It's time to get serious about saving money and investing money. Did you know that nearly 70% of all Americans have less than $1,000 stashed away? And 45% of them had nothing saved. Let's change that.
Are you looking for a savings tool that automates the process? Acorns is a robo-advisor that makes it easy for you to build a nest egg by auto-investing your spare change.
- Easy – Invest your spare change, auto-save money from each paycheck and get money tips to your cell phone.
- Smart – Experts design the portfolios that automatically adjust as your money grows.
- Trusted – Acorns is backed by leading investors and innovators from Blackrock to CNBC and now has 8 million users.
What is Acorns?
Acorns created a solution to the everyday problem, “I don't have enough money to invest.” They've created a unique solution to investing by allowing you to invest your spare change.
Here's How Acorn Investing Works:
So you can setup your auto-savings, auto-investing account. Then, the investing portfolios are built-in and auto-invest for you. That's easy.
But here's why it's popular:
Acorns work with 350+ brands like Nike, Apple, Chewy, Home Depot, Macy's, Old Navy, Sephora, etc. When you purchase ANYTHING from these companies, you get a percentage of each purchase back into your Acorns investment account. That's money back into your account for you to invest.
Let's say you're shopping at Nike. You're gonna buy a pair of shoes and maybe some shorts. You can earn money from this purchase, here's how: You would open your Acorns app, click Nike and Shop Now. When you press the Shop Now button, they'll invest 5% of your purchase within your Acorns account. That's the robo-investing component that allows you to grow your money.
Features Of Acorns App
- Minimum Investment: There’s no minimum to open an account, but the service requires a $5 balance to start investing in one of Acorn’s five pre-built portfolios.
- Acorns Earn helps you earn more money when you shop, find a job, or invite a friend, and auto-invests everything you invite a friend to the app and every time you shop within the app.
- Acorns Gift Cards: $25 digital Acorns gift cards are now available at participating stores and online. This is a great option for getting a friend started with this service.
- Educational content: Acorns also publishes Grow Magazine, an online personal finance site geared toward millennials with advice about side gigs, credit card debt, student loans and other financial topics. Grow content is also integrated in the Acorns app.
Acorns has created three different pricing tiers to help you get started.
The Lite Plan is $1 Per Month and Includes:
- Put Your Spare Change to Work for You
- Earn Bonus Investments from 350+ Brands
- Get Money Tips from Financial Experts
The Personal Plan is $3 Per Month and Includes:
- You get everything in the Lite Plan.
- Plus, Retirement Plans.
- A metal debit card.
- Bonus Investments.
- Money Advice.
- $0 ATM's (55,000 Nationwide)
- 10% Cashback from 350+ Brands
- Robo-Investing from Built-In Investment Accounts
The Family Plan is $5 Per Month and Includes:
- You get everything in the Lite Plan.
- You get everything in the Personal Plan.
- Plus, Investment Accounts for kids.
- Plus, Family financial advice.
- Automatic Recurring Investments.
How Does Acorns Work?
I'm going to create a full “how to get started” and “my experience with Acorns” training to help you get started. Until then, get a sneak peak how Acorn app works:
What is Acorns Round-Ups?
This is the beauty behind Acorns. When you purchase anything, Acorns gives you the option to round-up and add that change to your investments. For example, if you buy a coffee for $3.20 – Acorns ask if you want to round-up to $4. That extra is invested automatically within your Acorns app.
Then, you can use their round-up multiplier feature that allows you to multiply your spare change up to 10x. So now, your 80 cents becomes $8 invested within your account.
They also give you the option to setup your recurring investments on a daily, weekly, or monthly basis. Within the app itself, it projects what your investments could grow to over the long-term.
What do Acorns Invests In?
Your investments are diversified across more than 7,000 stocks and bonds and automatically rebalance when the market fluctuates, which sounds a lot like an index fund that tracks the market. You can also look at pre-determined funds based on your own investing goals.
For example, if you want to invest conservatively, then you can click on the conservative fund made up of mostly large company stocks, govt bonds and corporate bonds. If you want an aggressive approach, then you can click on the aggressive fund made up of mostly large/small company stocks and emerging market stocks (no bonds).
Is Acorns Worth It?
Yes. If you need the “set it and forget it” approach combined with a robotic investor, then this is definitely for you. However, if you think you're going to invest $100 over the course of the year, then the price per month might not be worth it.
For example, if over the course of the year, you rounded up and invested just $100 in your account. The $1 per month would mean you'd have a 12% negative ROI or 11.67% negative annualized return. That means you would need to make a 13.21% return just to return to breakeven.
If you plan to put no money in it like this, then, we don't recommend it. Also, if you know how to invest in index funds already, then go for the free options with Fidelity, eTrade or even Webull.
If you plan to invest more than $3,000, then it's worth the extra $1 per month. If you're the type that needs this set it and forget it, then go for it. Plus, if you upgrade your Acorns account, then paying an extra $3 for the free debit card and the checking account, then it's worth it.
For example, when I was with Chase Bank, they would hit me with so many fees per month that paying $3, I would already come out ahead. Then, I'm always shopping for people. My grandma needs new walking shoes. My daughter needs sewing supplies. I'm redoing my bathroom. The cashback auto-invested in pre-built portfolios makes this a no-brainer for me.
And if you're part of the 40% with no savings, then let's create a plan for you right now.
Pros of Acorns
- Robotic Investing with Pre-Built Portfolios
- Auto-Invests Cashback from 350+ Brands
- Educational from Financial Investors
- Pre-Built “Set It and Forget It” Investing
- Rounds Up Option with Multiply Effect
Cons of Acorns
- High Fee on Smaller Accounts
Frequently Asked Questions About Acorns Investing
Unlike most robo-advisors, who charge a fee based on your account balance, Acorns charges a flat monthly management fee. Since its target customer is someone in college or just starting out, the cheapest plan, Acorns Core, costs $1 per month.
It is a good start if you have little to save or need a nudge to start investing without affecting your lifestyle. Plus, the auto-investing is perfect for beginners who want to set it and forget it.
Acorns is an investment app. So yes, you are going to earn money from not only your investments, but also from cash-back on qualifying purchases if you use their card.
If you have an Acorns account, you can go to signin.acorns.com to login to Acorns or click here.
The catch with acorns is that you're paying a flat management fee at $1 per month. If you don't have a lot in assets, then that percentage could be high at $1 per month.
You will receive a 1099-DIV on any dividends that you earn for the previous year. Those dividends can be reinvested into more stocks, but you will add those to your 1040 and it may not affect your taxes owed.
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