Consumers not saving enough has been a huge issue for the US and Acorns may be the answer.
Acorns is an application on iOS, Android, and browser that syncs to your bank account or debit/credit and when you make a purchase the app rounds up the change to the next dollar and deposits that amount into a balanced portfolio. For example, if you buy a candy bar for $1.59 then the app will charge your account you used $.41 cents into Acorns and once your round ups hit $5 it will be put into a balanced portfolio. The balanced portfolio have five levels ranging from conservative, moderate, and aggressive diversified in large and small company stocks, emerging market stocks, government and corporate bonds, and real estate stocks and you may re-balance your portfolio on a daily basis.
Acorns fits two audiences, the first are those who have trouble saving money and the second are those who aren’t comfortable investing their own money. This app is a great way for addressing both kinds of audiences mainly because of the way it invests your money. To most people nowadays, change is an irrelevant form of commerce so for Acorns to reinvest the change you’d otherwise just throw into your cup holder in your car is a god send as it’s not too intrusive on your spending. The balanced portfolio that Acorns offers is also maintenance free unless you feel the need to change your level of risk/reward as you can just set your level and forget it.
Getting my Bachelor’s in Business and now working on both my MBA in Finance and my CFA, there’s definitely a target audience for this kind of app. I see it more so as a savings tool rather than an investment manager because for my I’d rather have a granular role in deciding exactly what makes up my portfolio. But I’m actively trading stocks, bonds, and foreign exchange on a daily basis and most users of Acorns won’t be going into a career in Finance. I’m a bit hesitant on the ability of the portfolio to perform in the volatile markets we’re experiencing today. You should also be aware of the fees attributed to this service, it’s $1/month for the standard account, .25%/year for accounts of $5,000 or more, but if you’re a student you’ll get up to four years free from the date of registration with a valid .edu email address.
Overall, Acorns may not be the best investment tool but it is the savings tool of the future. If you’re interested, please use my referral code linked here so you get $5 to begin your investment.
