Introduction
Acorns is a low-cost, easy passive investment solution that is ideal for beginning investors. While the app's user interface and educational content are geared for novices, the flat-fee structure is slightly more expensive than percentage-based costs for those just getting started (competitor Ellevest has a similar problem). That is to say, Acorns is probably best used by those who need a little push to save a little more, rather than newcomers with low balances seeking for the lowest alternative.
Acorns began as a micro-investing app in 2012.
Its name, in a figurative sense, explains what it accomplishes. A great oak tree begins with a little acorn, according to an old proverb. If you adhere to Acorns' manner of doing things, the same may be said about investing. Acorns automatically rounds up your purchases to the closest dollar and invests the difference in exchange-traded funds (ETFs). It charges a monthly fee ranging from $3 to $5. Acorns also allows you to save for retirement, create a bank account, and invest for your children.
Acorn's loose change strategy, dubbed "Round-Ups," isn't the only option to finance an Acorns account. Traditional money transfers and deposits are possible.
How Does Acorns Work?
Acorns is a low-cost, easy passive investment solution that is ideal for beginning investors. While the app's user interface and educational content are geared for novices, the flat-fee structure is slightly more expensive than percentage-based costs for those just getting started (competitor Ellevest has a similar problem). That is to say, Acorns is probably best used by those who need a little push to save a little more, rather than newcomers with low balances seeking for the lowest alternative.
Your spare change is automatically invested by Acorns. Their Round-Ups feature is what they call it. When you use your connected card to make a purchase, Acorns rounds up the transaction to the nearest dollar. This money is invested in a well-diversified portfolio. Acorns rounds up to $6 and invests the difference if you eat lunch for $5.25. (75 cents). Round-ups allow you to develop your account slowly while you go about your everyday routine.
You can also use a Round-Ups Multiplier. You may double the extra change by 2x, 3x, or 10x instead of merely rounding up to the next dollar. You'll get a far faster return on your investment if you do it this way. Acorns also offers recurring deposits on a daily, weekly, or monthly basis. Alternatively, you can directly deposit a lump sum into your account.
Invest, Later, Spend, Found Money, and Early are the five basic saving and investment options available to Acorns customers.
Acorns Invest:
This is a taxable investment account in which your money is invested in exchange-traded funds (ETFs) that have been selected for you based on your risk tolerance and financial objectives. Round-ups, regular deposits, and on-demand deposits are all options for funding the account. Setting up recurring contributions—Acorns allows customers to pay as little as $5 at a time—is your best option for building your portfolio and taking advantage of dollar-cost averaging.
