Author Topic: New to investing? Check out Acorns  (Read 1122 times)

StudentEngineer

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New to investing? Check out Acorns
« on: August 02, 2017, 10:01:00 PM »
Hi everyone! 
I wanted to inform everyone of an app that I've been trying out for the past half year or so.  Its called Acorns and it helps automate saving and investing.  You link as many credit and debit cards as you'd like to the service and you can turn on their Round Up feature which rounds your transaction to the next dollar and invests the difference.  An example would be if you bought a coffee for $1.50, Acorns would take $0.50 and put it into your account with them, every time your balance in their money-market type account reaches $5 they will sweep that money over into your prechosen diversified portfolio.  I typically have $30-$50 a month in roundups that gets deposited into my account, after six months I've got a total of $295 in my acorns account.

If you signup using my referral link and put $5 into your portfolio both you and I will get $5

Link: https://acorns.com/invite/FMGHKR




Further information

Acorns was founded in 2012 by a father and son duo who wanted to build their own platform to make investing easy and open up investing to people who otherwise would be too overwhelmed or intimidated to start investing.  They did this by realizing the main obstacles to investing were
1. It's difficult to get enough money together to get started
2. Commissions often make it hard to invest even $100 at a time 
3. New investors face too many choices stock funds, mutual funds, ETFs. This can be overwhelming if you're just getting started.

It has been backed by companies such as PayPal, e.ventures, Greycroft Partners, Rakuten and others.



Security

Check it out here: https://www.acorns.com/security/
* SIPC Protected Accounts every account is protected up to $500,000
* SSL Encryption, both their website and app are secured with 256-bit encryption
* Account Alerts, the user will be contacted if there is any unusual activity on their account
* Bank-level Security, Secure servers and privacy verified by physical security
* Account Safeguards, Multi-factor authentication, automatic logouts and ID verification to prevent unauthorized access

"All of your data is protected with 256-bit encryption and never stored on your phone, tablet or computer.
Acorns Securities, LLC is a Member of the Securities Investor Protection Corporation (SIPC) which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). Explanatory brochures are available upon request or at www.sipc.org.



The Portfolio

The user is asked a number of questions to determine their investing horizon and risk tolerance such as age, goals and income.  It then recommends one of five portfolios that range from conservative to aggressive.  You can go with this default recommendation
or you can manually choose one.  For the demographic they are targeting, college students, I'd fully recommend going with the most aggressive portfolio due to their long investing horizon.  The portfolios are made up of low cost ETFs from Vanguard Pimco and Blackrock and consist of the following asset classes: Large company stocks, Small Company Stocks, Real Estate, Government Bonds, Corporate Bonds, International Large Company, Emererging Market.

Some benefits of their portfolios are that the ETFs are commission free and allow fractional share purchases, so that you can invest as little as $5 at a time.

Link to an overview of their investments: https://www.acorns.com/investments



Pros

*Microsaving. 
        Easily my favorite feature as it is an easy thing to set and forget plus it introduces people to saving without feeling pain or inconvenience.

*Automated Savings. 
        Acorns offers the ability to manually and automatically deposit lump sums.  This would be the next step for new investors if they want to save and invest more.

*'Found Money'
       Basically Acorn has partnered with a somewhat short but powerful list of companies, such as Hulu, Apple, Walmart, Groupon, Airbnb, Dollar Shave Club and Jet to give the user up to 10% cash back when they use a linked payment method at one of those comapnies.  The money will typically be deposited into their account 30 to 60 days from the purchase.

*Grow Magazine
       Acorns also has a personal finance site, Grow Magazine, that is aimed at millenials with advice on numerous financial topics.  It's actually quite a good resource, especially for those who are new to investing.  For instance here was the front page article when I logged in today https://grow.acorns.com/warren-buffett-million-dollar-bet-on-index-funds/ which covers Buffets advice to becoming a millionaire by investing in low cost index funds and being patient.  Another article https://grow.acorns.com/pay-off-debt-without-windfalls-or-six-figure-salaries/2/ covers being frugal and avoiding lifestyle inflation, as well as mentioning side hustles as ways to pay off student debt.  Great information for those who think their student debt is too difficult to get rid of.

