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Ibotta Review Cash Back for Buying Stuff

A friend of mine keeps going on about Ibotta. For those of you who don’t know, Ibotta is a shopping app that gives you cash back rebates for various items you buy. What makes it such a huge deal for my friend is that those offers often include beer and wine, and often for a few bucks at a time, so that can add up. But, does that make Ibotta a legit deal for other, or is Ibotta a scam that takes more than it gives?

What Is Ibotta?

Ibotta is an app for either Android or Apple. You can also use it online via the webpage. It works a lot like many grocery store apps where you go through a list of coupons and select which ones you want to use. However, unlike my King Soopers app, or Safeway app, the offers on Ibotta are rebates, not coupons. In other words, while the coupons take 50 cents off of my grocery bill, the Ibotta rebates have no affect on the cost of my groceries. Instead, they go into a virtual account that I can withdraw as cash.

Ibotta is a private company backed by various venture capital companies, and it seems to have a fairly decent amount of offers.

How Does Ibotta Work?

Once you download and install Ibotta, you open the app on your phone and choose to “unlock” offers. Basically, this is the same thing as adding a coupon to your grocery app. Unlock is weird terminology, but basically it means that you can now get that rebate. Rebates are sorted by store, although it seems there is a lot of overlap. The list of stores seems to have most of the big ones. There’s the Kroger, King Soopers, Vons, BJs, plus Target, Costco, Sams, and so on.

Once you pick which store, you touch the “Unlock” button to add the offer into your account. Then, you go to the store and buy the item. When you get home, you have “Verify” your purchases. For some stores, you can link your loyalty card and skip the whole scanning and taking receipt pictures part. However, that list isn’t as big, and my local stores aren’t ones that can be linked.

To verify a purchase on Ibotta, you first scan the bar codes of the things you bought. Then, you scan the receipt that has those purchases on them. You want to scan all the bar codes first, then scan the receipt once you are ready.

My first question was how do I scan a long receipt in Ibotta. As it turns out, Ibotta is well aware of the fact that receipts can be pretty long. To scan a long receipt in Ibotta, you just start at the top and take a picture of as much of the receipt as you can fit. Then, once you have OKed that picture, you click the plus button to add another section of the receipt. Repeat as necessary. One of my recent grocery receipts took six pictures, so just keep going until you reach the end.

When you are finished, it totals up what you inputted and then you have to wait up to 24 hours for them to verify your purchases and credit your account. My first submission was reviewed and money credited to my account in just over an hour.

You can also get credit for buying things via the app like gift cards or

How Do I Get My Money From Ibotta?

Ibotta lets you link either a PayPal account or a Venmo account. You have to have a minimum of just $2.00 to get your cash, so that’s pretty easy to hit.

Once your money is in PayPal or Venmo, you just trasnsfer it into your linked bank account, or use your PayPal card to withdraw it from an ATM.

Is Ibotta Worth It?

The crux of any Ibotta review has to be is Ibotta worth it, or is Ibotta a scam and waste of time.

So, does Ibotta really work? Here in the Denver area, King Soopers and Safeway both offer grocery apps that allow you to ad electronic coupons to your card. It’s a great way to get coupon savings without having to find, cut out, keep track of, and remember to use coupons. Before I go shopping, I add the coupons to my card shoppers card for anything that I buy, whether I plan to buy it that trip or not. The idea is that if I do buy something and there is a coupon for it, I’ll get it. That’s great, and over time, I’m sure it saves me a fair amount of money.

I subscribe to the idea that you should only buy what you were going to buy anyway. So, when there is a coupon for 50 cents off of Frosted Flakes, that is a good deal, because I’m going to buy those anyway. But, a coupon for $1.00 off of 4 boxes of Lucky Charms, isn’t such a good deal because I don’t really eat that. The one trick to Ibotta isn’t a scam so much as a detail you need to pay attention to. Some of the deals expire, and it doesn’t matter if you already unlocked it. You have to verify it first.

In the end, my average grocery receipt never has more than a few dollars worth of coupon savings. So, while I every penny counts, it’s not like my life is any better because I paid $142.97 for groceries instead of $144.38.

