Finance apps 101: Investing for (total) beginners

The Acorns app is marketed as a way for everyday people to start investing, even if you know nothing about managing money or shares. Originally only available in the USA, earlier this year it was released for the Australian market. I’d been interested in the share market, and had been trying to learn how to get started by reading a series of ‘investing for those thicker than two short planks’ books, but it just wasn’t sinking in – I’m not a numbers person. After reading positive reviews of the Acorns app from American financial journalists, I decided to give it a try.

It seemed like the perfect app for me. I know next to nothing about money, beyond spending it on groceries and overpriced coffee. The app operates through my smartphone, and it didn’t require a big cash investment upfront. The app works like this:

  • you link the Acorns app to the bank account you use for everyday spending
  • the app rounds up your ‘loose change’ – every time you spend money with your debit card, it rounds up the purchase to the nearest dollar, and adds up those few cents
  • when it reaches $5, it transfers the $5 out of your account and invests it in shares on your behalf
  • you choose an investment portfolio – the options are conservative, moderately conservative, moderate, moderately aggressive and aggressive – and the app works within set parameters to invest money on your behalf
  • you can also choose to transfer a set amount of money every day, week or month.

And that’s it. You leave it to do its thing, it works in the background and before you know it you’re the proud owner of a portfolio of shares. So does it really work? Well, here’s what it looks like after nine months of being left alone – I often forget I’ve even set it up.

In total I have deposited $428 in the app. My total account value is $444. Over nine months I have made a profit of $15, or 3.6 per cent (which is more than I’m getting in interest on my savings account). At about the six month mark I adjusted my portfolio from ‘moderate’ (the default) to ‘moderately aggressive’ – it doesn’t seem to have made a huge difference, but I’m not sure three months is enough time to see the effect.

All in all I’ve made money, although not much, and it’s really turned into a handy little way to save money $5 at a time. In nine months I’ve saved enough for a holiday in a fairly painless way, and I know a little more about shares than I did when I started. I’m sure I could increase the contributions and watch it grow, but I quite like the way it’s ticking over at the moment. The app continues to get positive reviews from economists who know better than I how it should be working, and I would recommend it as a good introduction to the share market for those looking to make their money work a little harder without paying someone else to manage the process.

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