Last week during our podcast, we talked about automating your finances for financial success. As part of that we discussed how simple it is to automate your investing using an app called Acorns. So let us ask the question we’ve heard many times since: How Does Acorns Work?
Within this podcast, we talked about automated investing. Set it up once, and automatically invest in your future.
This was a popular subject within that podcast, although all of the ideas received positive responses and it is exciting to see so many of you implementing the automatic financial success tips!
Well, since this was one that many still had questions about as we were only briefly able to discuss it as part of the 8 options, we wanted to talk about in detail. And that is automating your investments by investing your spare change through the Acorns App.
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We believe that everyone should do this and nearly everyone has the ability to do this. We also feel that this shouldn’t be your only investing option, just one of many. In fact, an effective one that will grow without you hardly noticing an impact on your lifestyle, but with nice rewards in the future.
We have several investment options, but recently, we started also playing around with Investment Apps to help us build our investment portfolio and give us additional options for future growth. Stockpile has been a super fun one and this has been one we play around with, including our children. In fact, our 2-year old has a budding investment portfolio because of this option.
But Stockpile requires hands-on attention.
That is why we want to share how to automate investing with the Acorns App.
What is the Acorns App?
That is why our other favorite investment app is Acorns. Yes, this is an awesome app! It automates investing for you by rounding up your purchases to the nearest $1 and investing that change into a well diversified portfolio. It is basically investing your spare change. Instead of throwing it in a jar where it does nothing, it turns it into an investment. This is also known as “Micro Investing.”
And what an amazing option this has become for us.
For example, I have been using this app for about 90 days now. I have automatically invested $49.04, in spare change. My portfolio is now worth $65.96 (some of this is “found money,” details below). This is a market gain of $2.92, or 4.57% thus far! That is a nice increase for my money that would likely just sit in a jar and do nothing! Imagine the possibilities now!
My portfolio has grown greatly in a short time with a very small investment.
That is AMAZING to me!
It is also an investment that we haven’t noticed. When our amounts are rounded up, we hardly notice the difference in our budget! In fact, balancing our budget is kind of nice because it ends up being an even amount.
How Does Acorns Work?
One of the biggest questions is How does Acorns work if it is automatic? You simply link-up debit, credit and checking accounts and each time a purchase is made, it rounds it up to the nearest $1 and invests it automatically for you!
For example, if you buy something for $19.95, Acorns will round it up to $20 and take the excess of $0.05 and invest it for you. If you buy something for $10.01, Acorns will round up to $11 and invest the $0.99. Also, if you make an even dollar purchase, like a $5 purchase, it will round up even dollars to the next dollar. So in that case, it will round it up to $6 and invest $1 for you.
You can link as many cards and bank accounts that you want, to increase your investments.
However, we are going to tell you to NOT link up credit cards. It makes ZERO sense to invest using credit. Please don’t do this.
But connecting checking accounts and debit cards is extremely smart! It’s a forced investment plan that is perfect for anyone, even if you are already investing. It’s just another method to have money grow!
If you work on a cash system, you could consider doing this yourself. The Acorns App does allow you to make one-time investments as often as you want. So you can gather your spare change each month, deposit it and invest it.
It is also perfect for the BRAND NEW investor. Where ever you are at in life and with investment and retirement, this is a must-do!
We connected our debit card and checking account. We don’t make a lot of purchases with debit/checks because we make a lot of our everyday purchases with cash. So you can adjust it how you want. Both you and your spouse can connect cards, or you each can have your own account connecting the cards in your name, or just connect one and start with one and add any more at any time.
Automated Investing for Beginners: Invest Your Spare Change
So far, this is one of the differences between Stockpile and Acorns, besides the automated part, is that Stockpile, you are picking and specifically choosing which companies to invest your pennies in.
With Acorns App, you decide how conservative or aggressive you want your portfolio to be. Of course, a more conservative portfolio will likely grow slower, but be less risky.
The more aggressive your portfolio, the greater the potential to see your portfolio grow faster, but with more risk.
For my personal account with Acorns, I have decided to make this a more aggressive portfolio because it isn’t my only investment option and it is my spare change that I would probably use and not have much to show for it. So I might as well see what potential it has!
Acorns automatically diversifies my spare change based on my goal.
Differences between a Conservative and Aggressive Portfolio with Acorns App
Acorns takes your spare change and creates a diverse investment portfolio that are comprised of seven ETFs, including more than 7,000 stocks and bonds.
ETFs are Exchange-Traded funds that are stock, bond or commodity funds that typically track index, using the S&P500, and also themes like healthcare, technology and sustainable energy. ETFs allow an investor to invest in a variety of stocks. This has been a proven method for a good return on your investment.
The age-old adage, “never put all of your eggs in one basket” is more true in the world of investing than many other aspects of life. And Acorns does all of this for you automatically.
But in order for them to do this, you pick the type of account you want from conservative to aggressive.
By looking at these charts, this gives you an idea of how they diversify your portfolio – along with a “projected rate of growth” on each type of portfolio.
Bonds are the safest, least risky investment with the lowest average return and small company stocks are some of the most risky as they are often emerging companies that can take off and go big or they can fail. But these create the possibility for a GREAT ROI.
I personally have chosen the Moderately Aggressive option and it has worked well so far, but the stock market is a long-term investment, so although I’ve seen amazing returns so far, even if it dips, my plan is longer-term. But you can also change your portfolio at any time.
