Do you believe that Acorns can actually make you money? There is no straightforward answer to this question, and it depends on various factors that differ from person to person. Some investors swear by the app and have made significant returns using it while others are of the opinion that it’s not worth the hype. The AICPA reports that 60% of millennials have no money saved for retirement. Perhaps Acorns can change that for them?
Acorns, which is a micro-investing app, is designed to make investing less intimidating for beginners by simplifying the process. The app allows you to choose an investment portfolio, and then, it rounds up your purchases to the nearest dollar, investing the difference in your chosen portfolio. With this, you can easily invest your extra change without even noticing it. However, the question is whether or not it actually makes you any money, given that the fees are relatively high compared to traditional investment accounts.
Investing has long been known as one of the most effective ways for people to grow their wealth. However, it’s not always accessible for everyone. Many people struggle to invest because either they don’t know how to, or perhaps it seems too complicated or intimidating for them. Acorns was created to break down these barriers and make it easy for anyone with a smartphone to invest their money. But how effective is it? Does Acorns actually make you money? Let’s explore that in this article further.
How Acorns works
Acorns is a micro-investing app that connects with your bank account and credit/debit cards to automatically round up your purchases to the nearest dollar and invest the spare change into a diversified portfolio of ETFs (Exchange-Traded Funds). The app is designed to help people who struggle with saving money to invest in their future without having to think about it.
- Step 1: Sign up for an Acorns account and connect your bank account and credit/debit cards.
- Step 2: Make a purchase with your connected card(s) and the app will round up the amount to the nearest dollar.
- Step 3: Acorns invests the rounded up amount into your chosen portfolio based on your investment goals and risk tolerance.
The app offers five portfolio options ranging from conservative to aggressive, each consisting of a mix of ETFs. The portfolios are designed to provide diversification and reduce risk through investing in different asset classes such as stocks, bonds, real estate, and commodities.
Acorns also offers a portfolio recommendation engine, which takes into account your age, income, current investments, and financial goals to suggest a portfolio that aligns with your needs. There is also a socially responsible investing (SRI) portfolio option for those who want to invest in companies that prioritize sustainability and ethical practices.
Acorns charges a monthly fee ranging from $1-$5 depending on the plan you choose. The app also offers a Found Money program, which is a cash back program that allows you to invest the cash back rewards directly into your Acorns account. The program partners with over 350 companies including Airbnb, Walmart, and Macy’s.
| Cost | Portfolio Options | Features |
|---|---|---|
| $1/month | Conservative, Moderate, Aggressive | Core features |
| $3/month | Conservative, Moderate, Aggressive, Socially Responsible Investing | Everything in core plan plus SRI portfolio option |
| $5/month | All of the above plus a checking account and a debit card | Everything in core and SRI plan plus checking account and debit card |
Overall, Acorns can be a useful tool for those who struggle with saving and want to start investing small amounts of money. While the returns may be modest, the ease of use and automatic savings features make it appealing to those who want to invest without having to actively manage their portfolio.
Acorns Investment Strategies
Acorns is a micro-investing app that rounds up your transactions and invests the spare change. While the app may seem simple, there are a variety of strategies you can use to maximize your returns. Some of the most popular Acorns investment strategies include:
- Diversification: By investing in a variety of asset classes, such as stocks, bonds, and real estate, you can reduce your overall investment risk. Acorns offers five different portfolios, ranging from conservative to aggressive, each with a different mix of asset classes.
- Recurring Investments: To ensure regular investment, consider setting up weekly or monthly contributions to your Acorns account. This ensures that you’re investing consistently over time, despite market fluctuations.
- Using Round-Ups: While the round-up feature may seem small, it can add up over time. For example, if you make 100 transactions per month with an average round-up of $0.50, you could save $50 per month, which equates to $600 per year.
