Growing up, I always had a large jar for my loose change I kept close to my dresser. Every night while emptying out my pockets I would always throw my loose change into the jar and watch it grow over time. Once it was full I would deposit the funds into my savings account, and repeat. As the world has become more and more reliant on electronic transactions, I have as well and very rarely have any spare change to toss into a jar. Jeff and Walter Cruttenden, the father and son co-founders of the investing app “Acorns” which launched in 2014, noticed this same trend and set out to do something about it.
What is Acorns?
When it comes to investing money, many people typically get intimidated and just simply don’t have the funds available to meet minimum deposit amounts with many of the big investment banks. This has largely turned people off from investing their savings. Acorns allows you to connect credit and/or debit cards plus a checking account to your account. They will then automatically round up your transactions to the nearest dollar and invest that “spare change”. The “spare change” comes out of your checking account and is automatically diversified across 7,000 stocks and bonds in the form of ETFs (exchange traded funds) to help maximize your returns and reduce your risk. This is very simple, mindless investing with no minimum deposit. Investors are also able to choose from 5 different risk profiles for their account from very conservative to very aggressive.
Let me give you an example. Yesterday I ate at Chipotle for lunch, and the transaction was $7.24. I paid with an American Express credit card, which I had previously linked to the Acorns app. Acorns automatically rounded this up to $8.00 and invested the $0.74 in my account. The app will wait until you have $5 of roundups before an actual deposit will occur. Also, the deposit is not billed to your credit card, but rather the round ups are deposited directly from your linked checking account. You are also able to deposit any amount of money at any time not associated with round up accounts as well as set up recurring monthly deposits (I am only using the round ups service).
After inputting your basic information and answering a few questions about your investment timeline and risk tolerance, the app recommends one of six portfolios ranging from more conservative to more aggressive. This makes for very simple, hands off investing.
Are there fees associated with the account?
Once an account is opened, there are no fees on a $0 balance. As soon as you deposit money, there is a charge of $1 per month for accounts with a balance under $5,000 and 0.25% per year for accounts with a balance of $5,000 and over. All things considered, these are very reasonable management fees.
Thrifty Tip #1: Are you a student between the ages of 18 and 23? Acorns will waive your monthly maintenance fee, making the investment service completely free!
The “Found Money” Feature
There is also a feature in which they call “Found Money.” This is a very interesting development and something that certainly got my attention. Acorns has partnered with a list of retailers who will provide rewards in the form of investment money for shopping on their websites with the credit cards you have linked to your acorns account. There is a large list of retailers such as Airbnb & Uber offering cash back in the form of investments into your account.
Thrifty Tip #2: New to Acorns? Sign up using our link and we will both get $5 deposited into our accounts!
While Acorns is not the main vehicle that drives my retirement savings, it is proving to be a very easy way to save and invest additional funds without much thought involved. With no minimum account balance or initial deposit, they have made investing very approachable for the average Joe. I have been using the app for about 6 months now and have been pleasantly surprised at how fast my “spare change” has added up.