That brings us to Ibotta. Ibotta has plenty of the same kind of offers you see everywhere else. There is a 75 cent rebate on Charmin, for example. But, it also has some bigger, and more interesting rebates. Again, if you stick to the mantra of only buying what you buy anyway, then, there is no way for Ibotta to harm your spending. And, if you do hit on some of these offers, you can actually make some money from Ibotta’s cash back style offers.

Right now, there is a 75 cent rebate on Charmin, a $1.00 rebate on trash bags, $1.00 off of kitty litter, 50 cents off of any bananas, any eggs, and any milk, plus $2.00 on Mike’s Hard Lemonade. All of these are things I was going to buy anyway. So, I will get $6.25 in rebates for just these few items. That’s a pretty good deal.

For maximum impact, I might now withdraw my money for a while. With savings interest rates a laughing stock right now, it doesn’t exactly hurt anything to let this build up to say $20, or if I really got going maybe $50. Then, I could use the funds to make a purchase I wouldn’t have spent the money on, or if you need, maybe make an extra credit card payment.

In the long run, I’m not sure how worth it Ibotta will be. In the beginning, every single rebate is there for the taking, but over time you use them up, and I haven’t been using the app long enough to know how quickly new ones come in. However, the effort isn’t that much, and if you are buying your normal items, then it’s like finding free money. The above transaction will take me less than 10 minutes total to process, making it a nice return on my time for $6.

You can sign up for Ibotta using this link. If you do, I get $5, and you get $10 so it’s a win-win for both of us.

I’d go ahead and recommend trying Ibotta. It’s basically easy, free money.

Ibotta Bonuses and Teams

Ibotta currently offers various bonuses. As a new app, I’m sure these aren’t cheap and probably won’t be around for ever, but they are probably a good way to boost use. For example, I used my friend’s code like above, and I got a $10 bonus for the first rebate I submitted. If I redeem 5 more rebates within 30 days of signing up, I get another $2 bonus.

Then, you can do teams. I haven’t messed with this yet, but the idea, is that by linking with your friends you can earn other bonuses. For example, there is a bonus where you earn an extra $0.50 if you redeem 6 rebates in the month AND your team earns $6.00 worth of total rebates during the same month. I suppose the value of this depends on who your friends are.

Acorns Investment Portfolio Review

Written by Finance Gourmet 9 Comments

Recently, I did a review of the Acorns app. If you are not already familiar with the Acorns savings and investing app, you should read that for an introduction how to use Acorns first.

Are Acorns Investments Good Portfolios?

The idea of the Acorns automatic money savings app is that it rounds up all of your transactions and automatically invests that money for you. There are some nuances about how Acorns works you should understand first. Money is only transferred once the minimum round-up amount is $5, and it only happens once per day.

Before we get too in-depth here, it is important to remember a few things. First, when you get started with Acorns, we are talking about a very small amount of money. That means that as far as real dollar amounts go, the difference in percentages won’t be big. For example, if you have $100 in your Acorns account the difference between 10 percent and 8 percent (whether up or down) is just $2. In other words, this not something to wring your hands over, especially in the beginning.

However, you can make lump sum, or recurring, investments with Acorns now, which may make your investment balance bigger faster.

Where Does Acorns Invest Money?

Of course, the whole point is for your automatic savings to add up and grow over time, so it is necessary to understand where Acorns is investing our money. So, let’s take a look.

Acorns has five different investment portfolios that it uses and automatically re-balances for all users. This is a typical robo-advisor setup. The Acorns app helps you pick which portfolio based on your age, and various risk tolerance questions, or you can pick for yourself. The five portfolio types are very traditional, even if what is in them is not. The five Acorns portfolios are Conservative, Moderately Conservative, Moderate, Moderately Aggressive, and Aggressive.

The Acorn portfolios are pretty typical as far as the stock to bond ratio is concerned.

Aggressive Portfolio – 90% stocks / 10% bonds
Moderately Aggressive Portfolio – 75 / 25
Moderate Portfolio – 60 / 40
Moderately Conservative – 50 /50
Conservative 40 / 60

What Investment Does Acorns Use

One of the interesting things about Acorns investment strategies is that all five portfolios use the same six investments. All the investments are index-based Exchange Traded Funds, or ETFs. All six ETFs are regular, publicly traded ETFs. They are not specific to Acorns. In other words, you can look up the prospectus, history, and ticker symbol on any finance website or tool you like.

