“Don’t let average people make you feel guilty for pursuing your mission in life”
– Eric Worre –
If you’ve been reading my blog (and you should be regularly… so please subscribe) then you know that I’m a big advocate for financial literacy and how the lack of it has had massive negative affects on peoples lives. The average person has very little financial knowledge which is why the average person has little to no savings, drowning in debt and nothing put towards retirement planning. The average person will NOT be able to stop working in their later years because they are not preparing properly, if at all.
Even though I’m not a financial planner (yet, but working on it), here’s a tid bit of financial advice anyway. Don’t be average… you can’t afford it!
Did you know that nearly 77 million Americans have debt in collections? That’s just a portion of people who are drowning in debt, Nearly one third of Americans pay the minimum amount due on their credit card each month because they can’t afford to pay more. In 2018 the banks and credit card companies racked up $104 billion in interest and fees.
Being average requires that you keep up appearances and maintain a heavy consumer mentality instead of an investment one. There’s no money left over to put towards financial planning when you’re focused on living a lifestyle beyond your means.
It’s only 43% of Americans who spend more than they earn and borrow on credit each month to cover the shortfall.Credit card balances reached $930 billion in the last quarter of 2019, which was an increase of $46 billion from Q3.
The average American household has over $132,000 worth of debt and that doesn’t factor in those with a mortgage, then it averages to over $172,000. This debt factors in things such as credit cards, mortgages, auto loans, student loans, medical debt just to name a few. The average credit card balance alone is $16,061.
Are you noticing a word that stands out a lot so far? And I’m not even finished yet!
Only 30% of Americans have a long term financial plan and many of those aren’t planned properly against estate taxes, future market downturns and unexpected misfortunes.The average American’s 401k balance is only $96,288 and that’s tax deferred so the the taxes have yet to be paid on that amount.In addition to that, only 18% of Americans actively contribute to an IRA which is capped at $6,000 annually for people under 50.
The average person lives paycheck to paycheck. In fact, ten million Americans don’t even have a bank account. I think it’s safe to assume that these same people also don’t invest for their future or have goals set to become financially independent.
The average American’s social security retirement benefit is $1,363 per month. That calculates to $16,356 annual income. The average retiree relies on social security for nearly 90% of their income but it was intentionally designed to cover only around 40% of the average workers pre-retirement income.
The latest spending stats tell us the average US consumer spends about $60,060 per year yet, money statistics in America for 2019 say the median yearly income was $48,672.
I could keep going on but I’m going to start to wrap this post up. I hope the point I’m making here is pretty obvious. The whole reason that I created this blog is to help promote financial literacy to average people so that the new average of financially educated people becomes the standard.
If you haven’t done so already, give some attention and love to a couple of my previous post linked below so that you can avoid being average and live a life that you can afford to live.
Please help me get the message out and share these articles on your social media accounts and assist me in my mission of teaching financial literacy to the masses… it’s my passion!
As I’m starting a financial services business, my time is becoming limited to what I can put towards writing this blog which is my passion. I will be continue to post new articles regularly, but they will be once a week and most likely on every Sunday.
I so appreciate you as a valued reader and it’s an honor for me that you give your precious time to reading this blog.
As I like to say… “the journeybegins with the first step”.
If you see value in this article then please be sure to subscribe to the blog if you haven’t done so already. I’ll be putting up more wealth building posts in the future and you can have them delivered straight to your email account.
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I’ll see you in the next post. Until next time… be sure to comment below and let’s get some dialogue going. I’m curious to know, what tips do you have on avoiding being average?
“There’s a difference between interest and commitment. When you’re interested in doing something, you do it only when it’s convenient. When you’re committed to something, you accept no excuses; only results.”
– Kenneth Blanchard –
As someone who enjoys consistently learning about wealth building and then teaching to others what I’ve leaned up to this point, I often wonder how many people who are interested in building wealth are truly committed to the task. So let me ask you a question. As someone reading this right now… are you interested in achieving financial freedom or are you actually committed to doing whatever it takes to get there so long as it’s moral, legal and ethical?
I ask this because it seems most people have the desire, but not the drive. Everyone dreams of somehow coming into a large sum of money and all of the things they’d do with it, but they never intend to do the work by having financial goals set or even put any effort into pursuing any type of wealth building education whatsoever.
When you’re interested, you do what’s easy and convenient. If you’re interested you’ll allow your excuses and stories to convince yourself as to why you can’t. If you’re interested all of the obstacles that come your way will be larger than your vision and goals.
However, when you’re committed you’ll do whatever it takes. You’ll pursue and upgrade your knowledge, skills and develop the beliefs and habits to match your vision and goals.
Achieving financial freedom is a choice and part of the process to attain it requires taking action. If you’re not committed to something then it’s easy to make excuses and talk yourself out of doing whatever it takes to accomplish your goal.
So let me ask you this… which are you?
Without a sense of urgency… desire loses it’s value.
If you’ve decided that your committed then let’s discuss what it will take to make your desires achievable.
Set the goal and make a commitment to achieve the goal.
Once the goal is set, you then figure out how you’re going to do it afterwards. Most people believe they need to know how to accomplish them upfront or there’s no point in setting them in the first place. But the reality is, once you’ve committed yourself to them, the people, places, things and situations begin to reveal themselves a long the way.
Be intentional and specific about your goals designed outcome and set the date it will be accomplished. Specificity is the key to success. Keep the plan simple and easy to execute.
2. Feed your brain and reinforce your beliefs.
Begin to work on you… your identity. You’re limited by your identity and by what you think you’re capable of. Do things that stretch your identity and worth. You are your habits and rituals. Under pressure you’ll always go back to your habits, so develop habits, routines and rituals that serve you.
Start doing beneficial activities like affirmation meditation that feed your subconscious mind in areas such as self worth, self imaging and self esteem. Listen to podcasts and audiobooks, read books, blogs and watch videos on personal development and financial success.Experiment with all of these strategies and figure out what works best for you.
You need to learn that you deserve to be successful and not feel any sort of guilt for doing so. Good people only take what the feel they deserve.
Know that hard work matters. When you begin to do things that other people aren’t willing to do then you begin to believe that you deserve things other people won’t have. And it’s that type of thinking that will get you a seat at the table of success.
The hard work part plays into shifting your identity.
3. Put yourself in uncomfortable situations.
Another beneficial activity to stretch your identity and enhance personal development is to get comfortable with being in uncomfortable situations. Doing this and meeting set goals are probably the two most challenging things you will encounter in life.
By doing things you don’t want to do, you build mental toughness. Like any muscle, courage is a muscle that needs to be developed in order for it to get stronger.
There are those who fight the uncomfortable and those who can face the uncomfortable. Those who fight the uncomfortable are always hating, hiding and blaming. However, those that face the uncomfortable end up getting comfortable in it.Once you can overcome this obstacle there’s nothing that you can’t accomplish.
4. Associate with people who you look up to.
Mentors are a must have when you’re looking to grow. There’s a quote that says the five people that we look up to the most reflect our values and our integrity… that they’ll be a reflection of who we are.
