If you are hesitant about opening an investment account that’s perfectly understandable; you might not believe you have the time or knowledge to properly manage your accounts or the money to invest. But, there is a new app, Acorns, that makes investing EXTREMELY easy – it takes the management aspect out and best of all, you probably won’t even miss the money you invest.
How does Acorns work?
The Acorns’ app automates the investment process for you by rounding up your purchases and depositing them into an investment account.
Let’s say you spend 8.19 on lunch, 48.50 on gas and 33.24 at the grocery store in one day; Acorns will round-up each purchase ($0.81 from lunch, $0.50 from gas and $0.76 from the grocery store) and deposit that money into the investment account. That means you have deposited $2.06 in your account and you probably didn’t even miss it. Even though $2.06 doesn’t sound like a lot of money, imagine doing this over an entire week, month or year. You will quickly see how this spare change ads up!
How do I setup an account?
You can sign up on your PC or through a mobile app and opening an Acorns account is easy. You can sign up now by clicking here, but keep reading a bit longer. I’ll provide the link again.
- Sign-up with a password and secure password and if you are using a mobile app, then you will need a secure pin too.
- Link the bank account you want to use by providing your username and password. This is account that Acorns will use the round-up feature on.
- Acorns will ask a few investor questions, most people will answer “None of these apply to me.”
- Acorns will then ask some personal questions about your employment status, yearly income and investment history. They will also ask reason for investment (Long-term investment, Short-term investment, Major purchase, Children, or General) these questions are only to help Acorns pick a suggest risk profile for you.
- Although, Acorns will suggest a profile for you can change your risk profile whenever you like.
- The risk profiles are currently:
- Moderately Conservative
- Moderately Aggressive
- The risk profiles are currently:
- Acorns will then ask for an initial deposit. This can be low as $5.00 and up to $50,000. After you complete the initial setup, you will be taken to the home screen where you link additional accounts and credit cards.
Link whatever accounts you want the Acorns app to round-up and take deposits from – you can link an unlimited number of accounts. You can even link credit cards if you primarily use them instead of debit cards for purchases. You will also have the option to make regular/reoccurring deposits – these can be as low as $5.00 a month.
How does Acorns get the money?
From this point on, Acorns will start the round-up of your purchases and will even go back approximately one week of purchases to start you off. The roundup money doesn’t leave your account until reach $5.00 to invest, and no, there are no fees to withdraw the money.
My bank offers a “keep the change account” why should I use Acorns?
Good point, fair question. The programs offered by banks usually transfer money into a regular savings account while Acorns transfers your change into an investment account with higher returns.
The account is actually a portfolio of ETF’s (exchange traded funds) that Acorns selects and balances. Without getting too technical, Acorns does not try to beat the market, they invest in index portfolios which allow you to capture the movements of the market. Are they gains as big? No, but there are also arguably less risky and pretty steady.
Why should I trust Acorns?
Acorns was formed by father and son investment banker team Walter and Jeff Cruttenden in 2012 and within 2 years of launch had opened about 1 million investment accounts. Acorns has received $62 million in funding from corporate giants such as PayPal, e.ventures, and Greycroft Partners and others.
Acorns parent company is Acorns Securities LLC, which is a member of FINRA and SIPC and Acorns Advisers LLC is an SEC registered investment adviser.
Are there costs to invest?
The short answer is – yes. If your account balance is $5,000 or under Acorns charges $1.00 per month, once your account is over $5,000 Acorns charges .25% per year. As an example, if your account has $6,000 in it, you will have a $15.00 YEARLY cost. In the grand scheme of things – that’s great!
What’s the catch?
As with any investment account, you can lose your principal deposit. This will always be a risk when you invest money, but the saving is rather painless so take advantage of not having to think about managing an account. So go head and start saving your spare change!
What if I want to invest more?
There are additional investment opportunities within the Acorns app.
- Reoccurring Investments – you can set up reoccurring investments which will withdraw a set amount from your account on a monthly basis.
- Found Money – by May of 2016 the company expanded it offerings to introduce Found Money another way to earn investment dollars. Partners companies such as Jet.com, 1-800-Flowers, Hotel Tonight and others will invest money into Acorns users’ accounts when they shop with these brands.
- Refer a Friend – Once you have your account setup share it with your friends and you both receive $5. The link is only available in the mobile app, your phone will allow you send a referral link to any contact in your phone.
More on the app
Play around with the app so you can see its features and look at the default settings. For instance, by default if you have a purchase that is a round number, like 150.00 Acorns will automatically “roundup” $1.00 for your deposit on that purchase. You can see all the round-ups Acorns is doing.
You can limit the types of purchase Acorns will round-up from. If you have Acorns set to use all purchases, then anything you do – even actions like automatic payments through PayPal for your Netflix or Hulu subscriptions will be rounded up.
Start using Acorns now, click here and sign up! It won’t hurt to invest something today.