US fintech startup Acorns Grow, which turns small change into an investment portfolio, launches in Australia today after a successful trial period with 22,000 people.
The service’s aim is to be an inexpensive, easy way to get into the sharemarket and is targeted at people younger than 35, of which 75% made up its trail customer base in Australia.
It allows users, whether on through the website or mobile app to add their bank account so that it can see their spendings, round up daily purchases, and automatically invest the change into diversified portfolios of index funds. It can be anything from a $3.50 coffee which gets round up to $4 and the extra 50¢ going into the investment account or $80 on a new shirt, and a whole dollar put in.
“We’ve seen huge interest from the Australian market with over 23,000 pre-launch registrations. There’s a real excitement about the app coming to Australia, largely due to the fact that it breaks down the barriers associated with investing such as high start-up costs and being fully invested with the minimum balance of $5.00,” Acorns Australia managing director George Lucas (no, not that one) said.
“It’s about leveling the playing field and opening the market up, particularly to younger generations. It is also about educating people about the benefits of regular small investments into the market.”
A user’s money can be invested in five fund types, ranging from conservative which puts most into cash and bonds, through to aggressive which has over 80% allocated to equities.
Unlike in the US where most of the funds are shared across US companies, Australian investments are diversified between shares in Australia, Europe, Asia and the US.
I’ve been using Acorns now for a little under a month, and while that’s no where near long enough to determine how much money you can actually make off it, I’ve surprisingly enjoyed the experience. I’ve only saved $32.40 in nearly 4 weeks with just the automatic round ups, so you’ll definitely need to contribute more money into the accounts to make it worth it, which I did.
For me, I set up my funds for the “moderate” investment type, smack bang in the middle. 32% of my funds are allocated to Australian large capital stocks, including Telstra, BHP, CBA, Woolworths, Westpac and Wesfarmers. 25% to Australian corporate bonds for the big 4 Australian banks as well as Telstra. 19% in Australian government bonds and 3% in the Australian money market.
A further 8% is in Asian large capital stocks, including Samsung, China Mobile and TSMC, while 9% is in US large capital stocks with Apple, Google, GE, Exxon and Microsoft.
If you pushed it up to aggressive, nearly 80% of your funds would be allocated to the Australian and Asian large capital stocks, while if conservative, nearly 80% if Australian government and corporate bonds and cash.
There is of course fees involved, however they are quite small. It will cost you $15 a year if your portfolio is worth less than $5000 or 0.275% if it’s worth more than that.