Investing Your Spare Change - Another Successful Habit
Successful habits entail sacrificing something now for a future reward or result...
Improving your health and fitness by going to the gym - we expend energy, time and money to push ourselves to the brink physically and mentally and months or years later we have a physique forged of granite to show for it.
Building an online business that generates revenue once again, takes time energy and effort today for success in your proverbial tomorrow.
Investing money, which we're going to discuss here once again requires sacrifice, discipline and consistency today for the end result tomorrow.
I recently discovered the Acorns app and found that this is an absolutely simple way to automate this process.
Intro To Acorns
What Is Acorns?
Using your phone or tablet it's merely a matter of connecting your bank accounts and investing the change from every day purchases you make. Obviously, the Acorns app is entirely created and managed from a smartphone.
This small change, once it reaches $5.00 gets invested into a index fund. There are 5 funds on offer divied up by risk tolerance... from conservative to aggressive with the asset allocation to show you the portions of stock you're owning by selecting and buying into the said fund.
Also, small amounts of money — usually less than a dollar — are added up over time and invested into your account with Acorns, so you’re not dealing with large amounts of money or wealthy investors. Essentially, this app is a great starting point for anyone who hasn’t invested yet or needs a bit of guidance in the beginning.
In essence, Acorns is an easy to use, automated index fund investing application pinching a few extra cents here and there from your transactions and investing it in a portfolio based on your goals.
Features Of Acorns
- Available Accounts — Individual only. Retirement accounts are not available.
- No Minimum Deposit — You can start right away
- Annual Fees — $1 per month for accounts under $5,000, and 0.25 percent per year for accounts over $5,000.
- Mobile App and Website Access — iPhone and Android support and the recently introduced website access.
- Young People and Students Invest for Free (New) — Individuals under 24 years of age and those attending college pay no fees.
- Round-Ups — For each credit card transaction the Round-Up to the nearest dollar is invested into Acorns.
- Scheduled Deposits — Set recurring daily, weekly or monthly investments.
My Acorns Review
Now that you've got a bit of familiarity with the Acorns app here's my take on it after several months of use...
5 Things I Like About The Acorns App
After hearing good things about the Acorns App for several months from a few friends I decided to give it a try, here's what I like about the Acorns app...
Read any book on investing and self development and you'll be told to invest in yourself, to pay yourself first.
Old habits on consumerism and spending your money as soon as you're paid are hard to break, especially when they've been practised for so long.
With Acorns, there's no need to make up any excuses as to why you didn't invest a portion of your money.
Cents here, cents there and an automated monthly deposit (No minimum, you can literally add $2 per month if you wish) ensure that your money IS getting invested, without you doing anything other than the initial setup which takes a couple of minutes.
No Minimum Investment
Investing in an index fund such as Vanguard, buying ETFs or trading penny stocks generally requires a minimum investment (here in Australia it's $5,000 for starting to invest in a traditional Vanguard index fund or $500 plus brokerage fees for share trading).
What if you don't have that kind of money? What if you're young, struggling to get out of debt or stuck in a pair of golden handcuffs?
Previously, there wouldn't be a way to put a few dollars in Vanguard or shares... but with Acorns you can drop a Starbucks Latte each week and set those few spare dollars to now automatically top up your Acorns account.
Simple Interface, Simple Concept
No need to interpret candlestick charts or pick whether it's a bull or bear market - just set your goal, set your regular deposit (if you'd like to make one) and set your account to round up and invest those additional cents here and there.
I see Acorns as the ultimate, easy to follow and implement investing method for those who lack the discipline or funds to make their own regular investments into a larger buy in fund such as Vanguard.
Within your setup area, a performance tab showing the current value and movements of your stock as well as a projected future value based on potential returns and your regular investment over time it gives an insight into where your investment may be (remember as always, previous results do not dictate future returns). Simple, and therefore less chance of falling victim to paralysis by over analysis.
Caters To Your Goals
Want to put money aside and gain a small amount of interest in the short term to save up and buy that home gym you're after? Acorns can work well for small saving goals as well as long term regular investing via the round up of your change coupled with a monthly investment (investing on the same day each month or whatever interval you choose is a form of 'dollar cost averaging', allowing you to average your cost price of the stock over time, as opposed to playing the losers game which is a near impossible mission of attempting to pick the bottom of the market).
One Concern Regarding The Acorns App
There's one point worth noting that seems to be a cause for concern and has copped an amount of criticism from reviewers and users.
Potential Privacy Concern
The round-up feature...
The round-up feature of Acorns is essentially sending the details of each of your transactions (that it's able to draw the round-up funds on) to a third party.
However, there's no need to use this feature if you're making small regular deposits to your account, it doesn't need access to your bank accounts and therefore will have no record of transactions you make.
Who I Recommend Should Use The Acorns App
On the whole I'm a big fan of Acorns - they didn't make me write this post, I have no affiliation with them whatsoever, I merely found this App to be an extremely easy method of beginning to invest small amounts of money while learning and replicating the style of investing (dollar cost averaging, choosing a fund based on risk tolerance and time-frame etc.) into larger funds.
Anyone can use Acorns and reap the rewards however if you're in the following boat I recommend getting started with it now and breaking those bad habits...
Those Poisoned By Consumerism, With Minimal Savings In The Bank Or A Case Of The Golden Handcuffs
If you've got a case of the 'shiny object syndrome' jumping from one purchase to the next, stuck on the hedonic treadmill in the search for happiness instead of wasting all of your funds on goods that'll depreciate, that you'll soon derive no enjoyment from I recommend making a regular deposit (as soon as your pay cheque hits so you can't spend it) into your Acorns account.
If you're making a large number of purchases regularly too you'll be investing more via the round-up feature as (should you enable it) it'll round up the cents from every transaction.