At Bigger Fish we love technology that makes a difference in our day to day lives. In this review we look at an app that is fast becoming a favorite of mine because it saves two very important resources. Time & Money.
The app does a very simple but powerful thing. It links to your bank account and credit cards to round up the ‘change’, and invests this into a diversified portfolio of ETF’s (Exchnage Traded Funds). Let’s say you purchase a coffee for $3.50 at your local cafe using a debit/credit card. The Accorns app will see the transaction in your bank account and automatically round this up to $4.00. The $0.50 will be taken from your bank account and invested into a portfolio of index funds.
Acorns works so well because of this simplicity. The old advice for saving money is to ‘pay yourself before you pay others’. Put simply, you should transfer money to your savings account before you are tempted to spend the money. This sounds simple in practice but it takes a level of discipline that can be hard to sustain. Acorns solves this problem by forcing us to save as we spend. It takes 15min to set up, and then quietly runs in the background, dropping coins into your investment portfolio. The investment portfolio you choose is based on your preference for risk. This can vary from Conservative (cash and fixed interest), to Aggressive (mostly shares). The portfolio is made up of a diversified selection of low cost index funds.
So what’s the verdict? Whilst it’s not going to make you a millionaire overnight – it is a great financial innovation for a couple of reasons:
- It is a forced saving measure that turns a potentially bad habit (spending), into a positive saving mechanism.
- It’s a cheap way to get into the investment market with minimal savings. You can invest as little as $5.00 and the yearly fee is $15.00.
- It’s a great way to get you interested in the financial markets. Now the daily movement of the All Ordinaries Index and Dow Jones Index has a direct impact on your savings.
Give it a go and tell us what you think.