quote:

Originally posted by slabsides45:
My daughter and her husband started an Acorn account (along with a retirement account and savings, debt reduction plan, etc). Their logic was that it would be a reasonably simple way to save a few cents extra, and that it would be relatively painless to do.

I asked them about it after reading this thread. They have had it opened now for about 12 months, and have saved $1500ish. She says it pays 6-8% interest, depending on how aggressive you want it to be set up.

Maybe not a ton, but more than they might have otherwise been intentional about saving, and it starts to look like real money instead of falling back into the "pocket change" category.

Might not work for everyone, and I don't have an account, but it seems to be ok for them.

The real question is how does it compare if they had invested $1k (ie minimum initial investment) with Vanguard Target Retirement (guessing 2050) and done modest ($1 is minimum) weekly/monthly additional investments totaling the same amount as the Acorn?

quote:

Originally posted by slabsides45:
My daughter and her husband started an Acorn account (along with a retirement account and savings, debt reduction plan, etc). Their logic was that it would be a reasonably simple way to save a few cents extra, and that it would be relatively painless to do.

I asked them about it after reading this thread. They have had it opened now for about 12 months, and have saved $1500ish. She says it pays 6-8% interest, depending on how aggressive you want it to be set up.

Maybe not a ton, but more than they might have otherwise been intentional about saving, and it starts to look like real money instead of falling back into the "pocket change" category.

Might not work for everyone, and I don't have an account, but it seems to be ok for them.

Thanks Slabside, that's the kind of first-hand info I was looking for. And yes, at least in my house, $1500 is a significant amount of coin.

Boss

UPDATE

So I thought I'd give a bit of an update for anyone interested...

Disclaimer - past performance is no guarantee of future return/individual results may vary.

Obviously, we're in some unprecedented times and the market has been pretty volatile. That being said...with markets closed today, I'm currently at +12.45% Market Gain.

I opened my account with $5 at the start of March. If it continues to grow at is current rate...I *should* (hopefully) have about $1200 by next March.

I have pro-actively/deliberately made two subsequent contributions since the initial $5, only because a few weeks back I thought we were at the very bottom...I was off a bit...but not terribly. I only meant to make one additional contribution, but there was some 'lag' from the time I hit the 'submit' button and the $$ showing in my account...so I thought I screwed up somehow, and re-did it again. At that point, I was like 'screw it,' and just left it in there (wasn't massive $$).

The rest of the contributions have come from automatic round ups (which it 'pools' and does $5 at a time).

The only other 'deliberate' efforts I am making is little things...like when getting gas on the linked debit card, I put in $20.01 instead of $20.00 (so 99 cents goes to the 'round up' investment.) That's it.

On a side note...I had planned on setting this up and then ignoring my account balance, checking only like every 2-3 months. But I do find (since I put the app on my phone), more often than not, curiosity gets the better of me and I check it several times a week. I suspect that's largely due to roller coaster the market has been on. If we were in more 'normal' times, I'd probably not check it very often.

This isn't the only $$ I'm putting towards retirement, but one aspect of it.

So if the 'thrill & excitement' of researching stocks and managing an 'investment portfolio' sounds about as fun as watching paint dry, but you still want to do 'some form' of investing, this might be worth considering (especially if you're younger).

My plan is to see where this is in a few years, and then reassess. Maybe if the nest egg is big enough, I can do roll it over into something else. And if its performing well enough, maybe make a few more 'deliberate' contributions along the way.

And no, 'high rollers' that are buying/selling large quantities of stocks etc...it doesn't seem like this designed for you...this is more for the 'little guys' (yours truly included).

Let's see where we are in another 3 months.

Cheers,
Boss

Good for you Boss. I think diversification is important. Having 4 legs makes for a sturdy bar stool.

I think there are some good options. I know nothing about this one. But if you have done your research and are actively involved then the chances of success are generally good.

I am all for people doing what they can for themselves.

I'm really glad to hear it is working for you. Investing and savings can be intimidating especially without anyone to help guide you on it. I think it is a great step you have taken to get started here. I love the idea, it is quick, easy and you don't have to think about it. Plus 20 cents, here, 60 cents there is nothing you will ever miss.

