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Acorns App Review: Simplifying Investing for All

Investing can often feel complex and overwhelming, especially for those who are new to the world of finance. However, Acorns is here to change that. With its innovative mobile app, Acorns aims to demystify the investment process and make it accessible to everyone, regardless of their financial knowledge or experience. In this comprehensive review, we will explore the features, pros and cons, unique products, and pricing of Acorns to help you determine if it is the right investment platform for you.

What is Acorns?

Acorns is a smartphone app that takes a unique approach to investing. It utilizes a technique called microsavings, which involves rounding up your everyday purchases to the nearest dollar and investing the spare change. By linking your credit card and checking account to the Acorns app, it effortlessly tracks your spending habits and automatically invests the difference.

The app was initially targeted at a younger, tech-savvy generation, but it has since expanded its reach to users of all ages. Acorns has also introduced a web-based version, allowing users to manage their investments from both desktop and portable devices.

How Does Acorns Work?

Acorns goes beyond microsavings and offers a range of services to help users achieve their financial goals. By linking your credit card and checking account, Acorns analyzes your spending patterns and rounds up each transaction to the nearest dollar. The difference is then transferred from your checking account to your Acorns investment account.

Acorns provides several investment portfolio options based on Modern Portfolio Theory, a strategy that aims to maximize returns while minimizing risk. These portfolios are automatically rebalanced to maintain your desired asset allocation. Additionally, Acorns offers retirement accounts, checking accounts, and custodial investment accounts for children.

Features and Benefits of Acorns

Painless Way to Save

One of the primary advantages of using Acorns is that it offers a painless way to save and invest. By rounding up your purchases, Acorns helps you grow your investment portfolio without even realizing it. Since the amounts taken from your account are small, you won’t notice them missing from your checking account, making it a seamless and effortless savings strategy.

Hides the Complexities of Investing

Acorns simplifies the investment process by hiding the complexities of investing behind its user-friendly interface. You don’t need to have an in-depth understanding of Modern Portfolio Theory or financial markets to use Acorns. The app takes care of the investment decisions for you, making it an ideal platform for those who are new to investing or prefer a hands-off approach.

Start Investing with No Money

Unlike many investment platforms that require a significant initial deposit, Acorns allows you to start investing with no money. There is no minimum deposit required to open an account, making it accessible to individuals with any budget. This feature makes Acorns an excellent option for those who want to dip their toes into investing without making a substantial financial commitment.

Easy to Set Up Custodial Accounts

Acorns Early, a feature within Acorns, makes it incredibly easy to set up custodial investment accounts for your children. These accounts, known as UTMA/UGMA accounts, allow you to invest on behalf of your child and use the funds for their benefit. By investing small amounts regularly, you can help secure their financial future and potentially provide them with a significant sum when they come of age.

Acorns Features

Pros

Automatic Round-Up Investing

One of the standout features of Acorns is its automatic round-up investing. By linking your credit card and checking account, Acorns rounds up your purchases to the nearest dollar and invests the spare change. This hands-off approach to investing allows you to grow your savings effortlessly.

User-Friendly App

Acorns boasts a user-friendly app that is highly rated among users. Available on both iOS and Android devices, the app provides a seamless and intuitive investing experience. With a clean design and straightforward navigation, even those who are new to investing will find it easy to use.

Range of Account Options

Acorns offers a range of account options to cater to different financial goals. Whether you’re saving for retirement, setting up a checking account, or investing for your children’s future, Acorns has you covered. The availability of multiple account types makes it a versatile platform for all your financial needs.

Straightforward Pricing

Acorns has a straightforward pricing structure, making it easy to understand your investment costs. The app offers three subscription tiers, each with its own set of features and benefits. With monthly fees ranging from $3 to $9, you can choose the subscription that best suits your needs and budget.

Checking Account Access

Unlike many other investment platforms, Acorns provides checking account access through its Acorns Spend feature. This checking account comes with a debit card that allows you to seamlessly integrate your spending and investing. With features like real-time round-ups and access to fee-free ATMs, Acorns Spend offers added convenience and financial management capabilities.

Focus on Boosting Savings, Not Retirement

While Acorns is excellent for boosting your savings and investing small amounts, it may not be the most suitable platform for retirement savings. The round-up amounts are typically not substantial enough to contribute the recommended 5% to 20% of your income towards retirement. If retirement savings are your primary goal, you may need to explore other investment options.

Pricing and Fee Structure

Acorns offers three subscription tiers: Lite, Personal, and Family. Each tier has its own set of features and benefits, allowing you to choose the level of service that aligns with your financial goals. The pricing for each tier is as follows:

Lite: $1 per month
Personal: $3 per month
Family: $5 per month

The Lite tier includes the basic investing account, while the Personal tier adds an individual retirement account (IRA) and a checking account. The Family tier offers all the features of the Personal tier, along with the ability to set up custodial investment accounts for your children.

For individuals with small investment portfolios, Acorns’ monthly fees can be relatively high. While the fees may seem reasonable for larger accounts, they can have a significant impact on smaller balances. It’s essential to consider the fees in relation to your investment size to determine if Acorns is cost-effective for you.

It’s important to note that these monthly fees are in addition to any expense ratios associated with the underlying exchange-traded funds (ETFs) in your portfolio. Acorns’ ETFs have expense ratios ranging from 0.03% to 0.25%.

Unique Products and Features

Round-Up Transfers

Acorns’ round-up transfers are at the core of its microsavings strategy. By rounding up your purchases to the nearest dollar, Acorns helps you save and invest effortlessly. These round-up amounts are tracked and accumulated until they reach a minimum threshold (usually $5), at which point they are transferred from your checking account to your Acorns investment account.

You can choose to include all eligible purchases in your round-up transfers or manually select specific transactions. Additionally, Acorns offers round-up multipliers that allow you to increase the amount invested. This feature is particularly useful for those who want to accelerate their savings and invest larger sums.

Acorns Spend

Acorns Spend is a checking account feature that integrates seamlessly with your Acorns investment account. With Acorns Spend, you can instantly apply round-ups to your purchases, further boosting your investments. The checking account comes with a debit card that can be used at over 55,000 fee-free Allpoint ATMs nationwide.

Acorns Spend also offers benefits like smart deposit, which allows you to allocate a portion of your paycheck directly into your Acorns investment, retirement, or checking account. This feature helps you automate your savings and ensure consistent contributions to your financial goals.

Acorns Early

Acorns Early is a unique feature that enables you to set up custodial investment accounts for your children. These accounts, known as UTMA/UGMA accounts, allow you to invest on behalf of your children and use the funds for their benefit. By investing small amounts regularly, you can help secure their financial future and potentially provide them with a significant sum when they come of age.

Acorns Early is included in the Family subscription tier, which offers a comprehensive package of investment, retirement, and checking accounts for the whole family. This feature sets Acorns apart from many other investment platforms and makes it an appealing choice for parents looking to invest for their children’s future.

Conclusion

Acorns offers a user-friendly and accessible approach to investing. With its automatic round-up transfers and innovative features like Acorns Spend and Acorns Early, it simplifies the investment process and makes it easy for anyone to start saving and investing. While it may not be the most suitable platform for retirement savings or individuals with very small investment portfolios, Acorns is a great option for those looking to dip their toes into investing and grow their savings effortlessly. With its straightforward pricing and range of account options, Acorns offers a comprehensive solution for all your financial needs.

Acorns Review