I’m the kinda guy that signs up for shit these days. There are opportunities that emerge in Beta that make me a lot of money, I am happy to be the guinea pig in exchange for credit card points. Acorn Money App just emailed me to say I made the cut – there was a restricted Beta and I could sign up now if I so choose, and with the threat of my option being pulled away from me within 72hrs I went for it.
The concept:
Acorn pulls in your ‘spare change’ from a credit card or debit card transaction and invests it for no fee into the market (whenever it hits $5 increments). I tried to find out more, but couldn’t actually find their website when I googled it, so am going to spend the next 30 minutes searching these guys out, please put on a cup of tea, i’ll be back soon…
OK I found it!
I had to read through some VC articles, but the name of the site is acorns.com -you’d think that if they are going to select a single name site like that, and pay through the nose for it, that it might appear at least in the first 5 pages of google search (hint guys… hire some SEO folk!) So I guess it should be called Acorns (and I should change my own post title accordingly, but frankly I can’t be arsed.
My thoughts
I think it is stupid to invest your loose change from a credit card transaction. There is no ‘loose change’ from a credit card transaction.
I think that if you invest you should understand what you are investing in, the Acorn app does not talk about the ETF basket that it selects. During signup I was allocated an ‘Aggressive Portfolio’ I got to see one ETF, called VOO. Though if you select the tabs ‘Large Cap’, ‘Small Cap’ etc it does announce the amount invested… it seems very dumbed down to me, though the allocations are within reason for the profile I entered.
They do mention that a Nobel award winning Economist has been employed to help you invest, which is wonderful. In fairness to these guys they aren’t awful, they just have implemented a neat idea in a really bad way. If you want to micro fund the market then you are appealing to a certain niche in the market, and it isn’t one that you should attempt to gloss over with the fancy paypal-esque moving graphics.
- You need transparency, not fuzzy moving graphics.
- You need to focus on data points, not data integration.
- You need to keep it real guys.
My play
I can’t take this site seriously as it stands, so I would look at it as a MS play. There was ‘talk’ of $1000 per month caps. From my experience, Credit Cards assign a point for transactions of 50 cents or more.
The math..(it’s theory here)
If it works out (questionable because this is quite fuzzy) you could potentially earn 2% of $1 for 50 cents of investment. To give a little comfort to the math, let’s target 51 cent transactions, each one earning 2 cents, or 2.22cents if you use that travel card.
- 1960 transactions earning 2.22 travel cents each generating $43.47
So your $1K invested could spin off 4.3% per month (assuming you could use the travel money) but it would be in the market, that could swing more than that in a bad hour. Assuming you could pull off 1960 transactions in a month without either Corn-nut, or your transaction service, asking why you were up to such madness, and assuming you want to go through the process without losing your mind, for such a small amount each month.
Is there any hope???
Perhaps… as I mentioned, it has been my experience that 50 cents or over trigger a point.. eg $5.66 equals 6 points (x your multiplier) – that means there is no value to me from a MS perspective in sweeping such transactions into the market. Why introduce risk without additional points/cash back reward? The only value would be perhaps that this could sweep up those transactions that fall under the x.50 mark, and over time add up to a little something extra. We are talking not enough to be worth anything really though… I mean, most of my transaction tend to be $5049.50 these days, so what am I missing exactly?
The final verdict.
A silly site, that over spent on their URL, then forgot to SEO it up, and offer me nothing that is worth writing home about. Thanks for getting me all excited you bastards!
Though I do like their graphics.
I take it you never looked into this app any further than the article? I will assist any others that my be interested in this app, as I have been using it for a couple weeks now. First point/last point/most important point. The “spare change” investments are NOT, I REPEAT NOT, coming from your credit card. They come only from a linked bank account. In my opinion, the company is quite vague about this, as your credit card spending is dictating the amounts coming from you and then going into your investment account. After my first “Acorn” deposit was submitted, I got an odd email from my bank account alerting me of the withdrawal. This was alarming as I was awaiting the charge from my CC. I then started a chat session and was soon made aware that the investment sums come from your bank account and are calculated via your credit card expenditures. Not cool. I told the helpful and friendly Acorn staff member that this is not what I had expected, and she told me that they do not charge the CC as this could potentially lead to more debt for their customers. I thought that was funny, as the sums are small and I am not a fan of going into debt over amateur investing. Maybe that is just me though. Anyways, my thought is that it would cost them too much to charge the CCs rather than just pull it from the bank account.
Anyways, I hope this helps anyone else that ventures into this low risk type of investing. Clearly, this is not a way to boost any sort of credit card point accumulation.
Thanks for the data point here- I thought it wasn’t great before, and now it’s worse.