Acorns
App Store Rating: 4.7/5
Acorns is an app to help you save and invest your spare change, making it super easy to grow your money over time. It’s perfect for beginners who want to get started with investing without any hassle. While there are some fees, the Round-Ups feature and educational resources make it a great option for anyone who wants to watch their money blossom.
Round-Up Investing
Easy To Use
Automated Portfolio Management
Educational Resources
Quick Facts:
- What it is: Acorns is an app that helps you invest spare change and grow your money over time.
- Who it’s for: Perfect for beginners, families or anyone who wants to save and invest effortlessly.
- Standout Feature: Round-Ups: Automatically invest your spare change to watch your money grow!
Pros and Cons:
- Easy To Use: Set it and forget it! Great for people on the go.
- Round-Ups: Invest your spare change without even noticing.
- Fractional Shares: Invest in big companies with just a few bucks.
- Educational Resources: Learn about investing while you grow your money.
- Monthly Fees: Can be a bit much for small accounts.
- Limited Investment Options: Less choice compared to some competitors.
Introduction
Let’s face it, that daily latte habit might be delicious, but it’s not exactly fueling your long-term goals. What if that morning pick-me-up could be silently working for you, blossoming into a future financial windfall? Enter Acorns, the innovative app designed to transform your everyday spending into a powerhouse of long-term growth. But before you download it with starry eyes, let’s take a deep dive into its features, value, and user experience to see if Acorns is the missing piece to your financial puzzle, or just a trendy app with a hefty price tag.
Is It Worth It? Should You Be Using It?
This app takes the concept of “making your money work for you” and applies it to your daily routine. Imagine your afternoon snack morphing into a tiny investment towards your financial goals, or that leftover change from your grocery run secretly fueling your retirement. Acorns makes this a reality through its innovative features:
- Round-Ups: Acorns tackles the challenge of saving small amounts with its clever Round-Ups feature. Every time you use your debit or credit card linked to the app, Acorns rounds up your purchase to the nearest dollar.
Let’s say you have a daily coffee habit that costs around $5.25. With Acorns, that purchase gets rounded up to $6.00, and the difference of $0.75 is automatically invested for you.
Imagine this happening with all your everyday purchases – groceries, gas, lunch breaks. Those leftover cents, often forgotten or sitting idle, are now quietly contributing to your financial goals. Over a month of regular coffee purchases, that’s $22.50 invested just from your morning pick-me-up!
- Automated Investing: Set it and forget it! Acorns allows you to schedule automatic transfers, so you can invest consistently without the hassle of remembering or feeling overwhelmed.
Let’s say you decide to invest $25 every week towards a down payment on a new car. With Acorns’ automation, you don’t have to remember to manually transfer the money – it happens automatically each week. This way, your investment account steadily grows without any extra effort on your part.
- Fractional Shares:The stock market can seem out of reach for those with limited capital. Acorns breaks down this barrier with Fractional Shares. Traditionally, you could only buy a whole share of a company’s stock. But with Acorns Premium, you can invest in portions of a share. Imagine you’re interested in a company whose stock price is $100 per share, but you only have $20 to invest. No worries! Acorns lets you invest in a fraction (like 0.2 of a share) of that company. This means you can invest in a wider range of companies, even with a small amount of money.
Is The Acorns Pricing Model A Financial Boon Or Bane?
Now we get down to the nitty-gritty: how much does it cost, and is it worth it?
Acorns has taken the financial world by storm with its innovative approach to saving and investing. It uses your everyday spending habits to make investing painless and accessible. However, before you jump on the Acorns bandwagon, let’s take a deep dive into its features, fees, and considerations for younger investors to see if it’s the right fit for you.
Effortless Saving and Investing Features:
We’ve already explored Acorns’ key features like Round-Ups, Automated Investing, and Fractional Shares. These features make saving and investing convenient by turning your spare change into investments and allowing you to invest in portions of a share, even with limited funds.
The Acorn Doesn’t Come Free: Understanding Acorns’ Fees
While Acorns promotes itself as a low-fee option, it depends on how you look at it. Acorns charges a flat monthly fee, unlike many other investment platforms that charge a percentage of your investment amount. Here’s a breakdown of their tiers:
- Personal: $3 per month. This grants access to their core investing, retirement, and checking account features.
- Personal Plus: $6 per month. This adds educational resources, an emergency fund tool, IRA matching and rewards matching on debit card purchases.
- Premium: $12 per month. This tier unlocks a wider range of benefits, including custom portfolios and investment accounts for kids.
And the most exciting part is Acorns Later Match program.
Maximize your retirement savings with Acorns Later Match, a built-in feature that automatically boosts your contributions.
How It Works:
- Get a Match: Contribute to your Later account, and they will add a 1% match (Personal Plus) or 3% match (Premium) on top, depending on your subscription.
- Think of it as a Retirement Bonus: Similar to employer-sponsored 401(k) matches, Later Match rewards you for taking charge of your future.
