
Acorns – Automatically Invest Your Spare Change - gregchristian
http://www.acorns.com
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ch4s3
Their fees aren't actually that low. In fact with their fee structure and
inflation, you're likely to lose money in the long run, or at least
underperform against the stock market. It seems like a great idea on the
surface though.

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jliptzin
The fees are too high. I get that they're much lower compared to what a hedge
fund might charge, or even the run of the mill mutual fund, but consider this:

The average investor over the previous 10 years earned a 2.6% net annualized
return ([http://www.forbes.com/sites/advisor/2014/04/24/why-the-
avera...](http://www.forbes.com/sites/advisor/2014/04/24/why-the-average-
investors-investment-return-is-so-low/)). The performance actually gets worse
over longer timeframes.

That means that at the high end of Acorn's fee structure, the average investor
is paying almost 20% of his investment earnings on Acorn management fees.
That's high!

Considering the platform is all automated (according to Acorn), I'm not sure
what part of Acorn's system demands such fees, as really all it's doing is
shifting funds around through a set of simple rules (unless I'm not
understanding completely?)

What I'd really like to see is an open source passive investing platform which
you can hook up to your bank and your broker's API (if both of those even
exist), with a config file where you state your preferred portfolio breakdown
(i.e. s&p 10%, bonds 10%, stock XYZ 5%, gold 10%, euro 20%) along with
specifying frequency and amount of transfers from bank -> brokerage account,
which would handle all buying and selling and periodic rebalancing. I wouldn't
be surprised if some brokers already offer something similar and with no extra
fees on top of normal trade fees.

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cmart
You should check out Wealthfront. They automate your passive investing for
you. No trading fees and only 0.25% fee after the first $10k free.

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abpai
check out levered returns if you want to do it yourself

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arasmussen
A lot of my friends who aren't experienced investors are really excited by
this. The fact that they will automagically invest a small amount of money
without having to think about moving money or choose what to invest in seems
great to them. I personally would rather decide how much to invest and what in
myself so I am not particularly interested in paying someone else fees to take
this control away from me.

But definitely a cool product for the average person who doesn't want to put
any time/effort into investing.

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jerhinesmith
For the person who wants to put time/effort into investing, where you suggest
they start?

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spinlock
With your companies 401k or equivalent. Just put whatever percentage you want
into a low cost, broad index fund. The most important part is to make this
allocation before your paycheck gets cut (i.e. you never see the money).

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yummyfajitas
Also make sure to change jobs every few years so you can move money from the
401k to an IRA without a tax hit. 401k's tend to suck - high fees, low
returns, little competition. Most of the funds in your 401k are there because
a fund salesman took an HR person out to a steak dinner.

When you change jobs, always move the 401k into an IRA and put the money into
low cost ETFs.

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cdjk
Unless you have enough income to be over the Roth IRA contribution limits and
want to make yearly backdoor Roth IRA contributions (non-deductible
traditional contribution followed by a rollover to a Roth IRA). If you have a
traditional IRA there can be some tax complications due to the pro-rata rule.
If any traditional contributions are instead in a 401k the conversion is a lot
simpler, and tax-free.

The other way around it is to open an individual 401k if you have any self-
employment income, but that involves a bit more paperwork than an IRA.

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kolev
I created an account a month or so ago, but never completed the signup. Why
would a service snoop into my bank accounts instead of, let's say, withdraw
$10/month via ACH?! I really don't get this "spare change" idea (like BofA's).
$10/month sounds much easier to grasp, implement, and it's safer at the end.

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j4ustin
They connect to your account using a service like Yodlee, Intuit Aggcat, or
Plaid.io. So all they really have access to are your transactions. (I worked
with these API's for over 1 year, and can spot that sign up flow a mile away)

They then pull in the transactions for you to round up manually (through a
simple select process), and if you choose to round up, they ACH that amount of
money over.

Makes sense for people who are not used to saving money or budgeting for
financial services.

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kolev
I understand how they do it and I doubt they will reinvent the wheel (at least
I know about Yodlee that's been around for over a decade), but it's still not
worthy of exposing my financials for some questionable benefit. If they add a
feature to allow automatic investment of predefined small (or big) amounts,
they will have my business.

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colinbartlett
I tried this for a little while but I really did not like how variable the
monthly amount was depending on how many transactions I had. It's much easier
to budget $X per month.

Their fees seemed higher and fund selection lower than my other banks.
Probably I'm just not the target market for this because it's a really cool
idea.

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kylehotchkiss
Wow does this signup ask for a lot of personal info without making me feel
secure about handing it over.

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bsmartt
This looked really awesome, until I noticed the fees, which seem really high.

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ARothfusz
I don't understand how their app knows what I spend elsewhere.

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ukd1
It connects to your bank account and rounds up the transactions

