Acorns: Investing with Spare Change

by Miranda Marquit · 0 comments

Chances are that you understand that you need to invest if you want to build wealth for the long haul. However, it can be difficult to feel confident about investing when you feel like you don’t have enough money to get started. It’s true that you can start investing when you have as little as $25, and can spare as little as $50 or $100 a month. But what happens when you don’t think that you have enough to do even that?

Acorns is a relatively new investing site that helps you start investing with your spare change. It’s an interesting idea that suggests that you can use your spare change to add up to something serious over time. It’s kind of like putting your spare change in a jar at the end of the day. However, rather than waiting for a coin jar to fill up, you can be earning compound interest on your change from the very beginning.

How Acorns Works

Basically, Acorns sets up as a fee-based account. You can open an account with as little as $5, and there are no minimums. If you withdraw and end up with a $0 balance, Acorns won’t charge you a fee, which is kind of cool. The fee structure is very straightforward. You pay $1 a month if your account balance is less than $5,000, and you pay an annual fee of 0.25% on accounts with more than $5,000. It’s fairly inexpensive, although once you get to a really large account, other similar services might charge less. For example, Betterment only charges 0.15% a year when you have an account balance of $100,000 or more.

You can choose to have a set amount of money put into the account each month, helping it add up over time. Or, if you want, it’s also possible for you to arrange so that your purchases are rounded up to the next dollar and the spare change is deposited into your Acorns investment account. Either way, it’s automatic. No matter how small an amount you have, you can start investing — and do it automatically.

Who Acorns Works Best For

Acorns works best for those who want to get started investing, but don’t feel like they have a lot of money to get going. It’s a good way to get your feet wet.

You can also get a lot of benefit from using Acorns if you want to use it as an emergency fund. I keep my emergency fund money in an investment account, and it’s worked out well for me. If you are looking to build up your emergency fund, with a small amount of money, this can be a great way to do so. However, you want to make sure that you are aware of the implications that come with doing so. I like using an investment account like this because it provides you with a way to boost your returns (better than a traditional savings account), while at the same time providing you with a tax deduction if you happen to end up selling at a loss when you need the money for an emergency.

Overall, Acorns is a great tool for those hoping to get started investing and who hope to start with a small amount of money.

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