There are a lot of investment apps and robo-advisors out there, but is Acorns a trustworthy one?
In this article, we’ll take a look at what Acorns is, how it works, and what users have to say about it.
Acorns is a well-known robo-advisor that has gained recognition among investors.
Acorns monitors your spending habits and automatically adds a fraction of a penny to your savings account whenever you make a purchase.
Rather than keeping the spare change, Acorns invests it in a portfolio tailored to your individual risk tolerance and investment horizon.
Acorns’s platform is designed to assist users to take advantage of compound interest. You may get a better return on your investments if you put a little bit away every day.
The initial investment and whatever profits you’ve made will thereafter expand at an ever-increasing rate known as exponential growth.
Acorns automates and simplifies the process of taking advantage of the compounding effect.
Acorns allows you to create a wide variety of accounts, each of which can be used for a particular goal.
Types of accounts you can get through Acorns
Free checking accounts often do not charge customers for things like having a low balance or using a debit card.
Furthermore, part of your ATM costs will be refunded. The Smart Deposit function enables you to reroute direct deposits into your Spend account to other accounts, such as your Invest account, automatically.
An ordinary brokerage account is what the Acorns invest section represents.
There are no tax breaks, no restrictions on contributions, and no withdrawal penalties.
With your Invest account, you may take advantage of Acorns’ partner company roundups and bonus investments.
These accounts are basically custodial accounts for minors, so you may begin investing on their behalf while they are still young and then transfer the funds to their names when they reach adult age.
These funds are held in a tax-sheltered retirement account for you (IRA). Similar to Acorns Invest, your portfolio is made up of exchange-traded funds.
Even while your Acorns Invest funds are not intended for day trading or instant usage, the Invest/Later naming scheme nonetheless left us scratching our heads.
Any investment, no matter how short-term, is meant for the long haul.
Acorns Found Money
It’s a virtual mall that gives you a rebate on your purchases from hundreds of stores, including Walmart, if you make your purchases via them.
When you purchase with Found Money, you may put the money you save into an investment account called Acorns Invest.
What kind of investment opportunities does Acorns offer?
As a robo-advisor, Acorns puts your spare change and other donations into a portfolio of approximately 25 low-cost, diversified ETFs which include more than 7,000 stocks and bonds.
Acorns’ Round-Ups, added from the rounded dollar transactions on your connected credit and debit cards after they exceed $5, are another way users can fund their accounts.
Acorns uses the information you provide about your investment objectives, time horizon, and comfort level to provide ETF recommendations.
Your age, income, and net worth are just a few of the considerations that go into making your portfolio.
While Acorns does eventually aim to allow users to purchase and sell individual stocks, this service is not now available to investors.
Consider using a free stock trading platform like Charles Schwab, Vanguard, or Robinhood if you ever want to take the training wheels off and start trading on your own.
What membership plans does Acorns offer?
Acorns has two membership tiers to choose from, depending on the investor’s preferences and budget.
With Acorns, you may open a conventional brokerage account, a tax-deferred retirement account, or a savings account for your kids, all of which allow you to invest in the stock market and start saving for retirement or college.
The three features of Invest, Later, and Banking are included in the Personal plan, which costs $3 per month.
Using the Later option will provide you with a retirement account that is exempt from taxes.
With Banking, you may open a bank account and receive a debit card that can be used at participating businesses to earn more investments.
If you’re interested in banking with Acorns but also want access to a retirement account like a Roth IRA, the Personal plan is for you.
For only $5 per month, the Family plan grants entry to Invest, Later, Banking, and Early for up to six people in the household.
With Early, you may start UTMA/UGMA accounts and establish automatic contributions for minors.
Having a family also includes access to no-cost financial education for families, so you can make informed decisions about your kids’ futures.
If you wish to start saving and investing for a child or children, either inside or outside of your family, the Family plan is for you.
How Acorns manages your money
Similarly to other robo-advisors, Acorns uses user responses to a short questionnaire to construct an investment portfolio of low-cost ETFs that is tailored to the individual’s risk tolerance and financial goals.
You will be asked personal questions such as your age, wealth, income, and the potential need for the money. Your portfolio will be chosen by Acorns from a list of approximately 25 ETFs.
Acorns portfolio only included four extremely cheap exchange-traded funds (ETFs), all of which had extremely small expense ratios, the amount that the fund manager takes out of your investment to cover their operational costs.
You won’t have to give up any rewards for the sake of simplicity when it comes to managing your finances.
However, even for a risk-taking younger worker, putting all of their money into stocks might be a bit of a stretch.
Although it is possible to switch portfolios, you should proceed with caution: In this case, too little risk rather than too much might result from going against the questionnaire-based portfolio recommendation.
Can the Acorns app really help you earn money?
Acorns is not a get-rich-quick scheme or a money-making app. Consider it a method for increasing the value of your current financial resources via regular saving and investment.
If you link your card to your Acorns account, you can earn money through your investments and certain transactions.
Your assets may also be paying you dividends, but probably not very much. Prior to installing the app, you should give some thought to your needs and timeline such as whether or not you need the money immediately)
Please keep in mind that the value of your account might go down if your investments lose money. However, the long-term average return of the stock market is 10%.
When investing in Acorns, don’t expect to get wealthy overnight. It’s true that keeping a low balance might result in high fees. Acorns may be worth it if you have trouble investing or saving money.
Acorns strives to simplify the investment process so that you may start investing right now.
Even if you don’t consider yourself an investor, you can start making regular contributions fast because there is no account minimum.
You can even round up your purchases on connected accounts and put the extra money into the market.
Managing your funds is made easy by the intuitive interface, and you won’t be overwhelmed by a wide variety of ETFs.
Fees can be kept to a minimum by investing just in a “core” account and avoiding “ESG” funds.
The Acorns robo service is a great option if you are the type of person who needs a push to get started.
From what we’ve seen thus far, fees are the biggest drawback of Acorns.
Those management costs are outrageous. The fees charged by many robo-advisors are not fixed but rather a percentage of your portfolio’s value.
The way Acorns works can result in unexpectedly hefty fees, even for accounts with very little balances.
After doing some research, it seems that Acorns is a pretty trustworthy app. There are a lot of people who have used the app and had positive experiences with it.
There are a few complaints here and there, but overall it seems that the app is pretty reliable.
Acorns is a great investment app for those who are looking for a simple way to grow their money.
The app is easy to use and has a wide array of features that make it a great choice for those who are new to investing. However, the fees can be a bit high for those with a small account balance.
If this post was helpful, consider checking out whether Robo-Advisory services are worth the cost.