Maximizing Returns with Acorns Found Money
Not only can you earn money with Acorns’ investment strategies, but you can also earn cash back with Acorns Found Money. Acorns has partnered with over 350 brands to offer cash back on purchases made with a linked credit or debit card. Here are some ways to maximize your returns with Acorns Found Money:
- Compare Cash Back Offers: Before making a purchase, compare cash back offers from different retailers. While some retailers may offer a higher percentage of cash back, others may only offer cash back for a limited time.
- Stack Deals: When shopping, stack cash back offers with coupons or discounts to maximize your savings. For example, if a retailer is offering 5% cash back and a 20% coupon code, you could save a significant amount of money on your purchase.
- Use Found Money for Investments: To maximize your returns, consider using your cash back earnings to make additional investments in your Acorns account. This compounds your earnings over time, allowing you to grow your investments even faster.
Acorns’ Fees and Performance
It’s important to understand Acorns’ fees and performance to determine if it’s the right investment strategy for you. Acorns charges a $1, $2, or $3 monthly fee, depending on the account type you choose. While this fee may seem small, it can add up over time, especially for smaller accounts.
As for Acorns’ performance, it’s important to note that past performance does not guarantee future returns. While Acorns’ portfolios have performed well in the past, there is no guarantee that they will continue to do so. However, by using a diversified portfolio strategy, recurring investments, and maximizing earnings with Acorns Found Money, you can increase your chances of achieving a high return on your investment.
| Account Type | Monthly Fee | Portfolio Options |
|---|---|---|
| Lite | $1/month | Conservative, Moderate, Aggressive |
| Personal | $3/month | Conservative, Moderate, Aggressive, Socially Responsible |
| Family | $5/month | Conservative, Moderate, Aggressive, Socially Responsible |
Despite its fees, Acorns can be a great investment tool for those looking to get started with investing or those who want an easy and automated way to save. By using Acorns’ investment strategies and maximizing your returns with Acorns Found Money, you can increase your chances of achieving a high return on your investment.
Measuring Acorns ROI
If you’re considering investing with Acorns, you’ll want to know how to measure your return on investment (ROI). Let’s explore the best ways to do this.
- Tracking your portfolio: Acorns offers a user-friendly interface that displays your portfolio’s current value. By checking this regularly, you can track your portfolio’s growth and determine your ROI over time.
- Comparing against a benchmark: Another way to measure your Acorns ROI is to compare it against a benchmark, such as the S&P 500. This will give you a better sense of how your returns stack up against the market as a whole.
- Analyzing fees: It’s essential to factor in Acorns’ fees when measuring your ROI. The app charges $1 a month for accounts under $1 million, and 0.25% of your account balance annually for accounts above $1 million. Ensure you’re accounting for these costs when determining your ROI.
It’s important to keep in mind that Acorns is a long-term investment strategy, and short-term fluctuations in your ROI are to be expected. Focus on the big picture and consider your investment goals before making any changes to your portfolio.
Investment Performance
When investing in anything, the ultimate goal is to see a return on investment. Acorns has a proven track record of helping people save and invest their money, but is it an efficient way to invest? The table below shows the performance of Acorns portfolios compared to a benchmark portfolio of 60% stocks and 40% bonds.
| Acorns Portfolio | 1-Year Return | 3-Year Return |
|---|---|---|
| Conservative | 2.6% | 3.4% |
| Moderately Conservative | 4.1% | 4.8% |
| Moderate | 5.2% | 6.1% |
| Moderately Aggressive | 6.6% | 7.2% |
| Aggressive | 8.1% | 8.6% |
As you can see, Acorns has delivered competitive returns for its users, and it’s important to note that these returns are net of Acorns’ fees. While past performance doesn’t guarantee future results, it’s a good indicator that Acorns is a smart investment strategy for those who want to grow their wealth over time.
Acorns vs. Other Investment Apps
Acorns is a popular investment app that allows users to invest spare change by rounding up purchase amounts to the nearest dollar and investing the difference. But how does it compare to other investment apps?
