The proliferation of debit and credit cards and mobile payment service apps, such as Venmo and PayPal, has brought an end to the days of saving your spare change.
But some mobile and desktop apps have unearthed the days of piggy banks and coin jars and made it easy to invest that money.
Acorns is one such app.
The Irvine, California based robo-advisor allows members to round-up credit card and debit card purchases. They then deposit that loose change in an investment account and invest it for you. The service is free for college students and costs $1 a month for an investment account and $2 for a retirement account.
“Every time you buy something at a retail store, a cappuccino for $2.50, we round up to the nearest dollar,” says Acorns Chief Executive Officer Noah Kerner. “We make it three dollars and then we take the fifty cents and invest it into our portfolio for you.”
The app helps people take the first step in saving money as well as introduce their members to investing their money.
“Our fundamental belief,” says Kerner, “is no matter where you are, no matter what your station is in life is, you have the opportunity to grow for the future which is exactly what the American Dream is founded on.”
And while the app allows members to sprout their financial wings, Acorns itself is managing its own growth. In 2019 the app will offer a new service called Acorns Spend. Those that sign up receive a debit card that gives you real-time round-ups, allowing you to invest immediately. The card also invests into a retirement fund.
“It's the first checking account with a debit card that saves and invest for you,” adds Kerner. “So you can move your entire paycheck and your and your direct deposit over to Acorns.”
In addition, users will get extra investments when using the card at selected retailers.
Acorns is not the only app that offers to invest your loose change. Other apps include Qapital, Chime and Digit.
While gathering up spare change and making safe investments with it is a move in the right direction, some financial planners question if it’s enough to really make a lasting difference.
“I’m big on ‘set it and forget it’ but these amounts are too small to rely on,” says Mary Beth Storjohann, founder of the financial planning group, Workable Wealth in San Diego.
“Acorns and other apps are great as a supplemental strategy to help you save money,” she adds. “They are great as an addition to things you are already doing to build your net worth but they are not enough to a secure retirement or a great financial future.”
But as Acorns CEO Kerner puts it, it’s a start.
“Acorn is about providing access for people that didn't have it before. It allows you to invest, to save, and it helps you spend smarter. It helps you earn extra money and grow your knowledge. Those things weren't there for people before. That's why we're here.”