I had coffee recently with George Lucas.
No, not that George Lucas. My coffee was with the managing director of Acorns Grow Australia.
He wanted to tell me about his company's micro-investment app, which launches on February 10, and is designed to get young people started with investing.
Acorns works by rounding up your virtual "spare change" and investing it on your behalf.
I knew Lucas was on to something when, about a week after our coffee, my husband rang me up to ask if I'd heard of this new thing called Acorns because all the millennials in his office were talking about it.
Acorns hadn't even officially launched in Australia but my husband's tech-savvy colleagues had found their way to the "beta" or test version.
So I thought I'd better take a closer look.
Acorns has been running in the United States for a while and it has about 1.6 million members there, but Australia is its first international market. The local site is a joint venture with Lucas' company, Instreet Investments, which helped get all the correct legal approvals.
There's a website at acornsau.com.au, as well as apps for Apple devices and Android smartphones. It's easy to set up an account, which you then need to link to your bank so that you can deposit and withdraw funds.
Acorns charges $15 a year for balances under $5000, and a percentage fee above that. All deposits and withdrawals are free.
Your funds are assigned to exchange traded funds (ETFs), which are a parcel of investments designed to track the market or a market sector.
Acorns has technology and a particular legal structure that allows you to own fractional shares in an ETF, meaning you are fully invested from the first dollar. There's a nice visualisation on the screen where you choose one of five risk profiles, ranging from conservative to aggressive, and it shows you what the portfolio would look like.
There are three ways you can invest money. You can deposit a lump sum. You can set up a recurring deposit. Finally, you can round-up transactions, so that if you swipe your card to pay for a $3.50 coffee, you can choose to add 50c to your Acorns account.
Obviously this depends on your spending patterns. Are you the sort of person who withdraws a lump sum and pays in cash, or do you use payWave for every little thing?
By rounding up all my purchases in January, I added $24.61 to my account. There was something psychologically satisfying about that, because it felt like the number wasn't arbitrary.
It may be just a gimmick, but I like the idea of creating a mental link between saving and spending. It could help you form a habit and because it's an app, it's something you can do on the bus.
You have to approve each deposit, so you won't accidentally overdraw your account. You can always get your money back, which might be a trap if you find yourself withdrawing your Acorns funds in the week before pay day.
One downside is that all the growth-oriented portfolios were weighted heavily to Australian large caps. I'm not sure that BHP Billiton is such a great buy at the moment.
People might lose interest if the portfolio doesn't do well and $15 a year in fees looks pretty steep if you only have a couple of hundred dollars in the account. Still, it's a fairly painless, perhaps even fun, way to start out.
Right now, there's not much else around that's quite like Acorns. But there's so much innovation in the financial services sector, I'm sure competition is on the way.
It would be great if the super funds offered something like this – putting small change into a low-tax environment where you're forced to forget about it, would be the best environment to grow an oak tree.
Caitlin Fitzsimmons is the editor of Money.
Previous Mind Over Money columns:
- Sold to the lady in the pirate print sundress (or what to wear to bid at an auction)
- What The Big Short movie can teach ordinary people
- Are you paying the vague tax? (Or what to do if you leave your money on the ATM)
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