Once we start to get intentional about the people that we surround ourselves with, we can rapidly transform our life. If we meet someone who’s already living and modeling the type of life that we want to live, we’ll able to learn from them since they’re already masters of that area.
Associate with people who are always striving to the best possible version of themselves.
5. Create momentum… it’s a magnifier.
As you combine the afore mentioned strategies together, it’s an amazing feeling to see everything coming together and begin falling into place. Small gradual gains amass to large accomplishments over time.
One way to start momentum is to never stop learning. Become obsessed with self education and then extract what you know and teach it to other people (like what I’m doing with this blog for example).
Become part of a group and empower each other. When you’re around like minded people with similar goals, the energy becomes contagious. That energy then motivates which then leads to taking action.
Momentum is a magnifier needed to achieve growth. Momentum is the invisible force that takes something from good and makes it great… from great to extraordinary.
The key to success is to focus on goals… not obstacles
One last thing I’d like to add before wrapping this post up. Don’t listen to people who tell you that you can’t do it. They are dream stealers who limit themselves and project those limitations outward onto others. Because you’re committed, they were sent to you to test your resiliency and dedication.
Keep the promise that you made to yourself when you decided that you are committed and forget about everyone else, it’s the foundation in your life.
If you can overcome and disregard all of the naysayers and doubters and get clear on what really matters, then you have a really good chance of accomplishing great things.
As I like to say… “the journeybegins with the first step”.
If you see value in this article then please be sure to like and subscribe to the blog if you haven’t done so already. I’ll be putting up more wealth building posts in the future and you can have them delivered straight to your email account.
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I’ll see you in the next post. Until next time… be sure to comment below and let’s get some dialogue going. I’m curious to know, what’s your opinion on being committed?
401K contribution $177.30 – current value $15,555.40
Fidelity brokerage account $30.00 – current value $256.55
Acorns Roth IRA $0 – current value $101.51
Acorns investment account $0 – current value $139.49
– A part of what I earn is mine to keep –
You can create your own acorns account by clicking here.
As usual I’m not putting a lot into my brokerage account as I continue to pay down my debts. But I will maintain paying myself first no matter how little it might be. I do contribute 6% of my pretax income to my 401k since my employer matches dollar for dollar up to 6%. Unfortunately the employer match has been suspended until further notice due to the covid crisis.
I only added $30 into the brokerage account this payday because I’m starting a business and will be putting more into that as time goes on. I’m putting funds from this payday towards educational material and will have to pay for licensing fees once I’m ready to take the exam.
There are multiple ways to invest and the most important investment you can ever make is in yourself.
I’m considering picking up more shares of BRG since it’s down and that would make the divided yield that much nicer. I’ve also been considering opening a position in another REIT as well.
Be sure to keep track with me and if you’d like, share your payday plan in the comments section below.
Until next time… be sure to comment below and let’s get some dialogue going.
“Financially irresponsible people are not bad people. They’ve simply fallen prey to bad habits”
– Mary Hunt –
Let me ask you a question that some people find offensive but I think is very important to answer honestly. Are you struggling to make ends meat like most of society is or are you comfortable with your financial situation? I ask this because 78% of of Americans live check to check with very little to no savings at all… let alone have any type of financial investments working for them.
The savings rate in america is at an all time low at less than 2% as a nation.
The main reasons of this unfortunate reality is because of bad financial habits that were formed early on in life combined with lack of financial literacy. These formed bad habits have a ripple affect in peoples lives that not only affect their financial situation, but are contributing factors in things such as domestic violence, crime and a growing divorce rate.
The good news is that it’s never too late to purge the bad habits and replace them with habits that you will find beneficial to your life in more than one way. It’s just going to require some desire and discipline to make it happen.
Here are five powerful habits that once adopted will not only strengthen you financially, but assist in overall personal development and help you a long the journey.
Embrace financial hardships & set backs, don’t deny them.
This is where a lot of people get deeply into financial trouble when they can’t make payments and get behind on their debts. Rather than face the reality of the situation and work with creditors to come up with some type of repayment arrangement, they ignore the problem by not replying to collection notifications via the mail or phone calls.
I know from my own personal experiences with this that depression and embarrassment take it’s toll on you. Living in denial only escalates the situation that can lead to things like repossession, frozen accounts, wage garnishment and in worse case scenarios, bankruptcy.
The best way to prevent this from happening in the first place, is to have money put aside in case of an emergency. This not only gives you peace of mind, but also has the health benefit of staving off depression and the ailments derived from it. Also, your credit score will thank you for preventing it from falling by accumulating late payments.
Always be willing to discuss options and seek out any type of financial assistance you can.
2. Check your credit score on a regular basis.
We’ve all heard horror stories from victims of identity theft and how it decimated them financially. This is one financial hardship that I can say that fortunately I have not experienced and make efforts to keep it that way.
With free credit score services like credit karma that allow you to check your score once a week, there’s no reason not to be able to monitor your credit on a consistent basis. In fact, once you’ve established an account with credit karma, they will present offers on loans and credit cards that may help you to refinance your existing debts into lower rate loans. Which in turn saves you money that you could put towards building wealth.
Some credit card companies allow you to check your credit score once a week as well. I know that capital one not only shows your credit score but provides your credit utilization percentage and how that has an affect of your score.
There are also paid subscription credit monitoring services available. If any credit discrepencies pop up they alert you immediately for verification of legitimate credit purchases to prevent fraudulent charges from occurring.
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3. Designate time for financial education, study habits of the rich& teach them to others.
The saying “give a man a fish and he eats for a day… teach a man to fish and he eats for a lifetime” has so much relevance when it comes to building wealth. As mentioned above, financial literacy is severely lacking in society. Therefore, it’s up to us as individuals to self educate through medias such as books, podcasts, videos and websites like this one.
Schedule time at least once a week dedicated to learning. One way to use your time wisely is to listen to audio books and/or podcasts while commuting and running errands. Instead of listening to music, put that time towards expanding your knowledge base.
By studying the habits of the rich and incorporating them into your own life, you can emulate their success. As you level up and become more successful, you can then take that knowledge and teach it to others.
Surround yourself with people you can always learn something from and people that you can teach. I find so much value in the philosophy of teach what you know as you learn what to teach.
4. Seek out opportunities that will benefit you financially & life in general.
I don’t believe that money is the root of all evil. However, I do truly believe that the root cause for most societal issues are financial. When you take financial difficulty out of the equation, stress levels drop, depression lifts away and people are generally more happy with life.
If you’re passionate about something then figure out ways to earn an income from it. When starting out it takes time to build momentum and get the word out, but over time it’s possible to make a full time income from it. You just have to stick to it and be dedicated to making it work.
What’s important to remember is to not make it about the money. If the products or service that you’re passionate about has value, the money will come eventually.
Persistence, passion and discipline are requirements in order to become successful in anything that you pursue. But none of them have purpose without taking action.
