Dealing with finances is quite a tricky task for a lot of people. The process of investing money can be overwhelming and intimidating for many. But in this era of technology, there is a mobile application for everything!
The Acorns app is one such blessing that bridges your lack of investment knowledge and relieves your anxiety on this matter. The app is designed on an underlying theory, the Theory of Modern Portfolio. As per the theory, the app provides the user recommendations for optimizing their portfolios.
The following reviews on Acorns, the app itself, will help you understand why this application can be a great choice for your investment troubles.
What is Acorns?
Investing is usually very daunting and tricky for a lot of people. Just to escape the entire process of researching and finding a good investment plan, many like to escape it. As a result, they are left with nothing in times where there is monetary stress. But with Acorns, you don’t have to deal with this stress.
Acorns is a ‘one-stop’ investment app for people who look for easy ways to save and invest their money. Though their specialty lies in micro-savings, they offer a much more elaborate platform for investments.
With Acorns, you can set up a checking account, plan your retirement investment, or even set up a custodial investment account for your children as well. Surprisingly, these are just a few of the services the Acorns app offers.
How to use the Acorns app?
To use your Acorns app, all you need to do is link your credit card, and your savings account with the app. Once you have done that, Acorns will analyze your spending habits and then round up each of your expenses to the nearest whole number. Whatever difference is then pulled from your checking account and deposited in the Acorns account that you have set up.
On further reading the reviews on Acorn app, one can make out how simple and easy they have made the process of investment, even for the newbies. It provides you with all the guidance that you need for understanding investing at a beginner’s stage.
What are the main features of the Acorns app?
The Acorns app is popular for offering a plethora of features that help the user in the process of investing. Some of the features it offers are exceptionally good, making it a must-have application on your smartphone.
Acorns early account feature
The early accounts feature of the Acorns app allows a parent to open a custodial account for their child. By simply adding your child’s name and social security number, you can create an account for him or her. The account formed is a UTMA/UGMA type account, which allows you to use it for anything that might benefit your child.
Using simple math, say you invest your spare change, $10 a day in the custodial account, on the birth of your child, till (s)he is 18 years old. With an average interest rate of 7%, your child may get more than $90,000 when they turn 18. Isn’t this a great way to secure your child’s future?
With the Acorns app, you can simply set a reoccurring payment for the required period of time and forget about it. This type of account also provides the investor with tax benefits.
You can get access to the early account feature under the Acorns family account.
Acorns round-up feature
The round-up feature comes into play when your account is approved, and Acorns has withdrawn an initial deposit. The round-up transfers feature works by monitoring your spending account.
The app analyses the linked account and records your spending habits. Every expenditure made is round up to the nearest dollar.
For instance, you spent $45.50 in a Costco purchasing your regular snack supplies. The app will round up this amount to the nearest dollar. i.e., $46. That additional 50 cents get added to the Acorns Round-up balance. Once this addition reaches up to $5, it is automatically withdrawn from the account and invested in the Acorns investment.
You have the liberty to either choose the transaction that you want to be included in the round-up account or simply set it to automatic. In the latter, the app will choose eligible transactions on its own and apply the feature to them.
If you are particularly excited about your investment plans, you can increase the round-up amounts to even up to 10 times. That means, instead of rounding up to 50 cents, it will get rounded-off to $5. Depending on your financial ability, you can extend your round-off limit to as much as you want.
Acorns found money feature
The Found Money feature is one of the Acorns’ most unique features. Acorns has ties with around 300 participants involved in the Found Money feature. So, whenever you use your credit or debit card linked to your Acorns account at a partner retailer, the retailer will contribute some additional amount to your Acorns account.
The list of participants in the Found Money feature will leave your eyes wide open. You can get a 1.8% contribution to using Airbnb. You get a $5 contribution when you sign up with Disney+. You can get a 4% contribution with your purchases on Expedia, Macy’s, and many other such reputed and common retailers.
With Acorns, you are only pushing your financial status to the next level.
Other remarkable features on Acorns App
As mentioned earlier, Acorns don’t just offer easy investment opportunities, it also educates its user for a better beginner’s experience. The app includes educational information relating to the basics of investing, FAQs, and a common glossary of words that you might need to learn to invest.
These materials are designed by experts like Nobel laureates in the field of Economics. The expertise and wisdom that comes from such information can help you carve a path in the domain of investments.
