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Acorns smartphone app brings investing to the masses

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March 21, 2014

Acorns is a new app that allows users to make micro-investments from their smartphone

Acorns is a new app that allows users to make micro-investments from their smartphone

Investing is generally seen as the domain of the rich and wealthy. A new app wants to change that, however, by putting the ability to invest in the hands of just about anyone. Acorns is a smartphone app that enables users to make small investments.

Acorns has been in stealth development for two years, but its creators have recently announced the closure of a B round of funding to the tune of US$5.5 million. That brings the total funds raised by the app's makers to a princely $8.3 million and suggests that it isn't just a nifty idea on paper, but is something that investors think has genuine potential.

The app provides a means of making regular aggregated sub-dollar investments in fractional shares with high frequency, an approach, the company says, that has not been previously possible. Colton Dillion, CMO of Acorns, explained to Gizmag that users select a desired risk-level, from conservative to aggressive, and a portfolio balance based on that risk-level. Acorns automatically manages the portfolio once it is selected and users can re-assess their risk tolerance if conditions change.

According to Colton, Acorns only offers certain pre-selected portfolios of exchange-traded funds. "It does, however, highlight top-performing equities in each fund to better help the customer understand their ownership of those equities," he says.

The app employs a proprietary brokerage and advisory engine designed to make micro-investing economically feasible. There are no minimum account balances or commissions on trades and Acorns is hoping that this will encourage a new generation to start investing early and often.

Users need only have an online bank account and some basic information about themselves to get set up with Acorns. Any amount of investment can be made at any time and users can set up automatic lump sum investments, on a daily, weekly or monthly basis if they so wish. It is also possible to round-up credit and debit card purchases to the nearest dollar and then automatically invest the change.

Walter Cruttenden, co-founder and CEO of Acorns, explains that, for many people, traditional investing strategies aren’t realistic or economical.

"By breaking the increments into almost unnoticeable amounts of money, we open up new avenues to save and invest," he says. "And by sweeping these funds into a well-diversified portfolio, people can realize the benefits of compounding, dollar-cost averaging and portfolio rebalancing that comes naturally with high frequency investing. We believe micro investing can help people build a better financial future without conscious effort.”

Colton is similarly confident about the technology's potential. "There are many opportunities for investments now that the smartphone is becoming more and more ubiquitous," he says. "Transaction sizes and costs can get smaller and smaller, and the opportunity for any investor can get larger and larger. The smartphone will bring a world of investing to anyone who can afford the contract, and maybe even beyond."

Acorns is expected to be available by the end of June.

Source: Acorns

About the Author
Stu Robarts Stu is a tech writer based in Liverpool, UK. He has previously worked on global digital estate management at Amaze and headed up digital strategy for FACT (Foundation for Art and Creative Technology). He likes cups of tea, bacon sandwiches and RSS feeds.   All articles by Stu Robarts
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2 Comments

I like the idea of microshares but the limited selection of blended funds to choose from potentially takes some of the fun out of it.

In high school the good economics teacher taught the stock market and had all the kids pick and trade fake stocks in a sandbox through the year. All the kids seemed to enjoy competing against each other with stock market picks sort of like fantasy football.

Luck had a lot to do with it and there were winners and losers but at the end of the class everyone learned a bit about the market and finance.

I get that there are serious mobile apps and doing micro shares with all PTC's would be really hard to do but it would still be cool to have the option to compete against friends on stock picks using small amounts of real money.

Or maybe I only want to do this because I never got to do it in school with the other kids because I had the other economics teacher who spent ~5 months talking about why communism is a flawed form of government that is doomed to failure.

Daishi
22nd March, 2014 @ 12:45 am PDT

This seems like fun. I've always been interested in investing in stocks but I've never really got the full understanding of it. But an intuitive app like this might help me there.

TylorLC
23rd March, 2014 @ 04:47 pm PDT
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