How Does Acorns App Work [2023]

If you’re interested in understanding how does Acorns works and has anyone made money on Acorns, you’re in the right place. Acorns is a micro-investing app that seamlessly integrates into your daily spending habits. This blog will provide an insightful Acorns review, shedding light on both the advantages and disadvantages of this innovative financial tool.

For instance, when you make a purchase, let’s say a cup of coffee priced at $2.75, Acorns steps in by rounding up the transaction to an even $3.00 and subsequently investing the extra $0.25. This ingenious approach allows you to start investing effortlessly, even without actively thinking about it.

Now, let’s delve into Acorns pros and cons. One of its prominent advantages is the availability of low-cost investment portfolio options, carefully tailored to match your specific risk tolerance and investment objectives. Additionally, Acorns’ automatic savings features serve as a gentle yet effective reminder to set aside more money for future investments. So, whether you’re curious about how Acorns works, wondering if anyone has profited from it, or seeking to weigh its pros and cons, this comprehensive review will guide you in making an informed decision.

Plus, the easy-to-navigate interface makes it simple to set up and manage your investments. However, it’s important to note that Acorns fees are on the high side, depending on the plan you choose.

Overview of How Does Acorns App Work

What is Acorns?

Acorns is a financial app that allows you to invest your spare change automatically. It was founded in 2012 and has since grown into a popular robo-advisor service. 

Acorns aims to make investing simple and accessible to everyone, regardless of their income or investment experience.

How does Acorns work?

Curious about how Acorns app works and whether it’s worth it? Well, Acorns works by rounding up your purchases to the nearest dollar and investing the spare change. Wondering how does Acorns make money from this? You can also set up recurring investments and make one-time investments as well.

When pondering if Acorns is worth it, remember that Acorns uses your risk tolerance and investment goals to create a portfolio of exchange-traded funds (ETFs) that are diversified across asset classes. Additionally, it employs Modern Portfolio Theory to create portfolios that are designed to maximize returns while minimizing risk.

Acorns pros and cons

Acorns has many features that make it a popular choice for investors. Some of its features include:

• Investment account: Acorns offers an investment account that allows you to invest your spare change automatically.
• Portfolio: Acorns creates a diversified portfolio of ETFs based on your risk tolerance and investment goals.
• Savings: Acorns offers a savings account that allows you to earn interest on your savings.
• Checking account: Acorns offers a checking account that comes with a debit card and allows you to earn rewards for spending at certain companies.
• IRA: Acorns offers traditional, Roth, and SEP IRAs to help you save for retirement.
• Low cost: Acorns charges a low monthly fee for its service, which is based on the size of your account. There are no account minimums or trading fees.
• Easy to use: Acorns has a user-friendly website and mobile app that make it easy to set up and manage your investments.

Acorns is a fintech company that provides a modern and convenient way to invest your money. It offers a diversified portfolio of ETFs, a savings account, a checking account, and IRAs to help you reach your financial goals. 

With its low cost and easy-to-use platform, Acorns is a great option for anyone looking to start investing their spare change.

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Acorns Investment Options

Acorns is a robo-advisor that offers several investment portfolio options to help you grow your wealth. Here are the different investment options available on Acorns:

Investment Portfolio Options

Acorns offers five different investment portfolios that range from conservative to aggressive. Each portfolio is made up of exchange-traded funds (ETFs) that are diversified across asset classes and sectors. 

The portfolios are designed to help you achieve your financial goals based on your risk tolerance and time horizon.

Acorns Invest

Acorns Invest is the core investment account that allows you to invest your spare change automatically. This account invests your money in a diversified portfolio of ETFs based on your risk profile. You can also make one-time investments or set up recurring deposits to grow your wealth even faster.

Acorns Later

Acorns Later is a retirement account that allows you to invest in a traditional or Roth IRA. This account is designed to help you save for retirement by investing your money in a diversified portfolio of ETFs. 

You can set up recurring deposits or make one-time contributions to your retirement account.

Acorns Early

Acorns Early is an investment account for children that allows you to invest in a UTMA/UGMA account on behalf of your child. 

This account is designed to help you save for your child’s future by investing in a diversified portfolio of ETFs. You can set up recurring deposits or make one-time contributions to your child’s investment account.

Acorns Spend

Acorns Spend is a checking account and cash management account that offers a debit card with cash back rewards. 

This account is FDIC insured and offers fractional shares of stock when you spend with your debit card. You can also set up recurring deposits to grow your wealth even faster.

Acorns also offers tax-loss harvesting and a Bitcoin-linked ETF to help you optimize your tax strategy and potentially increase your returns. According to Acorns, their users have earned over $1 billion in investment returns since the app’s launch.