If the app draws in college students and then they see articles similar to this giving actually good financial advice, I can't see how they won't be better off in the long term.

*Intuitive interface for both the app and website.

*Dollar cost average small sums of money into a diversified portfolio



Cons

Essentially this is an app geared towards students and those who don't save, so if you fall outside of either of those categories it will be less attractive.

* Fees
   $1 a month if you're not a college student and your balance is less than $5,000.  If your balance is over $5,000 you pay 0.25% per year.

From their website "For accounts of $5,000 or more, pay only 0.25% per year.
Free for college students with a valid .edu address for up to four years from date of registration."   

So if you manage to save $500 in a year with acorns your $12 in fees comes out to 2.4% in fees, which as we know here on MMM, is huge.  So this should be really only attractive to college students who can waive the fees for four years or those who don't save at all and will find a greater benefit using acorns, even with the fees.

You could also say that a con would be the rigid portfolios, with no choice for the user to go 100% stocks, however due to its intended demographic I think that is alright.



Who is this for?

*College students (they can waive the fees with a .edu email address)

*People who are new or have little knowledge of saving/investing (many of my collegiate peers and millenials in general)

For the target demographic, I think this is a great way of introducing them to the world of investing by eliminating the costs and making it very easy.  I can see this as being a keystone habit or step that could lead to further interest in saving and investing, then maybe it'll open their eyes to FIRE.

Ideally, once people have used acorns they will come to see investing as fun and want to explore it further, perhaps buying stocks (check out my robinhood app review for commission free stock buying and the chance to win a share of a company worth up to $150 in my signature)
From my personal experience, several of the spendy non-financial friends that I've recommended this to have started to get excited about investing once they saw how saving just a bit here and there added up.  I've already got a couple making automatic deposits on top of the Round Up feature.  From 6 months they've completely changed their mindset towards investing.





Clearly this is NOT going to make anyone FI on any timeline, however I think it could be very helpful to introduce saving and investing to college students and those who do little to no saving already.  Additionally, the type of people who tend to not invest or save often have several annual crisis when an unexpected expense comes up, having a couple hundred or thousand dollars from using this  app can help them bridge an emergency.  Oftentimes those crisis lead to credit card debt which as well all know can quickly spiral out of control and ruin people's financial lives if they don't take care of it quickly.



If you do sign up, I'd appreciate it if you used my link as it took several hours to put this together.  Thank you!

Link: https://acorns.com/invite/FMGHKR



*Fees are waived for four years following registration with a .edu email address, so if you're in your last year of college you can still get this service for free for the next four years.
*Please do your own independent research before you make a decision.
*Let me know if I missed anything or if you have any further questions.
« Last Edit: August 11, 2017, 08:24:48 AM by StudentEngineer »
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New to saving and investing? Check out my post on the Acorns saving and Investing App!
https://forum.mrmoneymustache.com/reader-recommendations/acorns-saving-and-investing-app-for-millenials/

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runewell

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Re: New to investing? Check out Acorns
« Reply #1 on: August 03, 2017, 07:19:48 AM »
CONS:
Not sure I would want to pay an extra 0.25% expense load to siphon off my return. 
You save when you spend.  Instead of spending $1.50 to save $0.50 maybe I should just save $2.00
Saving/investing should be a deliberate decision.  This sounds like a gimmick for people who have no budgetary self-control in the first place.
Please leave Dicey out of this! Have you not been paying any attention? Trolls are not welcome here!

L.A.S.

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Re: New to investing? Check out Acorns
« Reply #2 on: August 03, 2017, 07:36:07 AM »
First the "free share from robbinhood" campaign, now this?

Lemme guess, your side gig is to subscribe for services and then get referral bonuses by steering them new customers?

StudentEngineer

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Re: New to investing? Check out Acorns
« Reply #3 on: August 03, 2017, 08:16:02 AM »
CONS:
Not sure I would want to pay an extra 0.25% expense load to siphon off my return. 
You save when you spend.  Instead of spending $1.50 to save $0.50 maybe I should just save $2.00
Saving/investing should be a deliberate decision.  This sounds like a gimmick for people who have no budgetary self-control in the first place.

