This past year I saved over $1000 doing nothing out of the ordinary. I spent as usual and didn’t setup and recurring savings plans.
All of this was done using the Acorns app. Every time I made a purchase using my bank account (debit card), my purchases were rounded up to the nearest dollar and this roundup amount was automatically transferred to an investment account.
I love this type of micro investment, and I believe it’s the future of investing and saving. It requires no effort on my behalf, and I barely notice it is even happening. I simply check in on the account every month or so to see how things are going.
Why you should use Micro Investing Apps
For some reason, the hardest part of saving can be remembering to do it. The good thing about Acorns is that money is transferred when you spend. That way you don’t need to worry about your bank balance dropping too low and it will happen on a regular basis.
Economists and financial advisors have for a long time advised that making regular investments is the best way to reduce risk and increase returns. With these micro investing apps, your making regular contributions on a weekly basis.
What about fees
I think the fees are one of the downsides, but obviously they need to make money. The fees are quite low. For accounts with less than $5k, you pay $1.25 per month. The growth in my investment, which is around 6% is far greater than the fees. Once you hit $5k, they move to percentage model which I think works even better.
I’m going to keep on going
I started using Acorns as a bit of an experiment. I shared the results here and I’m not completely convinced that this type of investing works.
Although I believe in saving for the sake of investing, I don’t plan on taking the money out of this account, as it’s growing well enough at the moment, and I will soon use it as part of my emergency fund (which I think everyone should have).
This is the future of investing
Gone are the days of having to transfer a minimum of 10k into an investment account. Gone are the days of paper statements, and opaque investing. Now anyone can get started within 5 minutes and without needing a ton of cash to begin with. Finance are getting exciting, with ever increasing competition. This is just the beginning and I can’t wait to see how they keep progressing.
Which modern finance apps do you use? What do you think of them?