This dates back to counting the spare change and “egg money” in my grandmother’s chipped gravy boat in the 70’s.
Today, this is the spare change stash in my office:
But here in the 21st century, I don’t have too many cash transactions, and therefore not a lot of physical spare change.
Enter the micro investing app Acorns* which invests your digital spare change.
Four years ago, I signed up for Acorns and linked my checking account. The checking account is my “funding source”.
Then I linked my credit card. You can link more than one card including debit cards.
For every transaction on the linked card, Acorns “rounds up”.
For example, yesterday I used my linked credit card to fill up my car with gas. The total was $63.16. (ouch) The round-up will be 84 cents.
When the round-up total gets to $5.00 it is withdrawn from the funding source account and invested in a low-cost ETF (Exchange Traded Fund) portfolio of my choice at Acorns.
If I have an even dollar transaction, for example $40.00, the Acorns default is to round up a whole dollar. This didn’t make any sense to me — a dollar is not spare change! But this amount is adjustable. I changed the whole dollar transactions to round up just 10 cents.
The fee is $3/month. This is deducted from my checking account. It does not reduce the balance in my Acorns portfolio.
Four years later, this is my Acorns account balance history as of 10/18/22:
My account value is $1,394.31
This amount is just barely more than I have put in.
*Note these numbers do not take into account the $3/month fee.
So far 2022 has been a lousy year for both the stock and bond markets. Much of the gains I had previously have disappeared. But I will hold and continue to buy shares at bargain prices.
Down markets recover eventually and I love buying anything ‘on sale’ including stocks and bonds!
There are five ETF portfolios to choose from ranging from Conservative to Aggressive.
I chose Moderate which is 60% stocks and 40% bonds.
The portfolios are well diversified across several asset classes. The stock ETFs hold 11,000+ different stocks from across the globe! Acorns rebalances regularly.
Acorns is simple and automatic. Beyond the initial set up and adjustment of the whole dollar round ups, I’ve done absolutely nothing. I rarely look at it, except to write this update every October!
Automaticity is one of the keys to successful saving and investing.
Now obviously I’m not going to get wealthy doing this. But I love the idea of automatically saving and investing amounts so small that I don’t even notice. Acorns says the average user invests over $30 a month through Round-ups. My average is a little less.
In addition to “round-ups” you have the option of setting up a recurring investment amount (minimum $5) on a daily, weekly or monthly basis. I have not done this.
Down years are not pleasant, however they are an inherent part of investing. I will stay the course.
I don’t have a plan for this money yet. Maybe I will wait until it reaches a certain dollar amount and cash it in to do something really “splurgy”. This will incur some capital gains tax, assuming I sell in the future at a gain.
For now I’m content to keep rounding up and auto investing.
It’s a glorious age we live in when a mere $5 gets you a diversified stake in the wealth creating power of the global capital markets! This certainly was not the case in the 70’s when I was counting egg money on the shag carpet at my grandmother’s house.
*I do not have any affiliation with Acorns.