Now that you are making money at A Suite Salon, it is time to start thinking about putting some money away for a rainy day. You hear commercials every day from any number of companies promoting hundreds of different products to save for retirement, college, or medical emergencies. Very quickly this process of saving for you and your family’s future can become so daunting, that inevitably you throw up your hands and go another several years without saving a dime.
In this day of apps and smartphones you would think there is an easier way to manage your money. In fact, there are several new ways that will make you wonder ‘where has this been all my life’. They are known as robo-advisors and they are changing the way people save money.
These apps are designed to make putting a little extra money away as easy as clicking an icon. You do not need to invest much at all, and these do not have to be your sole source of savings. They are designed to put away as little as $5 at a time. Best of all these can be managed from your smart phone in between clients if you wish.
While we are not endorsing any of these options, we feel it is important to consider savings and tax consequences now that you are a business owner.
Quite possibly the simplest of the robo-advisors is Acorns. Their strategy is simple: take your extra change and invest it. This is done by taking charges made on credit cards you select and rounding them up to the nearest dollar and then investing that money. For example, if you are buying supplies for $50.65, Acorns will sweep .35 cents into your investment account and your card will show a charge of $51 ($50.65 + $.35 = $51). Simple, easy and you are slowly starting to save money.
If you want to get a little more complex and want to consider other savings options such as 529 College Savings plans or retirement accounts or if you have an existing retirement account you would like to roll over, you may be in the market for an account through Wealthfront or Betterment. Both robo-advisors offer several other products not available from Acorns and for low fees as well. These sites have different balance minimums, but offer automatic payments and predetermined risk levels. The main difference between Betterment and Wealthfront is the cost and access to human advice. Betterment offers a premium account that offers consultation with a live advisor.
As you will see with most of these savings vehicles, you can select your level of risk by adjusting settings or answering several investment questions. You can also make contributions to the accounts in any amount you wish at any time. Some minimums may apply.
So what is the cost for all of this? Generally, these apps are very low cost when compared to their counterparts available from large retirement management companies. Acorns, for example, is $1 per month and .25%/yr for accounts above $5000. Wealthfront and Betterment are not far behind with their fees and both offer zero fees for accounts under $5000 to $10,000.
Bottom line is these are apps that are inexpensive, easy to manage, and worth investigating if you want an easy, simple way to save more than you already are…or are not.
As with anything having to do with your money, please do some homework. While these resources are meant to be easy, they are investments and there are possibilities for loss, but you certainly have more control than with investment vehicles of the past. These links below are reviews of each of these robo-advisors. Take a few minutes and see how they stack up and which may be right for you.