Get Started Investing

Squirrel Away Your Spare Change and Start Investing With Acorns

Last Updated on June 5, 2018 Last Updated on June 5, 2018
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Table of Contents
  1. What is Acorns?
  2. Advantages of Using the Acorns App
  3. Disadvantages of using Acorns
  4. Show Notes
  5. Read These Next
Table of Contents  
  1. What is Acorns?
  2. Advantages of Using the Acorns App
  3. Disadvantages of using Acorns
  4. Show Notes
  5. Read These Next

Want to start investing but a little nervous to get started?  We totally get it. Investing should be simple and easy and with Acorns you can get started with just some pocket change.

Acorns is a great way to start investing and building wealth. We’re here to show how you how to get started investing without a lot of money, and then forget about it until you retire.

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What is Acorns?

Each time you spend, Acorns rounds up to the nearest dollar and invests that amount for you.  So, if you spend $2.50 on a cup of coffee, Acorns will automatically invest $.50 for you. The pizza you just ordered that cost $15.05,  $.95 gets invested.

All you need to do is download the Acorns app, connect it to your credit cards to get started.

A lot of users are new to investing so the app provides a lot of guidance. There are also cool tools, that help you set and reach goals. By just entering your savings goals and what age you want to achieve them by and the app tells you how much you need to invest each month to get there.

They also have found money partners program that rewards app users for shopping through certain retailers.

When you making a purchase with one of their partners through the app or web portal, the retailer will send the rebate, cash back rewards, and loyalty programs cash into your account.

What’s better than cash back? Cashback that is automatically invested.

So, is pretty simple but let’s go a bit deeper.

Advantages of Using the Acorns App

They offer ETF’s, stock funds, and bond funds. The funds are chosen by a team of mathematicians and engineers who work in conjunction with Nobel Prize-winning economist Harry Markowitz.

There are no commissions, the cost is $1 per month and a maximum of .5% a year on managed assets.  Once you reach $5000, the percentage drops to .25%.  There is no fee to add money or withdraw it from the account.

Using Acorns is safe, your data is encrypted and they are working with “white hackers” to make sure that everything is private.

You can maintain a high degree of control in Acorns but if you want to set it and forget it, you can choose auto roundups where each transaction will be rounded up.

You can also have money auto deposited into the account via automatic transfer.

Her are the top benefits of using the Acorns app:

Fee exemptions

The Acorns platform appeals to young people and those who do not have investment experience. It allows college students to register for Acorns for free for up to four years, so long as they sign up with a .edu email address.

This makes it easy for students to focus on investing and building up wealth without worrying about account fees when they first start with Acorns.

Cashback

Investing your money little by little can really make a difference over time, especially when you have Acorns’ cash-back features to help you along. The app has more than 100 partner companies offering cash back on purchases you make with one of the payment methods associated with your Acorns account.

These cash-back rewards will go into your investment account to help you move closer to your goals.

Minimal upfront investment

Some financial institutions require individuals to invest thousands of dollars just to open an account. With Acorns, you can start investing with just $5—and there’s no minimum amount required to open an account.

This opens up investment opportunities to people who may not have otherwise had access to them.

It’s another reason why the platform is so popular with young people and students who might not have the kind of savings required to open up a traditional brokerage account.

Automated features

The “set it and forget it” approach to finances is critical, and Acorns allows you to invest money without even realizing it.

You can set up certain rules for your accounts to round up your purchases to the nearest dollar and put the remainder into your investment account, for example.

You may also easily transfer money from connected bank accounts to add to your Acorns investment. The app offers a user-friendly platform through which users can coordinate their accounts and investments quickly and easily.

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Disadvantages of using Acorns

There are also some drawbacks to using Acorns, including the following:

Portfolio limitations

If you want to make all your own investment choices, Acorns is not the platform for you. Although you may choose between several portfolio options, ranging from conservative to aggressive, the specific investments made are largely out of your control.

For some, this can be a plus, especially if you are looking for a hands-off way to start investing. For others, this form of investing does not offer enough control.

Fees

Just like any other platform or application, Acorns has to make a profit somewhere, and it does this in part by charging management fees.

The fees are only one or two dollars per month if you have less than $5,000 invested in your account, but this can actually make up a pretty big percentage of your account balance.

As you invest more money, these fees begin following a percentage structure similar to other investment platforms.

How to start saving with Acorns

If you want to give Acorns a shot, start by creating an account. When you do so, you will create a pin to secure your access and protect your information in the mobile app. You may sign up online or on your phone through the Acorns mobile app.

Then, you can begin configuring your account settings to begin your investment journey.

Once you’ve created your account, you will add banking information and connect accounts to transfer money to Acorns. The first account you will need is your round-up account. Acorns monitors the purchases you make with this account, and you will have the option to round up your purchases manually or automatically to contribute to your investment account.

Next, you’ll need to add a checking account that will transfer funds directly to Acorns. This checking account can be the same as your round-up account, but you may have to sign in separately to link it to Acorns as your primary checking account. Thanks to Acorns’ secure encryption, you don’t have to worry about the security of your credentials or account information in the app.

Now that you’ve taken care of some of the initial setup of your Acorns account, it’s time for the fun part: investing. You will provide some basic information, including your name and address, and set up a security question to protect your account. Acorns will ask several questions, as required by the SEC, about your affiliations that could have a bearing on your ability to open a brokerage account.

Next, you will enter your employment, income, net worth and some basic information about why you want to invest. Your answers to these questions help inform the type of investment portfolio that’s best for your specific needs.

Finally, you can officially start your investment account. From there, you can begin transferring money to your account and using your round-up settings to build your investments.

You know at LMM we only suggest things we’ve used and approved. Check it out, every penny counts!

Show Notes

Acorns:  Invest your spare change.

Acorns vs Betterment vs Wealthfront: We went deep on a comparison between Acorns and Betterment and Wealthfront, we think you should check it out!

Allagash Tripel:  A golden ale with a long, smooth finish.

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