Pre-note: Acorns will give you $10 (instead of the normal $5) if you sign up before the end of January 2016 through my link.
As a child I remember being fascinated with the power of doubling a penny. I imagine most of us realize the importance of financial investing for our future yet it’s so incredibly easy to put it off or to be sidetracked by “life”. Being self-employed with fluctuating income adds yet another layer of uncertainty to finances.
At 21 years of age I shared with friends that I’d have a net worth of a million dollars by the time I was 40. Not because I wanted to be a millionaire but because we grew up incredibly poor and with money there are “less” worries. With money I’d also be able to help those less fortunate. Well, 41 is right around the corner and I’m not even close to reaching my financial goal.
Like many others I’ve certainly experienced my share of significant financial bumps over the years.
- Kids are expensive! I’ve been a single mom for 19 years. I’ve gotten a staggering $12.69 from his father in child support. I find it “funny” how I remember the exact figure even though I cashed that one tiny check over 18 years ago.
- In the late ’90s I bought a house in Moraine, OH and later sold that house for a loss of ~$12K.
- In late 2006, prior to the real estate crash, I purchased a multi-family property in WI. My brother-in-law told me the land was worth the purchase price but I’d always have “something to do”. If only I had understood that “always something to do” would devour the entire $30K I had saved up and thousands more.
- A surprise tax liability of $12,230 after just my third year in business depleted my Roth IRA which was also compounded by paying a penalty for early withdrawal.
- Unexpected medical bills for my son’s liver disease diagnosis, throwing out my back (2011) due to poor self-care, and then (2013-2016) due to stress related health issues brought on by the havoc of the woman who is cyberstalking me.
- The nearly $14K I’ve spent in attorney and services fees in an attempt to stop the on-going cyberstalking.
Avoiding any one of these would have added significantly to my retirement savings and I would have had the power of compounding on my side. I actually believe I would have hit a net worth of a million by age 40. (If only I had just rented a place and given my son to traveling gypsies!)
I wish I could remember how I first discovered Acorns in late January 2015. It has made investing easy for me. It’s automatic and in increments I can currently handle.
Here’s the concept and how it works
Automatically invest your spare change into the stock market. This “spare change” comes from rounding up every purchase.
- Download the app (Android and iOS).
- Go through their verification process and answer a series of profile questions.
- Connect your round-up accounts (I’ve connected all of my business and personal accounts). Once connected Acorns will scan for purchases you’ve made and will round up to the nearest dollar. Make a purchase of $2.25 and Acorns will invest the difference between $2.25 and $3.00 ($.75). Make a purchase of $4.99 and it will save $.01.
- This is the part that tripped me up during the set-up. Decide what checking account you will use to fund the “roundups”. The funding account is where your “round up funds” are withdrawn. This has to be set-up separately from your connected round up accounts. (even writing this is confusing!)
- You can also do one-time investments and/or set-up recurring investments
Why I like Acorns so much:
- I like their name and what it symbolizes to me
- While not significant I have a lot of recurring purchases that all add up to a nice bit of change
- It’s so incredibly easy to play with their portfolio charts and to chose a portfolio risk that I’m comfortable with (I’m currently on their moderately aggressive)
- I don’t have to learn the stock market in order to invest in it
- I don’t need to save large sums before I can invest
I set my account up in late January 2015 and in addition to the five roundup accounts mentioned above I set up a weekly recurring investment of $20. In eight months I’ve managed to invest $1,512.61. Nearly two years later I’m just over $4,500 with over a 5% gain.
It’s projected I’ll have $24,288.93 by the age of 50 if I continue to invest at least $83 a month. While this isn’t a huge amount of money it will make a difference in my retirement.
It’s worth checking out and you’ll get $5.00 if you use my link. (Through January 31, 2016 they will give you $10 when you sign up!)
In a future post I’m going to write a bit more about personal budgeting software YNAB which I’ve also been testing out. Why Quickbooks Online for bookkeeping and YNAB for budgeting? That’s a post for another day!
PS: As I was writing out my list of financial bumps I realized that I should be proud of myself. I came out on the other side despite a lot of financial pressure. I managed to raise my son on my own. We’ve never went to bed hungry and we’ve never been homeless. I have much to be grateful for.