Monday, 4 December 2017

Acorns



ACORNS



I joined Acorns some time ago, had a mess around with it and was annoyed that there was not a option to add funds fortnightly on auto-pilot in line with my fortnightly salary (automation of my finances is the only thing that truly works for me), so I stopped using Acorns.

News Flash - Acorns has recently added a fortnightly auto deduction capability, so for me this Robo-Investor is back on the radar big time. It is certainly one of the cheapest and easiest robo-investors to use  (at time of writing this article) in Australia.

However, I remain unimpressed with Acorns' round-up of spare change functionality. I personally account for every cent and simply cannot understand the concept of my account being debited for so-called loose change.  I do not have loose change per se and find this functionality (which is marketed very briskly by Acorns) messy. I do not use this function in Acorns, instead I simply invest a set amount each pay day via direct debit which I set up on the Acorns app.

What I do love about Acorns is that for under 0.6% total fee structure (for the amount I have invested) I can enter the stock market with just $5 and add any amount I want, big or small, whenever I want for no extra charge. There's no entry or exit fees and no spread fees. This is even cheaper and easier than an Australian Vanguard Retail Fund!

Word of warning though, the fee structure for small amounts is steep and I reckon getting your account to over $400 initially should be done very quickly as an initial milestone, and then, up over $1500 as a second important milestone to ensure fees are reasonable. In fairness however, Acorns goes to pains to explain their fee structure in their PDS (Product Disclosure Statement) and remembers to factor in the MER (Management Expense Ratio) of underlying ETF's (Exchange Traded Funds).

At the end of the day, I much prefer my money to be invested in the stock market via a portfolio of ETF's (which is exactly what Acorns does) than moldering in a bank account whose return is less than inflation. Pfft!

Acorns offers several diversified portfolios starting conservatively through to aggressive as well as a socially responsible portfolio too.  I have chosen the aggressive portfolio as I do not mind the fluctuations as the longer term result is what aligns with my investment plan.  Actually, I do not the think Acorns' aggressive portfolio is actually all that aggressive due to the percentage of bonds and fixed interest used (10% currently) which softens this portfolio back to High Growth I feel. Aggressive to me means 100% stocks and no bonds or fixed interest component. (Yeah, whatever)

The Acorns Aggressive Portfolio is made up of the following ETF's:

54% Large Australian companies (SPDR S&P/ASX 200 ETF)
23.5% Large Asian companies (ISHARES ASIA 50 ETF)
7.10% Large European companies (ISHARES EUROPE ETF)
5.4% Large USA companies (ISHARES CORE S&P 500 ETF)
4% Australian Corporate Bonds ETF
3% Australian Government Bonds ETF
3% Australian High Interest Cash ETF


I do not use Acorns for huge amounts, nor as a serious ex-superannuation investment platform. I use it as a better performing option to a HIBA (High Interest Bank account). To be specific, I use it for my ever growing 3-6 months of living expenses account ..... which some alternatively call their Mojo account whilst others call it their F-you money (tch tch), others refer to it as their self insurance account.  I have even heard of people using their Acorns account to save lumps sums of $10K before then investing this directly into LICs or ETF's.

I've put a couple of links though out the text to the important info about Acorns so you can do your own research (always do your own research or seek unbiased qualified advice) because I am not a qualified finance person. I simply write about personal finances to help break the stupid taboo of not  talking about money and to encourage others to get interested in wisely handling their own hard-earned money.

By the way, Acorns are paying me nothing to write all this.


Take care folks and stay nice

Mr HM (Phil)

7 comments:

  1. Thanks for writing about the things I need to think about without making me go 'yawn'!

    Madeleine.x

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    Replies
    1. Thanks Madeleine. Some of the required reading is very yawn-worthy however. I nearly dislocated my jaw whilst reading Superannuation PDF's - my goodness!

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  2. Thanks Phil, am having a good read through their PDS and FAQ. Looks good, and way better fees than Vanguard. I'm a long way off the $5k required for a Vanguard retail account, so this is a good way to get into investing without needing to wait.
    I'd heard of it before, but the weekly email from Barefoot Investor a little while back rubbished the whole thing. I'm glad you mentioned it though.

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    Replies
    1. For me it fills that very obvious gap between a HIBA and a ETF .... That $5000 no-mans-land. I agree that Acorns is a little too expensive to be a long term big $ investment, but I find it really useful for amounts under $10.

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    2. After reading through the PDS, I see that they're not entirely upfront about the fees. This is the landing page for fees, which they describe as clear and simple: https://acornsau.com.au/fees/
      Looking at that, you'd think that they are the only fees involved. Once you get into the PDS, you see that these are the fees that acorns charge, then there is the underlying issuer fees, which they state range from 0.224% to 0.423%. I think it a bit misleading. Anyway, I'm happy with a set-and-forget method, and have put away $30 just to get it started.

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    3. Oh, but on the plus side, they have 'Found Money' partners. One of which is Aussie Farmers Direct. We recently started buying a weekly meals box, of which I will get $1 put into my acorns account, thereby covering the monthly fee, plus a little more.

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    4. That's why I say in my post that fees for my amount invested are a shade under 0.6% - I used the examples of how to calculate the full fees based on the instructions in the PDS.

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