In conclusion, Acorns offers a variety of investment options for hands-off investors who want a diversified portfolio mix. With a range of investment portfolios, tax-loss harvesting, and cash back rewards, Acorns is a great option for those looking to grow their wealth over time.

Fees and Costs

When it comes to investing, fees and costs are an important consideration. In this section, we will discuss the fees and costs associated with Acorns.

Acorns Pricing

Acorns offers three pricing tiers: Lite, Personal, and Family. The Lite plan costs $1 per month and includes a taxable investment account, a checking account, and access to Acorns’ financial education content. 

The Personal plan costs $3 per month and includes all of the features of the Lite plan, as well as a retirement account and access to a financial advisor. The Family plan costs $5 per month and includes all of the features of the Personal plan, as well as investment accounts for children.

Management Fees

In addition to the monthly subscription fee, Acorns charges management fees for its investment accounts. 

The management fee is 0.25% per year for accounts with a balance of less than $1 million. For accounts with a balance of $1 million or more, the management fee is reduced to 0.10% per year.

Account Minimums

Acorns does not have a minimum account balance requirement. This means that you can start investing with as little as a few cents. However, Acorns does require a minimum investment of $5 per transaction.

Acorns Spend Fees

Acorns Spend is a checking account that is linked to your Acorns investment account. There are no monthly fees associated with Acorns Spend, and there are no overdraft fees or minimum balance requirements. 

However, there may be fees associated with using out-of-network ATMs or making foreign transactions. Overall, Acorns’ pricing and fees are competitive with other investment apps. 

The subscription fee is reasonable, and the management fee is in line with industry standards. Additionally, the lack of an account minimum makes it easy for anyone to start investing.

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Investment Performance and Returns

When it comes to investment performance and returns, Acorns aims to provide a simple and effective way for you to invest your money. 

Here are a few things to keep in mind when considering Acorns as an investment platform:

Acorns Returns

Acorns offers five different portfolios, each with a different level of risk and expected return. The portfolios range from conservative to aggressive, with the aggressive portfolio offering the highest expected return. 

According to Acorns, the average annual return for their portfolios has been around 7% over the past few years. However, it’s important to remember that past performance is not a guarantee of future returns.

Rebalancing

Acorns automatically rebalances your portfolio to maintain your desired level of risk. This means that if one of your investments performs better than the others, Acorns will sell some of that investment and buy more of the others to maintain your desired allocation. 

Rebalancing helps to ensure that your portfolio stays aligned with your investment goals and risk tolerance.

Round-ups

One of the unique features of Acorns is their round-up feature. This feature rounds up your purchases to the nearest dollar and invests the spare change. 

While this may seem like a small amount, over time it can add up and help boost your investment returns. Overall, Acorns provides a simple and effective way for you to invest your money. 

Their portfolios offer a range of risk levels and expected returns, and their automatic rebalancing helps to ensure that your portfolio stays aligned with your investment goals. Additionally, their round-up feature can help you save and invest spare change, which can add up over time.

Benefits and Drawbacks of Acorns

Benefits of Acorns

Acorns is a financial app that can help you invest your money with ease. Here are some of the benefits of using Acorns:

• Spare Change Investing: Acorns allows you to invest your spare change from everyday purchases. This means that every time you make a purchase with your linked card, Acorns will round up the purchase to the nearest dollar and invest the difference. This makes investing easy and automatic.
  
• Low Minimum Investment: With Acorns, you can start investing with as little as $5. This means that you don’t need a lot of money to start investing.
  
• Diversified Portfolio: Acorns invests your money in a diversified portfolio of exchange-traded funds (ETFs). This means that your money is spread across different asset classes, reducing the risk of losing all your money in one investment.
  
• Easy to Use: Acorns is easy to use, with a user-friendly interface that makes it easy to navigate and understand. This means that even if you’re new to investing, you can easily get started with Acorns.
  

Drawbacks of Acorns

While Acorns has many benefits, there are also some drawbacks to using the app. Here are some of the drawbacks of using Acorns:

• Fees: Acorns charges a monthly fee of $3 to $5, depending on the plan you choose. This fee may seem small, but it can add up over time and eat into your investment returns.
  
• Limited Investment Options: Acorns only offers a limited number of investment options. This means that you may not be able to invest in the specific stocks or funds that you want to.
  
• Not Suitable for Active Traders: Acorns is designed for passive investors who want to invest their money without having to actively manage their investments. If you’re an active trader who likes to buy and sell stocks frequently, Acorns may not be the best option for you.

Overall, Acorns is a great app for people who want to start investing but don’t have a lot of money or experience. However, it’s important to be aware of the fees and limitations of the app before you start investing.

