Is Acorns Investing Worth It? Our 2022 Analysis

Acorns is one of the most popular round-up investing applications available, and it is among the finest in the business. It’s simple to use, offers a fantastic education platform for novice investors, and has simple, upfront costs, among other things. But, Is Acorns investing worth it? Let’s find out!

Is Acorns Investing Worth It | What is Acorns Investing?

Acorns is a fintech company best known as a micro-investing platform. It allows users to set up automated investments into a portfolio through Round-Ups: Acorns rounds up a debit or credit card purchase made on a linked card to the nearest dollar and invests the change on behalf of the member.

Investments are made into one of five portfolios carrying different levels of risk. Acorns is one of many fintech companies focusing heavily on millennial investors, including Robinhood Markets, Inc. and Stash Financial, Inc.

It appeals to millennials and other people new to the world of investing, who may not have significant capital to put toward their retirement. Acorns’ goal is to enable users to invest early and often and with minimal effort. The average Acorns member invests more than $30 per month through Round-Ups, the company’s signature program.

When was Acorns Investing launched? 

Acorns is an Irvine, California-based financial technology and financial services business that specializes in micro-investing and Robo-investing. Acorns had 8.2 million clients and $3 billion in assets under management in 2020, according to Fortune’s Impact 20 list.

 It was first released in 2014 as an iOS and Android app. The portfolio choices available to users created in collaboration with Nobel Laureate and paid adviser Harry Markowitz.

Who created Acorns Investing App? 

Walter and Jeff Cruttenden, a father-and-son business partnership, established Acorns in 2014. Walter, the father, established investment banking company Roth Capital and was the founder and CEO of E-Trade’s investment banking division. 

Shlomo Benartzi, a behavioral economist, named head of an Acorns behavioral economics committee in 2018. He is working on the Money Lab project, which would perform field tests on customer spending.

CEO Noah Kerner, who formerly headed creative branding firm Noise and served as Chief Strategy & Marketing Officer at WeWork, now leads the business. Acorns intends to go public in May 2021 via a merger with Pioneer Merger Corp, a blank-check business.

How Does Acorns Work?

Acorns is a platform that allows members to invest by saving small amounts of money regularly; a method known as micro-investing to save for retirement. Essential banking services are also available on the website for a low fee.

The company’s services are divided into three areas. The first allows members to invest their spare cash in exchange-traded funds (ETFs). The second feature allows users to create and fund an IRA directly through the platform, and the third gives members access to a debit card provided by Visa, Inc.

Acorns offer five distinct Robo-related products for Invest, Later, Spend, Found Money, and Early.

Invest 

A taxable investment account in which you may invest in exchange-traded funds (ETFs) based on your risk tolerance and financial objectives. 

Round-ups and dollar-cost averaging are two methods to keep the account funded indefinitely. You may set up regular donations to your account for as little as $5 with the latter. As previously stated, the former invests “spare change” from a connected account.

Later

Retirement is referred to as “later” by Acorns. You’re meant to invest for the long term, and selling your assets too often may be expensive. 

Perhaps Acorns should assume that their client base understands what “retirement” entails. In any event, “Later” is just a method to deposit funds into an IRA, which is a requirement for any Robo-service.

Spend

A checking account that includes a debit card and waives several fees, including one for maintaining minimum balances. 

Some ATM costs are also reimbursed. Smart Deposit is another tool that enables you to automatically drain money from a direct deposit in your Spend account into other accounts, such as Invest. 

Found Money

A website that gives you a tiny percentage back on purchases made at hundreds of big stores, including Walmart. The money you save when you purchase on Found Money goes into your Invest account.

Early

Acorns’ most costly tier offers access to a UTMA/UGMA account, enabling parents to open up accounts for their children without dealing with complicated paperwork.

What are the features of Acorns investing?

You can set up regular payments of larger amounts, receive referral incentives, and earn additional cash to invest by shopping via Found Money, the main Acorns app’s rewards program, to increase your Acorns balance, but these features aren’t as well promoted as the ability to invest your change. The features of acorns include: 

• Diversified portfolios.
• Automatic rebalancing.
• Access to Acorns Earns partners to earn while you shop.
• On-the-go accessibility through our mobile and web app.
• Investment support from our dedicated support team.
• Access to Acorns Later, an easy way to save for retirement.
• Access to Acorns Checking, the only debit card that saves, invests and earns for you.

How Can You Benefit From Acorns?

“The ideal moment to start investing was ten years ago. Today is the second-best time”. This is a saying you’ve probably heard before, and it couldn’t be more accurate. 

Compound interest has more time to act to your advantage the sooner you start investing.

For a student, is Acorns investing worth it? Acorns offer a great deal. It may be a fantastic method for students with large debt loads or modest salaries to start creating money for their long-term future.

Acorns are well-known for its ability to invest your extra cash, and for a good reason. It’s a fantastic concept, and Acorns makes it simple. 

The majority of individuals are unaware that investing isn’t limited to spare cash. You have the option of making more significant donations, which may be done automatically.

You may set up an account to automatically invest a modest but regular amount of money each month. You’ll have a far more significant effect if you combine automatic contributions with round-up investments.