5. Find a support system of like minded people and be active in it.
You should always be striving to be the best version of yourself by setting goals and making achievements a long the way. It’s always more pleasant to take the journey with others and chances are that there are others looking to do the same as yourself. Network within your community and social media with people pursuing the same path and develop strong bonds a long the way.
Be sure to be beneficial to the group by reciprocating in helpful ways through encouragement and providing examples for others to learn from. If you find such a group already exists then consider joining it (hint… hint). If not, take the steps necessary to create one yourself.
“Surround yourself with people you can always learn something from. Always work with people that are better at their craft than you are.”
– Tony Vincent –
As I like to say… “the journeybegins with the first step”.
If you see value in this article then please be sure to like and subscribe to the blog if you haven’t done so already. I’ll be putting up more wealth building posts in the future and you can have them delivered straight to your email account.
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I’ll see you in the next post. Until next time… be sure to comment below and let’s get some dialogue going. I’m curious to know, what’s your opinion on developing financial habits?
“We were not taught financial literacy in school. It takes a lot of work and time to change your thinking and to become financially literate”
– Robert Kiyosaki –
There’s a lot of financial wisdom being shared all over the web. Tips, tricks, strategies, how to guides and step-by-step tutorials just to name a few. I’ve written a few blog posts about these things myself. Many of them offering valid advice and with the intent to help the average person gain financial wisdom.
But it’s not the how that’s the issue here, it’s the why.
What’s holding you back from accumulating financial wealth up to this point? It’s probably because you were never taught financial literacy when you were growing up. We are trained and conditioned from adolescence to become good employees that are dependent on getting a good job that we can survive off of.
Imagine this…
You’ve been working for this corporation for 24 years. You’ve been a solid employee that’s always arrived on time, worked hard and built up a reputation in your field as “the go to guy”. When shifts needed to be covered and staffing was short, you were the one who came through time and time again. You were the pinnacle of the ideal employee.
Now, you’ve just started working a 12 hour shift because they needed you to help them come in early to get things caught up. You step it up and manage to get things caught up to where they need to be and that’s just the first three hours into the shift. You work tirelessly all night to keep the chaos under control and finally get to the end of your shift. You’re called into an urgent meeting before you punch out just to be told you’re being let go.
Yep… been there… done that.
The problem with that is what happens when we no longer have that “good job” that we rely on to pay for our cost of living expenses? What were we taught to do when that happens? EXACTLY!
You see, the answer to that is to get another job that you have to hope won’t be lost again. Just continue to participate in the rat race until one day you can no longer work for whatever reason that becomes. And if you have no retirement savings to fall back on… then what?
You’re not broke because you can’t build wealth, you’re financially strapped because you weren’t prepared to build wealth from a young age. You were led to believe that making a lot of money means spending a lot of money on frivolous things and luxurious items because “you only live once” (YOLO).
The truth is that you don’t become wealthy because you make a lot of money. A person becomes wealthy because of how they manage the money that they make. The sad reality is that most don’t know how and that’s why people who make six and seven figure incomes still end up broke.
There are several key factors when it comes to building wealth, but two of them are extremely important. One of them is discipline. The fact is that no matter how well educated you are, if you’re not disciplined enough to manage your money properly, you won’t achieve financial freedom.
That’s where I kept messing up on my past attempts to build wealth. I didn’t focus on the discipline part and sabotaged my financial gains time and time again. I should be a lot further down the path to being financially independent than I am, but I haven’t given up and learn from my failures.
Which brings me to the second key factor to building wealth… perseverance. The ability to not give up and begin to rebuild a financial foundation with a better understanding of what it takes to be successful on this journey.
Too many people just accept that they will never become rich because they have the wrong mindset. Once again, they were conditioned to believe that financial wealth is for the “privileged” and the “lucky”. Simply because they were never taught financial literacy.
Because I know what it’s like to endure financial hardships and also because of my failed attempts to accumulate wealth in the past, I’m very empathetic to those who don’t know what they don’t know. It’s become my passion to educate and teach financial literacy so that others can avoid the mistakes I’ve made.
My goal isn’t just to achieve financial freedom for myself, but to achieve it with as many other people as possible a long the way. There’s no joy in taking the journey all alone.
The mission is to keep on teaching financial literacy as I make progress, however slowly, and track my progress to share with the readers of this blog. I believe in the philosophy of you teach what you learn as you learn what to teach.
In order for others to follow the path I forge, I feel it’s my duty to provide markers towards progress. Achieving financial freedom is a slow momentum process that gradually accelerates over time.
People don’t become successful because they quit. Building wealth isn’t easy but it also isn’t hard either. It’s about laying brick upon brick gradually over time. There is no “get rich quick” short cut to wealth that doesn’t come with high risk for the “reward”. Only fools fall for the dream of “overnight success”.
So the why in why I teach financial literacy is because I don’t want people to stay trapped in the rat race until they die. I want to see wealth and prosperity for the masses and less suffering.
I ask for you to be there with me as we lift up others who follow our lead and give back to those in need with encouragement, so that we can be the change we want to see in the world.
As I like to say… “the journeybegins with the first step”.
If you see value in this article then please be sure to like and subscribe to the blog if you haven’t done so already. I’ll be putting up more wealth building posts in the future and you can have them delivered straight to your email account.
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I’ll see you in the next post. Until next time… be sure to comment below and let’s get some dialogue going. I’m curious to know, what’s your opinion on teaching financial literacy?
“Be not afraid of going slowly. Be afraid only of standing still”
– Chinese Proverb –
Let’s face it, we all dream of living “the good life” of financial freedom. The unfortunate fact is that most people won’t ever get to that point in life because they were never taught financial literacy. Not only that, society has been conditioned to believe that taking short cuts to “get rich quick” is the ONLY way to achieve financial freedom. The reality is that unless one has been fortunate enough to be born into wealth, most wealthy people achieve their status over time by being financially disciplined and meticulous planning.
But before we go any further, let’s define the term.
Slow FI: When someone utilizes the incremental financial freedom they gain along the journey to financial independence to live happier and healthier lives, do better work, and build strong relationships.
The journey to financial freedom is exactly that… a journey and not a race. If you haven’t done so already, it’s imperative that you start investing now so that your wealth portfolio has time to grow and use compound interest in your favor.
Don’t be fooled into believing that you can put it off until later because you’re young. That’s the ideal time to start! Building a wealth portfolio should be done meticulously but also enjoyable. Adding money each payday and watching it grow over time should be as much of a priority as paying down debts each month. And once you’ve achieved debt freedom, the money put towards those debt payments should then be put towards your wealth portfolio.
If you’ve read any of my other posts then you should know that I’m an advocate of the “richest man in bablylon” philosophy of paying yourself first regardless of your debts and putting that money to work for you. I’ve disciplined myself to do this and I implore you to do the same. I know I sound like a broken record by always repeating this, but repetition is one of the keys to learning and forming habits.