- Effortless Growth: Simply set up recurring contributions, make one-time deposits, or allocate a portion of your paycheck, and watch your retirement savings soar with the added Later Match boost.
Having a Personal Plus or Premium subscription automatically qualifies you for Later Match. There’s no need for activation – it works seamlessly in the background.
Key Points:
- Contributions must be successfully invested to be eligible for the match.
- The match amount is automatically invested in your Later account.
Here’s the Catch for Younger Investors:
Those monthly fees might seem small, but they can be significant for younger investors just starting out, especially when compared to a percentage-based fee structure used by many competitors.
For example, imagine you invest just $100 with Acorns (Personal tier) and keep it there for a year. You’ll pay $36 in fees compared to just $0.25 if you used a platform like Betterment that charges 0.25% annually.
The Takeaway: Consider Your Investment Horizon
The impact of Acorns’ fees lessens as your investment grows. Taking advantage of round ups, recurring investments, and other products help reduce the fees impact.
Perfect for: Busy individuals, beginners who want to learn and invest, those with limited funds who want to start small, and families with children.
Might not be ideal for: Investors with small accounts where fees could outweigh returns, seasoned investors seeking extensive control over their portfolio selection or tax-optimizing features.
Mobile: Acorns thrives on its mobile app. Users consistently rave about its intuitive design and clear navigation. Features are readily accessible, making it perfect for first-time investors or those intimidated by traditional financial apps. The app’s clean and modern aesthetic keeps users engaged, making the process of growing wealth feel approachable and even enjoyable.
Desktop: While Acorns doesn’t offer a dedicated desktop application, the web experience mirrors the mobile app closely. This ensures a consistent and familiar feel for users who switch between platforms. While some might miss the convenience of a standalone program, the mobile app’s functionality makes the web version a suitable alternative.
Customer Service: Acorns offers customer support primarily through email and in-app chat. While phone support is absent, users generally find the existing options satisfactory. Response times are reported to be reasonable, and customer service representatives are commended for their helpfulness and knowledge. This focus on digital support might not be ideal for everyone, but it seems to function adequately for most users.
Reputation and Trustworthiness: Acorns enjoys a positive reputation built on trust and security. They employ industry-standard encryption protocols to safeguard user data and financial information. Additionally, Acorns is a member of the Securities Investor Protection Corporation (SIPC), which offers account protection up to $500,000 (including $250,000 for cash claims). This layer of protection provides peace of mind for users who are concerned about the safety of their investments.
Overall, Acorns fosters a user experience that prioritizes ease of use and fosters trust through its security measures. While the lack of a desktop app and phone support might be drawbacks for some, the mobile app’s functionality and Acorns’ commitment to protection make it a reputable platform for beginner investors.
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Pros and Cons
Pros:
- Risk-Appropriate Portfolios: Acorns takes the guesswork out of investing by offering pre-built portfolios based on your risk tolerance. This ensures your investments align with your financial goals, whether you’re a cautious investor or one seeking aggressive growth.
- Automatic Savings On Autopilot: Acorns helps you effortlessly build your savings with features like Round-Ups, which automatically round up your everyday purchases and invest the difference. Additionally, Automated Investing allows you to schedule regular deposits, making saving a seamless part of your routine.
- A User-Friendly Interface For Everyone: Acorns boasts a user-friendly app that makes navigating the world of investing clear and straightforward. Even if you’re a complete beginner, you’ll find it easy to understand your investments and track your progress.
- Multiple Tiers With Added Benefits: Acorns offers three service tiers, each with increasing features. This allows you to choose the level of service that best suits your needs, with the highest tier even including custodial accounts for managing your children’s investments.
- Reasonable Fund Expenses: The underlying investment funds within Acorns typically have reasonable expense ratios. This means a larger portion of your investment returns goes directly to you, rather than being eaten up by fees.
- Customer Support When You Need It: Acorns offers customer support to answer any questions you may have about your investments or the platform itself. This can be a valuable resource, especially for new investors.
Cons:
- Potentially High Fees: While Acorns charges a flat monthly fee, this can be a significant drawback for smaller accounts. The percentage cost can be higher compared to competitors who charge a fee based on your investment total. So, for smaller investments, the convenience of Acorns might not outweigh the cost.
- No Tax-Loss Harvesting For Increased Efficiency: Tax-loss harvesting is a strategy that can help you offset capital gains taxes and potentially improve your overall returns. Unfortunately, Acorns doesn’t currently offer this tax-optimizing feature.
- Checking Account Fees Eat Into Returns: Unlike some other robo-advisors, Acorns’ checking account isn’t entirely free. You’ll need to pay a monthly fee to access it, which can further reduce your potential returns.