Keep in mind that you’ll have to pay a monthly charge to utilize Acorns. To make the entire thing worthwhile, you’ll want your investments to be more than your charge.

Rounds Up Method

Acorns is well-known for its “Round-Ups” method, which allows you to invest your spare change anytime you use a connection card. Let’s suppose you spend $9.45 on lunch at your favorite restaurant. You may use Acorns to round up to $10 and invest the additional 55 cents in your Acorns account.

Acorns has taken Round-Ups to the next level. You may choose to increase your “spare change” amount by up to 10 times. As a result, instead of spending 55 cents, you may invest up to $5.50 in that one transaction. This is a great habit to develop if you want to save more money every day.

In this instance, “Acorns Earn” refers to one of the Acorns’ most incredible and most potentially effective features, rather than any dimes or pennies you may discover on the pavement.

The way it works is that every time you use your Acorns-linked debit or credit card at a participating shop, that retailer will contribute to your Acorns investing account.

We’re not even talking about off-brands here. These are presumably companies where you already spend money.

Checking Account

Acorns also provide an Acorns Spend checking account. With their Smart Deposit service, you may have a part of your paycheck automatically deposited into your checking, investment, or retirement account. It’s a way to put money into yourself without even thinking about it.

Acorns Spend also includes a Visa debit card, which you may use to make purchases and deposit round-ups into your investing account. You also get access to 55,000 fee-free Allpoint ATMs throughout the United States.

Plus, if you sign up for direct deposit into your Acorns Spend account and get two installments, you can earn $75 right now. That’s an additional $75 you may put toward your investment account, retirement account, or have some extra spending money.

You’re well on your way to getting the most out of the Acorns app if you’ve signed up for Round-Ups and automatic contributions. You may get a bit more out of it if you connect your credit cards.

We aren’t usually lovers of utilizing credit cards. After all, getting out of needless consumer debt is a key to financial success.

Rewards Program

Credit cards with substantial rewards programs, on the other hand, may increase your Acorns advantages if you avoid keeping a revolving amount.

Let’s suppose you go to Starbucks and spend $2.95 on a large coffee. Acorns will round up to the nearest 5 cents and deposit the difference in your account. 

However, if you have a Round-Up booster set, you may round that number up to $5 and save even more money in your account.

If you pay using your Starbucks credit card, the money will be credited to your rewards account as well. 

You’re working your way toward complimentary drinks on top of the additional $2.05 you’ve placed in your Acorns savings account. If you do this every day, it will mount up over time, both in terms of your Starbucks addiction and your money.

Of course, depending on your credit card program, you may utilize this method to earn frequent flyer points and perhaps cashback.

There’s no better way to invest your extra cash and receive the odd store reward than Acorns, mainly since it provides IRA accounts. Acorns’ automated roundups simplify saving and investing, and most investors will be astonished at how fast their pennies add up.

What are the other users saying about Acorns Investing?

Is acorns investing worth it or not can be known by looking at the figure that the business has received about $100 million in venture capital financing since its inception.

Jennifer Lopez, Alex Rodriguez, Bono, Ashton Kutcher, and Kevin Durant were among the prominent investors in Acorns as of August 2019. PayPal, BlackRock, and NBCUniversal are among the company’s investors.

How to buy a subscription of Acorns?

For your financial requirements, Acorns provides three distinct subscription levels.

Acorns Lite costs $1 each month- Are you ready to get started? With a simple, automatic investing account, you can invest spare change, set up recurring investments, and more.

Personal Acorns – $3/month- Your financial health system, complete with all-in-one investment, retirement, and checking accounts, as well as a metal debit card, financial counseling, and more!

Acorns Family- $5/month- There are investment accounts for an infinite number of children per family! Also included are a personal investment, retirement, checking accounts, bonus investments, financial counseling, and more!

While those costs seem to be reasonable, they’re very costly when calculated on an annual % basis, as many other investing apps and Robo-advisors do. 

Younger employees just starting—the kinds of investors Acorns aims to attract—will pay more than rival robos.

Assume you have $100 to put in a new investing account. Your yearly fee would be $0.25 if you utilized Betterment, which charges an annual percentage rate of 0.25 percent for its essential Betterment Digital product. The cost of that $100 investment over a year would be $12 if you established an Acorns Lite account.

Consider a $10,000 investment in an Acorns Personal account, which would cost you $36 per year, or 0.36 percent, making it more costly than Betterment.

Naturally, when you invest more, the fees become a lower and smaller percentage of your total amount, but this may take time. 

Expenditure Ratio

The expenditure ratios for investment expenses vary from 0.03 percent (VOO) to 0.25 percent (two ESG funds). If you invest in Early, Invest, or Later, you will pay this amount.

A brief word on Spend: While Acorns’ checking account is technically free, the fact that you must spend $36 per year to get access to it is less than ideal, primarily because other robos, like Betterment, provide access without such restrictions.

Even so, you could see the checking account as a bonus to get into the $3 tier, in which case the cost is less important.

How to cancel the subscription of Acorns? 