- Robinhood: While Robinhood is more geared towards traditional stock trading, it does have a feature called “Robinhood Gold” that allows users to trade on margin. Acorns does not offer this feature.
- Stash: Stash also offers a round-up feature and has a larger selection of investment options, but has higher fees than Acorns.
- Wealthfront: Wealthfront is a robo-advisor that invests in portfolios tailored to each user’s risk tolerance. It offers tax harvesting and a higher interest savings account option. While Wealthfront has higher fees than Acorns, it may be a better option for more serious investors.
Overall, Acorns is a solid choice for beginners or those with limited funds who want to dip their toes into investing. However, for those seeking more advanced features or higher returns, other investment apps like Robinhood or Wealthfront may be worth considering.
Acorns’ Performance
But does Acorns actually make you money? The answer is yes, but the amount can vary depending on a variety of factors such as market conditions and the individual’s investment portfolio. According to a study by Acorns, users with a moderate portfolio (60% stocks, 40% bonds) who started with $5,000 and invested $50 per month saw an average annual return of 6.8% over a three-year period.
It’s also important to note that Acorns charges a monthly fee ranging from $1 to $5, depending on the user’s account balance. This fee can eat into potential profits, especially for those with smaller account balances. However, for many users, the convenience and ease of use of the app may outweigh the fees.
Acorns’ Investment Options
One potential drawback of Acorns is its limited investment options. While the app offers a selection of exchange-traded funds (ETFs), users do not have control over which specific funds their money is invested in. This may not be an issue for beginners or those who do not want to actively manage their investments, but for those who want more control or have specific investing goals, other investment apps with a wider range of options may be a better fit.
| Pros of Acorns | Cons of Acorns |
|---|---|
| Easy and convenient way to invest spare change | Limited investment options |
| User-friendly app and interface | Monthly fees can eat into potential profits |
| No account minimums | Potentially lower returns compared to other investment apps |
Overall, Acorns can be a useful tool for those new to investing or looking for a simple way to save and invest spare change. However, for more serious investors or those seeking more control over their investment portfolio, other investment apps may be a better fit.
Risks associated with using Acorns
While Acorns can be a useful tool for many investors, there are risks associated with using the platform. Here are five potential risks to keep in mind when using Acorns:
- High Fees: Acorns charges a monthly fee of $1 to $5, depending on the type of account you have. This may seem small, but it can add up over time and eat into your returns.
- Automated Investing: While Acorns’ automated investing feature can be convenient, it also takes control out of your hands. This means that you may end up investing in assets that do not align with your goals or risk tolerance.
- Limited Investment Options: Acorns only offers a limited range of investment options. While this can make investing simpler for some users, it can also limit your ability to diversify your portfolio.
- Market Risk: Like with any investment platform, Acorns is not immune to market fluctuations. While the platform is designed to mitigate risk, there is still a chance that your investments may lose value.
- Security Concerns: Any online financial platform can be vulnerable to security breaches. While Acorns takes measures to protect user data, there is still a risk of data theft or fraud.
Conclusion
While Acorns can be a useful tool for investing spare change, it is important to understand the potential risks involved. As with any investment platform, it is important to do your research, understand the fees and risks, and consider your financial goals and risk tolerance before using Acorns or any other investing platform.
Acorns’ fees and charges
While Acorns is a popular investment app that allows users to invest their spare change, it is important to be aware of the fees and charges associated with the service. Here are the fees and charges you should know about when using Acorns:
- Monthly Fees – Acorns charges $1/month for accounts under $5,000 and 0.25% per year for accounts over $5,000
- Portfolio Management Fees – Acorns charges 0.03%-0.50% fees on assets under management depending on the user tier. This is in addition to the monthly fees mentioned above.
- Banking Fees – While Acorns’ checking account has no overdraft fees, ATM fees, or account minimums, they charge a $3/month account maintenance fee for their checking account. This fee can be waived if the user maintains a balance of at least $5000.