We live in a quick buck society with instant gratification in high demand. But the reality of it all is that many people are managing to just get by pay check to pay check if even that. They dream big but often take no action and later in life have no financial reserves to fall back on.
As a reader of this blog, my goal is to help you avoid that lifestyle. I’m dedicated to getting this philosophy out and influence the counter culture belief that it’s okay to build wealth slowly and enjoy life in the process.
Dave Ramsey has a saying that goes like this “live your life today like no one else, so that you can live your life tomorrow like no one else”. It’s a very simple concept, yet so enlightening.
As I take this journey of building wealth from scratch slowly, I’m documenting it with my payday post plans. I post these every other Friday which consist of how much I’ve paid myself and how I’m applying those funds to my wealth portfolio. I take screen shots of my investment accounts and post them as proof.
So you see, I’m following the principle of SlowFi wealth building because I believe in the principle of practicing what I preach.
As I like to say… “the journeybegins with the first step”.
If you see value in this article then please be sure to like and subscribe to the blog if you haven’t done so already. I’ll be putting up more wealth building posts in the future and you can have them delivered straight to your email account.
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I’ll see you in the next post. Until next time… be sure to comment below and let’s get some dialogue going. I’m curious to know, what’s your opinion on slowfi wealth building?
“Financial freedom is a mental, emotional and educational process”
– Robert Kiyosaki –
Wow… here it is two weeks later since the last Payday Plan Post Time to do an update since the last one and document the planned investments for this payday.
– Designated funds from this payday –
401K contribution $172.10 – current value $15.825.30
Fidelity brokerage account $75.00 – current value $184.92
Acorns Roth IRA $5 – current value $100.13
Acorns investment account $5 – current value $143.44
– A part of what I earn is mine to keep –
You can create your own acorns account by clicking here.
I’m not putting a lot towards investments currently since I’m paying down debts. But the goal is to pay myself first each payday and put that money to work before anything else.
I wanted to catch the ARKF eft for $36.50 last payday, but it never went back down to that level and instead went back up into the $38 range. So I decided to add another $25 to the fidelity account and pick up a share of BIGC (Big Commerce) for $72.81. I watched it go down to the $66 range for two days before popping back up into the $140 range so I’m up huge on that buy at a 93.65% gain since the purchase. There’s been a lot of volatility on the price in an upward trend for three days straight.
I purchased a share of ARKF etf a few weeks back before the first payday plan post at $38.50 and its currently at $40.23. So I’m up 4.49% on that position. I’m thinking about picking up another share or two if it dips back down again.
I’ve been considering starting a small position in another stock or etf so I’ll see where the price goes in the next couple of days and share my decision on the 9/11/2020 payday plan post.
Be sure to keep track with me and if you’d like, share your payday plan in the comments section below.
Until next time…please like, follow and be sure to comment below and let’s get some dialogue going.
“The true investor welcomes volatility… a wildly fluctuating market means that irrationally low prices will periodically be attached to solid businesses”
– Warren Buffett –
As I’m writing this post for the blog, I’m watching the share price of one of the stocks I recently purchased soar. The thing is, on the same day I purchased the stock for $72.81, the share price dropped soon after I purchased it and the day after that it went down even further into the $66 range. I was bummed that I didn’t wait another day or two to buy it for cheaper but I also knew the stock jumped up from $24 to $103 on it’s IPO date a couple of weeks ago, so I held strong. Today as I’m writing this the stock price has jumped back up into the mid to high $90’s range and at one point traded at a day range high of $103.90.
If there’s one thing about investing that you need to take into consideration it’s the ups and downs of the market which is known was market volatility. This is where the weak hands get shaken out and strong hands add to positions on downward trends, also known as buying opportunities. Downward trends are where a lot of people make the mistake of panic selling and when the stock price recovers they end up regretting that they sold instead of riding it out.
Now, that’s not to say that selling on a downward trend is necessarily a bad thing either. Pending on the circumstances as to why a particular stock price or the market as a whole is dropping is taken into consideration. There are a number of reasons why a stock could be losing value.
Negative earnings reports
The change of upper management in a company
A dividend cut
Dilution of shares via the issuing of new stock
Shorting of the stock
Market uncertainty
Economic shocks
Those are just a few off the top of my head, but the thing to remember is that before you make an investment, you should always do due diligence before you put your money into it!
The benefit to market volatility and why it’s your friend is because downward trends are buying opportunities for solid investments. Back in mid-march of 2020 in the midst of the covid 19 scare, there was a huge market sell off where the market as a whole crashed. All of the solid stocks like the FAANG stocks Facebook, Amazon, Apple, Netflicks and Google went on sale. A lot of other great stocks and ETF’s dropped as much as 50% at the time and have since recovered to their original pre-crash values.
The thing is, you have to know why you make a particular investment in the first place and realize there will be price fluctuations along the way. This is where dollar cost averaging can be beneficial as you add to your position over time. But you also have to endure the downtrends or be shaken out of your position by panic selling.
When making your investment, don’t try to time the market. Price ranges can swing wildly in just one day as in today as the perfect example. The stock price of the stock I purchased a few days ago has had a daily range today of $75.07 to 103.90 and has been swinging wildly since. So decide on a price that you’d like to buy at and set a limit order in hopes of catching it at that price. You can also sit and watch the price during trading hours and do a market order if the price range is to your liking.
To be clear, nothing is linear when it comes to investing in stocks. Over time, prices tend to gradually go up with solid companies, but in what are called trend channels. That’s a gradual upward trend that has pull backs along the way, but gradually makes higher highs and pull backs tend to drop back down to previous high levels before heading back up again. A bullish trend channel example below:
One last thing, always have an exit strategy in place when making an investment. whether it’s a long term hold or swing trade have a plan in place for how long you plan to hold it and what sell price you’ll liquidate at. For me, I’m rebuilding my stock portfolio for a 15-20 year buy and hold strategy. I’m willing to ride out price fluctuations and “buy the dip” on down trends a long the way.
As I like to always say… “the journey begins with the first step”.
If you see value in the article, please be sure to like, comment and subscribe to the blog ifyou haven’t done so already because I’ll be putting up more wealth building posts in the near future.
Until next time… be sure to comment below and let’s get some dialogue going. I’m curious to know what’s your investment strategy and time line?
“Some debts are fun when you are acquiring them, but none are fun when you set about retiring them.”
– Ogden Nash –
Part of the process of building wealth is freeing yourself from financial debt. The grueling process of paying down debt isn’t an easy task, but one that must be completed in order to continue down the path to financial freedom. It’s obvious that the sooner you pay it off, the more you’ll have to put towards your investment portfolio. However, I don’t believe you should wait until your debt free to begin investing.
The process of paying off debts can and often does take years to accomplish. My personal belief is that you should pay yourself first as if you’re one of your creditors and put that money to work for you while the rest goes towards your debt free goal.
As much as I desire to live debt free as soon as possible, I also know the benefit of compound interest working in my favor over time. So I choose to build wealth and pay down debt in tandem. I know that this goes against the preaching of financial gurus like Dave Ramsey who believes you should be debt free before you begin investing. But, I follow the principle of the richest man in babylon that “part of what I earn is mine to keep” and put that to work for me now.
