Investing can seem like a daunting task, especially if you’re just starting out. That’s where Acorns comes in. This micro-investing app promises to simplify the process by rounding up your everyday purchases and investing the spare change. Sounds easy, right?
I’ve spent some time exploring Acorns to see if it lives up to the hype. In this review, I’ll break down the features, benefits, and potential drawbacks of using Acorns. Whether you’re a newbie investor or just looking for a hassle-free way to grow your savings, this review will help you decide if Acorns is the right fit for you.
What Is Acorns?
Acorns is a micro-investing app designed to make investing accessible to everyone. It automates the investment process by rounding up everyday purchases and investing the spare change.
Overview of the Platform
Acorns has an intuitive interface that caters to both novice and experienced investors. It offers several features aimed at simplifying financial growth:
- Round-Ups: Every completed transaction gets rounded up to the nearest dollar, with the difference invested into a diversified portfolio.
- Found Money: Users receive cash-back rewards from partnered brands, which get directly invested into their accounts.
- Acorns Later: The platform provides retirement account options, including IRA accounts, making long-term savings easy.
How It Works
After linking a bank account or card, Acorns tracks all transactions:
- Rounding Up Purchases: It rounds up each transaction to the nearest dollar, transferring the spare change to the investment account.
- Portfolio Allocation: Users’ funds are allocated into portfolios designed by experts. These portfolios range from conservative to aggressive, based on users’ risk tolerance.
- Recurring Investments: Automated investment plans can be set up daily, weekly, or monthly to grow the account steadily.
- Withdrawals: Users can withdraw funds anytime without penalties, making it convenient for both long-term and short-term needs.
Acorns leverages advanced technology to make investing straightforward, ensuring users can build their savings with minimal effort.
Key Features of Acorns
Acorns is packed with features that make investing easy and effective. Here are the key features that set Acorns apart.
Round-Ups
Acorns’ signature feature, Round-Ups, makes investing effortless. It rounds up each purchase to the nearest dollar and invests the difference. For example, a $3.75 coffee becomes a $4.00 charge, with $0.25 going into your investment account. This method ensures consistent contributions without impacting your daily budget significantly.
Recurring Investments
Recurring investments offer another layer of simplicity. You can set up automatic contributions daily, weekly, or monthly. For instance, you may decide to invest $5 every week or $20 every month. These scheduled deposits help grow your portfolio steadily over time without needing manual intervention.
Retirement Accounts
Acorns Later provides tax-advantaged retirement account options. Users can choose an IRA that suits their needs, such as Traditional or Roth IRAs. For example, a Traditional IRA allows for tax-deductible contributions, while a Roth IRA offers tax-free withdrawals in retirement. This feature ensures that you’re not only investing for the short term but also planning for long-term financial security.
Benefits of Using Acorns
Acorns offers several benefits that make it an attractive option for both novice and experienced investors. By simplifying the investment process, Acorns helps users save and grow their money effortlessly.
Ease of Use
Navigating Acorns feels intuitive. The app’s user interface is straightforward, with clear instructions and easy-to-use features. New users can set up their accounts in minutes, thanks to the streamlined onboarding process. Key elements like Round-Ups and Recurring Investments are easily accessible, enabling users to start investing without any hassle.
Automatic Savings
Acorns effortlessly promotes saving habits. The Round-Ups feature rounds up purchases to the nearest dollar and invests the spare change, turning everyday spending into savings. This automatic investment strategy accumulates over time, gradually growing the user’s portfolio without requiring active management. Automated contributions through Recurring Investments allow users to set up regular deposits, ensuring consistent growth of their investment account. These automated features make saving feel seamless and consistent.
Limitations of Acorns
Acorns has a few limitations that users should be aware of before committing fully.
Fee Structure
Acorns charges a fee for its services, which can impact returns, especially for smaller accounts. The monthly fee ranges from $1 to $5 based on the chosen plan, which might seem insignificant, but for accounts with low balances, it’s relatively high. For instance, a $5 per month fee on a $100 investment equates to a 5% cost, significantly reducing potential gains. Users must assess whether the value provided by Acorns justifies these fees.
Investment Options
Acorns offers limited investment options compared to other platforms. The app primarily invests in diversified portfolios of ETFs (Exchange-Traded Funds) but doesn’t provide options for individual stock picking or other asset classes such as real estate or commodities. While this simplicity suits beginners, experienced investors may find it restrictive. Additionally, the focus on ETFs means users have less control over specific investments, which can be a drawback for those wanting a more tailored portfolio.
Comparing Acorns with Other Microinvesting Apps
Acorns simplifies investing, but it’s crucial to compare it with similar apps like Stash and Robinhood to make an informed decision.
Competitor Analysis
Stash offers more personalization with individual stock picking and a broader range of ETFs. It also includes educational resources to help users understand investing principles. However, Stash’s monthly fees start at $3 and go up to $9, which is higher than Acorns.
Robinhood provides commission-free trades for stocks, ETFs, options, and cryptocurrencies, offering more flexibility. Its interface is user-friendly, especially for beginners, but it doesn’t offer automated investing features like Round-Ups. Robinhood’s revenue comes from payment for order flow and other premium services.
Here’s a quick comparison:
| Feature | Acorns | Stash | Robinhood |
|---|---|---|---|
| Fee Structure | $1 to $5/month | $3 to $9/month | $0 |
| Investment Options | ETFs | Individual stocks, ETFs | Stocks, ETFs, options, cryptocurrencies |
| Automated Investing | Yes | No | No |
| Educational Resources | Basic | Comprehensive | Limited |
User Experiences
Acorns users appreciate the simplicity and automated investments, particularly the Round-Ups feature, which makes saving effortless. Many find the fees reasonable for the passive management and ease of use it provides. However, some experienced investors feel restricted by the lack of flexible investment options.
Stash users often highlight the app’s educational content and the ability to choose individual stocks, which caters to those seeking a more hands-on approach. Despite the higher fees, its comprehensive investment choices and learning tools are valued.
Robinhood users favor the commission-free trades and wide selection of investment assets. Their main concern revolves around customer support and the complexity of some transactions. Nonetheless, the app’s flexibility and extensive asset options attract both novice and seasoned investors.
Conclusion
Acorns stands out for its simplicity and ease of use, making it an excellent choice for those new to investing. Its Round-Ups and Recurring Investments features make saving and investing almost effortless. While the fee structure and limited investment options are drawbacks, they may not be deal-breakers for everyone.
Comparing Acorns to other micro-investing apps like Stash and Robinhood reveals that each has its unique strengths. Stash offers more personalization and educational resources, while Robinhood excels with commission-free trades and a broader asset selection.
Ultimately, the best app for you depends on your individual needs and preferences. If you value simplicity and automated investing, Acorns is worth considering. However, if you seek more control over your investments or want to trade a wider range of assets, exploring other options like Stash or Robinhood might be beneficial.
