One popular fintech app that I’ve never really promoted on this blog is an app called Acorns. It’s what you’d call a micro-investing or micro-savings app. Here’s how it works. You link your credit and debit cards to Acorns. The app then monitors all of your transactions on those cards. Whenever you make a transaction, Acorns rounds the purchase to the nearest dollar, then saves that extra amount for you and invests it in a diversified investment portfolio.Â
Say, for example, you buy a cup of coffee for $1.50. Acorns will round up that purchase to $2, pull $0.50 out of your bank account, then invest that $0.50 for you. It’s like a digital version of your spare change jar, with the added benefit of investing your spare change, rather than having it sit there doing nothing.
I love microsaving apps – in fact, they’re an integral part of my money system. I think these apps solve a major problem that comes with saving, mainly that it’s often really hard to get started. A microsavings or micro-investing app like Acorns solves this problem by making the saving process pretty painless. Indeed, when you save small amounts like this, most of the time, you won’t even notice that you’re saving money. The public and investors seem to have noticed that this is a good idea too. Acorns is currently valued at $860 million and manages over $1 billion in assets. In other words, it’s a big player in the world of fintech apps.
There’s just one big problem with Acorns that makes me shy away from recommending it. I think it’s simply too expensive for what it does. In exchange for their service, Acorns charges users a small fee – currently, $1 per month for the Acorns Lite plan, $3 per month for the regular Acorns account (which includes IRAs and a checking account), and $5 per month for the Acorns family plan (which adds a kid’s investment account).
$1 to $5 per month doesn’t seem like much, but consider that most people using spare change investing apps likely aren’t going to be investing with large balances. The vast majority are probably going to have accounts with a few hundred dollars to a few thousand dollars at most. Many will probably have accounts with less than $1,000 (a simple Google search suggests that the average Acorns account size is somewhere in the $200 to $300 range).Â
The more financially savvy of us will recognize that this isn’t a good deal – an account with $1,000 will pay 1.2% in fees each year; a $200 account is looking at 6% in fees each year. But Acorns doesn’t market itself towards the financially savvy – it’s marketed toward the new investor who likely doesn’t understand how much a seemingly small, $1 per month fee can be when you’re investing small amounts.
Luckily, there is a way to make your own version free version of Acorns simply by using two Fintech apps that both cost nothing. In today’s post, I’ll walk you through my version of Acorns and how I get the same results without paying any fees.
Step 1: Download Peak And Use It To Roundup Your TransactionsÂ
To create your own free version of Acorns, the first app you’ll need to download is Peak. Peak is a completely free savings app that, most importantly, has a roundup feature, which will allow you to get the same roundup result as Acorns.
Like with Acorns, you link your credit cards to Peak. Peak will then monitor all of your transactions, round up your transactions to the nearest dollar, and then save your spare change in an FDIC insured savings account.Â
You can set up different savings buckets in Peak, so what you’ll want to do is create a savings bucket labeled “roundups.” All of your spare change should automatically deposit into that bucket. Let it accumulate there until you’re ready to move it (which we’ll discuss in the next step).
I’ve written an in-depth review of Peak in an earlier post, so definitely check it out if you want to learn more about how Peak works and why I’m such a big fan of this app. The one downside is that Peak is currently only available on iOS.
Bonus Step: Another step you can take if you want to do more micro-saving is to use what I call “sweep” apps. These are apps that monitor your primary checking account and analyze your income and spending patterns using proprietary algorithms. The apps then pull out small sums on a weekly basis that they think you won’t notice. These apps are another way to automate some more microsavings into your money system. I personally use a free app called Dobot, which I’ve never had a problem with and I think works great (Feel free to check out my Dobot review post; and if you open a Dobot account with my link, you’ll get $5 to start off your account).
Step 2: Download M1 Finance And Invest Your Spare ChangeÂ
The second app you’ll need to create your own free version of Acorns is a robo-advisor app called M1 Finance. What makes M1 Finance unique among robo-advisors is that it’s currently the only robo-advisor on the market that does not charge any management fees. This makes M1 Finance the perfect app for us to use to invest our roundups from Peak.Â
To do this, you’ll want to create a new investing account with M1 Finance. Once you create your account, you can then choose what you want to invest your funds into. You can either pick and choose your own stocks and ETFs, or you can choose one of the “expert pies” that M1 Finance has created.Â
Here’s an example of M1 Finance’s “Ultra Aggressive” portfolio, which invests your funds into 7 different low-cost Vanguard ETFs.Â
Personally, I don’t think you need to break up your investments into so many different buckets, especially if you’re only investing small amounts. In my own account, I have everything invested in VTI, which is a Vanguard Total Stock Market ETF. There are a lot of options when it comes to investing, so what you want to do is make it simple – pick a reasonable investment and go with it (reasonable means diversified and low-cost).Â
The main limitation is that M1 Finance has a $100 account minimum, so you’ll have to start off with $100 in your account to get yourself going. I don’t think that’s too big of a limitation, but it’s something to be aware of if you’re going to create your own free version of Acorns using a combination of Peak and M1 Finance.
