Acorns Review: Pros, Cons, & Is It Worth It?
In this Acorns review, we'll dive deep into its features, pricing, pros & cons, and performance to help you decide if it fits your financial goals.
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In today’s fast-paced world, investing is no longer reserved for Wall Street professionals. Thanks to innovative apps like Acorns, even the most novice investor can start growing their wealth with just a few dollars. But is Acorns really the best investment app for beginners?
What is Acorns?
Acorns is a micro-investing app designed to make investing simple and accessible for everyone. Launched in 2014, the app has grown in popularity due to its user-friendly interface and unique "Round-Ups" feature, which rounds up your everyday purchases to the nearest dollar and invests the spare change automatically.
Key Features of Acorns
1. Round-Ups
The Round-Ups feature is Acorns' claim to fame. Every time you make a purchase, Acorns rounds up the amount to the nearest dollar and invests the difference. For example, if you buy a coffee for $3.50, Acorns will round it up to $4 and invest the extra $0.50 into your portfolio. Over time, these small amounts can add up significantly, making it easy to invest without even noticing.
2. Found Money
Acorns partners with over 300 brands to offer Found Money rewards. When you shop with these brands using a linked card, the retailer automatically invests a percentage of your purchase back into your Acorns account. It’s essentially free money for spending at places you already shop!
3. Automated Portfolio Management
Acorns takes the guesswork out of investing by offering automated portfolio management. When you sign up, Acorns asks you a few questions about your financial goals and risk tolerance, then recommends a portfolio that suits your needs. These portfolios are made up of diversified ETFs (exchange-traded funds) designed by financial experts.
4. Acorns Later
For those planning for retirement, Acorns offers Acorns Later, a feature that allows you to open an IRA (Individual Retirement Account). Acorns Later automatically suggests an IRA based on your age, income, and retirement goals, making it easier to start saving for the future.
5. Acorns Early
If you’re a parent looking to save for your child’s future, Acorns Early is a UGMA/UTMA account that lets you start investing in your child’s name. It’s a great way to give your children a financial head start and teach them about investing early on.
Acorns Pricing
Acorns offers three subscription tiers:
- Personal ($3/month): Includes a taxable investment account, an IRA, and a checking account.
- Family ($5/month): Includes everything in the Personal plan, plus investment accounts for kids.
- Premium ($9/month): Adds priority customer support, extra banking perks, and financial wellness content.
While these fees are relatively low, they can be significant if your account balance is small. It's important to consider the cost relative to your investment size.
Pros and Cons of Acorns
Pros:
- User-Friendly Interface: Acorns is designed with beginners in mind, offering an easy-to-navigate app that makes investing simple.
- Automatic Investing: The Round-Ups feature and recurring investments make it easy to invest without thinking about it.
- Educational Content: Acorns provides a wealth of financial literacy content to help users make informed decisions.
- Diversified Portfolios: Acorns offers professionally designed portfolios to match your risk tolerance and financial goals.
Cons:
- Fees: The flat monthly fee can be a drawback for those with smaller balances, as it may eat into your returns.
- Limited Investment Options: Acorns only offers ETFs, so if you’re looking to invest in individual stocks or other assets, you’ll need to look elsewhere.
- No Human Advisors: Unlike some robo-advisors, Acorns doesn’t offer access to human financial advisors.
Who Should Use Acorns?
Acorns is ideal for beginners who are new to investing and want a simple, automated way to grow their wealth. It’s also a great option for people who struggle to save, as the Round-Ups feature makes it easy to invest small amounts regularly. However, if you’re a more experienced investor or looking for more advanced features, you might find Acorns a bit limiting.
Conclusion: Is Acorns Worth It?
If you're looking for a hassle-free way to start investing, Acorns is definitely worth considering. Its low barrier to entry, automated features, and educational resources make it a great tool for beginners. However, be mindful of the fees, especially if you’re investing small amounts. For those just starting their financial journey, Acorns can be a powerful tool to help you build wealth over time.
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