Want to invest your savings but don’t have the financial know-how? The Acorns App take care of this problem for you, and you don’t need a fortune to do so.
Acorns automatically takes your cash and invests it in the stock market for you with as little as pennies at a time. This form of robo-investing is great for those who want to see a positive return on their investments with little to no effort.
The best part? You get a $5 bonus for registering as a new user.
I’m going to go in-depth on this Acorns App review to tell you whether it’s worth your time, how much you can make and the fees involved. Registration is 100% free.
What Is The Acorns App?
Acorns is one of the most popular robo-investor apps on the market. Instead of deciding on what stocks or securities you should invest in, Acorns makes all the decisions for you. The only thing you have to do is deposit money.
Don’t want to make deposits on your own? Not a problem. You can also choose the option of having them round-up to the nearest dollar on each purchase. The difference between the purchase price and the next dollar is invested in your Acorns account.
Let’s take a look at a quick list of the pros and cons:
Pros:Can start with little to no money to invest
- Great for beginners without any knowledge of investing
- Management fees are waived for up to 4 years for college students
- Ability to setup automated saving with pennies at a time – if you don’t have to think about it, you’re more likely to invest
- Plenty of diversification
- Guidance on how to setup your portfolio
- Great referral program
- $5 bonus when you register
- Earn extra investment cash by shopping through their partner retailers (Airbnb, Blue Apron, Hulu, etc.)
- Commission-free trades
- Limit of 5 different portfolio types based on your risk level
- Acorns is not a tax-advantaged account like an IRA, Roth IRA or 401k
- If you’re not a college student, you pay $1/month or 0.025% of your total assets if you have over $5,000
- Some see automating your deposits as a downfall since you may forget that money is coming out of your account
- Acorns isn’t really meant for large investments since their round-up option is meant for you to deposit only pennies at a time
- If you aren’t a college student and have little to invest, the management fees can easily eat away at your investments
The goal of Acorns is to help you plan for your future without any extensive knowledge of finance or investing. For those that want an investment portfolio that’s 100% automated, Acorns has a a couple of different options:
- Round-ups – Link your credit card to your Acorns App account. Each time you make a purchase, the amount you spend is rounding up the nearest dollar. This spare change is deposited automatically into your Acorns account and is put forth toward your investments.
- Recurring Investments – When you make your first manual investment, Acorns will ask you if you’d like to set a recurring investment. This means that you can have the app automatically transfer a certain amount of cash from your bank account daily, weekly or monthly.
- Manual Investments – You can choose to opt out of the first two options and invest money into your account each time. Simply choose the amount you want to deposit and Acorns will take care of the rest. The only requirement with this option is that you deposit a minimum of $5 at a time.
For those of you who have heard of the Stash Investment App, the Acorns App is more or less on par with the same fee structure. They both give a $5 sign-up bonus as well. The main difference is that Stash gives you more choices on how you want to allocate your investment money.
Automate Your Savings
If you never want to have to touch your account, we suggest linking one of your primary credit cards with the round-up option. This is a great way to invest just pennies at a time.
For example, let’s say you buy a coffee for $2.78. Acorns will automatically round-up to the nearest dollar and charge your credit card for a total of $3. You still have to pay the total of $3, but the extra $.28 cents will be deposited in your Acorns account.
Registration for the app is 100% free, and you must be 18 years or older to participate. At this time, only residents of the US can register for Acorns. As with any brokerage firm, you will need to enter in your social security number to participate.
How Does Acorns Invest My Money?
You’re probably asking what Acorns exactly does with your money. They take your cash and make the appropriate investments based on your risk level.
Acorns only takes your cash and invests it in Exchange Traded Funds (ETFs for short). These funds are mostly made up of a broad holding of many stocks or bonds. For example, The Millennials Thematic EFT currently consists of over 76 different securities.
The idea is that by spreading your cash across a diversified range of investments, you ultimately lower your risk while still being able to see a positive return on your money.
This helps “smooth out” any bumps for sudden market changes. In short, don’t put all of your eggs in one basket. You’ll find that every dollar is invested in over 7,000 different stocks and bonds.
Acorns is also a firm believer that you’re better off investing your money than letting it sit. If you don’t invest, you’re not letting your money work for you. Not only that, but the value of your cash can actually decrease due to inflation and other factors.
What Are The Different Portfolio Types That Acorns Suggests?
There are 5 different types of portfolios that you can invest in with Acorns. The difference between these depends on your risk level.
When deciding, be sure to take into account how much cash you’re willing to invest and how much risk you’re willing to take on. A more aggressive portfolio can mean higher returns, but at the same time there’s a higher chance of losing your cash.
Each portfolio has been structured with stocks from investment management companies with a strong reputation. Not only that, but Dr. Harry Markowitz with Nobel Prize in economics also contributed to developing these portfolios.
Read: Why Should I Invest?
A conservative portfolio consists of 40% stocks and 60% bonds. This portfolio seeks to provide investors with their current income as well as preservice their capital.
Moderately Conservative Portfolio
The moderately conservative portfolio consists of 51% stocks and 49% bonds. This portfolio aims to keep investors with their current income and increase their capital.
The moderate portfolio consists of 61% stocks and 39% bonds. Its aim is to provide investors primarily with capital appreciation with the intent of maintaining their current income.
Moderately Aggressive Portfolio
The moderately aggressive portfolio consists of 74% stocks and 26% bonds. The only aim of this portfolio is to provide investors with capital appreciation without regard to current income.
The aggressive portfolio consists of 89% stocks and 11% bonds. This is a bit more aggressive than the last portfolio with more of a focus on capital appreciation.