The six Acorns ETFs are (Name, Ticker Symbol, Discussion):

Vanguard S&P 500 ETF – VOO – The bread and butter of stock investing, this is an index-based ETF that attempts to replicate the SP500 index by investing in large U.S. companies.
Vanguard Small-Cap ETF – VB – This is the small-cap stock ETF for Acorns. It invests in small U.S. companies. Specifically, it is designed to track the CRSP US Small Cap Index.
Vanguard FTSE Emerging Markets ETF – VWO – This is the international component of the portfolio. Specifically, this portfolio invests in a “sampling” of companies based in so-called emerging markets. The largest investments are in China, Taiwan, Brazil, India, and South Africa.
Vanguard REIT ETF – VNQ – This fund invests in Real Estate Investment Trusts, or REITs, and is designed to track the MSCI US REIT Index. A REIT is a way to invest in the real estate market through stocks. So, assuming everything goes according to plan, REITs would go up when real estate is going up, and vice versa.
iShares 1-3 Year Treasury Bond ETF – SHY – This is the low-risk investment in the line-up. Nothing lowers your risk like short-term U.S. Treasuries. There is probably a way to take the riskiest investment in the world, combine it with short-term Treasuries and come up with a Moderately Conservative portfolio. This fund is essentially one-step riskier than a money market fund.
PIMCO Investment Grade Corporate Bond Index ETF – CORP – This ETF is the “bonds” part of the Acorns investment portfolios. These are investment-grade bonds (not junk bonds) and is designed to track the BofA Merrill Lynch US Corporate Index.

So are Acorns investment strategies good?

Acorns Investments Performance?

As I’ve written multiple times before, when it comes to investing, what matters far more than investment selection is the amount of money you invest, and how long you keep it invested. That is true here as well. Remember, compound interest takes a long time to work its magic. The good news is that the whole point of the Acorns app is to keep you investing steadily over time. That is going to be a far bigger component of your long-term investing success, than how your investments are tweaked.

That being said, the Acorns investment strategies are solid, if somewhat unusual. The good news is that because all Acorns portfolios use publicly traded ETFs, it is relatively easy to watch Acorns portfolio performance.

First, this is all index investing. That means these investments are cheap. Fees won’t be eating into your returns, and you don’t have to worry about “beating the market” since the point of index-based funds and ETFs is not to beat the market, but rather to BE the market. If the market is up 7 percent, so are you (more or less). This is good.

Second, the diversification in the Acorns portfolios is good, but not traditional. Again, while we are only talking about hundreds or a few thousands of dollars, it really isn’t material, but if you ever did end up with a lot of money in your Acorns investment account, you would want to ensure that you compensate, if necessary, in other areas of your portfolio.

Typically, a financial advisor or financial planner would divide up your money in stocks and bonds to achieve a portfolio that matches your risk tolerance. At most major brokerages or investment firms, that would entail mutual funds or ETFs just like with Acorns. The difference is in two major areas, and one minor one.

First, most diversified portfolios include some exposure to international stocks, and so does Acorns. However, Acorns only includes emerging markets, that is economies that are still developing. That means your Acorns portfolio does not include much investment in Europe, Japan, or Australia. This isn’t necessarily good or bad, but it is different. Since emerging markets are more volatile this choice means dialing back the international exposure quite a bit for the more conservative portfolio choices.

Second, the inclusion of a REITs part of the portfolio is non-traditional as well, at least one this big. The Aggressive portfolio, for example, includes 30 percent invested in REITs. The theory is that real estate is a non-correlated asset to the stock market and therefore might do well when stocks are declining (or vice versa). The catch here is that REITs are still stocks, and stocks, even real estate stocks, don’t fully decouple from the correlation of the markets. If there is one area that gives me pause about how good the Acorns portfolios are, it is the large allocation to REITs.

Here is my point. Below, you’ll see the annual performance of the specific REIT ETF that Acorns invests in. While the size of the moves are different, there is a lot in common with the ups and downs of the stock market. Part of that is because good economy is good economy (and in 2008 vice versa).

The next image is a similar chart to the above for an S&P 500 ETF. In this case, this is for the SPY S&P 500 ETF. This is for example purposes because the actual Vanguard SP500 ETF used by Acorns is not old enough to have the years before 2011 included. So, there are some differences but a lot of the overall direction and magnitude are in the same ballpark.

