Let’s start our Acorns review.
Acorns is one of the hottest fintech investment apps on the market right now. As of December 2018, it has more than 4.2 million users and $1.2 billion of assets under management (AUM). The AUM number is impressive because Acorns has only been around since 2014.
Acorns is a micro-investing app that’ll invest your spare change for you. They do this by monitoring your everyday purchases when you link your debit and/or credit cards through their app. It’s another way to create different income streams if you don’t want start a subscription business with an eCommerce platform like Subbly.
For a lot of us, investing and savings is only a pipe dream as we’re trying to make ends meet. We have student loan debt, monthly bills, and other living expenses. Plus, we don’t have time to pay attention to the stock market and research companies.
This is where Acorns makes their entrance. Acorns has taken a daunting, complicated, and intimidating task then simplified it for us (i.e., non-financial people) with their service. They’ve created an automated investment app that takes your spare change and invests it into a lot of popular ETFs.
Investing isn’t a revolutionary concept. However, making it easy and accessible to everyone is revolutionary. Investing has always been a rich person’s playground until now.
Here’s a special invite to get $5 to start with Acorns:
Acorns Micro-InvestingLet’s get into our Acorns review.
HOW DOES ACORNS WORK?
Do you remember your parents change jar or your grandparents change drawer? How about those pennies, quarters, dimes, and nickels in your car? How many years has all the change sat there? Now, imagine if you put all of it into an investment account and got a return on it.
Acorns takes all your “change” and invests it for you. With its Round-Up feature, it monitors all your transactions and cumulates all your spare change to the nearest dollar. Once it hits $5, Acorns will withdraw it from your checking account and invest it in one of its managed portfolios of your choice.
Still not clear? Ok. Let’s say you went to Shell and bought $25.25 in gas. Acorn will Round-Up to $26.00 and the 75 cents is added to your Round-Up balance. Hence, spare change. Once your Round-Up balance reaches $5, Acorns withdraws the $5 and adds it to your investment account.
What’s more, there’s an option to apply the Round-Up feature to specific transactions or to all your transactions. How does this work? Let’s say you have a Starbucks addiction. You can set Acorns to only include Round-Up on all your Starbucks purchases.
Want to speed up your account value? You can do that with different Acorns features. The first way is the Multiplier feature. With it, you can multiple your Round-Up by 10, 3, or 2. The 75 cents from Shell will be $7.50 if you multiple your Round-Up by 10.
The other ways are setting up recurring deposits, adding your cards with rewards, or cash back, programs. Lastly, you can use Acorns’ Found Money – Cash Back Program – to your Acorns account.
WHO IS ACORNS MADE FOR?
It’s tailored towards young and new investors. In other words, people who are just getting started to build their retirement nest egg. But, there’s good news. Anyone can use Acorns to build their wealth.
Who’s using Acorns?
- College students.
- Young adults without any savings.
- People who aren’t financially savvy.
- Folks who aren’t good at saving.
- Investors who don’t want to manage their own investments.
That said, Acorns is certainly marketing to the younger generation because they don’t charge college students for four years. The only thing students need to do is register with a valid .edu email address and designate their occupation as student. Acorns will manage their account for free.
How much will you make? Historically, the S&P 500 has provided an annual return of 10%, which includes recessions. If you start with $2,000, you will double your money by 26.
| Age | Interest | Invest |
|---|---|---|
| 18 | 10% | $2,000 |
| 19 | 10% | $2,200 |
| 20 | 10% | $2,420 |
| 21 | 10% | $2,662 |
| 22 | 10% | $2,928 |
| 23 | 10% | $3,221 |
| 24 | 10% | $3,543 |
| 25 | 10% | $3,897 |
| 26 | 10% | $4,287 |
With automation, Acorns makes investing seamless and simple. In addition, with Acorns, it doesn’t significantly change your current lifestyle because it’s only investing your spare change. It’s an affordable way to start growing your retirement nest egg.
Want a special invite to get $5 to start with Acorns?
FEATURES
Now, we’ve come to the features section of our Acorns review. Acorns comes loaded with options, functions, features, and services. You can easily setup recurring deposits, earn extra cash via Acorns Found Money, and earn money for referring family and friends.
Per Noah Kerner (i.e., Acorns CEO), Found Money is extremely popular and the average Acorns investor gets over $60 per month.
Here are Acorns’ features:
- Round-Up – Every transaction made on your debit and/or credit card linked to Acorns will be included in your Round-Up balance. When your Round-Up balances reaches $5, it’ll be automatically invested by Acorns.
