Topic: Are Spare Change Investment Apps A Good Option (Read 139 times)
In my country the most popular bank has auto opt-in feature that is similar to that - it rounds up your transactions and sets a tiny change into a special deposit account. And most users hate that feature and disable it. It's more fun to just get cashback or monthly dividends on your balance, because you don't have to take any extra steps, as money go directly to your main account.
To me, from the perspective of someone who will invest $10 or $20 (or twice as much) a month, this does not seem like something that promises any kind of profit that makes sense. This is something like "investing for dummies", without realizing what they are really investing in and whether they will earn anything at all one day.
Imagine a world where one such company is worth almost $1 billion and has 5 million users, truly amazing in every way
Imagine a world where one such company is worth almost $1 billion and has 5 million users, truly amazing in every way
in the small amount of research I did, it doesn’t seem like a bad idea, but personally I’d rather just open a TD Ameritrade account for free, place trades for free and not have to pay any service fees (well not outward any way, we all pay fees via price spreads, despite being “invisible”).
Technically true. But let's probably not forget that both platforms cater to different demographics. Acorns seems to be a more "playful" take on an investing app, which can be great to get the younger demographic hooked. On the other hand TD Ameritrade's app looks a lot more "serious".
100%. That's why I'm not up in arms saying that it's stupid to invest money in apps/programs like this. What I mean is it's better to do your homework and invest on your own, but I realize for a lot of people that's just not plausible so things like Acorn certainly aren't a bad thing.
As I’ve shared many times before I’m a financial advisor and I come across these types of savings/investing platforms and Acorn is one I’ve recently done a little bit of research on. The retirement plan I advise for used to have it as an option for its plan but has since take it away (not sure why).
I would guess the retirement plan was structured similar to a 401k that is tied to stock market averages.
Probably removed due to the economic outlook not being the best atm and 401k's taking some nasty hits.
Yeah the plan is a deferred compensation/457b plan which is very similar to 401k plans. I think they removed it from the plan simply because they wanted to break down how many investments were available to the participants as to not confused them I guess. I dunno, it's actually pretty ridiculous how few investment options the plan I service has. I'm pushing hard for them to allow us to add more.
to be honest,, I think Acorns is very helpful for beginners who don't want to focus too much on investing but still want to invest small and don't really care about fees .. but for experts this is quite expensive and not worth it because the fees are unreasonable .. However, Acorns offers easy investment thats what makes it the best investment platform for beginner
I think it sounds interesting, especially if you consider how most of the target market of the app is the youth so a lot of the necessary stuff that you'd need to understand is basically automated by the app for the most part. Sure, it may not be the best type of investment to do in terms of profitability, but it would probably be a better option for someone without the knowhow compared to someone who does, plus it doesn't necessarily mean that they'd permanently stay on acorn for investing, it can be an introduction for people instead (which is likely the case most of the time).
I'm somewhat familiar with this Acorns company and their business model.
For some reason Acorns is being heavily advertised on get-paid-to websites (GPT) like Freecash, Swagbucks and Inboxdollars.
If you create Acorns account using their link and deposit 5 USD, you get a 25-40 USD commission. Pretty interesting form of marketing.
I wouldn't use services like Acorns, because I don't do online shopping that often and all this "invest your spare change" model seems exaggerated. At the end of the day, several dollars are just several dollars, you can't make them into several thousand dollars, Acorns can't offer 1000% ROI as well. It seems that Acorns and a bunch of similar companies have found their small niche in the financial world.
Good for them, but I couldn't care less about this business model and my spare change.
For some reason Acorns is being heavily advertised on get-paid-to websites (GPT) like Freecash, Swagbucks and Inboxdollars.
If you create Acorns account using their link and deposit 5 USD, you get a 25-40 USD commission. Pretty interesting form of marketing.
I wouldn't use services like Acorns, because I don't do online shopping that often and all this "invest your spare change" model seems exaggerated. At the end of the day, several dollars are just several dollars, you can't make them into several thousand dollars, Acorns can't offer 1000% ROI as well. It seems that Acorns and a bunch of similar companies have found their small niche in the financial world.
Good for them, but I couldn't care less about this business model and my spare change.
