Millennials are looking for new ways to invest in the market and build their wealth.
Acorns, an investing app that launched in August 2014, lets customers invest spare change from everyday purchases using a “round up.” For example, if you buy an iced coffee for $3.46 that rounds to $4.00. That spare $0.54 in change gets automatically invested into a portfolio of ETFs.
Users can choose from five portfolios, ranging from conservative to aggressive. Users can also opt to set up a weekly or monthly recurring investment.
The premise behind the app is to make investing seamless.
“I think to make it super simple. To make it something that happens in the background of life. A lot of people talk about skip the coffee skip this skip that we say you can have a coffee, but when you have a coffee we’re also going to round up the purchase of the nearest dollar and invest in spare change for you, while we’re nurturing people that change behavior through education through some of our features,” Acorns’ CEO Noah Kerner tells Yahoo Finance in the video above.
To date, the app has more than 1.5 million investment accounts. More than 75% of the users are millennials.
Acorns conducted a study of 1,900 millennials and found that 41% admit to spending more on coffee in the past year than they invested in their retirement. Half of those millennials don’t feel savvy when it comes to investing.
“Fifty percent of millennials don’t really know much about investing. And generally, in this country, there’s a lack of financial literacy that exists and that’s something that we feel really passionately about solving,” Kerner said.
Acorns has made an effort to produce content to teach personal finance.
Last year, Acorns received $2 million in funding from Steve Cohen’s Point72 Ventures, the family office hedge fund firm’s early-stage venture capital strategy. Part of that investment is used for the app’s Found Money rewards program, which features brand partners such as Airbnb, Dollar Shave Club and Blue Apron. When an Acorns user spends money with those partner brands, those companies make a direct investment into the user’s Acorns investment account.
Julia La Roche is a finance reporter at Yahoo Finance. Follow her on Twitter.