Acorns ‘micro investment’ app arrives in Australia to invest spare change in the stock market

WHAT if you put your spare change in the stock market rather than a jar? An app launching in Australia today wants you to find out.

Micro-investing platform Acorns is set to launch in Australia. The company promotes itself as a way for young people unfamiliar with the stock market to save and invest money.

AN APP designed to invest your spare change in the stock market will officially launch in Australia today, automatically buying stocks with money rounded up from your daily coffee purchases.

But Acorns, which describes itself as a “micro investing platform,” is already being used by thousands of Australians and has become the seventh most popular financial app in Apple’s App Store after it quietly appeared last week.

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Acorns Australia managing director George Lucas said the app could prove more popular in Australia than the US, as Australians were more smartphone-savvy and willing to use them to transfer funds or pay for goods.

Stock market on the phone ... Acorns lets users choose to invest their money in one of five portfolios.

“We’re getting over a thousand people signing up a day,” Mr Lucas said.

“Before we launched in Australia, we put up a website to register interest and we got 22,000 email addresses without even trying.”

The unusual financial app was created by a father and son team, Jeff and Walter Curttenden, in 2012 to entice first-time investors to the stock market.

The finance app works by letting users invest spare change — money rounded up to a dollar from everyday transactions — into their choice of exchange-traded funds.

If you bought a coffee for $3.40, for example, the app could round that figure up and invest 60c into your Acorns investment choice.

There are other ways to invest money using the app, including one-off or recurring payments, but Acorns global director Colton Dillion said its Round-Ups feature captured the most attention.

“It’s something people already do,” Mr Dillion said. “They throw money into the cup by the bed and they’ll wait until it’s a large enough amount to buy dinner with it.”

Australia is the first country outside the US to receive the app, which is now available for Apple iOS and Google Android devices, and Mr Lucas said he expected Australians to use it for investment outside superannuation or a brokerage account.

Savings aside ... Acorns Australia MD George Lucas says the app could introduce millennials to savings.

“You’ve got to remember Australia, even though we’re a small part of the world in terms of GDP, we’re the fourth largest fund management country in the world,” he said.

“Australians are much more smartphone-oriented than in the US and we do a lot more electronic payments, whether it’s transfers between friends or tap-and-pay when you buy in a shop. The US, technology-wise in financial services, is years behind Australia in that regard.”

To use the app, which is registered with the Australian Securities and Investments Commission, users must enter their personal and bank account details, and the Round-Ups feature can be used with a credit or debit card.

The app can round up amounts and invest them in $5 increments automatically, or when the user chooses.

Users can choose from one of five stock market options, from a “conservative” portfolio targeting a return of 4.6 per cent to an “aggressive” portfolio aiming to attract 7.5 per cent growth.

While the app is free to download, Acorns will charge accounts with less than $5000 $1.25 a month, with no fees for withdrawing funds, or .275 per cent per year for accounts over $5000.

Mr Dillion said it was a strategy that had already seen the company invest “more than $100 million on our customers’ behalf”.

Not every Australian who signs up for the service may be counted as a user at this early stage, however. Users with no money invested in Acorns do not attract the company’s monthly fees, and less than half of those who registered in the US funded their accounts.

Also, while management fees for the service are low, instead relying on the “scale” of the company’s overall investments, Acorns’ monthly $1.25 fee could represent a large portion of a small, spare change investment.