My D and I attended a meet and greet sponsored by a company which she was awarded a scholarship. The meeting included a great session on financial literacy and planning, and one presented the idea of micro-investing, such as Acorns and Stash for students. Can someone provide more information and/or had any experience with this type of investment?
When our kids were in college, the ONLY investing we would have done was a Roth IRA. Everything else was “invested” in college costs.
You can start a Roth IRA with your kiddo…assuming they are working, and you don’t need to involve any middle man to do so.
Does this Acorns and Stash charge ANY fees? Did the person doing the suggesting also suggest using HIM to set this up?
@thumper1: I checked into ACORNS, and there are three levels on how to invest, with fees of $1, $2, and $3/month, depending on the level. The $1/month level is free for college students. It involves downloading the app, www.acorns.com, and no, the presenter did not suggest using her to set this up. She presented Acorns as an option for college students to start investing by using his/her spare change. I’ve never heard of this, so that’s why a posed this question on CC.
My college students…did not have any “spare change”…and what they had would have gone into a Roth.
Just my opinion.
At some point, your kid will no longer be a college student…and those fees will kick in.
Thanks, @thumper1.
Roth is the way to go if they have any “earned” income. They are taxed at the lowest rate… 0% if their income is under ~6k. 10% if they make a little more.
I had my 20 year old start a vanguard roth in 2017. I had him do the compound interest calculation for 45 years.
$2K/year at 7% for 45 years = ~ $650,000
If you get a little lucky and return 8.5%, its over $1 million in tax free earnings… unless Washington changes the rules.
Disclosure, I am not an accountant, but rather someone who only used a traditional 401k and regrets that decision. I should have split my contribution 50/50 between roth and traditional.
Thanks, @NoKillli.
Stash has a a traditional and Roth IRA options, and Acorn says they have an IRA option “coming soon.” I would assume that Acorn if have both a traditional and Roth IRA option.
Acorn’s investments are portfolios made up of Exchange Traded Funds (ETFs) from Vanguard and Blackrock. The idea is to start saving on a consistent basis and putting those savings into an investment and generate income. Vanguard has a lot of information on their web site regarding ETFs and how they work. The idea is that the fund is based on a market index, so the costs are low because the fund just mimics the index.
Acorn and Stash are fairly new, and I do not think either web site has much information on returns their portfolios are achieving. The current market provides a good opportunity to learn about risk, reward and understanding that many investments are intended for long term gains.
The fees for Stash increase to .25% when your balance as above $5,000 and Acorn says that the fees stay the same until you have $1 million. I suspect in both cases the fine print lets them increase the fees, just as it does for most investment firms.
Thanks, @soxfan99.