Comparison Stash v/s Betterment v/s Acorns
| Feature | Stash | Betterment | Acorns |
|---|---|---|---|
Investment Style | Micro-investing, Thematic Investing, Some Self-Directed | Automated, Personalized Portfolios | Micro-investing, Round-Ups |
Account Minimums | $5 | $0 | $0 |
Fees | Stash Growth Plan - $3 per month and Stash+ Plan - $9 per month | 0.25% annually (0.40% for balances over $100,000) | $3 per month |
Fractional Shares | Yes | Yes | Yes |
Individual Stock Picking | Yes (Limited) | No | Yes |
Retirement Accounts | IRA, Roth IRA | IRA, Roth IRA | Acorns Later (IRA) |
Tax-Loss Harvesting | Yes | Yes | No |
Human Advisor Access | Limited access with premium plan | Available for an additional fee | No |
Additional Features | Fractional share purchases, Stock-Back® debit card | Cash management account | Acorns Early, Later Match (1% - 3%), Earn |
Best For | Beginners who want to learn and experiment, Thematic investing. | Beginners who want a hands-off, personalized approach. | Budget-conscious beginners who want a simple, automated solution. |
A Few Additional Considerations
Remember, Acorns is just one tool in your financial toolbox. Here are some additional factors to consider before making your decision:
- Your Risk Tolerance: Acorns offers pre-built portfolios with varying risk levels. Make sure the chosen portfolio aligns with your comfort level for potential investment fluctuations.
- Long-Term Goals: Are you saving for retirement, a down payment on a house, or a dream vacation? Consider your investment timeline and if Acorns’ portfolio options align with those goals.
- Researching Alternatives: Take some time to compare Acorns to other micro-investing platforms. Consider factors like fees, features, investment options, and user reviews to find the best fit for your needs.
How Acorns Works?
Acorns is a micro-investing app designed to make investing easy and accessible. Here’s a detailed breakdown of how it works:
Getting Started:
- Download the App and Sign Up: First, you’ll need to download the Acorns app and create an account. This involves providing your basic information and linking your bank account(s).
- Set Your Investment Goals: Acorns will ask you about your financial goals. Are you saving for retirement, a down payment on a house, or just building a nest egg? This helps them recommend an appropriate investment strategy.
- Choose Your Investment Strategy: Based on your goals and risk tolerance, Acorns suggests a diversified investment portfolio made up of Exchange-Traded Funds (ETFs). You can choose from conservative, moderate, or aggressive portfolios.
Making Your Money Grow:
- Round-Ups: This is Acorns’ signature feature. You can link your debit and credit cards to the app. Acorns then rounds up your purchases to the nearest dollar and invests the difference.
For example, if you buy a coffee for $2.75, Acorns rounds it up to $3.00 and invests the extra $0.25. Over time, these small amounts can add up significantly.
- Recurring Investments: In addition to round-ups, you can set up recurring investments. This allows you to automatically transfer a fixed amount from your bank account to your Acorns investment account at regular intervals (daily, weekly, bi-weekly, or monthly).
- One-Time Investments: You can also make one-time deposits of any amount into your Acorns account whenever you have extra cash.
Managing Your Account:
- Track Your Progress: The Acorns app provides a user-friendly interface to track your investment performance. You can see your account balance, portfolio allocation, and investment returns.
- Adjust Your Strategy: As your financial goals or risk tolerance change, you can adjust your investment strategy within the app. You can modify your portfolio allocation or recurring investment amounts.
- Withdrawals: While Acorns is designed for long-term investing, you can withdraw your money at any time. There may be some fees associated with withdrawals, so be sure to review Acorns’ fee schedule before making a withdrawal.
Additional Features:
- Acorns Later: Acorns offers a retirement account option called Acorns Later. This allows you to invest for retirement with tax advantages and now offers matching (Personal plus and Premium tiers only).
- The Mighty Oak Debit Card: A fresh approach to banking that automatically saves and invests for you. Plus, enjoy 3% APY on Checking and 4.52% APY on your Emergency Fund.
Important Considerations:
- Fees: Acorns charges a monthly subscription fee based on your chosen tier.
- Investment Performance: Like all investments, Acorns portfolios are subject to market fluctuations.
- Investing for the Long Term: Acorns is best suited for long-term investment goals.
The Final Verdict
Acorns offers a convenient and user-friendly way to make your spare change work for you. However, the monthly fees can make it less attractive for smaller accounts. If you’re a beginner looking for a simple, automated way to start investing, Acorns could be a suitable option. Just be sure to weigh the fees against your potential returns and explore all your options before diving in. Remember, Acorns can be a valuable seed for your future financial forest, but it’s up to you to nurture it with continued research, goal setting, and responsible financial planning.
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FAQs
Yes, Acorns is worth using for those who want an easy way to start investing. It automates savings by rounding up your purchases and investing the spare change, making it simple for beginners to grow their investments gradually.
Yes, Acorns can be trusted. It is a legitimate investment app with millions of users. Acorns uses bank-level security and encryption to protect your personal and financial information.
Yes, you can make money with Acorns. Like any investment, returns are not guaranteed and depend on market performance. Acorns offers diversified portfolios that can help grow your money over time.
It depends on your needs. Acorns is better for beginners who want automated, hands-off investing. Robinhood is suitable for those who prefer more control over their investments and want to trade individual stocks and cryptocurrencies.
