Micro Investing

December 7, 2022

Being part of Project Money has pushed our family to take a more active role in managing our finances, necessitating weekly conversations that have spurred growth from both educational and fiscal perspectives. One of the topics we had discussed was micro investing, investing small sums of money in fractional shares of stock or ETFs.

The two platforms that stood out to us were Acorns and Stash, specifically because of their round-up features. What they both do is round up purchases made on a linked account (i.e., checking account) to the nearest dollar – so if you bought something for $1.25 the round-up amount would be $0.75, and those round-up amounts aggregated and once they reach $5 would be invested in the funds chosen from the platform. Acorns allows you to link multiple existing debit and credit cards to calculate the round-ups, but it only transfers the total value of all the round-ups from the linked primary checking account (even if a round up was earned on card “X” the funds would come out of the checking account linked to card “Y”, if that was the primary account). Stash is slightly different in that you need to use their debit card in order to earn the round-ups. Stash’s Stock-Back card also earns stock on point-of-sale and online purchases at 0.125%.

Both platforms charge a flat fee of $3 per month for the basic level of services offered. Both also offer a robo-advisor for choosing the funds. Stash appears to have a more robust customizable offering of funds with 3,740 stock offerings and 93 ETFs. Acorns offers 9 standardized portfolios comprised of multiple ETFs each.

The option that seemed the most intriguing to us was Acorns, solely because it allowed for exiting accounts to be linked. We did a quick review of our transactions during a recent month, which we could consider average, and figured it would net ~$30. This seems to be in-line with Acorns claim that their average customer invests $150 in their first four months.

But while this approach to investing had us interested, as it seems like a low-risk, low-effort way to invest ~$360 per year, we ended up not moving forward. Based on discussions with our coach there are other areas where we could maximize first, getting a better return on our investment. I don’t think we will write this off completely though, as both platforms offer a custodial account option for minors. I could envision using something like this as our children get a bit older to as tool to help teach them about savings/investing.