Investing in the stock market has a big barrier to entry due to its risks. This hasn’t stopped those who lack a thorough background in stocks, as well as the capital, from fantasizing about one day “playing the stock market” and making millions of dollars.
In this review, I will breakdown Acorns, a micro-investing app that lets users dabble in investing in the stock market without losing the shirts off their backs. I will reveal to you real numbers from my own account (not big at all) from my one year of using the app.
What is Acorns?
Acorns is a micro-investing app that invests your spare change into pre-designed investment portfolios. By linking your various bank accounts to the app, Acorns will “round-up” your everyday purchases up to the nearest dollar amount and invest the difference.
For example, if you purchase a latte for $4.50, Acorns will take $0.50 from the card you made the purchase with and invest it into your portfolio. Think of it like investing the change you find in your pockets at the end of the day.
Intro to Acorns (Youtube)
Check out Acorns’ official explainer video on how it works:
What are investment portfolios?
An investment portfolio is a collection of investments and can include various compositions of stocks, government bonds, corporate bonds, Treasury bills, real estate investment trusts (REITs), exchange-traded funds (ETFs), mutual funds, and certificates of deposit (CDs).
Acorns – The 5 Portfolios
Acorns has developed 5 portfolios with help from Nobel Prize-winning economist, Dr. Harry Markowitz. Depending on how aggressively users want to invest, they can choose from the following portfolios:
- Moderately Conservative
- Moderately Aggressive
Acorns portfolios are developed with help from Nobel Prize-winning economist, Dr. Harry Markowitz.
Acorns investing fees
Acorns charges a $1/month portfolio management fee for accounts under $5,000, and 0.25% for accounts of $5,000 or more. These fees are typical of apps similar to Acorns such as Stash.
Acorns user interface
Acorns has a beautifully-designed user interface that is very intuitive and puts all of the info you need to know about your money, in your hands.
Acorns’ lets you set up recurring investments for amounts of $5, $10, $100 or more that can be invested daily, weekly, or monthly into your Acorns account. I set mine up for a monthly recurring investment of just $20 in addition to my round-ups. Users can also make one-time investments of any amount into their Acorns account.
Another interesting feature of Acorns is its Found Money partnership program featuring major brands such as Nike, Apple Music, T-Mobile, AT&T, and Columbia, to name a few.
When you make a purchase at a partner company with an Acorns-linked card, that company will invest money back into your Acorns account. The amounts vary from company to company. Here are a few that are featured on their app which shows pretty generous numbers:
Downloading the Acorns app gives you access to their blog/magazine, Grow. Grow features articles about student debt, getting out of debt, financial news, and investing basics, among others. Grow is also available on the Acorns website.
My experience investing with the Acorns app
The question going through your mind by this point is probably, “So what? Can I make money with Acorns? Or is it a scam?”
I definitely did not make big money with Acorns. Being somewhat skeptical but still very curious, I went with their Conservative portfolio because it has the least risk and is the safest. My balance grew primarily because of the round-ups and recurring monthly investments I was making. With the $1/month management fee basically being $12/year, a gain of $10.63 on my investments, and $5.32 paid out through dividends, I made just under $4.00 with Acorns:
What I made investing with Acorns in 1 year (Conservative Portfolio):
$10.63 (gains) + $5.32 (dividends) – $12.00 (management fees) = +$3.95
How withdrawing funds from Acorns works
To test how the process of transferring funds out from Acorns worked, I withdrew my entire balance to my bank. Once you withdraw, you will receive an email from Acorns confirming that they will start the transfer process to your bank. This message will also appear in the app (please ignore the “15% battery” message lol):
The process actually took 7 days, but the transfer occurred over a 3-day weekend (Martin Luther King Jr. Day) so we can give Acorns a break on this one.
Note: By the time I initiated the withdrawal process, my balance had increased from previous screenshots due to additional round-ups during that time. Another interesting note is that the final amount deposited included some more round-ups (I’m guessing), as the amount deposited was larger. Below is the deposit note in my banking app:
My takeaways from the Acorns app
Am I happy, or sad, or think that I wasted my time after profiting only $3.95 from using Acorns? I am actually pretty stoked! Not because of the whole $3.95 I now have, but because I also now have $410.00 saved up. Had this extra money remained in my regular bank account, attached to my debit card, it would have been spent a long time ago, probably on something stupid, but thanks to Acorns, I still have it.
Acorns as a “passive savings app”
Acorns is the perfect app to save money with without having to do anything. There are 3 reasons why Acorns works as a savings app:
- It is passive and you don’t have to think about it
- You don’t have instant access to your money
- It is investing only small amounts
In terms of the gains my account made with Acorns, I would have been better off sticking my money into a high-interest savings account and making a few dollars more. Marcus, Goldman Sachs’ rebranded online savings account, boasts a 1.40% Annual Percentage Yield (APY). However, where Acorns still shines brighter is in its automatic round-ups that takes the money out of your account without you having to do anything.
Bank account linking issues
One of my bank accounts got unlinked about six months into investing, and I am still unable to fix this issue so I am not getting round-ups from purchases on that card, however, it is still able to take out my recurring investment of $20/month from that account. Weird. As of now, only one of my Paypal accounts is linked, so round-ups are taking a little longer to add up, but I don’t mind because this was an experiment.
The app features beautiful charts that show you the projected value of your investments. At first glance, it appears that you will be making bank with their system, but the numbers seem grossly inaccurate and larger than realistic. I believe that this is a tactic to make you feel confident and invest more of your money.
Acorns is the tricycle for those who want to dip their feet in the world of investing while staying at a safe distance from financial ruin. It lowers the bar for speculators to access this mysterious world by simplifying the process. However, don’t expect to make a fortune using Acorns.
If you are looking for the thrill of investing and learning the in’s and out’s of investing, you would do better to look at other apps or services that give you more control over your portfolio.
For those who are looking for a way to passively set money on the side, I highly recommend Acorns.
Get $5 to invest with Acorns!
Get $5 when you use the Fortune Wolf invite code HC2ZDK, or click on this link: https://acorns.com/invite/HC2ZDK
Tried Acorns yourself? Let me know what you think of it in the comments.