Regarding Acorn:

I went and looked for 3 things on the Acorn site, in order to form my opinion of it. These are my basic must knows prior to investing.
1) Who is it that is running Acorn?
2) What are they investing in?
3) What are the fees?

Here is what I was able to find:

1) The company is run by a boatload of people

2) It is not clear where the money is invested, other than they have fund managers.

3) I could not find anything regarding their fee structure.


It would be great to hear back from you so we all can learn more about Acron.


1) You started with a $5 investment and made 2 more investment. What is the total amount of round-up investments + the 3 contributions you made? What is the total value of your investment?

1) What funds are available to invest in?
2) What are the fees? (is the CC company taking a separate fee on your round-up change, or is that paid by the merchant? (gas station, store etc...)

Drop me an email if you don't care to post the information here.

Your 12.45% is a great return. Below are some of the market's returns over that same period for reference.

S&P 500 3.050%
NASDAQ 10.768%
DJIA -0.103%

Greetings,

For anyone interested, another little ~3 month update.

So, according to the little graph on the website, I'm sitting at a 18+% performance over the past 6 months. So my 'acorn' is continuing to grow. I know those rates probably aren't sustainable over the long term.

I'm not really putting in a lot of 'work'...I check my balance once in awhile...maybe a couple times a week (if I remember), more out of curiosity than anything else.

Pretty much the only thing I'm doing is the round-ups. So as before, I do things put in $XX.01 of gas.

I did also make a 'one-time' deposit of an additional $25...mostly I'm wanting to see how that effects the theoretical projections. How does an additional $25 now effect their projections down the road?

They do also have alot of info they send out...'This week in a nutshell,' graphs, and other similar tools (most of which I don't have time to tinker with).

For those that want to start investing but don't have tons of cash, these types of programs are worth a look IMHO.

So there you have it. At this point, it's painless, doesn't require any real 'work' and performance seems solid, so I'll stick with it.


Cheers,
Boss

Without seeing the statements I can only guess that 18%, is the total account balance growth.

Here is an example of an 18% growth over 5 months.
Note Acron charges $1/month in fees

$30.00 Total Direct Contributions
$41.40 Monthly round-up Contributions and the return on investments
-$6.00 Monthly fee
$65.40 August ending balance

$35.40 Net Account balance growth

18% Return $35.4/$30 = 18% (this is just account balance growth, it is not the return on your investment)*

Monthly Fee Cost $6 / (6+35.4) = 14.5%

*Without knowing the total round-ups and the total "income" was per month it is impossible to determine what kind of return on your investment you are getting.

The strategy of using Acorn investment has resulted in your account balance growing by 18%

^^Well, don't want to give out all my dinky stats, but it has 'Total Invested' $X.

When I take X and multiply by 1.19, it gives me pretty close to my balance.

It also lists 'Performance' as 'Market Gain/Loss,' ie the ~+18-19%.

Bottom line is I'm 'investing' and seeing some positive returns. I don't think things like Acorns are for the 'big' investors. If you're dabbling in the market with 5-6 figures, yeah, you're probably going to have a much different perspective, be doing more analysis, etc. and 'working' harder at/with it.

Quite frankly, not my bag right now. Maybe when I build up $10K, I might have different ideas. But at least this is a pathway to get there.

Boss

The Stock Market is BOOMING right now!!!

Good job Boss1.

Everybody has to start somewhere.

First, congratulations on giving this a go, it seems to be a really good approach to saving money.

I was/am just trying to understand how your acorn investment is working. There isn't a ton of information on their returns that is published. An 18% return over 6 months is pretty darn incredible. To the point of being almost unbelievable. Thus I was both interested if it was true or if it was verbiage. I've explored their website and see the different strategies they have. But no return information is published which is an interesting approach for an investment company, maybe even concerning.

I finally found some examples of what Acorn is communicating. This from Reddit



Verbiage can mean a lot of things thus I wasn't sure what "performance" meant from your perspective.

Market Gain/Loss is much more specific. I'm surprised that Acorn isn't shouting from the hills that for the last 6 months their strategy has returned 18%. It is pretty darn incredible.

