Opening and growing a savings account is something that many young people struggle with. Unfortunately many college students graduate with debt, which makes saving difficult. Even if one wants to begin saving, taking the initial step of setting aside money can be a challenge. Cofounders Walter and Jeff Cruttenden recognized this wide-spread problem and decided to take advantage of the opportunity. A few years ago they built Acorns, which is a micro-investing platform where everyone can begin investing.
The Acorns platform works by automatically investing small sums of money for its users based on their spending habits. When initially setting up an account, Acorns requires the user to add his or her credit card or bank account information, so that they can help the individual save. For every purchase that a user makes, Acorns rounds up the transaction amount to the next whole dollar. The difference after rounding up is added to the user’s Acorns account where it will grow. The company collects information on users’ investment preferences and risk tolerance, so that they can wisely invest the user’s money in a collection of six exchange trade investment funds. If a user wants to save more money, they can make additional deposits directly into their Acorns account.
Acorns charges a low monthly fee of $1 per month for the services it provides, but allows college students to use the platform for free. This app provides young people with a great way to begin investing and those who are afraid of investing with a great way to get started with only a small amount of money.
According to CNBC, this Internet-based business is “the new millennial strategy for investing.” ABC News puts it in perspective by explaining that “if you set aside $5 every couple days you would have set aside over $1000 in a year.” Acorns explains that they want to look after the financial best interests of “the up-and-coming,” and they accomplish this through the power of micro investing.
Acorns has evidently been a successful Internet-based business. After exploring their website and reading some reviews, I am convinced that their success is due to them identifying a wide-spread problem and developing a simple solution that requires next to no work on the user’s end. By solving a pain that numerous people can identify with, they have grown quickly and made investing easy for many.
More information regarding Acorns can be found on their website here.