As I’ve shared many times before I’m a financial advisor and I come across these types of savings/investing platforms and Acorn is one I’ve recently done a little bit of research on. The retirement plan I advise for used to have it as an option for its plan but has since take it away (not sure why).
I would guess the retirement plan was structured similar to a 401k that is tied to stock market averages.
Probably removed due to the economic outlook not being the best atm and 401k's taking some nasty hits.
legendary
Activity: 1358
Merit: 1565
The first decentralized crypto betting platform
If you're too financially illiterate to just save and invest your own money, sure, why not. But it overall I'm sure is going to be pretty scammy because they are going to need a business model to be able to profit off of this "spare change". So by outsourcing this work based on pennies in the first place, you're going to a pay a price some other way.
I completely agree.
They are shit. They're the modern version of saving your change when you got home, but charging you.
Even if they don't charge you, it's much better that when you get paid you save. I mean, when I get paid I save £100, and if I saved the change instead, the total saving would be less than £15.
In the end, the total money you have to manage is the same, and the best proven way is when you get paid to save/invest some of it and act as if it doesn't exist, as if you haven't been paid.
If you're too financially illiterate to just save and invest your own money, sure, why not. But it overall I'm sure is going to be pretty scammy because they are going to need a business model to be able to profit off of this "spare change". So by outsourcing this work based on pennies in the first place, you're going to a pay a price some other way.
in the small amount of research I did, it doesn’t seem like a bad idea, but personally I’d rather just open a TD Ameritrade account for free, place trades for free and not have to pay any service fees (well not outward any way, we all pay fees via price spreads, despite being “invisible”).
Technically true. But let's probably not forget that both platforms cater to different demographics. Acorns seems to be a more "playful" take on an investing app, which can be great to get the younger demographic hooked. On the other hand TD Ameritrade's app looks a lot more "serious".
When it automatically rounds up the numbers to invest your spare change automatically, it already sounds like you have no choice. They are stealing from their users automatically.
While I totally agree that as early as possible, teens have to really start learning to invest and making money from it. It might just be good for the Acorn app to give an option for its users to pick which kind of assets to invest in. A list of crypto coins will be a good idea.
While I totally agree that as early as possible, teens have to really start learning to invest and making money from it. It might just be good for the Acorn app to give an option for its users to pick which kind of assets to invest in. A list of crypto coins will be a good idea.
I got offered this by my bank in the UK for "free" - they didn't charge a commission on investments but probabky made some from the funds they suggested (even those had - at most - 0.7% fees per year).
I've seen acorn advertised a lot (and moneybox too for a similar thing) and I think they're both a lot of hype without much behind them.
That being said, I'd find it'd only take a few minutes to download my monthly bank statement as a csv and crunch the numbers myself so maybe I'm not the person it's aimed at. I also think these types of schemes encourage spending more money too (especially on small, cheap items).
I've seen acorn advertised a lot (and moneybox too for a similar thing) and I think they're both a lot of hype without much behind them.
That being said, I'd find it'd only take a few minutes to download my monthly bank statement as a csv and crunch the numbers myself so maybe I'm not the person it's aimed at. I also think these types of schemes encourage spending more money too (especially on small, cheap items).
As I’ve shared many times before I’m a financial advisor and I come across these types of savings/investing platforms and Acorn is one I’ve recently done a little bit of research on. The retirement plan I advise for used to have it as an option for its plan but has since take it away (not sure why). I had a client ask if I thought it was a good idea… in the small amount of research I did, it doesn’t seem like a bad idea, but personally I’d rather just open a TD Ameritrade account for free, place trades for free and not have to pay any service fees (well not outward any way, we all pay fees via price spreads, despite being “invisible”).
Quote
You may have heard of Acorns. Acorns is an investing app lets people automatically invest their spare change by rounding up the purchases they make with a linked credit or debit card. Acorns, currently valued at $860 million, has been lauded by investors and journalists alike for finally getting millennials interested in investing. (The demographic – notoriously skittish when it comes to the market — makes up the majority of Acorns’ over 5 million users.) But is the micro-investing app worth its fees? Check out our full Acorns app review.
