A brokerage account and banking access costs $1 per month. Stash, which is similar to Acorns Personal, offers those services as well as a retirement account (conventional or Roth IRA) for $3 each month.
The main reason to not go with Acorns
You don’t need Acorns if you’re capable of saving money. One of the other investment brokerages on this list would be a better fit for you.
Who is Acorns best for?
If you’ve never been able to save money, Acorns is a great option for a Roth IRA. The automatic aspect of saving money through frequent expenditure makes the process of accumulation fully passive. You don’t have to do anything special to fund your account; it just happens as you go about your day.
How to Make Money on Acorns
Acorns is not a paid side business or money-making app. Consider it a tool to help you expand the money you already have by saving and investing consistently.
If you link your card to your Acorns account, you’ll generally earn money from your investments and qualified purchases.
This is because the sooner you begin investing, the more time you have to benefit from compound interest. Compound interest allows you to earn interest on interest you’ve already received, thereby increasing your money year after year.
Consider the following scenario: If you start with $500 and earn 5% interest, you’ll end up with $527.50. You will get $553.88 if you earn 5% interest on it. Many prominent investors have benefited from compound interest and time.
Anyone can get started investing with Acorns. By investing in seven asset groups, the app creates a diversified portfolio for you:
There’s always the possibility that investments will lose money, thus the value of your account may decrease. Over the long term, however, the stock market has historically returned 10%.
Dividends from your investments may also be a minor source of income for you. Before you download the app, think about your goals and time frame (for example, if you need money right now).
Why Acorns is a bad idea?
Acorns Accounts in the core are taxable brokerage accounts. There are better-suited account types available if you are investing for a long-term objective, such as your young child’s college fees or your retirement.
A 529 plan, or Education Funds Account, is a good option for college savings. You could also use a Roth IRA, which allows you to withdraw funds without penalty if you need to. These three accounts will all provide you with tax benefits and efficiency that you won’t get from a taxable brokerage account.
Is investing with Acorns worth it?
The bottom line: Acorns is the best place to go if you want to make the most of your spare change while also getting the odd merchant kickback. Acorns’ automatic roundups make saving and investing simple, and most investors will be astonished at how quickly their pennies add up.
What is the catch with acorns?
The fee of an Acorns account is the main drawback. Acorns charges a fixed management fee, unlike other robo-advisors. Spending just $1 a month sounds fantastic, but if you don’t have a lot of money in your account, it might add up to a significant portion of your assets.
Let’s pretend you have $500 in your bank account. A $1 fee equates to 0.20 percent of the assets you manage (AUM). If you keep a $500 balance in your account and pay 0.20 percent per month, you’ll pay 2.40 percent per year. When compared to other robo-advisors, which normally charge an annual rate of 0.50 percent or less, this is a fairly high rate. So, if you choose one of Acorns’ more expensive programs and don’t maintain a high balance, your charges could be substantial.
On the other hand, if you have more money in your account, the flat monthly cost equates to a lower rate. With Acorns Lite ($1/month), a $5,000 account balance would reduce your yearly fee to around 0.24 percent, which is comparable to other prominent robo-advisors’ management fees. To get down to a 0.25 percent fee with an Acorns Personal account, you’d need around $13,000. Once your account reaches that size, Acorns’ monthly fees become a much better deal.
You should be aware, however, that the ETFs in which Acorns invests your money will incur their own fees. These costs, according to Acorns, are baked into the ETF share pricing.
Aside from fees, it’s worth mentioning that some advisors also provide more comprehensive investing services, which can be beneficial when the value of your investments grows. Other robo-advisors, for example, use tax-loss harvesting to assist you lower your tax bill. This is a tool that allows you to sell investments that have lost value and then buy investments that are substantially comparable, allowing you to claim a capital loss deduction while remaining involved in the market. As a result, the amount you owe in taxes at the end of the year is reduced. Even if many Acorns clients don’t earn enough money to benefit from tax-loss harvesting, the taxes could still build up.
Acorns’ staff will also not provide you with any face-to-face professional guidance. Some people prefer to ask inquiries directly to an advisor, especially if their financial position is more complicated. Regardless of your unique situation, speaking with a live financial counselor can assist you in developing a more comprehensive financial strategy.
Can you lose money with acorns app?
Yes. Acorns Securities is a SIPC member, which ensures that all of our customers’ investments are insured up to $500,000 (including $250,000 for cash claims).
When should I withdraw from acorns?
Withdrawals can be made via the iOS and Android apps, as well as the web app. Please read the instructions carefully.
If you wish to change the bank that your funds are coming from, tap the bank name under the amount.
Withdrawal requests submitted before 11 a.m. PST on market days are usually processed the same day. If your request is received after 11 a.m. PST on a market day, Acorns will sell shares the next business day. Withdrawals can take up to 3-6 business days to reach your primary checking account. Following the sale of shares from your Invest account, we must wait two days for regulatory approval before transferring cash to your bank account.
*Please keep in mind that a withdrawal does not mean your account is closed. If you want to close your account, go here and read this article about account closures.
Do you want to take money out of one of our other products? Please see the following articles for more information:
What is the difference between acorns and stash?
Acorns and Stash are financial apps for those who want to grow their money but don’t have the time or expertise to do so. Stash is more likely to appeal to DIY, hands-on investors, whereas Acorns is better suited to investors who wish to outsource their investment management.
Can acorns be trusted?
256-bit encryption is used to protect our website and app. This means that only you and Acorns have access to your personal and financial information. To protect you from fraud, we will notify you if we notice odd account activity. Multiple levels of security, including secure servers, are in place to protect your data.
Is an acorns account an IRA?
Yes. Individual Retirement Account, or IRA, is what Acorns Later is. We’ll choose the best IRA for you based on your lifestyle and goals, with each having different tax benefits and eligibility.
Should I give acorns my SSN?
All financial institutions are required by the Patriot Act to gather, verify, and record information that identifies each person opening an account. Your social security number is also required for us to send you a tax reporting form at the end of each year.