This is yet another important tool that makes the investment experience easier. This tool helps the user to see the impact an additional theoretical investment will have on their account. This can be on a daily, weekly, or monthly basis.
The app allows you to grow as an investor. With innumerable interviews, news items, and to-dos available on the website as well as the app, one can amp up their investing game to the next level.
Acorns Gift cards
It is a guaranteed fact that once you sign up with Acorns, you will fall in love with their entire system. And what is better than gifting something that benefits you and your loved ones?
Acorns offer a $25 digital Acorns gift card, which can be used in any of the participating stores. You can gift these to any member of your family or your friends and introduce them to this amazing service.
With Acorns, you don’t have to set multiple reminders to keep your investments regular. All you need to do is set a recurring in the desired pattern (daily, weekly, or monthly) and forget about it. Acorns will take care of the rest for you.
Acorns also offer a service of a checking account called Spends. It comes with a debit card and lets you avail all the services that Acorns offer on your other savings accounts.
Acorns offer an Individual Retirement Account, IRA, where the user can invest for a financially independent retirement. This plan is found in the Acorns personal and Family account.
How to open an Acorns account
The process of making an Acorns account is like a cakewalk. Just like any other application, you either sign up on the website or download the app from your phone’s app store. The app is free of cost and is available for iPhone as well as Android users.
Signing up is a simple procedure. You are required to enter an access PIN code, which will be your security code for the app for future use.
Step 1 – Choosing a Round-up Account
The main account is the round-up account that you will be monitoring. You need to choose the transactions that you wish to round up and use the change in investment. You can choose from the most popular banks that are listed on the app’s server. If you are unable to find your bank, click next and type the name.
Once you have chosen your bank, the app will prompt you to log into your bank using the sign-in credentials for virtual banking. After you are able to access your profile, click the account, you want to choose for round up. You can also connect more than one account to your Acorns App.
Step 2 – Connecting the Checking Account
Apart from your round-up account, you also are required to make a checking account. This checking account is the one that will be used for transferring funds into your Acorns account. The process is similar to the one that you follow for your round-up account.
Once you have logged in for virtual banking, you are required to choose a checking account for linking.
Users might get a little paranoid before trusting their credentials with such an application. But you have nothing to worry about. Every data entered in Acorns App is encrypted. This adds a layer of security that is equivalent to what your bank provides.
Step 3 – Creating an Investment Account
For creating an investment account, you will be required to add some basic details about yourself. This includes your first and last name, your phone number, birth date, and a security question/answer.
The app then asks you to fill in your residential details. This step is done to confirm whether you are a U.S. citizen or not.
Once these details are filled in, you will be asked three questions:
- If you are a 10% shareholder of a publicly-traded company?
- If the IRS notified you of being subject to backup holding?
- If you are or have been affiliated with a broker-dealer?
These questions are required by the SEC in the event of opening a brokerage account. If they don’t apply to you, you can leave them unchecked and move forward.
The succeeding screen will prompt you to enter your employment details like your net worth, your yearly income, and the reason you wish to start investing. The nature of this information is personal. This will help Acorns to customize advice and recommendation portfolios. These portfolios are expertly designed and can help you in the future with your investments.
The apps give you a list of five different investment reasons.
- General investment
- Long term investment
- Short term investment
- Major purchase
As per your requirements, you can choose any of the options mentioned.
Once you are done with all these formalities, you have to enter your social security number, which will be used for identity verification, prevention of fraud, and tax reporting by the Acorns App.
After doing everything, all your signup boxes might appear green, and you can click the “Get started” button.
Step 4 – Start investing!
After you are done setting up your account, you can dive into the investing game. With the Acorns app, you are not just restricted to viewing your portfolio. You can also check your index funds’ performance, see market trends, and have access to other such information that can help better your investment game.
Acorns Investment Portfolios
As mentioned earlier, based on the details that you enter while signup, the app recommends you a customized portfolio. In this portfolio, you get a plethora of advice, tips, and ideas to make your investments better and fruitful for the future.
There are five portfolios that you can choose from in the app.
- Conservative – based on 100% bonds
- Moderately conservative – It has 36% stocks, 60% bonds, and 4% real estate.
- Moderate – It contains 54% stocks, 40% Bonds, and 6% real estate.
- Moderately Aggressive – It contains 72% stocks, 20% bonds, and 8% real estate.
- Aggressive – It contains 90% stocks and 10% real estate.
