A second look at Acorns and Digit, two systems for automatically building wealth.

A few months ago I wrote a post about Acorns and Digit, two ways to start building weath automatically. At the time I'd just started using Acorns and had no personal experience with Digit. Yesterday I finally signed up with the latter and thought this might be a good time for an update.

So first let's talk about Digit, which is the service that watches your checking account balance and figures out when it is safe to move a few bucks into an FDIC-insured savings account. You don't earn interest on your savings, but the service doesn't cost you anything either.

Anyone in the US can now sign up for Digit (when I first wrote about it it was still in an invite-only mode) and the process is pretty quick. You do have to provide your username and password for your bank's web site (which felt a little uncomfortable), and your bank has to be supported (they say they support over 2,500 banks and credit unions in the US).

There's no app or anything; you interact with Digit via SMS. For instance as a test I wanted to manually transfer $10 into my Digit account so I just texted "Save 10" to Digit's number. I then got a confirmation request that I texted "yes" in reply to. It's not fancy but it works. You can go to the web site to check your balance and take care of a few basic settings but for the most part you'll be using your phone and SMS messages.

Since I just signed up I don't yet have a feel for what Digit is going to save on my behalf but the first day it pulled $6.50 into the account. If the numbers are always that low I really won't miss that money. If you know you're heading into a tight money situation you can pause the automatic transfers at any time. 

I'll try to remember to do an update on Digit in a few months, but for now let's move on to Acorns.

Acorns is a micro-investing service. It uses a 'round up' system. Every time you make a purchase with a credit or debit card it rounds up the figure to an even number and deposits the difference into an investment account. I'll refer you to my earlier post for the set-up experience which was really uncomfortable for me (they need access to both your checking account and your credit card accounts) but so far I've had no security issues.

I was gung-ho for Acorns for a few months, supplementing the automatic deposits with additional amounts here and there. But then my interest drifted away and I kind of forgot about my Acorns account. That's when the beauty of the system kicked in. I forgot about it but the automatic deposits kept happening and my balance kept growing.

When I finally checked back in with Acorns I was delighted to find my balance had passed the inflection point where my projected balance continues to go up rather than down. (Acorns charges $1/month for accounts with less than $5000 in them so when your balance is very low you're spending more than you're making and with no additional deposits your account will eventually hit zero.) This all happened via small deposits that I really never noticed so it really is painless investing.

Of course it's also micro-investing. After about six months I only have about $270 in the account. I work out of a home office and I can easily go a week without walking into a store so I don't have nearly as many round-ups as someone who stops to buy coffee on the way to work every morning would have. In my case I think I'm going to set up scheduled deposits in addition to my round-ups; I'm glad that Acorns gives me that kind of flexibility. If you decide to try the service I'd just let it run on automatic for a few months and then see what kinds of numbers the round-up system is investing and supplement that number with scheduled deposits if you feel they're needed.

Overall I'm happy with my Acorns experience. It's the perfect kind of service for someone like me; a person that gets excited about saving or investing money every once in a while but has trouble staying focused on it. Now even when my attention is elsewhere my account is slowly growing and the transfers are all so small that they're completely painless.

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