Acorns is an investment app that takes a different approach to finances. Unlike other apps that focus on complex approaches like day trading, it promotes passive investing that is simple for everyday users. This approach breaks down the barriers to investing by eliminating the how do I start paralysis.
How Acorns Works:
Students typically do not have hundreds of dollars to pour into investing, but Acorns works because it focuses on micro-investments from everyday purchases. A double shot of espresso quickly becomes a small, traceable win when the $3.75 paid for it is rounded up to $4, the remaining 25 cents automatically invested to experience compound growth. This behavior, happening over several months, can lead to investments in the hundreds, with the average Acorns investor being able to invest $166 in just 4 months from everyday purchases, and that becomes compounded based on the return rates of chosen investments.
The Pros:
Acorns is one of the few finance apps that has passive investing through its flagship feature of rounding up to the nearest dollar on everyday purchases, and the ability to automatically invest a percentage of your paycheck, where many apps expect you to withdraw the amount you want to invest manually. There is also the benefit of comprehensive financial account offerings with Acorns, offering every kind of investment and financial account an individual can need, including the coveted Roth IRA. The savings also extend to their high-interest bank accounts, with the silver and gold tier users receiving 3% and 5% percent for Acorns Checking and Emergency Fund Accounts.
The Cons:
Monthly plan fees are a part of the Acorns app structure, even with the same accounts offered by competitors, at no additional cost, because users are paying for the hands-off automation of Acorns investing for them. Then there is the limited asset access, which means investors cannot directly invest in bonds, index funds, or CDs, which is typical of most brokerage accounts. Instead, it uses Exchange-Traded Funds (EFTs), consisting of multiple different kinds of investments, including stocks, bonds, commodities, or other assets, which are then traded on the stock exchange just like an individual stock while limiting risk. This continues into the final con, that Acorns is not structured for experienced investors because there is narrow flexibility for manual investment and limited research tools that are common with other apps, including stock screeners.
Bottom Line:
Acorns is changing how students and everyday people approach investing by bridging the gap of financial education and time with practical application by investing users' spare change for the future. Regardless of investors' goals, whether that will be to invest a few dollars or hundreds, Acorns simplifies the investment process for beginners, making financial management easy and accessible. This makes the $3 price tag of the bronze plan priceless for those without the time to manage an investment portfolio or for people who are just starting to invest and don't know where to start.
Discover it for yourself: https://www.acorns.com/
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