Invest your spare change



A new company, Acorns, helps you invest the spare change from your everyday purchases in an easy way.

When you buy that latte for $4.35 with a linked credit card, the Acorns app on your phone automatically rounds the purchase up, to $5.00, and deposits $0.65 into your Acorns investment account. There’s a short video on Youtube that explains how this works.

Over time, the small amounts from your daily purchases add up quickly – and you don’t have to think about it.

But Acorns does take great pains to make sure your money is invested intelligently. To do this, Acorns lets you choose between 5 predetermined risk levels for your portfolio (from “conservative” to “aggressive”). Each portfolio is made up of six ETFs, and the company rebalances your account automatically to ensure proper diversification.

“There are 315,000 financial advisers out there. We’re not trying to compete with them,” Walter Cruttenden, the company’s CEO, told WIRED. “We’re trying to be the starter account, the farm school, the incubator.”

Part of the company’s investment credibility lies with its advisor, Dr. Harry Markowitz, who won the Nobel Prize in Economics for his work on Modern Portfolio Theory. Markowitz is a very well-known name in finance.

Walter Cruttenden has substantial experience in finance as well, currently running Roth Capital Partners and previously having led the investment banking arm of ETrade. He founded Acorns with his son, Jeff, who recently graduated from Lewis & Clark College.

“I think the average person knows they should save or invest more, but it’s difficult to make that commitment,” Jeff told Mashable. “We wanted to build something that could work in the background.”

With low fees of just $1/month for accounts under $5,000 (and .25% for higher amounts), Acorns is an easy way to start investing intelligently. “Using Acorns for a year can cost less than some traditional brokers charge for two trades,” says the website.

Additionally, users can withdraw their money at any time without penalty. This streamlined approach to a previously complex process has earned the company a nickname – the “Tinder of Investing.”

Millennials are especially attracted to the service, and they are the primary target market of Acorns. Much work has been dedicated to improving the dismal savings rates of young people, and this app may be one of the best ways to do it.

Published on Opportunity Lives