The New Way to Pay Off Debt and Invest!

We're sure you have heard thousands of times that you need to pay off debt and invest in order to get ahead. But the trouble is that you don't always feel like you have extra money to spare, and investing seems complicated; this is where technology gets super exciting! What if we told you there is a new way to become debt free and invest, and you barely have to do anything at all besides make normal, daily purchases? 

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That's right! There are two mobile phone apps that will allow you to either pay off your bills or invest, or do both, all by spending money and living life. Let's start off with getting out of debt:

Qoins is an app that allows you to pay off bills while making purchases. The way it works is anyone 18 years or older links his or her credit card or checking account to the app. For each day that there is a spending transaction made; say you go to the grocery store, get a haircut, buy a donut and a latte, or even go see a movie, whatever you can think of - Qoins rounds each purchase up to the next whole dollar, deducts that amount, and once you meet your predefined threshold, the app withdraws the money and pays your creditor directly.

Let's say you want to your bills by the 15th of the month, and you set your Qoins "round ups" to the predefined threshold of $5, the app will withdraw it and hold it in a separate account from your checking account. When the 15th of the month comes around, however much you saved from the round ups of spending, is paid directly to whichever bill you have set to pay. 

When you buy a $3.45 latte, $0.55 goes into your Qoins predefined threshold amount. When you buy a $1.15 donut, $0.85 goes into your account, and so on. Every purchase you make goes toward your account, once it reaches $5 or whatever your predefined threshold is, it pays your bills! It's great for helping you to pay over the monthly minimum on things like credit card fees, or to pay off a pesky creditor that you don't find to be at the top of your list on pay day, but still need to keep up on in order to maintain your credit. 

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What about investing money? The next app works much like Qoins, but instead of paying off a bill, you get to invest your rounded up money instead. 

Acorns is an app that acts as an automated portfolio management system. Sound complicated? It's not! The app allows you to invest utilizing your "spare change." Acorns rounds up your purchases to the nearest dollar, just like Qoins but instead of becoming debt free, this app makes you money, which can still ultimately lead you to being debt free. So win-win. 

In this scenario, all you have to do to make money, is to spend money! It's that easy. Get a haircut for $48.05, $0.95 of that purchase is invested by Acorns. The investment strategy is based on something known as Modern Portfolio Theory - and the app will also use information such as income, investment goals, risk tolerance, and other factors to determine your portfolio allocation. You can override this at anytime if you feel you need to become more or less dynamic with your portfolio compared to what Acorns recommends.  

There are five investment portfolios to choose from that consist of six index-based exchange traded funds (ETFs):

  • PIMCO Investment Grade Corporate Bond Index Exchange-Traded
    Fund (CORP)
  • iShares 1-3 Year Treasury Bond ETF (SHY)
  • Vanguard Small-Cap Index Fund ETF Shares (VB)
  • Vanguard REIT Index Fund ETF Shares (VNQ)
  • Vanguard 500 Index Fund ETF Shares (VOO)
  • Vanguard Emerging Markets Stock Index Fund ETF Shares (VWO)

What's more, for each quarter of the year, the app automatically rebalances your portfolio to maintain the desired allocation. But that's not all! Acorns will automatically reinvest your dividends in a way that is consistent with your set portfolio allocation.

How do you sign up? Easy. Just like Qoins, you'll need a checking account to use Acorns. If you have an account balance of less than $5,000, you are charged $1 per month. After that, you are charged 0.25% of the account balance for balances over $5,000. And anyone under the age of 24, plus students of any age, can invest for free!

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Need more advice on how to gain financial freedom, contact us today!