I agree it is sort of gimmicky, however for their target audience of those who don't save already or are new to investing I think it is a good step towards learning about savings and investing.  You have to remember that they aren't targeting mustachians here.


Lemme guess, your side gig is to subscribe for services and then get referral bonuses by steering them new customers?

Definitely not a side-gig, they are both services that I use and have recommended to numerous friends.  Just wanted to share my findings with anyone who might find them useful.  In this instance that is college students and those who are new to saving and investing.  I'm certain that only a small section of people on these forums will find it useful, but if a couple people are able to change their mindset towards saving and investing because of starting with this app then I'm all for it.
Want a Free Stock worth $3-$150?  Sign up for Robinhood using my referral link and both you and I will get one!
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Check out my post detailing it: https://forum.mrmoneymustache.com/reader-recommendations/robinhood-trading-app/

New to saving and investing? Check out my post on the Acorns saving and Investing App!
https://forum.mrmoneymustache.com/reader-recommendations/acorns-saving-and-investing-app-for-millenials/

Want a fun side-gig? Check out https://forum.mrmoneymustache.com/reader-recommendations/make-money-with-the-jobspotter-app!/

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runewell

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Re: New to investing? Check out Acorns
« Reply #4 on: August 03, 2017, 09:54:22 AM »
I agree it is sort of gimmicky, however for their target audience of those who don't save already or are new to investing I think it is a good step towards learning about savings and investing.  You have to remember that they aren't targeting mustachians here.

I don't think so.  People will equate shopping with saving.  My $4.50 starbucks drink is OK because I'm SAVING $0.50. 

Please leave Dicey out of this! Have you not been paying any attention? Trolls are not welcome here!

StudentEngineer

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Re: New to investing? Check out Acorns
« Reply #5 on: August 03, 2017, 10:43:11 AM »
I agree it is sort of gimmicky, however for their target audience of those who don't save already or are new to investing I think it is a good step towards learning about savings and investing.  You have to remember that they aren't targeting mustachians here.

I don't think so.  People will equate shopping with saving.  My $4.50 starbucks drink is OK because I'm SAVING $0.50.

I see your point however I think after continuing their current habits they'll see a growing amount of money in their account and then get excited about it.  At that point I think they'll begin to delve into the financial articles that Acorns provides and begin to read stories similar to the ones I mentioned, being frugal, investing in low cost index funds etc which will point them towards a better financial future.  Then they can start to take advantage of auto deposits and see their balance grow more quickly.


Acorns also has a cool feature of a graph illustrating compound interest, where you enter in your balance, and a recurring investment and then it shows how large it will be compounded over a timeframe.  Truly eye opening for those who don't really understand compound interest.
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https://forum.mrmoneymustache.com/reader-recommendations/acorns-saving-and-investing-app-for-millenials/

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Proud Foot

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Re: New to investing? Check out Acorns
« Reply #6 on: August 03, 2017, 11:53:04 AM »
Pros

*Microsaving. 
        Easily my favorite feature as it is an easy thing to set and forget plus it introduces people to saving without feeling pain or inconvenience.

*Dollar cost average small sums of money into a diversified portfolio

I would probably put these in the cons. I know they keep track of your tax lots but to me it is not worth it. And I assume they rebalance the accounts to keep the target allocations? Let us know how it goes when you start having to include those on your taxes. 

 I personally prefer something like the Bank Of America Keep The Change Program to give you more options with your savings.

StudentEngineer

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Re: New to investing? Check out Acorns
« Reply #7 on: August 03, 2017, 12:45:32 PM »
Pros

*Microsaving. 
        Easily my favorite feature as it is an easy thing to set and forget plus it introduces people to saving without feeling pain or inconvenience.

*Dollar cost average small sums of money into a diversified portfolio

I would probably put these in the cons. I know they keep track of your tax lots but to me it is not worth it. And I assume they rebalance the accounts to keep the target allocations? Let us know how it goes when you start having to include those on your taxes. 