After you have chosen which portfolio suits you the best, you can explore their elaborate list of ETFs and choose an asset class that you plan to invest in.
The Acorns app will give you seven options for basic index funds.
- Government bonds
- Corporate bonds
- Emerging bonds
- Development bonds
- Small-company stocks
- Large company stocks
- Real estate
After reading through all the options and making a decisive choice, you simply have to click “confirm portfolio” and move forward.
How much Does Acorns charge for an account?
A quality feature about the Acorns app is that you don’t have to maintain any minimum balance. You are not charged any commission fee or given any penalties for withdrawal of funds.
For its basic services, Acorns charges a $1 monthly fee for the accounts with a balance of less than $5000. For accounts with a balance of more than $5000, it charges a 0.25% annual charge.
For a payment of $3 per month, you can get a personal account with Acorns. This will come with the features of an investing account, checking account, and retirement account.
For a payment of $5 per month, you can buy an Acorns Family Account. This comes with the benefits of custodial accounts and other personal tier features.
What is the legitimacy of an Acorns account?
An Acorns account is definitely a legit account that is regulated by a company. It is a member of the Financial Industry Regulatory Authority (FINRA), which is a self-regulating organization. It is also a member of the Securities Investor Protection Corporation (SIPC).
The broker and custody services offered by Acorns account is regulated by the Securities Exchange Commission. Acorns are legally obligated to submit all the information to the federal regulators and should also uphold the rules of the FINRA and SIPC.
But with investments, the investor should be aware of all the market risks. There are possibilities that there are dips in the stock market, and you end up losing money. Be prepared for the ups and downs and any other form of risk that are associated with investing.
What are the shortcomings of Acorns App?
The management fee by Acorns can be very relative, depending on your account balance. The app charges $1 for an investment account and $5 for a family account.
If you are making three small purchases from your round-up account and only 20 cents are getting invested every time, you might be investing only about $12-$13 per month. Out of this, the app cuts a fee of $1 per month, which is about 8.33%. This is at a significantly higher end of the scale.
Such flat fees are very rarely charged by Robo-advisors. They operate by charging a percentage of the asset under the management every year.
The $1-$5 fees sound a bit cheap, but if the account balance is low, you might end up paying more fees in comparison to the investments that you make.
Therefore, it’s more of a user’s call to decide if they wish to go for an Acorns account, depending on their account balance.
At some point in time, if you wish to transfer all your investment out of the Acorns account to some other provider, you might be charged an exorbitantly high amount of fee. For a transfer of one ETF, the app will charge you $50. So, if you have 4 ETFs with Acorns, you will end up paying 200 dollars for the entire transfer.
This is indeed a very common scenario with all such service providers, but Acorns fees are most definitely at the higher end of the scale. For instance, some other service providers might charge only up to $75 for the transfer of all the ETFs.
You still have the option of selling all your investments and then transfer the cash that you have obtained to a bank account. For this, no fee is charged from the user.
A weak portfolio
The Acorns portfolio might appear fancy to a lot of beginners coming for investment, but someone who is in the domain, might not find it interesting. The entire setup is based on a user’s personal data that is fed at the stage of signing up. Based on this information, the user has suggested a portfolio, or they can select one on their own.
There are seven assets classed to choose from that make the portfolio quite diversified. But the diversity is not enough as compared to other market options. One might feel a bit restricted with the options that are offered. One might also feel the need to create their own portfolio without any assistance from Acorns.
Loss on principle is possible
Even though the investment plan that is offered by Acorns is pretty conservative, there is still a possibility of losing some money with Acorns. In any case, you cannot be risk-free, always, when you are investing.
Is Acorns App a good choice?
If your focus is more on the micro-savings category, then Acorns is one of the best services that you can avail of. It is a great start for people who have a limited amount of money to invest. They can do so without altering their lifestyle or bringing any other significant changes.
There are a lot of different plans that they offer, like Acorns Family account, a custodial account, retirement accounts, to name a few. These options are quite appealing as you get a better and more diverse portfolio to explore. You can boost your savings and investments as per your liking, at any time you want.
A lot of people don’t follow the concept of saving or investing for rainy days. As a result, when there is actually a money crunch, they are left helpless with no monetary support. Acorns can be a starting point for you to begin your investment plans.
With Acorns, all you are doing is diverting your spare change into making something fruitful for securing yours as well as your family’s future. Thank you for reading the reviews of Acorn app, kindly check out other articles on our website.