Acorn, a micro-investment app, has been gaining popularity among investors. However, some users are seeking to know if it is a legitimate investment option or a scam. Although the app has been around since 2012 and has garnered over 9 million users, the question “Is Acorn Legitimate?” still lingers. In this article, we will explore a couple honest reviews about Acorn and provide you with a clear understanding of whether it is a safe investment option or a potential scam.
About Acorn app
Acorn automatically invests the leftover change from your purchases in exchange-traded funds after rounding them up to the nearest dollar (ETFs). A monthly fee of $3 to $5 is assessed. Through Acorns, you can also start a bank account, save for retirement, or invest money for your kids.
The technique of funding an Acorns account known as “Round-Ups” by Acorn is not the only one available. You can deposit and transfer money using conventional methods. Even better, by making purchases from the company’s retail partners, you can enhance your balance (more on that later).
When Acorns last made such figures available to the public in February 2020, it had more than 6.8 million users. From investors like NBCUniversal, BlackRock, PayPal, Jennifer Lopez, and Alex Rodriguez, the company has raised more than $200 million.
Due to the fact that it automatically invests your money into one of several pre-made plans, the fintech company is also referred to as a robo-advisor.
How Does Acorns Work?
The five main saving and investment solutions offered by Acorns are Invest, Later, Spend, Found Money, and Early.
Your funds are invested in exchange-traded funds (ETFs) that have been selected for you based on your risk tolerance and financial objectives in this taxable investing account. Round-ups, recurring deposits, and on-demand deposits are all options for funding the account.
Your best option is to set up recurring contributions so that you can use dollar-cost averaging to build your portfolio. Acorns allows users to contribute as little as $5 at a time.
A tax-favored individual retirement account is this (IRA). Your portfolio is made up of ETFs, like Acorns Invest. Since your Acorns Invest funds aren’t necessarily intended for day trading or instant use, we found the Invest/Later nomenclature to be a little perplexing.
Regardless of the objective, investing is always for the long term.
A bank account with a debit card that does not charge minimum balance fees or other fees of this nature. Additionally, it pays back some ATM fees. You can also automatically transfer funds from a direct deposit in your Spend account to other accounts, such as Invest, using a tool called Smart Deposit.
Acorns Found Money
A where customers may get a small percentage of their purchases from hundreds of big-name stores like Walmart back. You receive the cash back from Found Money purchases in your Acorns Invest account.
This UTMA/UGMA account, which is available to individuals who pay Acorns’ highest tier, enables parents to set up accounts for their children without having to deal with cumbersome red tape.
Reviews on Acorn: Is Acorn Legitimate or Scam?
The U.S. Security and Exchange Commission (SEC) oversees Acorns Grow, which was founded in the state of Delaware. 021-196744 is the Reporting File Number for them.
In addition to being classified as a broker-dealer, Acorns Securities is also registered with the SEC and was founded in Delaware. The report’s file has the 008-69294 prefix.
Acorns Securities has a CRD# of 168172 and is registered as a brokerage business with FINRA (Los Angeles district office).
They only made one regulatory notification to FINRA in 2017, and it involved accepting penalties for inappropriately storing electronic broker-dealer records.
Acorns does not appear to be the subject of any other disciplinary actions aside from this one. It is a legitimate personal financial business that emphasizes accessibility and micro-investments. It also manages more than $3 billion and has more than 10 million users.
Best Acorns Reviews 2023
The process of entering the stock market might be intimidating for people who are just starting out in investing. The step into investing, however, may be made considerably less scary by a number of fintech investment applications that have beginner-friendly features including no account minimum, educational resources, and streamlined interfaces.
Acorns, which offers several of these features, may be chosen by many beginners.
Acorns is a mobile application created especially for new investors who want to dabble in the stock market. It provides access to a bank account, tax-advantaged IRAs for retirement, and its robo-advisor platform. With the use of its primary micro-investment function, beginning investors can start out modest by depositing their spare change from regular purchases.
For instance, if you pay $3.75 for a coffee, Acorns rounds it up to the next dollar and puts the extra $0.25 into the market. The concept behind microinvesting is that your donations will grow over time. It’s a smart move for newcomers who want to test the waters before jumping in headfirst.
Your spare change and any further donations you make are invested by Acorns, a robo-advisor, into a mix of roughly 25 inexpensive, diversified ETFs (which include more than 7,000 stocks and bonds). Acorns’ Round-Ups®, which are added from the rounded dollar purchases on your linked credit and debit cards after they exceed $5, can be used to fund user accounts manually, automatically, or both.
Acorns chooses the ETFs for you after you answer questions about your financial objectives, timetable for investing, and risk tolerance. When building your portfolio, a number of factors are taken into consideration, including your age, income, and net worth.
Your Acorns portfolio may contain ETFs like the iShares Core U.S. Aggregate Bond ETF, which offers extensive exposure to U.S. investment-grade bonds, or the Vanguard S&P 500 ETF, which replicates the well-known S&P500 stock index.