 I personally prefer something like the Bank Of America Keep The Change Program to give you more options with your savings.

You would put microsaving in the con section? Whys that?

Good question on the taxes and rebalancing I'll have to do some research on those.

That BAC program looks great! Anyone that can should definitely go with that!
Want a Free Stock worth $3-$150?  Sign up for Robinhood using my referral link and both you and I will get one!
http://share.robinhood.com/keenanf4

Check out my post detailing it: https://forum.mrmoneymustache.com/reader-recommendations/robinhood-trading-app/

New to saving and investing? Check out my post on the Acorns saving and Investing App!
https://forum.mrmoneymustache.com/reader-recommendations/acorns-saving-and-investing-app-for-millenials/

Want a fun side-gig? Check out https://forum.mrmoneymustache.com/reader-recommendations/make-money-with-the-jobspotter-app!/

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runewell

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Re: New to investing? Check out Acorns
« Reply #8 on: August 03, 2017, 01:57:50 PM »
That BAC program looks great! Anyone that can should definitely go with that!

No it looks worse, it just moves quarters, nickles, and dimes from checking into savings where you get probably lose money after inflation.
Please leave Dicey out of this! Have you not been paying any attention? Trolls are not welcome here!

StudentEngineer

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Re: New to investing? Check out Acorns
« Reply #9 on: August 03, 2017, 02:16:31 PM »
That BAC program looks great! Anyone that can should definitely go with that!

No it looks worse, it just moves quarters, nickles, and dimes from checking into savings where you get probably lose money after inflation.

For someone that is having trouble saving, I think its a really cool way to get some to start saving small amounts.  If they see how it begins to add up, perhaps they'll become excited and more interested with investing leading to a much brighter financial future.

Obviously the majority of people on these forums don't need baby steps like this but some people would actually benefit from them - several of my friends have.
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New to saving and investing? Check out my post on the Acorns saving and Investing App!
https://forum.mrmoneymustache.com/reader-recommendations/acorns-saving-and-investing-app-for-millenials/

Want a fun side-gig? Check out https://forum.mrmoneymustache.com/reader-recommendations/make-money-with-the-jobspotter-app!/

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kenaces

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Re: New to investing? Check out Acorns
« Reply #10 on: August 03, 2017, 03:24:01 PM »
I love anything that might motivate some young college students to get started with investing, even if it isn't a good fit for me.

deborah

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Re: New to investing? Check out Acorns
« Reply #11 on: August 03, 2017, 08:57:51 PM »
Noel Whittaker - one of the Australian newspaper finance commentators (I think he has been writing his column for a million years) - recently wrote about Acorns. He was very much for it - see http://www.smh.com.au/money/investing/noel-whittaker-gives-his-verdict-on-microinvestment-app-acorns-20170608-gwnfil.html



Lan Mandragoran

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Re: New to investing? Check out Acorns
« Reply #12 on: August 04, 2017, 02:37:29 PM »
I dont buy anything really lol. My wife gets groceries and clothes for me. We pay bills and put money in index funds/real estate.

It's better than nothing for students or something though... maybe... I suppose. High fees on a less than 5% savings rate (totally made up number, but it cant be very high, if all your doing is rounding up peoples starbucks money and such) seems to me like it would be more discouraging than anything. Some is better than none... unless none makes people actually change. idk.

Edit: Ahh just saw the part about waiving the fees for college students or w/e. Maybe its good for that situation then
« Last Edit: August 04, 2017, 02:39:04 PM by Lan Mandragoran »
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StudentEngineer

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Re: New to investing? Check out Acorns
« Reply #13 on: August 04, 2017, 02:49:19 PM »
I love anything that might motivate some young college students to get started with investing, even if it isn't a good fit for me.

Exactly my view.  Many people on these forums are financially educated and so this baby step is unnecessary for them.  But if you put yourself in the shoes of a college kid who has no clue how investing works, this is clearly better than them continuing their non investing habits.

