Acorns is a relatively new app in an emerging group of new investment apps for the mobile generation.
Gone are the days of putting down a minimum of 10k in an investment account or paying huge fees on stock trades. There is a new generation of investment products that require very little up front cash, low fees and the freedom to walk away at any time.
Acorns is one of these apps and for the past couple of months, I've been trying out the app to see how it performs and whether or not it can compete as a geneuine investment.
The concept is really simple. Acorns rounds up your spare change from purchases you make and transfers this money into an investment account.
Acorns rounds your purchases up to the nearest dollar and tranfers the difference. For example, say you buy a coffee for $3.80. Acorns will transfer $0.20 into your investment account. These are called round-ups.
What's magical about this, is you never even realise the money is being transferred out of your account. It eliminates the fear of putting down big sums of money into investment accounts and instead grows your account slowly over time.
You can also choose to make additional one-time or recurring deposits to further your saving goals.
Your money gets invested across various ETFs listed on the ASX (the u.s version of the app invests in U.S based securities). These are the same index funds that your other investments are in, but Acorns lets you get started with as little as $5.
The funds you invest in is based on the type of portfolio of you want. You have a choice of 5 different portfolios which have different levels of risk and are based around your age. Younger investors will want a more aggressive portfolio where older investors with already established savings will want something less risky
You can change your portfolio selection at anytime
Acorns doesn't charge a large fee. But it's still something you need to be aware of. For accounts under $5000, you are charged just $1.25 a month. And over that figure are charged a yearly fee of just 0.275%.
By my calculations, if you have less than $100 in your account, then the fees will outweigh any growth, so that is something to be mindful of
Acorns also doesn't charge anything for deposits or withdrawals. And you get an unlimited number of these. Just be aware that it may take 7 days or slightly longer to withdraw due to the nature of needing to sell your positions and transfer to your bank account. This is standard but again it's something to remember - this isn't a bank account
I think so. I've only been on the app for a little while. It's nice to know that I'm saving money each month, without needing to think about it. The app is really well designed and the entire user experience is top notch. Obviously I will need to wait a few months or possibly years to see how this performs as an investment but early signs are really positive.
That's my growth figure on the right. Pretty good so far and it sure beats my savings account.
I think apps like Acorns are the future of financial products. Younger investors will demand the freedom to move their money from one app to another and not be locked into long term deposits. They will also want a good user experience and will want a mobile first experience.
The next generation will also want investing to be effortless and done for them. Left to the exerpts. And this is where an app like Acorns excells. You never need to think about it. You don't even need to log into the app on a regular basis. It just works