From my experience, the hardest part of paying down debt isn’t a money issue, it’s a self discipline issue. It’s so easy to give into the temptation of “I have to have it now” rather than practicing delayed gratification. But my determination and commitment to building wealth make it easier to resist.
When we decide to go into debt, our present self isn’t taking into accountability to the affects it will have on our future self. We take for granted that we’ll always have an income to make those “affordable payments”. But what we don’t factor in is that unexpected issues occur and if we’re not properly prepared by having an emergency fund set aside while setting up multiple streams of income, we become extremely vulnerable.This is why we’re on the path to financial freedom.
As a reader of this blog, I urge to to set financial goals today if you haven’t done so already. Make those goals definitive and give yourself a timeline to accomplish them. Vague goals like “I want to be debt free someday” aren’t good enough. Strive for specific targets and dates such as “Have the capital one credit card paid off by January 1, 2021”. This way it’s a measurable goal.
The other thing I want to discuss while enduring this grueling task to become debt free is commitment. I think we often confuse determination with commitment, but they are not one in the same. Determination is the unwavering decision making part, while commitment is the pledge to the course of taking action.
Make a pledge to yourself that it’s normal to live in debt is pure B.S.! The only exception that comes to mind is real estate which is considered “good debt” but has it’s risks as well. Otherwise debt is a burden that should be avoided at all costs (pun intended).
It’s grueling, but staying focused on the end result makes enduring the debt elimination process tolerable. There are countless articles, videos and podcasts on click bait title “ways to become debt free”… but the ONLY way to become debt free is to remain vigilant.
One last thing I want to say is that debt free does not equate to being financially free. Just because you don’t have debts to pay once achieved doesn’t mean there still aren’t cost of living expenses that need to be met. Until you have enough income saved and multiple streams of income other than working a job, you aren’t financially independent.
As I like to always say… “the journey begins with the first step”.
Be sure to like, comment and subscribe to the blog ifyou haven’t done so already because I’ll be putting up more wealth building posts in the near future.
Until next time… be sure to comment below and let’s get some dialogue going.
“Wise spending is part of wise investing. And it’s never too late to start.” – Rhonda Katz –
I LOVE fintech and I’ll be posting about that soon. However, in my previous post I mentioned that this post would be about how you can start investing for as little as $5 a month. I think it’s pretty amazing that the innovation of modern technology makes is possible for anyone to invest from anywhere and with little money to start. There once was a time when it required a large sum of money to start and paying expensive brokerage fees on top of that. Now you can purchase equities without fees and do so from your cell phone from anywhere depending on the type of account(s) you have.
I’ll talk about acorns, which requires a monthly fee depending on which account type you set up. Acorns is a micro-investing app that allows you to set up an account in just a few minutes and contribute funds to your account in a few different ways.
Set up a one time contribution.
Set up a daily, weekly or monthly contribution.
Use the round ups feature and contribute spare change from your purchases into your acorns account.
As with anything, there are pros and cons to the acorns micro-investing app to consider.
Pros:
Easy to set up and make contributions automatically.
Can start investing for as little as $5… options vary from one time contributions you can make at your convenience or automatically on a daily, weekly or monthly basis.
Depending on what bank account you have, you can set up the round ups feature to round up purchases to an even dollar and contribute the spare change into your acorns account. This feature is currently limited to specified banks and credit institution accounts.
Dividends earned on investments are automatically reinvested.
Can open up investment accounts for kids and easily transfer the account the the child later.
Can set up an IRA plan for retirement.
Cons:
As with most subscription services, there are fees to consider. Depending on the account type selected will depend on the monthly subscription fee automatically withdrawn monthly from the contributions deposited. Currently there are three plans to choose from… lite ($1), personal ($3) and family ($5). My acorns account is the $2 Plus which is no longer available to new customers.
Limited investment options. Once the account(s) are set up, you then choose from five portfolio types: conservative, moderately conservative, moderate, moderately aggressive and aggressive. IRA accounts are based off your age and timeline until retirement and invested accordingly.
Not able to purchase equities of your choice. Your investment choices are limited to the options available. Investment types and percentages can be viewed by clicking here.
Personally I like acorns and don’t mind paying the $2 monthly subscription fee. I know that there are those who view the fees as eating into the investments, but I view the fees as separate from what’s actually invested. So if I contribute $20 a month I know I’m actually investing $18 of it. I pay more than that for a cup of coffee so to me it’s putting my money to good use on a hands off investment.
The following is an article I found reviewing acorns compared to other investment options available. I think it’s extremely informative and explains things in great detail to better inform you.
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Do you have difficulty saving money?
It’s hard to invest when saving is an issue. That’s why Acorns jumped on the scene.
The micro-savings investment app rounds up your daily purchases to a whole dollar amount, and invests your “spare change”. Let’s say you purchase a daily necessity — coffee ☕️ — for $2.43. With Acorns, you just invested $0.57 cents.
Doesn’t sound like a lot? You might be surprised at how quickly it adds up. Users can also invest directly, to make sure a certain monthly contribution amount is met.
If Acorns sounds like a good option, there’s a lot more you need to know. Let’s dive in.
Acorns rounds up everyday transactions, using the “spare change” to fund investments. Those who find it difficult to save on their own love the service, while most people in general are a fan of the flat fee structure.
Investor Warning: Investing with Acorns involves risk, including loss of principal. Any references to past performance, regarding financial markets or otherwise, do not indicate or guarantee future results. Forward-looking statements, including without limitations investment outcomes and projections, are hypothetical and educational in nature. The results of any hypothetical projections can and may differ from actual investment results had the strategies been deployed in actual securities accounts. Prospective investors should consult their own financial and legal advisors about risks associated with securities and the suitability of investing in such securities.
What is Acorns?
Acorn has been in the news a lot lately thanks to CEO Noah Kerner, who has been called a pioneer in fintech for the mobile investment app that invests your change. Round-up investing has never been as easy as it is now thanks to this mobile investing app.
The start-up has become more and more hopeful of an IPO, but for now, its robo-advisor tools are becoming more popular with millennial investors as all eyes focus on investing with AI.
However, fintech is becoming much more than an investment app. With recent investors like Jennifer Lopez and Alex Rodriguez investing in Acorn’s technology, the CEO looks to help everyone invest without even thinking about it.
In June of 2020, Acorns expanded its investment model with Acorns Early. The program allows parents to create investment accounts for their children. To celebrate its launch, Acorns is providing a free account for all children born in the year 2020 — no fees until the child turns 18 and becomes the account owner.
While the app has grown extremely popular, there are some drawbacks to this innovative new investing strategy. We show you why Acorns may not be the right pick for certain portfolios.