Acorns does not yet allow investors to purchase or sell specific equities, but the business hopes to introduce this capabilit. Consider using a free stock trading platform like Charles Schwab, Vanguard, or Robinhood if you ever want to start trading independently and remove the training wheels from your trade.
You can open and manage a standard IRA, Roth IRA, SEP IRA, and/or 401(k) Rollover with Acorns Later in addition to Acorns Invest, a taxable brokerage account. Kids can open an investment account called Acorns Early.
Acorns is distinguished by its hands-off managed portfolio and Round-Ups feature, which automatically aids in market growth. To keep your investments on pace, Acorns will automatically rebalance your portfolio for you. Because your donations with this technique can be so little, Round-Ups makes it simple to set investing on autopilot and makes it available to nearly everyone.
Even better, you can choose to build an ESG portfolio using ETFs that provide you exposure to more sustainable businesses.
In addition, Acorns offers a checking account with many of the same features as a typical bank account, such as fee-free withdrawals from more than 55,000 Allpoint ATMs worldwide and direct deposit, mobile check deposit, debit cards, and fee-free withdrawals from ATMs.
Acorns delivers personalized financial literacy material on the move if you’re committed to thoroughly knowing the stock market’s ins and outs. A blog called “Money Basics” and the Grow + CNBC website are among its teaching resources.
In both the App Store and Google Play, the Acorns app is free to download (for iOS).
There are two levels of membership available at Acorns:
- A bank account, investment account, and retirement account are all included in a personal plan for $3 per month.
- In addition to the three accounts you receive with the Personal plan, the $5 monthly Family plan also comes with additional investment accounts for your children.
Although the app advertises itself as an inexpensive investment alternative for beginners, if you’re simply investing a few dollars each month, the monthly cost might significantly reduce your earnings. To really benefit, in addition to any spare change that gets picked up, set up a larger periodic contribution into your Acorns investment account.
Investment platforms like Robinhood don’t have a robo-advisor service, but they don’t charge any commissions for trading stocks or a monthly fee to keep a basic account active. Through its SoFi Automated Investing service, SoFi offers its own robo-advisor and does not charge any management fees. Additionally, you can open a cash management account with them at no cost as well.
Acorns is an accessible platform for beginners who want to invest their money but are unsure of where to begin. It includes a straightforward user interface and an automatic micro-investing feature that activates whenever you make a transaction. Plus, low-cost, diversified funds can keep your assets secure.
Consider using a robo-advisor like Betterment if you’re looking for something a little less entry level. It’s a good alternative for individuals who still like to let their assets run themselves, but more seasoned investors can personalize through flexible portfolios.
Acorns Pros and Cons
Acorns aims to make investing as simple as possible. The best way to invest is to start investing right away rather than waiting. Even if you don’t consider yourself an investor, you may start recurring contributions fast thanks to the absence of an account minimum and round up your purchases on linked accounts to invest money in the market.
Setting up your savings is made simple by an intuitive interface, and you won’t be overwhelmed by a complex selection of ETFs. Absent ESG funds, if you stick with a core account, you’ll pay very little in fees. The automation service offered by Acorns makes sense if you struggle with motivation.
Acorns have a few of significant flaws. The tiered fee structure is the biggest problem because it is excessively expensive for customers with modest starting balances. When you have a few hundred dollars invested, paying $36 a year is not a good value. Betterment offers a no-minimum, lower-fee alternative to many robo-advisors, which have an account minimum of $500 or $1,000.
It’s difficult to swallow that you have to pay $3 to access the bank account, and there is no way to communicate with a real financial counselor.
However, anyone saving for college might wish there was access to 529 accounts. While some parents might enjoy having access to a UTMA/UGMA account, it is not universal. Additionally, there are no tax-loss harvesting capabilities, which will be useful once you have more money in your account and need to balance the tax consequences of selling winners.
For as low as $3 per month, passive, automated investment seems like a great deal. Acorns’ management costs, however, might be astronomical if you only have a few hundred or even a few thousand dollars in your account because it offers flat rates.
Acorns can still assist people in forming positive habits. For those who might not normally save or invest, it can seem more approachable. It effectively carries out the “invest your change” notion and provides a few intriguing benefits.
Is acorns a good way to invest?
Acorns is a useful tool for long-term savings growth. Create an automatic savings plan that deposits money on a monthly basis to expand your portfolio for the greatest results. All of the trustworthy ETFs offered by Acorns Investments represent more than 7,000 equities and bonds.
Why acorn is a bad idea?
Long-term investing is not suited for the default Acorns account. Accounts with Acorns Core are tax-deductible brokerage accounts. There are more appropriate account types available if you are investing for a long-term objective, such as your retirement or the college costs of your young child.
Has anyone made money on acorns?
Acorns manages $3 billion in assets for more than 8 million members. The software enables users to invest for the long term in order to earn money and accumulate wealth. By making purchases from 350+ Acorns Earn partners, you can also earn free money with Acorns.
Is acorn safe to link bank account?
Due to the fact that Acorns does not save your bank login details, linking your bank account is secure.