If due to any reason, a question arises in your mind that “is acorns investing worth it or not?” and you like to cancel your subscription. Follow these steps while operating from your phone: 

• Tap the menu (avatar) in the top left corner of the screen after signing in to your account.
• Tap “Settings,” then “My Subscription,” then “Manage.”
• Follow the steps to liquidate and cancel accounts by tapping “Cancel subscription.”

And if you are operating through the web and the same question hit your mind that “is acorns investing worth it or not?” and you want to cancel your subscription. Follow these steps to cancel your subscription of acorns:

• After signing in to your account, go to the top right corner of the screen and select the menu (avatar).
• Select “Profile & Settings” from the drop-down menu.
• Select “My Subscription” from the drop-down menu.
• Scroll down to “Manage” and click it.
• Select “Cancel Subscription” from the drop-down menu.

To liquidate and cancel accounts, follow the instructions.

How to reach customer care of Acorns if having any inquiry?

If you have any queries, feel free to contact the Acorns Support team:

Phone: (855) 739-2859.

Email: support@acorns.com

What are the alternatives to Acorns? 

Is acorns investing worth it alone, or do an investor have any other option too? The answer to this question comes up with several alternative options. 

There are several alternative applications, which are operating on the principle of acorns. Some of them are Betterment, Wealthfront, and wealth simple. Let’s discuss a few details of these apps. 

Betterment simply levies a fee. It charges a flat cost of 25% per year for its lowest pricing tier, which works out to only pennies a month while you build up your portfolio.

What about Wealthfront, another Robo-advisor? You will require a $500 minimum balance. They do, however, provide free account management for the first $10,000 of each account. Wealthsimple, a Canadian Robo-advisor, charges up to.50 percent in fees but also provides a personal touch.

But an alarm beeps in the mind that is acorns investing worth it more than the others? The answer is, the five investment portfolios Acorns offers to maximize your profits while minimizing your risk.

Moreover, Acorns does not operate on commission. Therefore there are no account minimums. Acorns aims to provide you with the resources you need to take the best possible care of your finances.

We believe that everyone should have access to financial health, so we make it simple to invest in yourself. You can start investing early and frequently with Acorns without making major lifestyle adjustments. You may get start with as little as $5.

Pros of Acorns App

The answer to the question “Is Acorns investing worth it?” has two aspects. One is that the best investing approach is to get started right away—Acorns strives to make this as simple as possible. 

With no account minimum, you can start making regular contributions right away. You can also round up your purchases on connected accounts to contribute even if you do not consider yourself an investor.

However, setting up your savings is straightforward, thanks to an intuitive interface, and you won’t be overwhelmed with a confusing variety of ETFs. 

You’ll spend relatively little in fees if you stick to a primary account without ESG funds. If you need a little push to get start, Acorns’ automated service makes a lot of sense.

Cons of Acorns App

The other aspect of the answer to the question “Is Acorns investing worth it?” is that Acorns has a handful of significant flaws. 

The first is the tiered charge structure, which is prohibitively expensive for individuals who are just getting started with modest balances. It’s a terrible bargain to pay $36 a year to access an IRA when you have a few hundred dollars invested. 

While many Robo-advisors have a $500 or $1,000 account minimum, Betterment offers a no-minimum, lower-fee option.

It’s a difficult pill to take that you have to pay $3 to gain access to your bank account, and there’s no way to speak to a real-life financial adviser.

Meanwhile, although some parents may prefer a UTMA/UGMA account, anybody saving for college may wish 529 accounts were available. 

Furthermore, there are no tax-loss harvesting tools, which will be helpful if you have more money in your account and need to balance the tax consequences of selling winners.

Is Acorns Investing Worth It? – Quick Summary

We have reviewed the Acorns Investing thoroughly above, but does it really worth it? We have devised a quick guide to help you focus on the major factors that will help you decide if you really should use it or not.

Account minimum	$0 to open account; $5 required to start investing.
Investment expense ratios	0.03% to 0.18%.
Automatic rebalancing	Free on all accounts.
Tax strategy	Not available.
Portfolio mix	The portfolio mix is generally well-diversified but lacks significant exposure to international bonds. A sustainable portfolio is available for free.
Account fees (annual, transfer, closing)	$50 per ETF to have them transferred to another broker when you close your taxable Acorns account; no charge to sell your investments and have the resulting cash transferred.

CONCLUSION

The only way to fight inflation and make your money generate more money is to invest. Even though the markets are turbulent, you are more likely to earn money if you concentrate on long-term investment. 

Unfortunately, investment is often seen as a problematic and challenging concept to grasp, or at the very least, a time-consuming process to begin. This is why, before risking your real money, it’s a good idea to practice investing with paper trading.

Acorns is generally not a suitable match for people who are well into their careers unless they need to play significant catch-up with investing. 

If you’re in your 40s or later and haven’t begun saving for retirement, you should look into other ways to invest. Acorns are an excellent method to begin increasing your taxable assets, which are an essential component of every retiree’s portfolio.

Overall, Acorns is an excellent method to start investing and developing a portfolio without dealing with the headaches that come with HR. Using these methods to optimize your app use after you’ve gotten started, and you’ll notice your money start to increase quickly.