Those who are interested in Acorns because of its "round-up" savings claim to fame are the ones who are most likely to find value in the robo-advisor capabilities of the platform: When you make a purchase using accounts that are linked, the amount is rounded up to the closest dollar, and the difference is sent to a savings or investment account.

If you bought a coffee using a connected credit card and spent $4.50 on it, an extra $0.50 would be charged to your card and added to your investing account. If you've had success with this money-saving trick and found it enjoyable, you could also consider using Acorns to put money away for your retirement. Despite this, several robo-advisors on the market provide more comprehensive services at lower prices. Users who believe they will be inspired to save more with Acorns are the only ones who should apply.

How Acorns Works

Users of Acorns have access to five primary products that may help them save and invest money: Invest, Later, Spend, Found Money, and Early.

Acorns Invest

This taxable investment account invests your money in exchange-traded funds (ETFs) that are selected for you depending on the level of risk you are willing to take and the objectives you want to achieve financially. You can make on-demand deposits, round-up deposits, or periodic deposits into the account. Setting up regular payments is your best hope for taking advantage of dollar-cost averaging to enhance your portfolio. Acorns customers may donate as little as $5 at a time.

Acorns Later

A tax-advantaged individual retirement account is what we have here. Like that of Acorns Invest, your investment portfolio is comprised of ETFs. Because it's not the case that the money in your Acorns Invest account is intended for day trading or immediate usage, we found the Invest/Later terminology to be a little bit confusing. Regardless of the purpose, all investment is made with the long term in mind.

Acorns Spend

A bank account that does not charge fees, including those for maintaining a minimum balance, comes with a debit card. In addition to that, it compensates for some ATM costs. You may move money automatically into other accounts, such as your Invest account, from a direct deposit into your Spend account. This functionality is known as the Smart Deposit feature.

Acorns Found Money

An online marketplace that allows customers to earn a modest percentage of cash back on purchases made at various big stores, including Walmart. Your Acorns Invest account will automatically be credited with the cash-back that you earn while buying on Found Money.

Acorns Early

This is a UTMA/UGMA account, and it is only available to people who pay for Acorns at the highest possible price tier. It lets parents open accounts for their children without cumbersome red tape.

The Benefits of Acorns

The ideal method to invest is to avoid waiting and begin investing as soon as possible; Acorns strives to make this as simple and straightforward as possible. Even if you don't consider yourself an investor, you can put money into the market by rounding up your purchases on linked accounts or starting a monthly contribution quickly since there is no minimum account. You may even invest the difference between the amount you spend and what you round up.

You won't be overloaded with a confusing assortment of ETFs, and an easy-to-use interface makes setting up your savings account very straightforward. You will incur extremely little transaction costs if you stay with a core account rather than adding ESG funds. The automated investing service provided by Acorns makes a lot of sense if you need a push in the right direction to get started.

Acorns Disadvantages

The Acorns has several significant downsides. First and foremost is the tiered charge system, which imposes excessively high costs on new users who begin with smaller balances. It is not a good bargain if you invest a few hundred dollars and pay $36 each year in fees. Betterment offers a no-minimum account option for a lower price, unlike most other robo-advisors, which require clients to maintain balances of at least $500 or $1,000.

It is a bitter pill to chew that one must pay a fee of $3 to have access to one's checking account. In addition to this, there is no way to communicate with a real-life financial counselor.

On the other hand, although some parents would like access to a UTMA or UGMA account, anybody putting money away for education might wish access to 529 funds. In addition, there are no tax-loss harvesting capabilities, which are useful after you have more money in your account and need to balance the tax consequences of selling winners. These features will be useful once you have acquired more money in your account.