How to Save Money on Autopilot With the Acorns App
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If you've ever struggled to save money or find yourself wishing there was an easier way to do it, then today's post is for you!
I want to tell you all about a little saving and investment app I discovered about a year ago called Acorns. This is one of my favorite ways to save extra money without feeling obligated - it's a completely set it and forget it system
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So what is Acorns?
Acorns is one of the best ways to automatically take your spare change and invest it in the stock market.
It runs as an app for your phone that links to your debit card and bank account and rounds up all of your purchases to the next dollar. When it does that, any spare change from the transaction is swept into your Acorns account and invested in ETFs.
You get to choose how aggressive or conservative you want your account to be managed, and the app does the rest!
The best part is that it is completely automatic. Once you set it up, you can forget about it and it will continue to do its thing in the background month after month.
Quick Facts
- Management fee: $1-2 per month
- Account minimum: $0
- Difficulty level: Beginner
Things I love about the Acorns investing app:
- Basic acorns accounts are free for college students!
- It's a great way to save money without having to think about it
- You can withdraw the money at any time and use it for anything you want
- You can add a base amount of money you would like it to pull each month in addition to the roundups
- No fees to withdraw money to your bank account
- The Found Money feature can add cash to your account every month
The Downsides of using Acorns:
- Some people feel that the $1-$2 per month fee is too high (I’m fine with it.)
- There are steep fees for transferring your money directly to a linked brokerage account. I recommend withdrawing to your bank account instead (which is free!)
- The app isn't great as a long-term investment vehicle.
Acorns is best for:
- People who struggle to save
- Those who don't yet have the $500-$3000 minimum to open a brokerage account
- Those just getting started with saving and investing
- Those who want no hassle automation of their savings
- Those who want to save for other things like vacations, cars, or an emergency fund
Overall grade: 7/10
How I use Acorns to Build My Net Worth
As I've said before, Acorns really isn't a great long-term investment vehicle. The returns are much lower than investing in an index fund account with Vanguard or Fidelity and your money is only spread across seven ETF's.
The Vanguard Total Stock Market Index Fund, for example, invests your money in every single publicly traded US company. The stability and growth with a Vanguard account is much better overall.
Here's whereAcornsexcels. Instead of being a long-term investment account, Acorns is great for grabbing up those extra quarters and dimes from every transaction you make and bringing them into one place for you.
With my account, I let Acorns run for several months until I accumulate a few hundred dollars. As you can see, it took me about 10 months to reach $619.12 in my account.
After reaching a decent sum I withdraw the money into my bank account and then quickly send it to my Vanguard account. This is a great way to invest an extra $1,000-$2,000 per year without feeling the pinch at all.
And, you don't have to invest the money like I do. Many people use Acorns as a vacation fund, a new car fun, or just as a fun money fund for a special treat.
When used as a simple savings app, it is a really fun and painless way to watch your savings grow.
When I first set up my account, I wasn't sure what to expect so I set it to add an extra $5 per month to the account in addition to my roundups. Now that I've gotten a good feel for how it works, I will be upping that number significantly.
I love thatAcornsis crazy simple-to-use and that it supports my secret sauce to building wealth: Automate your savings and investments and you can’t help but succeed.
Ready to start stocking your pantry full of your own preserves? Grab these editable canning jar lids as a perk of becoming a subscriber, and you'll have shelves of beautifully labelled jars in no time.
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FAQs
Acorns is well known for its system that lets you take advantage of “Round-Ups” — investing your spare change whenever you use a linked card. For example, say you spend $9.45 at your favorite lunch spot. Using Acorns, you can round up to $10 and deposit that extra 55 cents in your Acorns investing account.
What are the downsides of the Acorn app? ›
Acorns charges monthly membership fees, starting at $3 per month. Even though it is a very easy way to get started investing, if you don't make enough purchases each month to round up and set aside enough money, the monthly fee could outweigh the benefit.
