A few weeks ago a friend Andrea mentioned that she was trying out the savings and investment app from Acorns. The mechanics of the app is interesting and I was keen to understand more about her personal experience with the app. I should mention that I am not recommending everyone use this app as their only investment gateway or vehicle. It does however present a novel way to understand how you spend money and what it is worth though.
Acorn just raised US$30 million. The idea of the app is to provide a simple gateway into the investment market through investing your spare change from your transactions.
Here’s Andrea’s thoughts:
I wanted to know how to ‘make my money work harder’. However, I didn’t want to read another article about ‘buying high and selling low’ – it seems to be a given when wanting a return on an investment. I certainly didn’t want to consult an unfamiliar financial advisor – again. So I contemplated different ways I could invest but I just wanted a low risk, low cost lesson and most of all I just wanted proof. And then I stumbled across the Acorns app. What is it? Well they summarise it pretty well – they invest your spare change.
For me it’s a pragmatic way on learning about investing with micro-investments. I set up the Acorn app on my mobile to connect to my CBA account (I spent more time checking that it was safe to connect than actually doing it). Now, when I buy a cup of coffee for $3.60 using my card, it gets rounded up to $4. The 40c is invested in stocks that I knew very little about at the time – but have since investigated. That’s right, 40c – shrapnel.
Anyway, I did this for a month and in total I invested $31. At the end of that month, I had approximately $53 waiting for me. Like magic.
The best thing about it is that I didn’t feel the risk or the ambiguity of investing large amounts before I actually had the chance to understand what’s going on. The app has allowed me to test the stock investment landscape without, quite literally, losing my house. Now, on top of the ‘roundups’ I deposit larger amounts ($10) into my investment portfolio, and next week I’ll be taking my ‘coin bowl’ to the bank to invest through Acorns. In a year, maybe I’ll have enough knowledge and confidence to take bigger risks for bigger rewards, but for now – the learning curve is safe and interesting.