So I’m about as out of the loop on investing as one can possibly be. This new app though sounds like a terrific idea though. Basically round up your normal purchases to the nearest dollar and invest the spare change.
Description
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Acorns is an app, FREE to download, that invests your spare change from everyday transactions into your very own diversified portfolio. You can easily get started in minutes: anytime, anywhere.
· Intelligent Investing ·
A simple and intelligent automatic investment system not only helps you invest regularly but also optimizes your investment through diversification and automatic rebalancing. In other words, we buy low and sell high without you having to keep an eye on things.
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Your peace of mind is our highest priority. Acorns protects your information, prevents unauthorized account access, and notifies you of unusual activity.
· Low Fees ·
No commissions, ever. It’s always free to move your money into and out of Acorns. Using Acorns for a year costs less than what most traditional brokerages charge for just two trades.
*Once you invest, Acorns will charge $1 per month. Acorns also charges a management fee ranging from .25%-.5% per year of total assets in your account.
HOW WE INVEST
· Diversification ·
Acorns seeks to maximize expected returns for a given amount of risk by carefully diversifying across multiple asset classes. The mathematical framework used for this diversification is called Modern Portfolio Theory.
· Automatic Rebalancing ·
Acorns automatically rebalances your portfolio during market fluctuations to mitigate risk and optimize returns.
· Low Cost ·
Acorns invests in low cost ETFs and passes these savings on to the users in the form of low management fees. Using Acorns for a year can cost less than some traditional brokers charge for two trades.
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it depends on what else you’re doing. If you’re doing nothing but a basic 401k then this a great idea to get you more involved / motivated.
I wouldn’t recommend it over a vanguard roth ira where you have tax advantages and many options at lower fees, but again, if you’re doing nothing either is better.
I don’t think this should take the place of a Roth account or stocks, or other investments at all. I think it’s an alternative to your change jar at home
A good question would be for every $10000 you have are you wiling to spend $50 on fees and does this cost more or less than more traditional investment vehicles? The interesting point is that there is no cost to make a trade and probably because you have such limited options.
I agree this sounds like a half way decent use of spare change.
Curious to see what tradersbase and Drew thinks (I imagind you’ve already consulted him).
It would seem that they tack on an additional .25% fee after $5000 invested annually. https://www.acorns.com/fees/
So there are fees from Acorns in the form of $1 a month for the service, a percentage from the financial advisers and in addition to that there are fees from each individual fund so this is just another layer of middlemen. I suppose you’re going to pay a price for not being able to save money and invest through more traditional methods. However if there are no costs for trading then that can be attractive. I would assume this is because you are just adding money to the account. I’m not totally sure. Google searches are very quiet other than the standard PR around this.
Also the site states the fees drop but the sliding bar shows a fixed amount remaining.
I’m curious as to what TraderBase says as well. I already have a Roth through FirsInvestors and a traditional 401k Pre-Tax through GM/Fidelity. I wouldn’t mind just letting pennies here and there pile up into another account.
I’m just thinking to myself how many times I use my credit card a month, maybe 2-3 times a day max?? So how much would the average person contribute per month figuring 30 cents here and there. So based on purchases today at Wegmans and Sunoco I would have invested about 84 cents between the two. So is this how it works?
I’m gonna take a shot in the dark and just guess between 20-40$ a month.
And then it looks like you can contribute to it as normal?
my argument is mostly around why pay more in fees and taxes. If you’re not maxed out on your IRA and 401k then why go elsewhere for buying general funds.
However, this is a great idea if you have poor willpower or are just starting out.
You guys gotta use the @ sign. These days my “investment thing” doesn’t go off automatically, been too busy with work and learning.
I’d be concerned with fees, potential decay on the ETF’s (depending on which they use) and I’d be curious how actively they manage/rebalance as well as their historical track record. If they are new and haven’t sustained a bear cycle I wouldn’t even dream of letting them touch my money…spare change or not. Kinda leaning with Blue here…tax treatment & fees are a big part of investing. If you don’t have the willpower to save/invest on your own you probably shouldn’t be investing. JMHO
That’s what my plan was. I have only been down a few cents since I started but the market has been crappy lately. I am still getting my toes wet.
I do a 401k and purchase yahoo stock at a discount (for the past four years).
I am not a big fan of an IRA because you get taxed as you put in while a 401k is taxed when you start withdrawing while you are retired and placed in a lower tax bracket.
