There once was a time where people used cash to pay. Crazy, I know, but this was before there were smartphones that could help you pay, or even before everyone could use a debit or credit card almost anywhere. People carried cash and change to pay for things. At the end of the day, a handful of change was inevitable. At my house, that spare change went into a collective bucket for a rainy day. No one missed this spare change, and after a year or two, we usually had a tidy sum to spend (or invest) however we pleased. Now, with electronic payments being the norm, the need for cash (or even change) is nearly gone. My change jar takes years to fill up. I miss those happy surprise paydays. Well now, there’s an app for that.
Acorns, an app available for iOS, brings this “spare change collection” method of savings to the digital age. Acorns helps you to collect the pennies you’ve been missing by rounding up your transactions to the nearest dollar. You link it to the account(s) you want to use for those round-ups and an account to fund them. At the end of the day, Acorns takes these round-ups and invests them in a portfolio. Per their website (https://www.acorns.com/support/), this portfolio “is composed of six index ETFs. ETFs trade like stocks and represent broad holdings of stocks or bonds.” You setup your portfolio by entering information like your age, income, goals, time till retirement, and risk tolerance. You can always choose a more or less aggressive portfolio at any time. There’s quite a bit more to this and all of it can be reviewed on their website, but for me, I just wanted to get started saving my pennies.
The app is native to the iPhone but can run on the iPad, but is not optimized for it. There is an Android version and a web app coming soon, but I think that Acorns targeting iOS first for their launch was wise. The numbers show that iOS users tend to spend more money, but that’s a subject for another article.
I linked the app to two checking accounts for roundups and another for the funding of my investment deposits. You can use Acorns to make recurring deposits or lump sum deposits as well, but I’m focusing on Acorns to replace the change I used to collect. After one week, I have already invested $61.02 from two accounts. That might say a lot about how many transactions I have in a week, but I highly doubt that I’ll miss that $61.02, and it’s being put towards something that grows.
But wait, this can’t be free! And you’d be right to think that. Acorns has to make money somehow, and they do this by charging $1 per month and 0.25% to 0.50% of your investment annually. There are no fees on $0 balances and you can move your money in and out of Acorns as you please.
Acorns has succeeded in keeping the change collection method of investment alive, and it’s an easy way to save for a rainy day.