Acorns - The Spare Change Investment App

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ValkyrieIATD

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Acorns

Acorns is a relatively new smart phone App that essentially takes your rounded-up change from debit card purchases/cash back rewards from credit card purchases and invests them in a diversified portfolio. You can dump hard cash in as well, and withdraw any amount of funds at any time with no penalty.

It's $1/Month for the service, plus a .25% management fee if you maintain a balance over $5,000.

I know there are a lot of people here, like me, who come to this section of the forum thinking about investing money, but then get gun-shy and turn away. I have a fair amount of money saved for someone my age (28), but not nearly enough to legitimize investing in serious ventures. Acorns offers me an opportunity to invest with little bits of money and a variable scale of risk (you can adjust your investment strategy on a slider, from Super-Conservative to Super-Aggressive).

Does anyone else have experience with Acorns, or any feedback on the process in general? I've seen almost nothing but great feedback from users.

Hopefully this can fill the void for a lot of posters here who also want to watch their money grow, but either don't have enough for a big investment or don't have the knowledge/willingness to invest big.

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Deathwing

Deathwing

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If you buy enough stuff that the roundups and cashbacks will make a difference in your retirement, you're either really irresponsible with money(and this app won't fix that) or you're already set for life.

It might be better to discuss why you're against putting money in a Vanguard ETF or paying off loans early. Assuming the interest rate on the loans are high enough, both of those are better choices than this app.
 
Rangoth

Rangoth

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Deathwing_sl said:
If you buy enough stuff that the roundups and cashbacks will make a difference in your retirement, you're either really irresponsible with money(and this app won't fix that) or you're already set for life.

It might be better to discuss why you're against putting money in a Vanguard ETF or paying off loans early. Assuming the interest rate on the loans are high enough, both of those are better choices than this app.
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I don't use the app myself and while it's not that your statements are untrue, it's just more of a mindset thing. People don't think about their daily lunch at work, morning coffee, random purchase etc. Even if it adds up to 500$ a year if you started this at a young age you'd have a mini-401k. It's "free" money, but without the effort or knowledge that you are doing it. That's the biggest step for people. It may also act as a gateway drug. They see how much they have in this account and "wow I made 8%" or whatever, maybe I should invest for real!

Again I know nothing about the app or the company or even the slidebar risk setting(lol to that one though), but I approve of the idea. I already invest, I have a 401k, I'm financially secure but I would do this if it worked with CC instead of just bank/debit, mostly because "why not"? I spend a shitload of money on a ton of things, use my CC for everything under the sun(gogo points) and it'd be a nice little lump sum of pocket change when I retire.
 
Blazin

Blazin

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You mean this as something in addition to retirement investments right? It seems fine just as a measure of being disciplined but making sure you are at least capping ira or high % into 401k, every year into a broad market index at Vanguard/Fidelity et al is far more important than this type of investing.
 
V

ValkyrieIATD

Silver Knight of the Realm
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Deathwing_sl said:
It might be better to discuss why you're against putting money in a Vanguard ETF or paying off loans early.
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I have no loans, and this is ground-floor for investing for me. ETFs would be the next "step"

Rangoth_sl said:
mini-401k... It may also act as a gateway drug.
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That's really the crux of it. It's basically a "My First Investment Portfolio," getting my feet wet and being able to see my contributions grow on a daily basis via their app -- also, the contributions aren't solely from round-ups on purchases. You can deposit up to 30K at a time.

Rangoth_sl said:
but I would do this if it worked with CC instead of just bank/debit
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It works with my Cash Back rewards on my CC, which I can directly deposit into my Acorns account almost immediately after making a transaction. You can link as many Round-Up accounts as you want, across any number of CCs or Debit Cards.
 
Rangoth

Rangoth

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To Blazin: Yes, I would never recommend this as a primary form of financial savings or retirement. Just like that bank of america card that rounds to the dollar and puts it in savings instead of checkings when you use your debt card, this is a neat feature and could be cool for reasons mentioned above.

Valkyrie: I don't mean on the cash back monies I get from my CC. I literally just mean my CC dollars spent. I don't have a cash back card, right now I'm using the VISA black though I'm not sure I will stick with it honestly. So this doesn't derail the whole thread with why I'm using a 500$ annual fee card: I spend a ridiculous amount every year for work travel so I wanted a card with no international transaction fees and decent generic(ish) rewards with a focus on miles as the primary reward. The VISA black also came with a free membership to the airline club rooms(which can cost 500$ annually)....or so I thought. Turns out the membership is through this third party program and it's kind of shitty to be honest. I wish they'd change it to be free wifi on any airline or some crazy shit instead but whatever. I may switch again in a year or so but right now it's no harm no foul and I still like collecting miles.
 
Khane

Khane

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Valkyrie, if you're going to invest soundly you're going to want to invest for the long term. And if you're investing for the long term the worst possible thing you can do is check your balances daily. You'll drive yourself mad.
 
V

ValkyrieIATD

Silver Knight of the Realm
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Blazin_sl said:
You mean this as something in addition to retirement investments right? It seems fine just as a measure of being disciplined but making sure you are at least capping ira or high % into 401k, every year into a broad market index at Vanguard/Fidelity et al is far more important than this type of investing.
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Yes, this is supplementary to my 401K, which gets 17% of my paycheck anyway. But a lot of people don't have employer match 401K available to them, so this could serve as their own baby 401K.

