Here’s How The Acorns App Saves You Money

If you’re a college student, hands-off investor, or just someone who struggles to save money, then Acorns can help. It’s an app that rounds up your credit or debit card purchases to the nearest dollar and invests your spare change into a separate computer-operated portfolio. Not familiar with the stock market or investments? This app will spark your interest. Here’s what it is and how it works. You might even make some money using it.

Acorns App

on Acorns website

What Acorns Is?

Acorns is an app that you can download to your smart device for free if you’re a four-year college student with a valid .edu email address. If not, the app will cost you $1 a month to use until your balance hits $5,000, then the app will require 0.25% of your balance each year to keep using it. Although you don’t need any money to open the account, the app requires you to spend at least $5 to start investing.

As a no-brainer way to invest money, Acorns has lots of people talking about it. The Australian app launched in 2016 and had more than 50,000 sign-ups in its first three weeks of being available to the public. The app, which links up to your credit cards and bank account, rounds up your daily purchases to the nearest dollar and automatically invests that money into a diversified portfolio of ETFs of over 7,000 stocks and bonds.

The idea behind it is to create interest in the stock market and investment in younger people who might not be familiar with the concept. It removes the middleman (in this case, the stockbroker) to save you money by eliminating buy-in prices and other high fees.

How does Acorns work?

Using the app is easy. It requires you to create an account by entering your personal information. You’ll also need to link up your credit cards by following the app’s step-by-step instructions. Make sure you connect all cards that you use on a daily basis to reap the benefits. Then, spend like normal. The app works by rounding up your purchases to the nearest dollar, adding the spare change to your selected portfolio, and investing in the stocks you pick.

You can invest your money into five different fund types that range from conservative (such as cash and bonds) to aggressive (over 80% allocated to equities). The app allows you to change your preferences, so you can gradually move up if you start with the easiest portfolio. You’ll need at least $5 worth of change before you can start investing, or you can deposit as much money into the app as you want. Unlike traditional apps that store your spare change in a separate account, the Acorns app lets you invest your money and increases the likelihood of saving more of it.

This easy to use app will spark your interest.
Acorns links up to your credit cards and bank account, rounds up your daily purchases to the nearest dollar and automatically invests that money.

Acorns Credit PROS

  • Free to college students. The app is intended to get younger people interested in learning about the stock market by offering free service to four-year college students. This is an extremely beneficial way for college students to come out on top of their finances after leaving college.

  • Easy savings. The app is designed to save you money quickly without putting too much thought into it. Your toughest job is picking out which portfolio you want. The app takes over from there.

  • No minimum investment. You're required to have $5 in your account before you can start investing, but there is no minimum investment if you want to add more. The more you add, the more you’ll likely save.

  • Found Money Program. Acorns offers a Found Money Program that gives you cash back for your purchases. It works by partnering with more than 100 companies to give you cash back when you use a payment method at one of the partner’s stores. To get the rewards, you’ll use a card that’s linked to your Acorns account to make the purchase. Then, the Found Money program will place the cash back in your account within 120 days.

  • Learn about stocks and investments. The app uses terms and language geared toward stocks and investments, which helps new investors learn about the system. The company that launched the app also offers a free five-step financial literacy course to its users to teach them about financial topics.

Acorns Credit CONS

  • Limited account options. Currently, the app only offers individual taxable accounts, but it plans to provide individual retirement accounts in the future. This makes the app a good option for college students who may not have the income to qualify for a retirement or 401(k) account, but people who are eligible for one should max it out before directing any money to their Acorns account. Keep in mind the money in your Acorns account is taxable, which might come as a surprise to some users. The bottom line is that Acorns should not be your primary savings strategy.

  • Management fees. If you’re not a college student, the app can become costly to use, especially if you start making money off it. Although the amount you’ll pay as a non-college student is similar to other independent services, it does not come with the account offerings, tax assistance, diverse portfolios or user interfaces that other services offer.

  • Smaller than average portfolio options. Acorns works by providing portfolio recommendations based on your user input. It considers your income, goals, age, and other factors to recommend one of five portfolios that range in potential earnings. You have the ultimate say in which one you pick as well as the option to change your portfolio along the way, but what you get right off the bat might not be what you choose if you had free reign or knowledge of the best investments.

  • Additionally, the portfolios themselves are smaller than average when compared to other computer-controlled collections. They consist of the following five to seven classes of low-cost iShares and Vanguard exchange-traded funds: small-cap stocks, large-cap stocks, real estate, emerging markets, and government and corporate bonds.

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