Financial Services

Acorn Financial Services guides individuals and investors/businesses in expanding and protecting their wealth. Acorns is a Robo-advisor whose service is based on the age-old principle of setting money aside. Its name is derived from the proverb that mighty oaks begin as tiny acorns, as paraphrased here. This robo-advisor rounds up all of your credit or debit card transactions to the nearest dollar and invests the difference in an ETF portfolio (ETFs). All is automated and done online, so you can set it and forget it.

Acorn Financial Services Inc is popular among young and inexperienced investors. It is particularly beneficial to college students. If you have a hard time saving, Acorns’ roundups may be helpful. This service automates it, so you don’t have to worry about failing to send money. It’s also a cost-effective alternative if you don’t have a lot of money to spend.

What is Acorn Financial?

Acorns is an investment app that allows users to invest their spare change by automatically rounding up transactions made with a connected credit or debit card. Acorns market capitalization is $860 million.

You can look elsewhere if you are a serious investor who wants to invest in more than Acorns’ limited selection of ETFs. Some robo-advisors, such as 529 college savings plans, offer a broader variety of account types.

Acorns Charges 

Acorns charge a flat monthly management fee, unlike most robo-advisors, which charge a fee depending on your account balance. The cheapest plan, Acorns Lite, costs $1 a month because its primary customer is new to investing. This is a straightforward taxable investment account. It’s easy, but it comes with Acorns’ roundup feature and bonus investment opportunities through Found Money partners.

You’ll need to upgrade to Acorns Personal, which costs $3 a month if you still want a Roth or traditional IRA and a checking account.

You’ll also get an Acorns Later personal retirement plan with tax benefits and automatic contributions and an Acorns Spend checking account with no monthly fees, access to 55,000 fee-free ATMs, and a debit card to meet your spending needs.

Acorns Family is the most expensive account rate, costing $5 a month. This tier includes all listed above, and an Acorns Early account for your children, an investment account. You can use this account to save for their college education, and the number of children you can save for is infinite.

How Acorns Works

You can build an account on Acorns’ website or via their mobile app. For their appealing designs, these platforms have earned numerous industry awards. To get started, you’ll need to include some personal details and connect your bank account, set up financial goals, and indicate your risk preferences.

Acorns will position you in one of five prebuilt portfolios based on your personal information: conservative, moderately conservative, moderate, moderately aggressive, or aggressive. In general, the higher your risk tolerance and the longer your period, the more money you’ll put into higher-risk assets with higher growth potential.

Acorns Roundups

Acorns use a mechanism called “roundups” to finance accounts. By connecting your credit and debit cards to your Acorns account, you can begin making roundups. The business will then round up your payment to the nearest dollar, deduct the difference from your bank account, and invest it into your portfolio when you purchase an Acorns-linked card.

Take, for example, a $5.60 coffee purchase made with your card. Acorns will round up your purchase to $6 and put the $0.40 difference into your portfolio. Even though this is a small number, the theory is that the difference will add up over time.

You can add as many credit and debit cards as you want to your account. Via a collaboration with Lincoln Savings Bank, Acorns also provides a branded checking account and debit card. This account is only available to Acorns Personal and Family. It’s built to operate in tandem with your existing Acorns account. You will keep track of your roundups and investments in real-time.

Roundups would be deposited automatically by Acorns, but you can also manually invest. This involves making a list of your sales and determining which ones you want to round up and invest in.

Acorns Key Features

Acorns Financial Services’ most distinctive characteristic of Acorns is its roundups. Although a roundup does not sound like much on a transaction-by-transaction basis, it adds up over time.

When you spend money with one of the Acorns’ partners, you get bonus cash in your account called Found Money. There are two types of Found Money transactions currently available. To take advantage of “Tap and Get” deals, you must first download the Acorns app and then make a purchase using your smartphone. Spend deals require you to make transactions with partner brands using your Acorns-linked card.

  • Automatic rebalances
  • Fractional shares
  • Mobile apps
  • Automatic deposits
  • Transaction roundups

Found Money deals are only available for businesses that affiliate with Acorns, unlike cashback credit cards that offer cashback on all transactions. Walmart, Expedia, Apple, Nike, and Sephora are among the more than 250 partners currently available.

Via its website and app, Acorns also provides educational material. This content uses straightforward language to describe critical investment terminology and concepts. You may also get sound financial advice to help you optimize your savings and investments.

Acorns Financial Services Investing Strategy

Acorn Financial Services, like many robo-advisors, follows a standard investing methodology known as modern portfolio theory (MPT). The entire principle of modern portfolio theory is that diversifying a portfolio through multiple asset classes can minimize risk while still optimizing returns. Harry Markowitz, the founder of modern portfolio theory, assisted Acorns in developing its portfolios.

Acorns use corporate bonds, government bonds, domestic large-company stocks, foreign large-company stocks, small company stocks, and medium company stocks are among the ETFs. Your risk tolerance level and investment priorities will determine how much you invest in each through your asset allocation.

  • Personal savings accounts
  • Traditional IRAs
  • Roth IRAs
  • SEP-IRAs
  • 401(k) rollovers

How Is Acorns Compare to Stash and Robinhood?

Acorns is aimed at young investors who do not have a steady source of income. Acorns, like other robos, provides a variety of accounts to help you get started saving, whether it’s in a taxable or retirement account. It doesn’t have as many features or account forms as certain other sites, so it isn’t the right option for users at all stages of their lives.

Acorns vs Stash

One business that operates in a similar market is Stash. It’s geared for people who are new to investing and provides a wealth of knowledge on saving and investing. Stash is almost equal in price to Acorns, but it isn’t a robo-advisor.

Stash provides both low-cost and higher-cost ETFs in investment niche topics that may be of interest to investors. You should buy the Clean & Green and Do the Right Thing ETFs, for example, if you want to invest in green energy or socially conscious businesses. However, investment fees average about 0.30 percent, which is high when compared to other providers. Stash also has around 150 individual stocks available.

Acorns invest in real estate, corporate bonds, government bonds, large-cap stocks, small-cap stocks, foreign large-cap stocks, and emerging markets through low-cost exchange-traded funds from iShares and Vanguard. Importantly, these investments’ fees average 0.10 percent, which is about as low as it gets.

Acorns take advantage of the psychological phenomenon of minor improvements going unnoticed. This app allows you to dangle your toe in the water of investing without making big lifestyle changes. It’s also ideal for those who want a self-balancing, conservative investment portfolio or who want to invest in a tax-advantaged retirement account.

Acorns vs Robinhood

Robinhood is a commission-free stock trading software that lets you exchange stocks, ETFs, options, and cryptocurrency without paying any fees. It’s designed for people who are new to investing and want to do so in the most straightforward way possible. The brokerage is purposefully simple, with an excellent user interface.

If you’re a seasoned investor who wants to experiment with individual stocks or options outside of your employer’s 401K, Robinhood is the way to go. Its commission-free trading structure is a great way to practice analyzing stocks or day trading without risking your money.

The educational features of Robinhood make it simple to gain the courage to delve deeper into options and cryptocurrency.

Acorns and Robinhood have very different investment models right off the bat. Choosing between the two is primarily a matter of whether you choose an active or passive investing approach.

By Anurag Rathod

Anurag Rathod, as a blogger he used to spread all about app-based business, startup solution, on-demand business tips and ideas and so on.

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