A father-and-son duo is the brains behind Acorns, an investment service that rounds your spending up to the next dollar and invests the difference. All you need is a linked credit card and checking account, and Acorns will take care of the rest. Although you’re only investing a handful of change at a time, this micro-savings service makes investing virtually painless.
Why It’s Hot
Why It’s Not
All About Investing With Acorns
|Under $1 million||$1 per month|
|Over $1 million||0.25% per year|
|Under 24 and in college||Free|
|IRAs||+$1 per month|
The micro investing service was designed for certain kinds of investors: people who have a hard time saving, college students, and those that want to be hands-off with their investments.
Round-Up transfers will take every purchase you make on your linked account, round the transactions up to the next dollar, and deposit the difference into your Acorns investment.
You can choose what kinds of purchases you want to Round-Up with, or set it to “automatic” which will apply to all eligible transactions. If you’re looking to invest at a faster rate, you can choose to go with Round-Up Multiplier, which will boost your Round-Up to 10 times the amount.
|Purchase Amount||Round-Up Difference||Multiplier (x10)|
Besides Round-Up deposits, you can also invest cash reward bonuses from a rewards program, or lump sum amounts. To simplify the process, you have the option to schedule recurring daily, weekly or monthly deposits.
There are no deposit or account minimums, no commision fees, and no penalties for withdrawing funds. Acorns makes money by withdrawing them from your funding source, rather than taking it out of the money you invested.
Every time you use your Acorns-linked debit or credit card at one of 100+ partner retailers, that retailer will invest a little bit into your Acorns account. In some cases, you’ll get your cash back automatically in 60 to 120 days, without having to complete any additional steps.
For existing Acorn users, Acorns Later is an optional service which invests in specially-designed Individual Retirement Accounts (IRAs). These cost an additional $1 per month until your investment reaches $1 million. After that, the fee is $100 per $1 million.
Free For College Students
Acorns is reaching out to new, young investors by offering zero fees on any accounts of any size. To qualify, you must have a valid email address ending in .edu, with a “Student” employment status for up to four years from the registration date.
The website and app are treasure troves of information for the newbie investor. You’ll find keywords defined in layman’s terms, Grow Magazine which covers personal finance topics, and a free, five-step, financial literacy course from Udemy.com.
Opening An Acorns Account
Signing up is relatively quick and easy by going online or downloading the app. You start by entering a PIN access code, which will be your PIN for every time you log into the app.
Choose a bank account to Round-Up. If your bank is not listed, you can click the “Next” button and do a search for your bank’s name. You’ll get a prompt to log into your bank. Once in, click on which account you’d like to Round-Up. If you want, you can link Acorns to more than one account.
Choose a checking account to transfer funds. Different than the previous step, this account is where Acorns pulls money for investment. Just connect an existing checking account from the list and sign-in. If the account isn’t listed, you can input your routing and account information to connect the checking account of your choice
Create an investment account. You’ll need to input your first and last name, address, phone number, date of birth, and a security question and answer. You’ll then be prompted to answer standard questions required by the SEC when you open a brokerage account. The next screen will ask about your personal finances and your reasons for investing. This will help Acorns give you a good portfolio recommendation as well as customized advice. Lastly, you’ll need to fill in your social security number, which will be used for identity verification, tax reporting, and fraud prevention.
Once you’ve open your Acorns account, it’s time to check out your portfolio, where you’ll also see a list of tips, advice and ideas.
Acorns will recommend a portfolio for you based on your variable cash flow, median net worth, long-term investment reason, age and income. However, you have the freedom to choose whichever portfolio you want:
|Portfolio||Stock %||Bond %||Real Estate %|
Once you’ve picked your portfolio, you can move on to exchange traded funds (ETFs). Select which asset class you want to invest in, click “Confirm Portfolio,” and you’re done!
If you’re new to investing, or if you don’t have much to invest, then Acorns may be a good option. Its micro-savings service won’t affect your lifestyle. On the flip side, the monthly deposits are such a small amount, that you can’t really count it as a way to save for your retirement.
If you want a more “serious” way to invest with larger deposit amounts, you should consider one of the popular Automated Investing services (a.k.a. Robo-Advisors) like WealthSimple, Personal Capital or Wealthfront.
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