Acorns Compared
Accounts & Fees
Management fees
$1, $2, or $3/month
0.25%
None
Account Minimum
$5
$0
$0
Account Types
Individual non-retirement accounts
Traditional & roth IRAs
Cash account
Traditional, Roth, SEP, & rollover IRAs
Joint and individual and non-retirement accounts
Trusts
Individual and joint taxable accounts
Traditional, Roth, SEP & rollover IRA
Trusts
General
Best for
Hands-off investing
Investors who have difficulty saving
Hands off investors
Retirement accounts
Low fees
Socially responsible investors
Promotion
None
1 year of free management, with qualifying deposit
None
Human advisor?
Yes, but only with Betterment Premium (0.40% fee)Rating6.0/10Visit Acornson Acorns’ website9.5/10Visit Bettermenton Betterment’s website9.0/10Visit M1 Financeon M1 Finance’s website
Quick Summary of Acorns’ Features
Management Fees
$0 to open account, $5 required to start investing
$1 a month for taxable investment accounts, $2 a month for IRA account and tax-advantaged accounts, $3 a month for checking account plus retirement and investment accounts
To close your account, investors must pay $50 per ETF to have ETFs transferred to another broker
No charge to sell investments and transfer money
Score: 8.5/10 Acorns is made to be low-cost, so it’s no surprise that they required deposits and monthly subscription fees. While it may not seem like a lot, it could be if you only invest $50.
Expense Ratios
Acorns has average expense ratios that start at 0.03% and go to up to 0.18%
Score: 9/10 The expense ratios can be a little high for Acorns with certain funds, but overall, the company keeps their ETF investment costs low.
Account Types
Individual non-retirement accounts
Traditional IRAs and Roth IRAs
Online checking account with debit card
Score: 6/10 You really do not get to diversify your accounts as much as you would think. There aren’t many retirement or savings plans options either.
Investment Options
7 different ETFs chosen based on risk tolerance
Uses small round-up investments from your accounts to invest in ETFs
Investments are Vanguard S&P 500, Vanguard Small-Cap, Vanguard FTSE Developed Markets ETF, Vanguard Emerging Markets Stock, Vanguard REIT, iShares iBoxx Investment Grade Corporate Bond, and iShares 1-3 Treasury Bond
Offers fractional shares
Score: 8/10 There are over 7,000 stocks and bonds available with Acorns, and you can invest in fractional shares.
Tax-Loss Harvesting
No tax-loss harvesting or tax efficiency benefits
Score: 0/10 You won’t find any of the bells and whistles like with Betterment or Wealthfront using Acorns. This is pretty bare-bones when it comes to investing services and tax strategies.
Rebalancing
Available and free for all accounts
Investors pick from five portfolios and Acorns automatically rebalances, reinvesting dividend payments regularly
Score: 7/10 Threshold-based rebalancing helps keep investors on track, but it’s not as sophisticated as other robo-advisors like Betterment and Wealthfront.
Human Advisors
Not available
Score: 0/10 The service is pretty low-cost and does not ask for much of an investment, but there are no options, not even premium ones, to help out beginner investors. Since this app is based on novice investing, wouldn’t it be better to have some broker assistance or financial planning for an additional cost?
Socially Responsible Investing
Not available
Score: 0/10 If you want this feature, you’ll need to head somewhere else. While you have some flexibility with the “Change Your Potential” tool, it’s not based socially responsible factors.
Instead, you can pick and change investments to simply boost account value. Other options and research into SRI factors are not available.
Acorns Overview
Pros
There is no minimum investment to get started
You can invest your spare change through round-up investments
Service is free for college students
Access fractional shares, gift cards, and over 7,000 stocks and bonds
Five investment portfolios ranging from conservative to moderate to aggressive
Cons
Fees are pretty high for small balances and could impact small business owners adversely
No tax-loss harvesting or tax services of any kind
No financial planners or human advice available
Very little investment options in comparison to other robo-advisors and brokerages
No socially responsive investments and very little flexibility on selections
How Much Does Acorns Cost?
We hate to see it, but Acorns is not exactly cheap unless you invest more than $5. Even though Acorns markets itself as a low-cost way to save, there are some fees, and they can lead to bigger costs depending on your account balance.
Although Acorns presents itself as a cheap investment platform, good options are available only for higher investments.
For example, you will pay $1 a month for “Acorns Core,” which is a taxable account, $2 a month for “Acorns Later,” and $3 a month for “Acorns Spend.” While you gain access to more services and accounts, is it worth paying almost $40 a year if your change does not make you more than $10?
It’s difficult to find any other robo-advisor that charges a flat fee like this because it can be very problematic for low balance accounts.
Here is a visual of what your fees are when converted to percentages of assets:
Account Balance
Acorns
Acorns Later
Acorns Spend
$100
12%
24%
36%
$500
2.4%
4.8%
7.2%
$5,000
0.24%
0.48%
0.72%
$10,000
0.12%
0.24%
0.36%
The fee system is meant to make accountholders invest more, but other competitors such as Better and Wealthfront only take 0.25% of your total account balance. In addition, Stash offers a $1 flat fee for a brokerage account plus a bank account that comes with a debit card. And, if you upgrade to the $3 a month plan, Stash offers you a traditional or Roth IRA, in addition to your other accounts.
There are also other fees that are problematic for Acorns users. For example, if you decide that you want to move your investments out of Acorns and to another brokerage, then you must pay $50 per ETF to transfer any investments.
While this fee is sometimes charged by other brokerages, it’s extremely high for Acorns. For example, if you are invested in all 7 ETFs, then you would spend $350 to move your money. Most firms only charge investors $75 for transfers no matter what the ETFs.
Overall, Acorns may seem sweet and innocent, but there are some steep costs if you are not constantly investing more into your accounts.
What We Like About Acorns
Acorns works by rounding up your change and investing your dollars through modern portfolio theory. This means that diversification is more important than the actual stock selection. This can benefit investors by investing in the best stocks, markets, bonds, and other options available.
The company is also headed towards an IPO, so it has to be doing something right. CEO Noah Kerner believes that Acorns users do not need much to invest, and that’s the beauty of it.
While Acorns feels like it’s affordable, the fees may not be for everyone. However, they do offer some financial breaks to certain users.
College Students Get Free Account Management with Acorns
It makes sense that Acorns would market itself to college students. After all, most of them are probably not thinking about investing, but the lure of turning change into pocketfuls of beer money is a big draw. These millennial investors do not have a whole to invest, which is why round-up investing makes so much sense.
Acorns aptly waives fees for this group as long as students register with an .edu email address. College students get the most advantages when they use this service because it’s completely free, and at graduation, they may have a nice pile of money after fours of rounding up their change.
Automated Investing
It’s easy to save money with Acorns. It’s not complex. The app connects to your accounts for you and rounds up your change, investing in stocks that will likely earn you a small profit.
Sometimes the hard part about saving is actually investing in yourself. Acorns makes this easy to do by automating the process for you. Investors don’t even have to think about it, and so money simply grows over time.
How does Acorns do this? The app connects to your linked accounts and moves all change from every purchase into your investment accounts.
