When you think of spare change, do you associate it with making investments for your future? If not then you’re missing out on a great opportunity to invest wisely.
Today, we’ll be talking about how you can start investing your extra pennies with the Acorns App.
What is the Acorns App?
Acorns is a micro-investment app designed to make investing simple. Designed by a father and son team in 2014, this app simplifies and demystifies the process of investing.
The app was designed with the intention of making the decision of investing a smaller and achievable one for everybody.
How Does the Acorns App Work?
At the core of Acorns is the concept of “Round-ups”. Essentially, each time you use your debit card, the app rounds up all your purchases to the nearest dollar and automatically uses the spare change to invest in a range of portfolios you’ve chosen yourself.
For example, if you spend $9.25 for lunch and another $3.25 for a cup of coffee, Acorn will round up these purchases and use the remaining $0.50 to invest for you.
It’s a great starting point if you’ve never invested your money in stocks or bonds before. With the app, you can make automatic daily, weekly, and monthly investments.
Every purchase you make can become an investment with Round-Ups. When your portfolio moves with the market, Acorns rebalances it to stay on track.
The Acorns platform uses these Exchange Traded Funds or ETFs to invest your spare change in:
- iShares iBoxx $ Investment Grade Corporate Bond ETF | LQD
- iShares 1-3 Year Treasury Bond ETF | SHY
- Vanguard Small-Cap Index Fund ETF Shares | VB
- Vanguard REIT Index Fund ETF Shares | VNQ
- Vanguard 500 Index Fund ETF Shares | VOO
- Vanguard Emerging Markets Stock Index Fund ETF Shares | VWO
- Vanguard FTSE Developed Markets Index Fund ETF Shares | VEA
Getting Started on the Acorns App
Step 1: Create an Acorns Account
To create an account, you need to follow a three-step process that involves entering a PIN access code. Be sure to remember this PIN since you’ll be using this to log into the app moving forward.
Step 2: Choose a Round-Up Account
After creating an Acorns account, you’ll then be asked to choose a round-up account. This is where you will monitor and choose which transactions you want to invest your spare change with.
The app supports various popular banks including Chase, Bank of America, Citibank, Wells Fargo, U.S. Bank, USAA. You may also type your bank’s name in the search bar. After which, you’ll be prompted to log into your bank using your online sign-in credentials. Remember you can connect more than one bank account to Acorns.
Step 3: Connect Your Checking Account
Next, you will connect your checking account to your acorns account. This is the account from which funds will be transferred into your Acorns account for investing.
Simply connect an existing account from the list and sign-in using your online credentials. You can also input your routing and account numbers manually if your bank does not appear on the list.
Step 4: Create Your Investment Account
You’ll be asked to complete a form containing your first and last names, phone number and birthdate, and address. You’ll also be asked to choose a security question for your account.
After this, you’ll be asked standard questions required by the SEC for opening brokerage accounts including:
- Are you or have you been affiliated with a broker-dealer?
- Has the IRS notified you of being subject to backup withholding?
- Are you a 10% shareholder of a publicly traded company?
If none of these apply to you, you may simply leave them unchecked.
After this, you’ll need to provide information that will help Acorns create a customized portfolio for you. This includes your employment information, net worth, and annual income, You will also be asked your reasons for investing. You can choose from long-term investment, short-term investment, major purchase, children, and general.
Finally, as a part of ID verification, tax reporting, and fraud prevention, you’ll be asked to fill in your Social Security number.
What Do You Get from Your Acorns Account
There are three price tiers for Acorns users. These are:
- Acorns Core. $1 is the original service that rounds your purchases to the nearest dollar and invests the proceeds in your choice of portfolios. This version is free to college students. As an added benefit, you’ll also get a subscription to Grow Magazine which features tips and money advice.
- Acorns Core + Acorns Later. For $2, you can add access to a tax-deductible IRA plan. If you choose this plan, your investments automatically shift to align with your goals as you approach retirement. You can also set automatic recurring contributions.
- Acorns Core + Acorns Later + Acorns Spend. For $3, you can have the benefits of the first two price tiers plus a branded checking account and debit card. Under this account, there is no overdraft or minimum balance fees. You also get unlimited free or fee-reimbursed ATMs nationwide — with an investment account and a retirement account built in. Furthermore, you get to enjoy features like digital direct deposit, mobile check deposit and check sending, free bank-to-bank transfers, unlimited free or fee-reimbursed ATMs nationwide and more
Gone are the days when investing is reserved only for a select few. With apps like Acorns, you can start making small investments today while you go about your day normally. You don’t have to be a Wall Street trader to secure your future, all you need is to buy things you already need every day and you can watch your spare change grow over time.
What is your favorite micro-investments app? Tell to us in the comments below!