Look at Those Acorns Grow…
A year ago Brian Hrnjak, from GHR Accounting Group, shared the news about an exciting piece of fintech called Acorns.
Now he tells COVERED about the apps progress and what the uptake of Acorns might imply for the future of financial services.
Acorns is a smartphone based micro-investment app that has introduced a novel and natural approach to saving and investing.
The concept behind Acorns is simple; by starting small, contributing often and committing long-term, anyone can get on the pathway to ‘financial well-being’ and reach their saving goals.
What is revolutionary about Acorns is that it is a micro-investing platform that allows you to get fully invested in a basket of Exchange Traded Funds (ETF’s) quoted on the ASX for as little as $5.
This provides first time investors with the tools to make small contributions easily, regularly and cost efficiently.
With a fee of $1.25 a month, using Acorns for a year can cost less than what traditional brokers charge for a single trade. And with Acorns there are no exit fees, switching fees, brokerage fees and withdrawing money from your account takes a couple of swipes.
Acorns users build on their knowledge of investing by having access to real-time information on their portfolio and ongoing information and educational content about what’s happening in markets.
There are three ways that people invest their money with Acorns:
Round-ups: This innovative feature links spending to savings. People invest their small change every day without even thinking about it. Acorns makes it possible to link your credit and debit cards and then round up the virtual change from every transaction. A virtual “piggy bank”.
Automatic Investments: Acorns also makes it easy to set up recurring deposits on a daily, weekly, or monthly basis. Setting up automatic investment can be done in seconds through the app and is great for maintaining a regular savings plan.
Lump Sums: Users can also invest any amount, at any time, with a simple lump sum investment.
When I first wrote about Acorns the app was in beta testing with only around 160 users. It was launched in February 2016, and in November 2016 has more than 160,000 registered users of the app in Australia.
In the space of nine months, the app has helped users invest more than $35 million into exchange traded funds via the platform.
The average account balance of the youngest users, the 18 to 24-year-old age group, is sitting near $500 and then rises exponentially by age group until we get to some octogenarians with rather large-ish account balances.
As an advisor, I had a lack of tools to offer clients who were looking to encourage their kids to save or establish something small for the grandkids that they could top up over time.
And it’s not just me saying it, well known financial commentator Noel Whittaker acknowledged as much in the Queensland Times in July 2016 after trying the Acorns app he commented, “This is one of the greatest products I have seen in my career.”
Disclosure: the author holds shares in Instreet Investment Management Ltd which is in local partnership with Acorns US.
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