Acorns as a powerful savings account tool 2017

Acorns as a powerful savings account tool 2017

What is Acorns?

Acorns is a mobile app built and designed to meet the needs of investors by

allowing them to invest their spare change. It is the new wave of mobile technology and is rapidly overtaking the piggy bank. This app is best alternative for a savings account. It’s especially helpful for people who want to save up some extra money for the holidays.

According to Jeff Cruttenden, the cofounder, “Acorns is an app that was designed for a single underlying purpose: to make investing a small decision instead of a big one”, as he unravels the intelligence behind this wonderful innovation to business insider.

Cruttenden wanted a kind of app that will cater to people’s needs by giving them a sort of investment decisions about the amount of investment and calculated risks. Thus an idea popped up giving birth to a revolutionary innovation in the investment industry.

The recent expansion of Acorns as a savings tool can also be traced to the Australian version which was launched earlier last year, precisely February, in which over 50,000 sign ups were recorded. Acorns helps investors make wealth out of small sums that is being accrued over a long period of time—savings is on a regular basis.

It allows you to automatically invest your spare change into a diversified portfolio of exchange traded funds (ETFs). Acorns enables anyone to start early, invest often and reach their financial goals.

Acorns is taking leverage on the uncertainty of investment returns and volatility.

Unlike Robinhood and Stash which give users opportunity to decide, it has ready-made portfolio designed for your needs. This prompted the construction of five diversified portfolios namely conservative, moderately conservative, moderate, moderately aggressive and aggressive—all using ETFs (Exchange traded Funds). An ETF is a diversification and a security tool that provides a cost-effective way and flexibility of trading stock. All the portfolios are compiled by a group of economists and financial analysts.

The conservative option is the option with lowest risk as investments are basically in cash and bonds. This does not pose any kind of threat to investors as there are considerably low volatility levels but these assets, conventionally, do not yield high returns. On the other

hand, the aggressive set invests basically in Australian and global shares. It is more appropriate for investors who have tolerance for the high risks involved and are comfortable with the level of volatility. Of course, their aim is to get higher returns on investments.

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How do I get started?

It is very simple to start using the app. Just download the app from your mobile.

After downloading, you will complete an application form. You will have to provide your personal details such as your full name (not proxy), date of birth and address. Other optional information is your internet banking details, account number and BSB.

You may choose to withdraw your money any time. However, there is a settlement period, usually, four to seven days during which you have to wait for investment sales.

Once you download the app, Acorns will ask for some personal details in order to suggest an investment portfolio combination that matches your nominated risk profile. Once the registration is completed the user may elect how much they would like distributions to round up to.

How does it work?

There are two methods of investing in Acorns.

You can deposit a whole sum or invest intermittently. First option is to select how much you want to invest and carry out a bank transfer. You can set a recruiting amount on a daily, weekly, or monthly investment. The second option is that Acorns will allow investors to “round up� every purchase and then transfer it to the diversified portfolio. For example, if you buy an iced cream for $9.55, Acorns will round it up to $10 and automatically send the extra 45 cents to the selected investment portfolio.

It is good to note that Acorns has already initiated a means where investors have to link their credit cards and bank accounts upon signing up. This process is not stressful except for some banks users that their financial institutions blatantly request for an RSA token for each login.

Investors can start the process with just $5. This implies that once the spare change has accrued up to $5, then it is invested in the portfolio option.

Acorns is connected to your bank account—A good reason why it can identify bank discounts and it can also be consolidated with any other consumer incentives or loyalty programs.

Advantages of Acorns as a Savings account • • • • • •

There is no requirement for monthly deposit.

The app is specially made free for college students.

There is no requirement for minimum balance.

Users have the opportunity to withdraw funds without any fees attached.

Users can deposit periodically or add extra funds.

Users are free to either accept or decline investment options and have the choice of switching portfolios.

Note: College students must be less than 24 years of age and they must provide a school email address. The account is open to them for up to four years (starting from the date the account was opened).

Acorns Fees A standard fee of $1 is charged per month for accounts with a balance of funds below $5000 while 0.25% is charged per year for accounts with a balance of $5000 or more. This is the fee that investors will pay as spare change. It covers every transaction and transfers, which implies that there are no extra charges attached to switching portfolios and withdrawing funds as indicated in the advantages above.

The app gives real-time information about investment and the history of performance status and investment can be seen in the app on the round-up page.

Users can also download transaction statements every month as a PDF file including tax statement.

Furthermore, the app is essentially secured on a powerful remote server with 256-bit encryption and investors can be rest assured that their money is SIPC insured. So, every detail input by the users is safe and secure even if their devices get lost. Another security measure is the multi-authentication system and automatic logouts in case of inactivity.

Acorns has a group of customer service agents that users can quickly contact in case of issues, complaints and requests, for instance, if there is something not right about your balance, you can contact them by phone or by a form hosted on the app website.

Summary

For investors that need a powerful micro-investing app with no minimum requirement for investment, then Acorns is the right app. Though, you won’t become rich overnight but it’s a good way to start. It’s very easy for you to do away with little amounts and the best part of this investment tool is that you’ve accumulated a lump sum of money overtime. Yeah, I’d definitely recommend this app to Millennial investors.

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