Millennial investors getting ripped off by Acorns - 6.2% per annum fees on microtransactions

punkindrublic on 07/09/2017 - 15:08

According to the SMH:

A simple division to calculate the fees being charged would emphasise how badly young Australians are potentially getting ripped off by Acorns. Micro-investing might look great at first glance, but more than 50,000 micro-investors using Acorns are paying annual fees of over 6.2 per cent a year on their micro-investments.

Acorns has reportedly hit $100 million in funds under management and registered users of 300,000. Downloading the app is free, meaning people with a zero balance do not get charged. But once you start using the app, the fees are a flat $1.25 a month – or $15 a year – to access the platform.

It might not sound like much, but compared with the alternatives, it's daylight robbery!

Users with a non-zero account balance have reportedly reached 111,570. On average, that's $896.30 per micro-investor.

More importantly, the median account balance is reportedly $241.13. Meaning that half of the non-zero account users, or 55,785, have an account balance of less than that amount.

Get out your calculator and do the division! That miserly $1.25 per month in fees is $15 in a year. Divide $15 by $241.13 and, voila, you get 6.22 per cent a year.

I haven't crunched the numbers myself but if true then my scepticism about these sorts of investment vehicles is well-founded. Just throw your money into ETFs or an index fund - you might not reach the highs of individual stocks or funds, but you'll damned well avoid being screwed on fees!

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Comments

  • ninetyNineCents on 07/09/2017 - 15:31
    -1

    Brokers, money dealers are the arseholes of this world, Paypal, Apple Pay, Credit cards…

    • dsar on 07/09/2017 - 15:43

      ????

    • [Deactivated] on 07/09/2017 - 15:56
      +2

      It just everyone against us!!!

      • Kangal on 07/09/2017 - 16:01

        Let's start a communist movement!!

        • [Deactivated] on 07/09/2017 - 16:28

          I know… we need a largely armed public force against us too; along with the rest of the world…

        • ninetyNineCents on 07/09/2017 - 19:01

          @eggmaster:

          im not communist, i just dont like those sort of parasites.

        • [Deactivated] on 07/09/2017 - 22:21

          @ninetyNineCents:

          Then live in a hippy commune "free of the evil chains of the man".

        • ninetyNineCents on 08/09/2017 - 14:36

          @eggmaster:

          You are twisting what i said, i said i dont like these sorts of financial people with a fast words and lots of tiny writing.

          The real communists are the bankers, they pretend they want a free economy, but when they stop winning at their casino bullshit everyone else ends up paying. Take Australia, no other business has their assets backed inthe same way the comm gov backs all bank deposits to 250k etc.

          Plumbers, electricians, Bunnings, you and me, etc dont get a free insurance like that from the community.

        • ninetyNineCents on 08/09/2017 - 14:39

          @eggmaster:

          When was the last time your communist tradie, petrol station, newsagent asked the gov for a bailout when they lost money ?

          Bankers are the ultimate communists, they just lie about it, just like they lie about many other things.

        • [Deactivated] on 08/09/2017 - 14:45

          @ninetyNineCents:

          How are bankers communists?

          Do you know what communism even is?

          Are you pissed off you took a debt and had to pay interest? Maybe be more responsible with your money.

          I enjoy the benefits I get from banking with various banks. Maybe it is just you with a chip on your shoulder.

        • ninetyNineCents on 08/09/2017 - 15:41

          @eggmaster:

          Your original answer associated communism and socialism. WHen you take money in the case of free insurance from the gov for deposits that socialism.

        • [Deactivated] on 08/09/2017 - 16:00

          @ninetyNineCents:

          I would be 100% behind the gov not giving money to banks… Would you still be able to afford your (profanity) aussie way of life with your ridiculous mortgages then? The gov enables your stupid mortgages to exist by enabling the banks.

        • ninetyNineCents on 08/09/2017 - 21:17

          @eggmaster:

          Would you still be able to afford your (profanity) aussie way of life with your ridiculous mortgages then?

          yes.

          The gov enables your stupid mortgages to exist by enabling the banks.

          Rubbish the comm bank when the gov created it over 100 years ago, more than managed to give many ordinary people a chance.

          If the gov ran the only bank in town we would all be better off for starters, fees would be less, and the gov would keep the profits. So yet again you lose.

        • ninetyNineCents on 08/09/2017 - 21:20

          @eggmaster:

          Look at electricity, everybody was better off when the gov owned them, now they have been sold off, we are all paying double compared to a few years back. This is of course because all power companies are colluding and keep prices higher, than the gov when it was basically the only game in town.