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Comparison to Other Investment Apps

If you’re considering Acorns as your investment app, it’s important to compare it to other popular options on the market. Here’s how Acorns stacks up against Betterment, Robinhood, Wealthfront, and Vanguard.

Acorns vs Betterment

Acorns and Betterment are both robo-advisors that offer automated investment management. However, Betterment has a more comprehensive range of investment options, including socially responsible investing and tax-loss harvesting. 

Acorns, on the other hand, is better suited for beginners who want to start investing with small amounts of money. Its fees are also slightly higher than Betterment’s.

Acorns vs Robinhood

While both Acorns and Robinhood are investment apps, they have different focuses. Acorns is geared towards passive investing, while Robinhood is geared towards active trading. 

Robinhood also offers commission-free trading, which can be appealing to more experienced investors. 

However, Acorns offers a more hands-off approach to investing, which can be beneficial for those who don’t have the time or knowledge to actively trade.

Acorns vs Wealthfront

Acorns and Wealthfront are both robo-advisors that offer automated investment management. However, Wealthfront offers a wider range of investment options, including 529 college savings plans and high-yield cash accounts. Wealthfront also offers tax-loss harvesting and direct indexing, which can help investors save money on taxes.

Acorns vs Vanguard

Acorns and Vanguard are both investment apps, but Vanguard is a more traditional investment platform that offers a wider range of investment options, including mutual funds and individual stocks. 

Vanguard also has lower fees than Acorns. However, Acorns offers a more hands-off approach to investing, which can be beneficial for those who don’t have the time or knowledge to actively manage their investments.

In conclusion, each investment app has its own strengths and weaknesses, and the right choice for you will depend on your investment goals and experience level.

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Customer Service and Support

When it comes to customer service, Acorns offers several options to assist you in managing your account.

Acorns Customer Service

Acorns’ customer support team is available seven days a week from 5 a.m. to 7 p.m. PT by live chat, phone, and email. 

The support team is known for being responsive and helpful, with many customers praising their quick response times and willingness to go above and beyond to help resolve issues.

However, some customers have reported issues with long wait times on the phone and slow response times via email. 

It’s worth noting that Acorns is a popular app, with over 9 million users, so it’s not surprising that wait times may occasionally be longer during peak periods.

Acorns Found Money

Acorns’ Found Money program is a unique feature that allows you to earn cashback when you shop with Acorns’ partner brands. 

The cashback is automatically invested into your Acorns account, helping you to grow your investments even faster.

If you have any issues with Found Money, Acorns’ customer support team is available to assist you. 

However, some customers have reported issues with cashback not being credited to their account or being credited incorrectly. 

It’s important to carefully review the terms and conditions of each offer to ensure that you meet the requirements to earn cashback.

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Is Acorns Right for You?

If you’re considering using Acorns, it’s important to determine whether it’s the right financial app for you. Here are some key factors to consider:

Who Should Use Acorns?

Acorns can be a good fit for those who are looking to invest small amounts of money regularly without having to actively manage their investments. 

If you’re someone who struggles to save money, Acorns’ automatic savings features can help you build up your savings over time. 

Additionally, Acorns’ robo-advisors can help you make investment decisions based on your financial goals and risk tolerance.

If you’re interested in socially responsible investing, Acorns’ ESG portfolio may be a good fit for you. 

This portfolio invests in companies that meet certain environmental, social, and governance criteria.

Acorns for kids

Acorns offers custodial accounts, which can be a good way to save for your child’s future. With a custodial account, you can invest money on behalf of your child and manage the account until they reach the age of majority.

Who Should Not Use Acorns?

If you’re someone who prefers to actively manage your investments or you have a lot of money to invest, Acorns may not be the best fit for you. 

Additionally, if you’re someone who prefers a more conservative investment approach, Acorns’ aggressive investment strategy may not be suitable for you.

Overall, Acorns can be a good fit for those who are looking to invest small amounts of money regularly without having to actively manage their investments. 

However, it’s important to consider your personal financial goals and risk tolerance before deciding whether Acorns is the right financial app for you.

Frequently Asked Questions about Acorns

Q: Is the Acorns app really worth it?

A: If you’re looking to make a passive investment portfolio without spending any time, then its the best option for you. Your investment portfolio will grow with every small purchase you make without having to do it.

Q: How much is Acorns fee?

A: Acorns charges between $3 to $5 depending on the type of plan you choose. However, this fee is subject to change, so always check the official app for the latest data

Q: Is Robinhood or Acorns better?

A: It depends on how you plan to invest. Comparing the overall investment portfolio, Robinhood is much better and offers diverse investing plans and much more control. If you want to invest passively without getting into the intricacies of investment, Acorns is the right choice for you.