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What if you could invest your loose change at the end of the day? Now you can with Acorns.
Acorns is an app taking advantage of new technologies and less expensive investment fees to allow anyone to start investing without a minimum balance or complicated application process.
Interview with Acorns founders
Walter and Jeffrey Cruttenden share the incredible technology and process behind Acorns. It was developed on the idea that everyone will be mobile, so the focus was on developing an app to act as a portal to connecting funding accounts with the investments – and track every penny along the way.
In the interview we discuss:
- Fees: $1.00 a month and .5% annual fee (.25% after reaching $5,000)
- Investment funds: ETFs from Blackrock, Vanguard and PIMCO
- How much control a customer has over the portfolio mix
- Can you deposit other monies into the account at any time? Yes
- Is there a ROTH or IRA option? Not at this time
- Acorns Beta users paid more attention to their spending and identified problems/opportunities
Walter and Jeffrey believe this is an excellent way to get millennials to begin investing. It’s hard to convince someone to save $1,000 in chunks but easy to squirrel away a couple bucks a day using the Acorns App process.
How Acorns works:
1) Download the Acorns app
2) Sign up for a free account
3) Tie your debit card (and credit card if you still use one) to Acorns
4) Choose your level of risk
Acorns will “round up” your purchase to the next dollar amount.
Once the rounded amounts accumulate $5.00 or more, Acorns will deposit that amount from your funding account (which is likely to be your checking account) into an investment account (the diversified portfolio of ETFs).
What I learned from the Acorns interview
It’s not as scary as it sounds. Tying your charge card to Acorns is similar to tying it to dining programs such as American’s AAdvantage program or United MileagePlus Dining.
Acorns never touches your original transaction: They monitor your activity and record the round-up amount.
Even if someone messes with your Acorns App, the money taken out of one account will end up in your investment account.
Once you set it up there is very little maintenance. Everything works automagically.
I find this fascinating. The technology and lower costs to get into investments makes Acorns possible. I can’t wait to see what’s next!
The September 100 Challenge
No, this has nothing to do with ice buckets.
The #100challenge is for people like myself who want to stretch their financial muscles for 30 days:
Squeeze every dollar you can until you reach $100:
- Sell stuff at a garage sale or Craig’s list
- Work extra
- Do something unusual for money (walk dogs, RUN dogs, take care of someone’s house while they are away, fix a fence, mow lawns, paint, etc)
- Or simply cut back on some things for 30 days
- Play guitar on a street corner for tips
Put a post-it note on your mirror or daily reminder on your phone.
Once you reach $100 – apply it to your next goal: Emergency savings, Christmas, car replacement fund, vacation, kid’s college, paying off the house, etc.
After you reach $100 keep working and/or saving more $$$ to do something special for yourself – just for September 2014!
Click the owl to Tweet or share your success with the hashtag #100challenge
Click to print this picture
What are some of the ideas you have that can bring home more money or spend less in September #100challenge?
Hey Steve, I met you at PM14 standing in line Friday night to check in. I love your podcast!!! I’m a big Dave Ramsey fan and your podcast gives action steps for the things he talks about. This is the first episode, of yours, thatI have listened to and it’s great. I have a 19 y/o son and I have been wanting him to start investing, like Dave says, but since I don’t know how, I didn’t know how to advise him. The Acorns app looks like a great way to start off easy. Going to try it. Thanks for talking with me in line 🙂 and thanks for introducing us to this app.
Janet
Cool Janet! It was great talking to you too!
Your son might be the ideal user of Acorns. It’ll get him started and, as long as he is paying attention, he could start putting away $20, $30, even $50 a month without batting an eye.
I’d love to hear about his experience using the Acorns app. Keep me updated, OK?
Hey Steve, Congratulations for all your success, you know a big fan and very grateful follower of yours
to the point. I was very thrilled when you invited the guys of acorns, I think is a fantastic idea, I gave it some time, then I listened in Stacking Benjamins once again about acorns. I am ready to go, I just want to ask you. Do you personally use Acorns? if so how do you navigate your records with YNAB, which i use and it’s been really really useful for me. Let me hear your comments and suggestions on how to integrate Acorns and YNAB
Hi William, thanks!
Although I love the idea, I decided not to use Acorns. We already have a savings routine set up and are working with our Financial Planner – adding Acorns to the mix would complicate things more than they need to be.
I think it’s a great idea for someone just getting started. If you can start using Acorns and send them more than just your loose change then this is a viable option.
How to incorporate with YNAB? I imagine it would be easy (gathering what I learned from the interview). They don’t touch your original transaction – they simply withdraw from your account once the accumulated “round-up” change reaches $5. So all you need to do is make a YNAB entry showing a $5 outflow to your Acorns savings each time they do this.
Let me know how it works for you!
I hope they at a IRA feature to it sometime. I’d hate to have pay taxes on investments I’m not touching, but that they are touching.