How does Acorns work?
The Acorns investing app encourages you to invest your spare change using a system it calls "round-ups." Acorns monitors your bank account and automatically invests the change from your daily purchases. For example, if you buy a coffee for $2.75, Acorns will round up to $3.00 and automatically invest $.25.
The “save your spare change” feature is Acorns’ key selling point, along with ease of use. Unlike financial tech startups Betterment and Wealthfront, which offer more robust investment services, Acorns was built to be mobile-first. It was originally available only as an iOS or Android app, though the company ultimately launched a web version.
Acorns review
Part of being an app means making the investing process as simple as possible. While Betterment and Wealthfront give you a wide variety of options to customize your portfolio, Acorns forces you to choose between their five default “smart portfolios” built with the help of Harry Markowitz, father of the Modern Portfolio Theory. The app will suggest one of these portfolios — conservative, moderately conservative, moderate, moderately aggressive, or aggressive — based on your savings goals and risk tolerance. You can alternately choose one yourself. Acorns will automatically rebalance your portfolio as the market changes.
There are no minimums to set up an Acorns account, but you need $5 to start investing.
How much does Acorns cost?
You won't see many Acorns reviews telling you that there's a danger to investing too little, but it’s important to understand how the return on an Acorns account stacks up against full-service investment apps. Acorns fees are $1 per month for all accounts with a balance under $1 million. The monthly fee rises $100 per month for every million you invest afterwards. Compared to traditional management, mutual funds, and DIY ETFs, this fee is incredibly low. Other portfolio advisory services, like Amerivest, charge as much as 1.25% and require a minimum investment of $25,000.
But, while Acorns’ fees seem low on the surface, Acorns’ traditional competitors aren’t encouraging would-be investors to build a portfolio around their spare change. When you’re dealing with just a few dollars every month, that $1 fee starts to make less sense.
For instance, if you make 50 transactions each month with an average of $.25 rounded up per transaction, you’re only investing $12.50 every month. At that rate, Acorns’ monthly fee is taking away 8% of your contribution to your investment portfolio in your first month. Keep in mind that Acorns doesn't take its subscription fee out of your account, but rather a linked funding source so that the monthly fee doesnt' directly impact your losses and gains.
The more transactions you have (the more you’re spending, perhaps multiple small purchases like coffee or fast food) this percentage will go down. At 100 transactions per month with an average of $.25 per transaction, you’ll invest $25 the first month and give 4% to Acorns. At 150 transactions, you’re investing $37.50 and giving almost 2.7% to Acorns.
Image link: https://i.ibb.co/Z2sHTqT/one.jpg
Note that none of this takes into account the money you already have in your account, slowly (or quickly) growing (or shrinking) because of market changes. If your portfolio grows a few bucks and Acorns reinvests it, that effectively adds to your monthly contribution. However, until your portfolio grows to be thousands of dollars, your portfolio growth is unlikely to make a noticeable difference to your bottom line month over month.
Acorns vs Betterment vs Wealthfront vs Wealthsimple
Betterment only charges .25% in fees per year for its baseline price tier, amounting to mere cents per month while you are building up your portfolio.
And what about Wealthfront, another robo-advisor? They require a minimum balance of $500. They do, however, manage the first $10,000 of every account for free. Canadian robo-advisor Wealthsimple has relatively higher fees of up to .50%, but also offer a human touch.
Image link: https://i.ibb.co/dPY5DGc/two.jpg
Acorns features & services
To boost your Acorns balance, you can set up recurring deposits of larger amounts, get referral bonuses and earn extra cash to invest by shopping through Found Money, the core Acorns app’s rewards program, though these features aren’t as heavily advertised as the opportunity to invest your change. The services are popular, however, says Acorns CEO Noah Kerner, with a typical customer investing over $60 per month.
“The majority of our customers take advantage of Acorns’ full suite of tools and services, making the small $1 per month subscription quite reasonable,” Kerner told Policygenius in a written statement.
Acorns' other services include:
Is Acorns worth it?
