What it's like to use Acorns, the app that lets you turn your spare change into an investment portfolio
- You could use your spare change to grab a pack of gum or you could use it to start micro-investing.
- The Acorns app makes it easy to start investing, even if all you have to start is $5.
- Based on your income bracket, Acorns will recommend investment options that fit your budget and lifestyle to help you build your portfolio. From there, you can invest a monthly sum, round up your daily purchases, or both.
- Get started with Acorns today »
When it comes to investing extra cash, many people are unsure where to begin. You may be overwhelmed by the sheer number of investment opportunities available, or perhaps you don't have a large sum of money to start a portfolio in the first place. Are there any investment opportunities for you?
The answer is yes, and you have a good option in Acorns, a millennial-minded investment app. If you aren't ready to start dumping large sums of cash into an investment portfolio, the Acorns Core product offers a way try your hand at micro-investing using daily spare change (there's also Acorns Later, a retirement product, and Acorns Spend, a checking account). Acorns allows you to invest small sums (as little as $5) and you can also round up your purchases and invest that extra change; the app was designed with diversification in mind and provides insight into the best portfolio for your financial goals.
Signing up for Acorns
The sign-up process is easy and takes only minutes to complete for verification. First, provide a valid email address, verify that you are a US resident, and link your bank account to your Acorns account. Note that if your bank account isn't on the list of supported banks, you can still link your checking account to Acorns. However, the list of banks and credit unions linked with Acorns is extensive; customers who bank with local or obscure banks might be surprised to find their institution on the list.
You may go through a multi-step verification process - it depends on the securities you have already set up through your bank. You will answer security questions through your bank and then enter your routing and account numbers to successfully link your Acorns account.
After the sign-up process is complete, you can start building your own personal investment portfolio. Acorns requires users to start by investing $5, and you'll have a few investment options, including several different asset classes. Asset classes are groups of similar investment opportunities that behave the same way in the market, such as real estate, government bonds, corporate bonds, and stocks in both large and small corporations. Acorns portfolios range from conservative to aggressive, emphasizing different types of asset classes according to your individual goals.
If you don't know what kind of portfolio is appropriate for you, never fear. Acorns was designed to ask a few leading questions to help determine the kind of investing strategy that best fits your financial profile. Based on your net income, the net worth of your assets, and your preferred investment timeline, Acorns will build a personalized portfolio recommendation for you.
When your income is limited
What if you are a student or recent graduate who is earning just enough to get by? Let's look at an Acorns case study to see what kind of profile would be recommended for you. If you are in a low income bracket, it might be prudent to try for a long-term investment strategy instead of shooting for short-term return. That way, investing doesn't become a major financial strain, but you can still build your portfolio in the background of your everyday life.
For a consumer in a low income bracket with assets worth less than $10,000, the suggested portfolio is moderately conservative, meaning it leans heavier on corporate and government bonds rather than emerging markets and real estate. By starting small and investing long-term, you might be surprised at the size of your returns. Note that you may update your info as it changes; your changing financial health will affect your optimal portfolio and investment habits.
Investing with Acorns
After that, it's up to you what kind of monthly investment you'd like to make, or whether or not you would like to turn on round-up investments. Your monthly investment will be a recurring deposit into your investment portfolio from your linked account, and it starts at $5. You may change this amount at any time, and there's no minimum balance required.
Round-ups find money from everyday purchases coming from your linked accounts and smooth out your purchases to even dollar amounts (or $0.25 increments) to invest that spare change into your Acorns account. If you have multiple accounts connected to your bank, you may turn them on or off depending on whether or not you would like those individual accounts to use the round-up feature.
If you have multiple credit cards or bank accounts, you can also link them to your portfolio. This is especially convenient for consumers who use points and miles credit cards, because Acorns is yet another way to capitalize on rewards. Double-dipping in your credit card game is always a good thing.
To use the app, Acorns will charge you a minimum of $1 per month for balances under $5,000, and .25% of your balance each year when your account reaches more than $5,000.
The bottom line
With no minimum balance requirements, Acorns is accessible to most people with a checking account or credit card. Automatic recurring daily, weekly, or monthly investments allow you to earn in the background, and round-ups take your everyday spending and turn it into a return later.
Acorns will also keep track of your current financial profile and remind you of your past investments and trends. Using that past data and present settings, Acorns will project your earning potential into the future. Going back to our previous example of a low-income, moderate profile - with a $10 monthly investment plus round-ups - the initial estimate on a projected return after 40 years of consistent investing breaks $80,000.
Keep in mind that Acorns works just as well for folks with major capital to invest, but it is important to emphasize its usability for those who do not. Whether you are building a small play portfolio with spare change or have the ability to go big, Acorns can help you get comfortable with the idea of investing and build your portfolio.
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