Acorns or Stash: Which App is the Best Place to Invest Your Loose Change?
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Let’s admit it: Some of us are not good at saving money. (Author sheepishly raises hand.)
With so many bills to pay, it’s hard to save.
It’s even harder to start investing your money.
But the sooner you start, the better off you’ll be. Investing is one of the best ways to build your wealth. Taking baby steps now will pay off later in a big way.
And you don’t have to be Warren Buffett to be an investor. You don’t have to follow the stock market. You don’t have to read The Wall Street Journal or watch CNBC.
Actually, you don’t have to know anything. And you can do it from your smartphone.
These apps have the same goals for you, but use different methods to get you there.
Set It and Forget It
So let’s get to the comparison.
Both of these apps are aimed at millennials, although it’s never too late in life to start investing.
Both are available on Apple and Android smartphones.
Both apps have mastered the “set it and forget it” method of investing. They’re really useful for tricking your brain into saving more. You’ll invest without even realizing you’re doing it.
Stash helps you set up an automatic investing plan. You can start with just $5 investments and choose from simple investments reflecting your beliefs, interests and goals.
You can set it up to pull a specific sum of money from your bank account at regular intervals, so you can grow your investments over time.
Once you connect the app to a debit or credit card, it rounds up your purchases to the nearest dollar and funnels your digital change into an investment account.
You can have it automatically round up all your purchases, or manually round up only the transactions you choose. Because the money comes out in increments of less than $1, you’re less likely to feel an impact in your bank account.
Again, each of these apps is using different methods to achieve the same ends.
Here’s a more in-depth look at each.
Stash It Away For Later
Stash’s mission statement is: “Investing should be simple and accessible.”
You can start with just $5. If you sign up here and enter the code PENNYH, you’ll get an extra $5 to make your first investment when you open your account.
Once you sign up, you can set up “Auto-Stash” to withdraw a certain amount of cash from your bank account every week or every month.
Now, where should you invest your Stash money? You can choose from over 30 investment funds.
Instead of overwhelming you with industry jargon, Stash curates and categorizes these funds and gives them understandable names.
You pay just a $1 monthly fee. When your account reaches $5,000, you’ll be charged 0.25% of your account balance per year. (As an example, that’s just $12.50 for a $5,000 portfolio.)
You can control all of this from your cell phone, with the security of a four-digit PIN.
Acorns — Not a Squirrelly or Nutty Way to Invest
Like Stash, Acorns’ is super simple for saving and investing.
You download the app to your phone, connect it to your bank account and select a few settings. This takes 10 minutes, tops.
Then you forget it.
Whenever you use your debit card to buy coffee, groceries, movie tickets or anything else, the app rounds up your purchase to the next dollar and diverts your change into an investment account.
Acorns calls these “Round-Ups.” But they don’t have to be automatic — that’s a setting you choose. You can also add Round-Ups to your Acorns account manually by going through a list of transactions in the app.
Penny Hoarder writer Dana Sitar tried out Acorns and was surprised to find herself painlessly saving $35 a month.
“I’ll save $420 a year — without thinking twice,” she said. “That’s a round-trip flight. It’s Christmas presents for my whole family. It’s groceries for two and a half months. It’s probably the cost of the next thing that stops working on my car.”
Where does Acorns invest your digital change? You answer a few questions on the app to create a financial profile. Acorns uses it to build your investment portfolio, which ranges from conservative to aggressive.
How much does Acorns cost to use? For an account with a balance below $5,000, the monthly fee is $1 plus 0.5%.
When Sitar checked her Acorns balance after the first three months, “It felt like free money,” she wrote. She put the app’s service into perspective:
“Because the amounts are so small, the gains with this kind of investing won’t blow your mind. I’m using Acorns to make saving easy.”
“The price is totally worth this service to help me save a few hundred dollars this year, and several thousand over the next few. It’s something I know I wouldn’t achieve on my own.”
The Bottom Line
So, here’s the million-dollar question: Which will grow your money faster: Stash or Acorns?
The thing is, there’s no simple answer.
The bottom line is that either of these apps will get you into the investing game.
Even if you don’t have an extra $10,000 to hand to a stockbroker or invest in Etrade.
Even if you don’t understand stock market mumbo-jumbo like “annualized rate of return” or “dividend yield” or “small cap” or “no-load mutual fund.”
Business magazine Fast Company ran an article about Stash with this headline: “Meet The Startups Helping Broke-Ass Millennials Invest Their Couch Pennies.”
There’s some truth to that. Even if you’re starting small, with “couch pennies,” it’s better to start now.
It’s the same thing they say about exercising:
A year from now, you’ll wish you had started today.
Mike Brassfield ([email protected]) is a senior writer at The Penny Hoarder. He invests, but needs to invest more.