There are tons of money apps out in the digital space. There are apps that pay you money, reward apps, and even apps that pay you to exercise. But, what about an app that helps you invest? If you have ever wanted to get into investing, but didn’t know where to start, you might have considered the application Acorns. The era of micro-investing is changing the way people invest as well as creating greater accessibility to larger numbers of people. While traditional stock brokerages have historically required that you invest hundreds or thousands of dollars, Acorns lets you start investing with just $5.
Now you may be wondering if it is worth investing in, or if there are other applications you should be using instead. This Acorns App review will go over just that.
What Is The Acorns App And How Does It Work?
Acorns is a micro-investing application that lets you start investing with just $5 to begin. When you first set up your Acorns account, the app will have you take a survey to determine what kind of investor you are. Once you do that, Acorns will recommend one of their five portfolio options:
- Moderately Conservative
- Moderately Aggressive
On the conservative end, the app invests more into bonds and less into stocks, while the aggressive side does the opposite. Everything in between is a variance of those extremes. While the survey does give you a recommendation, you can change your portfolio at any time.
You can link your debit card, credit card, or checking account to Acorns to start investing your money.
The Three Main Ways That Acorns Gets You To Invest Your Money
- Automatic recurring investments
- Found Money
The automatic recurring investments allow you to choose how much money you want to put towards your account each day, week, or month. You can customize it how you want, but the minimum you have to invest each month is $5 to use the recurring payments feature.
The round-ups feature invests your spare change for you. You can link as many debit and credit cards as you would like to the app, and Acorns will round up to the nearest dollar for every purchase you make. The round-up amount is what they use to invest in your account.
Lastly, the Found Money feature allows you to take advantage of the partnerships that Acorns has with various retailers. The Acorns application has multiple offers and will invest a certain amount of money for every offer you participate in. They will even invest money into your account if you do more to earn extra money, such as signing up to be an UberEats driver!
The other main features of the application include the “Acorns Spend” and “Acorns Later.”
The Acorns Spend feature allows you to get a checking account with Acorns and an Acorns debit card that you can use to spend the money in your investment account. I wouldn’t recommend spending all of your investment money, though. However, if you do decide to use Acorns Spend and get the Acorns debit card, you get to use it with no minimum balance fees, no ATM fees, and no overdraft fees.
We all know investing for retirement is important. The Acorns Later feature allows you to invest in a retirement account (IRA). You have three options with Acorns Later:
- Roth IRA
- Traditional IRA
- SEP IRA (for self-employed individuals).
As far as fees go, it only costs $1 a month to use the basic application for your first $1 million. After that, you would pay 0.25% annually. For information on the plus version, you get access to Acorns and Acorns Later and pay $2 a month. For the premium version, you get Acorns, Acorns Later, and Acorns Spend for $3 a month.
Read on to understand the advantages and disadvantages of the Acorns application.
The Pros Of Using Acorns
There are a lot of advantages to using the Acorns app. For one, the application makes investing extremely easy. All you have to do is invest the money, and they do the hard work for you. It doesn’t require much analysis of stocks since they automatically invest your money in a pre-determined portfolio.
The application is also very cheap to use. While it may not be free, all you have to pay is $1 a month to use basic Acorns. If you decide to use Acorns Later, you will spend $2 a month, and if you chose to use Acorns Spend, you will pay $3 a month. This isn’t much considering what the application does for you. Plus, there are no deposit or account minimums to maintain, no commission fees, and no withdrawal penalties. You can also invite friends to use the app and you both get rewarded $5 each.
Furthermore, the application is straightforward in terms of navigation. This is made possible by the clean and user-friendly design.
The best part about this application is that it allows you, the investor, to start small and gradually, consistently build your investment account over time. The round-ups feature enables you to invest money without even having to think about it. Additionally, the application’s automatic recurring investments makes the app unique. One of the most important strategies for growing your investment account is to keep investing money into it. The automatic recurring investments make this a smooth and passive way for you to do this.
Acorns also has a “potential” section of the app that gives you a projection of your future earnings given your current investment portfolio as well as the amount you are investing each month. This is a neat feature because it gives you an idea of what to expect of your investment earnings over the long-run. Lastly, the retirement options they offer are beneficial for investors who want to get a lot out of a single app.
The Cons Of Using Acorns
The main con of using Acorns investing is that it doesn’t allow you to trade. If you are someone looking to get into trading, this wouldn’t be the application for you. The Acorns app is best for long-term investors since it focuses on a long-term investing strategy.
Additionally, while the $1 fee isn’t much in the grand scheme of things, it is a lot if you aren’t investing enough each month. Even if you were to invest $12 a month, $1 would equate to an 8.33% fee each month. This is a lot compared to applications that only charge a 0.25% fee annually.
Lastly, you also can’t invest in individual securities. Since the application automatically allocates your money for you, it gives you less control over what stocks you invest in.
Who Should Use The Acorns App?
Once again, if you are looking to trade, this application isn’t for you. Instead, this application is excellent for the following types of people:
- New investors-it’s easy to start investing
- College students-College students are allowed to use the application for free for the four years they are in college.
- Investors who want to get a lot out of one application and that want to passively invest long-term.
Are There Better Applications?
In terms of long-term micro-investing, Acorns is one of the best applications for the passive version of this. However, some apps don’t charge any fees. One of those applications is SoFi which also allows you to invest in individual stocks. As noted before, if you are someone who doesn’t plan to invest a lot of money each month, the $1 fee could end up not being worth using the app. Another application for someone who would prefer to be able to invest in individual stocks is Stash Invest.
If you want to look into day trading, Robinhood may be a better choice of application.
Is The Acorns App Worth It?
Using Acorns isn’t necessarily a side-hustle strategy since you aren’t going to be cashing out on your wins often. However, it is still an excellent way to invest your money for the long-run and for retirement. Even if you decide to use other applications for trading or for more control over your investing, Acorns is still worth using because of how easy it is to use. It is a very passive way for you to invest, as long as you set up the round-ups and the recurring investments. Even if you like to day trade, it’s still good to have a long-term strategy as well.
Wrapping Up: Acorns
While there are many investing applications available, what makes Acorns stand out is how easy it is to passively invest through the use of their automatic recurring payments and round-ups. You can also set up a retirement account and get a lot out of just one app, including the cashback Found Money feature. While it isn’t the best for the active day trader or the investor wanting more control over their investments, it is, instead, an excellent way for new investors to set themselves up for the long-run. Now, go start investing!