Should You Really Invest Another Red Cent Before Checking Out This Acorns App Review??
Imagine walking into a major investment firm with the change (and lint) in our pockets and asking them to put it somewhere it will grow.
Obviously, they’d laugh us out of the building.
However, if you put your spare change from every purchase into a piggy bank for a year, it’s feasible that you’d have between $700 and $1,000 within a year.
The Acorns app takes this “virtual piggy bank” – so to speak – and helps its members to invest in one of a handful of diversified portfolios. Whether you are an iPhone or Android user, our Acorn investment app review shows you how this innovative concept works so you can decide if micro investing is right for you.
What You Need to Know About the Acorns App
The Acorns investing app is specifically designed to help millennials become investors. At a time when savings is at an all time low, teaching the value of socking away spare pocket change can go a long way toward reinforcing healthy savings habits. This is how it works:
- You add your debit and credit cards to the Acorns app.
- Every time you make a purchase with one of the connected cards, it rounds the amount to the nearest dollar and saves it in your Acorn account.
- Once you hit a minimum of $5, it takes that money and invests it in one of their diversified portfolios of your choice.
This isn’t the only way that you can invest in your Acorns account. You can also make one-time investments from $5 to $10,000 or sign up for recurring investment amounts as small as $5 a day.
You aren’t required to make the investments if you don’t feel that you have enough money in your account to cover your needs. You can set the app to approve round up investments individually by your phone, or you can set it to run automatically. (You’ll see why this is an important feature in the “common complaints” section.)
Once it’s time to invest, you enter information about yourself like age and occupation, and the app makes a recommendation for which of its portfolios you should invest in. You can, however, choose to override the app’s recommendation and invest in a riskier or more moderate portfolio instead, depending on your personal needs. In short, you have full control over how much you invest and where it is going.
Top Features of the Acorns App
- First, there’s no minimum investment required to start your account. Feel free to bring your nickles, dimes and pocket lint.
- You can cancel pending transactions if you realized that your savings put you past your account spending limit. Just use your phone to find the pending transactions that you want to cancel and hit cancel.
- If you run into problems, they have both email and phone support.
- Found Money gives you up to 10% cash back on certain affiliate purchases when you use one of your Acorns-linked cards. When you receive this cash back, you can withdraw it or invest that money too.
- One of the best features of this app, though, is that you can withdraw as much as you need from it any time without paying any fees. This makes it a great stash point for emergency savings funds.
The Acorns app currently has six ETFs (Exchange Traded Funds) to choose from:
- iShares IBoxx$ Investment Grade Corporate Bond (LQD).
- iShares 1-3 Year Treasury Bond (SHY).
- Vanguard S&P500 (VOO).
- Vanguard Small-Cap (VB).
- Vanguard FTSE Emerging Markets (VWO).
- Vanguard REIT (VNQ).
Some of these ETFs are performing much better than others in our current market.
Common Complaints for the Acorns App
- Acorns app is really only reasonable for someone who makes many purchases because it costs $1 for its services per month. Consider if you only bought a cup of coffee once a week for $3.75. You’d be investing 25 cents, four times per month for a grand total of $1.
- You’ll have to pay taxes on your earnings. A lot of automated portfolios have the advantage of saving you tax money even on this type of account by calculating losses from the parts of the portfolios that didn’t make money and balancing them against the parts that did make money. This app is too simplified though, and you will be responsible for the taxes owed on the capital gains.
- If you get hit with a bank overdraft fee because you forgot to round up your purchase when tracking account activity, Acorns states on their FAQ page that they will not be responsible for helping to correct your bank’s overdraft fee.
- Finally, not all banks and credit cards allow this roundup feature anymore. This is no fault of Acorns app. To see if your financial institution supports this feature, you must check individually with them.
Acorns App Compatibility
- iOS devices: Requires iOS 9.0 or later (on iPhone, iPad, iPod touch, Apple Watch).
- Android: varies with device (works with almost all).
- Windows Phone: not compatible.
- Windows: No app, but you can log into your account from any web browser.
- Mac OS: No app, but you can log into your account from any web browser.
The app size and version for Android varies with device, but the size of version 1.7.5 on iOS is 87.2MB. There are no in-app purchases to worry about, just the regular monthly fee.
There have been reports of accounts unlinking from phone devices and users having to contact customer service to re-link. Customer service is fairly responsive though. It seems that most of these problems are less due to glitches in the Acorns app and more due to changes in financial institution policies regarding third party vendor withdrawals.
Like all investments this the Acorns app is not without risk. You can make or lose money depending on the market. To make it really worth the $1 a month you are spending on management fees, you should be investing at least $50 a month. That’s a 2% management fee, which is still very steep compared to the mere 0.25% you are spending once you surpass $5,000 in savings, but at least you shouldn’t be losing money if your ETF is performing as hoped.
Either way, it’s a great way to develop the discipline of investing your savings if you haven’t started earning enough to invest in a regular retirement account yet. Now that you’ve read our Acorns app review, what do you think of the concept? Please share your ideas with us in the comments below!