The popular US finance app Acorns is now available in Australia. Like the nut it is named after, the app takes something small — your leftover change — and attempts to grow it into something much bigger. This is achieved by automatically investing the money into a diversified portfolio of exchange traded funds (ETFs) whenever you make an online purchase. Here's how it works.
The idea behind Acorns is pretty genius: once activated, the app automatically rounds up digital transactions to the nearest dollar when you make a purchase on credit or debit card. This virtual "spare change" is then allocated into one of five self-selected diversified portfolios. It's essentially a starter app for first-time players in the stock market.
The five portfolios on offer range from conservative to aggressive with users paying an annual flat fee of $15 for accounts holding less than $5000. All data is stored securely on a remote server with bank-level security and data encryption.
According to Acorns managing director George Lucas (no, not the Star Wars creator), the key strength of his service is the elimination of the high start-up costs normally associated with investing.
“The ethos behind Acorns is using technology to make it easier for people to save and invest," Lucas explained. "The app is perfect for those who know little about investing or don’t know how to start.
"It's about levelling the playing field and opening the market up, particularly to younger generations."
We feel it's worth noting that it pays to do as much research as possible before launching any financial venture. If you really want to maximise a return on investment, relying on an automated smartphone app probably isn't the way to go. With that said, every budding investor needs to start somewhere, and this seems as good a place as any.