Here is what we are looking at. The REITs are indeed different, but often move in the same direction, with the very notable exception of 2007 when real estate was falling apart, but the stock market hadn’t figured that out yet. Obviously, there is some value in including REITs in a diversified portfolio, but the 30 percent number seems an odd way to push for more aggressive returns. Let me be clear, this is not wrong or bad, just not traditional.

The final, smaller difference is the lack of a mid-cap investment option. Perhaps this is where that extra REIT allocation is coming from. Mid-cap stocks often end up being the best performers over a 10 year period, partly because they are bigger enough than small-caps to not have such volatile swings (especially in down markets) but smaller enough than large-caps to have plenty of room to grow and innovate.

Again, the lack of a mid-cap investment isn’t wrong, but the typical financial advisor will send you home with a portfolio that has a mid-cap option (maybe even split into mid-cap growth and mid-cap value) and with a smaller amount allocated to REITs. In some ways, this difference in portfolios offers even more diversification for your overall assets.

In the end, the Acorns investments are solid portfolios. Acorns investment performance will be about as good as any mutual fund portfolio your financial advisor would come up with. They are built using low-cost ETFs which is important both for you the investors, and for the company. For you, the anchor of higher fees isn’t weighing down your returns. For Acorns, the ability to get into and out of ETFs cheaply is important to its low-cost, no minimums fee structure.

Finally, Acorns automatically rebalances your portfolio for you. This is huge, and maybe more important to your long-term success than getting the particular investments or percentages just right. The reality is that if you look at a chart of which asset class performed best each year, you’ll see that it varies greatly. Sometimes, small cap stocks are the big winners, and then the big losers in the next year or two. If you don’t rebalance your portfolio, you end up just riding the wave up and down. However, with rebalancing, you pull money out at the top, and put it in at the bottom. This is how to buy low and sell high without ever knowing anything about stocks, and like everything with Acorns, it’s automatic.

Acorns rebalances your funds by taking your incoming contributions and investing them where you are low. More importantly, it will actually transfer funds between investments quarterly if things get more than 5 percent out of balance. That means that Acorns will be selling after that 30 percent run up to lock in some gains.

If you like the idea of automatically investing over the long-term to build up a nice portfolio, then these Acorns portfolios are going to be just fine for achieving that.

Digit Review Scam Legit or Necessary?

Written by Finance Gourmet 17 Comments

Digit is an automated savings service. As always, my first question is Is Digit a Scam? Then, if Digit is legitimate, the question is what exactly does this online financial service do, and is Digit worth it for the average person’s personal financial situation.

If you are looking for something similar, but that invests the money, and doesn’t calculate it’s own savings (it’s a round up savings app) check out my Acorns reviews.

Is Digit A Scam?

The burden of proof for calling something a scam differs based on what exactly it does, and what can be shown from available source. Digit is a venture capital backed internet start up, raising money from, among others, Google’s own venture capital arm. That in itself doesn’t mean it is not scam, but it does mean that it isn’t some fly-by-night hacker operation looking to steal a few credit card numbers and email addresses.

Is Digit Legitimate?

Since Digit is a legitimate business and not just a scam to steal your banking information, the question becomes whether Digit is necessary. The idea is that if you are not saving as much as you could/should/want to, then could a computer algorithm squeeze more savings out of your monthly cash flow? If so, then Digit is a legitimate service for the harried saver. If you’re already getting every penny, then you are just adding a layer for no reason. This is my review of the Digit automated savings service.

Digit Review

Digit is an automated saving service. If you are familiar with the concept behind the Nest thermometer, then you can consider Digit the Nest of saving.

There are many ways to automate your savings. One of the most popular is the concept of paying yourself first. Deductions that go straight to your 401k plan, or automatic transfers to your savings or money market account are examples of this. The trick to this concept is that you have to make some sort of educated guess, from your budget, about just how much to pay yourself before you actually experience the various life events that make up your spending for the month. If you guess wrong for that month and spend more money than expected, you’ll need to ensure that you can transfer some money back (easy from savings, not so easy from your 401k). But, what if you spend less than expected? You’ll need to notice and transfer some additional funds to savings.