You can connect as many debit cards as you need to, but all the round-up investments come from a linked checking account. Acorns will round up to the nearest $1 and offer you the option to transfer your change into your portfolio.
It’s best to set this process to automatic so that each purchase is earning you an investment, but you can also select manually and view your purchases, then select which roundups you want to send to your investment accounts.
Acorns also allows users to invest larger sums manually as well. For example, you can set up a recurring direct deposit that happens daily, weekly, or monthly. These transfers can be as little as $5.
Found Money
Acorns offers a cash back program that is pretty intuitive and amazing to help their investors grow money out of thin air. The Found Money program allows you to use your Acorns debit card with our chesting account and earn cash back at certain partners.
Found Money program lets you earn your cash back while buying at Acorns’ cashback partners.
These cashback partners include:
Nike
Walmart
Warby Parker
Airbnb
Sephora
Whenever you use your card with a linked payment method at these stores, then your cash back is automatically invested in your portfolio. Again, Acorns excels at allowing you to invest money when you didn’t know you even had any.
Expertly Created, Nobel Prize-Winning Portfolios
It’s easy to sign up for an Acorns account, whether you are online or on your phone. The guide takes you through each step, and then you fill in your reasons for investing.
Based on your answers, Acorns creates a customized plan with a recommended portfolio that was created by experts, which includes a Nobel Prize-winning economist.
There are five different options that you can select for investing:
Long-term investment (retirement)
Short-term investment
Major purchase
Children
General
Once you log in, you can connect your accounts and start earning money from your round-up investments. You can see what index funds you invest in as well and how the market is doing.
Set Up Your Retirement Using Your Change
Acorns offers easy IRA setup and lets you invest in your IRA with small amounts.
This is the best part of Acorns and what it was meant to do. Many younger investors and beginners shy away from long-term investing due to all of the planning and paperwork over setting up an IRA. With Acorns, you can set one up in seconds, and you don’t have to worry about funding it.
The interface makes it extremely easy to link your accounts and start rounding up your spending. As soon as you have $5, it’s transferred into your IRA, and the robo-advisor adjusts your shares accordingly. It could not be more simple to grow a little nest egg.
Where Could Acorns Improve
We do think that the fees are quite atrocious from Acorns since advertising suggests that it rounds up your change without much cost. However, the fees have actually proven to be quite significant to those who do not invest more than their change and also do not deposit any other sums manually into their investment accounts with Acorn.
There are a few more things that Acorns should consider changing:
Difficult to Transfer Accounts
Acorns does not want you to take your accounts away, but that should not be a reason to punish. If you have to leave Acorns, you may not be able to take your investments with you unless you can pay $50 per ETF that you have invested in.
We believe Acorns does this to prevent customers from “stealing” their strategy after a week and just paying a small fee to transfer over like so many do in other brokerages, but it just seems wrong to charge hundreds of dollars or lose everything to cash out.
No Human Advisors
For beginners using Acorns, everything seems so simple, but what if you don’t know what you want to invest in? Are you making the right move by putting your money into those stocks and bonds?
The automated features may be impressive but the human advisor is necessary in some cases.
The robo-advisor will select stocks and bonds based on your answers to a questionnaire, but what if you don’t want to invest in something? What if you aren’t sure how to buy stocks?
You can’t change your selections, and your investing options are extremely limited. You have 7 different asset classes to choose from, but once your picks are made, Acorns expects you not to look into it any further.
That is the goal of a robo-advisor: to provide completely hands-off investing. However, most robo-advisors do include a human touch to ensure that investments are in line with the client’s needs.
There are No Tax Benefits
Tax-loss harvesting is not included with your Acorns account. There virtually is no tax assistance, including no advice or education articles about it.
In fact, Acorns will only send you something about taxes during tax season when you receive a 1099 in the mail. Most robo-advisors today include this service to help reinvest earnings and save clients from capital gains tax.
Smaller Portfolios
Even though Acorns is like other robo-advisors in that it takes inspiration to invest from your questionnaire, the app also uses your data such as income, age, and goals to recommend one of five portfolios. These portfolios range from aggressive to super conservative, meaning only bonds. You can accept the portfolio given to you or you can opt for a different one that is more suited to your risk level.
There are just five portfolio options to choose from. With an aggressive portfolio, most of your investments are in stocks. On the opposite end, conservative portfolios stick to bonds. Here is a quick comparison:
Portfolio
Stocks
Bonds
Real Estate
Aggressive
90%
0%
10%
Moderately Aggressive
72%
20%
8%
Moderate
54%
40%
6%
Moderately Conservative
36%
60%
4%
Conservative
18%
80%
2%
The portfolios on their own are actually much smaller than what you would receive at places like Betterment or Wealthfront. These are portfolios consisting of low-cost Vanguard and iShares ETFs that only cover around five to seven different asset classes. These typically include real estate, small-cap stocks, large-cap stocks (international and domestic), emerging markets, and corporate bonds.
While this can diversify your portfolio, it feels too restrictive to actually have a well-rounded portfolio. If you want more options, then Betterment is likely better because of its many options and larger asset class array.
Acorns Platform, Mobile Access, and Ease-of-Use
Acorns is easy-to-use on the web and on mobile. The navigation is quick and simple, allowing you to review investments, check your accounts, and see your “Found Money.” There is no minimum to open, so as soon as you earn $5, it is automatically put into your diversified portfolio.
On mobile, Acorns users will have an even easier time investing their money and seeing their savings. When you login, there are three panels including Past, Present, and Potential.
These panels give you more insights into your portfolio. Each tab offers more information including analysis and current values of your accounts as follows:
Present Tab
This tab refers users to an overview of their current accounts. You can use this panel to make fast changes to your round-ups, deposits, and see the most recent offers from Acorns’ Found Money partners. It’s the best way to gauge the overall health of your investments with Acorns.
Past Tab
If you want a more in-depth analysis, then the Past tab is the best way to look at all of your previous round-up transfers, check on deposits, look at your earned FoundMoney, and more features.
For example, if a user has earned money from dividends or referrals, then these will be shown in the Past tab, too. It’s easy to see how your investments are compounding and also how quickly your accounts are earning you more money.
Potential Tab
Most investors want to grow their money. The potential tab is where you can see the projected value of your accounts based on your current selections for investment.
If you do not like the projects, you can tap “Change Your Potential,” which will let you alter some investments in order to boost your account value. However, beginner investors do not get much education here, so they have to be careful not to change too much.
In addition to these features, Acorns also offers a blog that provides some knowledge of different investing terms and savings. You can also catch up on the latest investing news and learn what trends are currently swaying the stock market.
There are also a number of different frequently asked questions if you get stuck. Overall, the blog and education section are pretty extensive and will help you learn more if it’s your first time investing in anything.
What Type of Investors Should Use Acorns
Acorns appeals to the beginner investor who does not want to fully understand the market in order to participate. If you don’t have the time to figure out investing, then Acorns will seem simple and quite low cost. Since it mostly relies on the mobile app, it’s mainly geared towards millennials who want to grow money from their purchases with round-up investments.