Why are Acorns a bad idea? ›
Where Acorns falls short. No tax strategy: Unlike many of its competitors, Acorns does not offer a tax strategy. High fees on small balances: Because of its pricing structure, Acorns can have high fees on small account balances.
Is Acorns a pyramid scheme? ›
No, Acorns is not a scam. We've been helping everyday Americans save and invest since 2014. We've served over 13,000,000 customers, who have invested more than $20,000,000,000 with us. Your trust means the world to us — it's why we're committed to keeping your investments, savings, and personal information secure.
What is the 50 30 20 rule on Acorns? ›
50% for essential spending. 30% for flexible spending. 20% for financial goals.
How to use the Acorns app effectively? ›
Simply select how much money you want to invest and transfer it from your bank. The second way is "round-ups." After you connect debit or credit cards, you can set Acorns to "round up" your purchases and invest the difference — if you spend $8.46 on lunch, Acorns will invest the $0.54.
Why is Acorns charging me $3? ›
Acorns Personal, a $3 monthly Subscription Fee Tier, includes an Acorns Invest Account (Base Portfolio only), one or more Acorns Later accounts, and access to Acorns Checking.
Is the Acorns app really worth it? ›
Bottom line. For those who want to invest their money but don't know where to start, Acorns is an approachable platform for beginners. It has a simple interface and a micro-investing feature that goes to work every time you make a purchase. Plus, your investments will be safe in low-cost, diversified funds.
Do I have to report Acorns on my taxes? ›
Every time you sell a portion of your investment, you incur what the IRS considers a taxable event. If you sell part of your portfolio and transfer it to another Acorns section such as the 'Later' retirement IRA or 'Spend' debit account, you still have to report those transactions to the IRS.
Does Acorns charge a fee to withdraw? ›
One of the primary concerns for users contemplating withdrawals from Acorns is the possibility of penalties. Fortunately, Acorns does not impose penalties for withdrawing funds. This means users have the freedom to access their invested funds without incurring additional charges from the platform.
However, a significant drawback of Acorns is its fee structure. The app offers three plans, priced at $3, $5, or $9 monthly, based on the services you need. The $3 monthly fee is relatively high for accounts with smaller balances.
Does Acorns grow your money? ›
Money doesn't grow on trees, but with compound interest or compound returns, money can grow itself. The longer you invest with Acorns, the more you're giving your money a chance to work for you.
Can you lose money investing with Acorn? ›
Yes. The securities you own are always subject to market fluctuations. Market volatility can be unnerving, but it can also be an opportunity for investors. The big lesson we want all investors to remember is to keep going — over time, the market has bounced back from tough times.
Is Acorns a Chinese company? ›
Acorns is an American financial technology and financial services company based in Irvine, California, that specializes in micro-investing and robo advice.
Is it bad to withdraw from Acorns? ›
Unlike some traditional investment accounts, Acorns does not impose penalties for withdrawing funds. However, users should be mindful of potential tax implications, especially regarding capital gains.
Can you actually make money with acorn? ›
Acorns is not a side hustle or money-making app that pays you. Think of it as a tool to grow the money you already have with consistent saving and investing. Generally, you'll earn money from your investments and by making qualifying purchases if you link your card to the Acorns account.
Is acorn a good way to start investing? ›
These portfolios consist of low-fee ETFs (exchange-traded funds). While they can be used for short-term investments, they are geared towards long-term financial goals. Acorns is particularly effective for traditional IRA and Roth IRA accounts, where investments typically span many years or even decades.
How does acorn savings work? ›
Acorns is a fintech company that is best known as a micro-investing platform that allows users to set up automated investments into a portfolio through Round-Ups: Acorns rounds up a debit or credit card purchase made on a linked card to the nearest dollar and invests the change on behalf of the member.
Is investing in Acorns risky? ›
Banking insurance: Acorns works with partners Lincoln Savings Bank or nbkc bank, Members FDIC, to make sure your funds are federally insured up to $250,000. It's also a member of the Securities Investor Protection Corporation (SIPC) which is a protection measure for customers if their brokerage firm fails.
