Acorns App

There are so many opportunities available for those of us looking to earn or save a few bucks. Many of them require varying levels of effort, typically more effort put forth yields greater results. Acorns is an exclusion to this rule. The service has a number of different options to invest/earn money for you, which we will cover along with the fees below.

Acorns Core

The original idea behind the app and still a convincing feature that makes the app enticing. Within 5 minutes, you can have the app set up to roll your spare change into an automatically diversified investment portfolio. This works by monitoring your transactions, and "rounding-up" your purchase to the next dollar and invests the difference. For example if you spend $7.75, Acorns will "round up" to $8 and invest the difference of $0.25 into your Acorns Core account. You also have the option of adding a recurring investment, if you wish to boost your contributions on a schedule.

The portfolio is built from your preferences, as you will have to answer a few questions around your goals and current financial situation. From the brief quiz, Acorns will recommend a blend of ETFs. Skeptics of the "automated portfolio" should know that the portfolio strategy was built with the help of Nobel Prize-winning economist, Dr. Harry Markowitz. If you are still skeptical, and are more financially savvy, you can dive right into the prospectuses of the various ETF offerings. Your blend of ETFs will be comprised of multiple of the following ETFs from Vanguard and iShares:

LQD - Corporate Bonds
SHY - Treasury bonds
VNQ - REIT
VOO - S&P 500
VWO - Emerging Markets
VEA - Developed Markets

The Acorns Core service costs a minimum of $1/month, but is free for college students.

Acorns Later

Acorns later is built on top of the same great foundation, but targets your retirement account instead of just everyday saving and investing. The app will automatically create a diversified portfolio, and help you choose between a Roth IRA, Traditional IRA, or SEP IRA. Acorns Later can be opened with as little as $5. Even though the minimum is low, you will want to start your account with a larger amount to minimize the effect of the $2/month fee. If you annualize the fee on a $100 balance, that would equate to a 24% fee, which is high when compared to most hedge funds. To make this $2/month fee worthwhile, we recommend starting an Acorns Later account with at least $2500 to keep your total fees under 1%.

Acorns Spend (Debit Card)

Acorns Spend is a debit card which is currently available for preorder. While this card isn't out at the time of writing, it promises a few advantages over the current Acorns account. Partipating brands and restaurants could provide cash back of up to 10% which would go immediately into your investment account. While the cash back could be nice as an independent product, it appears that to use Acorns Spend you must also contribute to Acorns Later or Acorns Core. The card requires you to subscribe to Acorns's most expensive monthly service at $3/month ($36/year) which is slightly lower than the average annual fee of comparable cards on the market with annual fees. I'm personally very curious to hear more about which participating merchants will offer cash-back and how it will compare to other credit/debit cards.

Found Money

My personal favorite, is Acorns Found Money. This allows me to get cash back for performing various actions. Some of the actions are as simple as signing up for a free service, and may offer you $5 or even $10 for a few minutes of your time. I've used 6 different Found Money actions, and earned a total of $55 (screenshot below) for my investment account. Other options are similar to cash back programs, where you can purchase a product and the merchant will deposit a percentage back into your Acorns account.

Fees

The pricing model is slightly confusing, but makes sense from a business perspective. Acorns Spend only works with either an Acorns Core or Acorns Later account, so if you want the credit card you must also pay for the other invesment services. While not completely unreasonable, the fees can definitely impact the performance of your portfolio. Before you invest, make sure you take the fees into consideration as a total percentage of your invested cash.

For more information, download the app or check out their great finance blog Grow.