If you open an M1 Finance account using my referral link, you’ll get $10 to start off your account.
Step 3: Putting It All TogetherÂ
Now that you have Peak and M1 Finance set up, the last step is putting them both together. Peak will continue to monitor your transactions and save all your spare change for you in a separate savings account. You’ll then have an M1 Finance account that doesn’t charge you any management fees ready for you to fund.
If you want to make things easy, at the beginning of each month, simply move all of the spare change that Peak saved for you into your M1 Finance account. M1 Finance will then automatically invest those funds for you in the portfolio that you created. Yes, this is a step that you’ll have to manually do, but since it’s on your phone, it really won’t take you much time. Just a minute or two per month.Â
Note that Peak and M1 Finance won’t link directly to each other, so you’ll have to move your saved money from Peak into your primary checking account, then move money from your primary checking account into M1 Finance. This hasn’t really been much of a problem for me.Â
So one question is when could Acorns be worth using? At $1 per month, you’ll be paying $12 per year. Thus, if you have $1,000 in your Acorns account, you’d be paying a 1.2% annual fee, which is way too high to make it worthwhile.
At the $3,500 mark, you’d be paying a 0.34% management fee. That’s probably the minimum account balance you need to make Acorns worthwhile. Otherwise, the fees are simply too high a percentage of your assets under management. The thing is, the point of an app like Acorns is to help people without a lot of money start saving and investing. So will you really have that much in your Acorns account? Most people using an app like this won’t be at that point.Â
For now, this is how I’m doing it – Peak rounds up my transactions. Then, once per month, I move that money over to my M1 Finance account, where it’s invested into VTI (a Vanguard Total Market ETF). It’s not going to change my life or anything – but it’s just another thing I like to do to automate and squeeze out some extra savings each month.
More Recommended Ebike/Scooters
Check out these other ebikes and scooters I've reviewed:
- Urban Arrow Ebike – Last year, I made one of the largest purchases I’ve ever made – I bought a $9,000 electric cargo bike from Urban Arrow. In my Urban Arrow review, I will discuss what it is and why I decided to buy this bike, as well as discuss how impactful a bike like this can be on your journey to financial independence.
- Troxus Explorer Step-Thru Ebike – The Troxus Explorer Step-Thru is a fat-tire ebike that I’ve had the pleasure of riding for a while now. It has amazing power, great looks, and awesome range. If you’re looking for a great fat-tire ebike that offers a lot for the price, the Troxus Explorer Step-Thru is definitely one for you to consider. Check out my Troxus Explorer Step-Thru Review.
- Hovsco HovBeta Ebike – The HovBeta is a folding ebike with great specs and a lot of interesting features, and importantly, it’s sold at a good price point. I’ve had a blast commuting with it and using it to do deliveries with DoorDash, Uber Eats, and Grubhub. Check out my Hovsco HovBeta Ebike Review.
- Vanpowers Manidae Ebike – The Vanpowers Manidae is a fat tire ebike that I’ve been riding as my primary winter commuting bike and have also been using it to do food delivery with apps like DoorDash, Uber Eats, and Grubhub. After clocking in a decent number of miles with this ebike, I wanted to write a post sharing what my experience with the Vanpowers Manidae ebike has been like. Check out my Vanpowers Manidae Review.
- Sohamo S3 Step-Thru Folding EBike Review – A Great Value Folding Ebike – The Sohamo S3 Step-Thru Folding Ebike is an entry-level folding ebike that offers a lot of value for the price point. I’ve been riding the Sohamo S3 for a while now, putting the bike through its paces, and I have to say, this bike has exceeded all of my expectations. Check out my Sohamo Review.
- KBO Flip Ebike – The KBO Flip is an excellent bike. I’ve had a great time riding it and think it’s a versatile bike that can be used for a lot of purposes and can fit a variety of lifestyles. It’s worked out great for me as a general commuter bike and as a food delivery bike. Check out my KBO Flip Review.
