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Acorns is an investment app designed to promote passive investing and simplify financial management for everyday users. Unlike other investing apps that make day trading easier or democratize access to more complex alternative investing methods, Acorns is focused on providing a slow-and-steady approach to investing along with its flag-ship feature Round Ups, which enables investors to invest spare change from daily purchases up to the nearest dollar.
Read on for details on how Acorns works, the new features that set Acorns apart from competing investment apps and answer the question of whether Acorns is right for your investing journey.
What Is Acorns?
Acorns was founded by father and son duo Walter and Jeff Cruttenden in 2012 with a flagship product that enabled users to round up daily purchases to the nearest dollar and invest the difference in portfolios of exchange-traded funds (ETFs). Rather than actively managing a portfolio of stocks or manually investing amounts into self-selected funds, Acorns automated and simplified the investment process. Acorns has maintained its mission to encourage passive investing to the broader public while building new features like custodial accounts for kids and methods to earn bonus investment opportunities with everyday spending.
How Acorns Works
Acorns is an investing app offering three paid-subscription plans, which have a range of investment, banking and earning features to help users save and invest for their future and the future of their kids. Acorns is built for automation and financial simplicity with automated investment portfolios and the ability to contribute to accounts with round-Ups, percentage-based contributions from paychecks, recurring contributions or lump-sum contributions.
Acorns also offers more than 450 opportunities for users to earn bonus investments with partner brands, a tool to find side hustle opportunities, a browser extension to earn additional bonus investments, and educational resources.
How Does Acorns Differ From Other Investment Apps?
Acorns differs from other investment apps by offering an investment and financial experience that seamlessly inter-operates specifically for newer investors or investors seeking a less-complicated investing experience. For example, unlike Robinhood, Acorns limits the ability of non-premium plan users to directly invest in stocks. Acorns also offers unique features like “Earning” to get bonus investments and “Round Ups” to invest the difference of purchases up to the nearest dollar.
While financial apps, like the Autopilot app, have been launched in recent years to increase investor access to more sophisticated investing opportunities, Acorns is focused on offering only simple-but-proven investing options to its users.
Investment Portfolios Offered By Acorns
For Acorns Invest, Acorns offers five core portfolios and four ESG (environmental, social and governance) portfolios based on risk tolerance. These portfolios are composed of exchange-traded funds (ETFs) holding a mix of stocks and bonds diversified across sectors and regions. Premium plan users can customize their portfolio adding specific stocks.
Acorns Later customers are placed in a similar diversified ETF portfolio based on their age. This portfolio will adjust to hold more conservative investments as retirement age approaches. The Acorns Early default portfolio is more aggressive and holds a larger mix of stock ETFs.
Features And Benefits Of Using Acorns
Acorns’ core benefit is the comprehensive suite of financial accounts it offers to users with built-in features that make it easy to contribute and automatically invest for the future. With Acorns Invest, Later, Early and Banking accounts, you can invest for the short term, long-term, for your kids’ futures, and manage as well as save their cash, all while utilizing innovative methods to make contributions effortless.
In recent years, Acorns has rolled out new offerings and features like its ESG portfolios to invest according to users’ principles and to directly invest in stocks and ETFs with custom portfolios.
A benefit of using Acorns is the lack of overdraft fees and the ability to use more than 55,000 fee-free ATMs. Depending on the subscription plan, Acorns offers educational resources through videos, tips, live Q&As with investing experts, and educational courses.
Acorns Subscription Plans
Acorns Personal
Acorns Personal, priced at $3 per month, offers access to an investment account, Acorns Later retirement account, and a checking account with Round-Ups and Acorns’ automated investment portfolios. This subscription plan is best suited for those wanting a simple investment strategy for the short and long term and manage their finances in a single easy-to-use application.
Acorns Personal also offers educational resources through Learning with investing videos and tips. With the Personal plan’s Earning feature, you gain access to more than 450 bonus investment opportunities through shopping partners.