Acorns investing is positioned as the best choice for many millennials looking to dip their toes into the waters of investing, but, as this Acorns review shows, it doesn't mean it’s the best choice for you. As the chart illustrates, the Acorns investing app is relatively expensive. If you keep a small balance, you'll wind up paying a high percentage of those assets in Acorns management fees.
If you can't afford to fork over $500 right now and start your journey toward full-fledged investing, you might consider putting some money into a savings account instead. A high-yield savings account is usually free and will allow you to grow small amounts of money over time. Once you’ve reached a self-imposed threshold —either Weathfront’s $500 minimum or some other savings goal — you can revisit the idea of putting that money in an investment portfolio instead.
Acorns does waive the $1 account management fee on its core micro-investing app for college students, so, if you’re still in school, it’s an easy — and free — way to start saving. You’ll need a valid .edu email address to take advantage of that offer. Acorns is also worthwhile if you're brand new to investing and looking for an quick, easy way to get started.
The best investment apps
These days, prospective investors have more choices than ever before. Spare change apps like Acorns can help you get more comfortable with investing, but you can also consider doing business with a robo-advisor like Betterment or Wealthfront, which mix automation (no trading or stock picking) with access to financial planners. There are also online brokers like Robinhood and Stash that let you trade and manage stocks yourself.
Want to learn more about new ways to invest? Check out our roundup of the best investing apps.
https://www.policygenius.com/investing/news/beware-of-spare-change-investments/
How does Acorns work?
The Acorns investing app encourages you to invest your spare change using a system it calls "round-ups." Acorns monitors your bank account and automatically invests the change from your daily purchases. For example, if you buy a coffee for $2.75, Acorns will round up to $3.00 and automatically invest $.25.
The “save your spare change” feature is Acorns’ key selling point, along with ease of use. Unlike financial tech startups Betterment and Wealthfront, which offer more robust investment services, Acorns was built to be mobile-first. It was originally available only as an iOS or Android app, though the company ultimately launched a web version.
Acorns review
Part of being an app means making the investing process as simple as possible. While Betterment and Wealthfront give you a wide variety of options to customize your portfolio, Acorns forces you to choose between their five default “smart portfolios” built with the help of Harry Markowitz, father of the Modern Portfolio Theory. The app will suggest one of these portfolios — conservative, moderately conservative, moderate, moderately aggressive, or aggressive — based on your savings goals and risk tolerance. You can alternately choose one yourself. Acorns will automatically rebalance your portfolio as the market changes.
There are no minimums to set up an Acorns account, but you need $5 to start investing.
How much does Acorns cost?
You won't see many Acorns reviews telling you that there's a danger to investing too little, but it’s important to understand how the return on an Acorns account stacks up against full-service investment apps. Acorns fees are $1 per month for all accounts with a balance under $1 million. The monthly fee rises $100 per month for every million you invest afterwards. Compared to traditional management, mutual funds, and DIY ETFs, this fee is incredibly low. Other portfolio advisory services, like Amerivest, charge as much as 1.25% and require a minimum investment of $25,000.
But, while Acorns’ fees seem low on the surface, Acorns’ traditional competitors aren’t encouraging would-be investors to build a portfolio around their spare change. When you’re dealing with just a few dollars every month, that $1 fee starts to make less sense.
For instance, if you make 50 transactions each month with an average of $.25 rounded up per transaction, you’re only investing $12.50 every month. At that rate, Acorns’ monthly fee is taking away 8% of your contribution to your investment portfolio in your first month. Keep in mind that Acorns doesn't take its subscription fee out of your account, but rather a linked funding source so that the monthly fee doesnt' directly impact your losses and gains.
The more transactions you have (the more you’re spending, perhaps multiple small purchases like coffee or fast food) this percentage will go down. At 100 transactions per month with an average of $.25 per transaction, you’ll invest $25 the first month and give 4% to Acorns. At 150 transactions, you’re investing $37.50 and giving almost 2.7% to Acorns.
Image link: https://i.ibb.co/Z2sHTqT/one.jpg
Note that none of this takes into account the money you already have in your account, slowly (or quickly) growing (or shrinking) because of market changes. If your portfolio grows a few bucks and Acorns reinvests it, that effectively adds to your monthly contribution. However, until your portfolio grows to be thousands of dollars, your portfolio growth is unlikely to make a noticeable difference to your bottom line month over month.
