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Dave Ramsey says: Micro-investing apps are OK, but don’t build wealth

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Dear Dave,

What is your opinion on micro-investing apps like Acorns and Betterment?

Are these good vehicles for building wealth in the long term, and are there any major drawbacks to these types of services?

— Alex

Dear Alex,

I’m not saying there’s anything really wrong with Acorns or Betterment, but they do different things.

Acorns is more of an invest pennies, round-up kind of program, where Betterment is kind of a robo-investing deal.

Here’s the thing. Micro investing is going to create micro wealth. And the big downside is you’re going to feel like you did something important.

The way you end up with money is by investing money. The way you end up with more money is by investing more money.

You can argue all you want that using things like these create extra money. Yeah, but not really. The returns are still micro.

An app doesn’t make $2 turn into $20.

It’s OK to use apps like that. I’m not mad at them, and I don’t think they’re a rip-off.

What worries me about these kinds of things, in an investing sense, is they give the illusion that you’ve done something significant with your money.

— Dave

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