- Hiboy P7 Commuter Ebike – The Hiboy P7 is an excellent electric commuter bike that’s offered at an affordable price point. The range and speed of this bike are both very good, so you won’t have any trouble getting anywhere you need to go with it. As a food delivery vehicle, this is also good – with how much range it offers, you’ll be able to work all day on a single charge. Check out my Hiboy P7 Commuter Electric Bike Review.
- Himiway Escape Ebike – The Himiway Escape is an interesting bike for anyone looking for a moped-style ebike. If you’re a gig economy worker, the Himiway Escape is particularly interesting and it’s possible to think of it as an investment, especially if you can opt to do deliveries with the Himiway versus using a car. It’s not cheap, but you can definitely make your money back when you compare the mileage you’ll put on your car versus using an ebike. Check out my Himiway Escape Bike Review.
- Espin Sport Ebike – The Espin Sport is a good ebike for someone who is looking for an ebike that feels and rides more like a regular bike. There are many ebikes that are really only bikes in name. In reality, they’re basically electric mopeds. The Espin Sport, by contrast, is a bike you could probably ride without the battery and you’d feel like you’re just riding a regular bike. Check out my Espin Sport Review.
- Varla Eagle One Scooter – The Varla Eagle One is an excellent scooter that can make sense for a lot of people. It can work as a primary mode of transportation. You can use it to work on gig economy apps like DoorDash, Uber Eats, and Grubhub. And it can also be a recreational vehicle if you’d prefer to use it for that. Check out my Varla Eagle One Review.
- Varla Falcon Scooter – The Varla Falcon is an excellent scooter that offers a good amount of power at a lower price point compared to more powerful scooters. It’s not exactly an entry-level scooter, nor is it a high-powered scooter. I think it fits somewhere in-between those two categories – an intermediate scooter if I had to give it a category. Check out my Varla Falcon Review.
- Hiboy S2 Scooter – The Hiboy S2 is an excellent entry-level commuter scooter that's perfect for someone looking to save some money in transportation costs and improve their commute. Check out my Hiboy S2 Review.
- Hiboy S2R Scooter – The Hiboy S2R is one of the more interesting electric scooters I’ve been able to test out. It’s not a high-powered scooter, but for an everyday transport option, it’s very useful, especially given some of the unique features that it has. Indeed, for the price, the Hiboy S2R might be the best value scooter I’ve used. Check out my Hiboy S2R Review.
- Fucare H3 Scooter – The Fucare H3 is a fun scooter and I’ve enjoyed testing it out. For a daily commuter or quick trips or errands, the Fucare H3 is probably the scooter I’ll use. It’s portable and easy to maneuver, so it’s just easier to take on the road when I need it. Check out my Fucare H3 Scooter Review.
More Recommended Investing App Bonuses
For additional investing app bonuses, be sure to check out the ones below:
- M1 Finance ($100) – This is a great robo-advisor that has no fees and allows you to create a customized portfolio based on your risk tolerance. You also get $100 for opening an account. Check out my M1 Finance Referral Bonus – Step-By-Step Guide.
- Webull (20 free stock shares) – Webull's current promotion gives you 20 free shares valued between $3-$3,000 each if you open an account using my referral link. Here’s a guide I wrote about how to earn your free shares using Webull.
- Moomoo (15 free stocks) – Moomoo is a free investing app currently offering 2 different referral bonuses if you open an account using a referral link. Read my Moomoo referral bonus guide for more information.
- Robinhood (1 free stock) – Robinhood gives you a free stock valued between $2.50-$225 if you open an account using my referral link.
- Public (1 free stock) - Public gives you a free stock valued between $3-$70 if you open an account using my referral link.
- SoFi Invest ($50) – SoFi Invest is an easy brokerage account bonus that you can earn with just a few minutes of work. Use my SoFi Invest referral link, fund your SoFi Invest brokerage account with just $10 and you’ll get $50 of free stock. I also have a step-by-step guide for the SoFi Invest referral bonus.
More Recommended Bank Account Bonuses
If you’re looking for more easy bank bonuses, check out the below options. These bonuses are all easy to earn and have no fees or minimum balance requirements to worry about.
- Upgrade ($150) – Upgrade is a free checking account that’s currently offering a $150 referral bonus if you open an account and complete a direct deposit. These bonus terms are easy to meet, so it’s well worth doing this bonus as soon as you can. Here’s a post I wrote with more details: Upgrade $150 Referral Bonus – Step By Step Directions.
