Acorn Investing Review: How Does the Acorn App Work?
Acorn Investing is a relatively new investment service targeted towards investment beginners. Also, it can be used by those with limited investment capital. The company offers “round up” investments, which track purchases from linked cards or accounts. Moreover, these option rounds the purchase amounts up to the nearest dollar. At designated intervals, Acorn withdraws the rounded total from a linked checking account and invests it in a diversified portfolio. This portfolio is cultivated by Acorn Investing. This article will explore Acorn Investing and discuss how it works. Furthermore, you will discover who might benefit from this type of investment vehicle and touch on specific, unique aspects of the plan and its components.
Acorn Investing – Details and Overview
Acorn investing was founded in August of 2014. They are based in Irvine, California and employ over 100 employees, all of whom have biographies available on the Acorns website. The company was awarded “Best New Economy” at the 2015 SXSW awards. It has a total net worth of around $60 million, some from backers such as PayPal, Rakuten, eVenture, and Greycroft. The company was founded on the simple premise that investing should be accessible and not be only for the wealthy. Moreover, is states that savings can be built with small amounts of money invested frequently.
The Acorn Investing Process Explained
A user wishing to open an Acorn Investing account should visit their website and click on “Sign Up.” All Acorns Investing clients must be US citizens and 18 years or older. The website will prompt users to enter their e-mail address and create a password. You will then have to read the user agreement, verify that you are a US citizen, and agree to Acorn’s terms and conditions. The website will then ask a series of questions. Among these, there will be ones including your reasons for investing, your annual income range, current net worth, employment status, employer’s name, investment timeline, and birthday.
Acorns will then suggest a portfolio for you. They have five available risk templates. Users can toggle the portfolio to see what other options are available, as well as how much they can expect to have in their account at specific ages. All this is based on a $25 monthly contribution. As noted, you can change your investment portfolio at any time and are not bound to this initial selection.
Next, Acorns Investing will ask you to choose the amount of your first investment. You can choose an amount from $5 up to $5000. Linking your bank is the next step, and finally, you will fill in information such as your name and phone number.
Once your account is set up and linked to an account, Acorns will track your purchases made via debit card or direct draft, then round the amount up to the nearest dollar. For example, if you made a purchase of $14.95, Acorns would add 5 cents to your investment account. Withdrawals are made in approximately $5 intervals. There is also an option to invest in larger denominations, such as $20. Withdrawals from your Acorn account and portfolio changes can be made at any time.
PROs and CONs to Acorn Investing
- The company allows you to invest very small amounts of money, as opposed to larger accounts which generally have high deposit requirements.
- Investing is automatic through this investment vendor. Acorns Investing does all the work for you and creates a very hands-off investment process.
- Portfolio preferences can be updated at any time by the user, without additional fees or steps. This can be helpful in the case of major life changes, such as birth, death, adoption, or home buying, where the user may wish to scale back their investment risks a bit.
- The mobile app (for iOS and Android phones) is intuitive and easy to use.
- Acorns’ fees can be high when viewed as a percentage of the amount invested. The company charges $1 per month for accounts under $5000, so if you invest $5 per month your fees are 20% of the value of your investments. This percentage does decrease as the amount invested per month increases, but for truly small investors, this can take a big bite.
- This company does not track your bank account to determine if you have enough funds prior to withdrawing. This can result in overdraft fees with your bank. Acorns shut down investing in your account if this happens, but the damage at your bank may already be done. This can be particularly harmful to those without much “extra” at the end of the month.
- For accounts over $5000, Acorns charges .25% of the account balance annually, which is a relatively high fee. This can be problematic for investors but can be avoided by transferring money out of their Acorns account when it reaches or nears the $5000 threshold.
Acorn Investing Customer Service Review
Customer service with Acorns is fairly good. The website has a searchable FAQ section and a “Contact Us” area with an e-mail form. This allows individuals to find help via the internet. For immediate problems, a phone number is also provided, although wait times can sometimes be lengthy due to a small staff. Some users have had luck getting a faster response by tweeting @Acorns and hoping for a response there. Overall, the app has few issues that require a customer service representative to step in, and many are solvable independently.
Overall, Acorns Investing is an excellent tool for those looking for a way to invest small amounts of money without having to know lots about the market. It is easy to use, intuitive and has an impressive array of tools for the more hands-on investor. If you use your credit or debit card to shop, why not use it to set aside money for your future? Visit Acorns today to set up an account and start your investing journey the simple way.
Have you used Acorns? What were your impressions?