From Reddit here are a few snapshots of what people have seen. Unfortunately, the time frame for them isn't given. However, it is a good perspective

https://www.reddit.com/r/acorn...acorns_return_rates/

This page details out Acron's portfolios. However, no performance is given. Which is strange from my point of view. (for whatever that is worth)
https://www.acorns.com/invest/

In a separate but related perspective, this article is a quick read regarding some top-performing stocks of recent times. I was surprised by a few on the list.

https://grow.acorns.com/best-performing-stocks/

Well that's it from me, its 4am and I need to go back to sleep.

^^Well, FWIW, that's exactly what one of Acorn's screens looks like.

If you look back, on ~Mar. 23 (about 3 weeks after I started), the Dow was under 19,000. This week, it's been over 29,000. So for those of us that started this roller-coaster in March have probably done OK. As I say, probably not sustainable over the long term...past performance no guarantee of future return.

Acorns may not be the best for everyone...there's other competitive options. Bottom line is these kinds of companies are opening the door for 'regular folks' who don't have large sums of liquid cash and don't want to deal with the other more traditional brokers.

That's about as analytical as I want to get. I'm not delving too deeply into all the internal minutiae. All brokers/investment tools, etc. have fees.

Otherwise, just hoping it keeps going up, particularly after Nov. 3.


Boss

Investing small amounts will net small amounts. You need to be intentional when investing. This has worked well for me.

^^ Acorns (as the name implies) is designed for folks who are at a different (lower) spectrum of investing.

Boss

Boss1, good for you.

What you are essentially doing is dollar cost averaging your savings into a managed fund. It may not be optimal, based on fees and deposit inconsistencies, but you know what? Don't let "perfect" be the enemy. The savings rate of Americans is dismal, I hear. Taking the first step is more than many Americans can say.

When you are ready for the next step, I recommend Betterment or Wealthfront. What you are doing now is rounding up a few pennies at a time and investing it. It's pretty painless. But the next step is to carve out a small weekly commitment to save (not just the rounded up pennies from a debit card). Betterment and Wealthfront are both super simple robo-investors. Just algorithms based on your risk tolerance that allocates a recurring weekly or monthly deposit into bigger funds for you. It's basically what you are already doing, just more intentionally with a recurring weekly amount.

Many people stop there. It's automatic, and its simple. Others will progress even further and open a real brokerage account and control their own investments.

Even though I favor low cost index funds or exchange traded funds from Vanguard, I also keep an active Wealthfront account that continually scrapes money out of my checking account. I find that the auto investing helps me keep more of my money in the market than using Vanguard alone.

So very briefly, at roughly the 1 year mark, give or take a couple days...I've thus far managed a roughly just under 15% gain on my portfolio, putting me in the low (very, very low) four figure range. I've done a handful of 'one time' deposits for like $50. If I get any kind of tax return, might put a couple more extra bucks into it.

So overall, wouldn't see to be too much room to complain.

$.02 worth.

Boss

I've been doing something very similar to you. When rounding up in my checkbook ledger, after a few years, it amounted to around $1,000. I got tired of seeing it earning 5 cents a month in my account. I opened a Fidelity account and started investing in mutual funds IALAX and ACFOX.

Once I refinanced the house and rolled higher interest loans into it, at 2.6%, I was able to put more money into the Fidelity account. It's at 12% return right now, but got as high as 20%. The NASDAQ, which is where my mutual funds are based, has been a roller coaster lately.

I do Acorns as well
I am 44 years old
I am set for moderate aggressive


Initial Investment $750 in Jan 2020, then $25 a week for 6 months ($600) then $50 a week for 7 months (1400)

so 750+600+1400 is $2,750 in, then it automatically adds in any dividends.

I don't do round ups and I don't use a linked credit card.

Current Balance today is $4,243.09

I also have ample savings and minimal cc debt, so I am comfortable with where I am at.

I'm not going to some investment guy with 30K right now to "get in the market", so this let's me get my feet wet until I can get some more savings and start for real.

^^Cool.

I'm kind of at the opposite end. I started for $5, do the round ups and occasional smaller contributions. It does add up...as I say, 1 year in and I am (barely) in the 4 figures. But if not for this type of thing, probably wouldn't have anything like this at all.

But I will see where I am in a couple years. Perhaps my portfolio would allow me to get into something else...but honestly, if they're doing as well as they are, might not be any reason to change. Time will tell.