Noel Whittaker - one of the Australian newspaper finance commentators (I think he has been writing his column for a million years) - recently wrote about Acorns. He was very much for it - see http://www.smh.com.au/money/investing/noel-whittaker-gives-his-verdict-on-microinvestment-app-acorns-20170608-gwnfil.html

Thanks for your post!

Here's an excerpt from that article "Acorns is far more than just a method of investing small sums it is also a brilliant educational tool and has recently launched a My Finance feature that analyses your spending to give you tips to help you manage your finances."  I can totally see this as a way to introduce people to investing and saving + give them knowledge on how to become better off financially.

I dont buy anything really lol. My wife gets groceries and clothes for me. We pay bills and put money in index funds/real estate.


Yeah it's definitely not aimed towards you :P you've got it all figured out but many people don't, especially college students and this could really give them a hand towards investing.
Want a Free Stock worth $3-$150?  Sign up for Robinhood using my referral link and both you and I will get one!
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New to saving and investing? Check out my post on the Acorns saving and Investing App!
https://forum.mrmoneymustache.com/reader-recommendations/acorns-saving-and-investing-app-for-millenials/

Want a fun side-gig? Check out https://forum.mrmoneymustache.com/reader-recommendations/make-money-with-the-jobspotter-app!/

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Proud Foot

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Re: New to investing? Check out Acorns
« Reply #14 on: August 04, 2017, 03:40:38 PM »
Pros

*Microsaving. 
        Easily my favorite feature as it is an easy thing to set and forget plus it introduces people to saving without feeling pain or inconvenience.

*Dollar cost average small sums of money into a diversified portfolio

I would probably put these in the cons. I know they keep track of your tax lots but to me it is not worth it. And I assume they rebalance the accounts to keep the target allocations? Let us know how it goes when you start having to include those on your taxes. 

 I personally prefer something like the Bank Of America Keep The Change Program to give you more options with your savings.

You would put microsaving in the con section? Whys that?

Good question on the taxes and rebalancing I'll have to do some research on those.

That BAC program looks great! Anyone that can should definitely go with that!

For me the reason I would put it in the con section is more related to the potential tax issues I outlined above along with the fact that microsaving doesn't do much for me in my personal situation.  Definitely agree that it can be beneficial to certain people and those who would not be prone to invest on their own. It would be nice if they could allow IRA/Roth accounts but that would open up the potential for a lot more issues.

That BAC program looks great! Anyone that can should definitely go with that!

No it looks worse, it just moves quarters, nickles, and dimes from checking into savings where you get probably lose money after inflation.


Yes it is worse if you leave the money there. If I were to use this I would have it set to empty out on a set schedule either to investment accounts or as a payment on a debt.

StudentEngineer

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Re: New to investing? Check out Acorns
« Reply #15 on: August 10, 2017, 11:05:43 AM »

For me the reason I would put it in the con section is more related to the potential tax issues I outlined above along with the fact that microsaving doesn't do much for me in my personal situation.  Definitely agree that it can be beneficial to certain people and those who would not be prone to invest on their own. It would be nice if they could allow IRA/Roth accounts but that would open up the potential for a lot more issues.

...

Yes it is worse if you leave the money there. If I were to use this I would have it set to empty out on a set schedule either to investment accounts or as a payment on a debt.


Here are some things I found when searching about the tax implication of using acorns.

* In most cases, your tax forms will be available on or before March 15.

* Acorns Securities will send you an email notification with a link to download your forms. You can also find the forms in your Acorns account by visiting https://app.acorns.com/dashboard/documents/tax-reports.

* Acorns Securities will provide you with a Form 1099 during each tax season for the prior year of investing with Acorns.

* Acorns will notify you via email if you will not receive a tax form this year because Acorns Securities was not required to report your account activity to the IRS


I agree opening up IRA/Roth accounts would be great, maybe down the road that will happen.

I also agree that if you use BAC's feature you should set up an automatic sweep out to do something productive with that money, be it paying down debt or investing.
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https://forum.mrmoneymustache.com/reader-recommendations/acorns-saving-and-investing-app-for-millenials/

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mjr

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Re: New to investing? Check out Acorns
« Reply #16 on: August 10, 2017, 02:18:10 PM »
First the "free share from robbinhood" campaign, now this?

