For the past two years I've been saving money using the Acorns micro-investing app. In that time, i've saved a few thousand dollars but also seen a 28% return on my investment. I've been blown away at how well it worked for me. So if you've been looking at getting started micro-investing, then read on to find out how easy it is
What is Acorns
Acorns is a micro-investing app. It lets you invest small amounts of money in a diversified portfolio of stocks and bonds.
Acorns is unique in that it automates this process. It keeps track of the purchases you make and roundups your spare change and transfers it to your investment account. So the more money you spend, the more you'll actually end up saving. These roundup amounts aren't very much, but they do start to add up over the course of a year.
Acorns invests your money in one of 6 different portfolios. The portfolios are made up of ETFs with underlying assets including stocks and bonds. ETFs or Exchange Traded Funds are basically just a diverse collection stocks and bonds. They allow you to invest in an entire market with just one investment.
Why I like Acorns
I've been using Acorns for the past 2 years and I've had a lot of success with it. For me, it's been the easiest way to invest and save money.
You can start with $5
Investing in ETFs used to be very expensive. If you bought ETFs through a broker you'd need to spend at least $1000 in order to offset the brokerage commissions. So only the rich could get access to these markets. Thanks to apps like Acorns, now anyone can invest in ETFs.
It's App Based
You can access Acorns through their website, but most people choose to use Acorns through the app. I would say that Acorns is a “mobile first” product. This makes it easy to check your balance and control your account. You don't need to worry about being stuck on hold on the phone trying to find out information about your investments. You can even change which portfolio you are invested in, with a couple of taps.
Dollar Cost Averaging
Acorns invests small amounts at regular intervals. This is known as dollar cost averaging and it's a tried and tested investing technique. People who try and pick the best time to buy and sell stocks usually end up losing money. With dollar cost averaging you sometimes buy into the investment when the price is high, and sometimes when it is low. But overtime this averages out and you simply gain in value as the markets gain in value. DCA is a smarter way to invest.
How to Get Started on Acorns
Getting started on Acorns is really easy. I recommend using the app. Here's how:
- Grab the app here
- Sign up to Acorns and link your bank account
- Choose your portfolio
- Sit back and let it invest for you
Which Portfolio is best
I can't choose a portfolio for you, but I can give you some general tips. The younger you are, the less capital you probably have. So you should be looking for capital appreciation. So in this scenario you'd choose a more aggressive portfolio. If you already have a chunk of capital you'll be looking to preserve it's value and beat inflation. So you'd probably choose a more conservative portfolio.
I use the Aggressive portfolio on Acorns and I've gained around 28% over the past 2 years. Obviously this is just my past experience and I can't guarantee you'll see the same results in the future.