It really boils down to this: I already have my debit card purchases rounded-up and deposited into a savings account. I also receive cash-back rewards on two different CCs. As of right now, those rounded-up cents and cash back credits just sit and spin in .00000001% interest rate accounts (I average about $50-$60/Mo in rounded-up and CC rewards). Rather than them doing practically nothing for me, they get dumped into my Acorns account, which I get to have a little fun with, some control over, and the ability to monitor on a daily basis.

This isn't big-time investing. This is super basic with some slight variability in returns. The portfolio you invest in has some fun big-name stocks like Google and Apple, and also some blue-chip stuff, along with government bonds. It's basic, easy to follow, and a good starting point for someone like me with almost zero investing background.
 
Khane

Khane

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So it's investing in individual stocks rather than ETFs or mutual funds? No thanks.
 
V

ValkyrieIATD

Silver Knight of the Realm
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wut? The whole thing is an ETF. Here are the main components: Vanguard S&P 500 ETF (VOO) - Vanguard Small Cap ETF (VB) - Vanguard Emerging Markets ETF (VWO) - Vanguard REIT Index ETF (VNQ) - PIMCO Inv Grd Corporate Bond ETF (CORP) - iShares 1-3 Year Treasure Bond ETF (SHY).

Which are comprised of:

Apple, Exxon Mobil, Google Class A, Microsoft, GE, Johnson & Johnson, Towers & Watson Co. Class A, Glenworth Financial Class A, Fortune Brands Home & Security, Jarden Corp., Hanesbrand, Cooper Cos. Inc., China Construction Bank Corp., China Mobile, Industrial & Commercial Bank of China, Tencent Holdings, Taiwan Semiconductor Manu. Co. Ltd ADR, Taiwan Semiconductor Manu Co. Ltd., Simon Property Group, Public Storage, Prologis Inc., Ventas Inc., HCP Inc., Health Care REIT Inc.

Corporate Bonds: GE Cap Corp Mtn Be 5.5%, Hsbc Bank USA NA Global 4.875%., Morgan Stanley 7.3%, Jpmorgan Chase 3.7%, Pfizer 6.2%, Prudential Financial Inc Mtns Book 4.75%

And Government bonds
 
Frenzied Wombat

Frenzied Wombat

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This feels extremely "gimmicky" to me. To me, it's modelled after the same type of person that can't implement the self control necessary to divert $100 into an investment account each month, but can empty their loose change each day into a piggy bank.

IMHO, you're better off estimating how much "change" you actually collect each month, and just opening up a brokerage account and transferring that amount directly. You can invest in the same ETF's and skip out on the management fee.
 
Khane

Khane

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ValkyrieIATD_sl said:
wut? The whole thing is an ETF. Here are the main components: Vanguard S&P 500 ETF (VOO) - Vanguard Small Cap ETF (VB) - Vanguard Emerging Markets ETF (VWO) - Vanguard REIT Index ETF (VNQ) - PIMCO Inv Grd Corporate Bond ETF (CORP) - iShares 1-3 Year Treasure Bond ETF (SHY).

Which are comprised of:

Apple, Exxon Mobil, Google Class A, Microsoft, GE, Johnson & Johnson, Towers & Watson Co. Class A, Glenworth Financial Class A, Fortune Brands Home & Security, Jarden Corp., Hanesbrand, Cooper Cos. Inc., China Construction Bank Corp., China Mobile, Industrial & Commercial Bank of China, Tencent Holdings, Taiwan Semiconductor Manu. Co. Ltd ADR, Taiwan Semiconductor Manu Co. Ltd., Simon Property Group, Public Storage, Prologis Inc., Ventas Inc., HCP Inc., Health Care REIT Inc.

Corporate Bonds: GE Cap Corp Mtn Be 5.5%, Hsbc Bank USA NA Global 4.875%., Morgan Stanley 7.3%, Jpmorgan Chase 3.7%, Pfizer 6.2%, Prudential Financial Inc Mtns Book 4.75%

And Government bonds
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Gotcha, you just made it sound like it was individual funds in your previous post.
 
opiate82

opiate82

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ValkyrieIATD_sl said:
It's $1/Month for the service, plus a .25% management fee if you maintain a balance over $5,000.
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This is the part that tells me not to do this. Yeah, it sounds like a neat little change jar type deal but either you are investing so little that it won't make any sort of impact on your finances whatsoever, or you can do the same thing this app does for much cheaper on your own.
 
Borzak

Borzak

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I'm old fashioned, I pay cash for most of the small type of stuff. Every so often I take my jars of change down to the bank and they run it thru their machine. Every year I wind up with about $300 to $500 in change and just put it in the checking account at the bank so they do it for free.
 
V

Vilgan_sl

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Acorns is good for people who are not investing. People who are already investing can just skip acorns and increase their contributions slightly and avoid paying the pretty absurdly high fee.
 
Blazin

Blazin

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Vilgan_sl said:
Acorns is good for people who are not investing. People who are already investing can just skip acorns and increase their contributions slightly and avoid paying the pretty absurdly high fee.
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Lots of posts on here I would just ignore. Basically anyone suggesting a strategy that they think is "good" should probably be ignored.

Your gut instinct with going with Vanguard is a good one. Keep the money fairly secure while you figure out next steps and then invest it appropriately once you have a strategy. I would also recommend 4 pillars by Bernstein. There's also an investment thread on something awful which generally has a lot better advice than you'll find here.
 
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