          Stop drinking the american koolaid, where they curse gov ownership of certain things and actually look a bit harder at Australia today and in the past. If you want to make a statement im wrong, please do, but back it up with real world examples from Australia.

        • ninetyNineCents on 08/09/2017 - 21:25

          @eggmaster:

          Are you pissed off you took a debt and had to pay interest? Maybe be more responsible with your money.

          When did i say or imply i was poor or struggling ?

          I enjoy the benefits I get from banking with various banks. Maybe it is just you with a chip on your shoulder.

          No i just like to be honest and dislike fakes.

  • 0FoxGiven on 07/09/2017 - 15:59
    +1

    Ye.. I bought into the Acorns hype this year and so far I have like $460 invested with a measly $13 in returns.. take out the months fee and thats less than $6 in returns. I'd rather have money in my RAMS. Will be closing the account soon

    • punkindrublic on 07/09/2017 - 17:43

      That sucks, but good idea to stop and move onto something else rather than throwing more money hoping for an improvement

    • TimApple on 11/09/2017 - 14:48

      If you have less than $3,000 in it, the fee is pretty high.

      • 0FoxGiven on 12/09/2017 - 13:24
        -1

        You got that wrong.

        For account balances up to $5000 there is a flat $1.25 maintenance fee while amounts above $5000 is 0 (Great, that saves like $15 a year)

        The Account Fee (another separate fee) for amounts up to $5000 is 0 while amounts above $5000 is 0.275%. So say you have $10,000 in the account, your account fee is 27.5. The higher you go, the higher the account fee.

        THEN there is the Underlying Issuer fees which can vary between 0.224% to 0.423% based on the type of investment portfolio chosen

        IMHO, nobody comes out on top by much and things wont change till the share market suddenly shoots up and % returns go up to like 8% returns.

  • fruit on 07/09/2017 - 17:06
    +1

    Why Millennials? Do they get different fees to other generations?
    I wonder if they sell your transaction data too?

    • punkindrublic on 07/09/2017 - 17:45

      My guess is that because it's a 'next-gen' app investing platform younger people are more likely to use it. And are more likely to get sucked into the hype rather than doing the sensible thing and checking management fees and other variables before throwing money at it.

  • Diji1 on 07/09/2017 - 17:08

    Just throw your money into ETFs or an index fund

    … where the investors own the fund or else there is an incentive for fees to be taken from you.

  • fruit on 07/09/2017 - 17:11

    Now imagine if you invested all that money in Bitcoins?

    • punkindrublic on 07/09/2017 - 17:47
      +1

      You'd have almost a 30th of a Bitcoin by now!

  • [Deactivated] on 07/09/2017 - 18:40

    brickx and this are just scams, only dumb people think its going to make them rich

  • Darkpulsar on 08/09/2017 - 02:23

    Here's a spreadsheet to calculate the fees on investment:

    https://docs.google.com/spreadsheets/d/1CC2Ss8zHB8O95aSK-VdS…

    The Underlying Issuer Fees will vary depending on the portfolio. On Emerald (most expensive, sustainability portfolio), a balance of ~$2625 will get you under 1% fees, $1000 at 1.928%, $500 at 3.428%.

  • Ilovebne on 08/09/2017 - 03:24

    I used to have Acorns account, but closed it a while ago, based on barefoots suggestion…

  • TimApple on 11/09/2017 - 13:23

    They have no one to blame but them self. I did my own maths and decided that I need $3,000+ balance in order for the fees to be low enough, and I did just that.

    Very surprising that the median account balance is just $241. They should just use ING savings maximiser at that amount.

  • hamole on 11/09/2017 - 14:39
    +1

    I like the app. I have a bit over $4,000 in my account and the fee is still $1.25 a month so nowhere near the percentage quoted. It's not like they hide how much the fees are going to be.

    I don't have much experience in the share market so I enjoy seeing the structure of the different portfolios and how the markets fluctuate. The app even sends you notification talking about the average people invest, their average returns and they are not inflated figures. They go out of their way to emphasise that it's not a get rich quick scheme.

    Reactions that it's a "scam" are hugely overstated in my opinion. Unless you have more than $5,000 in the account the most fees you'll be charge in a year is $15. It's gotten plenty of my friends who wouldn't never thought about it before talking about market funds and investing. Well worth it in my opinion.

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