Setting aside spare change can be a sound strategy for building up a rainy day fund, but how about an investment portfolio?
Some new start-ups are angling to turn contributions of a few cents here and there into big business. App investment platform Acorns tracks purchases on users' banking and credit card accounts, sweeping cash in from a linked checking account once the round-ups total at least $5. Then there's Wherewithal, an online loyalty mall. Users shop at favorite retailers through the site, earning cash-back rewards that can be redeemed or slotted into an investment account. Regular users can become eligible for bigger cash-back bonuses over time.
Both of the new programs, which launched this fall, take a leaf from Bank of America's long-running Keep the Change program, which rounds purchases to the nearest dollar, transferring the difference into a savings account.
Small contributions have the power to add up fast, especially during the holiday shopping season. Acorns estimates its average user generates $1.40 in round-ups each day from purchases. Over the course of a year, that adds up to $511—before factoring in elective contributions or the investments' performance. "We wanted to offer a program that could provide meaningful returns over the long term," said Jeff Cruttenden, co-founder and chief operating officer of Acorns.