Let's consider the main reasons to build an investment apps like Acorns for the stock market.
If you are going to build a mobile app for investors, you should scrutinize your target audience. Micro-investments gained it's popularity simply because 69% of Americans have less than $1,000 in their account. So most people are unlikely interested in large projects. As an alternative, micro investments can be attractive for those who don't possess big money but want to become investors. And the biggest part of their banking and investment activity they perform with the help of tablets and smartphones.
Categories of apps for investing
Banking apps. The banking system runs a high risk of disruption, since an overwhelming majority of modern people prefer using Internet banking as well as making deposits, so the development of the software can be a solution. Also, there are some interesting facts:
- 71% of Millennial Disruption Index users would prefer to visit a dentist rather than to listen to a banker;
- 73% of respondents are more interested in new financial offers from PayPal, Google, Apple, and Amazon, than from their banks;
- Almost 50% of people are waiting for new innovations in the financial environment.
According to information from Bloomberg, $2.2 trillion of personal assets will be managed by robo-services by 2020.
Thus, this data indicates that banks will have to work more to establish of confidential relationships with their customer segmentation, offer mobile banking solutions and the best investment apps.
Investment app - how it looks
Exchange-traded funds. Apart from this category, you can also pick out an app that will allow you to participate in stock trading. Mechanisms of organized trade of the secondary market serve for redistribution of securities between major primary investors (underwriters and investment consortiums), smaller investment companies and private investors. Main securities turnover is performed on the secondary market.
Because of the secondary market, private persons become securities owners directly or indirectly (with the help of investment banks and funds). Availability of a sufficient number of private investors allows the economy to function efficiently, drawing huge funds for vital tasks solution. That is what stock investing apps can do.
If you own a business related to this activity, it will make it possible to draw a large number of clients due to free participation in funds trades as well as minimal fees comparing to the service fee of a stockbroker. In other words, a large number of trades participants will increase the liquidity of the securities you sell.
Acorns investing app serves as the goal of a stock index fund that is remarkable for risks. It manages funds portfolios. It offers programming algorithms that provides clients with investment advice. Distribution of exchange-trade funds offered by the largest managing assets in the world like Vanguard, Blackrock, and PIMCO is implemented on the basis of personal information that each customer enters through the website or the app. Acorns distributes orders to the broker, Acorns Securities, LLC (Acorns Securities) buys, rebalances and sells assets. Each customer personally chooses the distribution of these assets. Acorns simplifies the investment processes by uniting brokers and the consulting services.
What should you know to create a mobile investment app?
The first step to successful investment includes the determination of your financial goals and risk tolerances with the help of a financial specialist or on your own. After you understand what you're saving for, when you need money, and what risks you can take, you can narrow your choice to create the best apps for investing.
The majority of mutual funds can be included in three main categories: money market funds, bond funds ( so-called funds with a fixed profit), and equity funds. Every type has various peculiarities and various risks and rewards. As a rule, the higher the potential of profitability is, the higher the risk of losses it implies.
A stockbroker is a person or enterprise that has a license to purchase or sell stocks and other securities with the help of the market exchange. The only way for people to invest directly in stocks is to hire fund brokers to make deals on their behalf. But now you can do it using mobile top investing apps. Perhaps, if your users don't want to invest large sums, they will want to deal with robo-advisors to avoid deals with brokers and paying large commissions.
Robo-advisors represent online services for portfolio management. That's what clients use to invest funds. Robo-advisors can automatically rebalance portfolios when necessary. Robots' functioning directly with brokers' services (bypassing clients' interfaces) allow users to promptly obtain market data and account conditions, to process this data faster, and generate orders for purchase or sale. Then you can track their status in money investment apps. According to this scheme, trade speed depends only on the robot's speed and connection channels.
In whole, the scheme can be described as follows: server with the trading robot connects to the intermediate server located in the top proximity to the core of the exchange trading system. The scheme has a special software installed on that server - so-called gateways that are used for applications and market information transfer directly to the trading system. At the same time, various protocols and connection ways are used for executing operations and creating data receipts. Betterment and Wealthfront are two leaders in this area. These companies invest in exchange-traded funds (ETFs), as a rule. When you create investment apps for beginners, you should take it into account.
The main difference between index funds and ETFs is the following: exchange index funds are buying and selling stocks within the day on the basis of supply and demand. It means ETF investors can pay commission but today there are many funds that don't charge commission. Mutual funds can be efficient, economically beneficial way of investing funds. When you invest in funds, you buy funds stocks, and it means you have part of all the main investments. Exchange index funds are usually passively regulated, therefore expenses are lower. Exchange index funds can help diversify investments on the basis of market segmentation selection.