As is often the case, if you already have a solid grasp on your personal finances and manage your money well, then a new service probably isn’t necessary for you. On the other hand, if you wish you could do better, and might be interested in getting some help, then Digit provides an automated way to increase your savings.

How Digit Works

Most of the press coverage of Digit is using the company supplied tag line that Digit “finds extra money” and then automatically saves it. Of course, there is no extra money that you didn’t have before, but a computer constantly looking for a dollar or two here or there may just find a few bucks more than you would while managing your finances.

To use Digit, you have to link it to your checking account. You won’t want to link it to a savings account because those accounts are typically restricted to just 6 withdrawals per month, and you don’t want Digit using them up for you.

Once linked, Digit begins to monitor your checking account balance. Over time, it builds up an algorithm that determines when you spend your money, and when you get paid. The idea is that when it sees an opportunity to stash some money away, it transfers it automatically to your Digit account. The company says it checks your account “every 2 or 3 days.” The transfers are typically between $5 and $50.

Here is where it gets a little gray. The Digit website mentions FDIC insurance, but doesn’t say exactly where the money is held. It does not appear that you get any statements or interest or anything like that. This is how Digit to makes money, they are keeping the interest earned on user’s money while it is in the secret Digit savings account somewhere. When you want your money back, you send a text to Digit and then they transfer the money back into the account they took it out of in the first place.

Is Digit a Good Idea?

Whether or not Digit is worth it depends very much on how you currently handle your finances.

For example, I always recommend that people keep a little buffer in their checking account to avoid ever coming up short on an unplanned expense. Digit will eventually drain that buffer away as “extra” money that you could be saving.

For the same reason, Digit is not a good idea for people who primarily use a debit card for their purchases. Digit requires some sort of routine for the algorithm to work. If you normally spend more money in the middle of the month, for example, Digit will account for that. However, if you go out and try and spend $800 on a new bedroom set using your debit card, Digit almost certainly is not prepared for that. Big, unusual expenses are probably going to be Digit’s Achilles heel.

People who get paid monthly will probably find Digit more problematic as well. If you get paid every week, sneaking a fiver out of your checking account probably won’t be noticed because new cash flow is coming soon. But, if Digit pulls $50 out on the 11th, and you don’t get paid until the 30th, then that might be more noticeable.

The best possible people to be using Digit are those that have very set spending patterns and then use a credit card, or debit card from a different account for big purchases. That way, Digit can figure out your spending and won’t ever be blindsided by a big purchase.

In the end, Digit is probably more fun than it is necessary. The fact is, assuming you have extra money each month, the only thing that happens is that it builds up. The premise behind Digit is that unless they took the money first, you would spend it. If that isn’t you, then you can just transfer the money whenever it is convenient for you.

Digit is a very neat concept, but only a small portion of people would actually need it.

Acorns Review Automated Investing Made Easy?

Written by Finance Gourmet 54 Comments

Note: This Acorns review article has been updated with the latest information as published on the acorns.com website.

No sooner than I finished my Digit review, than I saw an ad for another automated savings app on Facebook that takes a different tack for building up your savings automatically with the help of an app and online financial service.

This one is called Acorns. Whereas Digit monitors your bank balance and transfers money its algorithm determines is “extra” into a savings account for you, Acorns rounds up the change on every purchase you make to the next whole dollar amount and automatically saves that money for you. Another difference is where Digit sends your money off to a savings account somewhere, the Acorn app, invests your money in a “personalized investment portfolio.”

Acorns Reviews – Is Acorns Legit and Safe?

First up, we’ll want to make sure that Acorns is not a scam. The company is backed by some big name investors, so if it is a scam, some other people got scammed for a lot more money than you ever will.

According to the website, your money is transferred to an SIPC insured account. (SIPC is the investing and brokerage world’s equivalent of FDIC insured.)

How credit scores work.

How Acorns App Works

Acorns doesn’t work exactly the way you might think it does based upon the headlines and bold print at Acorns.com. It’s not that Acorns is a scam, it’s that the actual mechanism it uses to operate doesn’t match up with the concept that is boldly advertised by the company.

This online money service actually has no way to “round up” your purchases. That kind of transaction adjustment can really only be done by the merchant (like when Safeway asks if you want to round up for cancer research), or by the payment processor themselves. Instead, the actual mechanism of Acorns is that you link whatever accounts you want to use for your rounding up and investing, and then the Acorns software keeps track of what you would have rounded up if they could actually round up your transactions. Then, by linking your checking account, Acorns will then make a transfer of that amount at a later time, once all of your round ups totals at least $5.00.

