $20,000 per day) into your Acorns account, and you can withdraw money at any time without transaction costs.
You’ll never pay trading fees which is a big cost saver for small investors.
Final Thoughts About Investing With Acorns
Acorns is the best place to start especially when you don’t have a lot of money to invest. You can even start without investing a cent.
Acorns will give you cash back offers far higher than those from the biggest cashback sites out there.
Plus, you get $5 bonus if you sign up using my link.