Dad had one. His grandfather had one, too. And today, despite using credit cards for most transactions, I, too, have a change jar sitting on my dresser.
As people shift from cash transactions to paying for everything with credit cards, debit cards, and even their phones, is the opportunity to invest “spare change” lost? Not if you try one of these micro-investing apps that purport to effortlessly grow your savings. Let’s review some of the most popular apps, including their pros and cons.
What it does: After you link one or all of your credit cards to your account, Acorns rounds up each purchase to the nearest dollar and takes the difference from your checking account. (See also: Here’s What I Learned About Money After Using Acorns)
Cost: Free for college students for four years, $1 per month for others; 0.25 percent for accounts of $5,000 or more.
The good: Automatic saving is great because you don’t have to remember to do it. Your investment account is auto-managed in ETFs (exchange-traded funds), so the money that grows there will feel like pennies from heaven.
Partners including Jet, Airbnb, and Hulu have agreed to give Acorns users cash back, which they deposit straight into your account. Free money, people!
The bad: If you are only investing a few dollars a month, that $1 management fee could turn out to be an outrageously high percentage of your investment. Also, if your bank account tends to run low, the money this app withdraws could cause an overdraft and cost you a nasty fee.
What it does: Stash is simply an ETF investing app, but unlike stockbrokers who require a $1,000 or larger initial investment, Stash keeps the initial investment threshold at just $5. Pre-arranged portfolios have cute names like “The Activist,” to help people with no interest in financial jargon figure out what funds to buy. The Auto Stash feature will periodically transfer a predetermined amount of money from a linked bank account.
Cost: $1 per month for balances under $5,000; 0.25 percent per year after that (which starts at $12.50 per year for $5,000).
The good: If not knowing what to invest in or not having enough money to buy into a mutual fund was keeping you from investing, user-friendly Stash could be a good jump start. It could be a good way for kids or young adults to experiment with investing on a small scale.
The bad: As with Acorns, the $1 a month fee is actually quite expensive for small account balances. Then there’s the question of whether you’re getting good advice on what to invest in. The funds currently offered on Stash have a relatively high expense ratio, meaning that, market performance being equal, other funds might yield more money to the investor after fees. And Stash doesn’t auto-balance your investments over time like other robo-advisers.
Special offer: Want $5 to get started? Use our referral link: Sign up for Stash and get $5 to start investing today!
What it does: Qoins skims the “change” from transactions, and then uses that change to pay off debt. The company estimates that most people end up paying down an extra $40 in debt each month they use Qoins.
Cost: Quoins deducts $1.99 from each monthly payment sent out on your behalf. If your monthly total is less than $20, Quoins won’t send out a debt payment and won’t charge you; instead it will roll over your accumulated spare change into the next month’s payment.
The good: If you’ve got high-interest loans, you can probably save more in interest by chipping away at debt than you could earn from saving at today’s low interest rates….
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