Acorns is an app that helps you save money so you can invest in your future. When you sign up for Acorns, your debit and/or credit card transactions are rounded up to the nearest dollar and this spare change is put into your investment account with the app.
The money in your account is invested into your own portfolio of exchange-traded funds (ETFs). There are different types of Acorns accounts you can sign up for to help you save for retirement or diversify your investment portfolio. Reviewing these different options and the pros and cons of each can help you decide if Acorns is the right investment app for you.
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What Are the Fees?
While most robo-advisors charge fees based on your account balance, Acorns charges monthly fees to manage your account. These fees can vary depending on the plan you choose and how much money you invest in your account. There are three different plans you can choose to enroll in and each is associated with different fees:
- Acorns Invest: Your spare change is automatically invested in ETFs and you can invest as little as $5. You’re responsible for a $1 monthly fee for your Invest account.
- Acorns Later: You agree to recurring contributions to an IRA account to save for retirement. The monthly management fee for an Acorns Later account is $2.
- Acorns Spend: This account is associated with an Acorns checking account and debit card that allows you to spend while also investing. You’re charged a $3 monthly fee but no minimum balance penalties or overdraft fees.
No matter which plan you’re enrolled in, once your account balance reaches $1 million, your monthly fee is $1,000 per month for each $1 million you have invested.
Who Does Acorns Work Best For?
The Acorns app may be the most beneficial for beginner investors. Since there aren’t account or investment minimums, the app is also useful for college students or those who can’t contribute a lot to their investments just yet. As an added perk, the Acorns Invest account is free for college students, meaning monthly management fees are waived.
Acorns does the investing for you. It’s helpful for first-time investors who aren’t quite sure how to build their investment portfolios or where to put their money so it can start working for them. To find out if the Acorns app is right for you, it’s important to review the pros and cons.
The Pros of Acorns
There are many advantages to using the Acorns app, including the following:
- Easy account setup: Even if you’re new to investing or using robo-advisors, it’s easy to set up an Acorns account. Simply download the app, sign up for an account, choose your plan, and link it to your debit or credit card.
- Automatic investments: One of the greatest benefits to using the Acorns app is that it automatically invests your money into the account you choose. It can be tough to set aside money each month for your investments but with an Acorns account, your spare change or recurring contribution is automatically distributed, so you can set it and forget it.
- Easy to use: The Acorns app is simple to use and by signing into your account, you’re able to see your balance and how your money is being invested.
- Cash back at participating retailers: Acorns has a partnership with several popular retailers, including AirBnB, Warby Parker, Sephora, and Nike. When you purchase products or services through these select retailers using a card that’s linked to your Acorns account, you’re rewarded with cash back.
- Educational content: Acorns caters to beginner investors and while the app automatically invests in ETFs for you, it still wants you to build your knowledge of investments. You can find educational content on the app to help you learn more about your portfolio, the ETFs you’re invested in, and how an IRA can help you save for retirement.
The Cons of Acorns
While the Acorns app makes it easy to invest, there may be some disadvantages to this robo-advisor, including the following:
- Limited account options: The Acorns app only offers three account options and investments in ETFs or an IRA account. Your money isn’t invested in mutual funds or other diverse strategies. This limits the investment opportunities your money is used for and you may experience a greater return through other types of investments.
- Low transparency: You have little to no control over where your money is invested with the Acorns app. If you have specific moral obligations and don’t want to invest in certain companies, you won’t have a choice with the money you put in your Acorns account. Additionally, if you’ve done your research on investment opportunities and have strong feelings about certain stocks, you won’t know if your Acorns investments are placed in these promising stocks or elsewhere.
- Investing too little: Acorns allows you to make extremely low investments, which is great for beginner investors on a budget. However, if you invest too little into your account, you won’t see any growth. You may also still be responsible for monthly management fees, which can negatively affect your balance if you’re not investing much.
Is Acorns Right for You?
When deciding whether to invest in the Acorns app, it’s important to analyze your own financial situation and investing style. If you’re having trouble setting aside money for your investments, Acorns makes it easy by automatically contributing money to your account.
However, if you feel you won’t be able to invest enough money to make it worth the monthly management fees or to see true money growth, you may need to look into alternative investment options. It’s also important to keep in mind you don’t have control over the stocks your money is invested in since it’s all decided by the robo-advisor.
You can choose between three different plans with Acorns and reviewing your financial goals will help you decide which one is right for you. Beginner investors may find the Acorns Invest plan beneficial. If you’re focused on retirement, the Acorns Later plan may be best for you and if you need a checking account with built-in investment benefits, consider enrolling in Acorns Spend. No matter which plan you choose, weigh the pros and cons of Acorns against your financial situation before signing up for an account.
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