I’ve become a huge fan of having Acorns as a part of my investment strategy. I’m a fan of many things that help me to automate my finances, but Acorns makes it seamless. No longer do I have to worry about uneven transactions on my account because Acorns will round-up the spare change and invest it for me.
What it does –
One-time investments –
When you open your account, you’ll have to drop in a one-time deposit (and you’ll be prompted to to set up a recurring transfer (more on that).
You can also go into Acorns any time you find your bank account with extra cash and move it easily through the App as a one-time deposit without disrupting the automation.
Recurring transfers –
Every week, Acorns automatically takes a small transfer from my checking account. I’ve had this set anywhere from $5 to $100, but it’s extremely flexible. You can have the frequency set to anywhere from Daily, to Weekly, to Monthly and the amount can whatever your finances can realistically support.
You can easily invest a dollar a day, or a thousand a month depending on your personal financial situation.
This is where Acorns really shines. The app links your credit cards, debit cards, and bank accounts to analyze your transactions. You then specify which accounts to turn on Round-Ups for and Acorns does the rest, seeing how much spare change is required to round up to the next dollar (one full dollar for an even $.00 transaction) and adds it to a pending investment.
When that pending amount reaches $5 or more, Acorns pulls it from your bank account and transfers it into the investment account automatically purchasing a mix of ETFs.
It’s easy to amp-up the Round-Ups with a multiplier. The multiplier can be set to 2x, 3x, or 10x and then every Round-Up is multiplied to calculate a pending amount. For example, on a 3x round up a $4.70 cup of coffee will result in an investment of $0.90 and a $15 charge to your car toll account will result in a $10 ETF investment.
You can see in the image here how easy it is to change your Round-Up multiplier. Just tap the amount you want and you’re ready to go.
So what? –
I don’t know about you, but the less I have to think about taking money out of my checking account, the better. Acorns makes it easy to invest with no experience or knowledge of the stock market and for a low-fee (starting at $1 per month).
Acorns is built to be mobile-first. This means you can easily monitor your investments and see pending transfers (or make any changes) right on your phone. Even skipping a recurring transfer or changing your Round-Up multiplier any time you need.
There are few options out there that make investing this easy, the biggest challenge in Acorns is ensuring that you leave your money alone for the long-term despite having such convenient access to it.
Doing it Wrong –
The biggest point of caution in Acorns is to look at the fees as a percentage of your balance. A savings account can earn almost 2% APR right now with no minimum monthly fee, a Betterment account will run at 0.25% of your balance under $5000, and many checking accounts have no minimum monthly balance either.
If you start with a $5 deposit and then only put a dollar a day into the account, you will be overpaying in fees. It’s easy to look at the $1 monthly fee and think it’s not important, but your fee percentage the first month on $35 of deposits is almost 2.9%. At the end of the next month when you’ve made another $30 in deposits, the monthly fee is over 1.5%. Month 3 the fee is just over 1%. When you get to month 6, the fee is down to just .054%. Even at the end of 1 year (0.27%), that $1 monthly fee is still higher than Betterment.
My personal (not a financial professional) opinion wouldn’t be to start an account with less than a $400 opening deposit to at least start on even ground.
Additionally, as noted here – Acorns doesn’t always play nice with apps that track your finances.
I may earn commissions or referral bonuses off links from this site, but that does not influence which sites or apps that I link to. These are applications that I am signed up for and use. The affiliate links are there to get this blog to start paying for itself.
I only receive a $5 referral bonus if you sign up for Acorns from one of my links here, not even an affiliate bonus. Thanks for helping me and the blog, I hope you found the review worthwhile.