I think the real benefit of things like Acorns is they allow pretty much anyone who wants to get into the market without big $$ up front, having to deal with 'financial advisors,' etc. I wish they would have had something similar 30 years ago.

Anyone, particularly if you're younger (sub 30), ought to be doing something along these lines if they can.

$.02 worth,
Boss

quote:

Originally posted by Boss1:
Anyone, particularly if you're younger (sub 30), ought to be doing something along these lines if they can.

Yes, everyone should be investing for the future. And the earlier you start, the better, due to compounding. (I was a little dumb and didn't start investing until my 30s, leaving lots of potential money on the table... Luckily for me, I also have a good pension coming, so it won't hurt me as much as someone else whose sole source of income in retirement would be their investments, supplemented by whatever happens to remain of Social Security.)

However, whether everyone should be using Acorn depends on your situation.


If you're saving for retirement specifically, an Acorn account probably isn't your best option. It doesn't have the same benefits and incentives as specialized retirement accounts.

Instead, if you have a 401k through your work, especially if your employer matches your contributions, that's likely a much better option.

If you don't have a 401k through work, an IRA or Roth IRA is another better option for retirement investing, due to some associated tax breaks. (I see that Acorn offers an IRA, but their base account is not an IRA; it's just a standard investment account.)

Having a basic Acorn account is better than not investing at all for the future, but it should not necessarily be Plan A or even Plan B for most people when it comes to retirement investing. Pretty much anyone will likely be better off taking advantage of the other major benefits for the other kinds of retirement accounts, like employer matching or tax breaks, before starting a standard investment account.

And retirement accounts like 401ks and IRAs can even be used for non-retirement purposes, in some cases. There are exceptions that allow early withdrawal from 401ks/IRAs with no penalty for things like house purchasing, paying for your kid's college, or major medical expenses.


You can even do this "spare change investing" approach yourself, if your bank offers something similar between a checking and savings account (like mine does). Set it to round off the spare change from your checking/debit purchases into your savings account. Then once a week, roll that savings account balance into your IRA or other investment account.

(Ideally, you'd also be setting aside a decent percentage of each paycheck to go into your retirement 401k/IRA too, above and beyond just spare change. But I understand that may not be an option for everyone's budget currently, and something is better than nothing.)


Investing on your own using index funds is extremely simple. A paid financial advisor is not needed, nor is a ton of research into picking individual stocks.

There are very simple portfolio options out there through providers like Vanguard or Fidelity and their one-fund index packages, such as Target Date Retirement funds or LifeStrategy funds. Many of these are also available as ETFs, with a lower bar for initial entry.

Or you can build your own simple, highly diversified index fund porfolio by manually investing your IRA in a couple of index mutual funds or ETFs, using the two-fund/three-fund/four-fund "lazy portfolio" approach: https://www.bogleheads.org/wiki/Lazy_portfolios (Although this manual portfolio requires annual rebalancing, whereas the automated one-fund portfolios like Target Date funds do that rebalancing for you behind the scenes.)


However, if you're just wanting to get into regular (non-retirement) investing to grow some "fun money", Acorn seems like a fairly simple way to do it. Probably easier to digest for a beginner than creating a standard brokerage account and picking investments.

This message has been edited. Last edited by: RogueJSK,

quote:

Originally posted by Boss1:

Anyone, particularly if you're younger (sub 30), ought to be doing something along these lines if they can.

Unless retired and actively drawing down on your principal, everyone should be *proactively* setting aside money into savings and investments.

Pull the band aid off in one go, set your deposit schedule to skim a set percentage of your income off of each pay cycle, and have it moved into the investment vehicle of your choice. Your lifestyle will compensate for the missing money on its own.

If one was uncomfortable with directing one's own investments, an automatic robo-investor like Wealthfront or Betterment is very simple.

Acorns is nice as a little extra way to move a few *more* bucks into savings and investments, but everyone ought to be carving out 10+% of their income out in savings *on the front end* before the money is spent, instead of trying to pick up the loose change at the end.

As I previously mentioned, I think it's great that the OP and others have managed to take grab onto the low hanging fruit of "spare change investing". It's better than nothing, and when it comes to savings, every little bit helps--and certainly don't let "perfect" get in the way of progress. That said, I think anyone relying only on Acorns should probably also think about proactively investing rather than reactively skimming change.