I’ve been trialing Acorns AU for around 4 months now, and have decided to close my account. With that in mind, I thought I’d better write a round up post (haha) to explain what I liked and didn’t like about it.
Far better minds than mine have written about Acorns AU, but I’ll give you a quick run down anyway. Basically, Acorns monitors your ‘spending’ accounts, and every time there is a transaction, it ’rounds up’ the value to a whole dollar. It then keeps that value in its system, until you have gotten enough round ups to be over the $5 limit. Then it deducts whatever that amount is from your ‘saving’ account, and converts it into shares.
Those shares fluctuate as per normal, and your balance will change based on that. It allows for 5 different portfolios of risk, from conservative (Australian cash and bonds) to risky (overseas shares and stocks). I would need to know more things to know what those things actually are, but since I was just testing it out, I went for the riskiest investment portfolio.
What I liked:
This was a set and forget method of saving. For people who have trouble keeping track of their budgets, Acorns would be an easy way to set aside money that keeps growing at the same time. It’s better than nothing! I have hardly any things that I pay for in a month, so the amount of money being put aside was basically nothing.
It was easy to get involved in the market, and I think that’s a big thing for some people. Me on the other hand, I jumped for the Medibank Private shares when they were going. My one wish with those is that there was a share reinvestment plan for Medibank. Eli also has some AFIC shares, which I have gradually been bolstering the numbers of with reinvestment plans and some wayward cash buy ins.
A nifty feature which I probably should have taken advantage of was a ‘refer your friends’. Now, if this blog ever takes off, I think it would be worth me having an account because it would be growing itself very nicely if people used my link. Their ‘refer your friends’ link meant that if a friend signed up, and started using Acorns, both of you would get a monetary incentive to keep you going.
Closing the account was super simple. You simply need to go onto the Acorns site, and choose to close your account. There were no hassles, and the money made its way back into my account in about a week.
What I didn’t like:
Acorns charges a monthly fee of $1.25 (or $15 a year) for balances less than $5000. At my time of exit, the value increase in my account was around $14 (on a balance of $271.66). For people who are just going to let those tiny round ups work for them, their increases could be easily eaten by this management fee. However, if they weren’t going to save that money in the first place, Acorns is fantastic.
Why I left:
While Acorns is perfect for dipping your toes in the market, some of its fantastic features just weren’t for me. I’m capable of setting aside my own savings, and do so every month.
I have a mortgage to pay down, and I have an offset account. While I have that debt, Acorns needed to be returning me a rate higher than that of my mortgage rate for it to be worth my money. Only once or twice did I see a return rate over 5%, which wasn’t close enough or consistent enough and wasn’t worth it compared to the account fees for values under $5000. We are only talking about small change here though. I’m also well aware that this style of investing is about long term investment, and that the system would work far better with larger sums of money (The management fees for values above $5000 is 0.275%)
I’ve already thought about investing in shares. I’ve picked out a couple of dead ringers ‘Blue Chip Stocks’ that I’ll eventually probably invest in. I would rather invest in shares than the real estate market, but Eli and I differ on this point. My first aim is to pay off the mortgage.
The Final Verdict:
Acorns wasn’t for me. But I think a huge proportion of people in my age bracket should be taking a leap and testing it out. The less self-control you have, the better the Acorns return. Lots of little transactions are going to be the best way of funding this. And if you are saving for a downpayment, this could be a good place to keep your money as long as you are comfortable with some risks. Test it out. I’ve come out of the experience a little wiser, and ‘gained’ a net $5 for the 4 months!
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