- Round-Up Multiplier – You can multiple your “Round-Up” amount by 2, 3, or 10 to speed up your retirement nest egg.
- Recurring Deposits – Setup recurring daily, weekly, or monthly deposits if you want to grow your savings faster.
- No Transactions, Trading, or Withdrawal Fees – Acorns doesn’t charge any transactions, trading, or withdrawal fees.
- No Monthly Fees – Acorns doesn’t charge college students their monthly fees for four years. That’s a $48 savings.
- User Support – Acorns offers customer support and they try to get back to their users within 24-48 hours.
- Acorns Spend – Acorns partnered with Lincoln Savings Bank to provide checking and Visa debit cards. The Acorns branded accounts are FDIC insured and your cash balance is covered up to $250,000 is covered. You can earn up to 10% cash back for participating local retailers’ purchases for transactions on Acorns Spend.
- Acorns Later – Traditional IRAs, Roth IRAs, and SEP-IRAs are available to Acorns users and it’s only $2 a month for both Acorns Later and Core accounts.
- Acorns Learn – It’s an educational area, which includes some FAQs, an investment glossary, and investing basics.
- Acorns Grow – This feature includes investment tutorials, new interviews, and current investment news. It’s available on their website or app.
- Acorns Potential – This is an estimated projection of how much your invested money will be worth. You can change your recurring deposits, Multiplier, and Round-Up amounts to see how it’ll affect your total account balance.
- Found Money – Found Money is Acorns reward program and it works in the manner as your cash back credit card. However, the cash back is only for participating partners like Nick, Sephora, Blue Apron, Expedia, Blue Apron, AirBnB, Macy’s, Lyft, and more!
- Gift Cards – You can gift your friends and/or family with an Acorns Gift Card. They start at $25. What’s a better gift then gifting an investment?
Want a special invite to get $5 to start with Acorns?
We’re going to get more in-depth with Found Money on our Acorns review.
FOUND MONEY PARTNERSHIPS
As discussed earlier, Acorns has partnered up with major online retailers and service providers to offer an “invest back” program. How does it work? For every partner purchase, the company will invest in your Acorns account.
It will take approximately one to two months to see your award in your Acorns account. It’s a great way to maximize all your spending and spare change to get more bang on your buck. In other words, Acorns has meshed the micro-investing and cashback concept, but it’s a program that keeps paying dividends.
Here are the “invest back” percentages for the Found Money partners:
| Company | Discount |
|---|---|
| Airbnb | Up to 1.8% of service fee |
| Barnes & Noble | 2% |
| Billshark | $10 on sign up |
| Blue Apron | $30 on sign up |
| Boxed | 4% |
| Chevron | 25 cents for $15 or more |
| DirecTV | $25 on sign up |
| Dollar Shave Club | 10% |
| Earnest | $100 for refinancing student loans |
| Expedia | 4% |
| Groupon | 5% |
| Liberty Mutual Insurance | $5 per auto or home quote |
| LifeLock | $25 for new purchases |
| Lyft | $15 on sign up as a driver |
| Macy's | 5% |
| MeUndies | 20% |
| New Balance | 5% |
| Nike | 5% |
| Sephora | $3% |
| Stich Fix | $10 for new purchases |
| Walmart | $5 for a new subscription |
| Warby Parker | 1% |
PORTFOLIO
Acorns provides different portfolios you can invest your spare change. Harry Markowitz is one of Acorns advisors. Who the heck is Harry Markowitz? Harry Markowitz is one of the world’s leading economists and he was awarded the 1990 Nobel Memorial Prize for Economic Sciences. He’s kind of a big deal.
In addition, Acorns investing approach is a Modern Portfolio Theory (MPT), which focuses on diversification over specific asset types. MPT happened to be developed by Harry Markowitz. Yes. He’s a big deal.
What’s more, you are free to choose your portfolio. If you are risk averse, you would want to go with the Conservative option. However, if you risk tolerance is high, you should go with the Aggressive option.
