Investing In Your Future, Transparently

Investing takes discipline. That’s what everyone says, so it must be true. Wouldn’t it be fantastic though, if it didn’t? If the whole mechanism for investing was just invisible? If it was this thing that happened behind the scenes and without your ever having to even think about it?

Years ago, banks hit upon a clever idea, and for a while it was all the rage. They’d offer checking account holders a savings account linked to their checking. Every time you spent money from your checking account, the bank would round your purchase up to the nearest dollar and automatically transfer the change into your savings. It was a great idea and it accomplished the goal outlined above. It made savings invisible and automatic.

Recently, a California start- up has taken that idea and applied it to investing. You can download an app called Acorns and when you fill out your profile it will recommend one of five pre-constructed portfolios for you, based on your answers. The five portfolios range from aggressively risky to very conservative and you’re free to select as you like. We are not affiliated with the programs or entities mentioned, and do not recommend any one approach or person and do not guarantee any results. See disclaimer below.

Once everything is set up, this app gets bolted onto your bank account and it performs the exact same function that the automatic savings accounts did as they were described above. Each time you make a purchase; Acorns will round it up to the nearest dollar and sweep the resulting change into your portfolio account investing that money for you. So far, they’re reporting that their average transaction size is $0.57 with an average of three transactions a day. Their returns are ranging from 4% to 9% depending on the portfolio making this a vastly better alternative than a tired old savings account which may not earn any interest at all and if it does it certainly isn’t anything approaching those numbers.

It’s a beautiful system because it’s so transparent. The whole investing function just fades into the background and becomes a seamless part of your everyday life and actions. That’s powerful. Now granted, investing fifty-seven cents at a time isn’t going to build your retirement fund by itself but this is a hugely important first step for people who are struggling to find the money and discipline to make investments by more traditional means, and if you’re worried about the cost of the program, don’t be. The app is free and account management is a dollar a month plus 0.25 to 0.5 percent in annual maintenance fees, depending on your selected portfolio. Best of all you can withdraw your money any time you want it giving you all the advantages of a savings account plus higher rates of return.

Obviously this isn’t something you want to do if you’re saddled with high interest credit card debt. If that describes your situation then your best move by far, is to pay that off first. Once you have though this becomes an incredibly attractive way to save and invest. It’s just a no brainier because even with the fees you’re making more from your money than you would by tossing it into a savings account. Highly recommended.

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