- SoFi Money ($275) – SoFi Money is a free checking account from SoFi. They’re currently offering a $25 referral bonus if you open a SoFi account with a referral link and deposit $10. You can also make an additional $250 as well if you complete a direct deposit. This is a good bank that is also 100% free, so you won’t have to worry about managing this account. Here’s a post I wrote with instructions on how to earn your SoFi Money bonus: SoFi Money Referral Bonus: Step By Step Guide.
- Chime ($100) - Chime is a free bank account that offers a referral bonus if you use a referral link and complete a direct deposit of $200 or more. In practice, any ACH transfer into this account triggers the bonus. This bonus is easy to earn and posts instantly, so you’ll know if you met the requirements as soon as you move money into the account. I wrote a step-by-step guide on how to earn your Chime referral bonus that I recommend you check out.
- US Bank Business ($800) – This is a fairly easy bank bonus to earn, since there are no direct deposit requirements. In addition, you can open the Silver Business Checking account, which comes with no monthly fees. Check out how to earn this big bonus here.
- Fifth Third Bank ($350) – This offer is limited to customers in the following states: Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, North Carolina, Ohio, Tennessee, West Virginia, and South Carolina. If you don’t live in one of those states, you won’t be able to open an account online but you can still open an account in-branch if you happen to be visiting a city that has a branch. This is a fairly easy bank bonus to earn, especially since there are plenty of data points showing what will trigger the direct deposit requirement. In addition, you can open the Fifth Third Momentum Checking bank account, which comes with no monthly fees or minimum balance requirements. Read my guide on this bonus here.
- GO2Bank ($75) - GO2Bank is an easy bank bonus that I recommend people take advantage of if they have an easy way of meeting the direct deposit requirement. I like that it’s easy to open the account and that the bonus pays out quickly. Check out my step-by-step guide on how to earn your GO2Bank $75 referral bonus.
- Current ($50) – Current is a free fintech bank that’s offering new users a $50 referral bonus after signing up for an account using a referral link. Current is an easy bonus to earn and also gives you access to three savings accounts that pay you 4% interest on up to $2,000. That means you can put away up to $6,000 earning 4% interest. That’s very good and makes Current an account I recommend to everyone. Check out my step-by-step guide on how to earn your Current Bank bonus.
- Netspend ($40 + 5% Interest Savings Account) – Netspend is a company that provides 5% interest savings accounts. If you sign up using my referral link, you’ll get a $40 signup bonus once you make your first deposit into your Netspend account of $40 or more. That means you get a 5% interest savings account and a free $40 to start! Make sure to check out my in-depth guide on how to set up these accounts.
- Digital Federal Credit Union ($20) – Digital Federal Credit Union (DCU) is a free, nationwide credit union that I recommend to readers for two reasons. First, DCU has a $20 referral bonus if you open a free DCU checking account with a referral link. Second, DCU has a saving account that gives you 6.17% interest on your first $1,000. Check out my in-depth post on how to set this account up.
- Novo Bank ($40) - Novo bank is a free business checking account that’s currently offering a $40 bonus if you open a Novo business checking account using a referral link. In addition to being a good bank bonus, Novo is also a good business checking account. It has no monthly fees or minimum balance requirements and operates a good app and website. Indeed, it’s the business checking account I currently use for this blog. Check out my post on how to easily open a Novo account.
- Varo ($30) – Varo is a free fintech banking app similar to Chime or Current. It’s currently offering a $30 bonus to new users that open a new Varo account with a referral link. The bonus for this bank is very easy to meet, all you need to do is spend $20 within 30 days of opening your Varo account. Check out my step-by-step guide to learn how to earn this bonus.
Kevin is an attorney and the blogger behind Financial Panther, a blog about personal finance, travel hacking, and side hustling using the gig economy. He paid off $87,000 worth of student loans in just 2.5 years by choosing not to live like a big shot lawyer.
Kevin is passionate about earning money using the gig economy and you can see all the ways he makes extra income every month in his side hustle reports.
Kevin is also big on using the latest fintech apps to improve his finances. Some of Kevin's favorite fintech apps include:
- SoFi Money. A really good checking account with absolutely no fees. You'll get a $25 referral bonus if you open a SoFi Money account with a referral link, and an additional $250 if you complete a direct deposit.