Acorns vs Betterment vs Wealthfront vs Wealthsimple
Betterment only charges .25% in fees per year for its baseline price tier, amounting to mere cents per month while you are building up your portfolio.
And what about Wealthfront, another robo-advisor? They require a minimum balance of $500. They do, however, manage the first $10,000 of every account for free. Canadian robo-advisor Wealthsimple has relatively higher fees of up to .50%, but also offer a human touch.
Image link: https://i.ibb.co/dPY5DGc/two.jpg
Acorns features & services
To boost your Acorns balance, you can set up recurring deposits of larger amounts, get referral bonuses and earn extra cash to invest by shopping through Found Money, the core Acorns app’s rewards program, though these features aren’t as heavily advertised as the opportunity to invest your change. The services are popular, however, says Acorns CEO Noah Kerner, with a typical customer investing over $60 per month.
“The majority of our customers take advantage of Acorns’ full suite of tools and services, making the small $1 per month subscription quite reasonable,” Kerner told Policygenius in a written statement.
Acorns' other services include:
- Acorns Later: Acorns Later is an individual retirement account available to Acorns investing app users. People who open an IRA through Acorns Later pay $2 a month for both accounts.
- Acorns Spend: Acorns also has an FDIC-insured checking account plus debit card, called Acorns Spend, that its Core users can pre-order. You pay $3 a month if you have Acorns, Acorns Later and Acorns Spend.
- Found Money: Acorns has a cashback program that's a bit similar to one you might see with a rewards credit card. If you make a purchase through an Acorns Found Money partner, that company will automatically invest in your Acorns portfolio.
Is Acorns worth it?
Acorns investing is positioned as the best choice for many millennials looking to dip their toes into the waters of investing, but, as this Acorns review shows, it doesn't mean it’s the best choice for you. As the chart illustrates, the Acorns investing app is relatively expensive. If you keep a small balance, you'll wind up paying a high percentage of those assets in Acorns management fees.
If you can't afford to fork over $500 right now and start your journey toward full-fledged investing, you might consider putting some money into a savings account instead. A high-yield savings account is usually free and will allow you to grow small amounts of money over time. Once you’ve reached a self-imposed threshold —either Weathfront’s $500 minimum or some other savings goal — you can revisit the idea of putting that money in an investment portfolio instead.
Acorns does waive the $1 account management fee on its core micro-investing app for college students, so, if you’re still in school, it’s an easy — and free — way to start saving. You’ll need a valid .edu email address to take advantage of that offer. Acorns is also worthwhile if you're brand new to investing and looking for an quick, easy way to get started.
The best investment apps
These days, prospective investors have more choices than ever before. Spare change apps like Acorns can help you get more comfortable with investing, but you can also consider doing business with a robo-advisor like Betterment or Wealthfront, which mix automation (no trading or stock picking) with access to financial planners. There are also online brokers like Robinhood and Stash that let you trade and manage stocks yourself.
Want to learn more about new ways to invest? Check out our roundup of the best investing apps.
https://www.policygenius.com/investing/news/beware-of-spare-change-investments/
....
An app that invests your spare change. Sounds like a great idea. It sounds like a gateway drug to entice youth to become investors. Which isn't necessarily a bad idea.
I would guess most wish they had begun trading and investing at an earlier age. Based upon the idea that says the earlier people become involved in finance and business. The more successful they can be. Everyone wishes they had been an early adopter of bitcoin, amazon, tesla and other successful ventures. Sitting on the sidelines, leaves many good opportunities passing us by.
In this case, acorn costs only $1 per month to invest and manage spare change. The $1 fee is waived for college students. And some of acorn's competitors charge a flat percentage rate rather than $1. The fees definitely seem manageable. The format and structure of the investment seems like something many could benefit from. Especially during a bull market. When the prices of most assets will be increasing.
But what options do investors have during bear markets or recessions when prices are trending downward. Considering stocks and bonds usually trail in the same direction. While this is a great concept and idea. What's really needed in 2022 is something that can be consistently profitable during an era of economic contraction.
Jump to: