Investment Apps Like Acorns
Monday, Jun 1 2020
What are Investment Apps?
In the times way back before credit and debit point of sale systems were everywhere, many clever people used to have a great savings system. They’d take all the change they had in their pockets at the end of the day and put it into a bucket. Once a year, they’d take all that change down to their local branch and put it into a savings account. Over the course of a lifetime, they’d squirrel away thousands of dollars! Now, we have investment apps like Acorns.
While we’ve lost the old savings tools, we have gained some impressive new ones. Electronic banking enables many savings strategies to sock away money without feeling the pain. Automating your savings is a great way to do that without testing your willpower at every paycheck.
What is Acorns?
A new app proposes to combine the old and the new. Called “Acorns,” it rounds every transaction you make to the nearest dollar. It takes that extra “change” and invests it in a broad array of low-cost investment vehicles. Through conservative investing and small, regular savings amounts, Acorns users can see their tiny deposits grow into significant savings; also called “micro investing”.
The app is designed to serve two purposes. First, it encourages people to save using small, automatic processes. In addition to rounding your transactions, the app will also schedule regular deposits – daily, weekly or monthly. In this way, users can see the power of regular savings.
Second, the app is designed to demystify the investing process. For many people, investing is complicated and scary. They don’t know where to begin, and researching the subject can be as confusing as reading insurance documents that are written in another language. Acorns provides one option – a fairly conservative, diversified range of exchange traded funds. Their objective is to provide the best rate of return for a fairly low risk level.
Investment Apps Like Acorns
Robinhood is a more advanced investment app when it comes to investing. With most investing apps, you’ll be dealing with individual stocks. With Robinhood, however, you’ll learn how to manage diverse portfolios. So, there is a higher learning curve, but with that comes a higher earning potential.
Another great perk is that you only pay the fees that the regulators require and their service fees are very reasonable.
This is a great app if you want to have a hand in your investment portfolios. However, if you’re looking for something more “hands free” you might look to apps like Acorns.
Savings Assist Programs
One of the big draws to apps like Acorns is the “hands off” approach to building a savings and investing. There are other options if you aren’t interested in investments like the savings assist program. The savings assist program rounds up each purchase you make on your debit card by any amount you designate and at the end of the day that amount is deposited into your savings account.
This is a great way to save for a big purchase, vacation, or set aside money for a rainy day fund. The amount you designate to be rounded up to will determine how fast your savings builds.
Pros and Cons of Investing Apps
We’ve gone over the advantages of having an investing app at your fingertips, it’s an easy way to start investing without the headache. But is it worth your time?
Investing and saving for retirement is always a good idea. But if using an investment app is your only avenue, then you might fall very short when it comes time to retire. Micro investing is great if you have some extra time and you think you can make some sound investment decisions. But it’s always a good idea to diversify.
It’s ok to do micro investing, but work on building your emergency fund and paying off debt first. And if your company is offering a 401K match, that’s always a great option.
In the end, work on building your emergency fund first by enrolling in a savings assist program. Then, you can work on paying off debt and investing in retirement.