Here are Acorns investment asset types:
- Large Company Stocks
- Small Company Stocks
- Emerging Markets
- Developed Markets
- Government Bonds
- Corporate Bonds
- Real Estate
Here is an asset type breakdown for each of Acorns’ portfolio:
| Portfolio Type | Stock | Bond | Real Estate |
|---|---|---|---|
| Conservative | 0% | 100% | 0% |
| Moderately Conservative | 36% | 60% | 4% |
| Moderate | 54% | 40% | 6% |
| Moderately Aggressive | 72% | 20% | 8% |
| Aggressive | 90% | 0% | 10% |
With any investment, there is no guaranteed return and you could potentially lose your invested money. What’s more, investments are SIPC insured and not FDIC insured. Plus, Acorns invests in iShares and Vanguard ETFs; they’re two most invested ETFs in the stock market.
Here are available ETFs on Acorns:
| TICKER | ETF | ASSET CLASS |
|---|---|---|
| VOO | Vanguard S&P 500 | Large Company Stocks |
| VB | Vanguard Small-Cap | Small Company Stocks |
| VEA | Vanguard FTSE Developed Markets ETF | Developed Markets |
| VWO | Vanguard Emerging Markets Stock | Emerging Markets |
| VNQ | Vanguard REIT | Real Estate |
| LQD | iShares iBoxx$ Investment Grade Corporate Bond | Corporate Bonds |
| SHY | iShares 1-3 Year Treasury Bond | Government Bonds |
Furthermore, Acorns has other supported investment accounts:
- Traditional IRAs
- Roth IRAs
- SEP-IRA
- 401(k) Rollovers
- Personal Savings
ACORNS REVIEW PROS VS CONS
Pros
- Easy and seamless way to invest
- Acorns manages your investments for you
- Acorns makes it simple to invest
- No minimum investment
- College students don’t pay any fees for 4 years
- Investing is fully automated
- “Spare change” investing doesn’t affect your current lifestyle
- Accessible educational content
- Found Money helps you invest more
- No withdrawal fees, so you can cash out any time
- No trading or transactions fees
- Perfect option for new investors
- Recurring deposits feature
- Ability to increase your Round-Up with Multiplier
Cons
- Investing always has a level of risk
- Limited investment choices
- Tax benefits or tax-loss harvesting could be limited
- Relatively high fees on smaller balances
Want a special invite to get $5 to start with Acorns?
THINGS TO REMEMBER
“Number one rule of Wall Street. Nobody… and I don’t care if you’re Warren Buffet or if you’re Jimmy Buffet. Nobody knows if a stock is gonna go up, down, sideways or in fucking circles. Least of all, stockbrokers, right?” Mark Hanna from the Wolf of Wall Street
The quote cannot be any truer when it comes to investing. The stock market is volatile and it can head in any direction. It could increase one day and go down the next day. It doesn’t matter if you bought stock from brokerage firms like eTrade, Fidelity, or Charles Schwab.
For example, the 2007-2009 recession saw the S&P 500 lose 50% of its value. In March 2020, the S&P 500 loss about 34% of its value in a few weeks. In both situations, the S&P 500 regained its value. What’s the point? The point is investing is a long-term thing. It’s not a sprint. It’s a marathon.
What’s Acorns main benefit? It helps you gain solid financial habits. It’s never too late to start investing and saving for your future.
What’s more, if you haven’t started your retirement nest egg, Acorns is a great tool to get started. In my opinion, it’s a much better investment vehicle than your savings account. Your money is losing its value if you’re keeping your money in your savings account. How?
The annual inflation rate is about 2-3% and your Chase savings account is probably paying you 0.25% annually. What does that mean? Your money will be worth 1.75% to 2.75% less than it was a year ago.
Per Investopedia article, from 1926 to 2018, the S&P 500 average return has been 10-11%, which is about 8% higher than inflation. With the stock market, you’re making your money work for you. Here’s an example of the return on your money with 10% annual return:
| Age | Interest | Invest |
|---|---|---|
| 18 | 10% | $2,000 |
| 19 | 10% | $2,200 |
| 20 | 10% | $2,420 |
| 21 | 10% | $2,662 |
| 22 | 10% | $2,928 |
| 23 | 10% | $3,221 |
| 24 | 10% | $3,543 |
| 25 | 10% | $3,897 |
| 26 | 10% | $4,287 |
HIGHLIGHTED COSTS FOR ACORNS REVIEW
If you’re a college student, it’s completely free. You just need to sign up with a valid .edu email address and keep your employment status as “student”.
If you’re not a college student, Acorns doesn’t charge any transaction, trading, or withdrawal fees.
You can transfer up to $20,000 a day into your Acorns account without any issues. Plus, you can withdraw your money without paying any fees.
