Why You Should Invest Using the Acorns App

In some of my blog posts, I’ll be sharing my experiences with investment platforms that I enjoy using as well as those that I plan on utilizing down the road. This article pertains to a popular app that has been getting a lot of buzz across several media outlets, and is especially popular with millennial investors – Acorns.

Acorns is a software company that enables individuals the opportunity to micro-invest in a series of portfolios. The platform is a quick, easy-to-use, mobile-friendly app that almost anyone can set up in just a few minutes. The app enables investors to open an account with as little as $5, and only charges its users between $1, $2, or $3 a month until a user preserves a $1 million account.

The app is an investment platform, which means that funds are not FDIC insured. However, Acorns is Securities Investor Protection Corporation (SIPC) insured for up to $500,000. This means that if Acorns were to shut down, users would be covered for a maximum of $500,000. Although there are a multitude of perks and amenities offered through Acorns, here are the methods I currently use to invest my account.

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Portfolio – Acorns does not allow users to personally pick which stocks, ETF’s, or mutual funds their money will be invested in. However, there are five portfolios that users have the option to choose from; conservative, moderately conservative, moderate, moderately aggressive, and aggressive. In my personal account, I currently have the moderately aggressive portfolio. I chose this portfolio based off of the information I provided on the app’s questionnaire and the suggestions Acorns gave.

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Round-Ups – Acorns figured out a simpler way for all of us to invest without dishing larger sums of money at one time. Through Round-Ups, Acorns automatically invests your spare change from everyday purchases. For instance, if you were to buy a cup of coffee for $2.47, Acorns would automatically round up $0.53 to make it a total of $3.00. However, on full dollar purchases, Acorns would typically round up to the next dollar amount.

If you were to purchase an item for $11.00, Acorns would automatically round up $1.00; making it now $12.00. You can change the setting for full dollar amounts so it takes less than $1.00 each time. For me, I have set Acorns to transfer just $0.05 off of full dollar payments. When your Round-Ups reach at least $5, Acorns will transfer that amount into your Funding Source, which is the account that automatically invests your money into your portfolio. You aren’t required to have round-ups on, and you should be fully aware of how it works beforehand.

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Recurring Investment – This is a great way to build up your account consistently. You can set up a daily, weekly, or monthly investment option that you can change at any moment. I highly endorse setting up a weekly recurring investment rather than a daily or monthly investment. You’ll have a better chance of buying in at a lower rate (i.e. dollar cost averaging) with more frequent investments than you do with just one monthly investment.

Daily investments would appear to make more sense with this method, but it can be tough to remember maintaining additional funds in your account. Having recurring investments set to a week at least enables you enough time to prepare and transfer funds conveniently. I currently have a recurring investment of $12.50 a week (totaling $50/month). You don’t need to set up a recurring investment, but it’s (obviously) recommended that you do set up the minimum for the time being.

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Found Money – I love this concept, which most other investment apps that I have seen don’t offer. When you shop with one of Acorns 200-plus Found Money partners including Nike and Macy’s by using the extension on the Acorns app, the company automatically invests back into your Acorns Core account. You’ll typically see companies give back between 3% - 5% on the total amount that you spend during a particular time, but I’ve seen some brands offering up to 10% back. However, it does take around 30-120 days to receive the funds into your Acorns account from the company you shopped with, but it’s a great treat to get when you least expect it.

I recommend taking advantage of found money when you know you’re shopping for certain items, you’re binge shopping for presents during the holidays, or when you have gift cards that you still need to use. For instance, my fiancé’s brother gave me a $25 gift card from Nike on Christmas back in 2018. Instead of going directly on Nike’s site from the gecko, I took a few more seconds and logged into my account of the Acorns app, then went on Nike’s website that is linked to app, and decided to purchase a shirt.

Thanks to the limited efforts I made going through the Acorns app first, Nike gave me $1.25 in return, which was then distributed into my Acorns portfolio. Not only did I get the shirt for free using the gift card, but I was also rewarded for my “good deed”. Even better, that $1.25 is now in my Acorns account, which has the potential to accrue interest overtime. It may seem that $1.25 doesn’t sound like much, but it can add up quickly! Imagine getting money back every time you purchased something online…..