It is important to note that while these fees may seem small, they can add up over time and significantly impact your returns. Therefore, it is important to carefully consider whether Acorns is the right investment app for you and fully understand the fees and charges associated with the service.
Acorns’ Fee Comparison
| Service | Fees |
|---|---|
| Acorns | $1/month for accounts under $5,000 and 0.25% per year for accounts over $5,000 plus 0.03%-0.50% portfolio management fees |
| Wealthfront | No fees on the first $5,000 and 0.25% per year on balances over $5,000 |
| Betterment | 0.25% per year on all balances with no account minimums |
| Robinhood | No fees for stock trading, but charges $5/month for Robinhood Gold subscription |
Comparing Acorns’ fees and charges to other investment apps in the market can give you a better understanding of how the fees stack up against the competition. While Acorns’ monthly fee may be lower than some of its competitors, the portfolio management fees may make it more expensive over time. Therefore, it is important to carefully evaluate your investment goals and risk tolerance to determine whether Acorns’ fees and charges are worth it for you.
Customer reviews of Acorns performance
Acorns has gained a lot of popularity over the years, but does it actually work? The opinions of customers who have used Acorns can give insight into how well the app performs.
- Many customers have reported positive experiences with Acorns, saying that it has helped them save money effortlessly.
- Some users have reported that they were able to save more money using Acorns than they did when they tried to save on their own.
- Several reviewers have mentioned the ease of use of the Acorns app, as well as its ability to create a diversified portfolio.
- Some users have reported that they found the fees associated with Acorns to be too high and that they were not worth the investment.
- There have been reports of glitches and technical issues with the app, causing some customers to become frustrated.
- A few users have mentioned that they do not like the aggressive marketing tactics used by Acorns, often urging customers to upgrade to a more expensive subscription plan.
- Overall, the customer reviews of Acorns are generally positive, with a few complaints about fees and technical difficulties.
Here is a breakdown of the customer ratings on popular review websites:
| Website | Rating out of 5 |
|---|---|
| Trustpilot | 4.4 |
| Consumer Affairs | 4.6 |
| Investopedia | 4.3 |
Overall, the customer reviews of Acorns suggest that it is a reliable investment app that can help users save money without much effort. However, be sure to consider the fees and potential technical difficulties before making a significant investment.
Does Acorns Actually Make You Money? FAQs
Q: How does Acorns make me money?
A: Acorns helps you invest your spare change from everyday purchases by rounding up transactions and investing that change into a diversified portfolio of stocks and bonds. Over time, these investments can grow and potentially make you a profit.
Q: Is Acorns safe to use for investing?
A: Yes, Acorns prioritizes security and utilizes bank-level security measures to protect your account and personal information. It is also a registered investment advisor and is regulated by the Securities and Exchange Commission (SEC).
Q: Can I lose money with Acorns?
A: As with any investment, there is always a risk of losing money. However, Acorns aims to minimize that risk by investing in a diversified portfolio which spreads out your investments across multiple stocks and bonds, reducing your exposure to any single investment.
Q: How much money can I make with Acorns?
A: The amount of money you can make with Acorns depends on several factors such as how much you invest, how long you hold your investments, and market fluctuations. Acorns does not guarantee any particular rate of return.
Q: Are there any fees associated with using Acorns?
A: Yes, Acorns charges a monthly fee ranging from $1-$5 depending on the plan you choose. However, if you’re a student with a valid .edu email address, you can use the service for free.
Q: Can I withdraw my money from Acorns at any time?
A: Yes, you can withdraw your money from Acorns at any time without penalty. However, it may take a few days for the funds to be transferred to your bank account.
Closing Thoughts on Does Acorns Actually Make You Money
So, does Acorns actually make you money? While there are no guarantees when it comes to investing, Acorns provides a simple and easy way to start investing your spare change. By choosing a diversified portfolio, you can potentially grow your investment over time and earn a profit. Just keep in mind that there are fees associated with using Acorns, and investing involves some risk. Thanks for reading this article, and we hope to see you again soon!