First off congrats for starting something. That’s huge. Acorn isn’t necessarily a great idea though. It’s a gimmick that bypasses perhaps the most important element of investing. Consistently, regularly, setting aside a portion of your earnings into an investment of some type.

Instead of “rounding up”, you should sit down with pencil and paper, your budget, and figure out a reasonable amount that you can invest regularly. Then set up am automatic withdrawal from your paycheck/bank account to your investment vehicle of choice. It will quickly become invisible to you as you get used to it. It basically never hits your hands and you won’t miss it. Old saying used to be “write the first check of every month to yourself”.

Obviously 401k’s and Roth IRA’s should be a priority as well but I assume we are talking beyond basic retirement accounts.

There is a misconception it seems as well. Investing isn’t only for the “big boys” or not until you have tens of thousands of dollars to invest. Not sure where that idea came from. Vanguard accounts can be opened with as little as 1000 dollars for certain retirement accounts or 3000 for pretty much any mutual fund. That’s just one brokerage.

Once again,you have done great. There are better vehicles than Acorn and better ways to invest than just pushing pennies. Pick an amount and set up the automatic withdrawal. Get a pat raise? Raise the amount. You won’t even notice.

I started investing as an E1 in 1985. I didn’t make 500 bucks a month but my dad insisted I start an IRA. I stopped investing in it about 14 years later when I got married and got out of Navy. Bottom line, I wasn’t putting away a ton. Fast forward to now, 36 years later, that little IRA that I basically “forgot” about is over 200k. Time value of money can’t be overstated.

quote:

Originally posted by pedropcola:
There is a misconception it seems as well. Investing isn’t only for the “big boys” or not until you have tens of thousands of dollars to invest. Not sure where that idea came from. Vanguard accounts can be opened with as little as 1000 dollars for certain retirement accounts or 3000 for pretty much any mutual fund. That’s just one brokerage.

The bar can be even lower, considering many of their funds are also available in ETF form, which only cost the price of one share to get into - typically somewhere between $50 and $300, depending on the ETF. (Similar to buying individual shares in a stock.)

^^^^^^Yup

Biggest thing is to start. And be consistent. Make it automatic and soon you won’t even realize it’s being invested.

I actually think Acorn and it’s ilk actually lend themselves to teaching bad habits not good ones.

quote:

Originally posted by pedropcola:
Make it automatic and soon you won’t even realize it’s being invested.

Agreed.

Personally, 7.5% of each paycheck is automatically diverted to my savings account for home/auto repair expenses, and 7.5% is automatically invested into the funds in my Roth IRA for retirement. (That's in addition to the pension contributions that are automatically deducted before taxes; most folks without solid pensions will want to be saving a lot more than 7.5% of their income for retirement...)

I don't even see that 15%. The transfers are automated. To me, that money doesn't exist, until I need the savings for a big expense, or until I'm ready to draw upon the investments for retirement. My budget is built around the remaining 85% of my takehome pay.

This strategy is typically called "pay yourself first", and is an easy way to set aside 5/10/15/20 percent of your paycheck for savings and/or retirement, since it's automated and requires no action on your part (and therefore no temptation to spend it rather than saving it).

quote:

Originally posted by pedropcola:
^^^^^^Yup

Biggest thing is to start. And be consistent. Make it automatic and soon you won’t even realize it’s being invested.

I actually think Acorn and it’s ilk actually lend themselves to teaching bad habits not good ones.

How is saving and ‘getting into the market’ teaching bad habits?

‘As little as $1000-$3000...’

There are some very good, hard-working members here who aren’t trying to figure out what to do with 3-4 figures worth of surplus cash at the end of every month. That old adage of 10% of your salary into savings isn’t reality for many, especially these days.

If something like Acorns or others allow folks to at least get started and perhaps springboard later, worth considering IMHO.

YMMV.

$.02 worth,
Boss

Something is certainly better than nothing. No doubt about that.

But when pedropcola talks about "bad habits", I believe he's talking about saving on the back end vs. saving on the front end.

Rather than just saving whatever's left over after you get done spending your income (considered a "bad habit" when it comes to saving, but still better than not saving at all), a better habit would be to deliberately save a certain amount first and then spend/budget around what's left after your intentional savings.

That tends to work better for most people (myself included), because you're not left with the temptation to spend that remaining amount rather than saving it. It's usually a better plan to auto-save it initially, so that you never even really see it. That generally allows more people to save a higher amount each month, more consistently.

I certainly don't have 3-4 figures worth of extra cash sitting around at the end of the month. But that doesn't mean I can't afford to set a percentage of my income back on the front end, and still come up with a budget where I can pay all my bills and have some discretionary income left.

You very likely could too. If you were able to come up with a $1000+ investment account in 1 year with a ~15% return, that means you were investing something like $80+ in "leftover spare change" every month. So you could very likely afford to do it from the other way around, and even comfortably set aside a slightly higher amount like $100 or $150 every month first, and then budget for the month around the remainder.

But knowing how much you can really afford to set aside in initial savings/investing each month requires having a detailed monthly budget, as a first step. If you don't have that already, you should give that a try. You might be surprised how much you can actually afford to intentionally save each month. Especially if you're disciplined enough to cut back on impulse spending and stick to a strict budget.

Working up a detailed monthly budget can be eye-opening, especially when it comes to seeing just how much you've been spending on things like eating out, grabbing sodas/snacks from the convenience store, drinking/smoking, etc. Those are easy things to cut back on, when you're serious about saving/investing for the future.


Also, the "as little as $1000" is just the minimum to first get started in those retirement mutual funds. From there, you can add to it with mere cents at a time if you want (or even not add to it at all). It doesn't mean "you must add in a minimum of $1k more each month" or anything like that.

As you've seen, you already came up with $1,000 in just a year of saving leftovers! So after a year of basic low-level saving, you already have enough to get you started with a retirement account built using something like a Roth IRA investing in a Target Date Retirement mutual fund. From there, contribute whatever you can afford each month going forward. Even just the $80 in spare change you were already saving, or ideally bump it up to the $100/$150/$200/whatever you figure out you can afford based on building your detailed monthly budget.

Rogue said it well. The bad habit is not writing the first check of the month to yourself. Everyone can do that. Everyone. It takes discipline though. I looked up one brokerage, perhaps the biggest. You already have the minimum. Others can start with less.

The single biggest impediment to starting investing or putting away money is deciding its more important than the wasteful discretionary spending almost everyone does. Did you read the part where I was making 500 dollars a month as an E1 in the Navy and put money away? I only did it because my Dad encouraged me to. I would have rather taken that money and spent it. No one has told you to take a certain percentage and put it away. You did that. I said take a pencil and a piece of paper and with your budget figure out what you could invest/put away on the front end. It’s good advice. It’s better than the Acorn model. It’s advice though. Take it or don’t take it. I learn something all the time from people, I’ve read great advice on this thread. No one is talking down to you. But you can do better than spare change. Everyone can. Your choice.