An Update on the Acorns App

Question


Hi Barefoot,

I have been an avid reader of your column in the Herald Sun and have read your book back to front several times. With your inspiration, I paid off my $1.5 million dollar house last year at the age of 45. I have also been educating myself about investing — using the Acorns app to invest $5,000 of my money. But do you think this app is any good?

Tom

Scott's Answer


Hi Tom,

Well done, dude!

The Acorns app is the investment equivalent of putting training wheels on a bike (with a bell and streamers on the handlebars). It collects ‘loose change’ (like rounding up your purchases) from your account and invests it, or you can set it to regularly drag out small amounts as well. It then invests your money into exchange traded funds (ETFs) — charging an extra layer of fees to do so.

It’s an easy way to invest, but I wouldn’t commit serious dough to it. That’d be as ridiculous as a 45-year-old man riding around on a bicycle with training wheels. For beginner investors, though, it’s an okay deal.

But I’ll tell you what’s a stinker of a deal — an investment in Acorns itself. Acorns Australia have just released an ‘investment opportunity’ for its young, inexperienced customers: the ability to buy shares in Acorns itself.

They emailed their customers last week attempting to raise as much as $6 million in what Acorns’ own lawyers have described as a “highly speculative” and “highly illiquid” investment opportunity.

Damn straight.

Reading the prospectus, I note that Acorns Australia generated a loss of $1.7 million in the 2016 financial year on skimpy revenue of $154,236. It’s a rolled-gold turd of a deal, and you should steer clear of it.

Don’t let them touch your nuts!

Scott