The Acorns platform facilitates investing for people who don’t plan on becoming professional investors.
If you are a college student, Acorns has significant benefits, and it’s free. You can save for the future one purchase at a time, and it helps you start planning for a new house or even retirement.
Passive investors get a kick out of Acorns because you can set it and forget it. Once you return to check on your investments after a couple of weeks, you may be surprised to see that your round-up investments have earned you $20 to $50 or more.
Investors who don’t have a lot of time also appreciate Acorns because there’s nothing to it. This is one of those completely hands-off investment tools that does not even require you to manually make deposits or check on your investments to ensure that they stay within your risk tolerance. Everything is automated and easy.
For those who are not interested in learning about investing but want to save money, Acorns is the perfect mobile app. You don’t even have to think about investing with this robo-advisor.
All of the investments are made automatically, which lets you save without even a thought. It was also named one of the most innovative companies in 2019.
While Acorns would like it to be so simple, many knowledgeable investors have criticized the platform for the amount of fees and high costs associated with closing your account. While there are no costs for selling and transferring money from your investments, many investors see the inability to transfer investments without paying $50 per ETF as a huge blow.
How will you diversify your strategy when you earn $5,000 or $10,000 with your round-up investments? Acorns may not want you to get that far because you could start to take this investing thing seriously.
Frequently Asked Questions About Acorns
Should round-up investments be central to your investing strategy?
Some people have a hard time saving money even when they make a lot of it. The idea with Acorns is that you don’t even have to think about your savings to start saving.
However, we don’t think that round-up investments are central to a strong investing strategy. You add up your earnings slowly, and Acorns does not offer enough asset classes and flexibility to really provide the best portfolios.
We did the math, and if you invest on average $50 a month through your round-up investments with Acorns, using a 7% market return, then you will have over $3,200 after five years. In comparison to simply sending your change to a savings account at a bank, you probably would only earn $2,500 in five years.
Can you invest larger sums with Acorns?
Yes, it is possible to deposit larger sums manually into your Acorns account, but should you? If you have extra money to play with and your returns have been generous with your Acorns portfolio, you may see nothing wrong with adding $10,000 to your account. In fact, your costs in fees drop considerably when you invest larger sums like this.
However, their investment options simply do not offer what you can achieve with another robo-advisor like Betterment or even a full-service brokerage where you can make more with your money. Acorns has less ways to diversify than most other brokerages, and you don’t have any flexibility to customize asset allocations unless you pick from one of the other five portfolios.
In addition, there are no broker-assisted trades or financial planning help. You are on your own with Acorns, although their education area continues to expand. It’s still not comparable to a service like Betterment or Charles Schwab that would help you with advice.
What are Acorns gift cards?
Acorns announced a new gift card portal in 2019. You can choose the amount and send to your recipient so that they can have that automatically invested in their Acorns account.
All the amounts sent with the Acorns gift card are automatically invested in the recipient’s Acorns account.
There are some restrictions including that you must be a legal US resident and be over the age of 18.
Aggressive portfolios seem to have a higher rate of return, but there is also a lot of risk. Most investors using Acorns are not familiar with some investing terms and may not understand the differences in stocks and bonds as relative to aggressive and passive strategies.
This could lead to bigger losses, but it’s really the fees that are problematic for most savvy investors who say that Acorns is ripping off millennials since they don’t know any better.
Can I withdraw money from my Acorns account?
Yes – Acorns allows you to withdraw money to an external checking or savings account at any time without any fees.
How long does it take to withdraw from Acorns?
Most withdrawals from Acorns will take 5 or 6 business days, after which the funds in question will be available to you in your bank account.
When you place a withdrawal request, you’ll receive a confirmation email within one business day. Once you verify that you’ve placed the request, Acorns will place trades to raise the required amount of cash. Requests that are placed before 11AM PST will typically be processed within the same day.
When that is done, it takes another 3 days for the trades to settle, and an additional day or two for the ACH transfer to be completed.
Is there a penalty for withdrawing from Acorns?
No, there are no penalties or fees associated with withdrawing money from your Acorns account.
Do you pay taxes on Acorns?
Yes, you will be required to pay taxes for investments made with Acorns. Even if you did not withdraw any money or sell any of your investments within a single year, you may still be liable for taxation.
If you’ve received dividends totaling more than $10, sold investments for $20 or more, or withdrawn money from your Acorns account, you will certainly have to pay taxes.
Acorns doesn’t offer tax advice, but they will send you tax forms on an annual basis – just remember to consult a professional and take care of that unfortunate and inevitable bit of business on time.
Which is better: Stash or Acorns?
While Stash and Acorns might look similar at first glance, they do differ from each other in a variety of aspects.
Acorns is a robo advisor, while Stash isn’t. Stash allows you to hand-pick your investments, and also allows for the purchase of individual stocks, while Acorns invests your money solely into ETFs.
Stash has a bigger focus on educational materials – although Acorns doesn’t lag far behind them in that respect. Stash also offers a wider variety of investments to choose from.
On the other hand, Acorns will end up costing you less – their fees are lower, and the rounding-up feature is a quite useful way to passively set aside money for investing. Looking at both services, it’s too close to call. The biggest difference is the approach that you’ll get with either – hands-on and active with Stash and hands-off and mostly passive with Acorns. If you’d like to see an in-depth review of how these two services stack up against each other, check out our comparison of Stash and Acorns.
Competitor Comparison
Compare Acorns
Find out how Acorns stacks up against the competition.
For our Acorns robo-advisor review, here is the criteria we used to rate the company:
Low-to-no management fees: We look at the fees assessed by the robo-advisor, which is typically a percentage of your assets charged annually. This number should be low, equating to less than .23% annually.
Expense ratios: Many mutual funds, index funds, and ETFs have low-to-no expense ratios. Your robo-advisor should invest in funds that do not have high expense ratios. It’s also important to know the average expense ratios by fund type.
Available account types:Robo-advisors should have retirement accounts for tax advantages and taxable accounts to cater to both passive and active investors.
Available investments: What does the robo-advisor like to invest in? Most use a combination of low-cost index funds and ETFs.
Tax-loss harvesting: Robo-advisors should be able to identify losing investments and cut losses by eliminate taxes you would owe on capital gains.
Rebalancing: Automated investing also means remembering goals and bringing back allocations when necessary. Robo-advisors should check this daily and ensure they are investing with your goals in mind.
Human advisors: Some free robo-advisors do not offer any financial advice from a human, so this isn’t always important, but if you are new to investing and want to ensure your money is spent right, you may want this option.
Socially responsible investing:Most robo-advisors have a quiz or survey at the beginning to understand your SRI or socially responsible investing type. These are values that may exclude some industries, such as fossil fuels or guns.
As I like to say… “the journey begins with the first step”.
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I’ll see you in the next post. Until next time… be sure to comment below and let’s get some dialogue going. I’m curious to know, what tips do you have on how to build your wealth portfolio?
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