So Which Portfolio Should I Invest In?
If you’re not entirely sure which portfolio to invest in, Acorns will make a suggestion for you. Based on my profile and the information that I provided (current capital, debt, age, etc.), they recommended that I go with an Aggressive portfolio.
If your circumstances at any time, you can always go back into your Acorns portfolio at any time and change your profile. The thing that I love about Acorns is that they will estimate how much you earn based on how much you put in.
For example, I put in that I would invest $50 monthly. This calculates out to be a total investment of $12,000. Based on their calculations, they estimate that I will have a projected value of $30,614 in 20 years, or a return of $18,899. That’s not a bad return for not having to do any work.
Although Acorns does give you a recommendation on how to invest, it’s important to know your own risk tolerance. Keep in mind that while there are potential returns, there is a potential risk as well.
What Are The Fees Involved?
As mentioned above, registration for the Acorns App is 100% free. If you’re a university student, the app doesn’t cost anything for up to 4 years provided that you give a valid .edu email address. Otherwise, you’ll have to pay a small fee.
For every month you invest with Acorns you have to pay $1. If you invest over $5,000, you have to pay a yearly fee of 0.25% of your total investment. At $5,000 this is only $12.50 per year.
What I really love about Acorns is that all trades are commission-free and there’s no minimum deposit required to maintain an account.
Not only that, but you’ll find that the typical brokerage firm charges up to $10 per trade. Vanguard states that the typical mutual fund management fee is 1.02%. Acorns is much better in comparison.
How Do I Start Investing With The Acorns App?
Setting up an account with Acorns is incredibly simple. In order to ensure that you don’t miss a step, we’re going to walk you through the process in detail.
You can register for the Acorns App 100% free by clicking this link here. All you need to get started is to enter an email address and create a password. They even give you a $5 registration bonus as a new user.
2. Link your bank account.
Next you’ll need to link your bank account. You don’t have to deposit any money right away, but you do need to go through with this step to create the registration process.
3. Complete your personal profile.
You’ll need to complete your profile that includes entering in some of your personal information. Like any brokerage firm, they will need your SSN since all earnings will be reported to the IRS.
4. Complete your financial profile.
This is a very important step in the registration process. When you fill out your financial profile, Acorns will du their best to suggest which type of portfolio you should invest in. Be sure to answer all questions as honestly as possible. You can change these answers at any time.
5. Setup round-ups.
If you want Acorns to automatically round purchases up to the nearest dollar, you can link your credit card for round-up purchases. This is a great way to start investing with just pennies at a time without any work on your end. Watch the video below to see how round-ups work.
6. Setup recurring investments.
If you want to invest a certain amount of cash over a certain interval, you can setup recurring investments. You can choose to invest as little or as much as you want on a daily, monthly or weekly basis. The minimum amount must be $5.
Free Ways To Earn Cash With Acorns
Instead of constantly having to deposit some of your own cash into your Acorns account, why not earn free cash? You can earn extra money with their found money and refer a friend options.
Acorns has partnered with multiple retailers across the web. When you click on the “Found Money” option in their sidebar, you’ll see a list of all these retailers and a special offer.
For example, when you shop at Banana Republic and use the link found in the Acorns App, you get 2% in cash back of your total purchase deposited into your Acorns account.
When you book a trip with Airbnb using the link found in the app, you get 1.8% in cash back. The amount you can earn depends on the offer and the retailer. Keep in mind that these rewards are given anywhere between 30 – 60 days from the date of purchase.
Refer A Friend
The Acorns App has an excellent referral program. For each friend that you refer that signs-up using your referral link, you get a $10 bonus when they start investing. Not only that, but your friend also gets a $5 bonus.
What Do Others Say About Acorns?
Acorns has mostly praise from the investment world. CNBC states that it’s the new millennial investment strategy. U.S. News sees it as a positive way to overcome the mental barrier of having to invest a large amount of money to begin investing.
In short, the overall consensus is that Acorns is great for beginner investors.
Is Acorns Right For You?
If you’re new to the finance world, robo-investing with the Acorns App is a great way to start. Even if you don’t want to continue using the app, you still get a $5 bonus just for trying it out.
While there is a small fee involved (unless you’re a college student), the return on your investment and the knowledge obtained for beginner investors far outweigh the cost.
The biggest downside about Acorns? It doesn’t offer any sort of tax-advantaged investment account like an IRA or 401k. However, it is a great tool to get investors off of the ground.
We suggest using Acorns only after you max out your 401K and IRA. Many people also use the Stash Investment App. Stash works in a very similar manner to Acorns and also comes with a $5 registration bonus.
Do I enjoy using Acorns? You bet. Yet this doesn’t mean I’m putting all of my cash in there. The main reason I enjoy it is because I can invest without having to do anything since I chose the round-up option.
My tiny purchases have really added up a lot more than I thought they would. After about a month I was able to put around $15 toward investing that I otherwise wouldn’t have.
Who Acorns Is Not For
If you’re already living paycheck to paycheck, the pennies you put in on each purchase can really weigh down on your financial stress. You’d be better off looking for other sources of income. When I was in a struggle making under $700/month, survey sites really helped me boost my income by a few hundred a month.
New Educational Content
The Acorns App recently updated their app and put in a section to educate investors about how to become a knowledgable investor. Read topics on diversification, how the economy works, tips for running your finances, how to get out of debt and more. I find the Investing Basics section great for beginners.
Overall, Acorns is very easy to use and is a great way to start off in the investment world. If you have any experiences with the Acorns App, let us know about them in the comments below. I hope you enjoyed this Acorns App review. Thanks for reading and happy frugaling!