Lemme guess, your side gig is to subscribe for services and then get referral bonuses by steering them new customers?

+1

Guizmo

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Re: New to investing? Check out Acorns
« Reply #17 on: August 10, 2017, 07:37:45 PM »
First the "free share from robbinhood" campaign, now this?

Lemme guess, your side gig is to subscribe for services and then get referral bonuses by steering them new customers?

+1

StudentEngineer

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Re: New to investing? Check out Acorns
« Reply #18 on: August 11, 2017, 08:16:07 AM »

+1


+1

What do you think of the app?  Would you use something similar to it?  Would you recommend it to college students or people that struggle mightily to save and invest?

I tend to think that their target audience would be better off financially if they used the app, rather than continue with their non-investing/saving ways.  Do you agree with that premise?
Want a Free Stock worth $3-$150?  Sign up for Robinhood using my referral link and both you and I will get one!
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New to saving and investing? Check out my post on the Acorns saving and Investing App!
https://forum.mrmoneymustache.com/reader-recommendations/acorns-saving-and-investing-app-for-millenials/

Want a fun side-gig? Check out https://forum.mrmoneymustache.com/reader-recommendations/make-money-with-the-jobspotter-app!/

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dpc

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Re: New to investing? Check out Acorns
« Reply #19 on: August 11, 2017, 08:23:59 AM »
First the "free share from robbinhood" campaign, now this?

Lemme guess, your side gig is to subscribe for services and then get referral bonuses by steering them new customers?

+1

I think we give him a break. As long as it's a valid recomendation, we as a community might as well let someone benefit from the referals. He's a college student, so at this stage it makes a meaningful contribution to his retirement. The referral rewards are trivial to the 6 figure+ net worth people. Yes, it's a waste of time to this crowd.


I love anything that might motivate some young college students to get started with investing, even if it isn't a good fit for me.

I completely agree. In college, I scraped by. Sometimes didn't even have enough grocery money. Forget gas, beer, or eating out. Yet I always gave to charities supporting the truly poor when I did earn money. Now that I have real money, I can give in a month, what I earned in a year back then. The habit stuck. Life's a whole lot easier for me now, and a whole lot of others. 

If free by 30 is the goal, any way to teach the basic mechanics of investing, and illustrate the return on investing while in college is a win. Who cares if it's $150 total over a college career. The effect will only be amplified upon graduation. Same thing as giving. Financial habits only scale with income.

« Last Edit: August 11, 2017, 08:25:47 AM by dpc »

StudentEngineer

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Re: New to investing? Check out Acorns
« Reply #20 on: August 11, 2017, 11:52:27 AM »
First the "free share from robbinhood" campaign, now this?

Lemme guess, your side gig is to subscribe for services and then get referral bonuses by steering them new customers?

+1

I think we give him a break. As long as it's a valid recomendation, we as a community might as well let someone benefit from the referals. He's a college student, so at this stage it makes a meaningful contribution to his retirement. The referral rewards are trivial to the 6 figure+ net worth people. Yes, it's a waste of time to this crowd.


I love anything that might motivate some young college students to get started with investing, even if it isn't a good fit for me.

I completely agree. In college, I scraped by. Sometimes didn't even have enough grocery money. Forget gas, beer, or eating out. Yet I always gave to charities supporting the truly poor when I did earn money. Now that I have real money, I can give in a month, what I earned in a year back then. The habit stuck. Life's a whole lot easier for me now, and a whole lot of others. 

If free by 30 is the goal, any way to teach the basic mechanics of investing, and illustrate the return on investing while in college is a win. Who cares if it's $150 total over a college career. The effect will only be amplified upon graduation. Same thing as giving. Financial habits only scale with income.

I really appreciate your post dpc, thanks.  I've only recommended products that I personally use and have shown to close friends and family and figured that reaching a wider audience with a helpful product would be a good thing.

I second your opinion on teaching the basics of investing is a good thing.
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