This is the kind of rock-bottom robo-adviser fee that has the investment advisory business a little freaked out right now. It prompted me so many times that I finally agreed to do it weekly, in an amount affordable to me.īy the way, nobody’s accumulating much money based on the “spare change” gimmick I described above, but this automated invested feature is what will make a 20-something a millionaire in the long run, with hardly any suffering along the way.Īcorns charges $1 per month until you get $5,000 with it, after which it charges 0.25 percent per year on your portfolio. The app continuously pestered me to commit to an automatic investing program, either daily, weekly or monthly, and in any amount, from as little as $1 per transfer. This, right here, is the most powerful part of the Acorns app, since automation is the key to moderate-income people getting wealthy. I chose the “Aggressive” portfolio instead, like the middle-aged man who rents the black Camaro convertible because #YOLO. “Are you calling me old?” I whispered angrily into my phone. With no investment choice to make beyond one of five portfolios on a risk spectrum, app users don’t get stuck by the deadly indecision problem, what behavioral economists call “the paradox of choice,” in which we avoid something entirely because we can’t face the problem of choosing between too many options.īased on my age, income and wealth, the app suggested the merely “Moderately Aggressive” portfolio for me. While I personally find markets fascinating, I think the ultra-simplification makes sense for everyone who finds stock and bond markets utterly dull. Can’t you see Daddy’s moving money around with his phone? This is two minutes of sacred daddy time.” (I’m a really good parent.)Īfter about two minutes of entering personal information, the app suggests one of five portfolios on a risk spectrum from “Conservative” to “Aggressive.” Each of these is built from a blend of Exchange Traded Funds (ETFs) to get you exposed to bonds and stocks but without having to know anything about these things. ![]() “No, sweetie, I didn’t really listen to your story about the turtle. I set it up on my phone, in between my kids talking to me about their day. I never spoke to a live human, which is great. The app took about five minutes to get started and an additional three minutes that first day for entering a bit of personal data and linking bank accounts. Acorns tracks these spare change amounts from all accounts you choose to link - such as a debt, credit or checking account - and automatically transfers it into an investment account. The app’s opening pitch is that it will invest your “spare change.” It uses a technique Bank of America pioneered about 10 years ago, which was to “round up” little transactional odd-lots - the equivalent of pocket change you’d throw into a coin jar at the end of the day - and invest it for you. The app invites you to begin with an initial $5 bank transfer. The crazy thing about Acorns is that it has addressed all six of the problems I listed above. Having said that, I’m almost annoyed with myself to say this is an awesome product and every investment beginner should be using it. ![]() Now, I really hate to endorse a specific product or company when I write about finance topics because part of my whole “ex-banker in recovery” identity is to form opinions without the reality - or even appearance - of “selling a product.” No experience avoiding high-cost service providers.Įach of these problems afflicts 20-somethings even more than the rest of us.Īnd yet, as any 50-year-old who wakes up from a few decades working and paying down debts learns (when they finally have an appointment with an investment adviser) even small amounts of money socked away decades ago would have made the problem of retirement and wealth-building so much easier.īut how does anyone even begin? As I have mentioned before, beginning is perhaps the hardest part of investing. No plan for ongoing automation of investments No confidence navigating investment choices ![]() No interest in following stock and bond markets
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