App that invests spare change on the stock market has officially launched in Australia
If you regularly have 50 cents left over from your daily coffee purchase, you could be doing more with it than simply tossing it in a jar with all your other shrapnel.
The fintech app, Acorns, which officially launched in Australia on Wednesday — its first market outside the U.S. — aims to help people start investing with only small amounts of money, and without high commissions and prohibitively large minimum account balances.
The free Android and iPhone app, which was founded in 2012 by Jeff Cruttenden and his father, Walter Cruttenden, aims to open up investing to young people and those who might be intimidated by the process.
The company chose Australia as its international starting point because of the country’s similarities with America, Colton Dillion, global company director of Acorns, told Mashable Australia. “We have similar investing and saving [habits] … and the readiness of the market for the Acorns product appeared to be about the same,” he explained.
The company began a beta testing phase for the app in December, and claims to have signed up 26,000 people as of launch day.
Acorns chose a rough day to kick off Down Under — the global stock market has been taking a serious beating in recent days and the outlook is decidedly gloomy. “Unfortunately, we picked this date awhile ago and we forgot to tell the stock market about it,” laughed George Lucas, managing director of Acorns Australia. He wasn’t too concerned, though: “We’ve already got 26,000 people signed up. They understand the market goes up and down.”
“If you ask Warren Buffet, … he says it’s always best to buy stocks when they’re at a discount, and they haven’t had prices this low since the beginning of 2014,” Dillon added.
Acorns can be approached in a number of ways. Using Acorns’ “round up” model, if users connect their banking details, the app will track their purchases, rounding up each transaction to the nearest dollar and investing the difference in a portfolio. “It’s a way to painlessly build up an investment account,” Dillon said.
They can also chose to add lump sums or make recurring deposits.
To keep things simple, users can only choose from five portfolios depending on the level of risk they’re comfortable with and their investment goals. “At Acorns, we like to say we’re making big investment decisions into small investment decisions,” Dillion explained.
There’s no minimum account balance required on opening an account, but you’ll need at least $5 to keep investing. Money can also be withdrawn at anytime with just a couple of swipes. For its part, Acorns charges A$1.25 per month for accounts below A$5,000, and 0.275% per year on accounts over A$5,000.
In May 2015, the stock-trading app, Robinhood, proposed launching Down Under, although financial experts suggested the startup might run into regulatory issues as it hoped to allow Australians to buy U.S. listed stocks, among other concerns.
According to Lucas, Acorns won’t run into the same hurdles. “Although the software comes from the U.S., the whole things has been ‘Australian-ised’ to make sure it fits in with Australian financial services regulation,” he said. The team took nine months to get ready for the Australian market, he added, and the data of Australian users will also be stored domestically.
Although apps like Acorns and Robinhood are going after the first-time, millennial investor, questions have been raised about whether young people even want to invest or whether the apps could become exploitative.
For Lucas, an app like Acorns can have a positive impact, introducing young people to financial literacy. “Because you’re not risking A$50,000 or A$20,000, because you can open an account for $5, people get comfortable following the market,” he said. “And also, you can get your money back at any time.”