Ash The Great | Oct 31, 2017 | 0
Acorns Review – A Deeper Look At The Acorns App
I really like the idea behind Acorns because their underlying method is something I do myself. On the other hand, I have say that I do not personally use this investment app. The main reason is because I do what it does on my own terms (manually). Plus, it means handing over control of the investment side to them and I prefer to do it myself.
Nevertheless, if you are not like me and you do not have time to do what Acorns do manually, then this may be the app for you. Since this review is fairly positive, here is a link to the Acorns website where you may sign up for their app, or you may use their web services if you don’t have a Smartphone or you don’t want financial stuff on your phone (a wise move to keep such things off your personal phone if you ask me).
What Does Acorns Do?
The Acorns app is a mobile-first app, which means the service was created especially for mobile users. The Acorns app invests your spare change and helps grow it over time.
When you spend money in a store or online, the Acorns app invests your spare change. If you spend $8.90 in a store, it invests $0.10 into the investment portfolio, which adds to your savings within the Acorns service.
Over time, you save money because you are continually adding to the amount you have in the Acorns app. Plus, there is chance that the investments that are made will grow and that your money will grow with it.
Can I Set How Much Is Rounded Up?
You can set how much is rounded up, but as it says in the “Cons” section below, I am very unimpressed with their transparency about the issue. It turns out, after we signed up and started playing with the app, that you are able to adjust the amount you round your account up to. Here is a link to their instructions on how to set your rounding up amount.
How Do I Withdraw My Money?
There is an option on the app that allows you to make “One Time” transactions. As you can see by the image below, you are able to select an amount, and then choose to deposit that amount (from your linked bank account), or you may withdraw that amount into your bank account.
Your first withdrawal (our first withdrawal) took 11 days. We were told that they often put a 5-day hold on newer accounts to help prevent fraudulent activity. We then had to wait six days after the hold was lifted.
If a hold is put on your withdrawal, then that is five days you have to wait. There is a two-day settlement period, and then it takes between three to six days to get to your bank account. That means, if your money is put on hold, then you will have to wait between 10 days and 13 days, and if it is not put on hold, then you will have to wait between 3 to 6 business days.
Update – We have been told that our money was put on hold for 5 days both because we had a new account, and because we had made an investment and then asked for a withdrawal a few days later.
How Am I Able To Buy Shares With Such Small Investments?
The Acorns explanation is a bunch of nonsense that they use to simply disguise what they are really doing because what they are really doing sounds a little unprofessional and not “Sophisticated” enough. Their explanation is all about how they are able to buy fractions of a share, but I highly doubt they go to all that trouble when there is a far easier solution.
What they do, or what they probably do, is wait until the end of the day, pool everybody’s money, buy their shares the next day, and then assign each investor a share of the profits or loss based on how much each person invested. I highly doubt that every time you have change, they go out and buy a 12c fraction of a $100 share when they could pool everybody’s money at the end of the day and buy several $100 shares.
Is There A Risk I Will Lose All My Money?
Yes, there are three risks where you may lose your money. The first is that these sorts of investment schemes only work when the market is going up, when things start to drop, you are likely to start seeing losses.
Secondly, a good hacking group or a powerful virus may infect this company (and/or many others) and either draw money from your investments or steal your financial information. This is always a risk when you invest money with any company or institution.
Thirdly, the company is not FDIC insured, which means that if the business takes a big loss or the company goes under, then your money goes with it. If your bank goes under, then FDIC insurance helps ensure you do not lose everything. However, with Acorns, if the company goes down, then you can kiss goodbye to your money.
Acorns – Pros
- Acorns offers a very passive way of saving, and even though such passive saving will not help you retire early, it will certainly make you richer in the long run.
- If you like the “Playing it safe” investment strategy that Acorns uses, then you may add one-off payments to increase your savings, and you may set up recurring payments.
- Spending your change makes it easy to forget that you are saving at all, which is ideal for some people who normally have trouble saving.
- The fact that it takes a few days to withdraw the money means that people are not tempted to use the money to fund quick and frivolous purchases.
- You only pay $1 per month for the service, and you pay 0.25% if you have a balance of more than $5000. There are no fees for deposits or withdrawals.
Acorns – Cons
- The Acorns is very unclear about how much they are rounding your account balance up to. You assume they are going to round up to the nearest dollar, but for all they tell you, they may be rounding up to the nearest hundred.
- Seeing how much you have saved is going to tempt some people. Acorns should make it just a bit harder to see your balance so you do not see it as soon as you enter your app.
- The little bit here and little bit there idea is great, but if you are already struggling, then you may have been better off by keeping the spare change in your account.
- They should better explain the service on their website before having people sign up because their website only seems to paint half the picture.
Conclusion – I Recommend It, But I Do Not Use It
Whenever I log in to my online bank account, I take whatever change I have got and I send it to my savings account in order to round up my account balance. When there is enough money in my savings, then I make an investment.
The Acorns app is doing a similar thing except that it rounds up every time you make a purchase. I prefer to do it my way, but then I do check my account balance fairly often. If I had another job where I was not on a computer all the time and not on my online bank account so often, then I probably would have the Acorns app investing my spare change for me.