Acorns is a growing platform in the robo-advisor space. The company has a fresh perspective on investing for the everyday person. Micro-investing is a newer idea in the investing world and it’s about setting aside small amounts of money frequently. This is a good choice instead of requiring a large lump sum. This way makes investing much easier for many people.
How much does Acorns cost?
The biggest strength Acorns offers are cost and ease of use. Investing through Acorns is much more affordable than the usual route. With a service fee of just one dollar per month, anyone with a debit or credit card, a bit of money and a smartphone can join.
Acorns easily pays for itself quickly as investment values grow. Students interested in investing with Acorns can do so free of charge for four years. They just need to register with a .edu email address. For larger account balances over $5,000 the fee is 0.25% per year. As a comparison, traditional advisors either charge a fee based on the total portfolio value or a simple flat-fee for the service. That fee tends to be much more than $1 per month.
How does it work?
The software connects to the user’s credit or debits cards. Each time a user makes a purchase, Acorns rounds the total up to the next nearest dollar and invests the difference. Acorns allows their users to connect as many cards as they want to the platform.
If a user wants to increase the amount they are investing, then Acorns has an option to “boost” the account. A boost is the addition of extra money to buy more stocks and bonds. You can boost the account at any time. Whether the amount is five dollars or 500 dollars, adding extra money is easy to do. There is also the option to set up an automatic boost. You can schedule additional daily, weekly or monthly account contributions.
Experts at Acorns make investing easy with pre-packaged and diversified portfolios. A diversified portfolio is a mix of different kinds of stocks and bonds and other securities. This diversification of assets is often the hardest task. It can be very difficult to know how much of each security is necessary to reach investment goals.
Acorns simplified that process by providing a mixture of Exchange Traded Funds, also known as ETF’s. Each Acorns portfolio consists of six ETFs, and your desired risk level will determine what’s in your portfolio. As an Acorns user, you will have complete control over your level of investment risk. You can choose anything from conservative to aggressive. Make your choice and Acorns will do the rest.
Is Acorns secure?
Yes! They boast bank-level security features to protect personal data. Some of these features include 256-bit encryption, account alerts, and multi-factor authentication. They are members of the Securities Investor Protection Corporation (SIPC), which insures investors’ securities up to $500,000. Acorns also takes measures to ensure that your data will not remain on your device.
Who is it for?
The short answer is anyone!
Acorns could encourage people, who feel that they don’t have enough money, to actually invest. The low cost and low maintenance fees make it simple to join. However, this way might not be as appropriate for high net worth individuals. The opportunity to use a beneficial retirement account to help with taxes is not an option. In this case, the long-term goal of the user is very important to consider.
Individuals who value building a relationship with a human advisor will find that missing from the Acorns experience. While financial professionals play a heavy role in building the portfolios and software, the intent of this service is not to help new investors develop relationships.
Day traders would likely not find this platform suitable for their needs. The reason being that Acorns offers only a small selection of ETF’s. This can be nice for inexperienced investors, but successful day traders would dislike those limits.
Overall, Acorns is a great option for new investors. The ease-of-use and low fees are both wonderful features of the software. Additionally, it gives hope to those who previously saw themselves excluded from wealth building through investing in the stock market. Even seasoned investors may find the passive nature an enjoyable and easy way to grow their net worth.