- 5% Savings Accounts. I'm currently getting 5.25% interest on my savings through a company called Raisin. Opening a Raisin account takes minutes to complete, it's free, and all of your funds are FDIC-insured. I explain how it works, why I'm now using it to store my emergency fund and any other cash savings I have, and why I recommend everyone check it out in this review.
- US Bank Business. US Bank is currently offering new business customers a $800 signup bonus after opening a new account and meeting certain requirements.
- M1 Finance. This is a great robo-advisor that has no fees and allows you to create a customized portfolio based on your risk tolerance. You also get $100 for opening an account.
- Personal Capital. One of best free apps you can use to monitor your portfolio and track your net worth. This is one of the apps I use to track my financial accounts.
Feel free to send Kevin a message here.
What are the transaction costs? I believe it is included in the Acorns model and fees?
Tried to download Peaks on iOS but I guess it’s not available in the USA when I try to download the app? Any other apps or work around?
You omitted a HUGE fact: M1 will NOT auto invest in your brokerage balance until it is at or above $25. So after your $100 initial deposit, if your monthly microsavings balance in M1 Finance is below $25 it will just sit there doing nothing. One idea could be to only transfer out of Peak once you reach $25. Or, if you want to “Supercharge” your savings, boost your monthly Peak microsavings to $25 on any month you don’t reach that with microsaving.
Good point and I didn’t even notice this limitation. Presumably, you’ll probably save $25 per month in spare change anyway, but if you don’t at worst, your couple of bucks is sitting as cash for 2 months max. That won’t have any real impact on your returns.
I agree, fees can’t be evaluated/analyzed in isolation. You really have to couple the fee associated to the investment amount. When I originally heard about Acorns, I was intrigued by it but when you do the math it just doesn’t make sense mathematically. The one thing I will say is that not everything is math. Similar to Dave Ramsey’s debt avalanche or debt snowball there’s a psychological piece to the story. At the end of the day investing is better than the alternative. Acorns has pros and cons, if someone still wants to use the app they should at least know both and decide accordingly. Last, once you graduate from Acorns, you might want to ditch and move into something like Vanguard/Fidelity, etc, or a robo (will also have fees and you need to know what those are).
I’m going to respectfully disagree with you about acorns. Not that I don’t see value in the M1 account that you talked about. However, with acorns, someone can start investing for as little as $5 a month who is on a strict budget but wants to get started investing. I get the whole fee issue that people have, but yet $1 a month is nothing. When you think about it, someone can start investing say $10.00 a month paying a $1 a month fee and start investing today and pay $12.00 for the whole year and not need to worry about a minimum amount. Whereas, someone who might not have $100 right now to start can get into the habit of putting money away to invest each month.
I noticed that M1 Plus has a $125.00 annual fee on top of the $100 minimum balance to be able to borrow at a 2% fee. Whereas the M1 Basic doesn’t seem to have an annual fee but the borrow rate is a variable even though it currently advertises for a 3.5% rate. It’s appears that M1 makes is profit off of loans and annual fee on the M1 Plus accounts rather than charging a monthly fee.
Having said that, I do like that M1 let’s you chose how to invest your funds into things like stocks and ETF’s as opposed to limited options like Acorns does. There’s advantages and disadvantages to both, but I think Acorns has it’s place for beginner investors and people on limited incomes.
Hey Daniel,
The problem is that proportional cost right there. Putting in $10 per month and paying $1 per month means you’ll pay $12 in fees and save $120. That’s a 10% management fee. Assuming the market goes up about 7% on average, you’ll literally end up losing money in those early days. It really takes several thousand dollars before the fee can even be justified. Most of us who understand how these fees work can understand this, but my issue is that Acorns targets new investors, which means most of them have no idea that $1 per month is very significant when your balance is tiny,
I don’t know much about the M1 plus thing, but it’s not even a feature I would ever use since I wouldn’t be borrowing money through an app like M1 Finance. So, they could charge $1 million a year for that if they want – really doesn’t matter to me since that’s not a feature I think anyone should use.
Nice write-up!
Thanks!
One thing you can do to avoid this is just withdraw the money so the account is at $0 most of the time. It won’t charge you the monthly fee then. This is annoying, but every once in a while a good cashback deal comes up through the app that isn’t available elsewhere.
Interesting. So you can have an account with no money in it and they don’t charge you then? I closed my Acorns account a long time ago because of the fee, but I do like having these accounts open so that I can at least check them out to see what’s new.