So when you develop apps like Acorns, you can choose what type you want to deal with, what stocks, and even what exchange index funds or mutual index funds. Various types include various degrees of risks. For the management of investment risks, we advise you to include a mix of various investment types. Distribution of your money to various investments can help balance your risk susceptibility in the long term.
Acorns app review
Here would like to specify what is Acorns app. The app is oriented for millennials that don't have spare money for investment. Acorns offers to invest in small steps. The app is tracking purchases of your credit and debit card and rounds off every purchase from them to a round sum. The margin is put away in the investment portfolio.
For example, let's assume that you buy a latte at Starbucks for $4.25. your purchase will rounded off to $5, and 75 cents will automatically be included in your investment account. Once you have 5 USD, Acorns invests in one of 6 investment portfolios on the basis of risks that the user chooses during registration as well as the possibility to adjust regular automatic investments. You still understand how does Acorns app work?
The user can add an unlimited number of cards, transfer or withdraw money anytime and receive money spins from the selected list of partners.
Besides, the app provides you with visual reports of your investment portfolio in a real-time mode as well as with advice for managing your finances. Acorns doesn't have a reimbursement policy, and while the user is logged in the app will implement all features on his behalf. If he wants to stop using this app, he should contact their support service immediately specifying the subject 'Close My Account'. Simply removing the app from the device won't stop transactions and will not close your account.
Meanwhile, many people are worried about one question - is Acorns app safe? Since it is one of the most popular investment apps, it is encrypted properly to provide users with a high level of security.
Acorns' investment strategy. Acorns combines two popular investment strategies: expenses averaging on the basis of sums rounded off and an investment index. If you invest small stable sums on a regular basis - $100 every month, for example - you buy more stocks by default when they have a low price, and fewer stocks when they are expensive.
The main disadvantage of Acorns web app (or mobile version) can lie in the complexity of financial planning. This planning requires not only choosing several index funds within the framework of a few assigned portfolios but also you should consider other factors.
Must-have app features to integrate into Acorns-like app
Security. One of the main features for the development of such an investment portfolio app. You need to avoid fraud since the app will have access to bank accounts and cards. It is better to apply SSL certificates and encryption. Acorns accounts are provided with SIPC (The Securities Investor Protection Corporation) up to $500 000. The whole app includes 256-bit encryption.
To increase the security level you can assign two-factor authentication:
- additional secret words;
- verification code by SMS or e-mail;
- last 4 digits of a social security number.
Creation of the investment account. You will have to add a bank account as well as any credit and debit cards with the user profile, and social security number. Acorns has two accounts: Round-Up account (that is made directly for users) and a settlement account (for funds transferred to your Acorns account). In the Acorns app you need to enter your name and surname, phone number, birth date, select a secret question/answer. Then you can fill in your occupation, information about assets' cost, annual revenue, your reasons to invest and what is your strategy. These answers will help develop individual consultations and recommended portfolios. Then your SSN is verified for identification and reporting tax to avoid fraud. This is a short manual of how to use Acorns app.
Investment options. You will have to foresee available options of investments, adding financial statistics and analytics. Also, you need to provide users with the opportunity to choose the amount to invest. In addition, users should be able to adjust automated funds write-offs daily, weekly or monthly. Notifications that will display profitable deals or changes in the financial market.
Additional features to integrate
This planner will be your advisor to help manage finances or explain how much should you invest to get a certain amount at the end of the year. For example, also you can add a feature to apps similar to Acorns that will analyze and notify the user about unused funds and how he can invest them.
Besides, if you take into account that your target audience is people that are not very skilled at financial issues, you can add a virtual coach. It will help users trade and invest virtual currency to have a higher profit.
Service of retirement planning and funds accumulation
Everything is performed in an IRA (individual retirement account). An IRA account is the most widespread option for personal investments and funds accumulation with the help of further investments in public stocks, and unit investment trusts. This feature can be beneficial in investment apps for iPhone or Android.
Ways of making money with Acorns-like app
Acorns app gets money from membership fees and external investments. Acorns app fees include monthly payment at the rate of $1 from users who have less than $5000 on their account.
Can there any benefit from MVP features only? Read How you will profit with an MVP?
Similar apps also charge a percent from your investments amount per year. Acorns has a few advertising campaigns such as a Free account for students for a period up to 4 years from the moment they open the account. Users should have $5 minimum to start investing.
Is Acrons app worth it?
What should you undertake to create an app like Acorns?
You see that the development of an investment app like Acorns can be a real challenge. If your users turn out not to be professionals in investment, you must be savvy and experienced in this business and it would be better to make investment app reviews. But it doesn't require you to be good at the software development.