Squirrels are the commiserate example of preparing for the future. They literally store up food for themselves a little bit at a time in order to have a sufficient stock pile by winter. The
Acorns app operates under a similar premise. It makes very small, incremental transfers into what's essentially a brokerage account that's invested in mutual funds for diversity. Now before you shrug it off as something that seems overly complicated, let me assure you that it's actually quite simple.
It only takes a minute to
set up an account with Acorns to get started. After you link up a debit or credit card (or more than one if you would like) there is obviously a verification process to make sure you own the associated account. That step is simple though and you have likely been through that drill before in setting up other financial accounts. Once verified, you're done! Now every time that you make a purchase, the Acorns app will round up to the nearest dollar and roll that amount into your new account. The funds that accumulate are then invested into mutual funds automatically. You have several options based on your risk tolerance but they even make that simple. Rather than having to pick and choose the individual mutual funds, using a sliding scale, you select how aggressive you would like the investments to be. That's it! Now you can just sit back and watch the loose change add up over time. Here's a snapshot of a few transactions to give you an idea of how it looks.
How much you can accumulate is of course contingent on your spending. And the growth (or loss) is tied to the market performance of the mutual funds selected. From my experience, I've seen relatively steady growth in my account. But, perhaps the real 'secret sauce' is the pure automation of the savings. By rounding up the odd change on every transaction, it never feels like money that I'm missing. In fact, by dealing with only round numbers it actually makes budgeting a bit easier as well. This is hardly a get rich quick scheme but continues to develop the habit of saving more and more all the time. And, assuming traditional gains over the long term the fifty or so dollars per month that you're squirreling away could be worth more than $75,000 in thirty years. While that's not enough, in and of itself, to retire anyone, it's definitely a nice supplement. Heck, buy yourself a retirement present like a new Corvette if you're into that kind of thing. What if you chalked this account up to just being extra loose change and just used it for charity, gifts, helping people in a tight spot completely anonymously? Think about the difference your left over change could really make.
What are some of the things you would do with an 'extra' $75,000? Realizing the difference that change makes and starting today might be just the thing to put you in a position to answer that question sooner rather than later.
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Jefferson