Here are Acorns’ current monthly fees for each service:
| Service | $1/Month | $2/Month | $3/Month |
|---|---|---|---|
| Acorns Invest | X | X | X |
| Acorns Later IRA | X | X | |
| Acorns Spend | X |
Their $3 per month is cheaper than a Starbucks Coffee Frappuccino. Let’s put this in perspective. $3 per month equals 10 cents a day.
What’s more, if you utilize Acorn Spend feature, you can earn up to 10% invest back money. However, the invest back will be dependent on local retailers participating in the area. If there aren’t any participating retailers, you won’t get any money back. The local retailers include grocery stores, coffee shops, restaurants, and other stores.
The big topic for other Acorns review is Acorns’ management fee. What’s management fee? It’s the price you pay Acorns every month for managing your investments. In other words, it’s $1-3 depending on your plan.
If your Acorns balance is small, the monthly fee is relatively expensive in terms of Assets Under Management (AUM) compared to other investment firms. Plus, the ETFs have their own management fees. The ETF management fee is charged whether you have Acorns manage your investments or buy it through Fidelity, eTrades, etc.
Here are Acorns management fee (Acorns Monthly Fee/Account Value = AUM %) based on your investment value:
| Acorns Balance | Acorns ($1) | Acorns Later ($2) | Acorns Spend ($3) |
|---|---|---|---|
| $100 | 1.000% | 2.000% | 3.000% |
| $500 | 0.200% | 0.400% | 0.600% |
| $5,000 | 0.020% | 0.040% | 0.060% |
| $10,000 | 0.010% | 0.020% | 0.030% |
| $20,000 | 0.005% | 0.010% | 0.015% |
| $30,000 | 0.003% | 0.007% | 0.010% |
Lastly, the management fee shouldn’t be an issue unless you’re paying 10%. You just have to remember you don’t have to do anything and Acorns is essentially doing all the work for you. It’s essentially 3 cents to 10 cents a day depending on your service.
Want a special invite to get $5 to start with Acorns?
IS ACORNS SAFE TO USE?
Safety is always a big concern for us with any service and we’re going to get into it with our Acorns review. Acorns’ app and website is secured with “bank-level” 256-bit encryption. But, with every online service, there is always a chance of it getting hacked and your personal information leaking on the dark web.
In the past years, we’ve seen social media accounts compromised, local government hacked, Sony hacked, and so forth. It’s the world we currently live in now. There are things companies do to limit their risks. That said, there is always a risk like getting into a car accident.
To provide some relief, Acorns never stores your bank login information and you can enable two-factor authentication on your Acorns account. In our opinion, two factor authentication should be enabled on all your online accounts.
More good news. Acorns Spend is FDIC insured and Acorns is SIPC insured. SIPC is a federally mandate and it is required for all brokerage firm. With SIPC, your investment account is protected up to $500,000, which includes up to $250,000 for cash balances.
In other words, if Acorns fails, your money will likely be covered. However, SIPC doesn’t insurance doesn’t protect against market losses for obvious reasons.
ACORNS REVIEW CONCLUSION
We’ve reached the end of our Acorns review.
Should you sign up with Acorns? Yes. It’s a great tool if you’re getting started, don’t have time to read 100s of SEC financial statements, research the market, and/or manage your account. In addition, with Round-Up, it won’t affect your current lifestyle and you can start to increase your deposits as you gain more knowledge.
Plus, it’s free to use if you’re a college student. You can start saving while you’re in college and working a part-time gig. When you graduate, your investment will likely increase if the S&P 500 continues its historical 10-11% annual return.
If you’re just starting out, it’s still a great tool to get started. The monthly $1-3 fee is inexpensive especially when you have someone managing your investments. It’ll literally pay dividends in the long run.
Want a special invite to get $5 to start with Acorns?
Acorns Review - Can You Build Wealth With Acorns App?
Overall
Summary
Should you sign up with Acorns? Yes. It’s a great tool if you’re getting started, don’t have time to read 100s of SEC financial statements, research the market, and/or manage your account. In addition, with Round-Up, it won’t affect your current lifestyle and you can start to increase your deposits as you gain more knowledge.
Plus, it’s free to use if you’re a college student. You can start saving while you’re in college and working a part-time gig. When you graduate, your investment will likely increase if the S&P 500 continues its historical 10-11% annual return.
If you’re just starting out, it’s still a great tool to get started. The monthly $1-3 fee is inexpensive especially when you have someone managing your investments. It’ll literally pay dividends in the long run.
Want a special invite to get $5 to start with Acorns? Get it here.