But isn’t the point of an app that collects your spare change to be able to start out with an empty jar and watch it fill up over time?Īlso, if you’re using Acorns, I’m willing to wager you’re probably not using it because you want them to be your Robo-Advisor platform. Sure you could just put in more money to start. You’re throwing away your spare change to fees! Couldn’t You Just Initially Put In More Money To Lower The Costs? That’s just too high and it will take you a pretty long time to reach $3500 using just your spare change. In year one, you’ve invested $600 dollars, and paid over 2% in management fees. If you imagine that you’re rounding up an average of 50 cents per transaction, how many transactions are you doing per month? Even if you did 100 transactions per month (which would be about 3 a day, which seems really high to me), you’d only be investing $50 per month. You really need to start off with probably at least $3,500 to be considered paying reasonable fees. In that first month, you’d pay 20% of your balance in fees. So while the minimum is $5 to start, that really isn’t a realistic minimum. Here’s an example of the management fees you are paying depending on the amount invested in Acorns, in intervals of $500.Īs you can see, the fees are extremely high when you’re in the $1000 range and still pretty high until you get to a couple thousand dollars invested. You’re now paying a management fee of 2.4% just for the privilege of having your spare change collected. Let’s say you’ve got $500 of your hard earned spare change invested in Acorns. If you’re paying $1 per month, that’s $12 per year. It’s not nothing! It’s actually a ton of money! Keep fees low!įor accounts under $5000, Acorns “only” charges a management fee of $1 per month. The problem is pretty simple and known to anyone who is interested in investing. What’s the problem? The Problem With Acorns. Pretty simple and straightforward robo-advisor type service in a gorgeous app. Once you reach $5 of spare change, it invests it for you. So for example, if you buy something that is $1.50, Acorns will recognize that transaction and will pull 50 cents out of your bank account and invest it for you in a number of ETFs. It then takes that spare change and invests it into a diversified portfolio of low cost ETFs based on your risk tolerance, which is determined from your answers to a number of survey questions you answer when you set up your account. The app monitors your credit card transactions and rounds up each transaction to the nearest dollar. Well, it turns out its not very awesome at all.Īpps like Acorns have led me to the conclusion that your spare change should be saved, not invested. You only need $5 to get started investing. Best of all, it has a tiny barrier to entry. Basically, the app takes your spare change and investsit for you in a diversified portfolio. The biggest player in the microsaving app world is probably an app called Acorns. Instead, there are a new wave of fintech apps that have hit the scene in the past few years that make it easy for you to save your spare change. I don’t really use cash very often anymore, but I still collect my spare change. I love microsaving! I think it’s a great way to save a little bit of money into your pocket without even noticing it. Add up all your spare change over a year, and you can probably have yourself a couple hundred bucks without doing any work really. Basically, doing a small amount of saving over time (such as gathering up your leftover change) can add up to a pretty decent chunk of money in the end. This process of saving up small amounts is called microsaving. It’s amazing to think that I had a couple hundred bucks sitting around in a jar! I remember as a kid lugging big jars full of change to my local bank, watching them clink around the coin counting machine, and walking out of the bank with cold hard cash. We all probably remember – or maybe some of you still have – the jar full of change that we would drop our coins into at the end of the day.
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