3 Apps to Invest Your Spare Change

8 Best Money Saving Apps Of 2024 | Bankrate

Saving spare change is often facilitated by mobile apps that automatically round up your everyday purchases to the nearest dollar and invest the difference. The philosophy behind this method is “little and often.” Each time you spend money on things like gas, groceries, or dining out, an app rounds up the purchase and saves the change for you.

HOW DOES SPARE CHANGE SAVING WORK?

Spare change savings apps typically connect to your credit and/or debit card, taking the virtual change from your linked checking account and putting it into a savings account. The app monitors your day-to-day transactions and automatically rounds up each purchase to the nearest dollar.

For example, if you buy a sandwich for $7.80, the app transfers 20 cents from your checking account into a savings account.

Some apps deposit your money into a traditional savings account or a combined checking and savings account. Others invest your money in small portfolios based on your risk tolerance and financial situation.

3 APPS THAT HELP YOU INVEST SPARE CHANGE

Several apps utilize the concept of rounding up everyday purchases to the nearest dollar and investing the difference. Here are three popular apps that offer this service:

ACORNS

Acorns links to your bank account and credit/debit cards, rounding up each transaction to the nearest dollar and investing the spare change in a diversified portfolio of exchange-traded funds (ETFs).

Main Features:

  • Automated, hands-off investing
  • Various portfolio options based on risk tolerance
  • “Found Money” feature where partner companies invest a percentage of your purchase into your Acorns account
  • Monthly subscription fee based on account balance (may offer a free tier for students)

STASH

Stash is a micro-investing platform that allows you to invest with as little as $5. Users can choose from a selection of curated ETFs based on their interests, values, and goals.

Main Features:

  • Fractional share investing for easier diversification with small amounts
  • Educational content and tips to help users learn about investing
  • A variety of ETFs aligned with specific themes or industries
  • Monthly subscription fee based on account size

ROBINHOOD (ROUND-UPS)

Primarily known as a commission-free stock trading app, Robinhood also offers a “Round-Ups” feature. This rounds up your everyday purchases to the nearest dollar and invests the spare change in a portfolio of your choice.

Main Features:

  • Commission-free stock and ETF trading
  • Automated investing of spare change through the Round-Ups feature
  • Cash management feature with a Robinhood debit card
  • No monthly fees, though some premium features may have fees

THE BENEFITS OF SPARE CHANGE SAVINGS

There are several potential benefits to using spare change savings apps:

EASY AND AUTOMATIC SAVING

One major advantage of spare change savings is its automatic nature. You don’t need to remember to transfer money into your savings account—it’s done for you. This can jumpstart the saving process and make it relatively painless, especially if you struggle to save money.

INTEREST EARNINGS

Unlike the piggy bank method, spare change apps can place your savings in an interest-earning account, helping your money grow over time. Some apps even offer micro-investing, allowing you to invest small amounts. Although this involves risk, successful investments can significantly grow your savings.

LESS INTIMIDATING INVESTING

Micro-investing apps simplify the process of starting to invest, even for those unfamiliar with it. They often recommend a portfolio based on your goals and time horizon, turning your spare change into a small-scale investment, which is a great way to get started.

START SMALL

For those who find it difficult to set aside large amounts, spare change savings offers a way to start small. It turns everyday transactions into a saving strategy, promoting a habit of regular saving.

PROMOTES FINANCIAL DISCIPLINE

The automatic nature of spare change savings fosters financial discipline. Small, regular contributions can accumulate over time, helping you build a savings habit without significantly impacting your daily spending.

SUMMARY

Spare change saving involves rounding up everyday purchases to the nearest dollar and saving the difference, often facilitated by apps like Acorns and Stash. These apps automatically round up your transactions and transfer the spare change into a savings or investment account, making saving small amounts easy and automatic.

Before using any of these apps, carefully review their features, fees, and investment options. While investing spare change is a convenient way to start with small amounts, consider your financial goals, risk tolerance, and the associated fees.

Always conduct thorough research and make informed decisions based on your individual financial situation.

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