Acorns Personal Plus
Acorns Personal Plus, priced at $6 a month, offers Acorns Personal’s core offerings in addition to a 1% IRA match on new contributions, upgraded banking and investment features, and live Q&As with investing experts. Upgraded banking with Personal Plus is called Mighty Oak Banking and provides APY of 3% in checking and 5% in an emergency fund account.
Personal Plus users also gain a 25% match on bonus investments through the Earning portal and a special tungsten metal Might Oak Visa debit card to flex their membership.
Acorns Premium
Acorns Premium, priced at $12 a month, offers Acorns Personal and Personal Plus’ core offerings as well as additional features specifically for parents. In addition to investment, retirement, checking and emergency fund accounts, Premium users gain access to Acorns Early, an investment account for parents to save for their children’s futures and the ability to add individual stocks.
Premium users also get a 50% match on bonus investments instead of 25% and educational courses. In addition, Premium offers Banking for kids through GoHenry by Acorns, a $10,000 life insurance policy for eligible customers, and a no-cost Will.
Saving For Retirement With Acorns Later
Acorns Later makes saving for retirement easy with automated investing through traditional, Roth, and SEP IRAs. By investing through these accounts, investors can access tax savings by deferring taxes or seeing investments grow tax-free. With Acorns Later, investors’ diversified portfolio is selected based on age and time until the user reaches age 69.
Acorns Later accounts are SIPC-protected up to $500,000, as are traditional options like Vanguard retirement investing accounts, and investors can set up daily, weekly or monthly contributions to these accounts to make saving for the future even more frictionless.
Investing For Kids With Acorns Early
Acorns Premium users can invest for their kids’ futures with Acorns Early, a UTMA/UGMA (uniform transfer to minors/uniform gift to minors) custodial account. These custodial accounts enable users to invest funds that can then be transferred to the children when they’ve reached maturity for any purpose they’d like. Friends and family can also easily contribute to Early accounts for your child to expedite growth.
Like with Invest or Later accounts, you can choose to manually invest in Early accounts, invest a percentage of paychecks or automate contributions. Early accounts automatically invest in Acorns’ aggressive portfolio as these accounts are intended for longer time horizons.
Security And Privacy Features
Privacy and security are priorities for Acorns through both app features and internal company practices. Acorns protects and does not sell data and protects user accounts through two-factor authentication requirements. The company also encrypts data, runs regular security audits and has a third-party verify technical controls to meet industry standards for information protection.
Pros And Cons Of Using Acorns
Acorns’ features are optimal for new investors and investors seeking a simple, automated investing app. With perks like educational resources and high APY on bank accounts, Acorns is ideal for individuals seeking a single financial home to save and invest for the future.
Acorns’ disadvantages mostly revolve around limited manual investing opportunities for more experienced investors who ultimately aren’t the target customer demographic for Acorns.
Pros
- Automated investing: Round-Ups and automated investing portfolios make Acorns ideal for new investors.
- Comprehensive financial account offerings: Acorns offers every investment and financial account an individual would need for long-term financial well being as well as useful financial products like life insurance.
- High-interest banking accounts: For Personal Plus and Premium users, the Acorn Checking and Emergency Funds accounts are high compared with competitors at 3% and 5%, respectively.
Cons
- Monthly plan fees: Acorns charges fees for accounts that are usually offered at no cost by competitors.
- Limited asset access: Acorns does not allow investors to directly invest in bonds, index funds or CDs like traditional brokerages.
- Less ideal for experienced investors: Experienced investors may be left wanting more manual investing flexibility and research tools traditional brokerages offer like stock screeners.
Bottom Line
While experienced investors may find that Acorns lacks essential features they’ve come to expect from investment apps, many would benefit from starting their investing journey with Acorns. Whether investors want to save $10 or $10,000 a month, Acorns makes it easy to save for the short term, for retirement and for growth of a child’s portfolio. With educational resources to grow the confidence of beginners and Custom Portfolios for discerning investors who want to invest in individual stocks or ETFs, Acorns is an innovative app that makes financial management simple and accessible.
