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Acorns is an investment app designed to encourage passive investing and simplify financial management for everyday users. Unlike other investment apps that facilitate day trading or democratize access to more complex alternative investment methods, Acorns focuses on offering a slow and steady approach to investing, along with its flagship feature, Round Ups, which allows investors to invest spare change from everyday purchases down to the nearest dollar.
Read on to learn details about how Acorns works, what new features set Acorns apart from competing investment apps, and to answer the question of whether Acorns is right for your investing needs.
What are acorns?
Acorns was founded in 2012 by father-son duo Walter and Jeff Cruttenden with a flagship product that allowed users to round up everyday purchases to the nearest dollar and invest the difference in portfolios of exchange-traded funds (ETFs). Rather than actively managing a stock portfolio or manually investing amounts in self-selected funds, Acorns automated and simplified the investment process. Acorns has maintained its mission of promoting passive investing to the general public while developing new features like custodial accounts for kids and ways to use everyday expenses to gain additional investment opportunities.
How Acorns works
Acorns is an investment app with three paid subscriptions that offer a range of investing, banking and earning features that help users save and invest for their own and their children’s futures. Designed for automation and financial simplicity, Acorns offers automated investment portfolios and the ability to fund accounts with round-ups, percentage contributions from salary, recurring contributions or lump sum contributions.
Acorns also offers users more than 450 ways to earn bonus investments from partner brands, a tool to find side income opportunities, a browser extension to earn additional bonus investments, and educational resources.
How is Acorns different from other investment apps?
Acorns differentiates itself from other investing apps by offering an investing and financial experience that blends seamlessly together, especially for newer investors or investors looking for a less complicated investing experience. For example, unlike Robinhood, Acorns limits the ability of users without a premium plan to invest directly in stocks. Acorns also offers unique features like “Earning” to earn bonus investments and “Round Ups” to invest the difference of purchases to the nearest dollar.
While financial apps like the Autopilot app have been launched in recent years to give investors greater access to more sophisticated investment opportunities, Acorns focuses on offering its users only simple but proven investment options.
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 consist of exchange-traded funds (ETFs) that hold a mix of stocks and bonds diversified across sectors and regions. Premium plan users can customize their portfolio by adding specific stocks.
Acorns Later clients are placed into a similarly diversified ETF portfolio based on their age. This portfolio is adjusted to hold more conservative investments as they approach retirement age. Acorns Early’s standard portfolio is more aggressive and holds a larger mix of equity ETFs.
Features and benefits of using acorns
The main advantage of Acorns is the comprehensive range of financial accounts it offers its users with built-in features that make it easy to deposit and automatically invest for the future. The Acorns Invest, Later, Early and Banking accounts allow you to invest for the short term, long term and for your children’s future, and manage and save their money while using innovative methods to make deposits effortlessly.
In recent years, Acorns has introduced new offerings and features such as its ESG portfolios to invest according to users’ principles and invest directly in stocks and ETFs with custom portfolios.
One benefit of Acorns is that there are no overdraft fees and you can use over 55,000 fee-free ATMs. Depending on your subscription, Acorns offers educational resources in the form of videos, tips, live Q&As with investment experts, and educational courses.
Acorns Subscription Plans
Acorns Personal
Acorns Personal costs $3 per month and provides access to an investment account, an Acorns Later retirement account, and a checking account with Round-Ups and Acorns’ automated investment portfolios. This subscription is best for those who want a simple investment strategy for the short and long term and want to manage their finances in a single, easy-to-use application.
Acorns Personal also offers educational resources through learning with investment videos and tips. The Personal plan’s Earning feature gives you access to more than 450 bonus investment opportunities through shopping partners.
Acorns Personal Plus
Acorns Personal Plus costs $6 a month and offers the core offerings of Acorns Personal plus a 1% IRA match on new contributions, enhanced banking and investing features, and live Q&A sessions with investment experts. The enhanced banking with Personal Plus is called Mighty Oak Banking and offers a 3% APR on checking accounts and 5% on an emergency fund account.
Personal Plus users also receive 25% on bonus investments through the Earning Portal and a special Might Oak tungsten metal Visa debit card to boost their membership.
Acorns Premium
Acorns Premium costs $12 a month and offers the core offerings of Acorns Personal and Personal Plus, plus additional features specifically for parents. In addition to investment, retirement, checking and emergency fund accounts, Premium users get access to Acorns Early, an investment account that allows parents to save for their children’s future and add individual stocks.
Premium users also receive a 50% subsidy on bonus investments (instead of 25%) and educational courses. In addition, Premium offers banking for children through GoHenry by Acorns, a $10,000 life insurance policy for eligible customers, and a free will.
Saving for retirement with Acorns Later
Acorns Later makes saving for retirement easy with automated investing through traditional, Roth and SEP IRAs. Investing through these accounts allows investors to realize tax savings by deferring taxes or letting their investments grow tax-free. With Acorns Later, investors’ diversified portfolio is selected based on age and time until the user turns 69.
Acorns Later accounts, like traditional options like Vanguard retirement accounts, are protected by the SIPC regime up to $500,000. Investors can make daily, weekly or monthly deposits into these accounts to make saving for the future even more seamless.
Investing for children with Acorns Early
Acorns Premium users can invest in their children’s futures with Acorns Early, a UTMA/UGMA (Uniform Transfer to Minor/Uniform Gift to Minor) custodial account. These custodial accounts allow users to invest money that can then be transferred to the children when they reach adulthood, for any purpose. Friends and family can also easily contribute to Early accounts for your child to accelerate growth.
Like Invest or Later accounts, Early accounts allow you to invest manually, invest a percentage of your paycheck, or automate contributions. Early accounts automatically invest in Acorns’ aggressive portfolio because these accounts are designed for longer periods of time.
Security and privacy features
Privacy and security are a priority for Acorns, both in 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, conducts regular security audits, and has third-party verified technical controls to meet industry standards for information protection.
Advantages and disadvantages of using acorns
Acorns’ features are optimal for new investors and investors looking for a simple, automated investing app. With benefits like educational resources and high APY on bank accounts, Acorns is ideal for individuals looking for a single financial base to save and invest for the future.
The disadvantages of Acorns lie primarily in the limited manual investment options for more experienced investors, who ultimately do not belong to Acorns’ target group.
Per
- Automated investing: Round-ups and automated investment portfolios make Acorns ideal for new investors.
- Comprehensive range of bank accounts: Acorns offers all the investment and financial accounts an individual needs for their long-term financial well-being, as well as useful financial products such as life insurance.
- High-interest bank accounts: For Personal Plus and Premium users, the Acorn Checking and Emergency Funds accounts are high compared to the competition at 3% and 5%, respectively.
Disadvantages
- Monthly plan fees: Acorns charges fees for accounts that competitors normally offer for free.
- Restricted asset access: Acorns does not allow investors to invest directly in bonds, index funds or CDs like traditional brokers.
- Less ideal for experienced investors: Experienced investors may want more flexibility in manual investing and more research tools that traditional brokers like stock screeners offer.
Conclusion
Experienced investors may find that Acorns lacks essential features they expect from investing apps, yet 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 growing a child’s portfolio. With educational resources to build the confidence of beginners and custom portfolios for sophisticated investors looking to invest in individual stocks or ETFs, Acorns is an innovative app that makes financial management simple and accessible.
