In my first article for Mom-of-Seven, I talked about teaching my kids the habit of budgeting and savings (you can read about that HERE.) After my oldest had a handle on those concepts, I wanted to teach him about Investments. In my early 40’s now, I’m disappointed in where my investments are versus where they could have been had I started sooner. But I remember investment banking being super confusing and intimidating 20 years ago. These days there are multiple tools available to help the future generations (and us older ones) navigate the vast ocean of options.
For example, I wanted to start off with easy investments; saving the (electronic) change on my purchases. Rounding up puts a few cents into my account when I buy items on my debit card.
Teaching my Teen about Investments
After budgeting and savings, we should to teach teens about investments. You may be thinking:
Hmm…where to start on that topic? Long term, short term, stocks, bonds, mutual funds, property, comic books, Star Wars action figures?! That’s a pretty big topic!
Well, I found a great starting place and I wanted to share it with everyone: Acorns!
[Let me make a disclaimer: Acorns is in no way paying me for this ringing endorsement. However, if anybody over at Acorns reads this and wants to, I’m all for it!]
What is Acorns?
Well, put simply, it’s an automated saving of electronic change and investments account. Just download the Acorns App to your phone and set it up. I’ve had an Acorns account for 2 years now, since I heard Clark Howard singing its praises on his podcast. My first year alone I saved $484.34! That included roughly $50 in Dividends, Gains/Losses, and Found Money. Some of you are thinking “that kind of savings isn’t worth my time and effort”. Well, you’d be wrong. After you set Acorns up, you’re done. Literally. There is no time and effort after the setup. That’s the best kind of savings!
Are you going to retire on this?Come on. Should it be a part of your investment portfolio?Absolutely! Is it a great start for young adults?That’s what I’m saying.
How does it work?
Acorns saves your money by using what it calls Round-ups. You link it to your checking account and every transaction on that account will be rounded up to the next whole dollar amount. When your Round-up amount equals $5, Acorns will transfer it from your bank to your Acorns account. Like I said earlier, I’m averaging around $450 per year, but that’s based on my spending habits. My son, for example, doesn’t spend anywhere near the amount I do so his Round-ups are significantly smaller. If you have the money for more, Acorns offers a Round-up Multiplier (2x, 3x, or 10x) to help you save more.
You can also use Weekly Investment options. Like a standard allotment, Acorns will take money out of your bank account every week based on the option you choose ($5, $10, $15, or $20).
What does Acorns do with my money?
This is where the investments come into the process. Acorns isn’t just a savings account that pays out a fraction of a percent, it’s actually a mutual fund investment vehicle! (I like using the word “vehicle” when it comes to money, it makes me feel smarter!) And like most mutual fund investments you don’t have to do anything. In fact, that’s encouraged. Mutual funds are best when utilized long term. Just set them up and forget about them.
If saving money sounds exciting to you and doing nothing doesn’t, then fear not, Acorns will satisfy your cravings for that too. Their app has fantastic graphing tools to show not only the amount you’re depositing and your Gains/Losses, but also your Projected growth. Even at something as small as $5 increments, I had a lot of satisfaction watching the lines on my graphs move up like Superman!
You receive regular emails about the funds you’re invested in, and this whole process provides great opportunities for regular teaching lessons for your kids. Watching the ups and downs of the funds is a little nerve-wracking, but this is by far, the least stressful way to live through it that I’ve found. (Again, this shouldn’t be your primary savings vehicle, just another tool in your belt.)
Is there a down side to Acorns?
Not that I’ve found, but if you’re the type of person that doesn’t believe the good unless they see the bad, here’s the only thing I don’t like about Acorns: Found Money. Acorns offers a feature, Found Money, that allows you to shop online and get a percentage of your purchase back as a deposit into your Acorns account. For example, shopping at Walmart.com or Walgreens.com will get you a 1% return.
Free money is great, why don’t I like it?! Well, for the same reason my favorite podcasters don’t get to enjoy the fruit of my purchases on Amazon… it’s too inconvenient. All you have to do is open your app, click on Found Money, then click through to the online store you want to purchase from.
For me personally, when I shop on Walmart.com I don’t use my phone, I use my desktop, and I’m not interested in changing that habit. Just like the Amazon example, it’s just easier for me (based on my own habits) to use the Amazon app when shopping, not my browser, and going through the link-throughs of another site. For 1% I’ll just skip those extra steps, but that’s just me. (Sorry Acorns, can I still get paid?)
So, automated savings of electronic change…check!
Easy to understand mutual fund investments…check!
Cool graphics to keep you looking ahead…check!
So what are you waiting for? Get started preparing your teens for their future!
**Dad-of-Seven is an “Epic” parent (I’m quoting, here) and Guest Blogger**