Is Acorn Investing App Worth Using?

As of lately, Acorn has been on a media campaign via talk shows, youtube commercials, and television ads to promote a service that, at the heart of it, basically helps automate investing for you. Acorn Investing basically has a round-up feature that invests the spare change by rounding up on the dollar and investing the difference. So if your can of soda cost you $1.49, acorn would take the .51c difference and then put it in one of their two investing strategies that we will discuss a little more of lately. There are other surprises and investing options available through this platform, and in today’s article, we will discuss what those features are and what we believe the value of this app is (IF).

Acorn is a Robo Investor

There are types of investors out there and Acorn effectively is considered to be a Robo Investor. This means that without help from a financial advisor or any kind of human expert, Acorn will put you into one of three buckets that have been developed in order to fit what style of investing you’re most interested in getting involved in. This is not to say that their Robo Investor wasn’t designed with human experts thinking deeply about what stocks are best for you in the market, but what it does mean is that you are investing more in a broad funds account that tracks the market similarly to how you’d invest into something like Vanguard.

Bottom line, the way you’re choosing to invest is not custom tailored to you, but it does have value inherently.

Different Ways to Invest: Round Up or Multiple.

There are different ways you can choose to invest with Acorn Investing. This can be broken down firstly into which style of investing best suits you and your financial goals. The way you can choose to invest in is basically two categories, the simple round-up category or the roundup multiplier.

The roundup doesn’t need much of an explanation and is the flagship feature of Acorn, as discussed all that means is your change to the nearest dollar that isn’t invested will be put into a broad investment fund. But the roundup multiplier currently has three ways you can invest even more money. With the multiplier, the buckets are respectively, 2x, 3x, 10x.

It works by taking the difference in change and multiplying by the bracket you’ve chosen.
So for a working example, you spend $1.68 on a pack of gum.

The change left over is .42c
In two bucket multiplier: .42c (2x)= .84cents invested
In three bucket multiplier: .42c (3x)= $1.26 invested
In ten bucket multiplier: .42c (10x)= $4.20 invested

Different Ways to Invest: Financial Goals

There are also different styles of investment you can choose to be put in an “aggressive” 5-year cycle that inherently comes with “more risk”, but its goal is to get you the highest margins possible within the small time frame. There is also the 20-year investment strategy modeled after being an extremely conservative approach of helping you make gains in the marketplace.

The Cost/Membership Features.

There are more features than what we’re listing but with three tiers to membership, we will share the most striking features and afterward give our review and thoughts on the value of Acorn overall.

The $1 per month considered the basic tier membership is essential, it is also free for college students under 24 years old. If you were to invest $50 a month using Acorn starting from $0 in your investment account, you would lose 2% of your money every month just by having an account. In fact, you would have to have in about $3,000 USD just to break even on the value gained from the monthly membership loss at current market growth rates.

Now I understand, this sounds like we’re making a bigger deal out of it than it is, you spend $12 a year for a basic membership that helps you save money. And for people that haven’t tucked away or invested any money in their life, we admit, this is a good value. Having some money put aside is better than none at all, it’s just good to be aware of that Vanguard (0.04% transaction fee) & Fidelity (0.00% transaction fee), offers a better competitive value since you are virtually paying nothing to use their platform manually.

The level two membership that costs $2 per month comes with an Acorn IRA. An IRA, or Investment Retirement Account, will be selected based on your financial goal, and is another account with a very low barrier to entry. In fact, it only actually costs $5 to get started in this account, and Acorn will do the heavy lifting of finding a portfolio that is right for you to invest into.

Finally, there is the $3 per month account that comes with their very own Acorn checking account and an actual physical debit card that has the benefit of unlimited ATM fee reimbursements. So overall it’s actually not the worst thing to invest into in the world, especially when other accounts actually do not have the same features nor do they have the unlimited withdrawal features.

Final Thoughts

So final thoughts,

Overall when 84% of Americans put away less than 15% of what they make a month then saving something is better than nothing. Although Acorns is essentially just a stepping stone in your goal to financial literacy it does make things easier for you, if you’re completely new to investing, and could be recommended for a lot of people that just don’t know where to begin. So in short, yes although not the very best for investing just from a pure economist’s point of view, from a consumers perspective it is something that could be advisable for a lot of people overall.