How much does the Acorns App cost?
Well, this is where the good news is! As of the time of writing this post, it is only $1 per month to use the service. You can use as much of the service as you want, including just the automated part and it is only $1 per month.
All of the above services are available to access for only $1 per month. One of my favorite extra services provided is the “found money” option. It’s an additional way to invest that actually doesn’t require any of your own money. Find details on this below.
Basically, you have your own investment broker for only $12 for the year. CRAZY CHEAP, especially when most of it is just done automatically and left alone for them to work their skills, making your portfolio grow for you.
Please note: if your account grows to be over $5,000, instead of $1 a month, Acorns will then cost only 0.25% per year, which is still incredibly low for this kind of service.
How to set-up an Acorns App Account (PLUS a FREE $5 to invest and kick off your account)
Acorns is an app. So it is intended to be managed from a smartphone app. But Acorns also offers a special referral program. So if you use the link from someone that referred you, both you and the person that referred you get $5 to invest/cash out.
So here’s how to get the Acorns App, PLUS your FREE $5:
- Download the Acorns App HERE
- Link your first debit card or checking account to start
- Then use this tool how you want to grow how you want – add more cards/accounts or increase the amount of spare change you want to invest, make one-time investments to boost it, etc. Just have fun with it!
Be assured that Acorns is safe and secure.
How to help your Investment Portfolio grow for FREE (or with others’ money) with Acorns App
And guess what! Using the Acorns App not only invests your spare change, but there are several other things that you can do to grow your Investment Portfolio and it will cost you nothing extra! In fact, not only will that not cost you anything extra, it is actually FREE MONEY that you can invest into the stock market instead of using just your spare change. This is an option in the Acorns App called “Found Money.” for example if you were to become an Airbnb host, Airbnb would put $200 free into your Acorns Account for it to grow. As another example, if you were to make a purchase off of Groupon, Groupon will invest 2% of your purchase through your Acorns account on your behalf.
There are several options like this to be able literally find free money by doing your shopping through the Acorns App some of the stores that they provide so you can build an Investment Portfolio that can have a nice nest egg in the future by simply linking up one debit card or checking account to invest your spare change plus taking advantage of these found money opportunities.
The “found money” options change all of the time, which just means that this gives you the chance to find new and different ways of investing free money.
For example, some of my personal favorite “found” money options today (note it changes frequently) are:
1. Uber will invest $0.50 into your account for each Uber ride you take.
2. Sam’s Club will put $10 into your Acorns account for becoming a new member.
All of this is completely free money. You just have to claim it and take advantage of it.
This means your investments can grow at a quicker rate by investing “other peoples’ money” by using their product or service.
How to help your Acorns investment grow faster with the 52-Week Money Saving Plan
Last year, we put our “spare change” in with our 52-week money saving plan. This not only gave us the original $1,367, but nearly $2,000 that we took an amazing family vacation with. This is a super popular plan, but this is also a nice way to make it grow even more, instead of sitting in a jar!
So now, instead, if we invest the spare change, it has a MUCH greater potential over the long term. This is even a great way to automate the 52-Week Money Saving Challenge. Instead of in a jar or high-yield savings account, you can invest your spare change, plus the money on this chart for a longer-term, smarter savings plan.
Summary of Benefits of Acorns App
- Invest your spare change and create a nice investment portfolio automatically and hardly notice
- Only spend $1 a month for this service
- Invest even more with FREE “found money”
- Start today with a FREE $5 through this link
We hope that we have helped to answer the question of How Does Acorns Work? in detail. We weren’t able to go into this kind of detail the first time we introduced it on the Take Back Your Finances Podcast Episode #10 where we talk about 8 Ways To Set Yourself Up for Financial Success. Now that you understand it a little more, we hope this will help you begin or add to your investment options!
If there are questions we didn’t answer – leave them in the comments below and we will see if we can get answers for you!
Am not sure I understand….So if I buy something for 49.95, then $50 is deposited into the Acorn account?
And if I mostly pay purchases with cash, then I manually put it into the account?
Hi R, No, it rounds it to the nearest dollar. So if you buy something for $49.95, it is rounded up to $50.00 and $0.05 is added to your account. Hopefully that makes more sense. 🙂
Is one able to withdraw at any time?
Yes! It is a super flexible and easy app to use. You can withdraw at any time.
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Is a payment, such as for the light bill or the garbage bill, that comes from my checking account treated as a purchase for round-up purposes, even though I didn’t actually “purchase” anything?
For example, if the light bill is $78.50, is 50 cents rounded up and added to my investment account? I wouldn’t use my debit card to pay for this.
If you have your checking account as one of your linked accounts, then yes. If you only have your debit and any purchases (including automatic) would count. It’s anything that is coming out of the account you linked. You can change settings at any time. Hopefully that helps.
I have been using Acorns for a week now. I am surprised that Acorns keeps going back to purchases made prior to starting the program and asking me to authorize round ups for those purchases. Is there a setting that I am missing to turn those prior purchases off for the round ups? I have asked Acorns this same question with no response, which is a big disappointment.
Thank you really this much for telling me about this great investment app. I will certainly beta test if if I have time. Which I am not sure about as I spend all my time with Bitcode Prime platform which I am quite happy by the way. And when you are happy earning with one platform, there should be sustainable proof for me to review more platforms.