The idea of saving money is a concept that we would all like to master but rarely do we see it through to our set goals. Whether an emergency arises, or we simply lose interest in keeping to a budget, for many of us the hardest part about saving money is disciplining ourselves to not spend that money on other things. That is where Acorns takes our spending weaknesses and manages to still help us save and even INVEST our money.
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If you were a kid that had a piggy bank growing up, then Acorns’s approach may seem familiar to you. Acorns takes your “loose change” and stores it so that it can add up over time, but with physical currency continuously being replaced by debt cards, you may have noticed that your traditional piggy bank is in the process of becoming obsolete. While I still have a mason jar that I put my loose change in anytime it starts accumulating in my pockets, even I have noticed that many of my purchases have recently been made using my debt card rather than cold hard cash. This has made me have to re-evaluate how to save my “loose change” that I no longer see. That is why I too use Acorns as one of apps I invest my money into.
How Does It Work?
To revolutionize the piggy bank method of saving change, what Acorns is designed to do is to round up any purchase you make with your debit card to the nearest dollar. Say you bought something for $14.59, Acorns would round that up to $15 and take the remaining 41 cents (or that “loose change”) and put it into your Acorns account to be invested. While I would never suggest for someone to go out and openly spend money on things so that they can have loose change, Acorns at least reassures us that our shopping habits don’t have to restrict us from saving and investing money. I still advise people to start a budget and control their spending, but for those purchases that you NEED to make such as food and gas for your car; the Acorns app can be a useful tool to assist you in controlling your money. One thing that makes Acorns stand out even more from your traditional piggy bank, is the ability to invest that left over change into business and government stocks and bonds. When you first set up your Acorns account, it will ask you what you’re main reason to invest is. The choices it gives you are: General, Children, Major Purchase, Short-term Investment, and Long-term Investment. It will also ask you how long you plan to invest which ranges from “less than 5 years” to “25+ years”. Taking your answers to these questions into account, Acorns will then set up your portfolio accordingly so that you can reap the most out of your investments. Whether you choose to stay more conservative or you prefer to be more aggressive, the goal Acorns sets for itself is to invest your money wisely. This is why every portfolio will be a little different, and if you have friends that are using the app as well, you might see different outcomes at certain points in time.
Can You Invest More Than Just Your Change?
A nice thing about Acorns is that you have the ability to invest more than just the spare change from your purchases if you chose to. Like many other investment apps, you are allowed to make one time deposits or even reoccurring deposits that you can set up to come out of your bank account when ever you want. This makes saving for that major purchase or investing for your long-term goal that much easier. Even if you’d prefer to simply use one time deposits as your sole source of funding your Acorns account, you have the ability to turn off the Acorns automatic round-ups feature so that it would no longer take out the spare change from your purchases
Some CONS About the Acorns App
While I think Acorns is a great tool for first timers and intermediates to start making their money work for them, I want it to be completely transparent for you if you are looking to sign up for the Acorns service. These are some of the things I’ve noticed while using the Acorns app:
- PREDETERMINED STOCKS AND BONDS — The first thing that many people will notice is the lack of being able to buy specific stocks and bonds. While you have the choice in buying your favorite stocks through other mobile apps, Acorns has more control over which stocks and bonds it puts your money into (while still keeping in mind your preferences as mentioned earlier). For some that may be alright, after all, the Acorns pros may be more experienced and knowledgeable than some of us starting out, but for those who prefer more control over exactly which company stocks they are putting their money into, Acorns may not be your best option.
- ACORNS IS NOT A FREE SERVICE — Another thing that many other Acorns reviewers tend to leave out is the fact that there ARE managerial fees for using the Acorns service (unless you are a college student, in which you get 4 years for free with a valid .edu email address). Acorns’s fees range from $1-$3/month depending on your account type. While this is a far cheaper option than a lot of other professional investment brokers, many don’t realize that there are fees involved. I look at it this way, if I made simply two purchases a month that averaged out to 50 cents each of rounded up change, that covers my core management fee for that month. So if you plan on making more than two purchases a month, you should still be seeing your account value grow even with that $1 monthly fee.
- NOT ALL BANKS WORK WITH AUTOMATIC ROUND UP — During my time using the Acorns app, I came to realize that not all of my banks/credit unions are in the Acorns “Network”, and while I was still able to manually link my account to perform one time and reoccurring deposits, the round-up feature for those certain bank accounts were not supported. For those of you that use a smaller local credit union or bank, keep in mind that you may not be able to take advantage of the round-up feature that Acorns offers to bigger, more recognizable banks/credit unions.
My Overall Conclusion
While there may be a few cons that Acorns has that you need to be aware of, there is no doubt that Acorns is a great tool for those who wish to start saving and investing their money. Keep in mind that no app is going to be a perfect fit for everyone, yet what Acorns has to offer is a tested and reliable service that over 3.7 million people have trusted enough to use as an investment platform in their lives. If you are the type of person that wants to start investing, but also finds it hard to change your spending habits, perhaps Acorns is the right move for you.
If you would like to learn more about Acorns, or if you would like to sign up for their service, you can click on the links within this article to be directed to their site. The links are my own affiliate links to Acorns, in which I get paid a small commission if you were to sign up. This comes at no extra cost to you and you are not obligated to sign up for anything that you don’t want to. Just know that any commissions that I can get, helps me keep this site up and running. (For my full disclosure of Affiliate Links, click HERE.)
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