So Acorns really works like this:

You link your Capital One Rewards credit card to Acorns
You buy lunch for $6.37
Acorns calculates the amount to round up as $0.63 (it does not transfer any money at this time)
You keep buying stuff, and Acorns keeps adding the amounts up
When you have at least $5.00 of round up, THEN, Acorns transfers $5 from your linked checking account, no matter where you made the charges originally.

So, if you expect to see each one of your purchases, on several accounts, rounded up to the nearest dollar, that won’t happen. All the money invested comes from one single checking account, no matter how many accounts you link for spending and rounding up purposes.

If you expect to see a few cents transferred out of your checking account every time you make a purchase, that won’t happen either. Mathematically speaking, the greatest possible round up is 99 cents. So, it would take a minimum of six purchases to have any money transferred and invested. Statistically speaking, the average number of transactions before a transfer occurs would probably be around 10.

What you will see is the occasional transfer of $5 from your checking account, a few times every month. The company’s transfers will be listed as ‘Acorns Investment WEB PMTS’ on your statements. There is nothing wrong with this, it just isn’t exactly what you might expect to see based on the Acorn.com marketing copy.

Currently, Acorns only works as a smartphone app. This makes me nervous security-wise, but with services like Apple Pay, this kind of thing is clearly the future, at least until the first major rip off of people occurs and then the security gets better. The company also says that nothing is stored on your phone, so theoretically, if you lose your phone, there isn’t anything to find.

Acorn Fees

Here is where you want to pay attention with Acorns. The company has done something really great by not having minimum account balances or minimum investments. However, investing your money isn’t free, and Acorn does charge some fees, which they are refreshingly up front about.

A new feature allows students to invest for free, and by students, they mean people with an email account at an .edu address, or those under age 24. If you are under 24, then you automatically get the free fees setup. Resist the urge to lie about your birthday which can run you into trouble with banking rules and money laundering laws down the line. If you are a student, and over 24, then you need to sign up with your .edu address AND list student as your employment status to get the free fees.

Otherwise, if your account balance is less than $5,000, you will pay a $1 per month fee. On the one hand, this doesn’t sound like much, but as a percentage, this is can be pretty steep, especially when you first start using the product. For example, if your round ups for the first month total $25, then a $1 fee is 4 percent. But, don’t forget that’s for one month. Annualized, that same fee is something like 48 percent. (That’s not entirely accurate, especially if your account balance is growing, but the point is the same.) Accounts with over $5,000 in them are charged a much more reasonable (actually pretty darn good) fee of 0.25% per year.

The good news is that you can also invest a lump sum, or recurring amount, outside of your usual round-up investments. The maximum single deposit is $10,000. Ideally, you want to make a lump sum investment of $5,000 to get the minimum fees for your account, and then start using the rounding up savings and investing feature of the acorn app.

Where Does Acorns Put My Money?

The most interesting thing about Acorns is where it transfers your money to when it scoops out that $5 at a time from your checking account.

Instead of putting your money in a savings account, Acorns invests your money in a stock-based investment portfolio. We cover what Acorns investment portfolios look like in the next article, but it is important to understand what this means from a personal finance standpoint.

A service like Digit puts your money in a savings account with no fees. They also pay no interest. That is how they make money. On small amounts that you plan to spend anytime in the next three to five years, this is much better than investing your funds in an account like Acorns does where the balance will fluctuate and you will need some time for your earnings to out pace your fees, and the market’s volatility.

However, if you consider Acorns to be money you are setting aside for the long-term, like a kid’s college fund, or even for your retirement, then this is a very intriguing idea. Just don’t forget, your balance will fluctuate with the markets. The stock market is NOT where you put your short-term savings.

Withdrawing Money from Acorns Investment Accounts

Once you have money invested, you may want to withdraw some of your Acorn money. Withdrawing money happens as an electronic deposit into the same checking account your deposits come from. This can take 5-7 business days for the money to be fully available in your account. This is a function of the banking system, and not Acorns’ delay.

The company says that there are no fees or penalties for any withdrawals at any time. There is no limit to the amount you can withdraw at any one time.