Acorns-Invest Your
Spare Change
Back in March, I came across a new investing app for Android
and iOS called Acorns. At first I was skeptical about investing apps but after
using it for more than six months, I can say that I am very pleased with
Acorns and I've saved over $300 that probably would have gone unnoticed and spent on junk. Acorns operates on the premise that it invests your spare change. Most
people have a spare change bucket or something similar in their home. When they
come home, they throw their spare change from their transactions throughout the
day in this spare change bucket and after a while, it adds up and you can spend
it how you please. Acorns is similar, instead of investing the physical spare
change, it invests the spare change from your credit card transactions. In
order to this, when you sign up for Acorns, you set up a round up account
within the Acorns. This round up account is where you link a debit or credit
card to Acorns. Any time you make a transaction with that round up account, say
your Chase Visa card and the total comes out to $3.30. Acorns sees that you
made that transaction with the card and rounds up the purchase to $4.00. Now
since Acorns doesn’t actually have access to your credit cards accounts besides
the transactions, they can’t charge your card the extra $0.70. So it rounds it
up and the round up account total would be $0.70 and when the total in the
round up section of Acorns gets up to $5.00 it will withdraw it from your
checking account that you will link during set up. Many might be worried about
privacy but they use bank level encryption to keep your information safe and
are SIPC insured. Acorns also has a feature in beta called “Found Money,” which
is basically a rewards program for shopping at certain partners that Acorns
partners with. As of September, these brands were, JackThreads, Dollar Shave
Club, Jet.com, HotelTonight and Blue Apron. Rewards vary depending on where you
shop and you must shop using a card that is linked to an Acorns round up
account. Now investing can carry loss over time but this is a good way for
people to get started who don’t know where to start and don’t know how to pick
investments. Well Acorns invests it in ETF’s. You choose your risk tolerance
and Acorns will allocate your investment appropriately in the five ETF’s
mentioned below. The ETF’s Acorns invests in are LQD which are corporate bonds,
VOO (Large Cap companies ), VB(Small Cap companies), VWO which is emerging
markets and SHY which is composed of government bonds. Now Acorns has a $1 fee
per month but is waived for accounts that have an .edu extension on their email
when signing up or that fee is 0.25% when the account reaches $5,000. Now
Acorns is great for the investor who is just starting out and who may or may
not know how to pick their own investments. Make sure you support the Almighty
Dollar by using our referral code when signup up for Acorns: https://acorns.com/invite/GLJGJH
Pros:
·
Simplicity
·
Low starting capital
·
Diversified
Cons:
·
Fee is a little high
·
Can’t pick your own investments
·
Only taxable accounts, so if you sell any of
your holdings, you will incur capital gains taxes
