Alumnus’ app lets users invest spare change
March 14, 2014
It’s easy to see why. Once launched, Acorns will help users shift spare change from their purchases right into publicly traded securities, making investments a breeze for those who could otherwise be intimidated.
Cruttenden, who serves as the company’s chief operating officer, told Mashable that he became an “evangelizer” for investing while studying math at Lewis & Clark, but found that even those who expressed some interest typically ran into one of a few obstacles: either they couldn’t afford the minimum balance to set up an investing account, or they were deterred by the exorbitant commissions taken by some brokerages, or else they simply couldn’t decide what to invest in.
The Acorns app will round up purchases from your credit or debit card accounts to the nearest dollar—for example, 25 cents on a $2.75 taco—and invest the difference in a portfolio of index funds. No minimum balance is required, and the fee is 1 percent. Acorns will charge users $1 a month for the service, though it will also give users $5 when they first create their accounts.
“We’re not setting out to change peoples’ behavior,” Cruttenden said. “I think the average person knows they should save or invest more, but it’s difficult to make that commitment. The goal is to invest small amounts of money more frequently. It’s hard for many to part with $50, but it’s much easier to part with $1 50 times.”
Acorns recently closed a $5.5 million Series B funding round led by Jacobs Asset Management and has raised a total of $8.3 million to date. The start-up, which is based in Newport Beach, California, currently has 20 people on staff and even has one Nobel laureate—economist Harry Markowitz—on its board.
Acorns is currently in beta testing and plans to release its “microinvesting” iPhone and Android apps in the second quarter of 2014. Until then, you can sign up to be on the list for early release of the app at acorns.com.