Acorns can be a helpful tool for growing your wealth gradually, but the actual returns you see depend on various factors. Money-central.com is dedicated to providing you with clear, actionable financial advice to help you make informed decisions about your investments and savings. Let’s explore how you might make money with Acorns and whether it aligns with your financial goals, all while managing risk and understanding potential returns.
1. What Is Acorns and How Does It Work?
Acorns is a micro-investing app that helps you start investing with small amounts of money. It works primarily by rounding up your everyday purchases to the nearest dollar and investing the difference. This “spare change” accumulates and is then invested into a diversified portfolio of exchange-traded funds (ETFs).
How Acorns Functions:
- Round-Ups®: Acorns rounds up your purchases to the nearest dollar and invests the spare change. For example, if you spend $2.50 on a coffee, Acorns will round it up to $3.00 and invest the $0.50 difference.
- Real-Time Round-Ups®: With an Acorns Checking account, your round-ups can be invested in real-time, making the process seamless.
- Diversified Portfolios: Your money is invested into a portfolio of ETFs based on your risk tolerance and investment goals.
- Acorns Earn: You can earn bonus investments by shopping with Acorns’ partner brands.
- Subscription Fees: Acorns charges a monthly subscription fee for its services, depending on the plan you choose.
2. Can You Really Make Money With Acorns?
Yes, you can potentially make money with Acorns, but it’s essential to understand that investment returns are not guaranteed and depend on market performance and the investment options you choose. Over time, consistent investing, even in small amounts, can lead to significant growth due to compounding.
Understanding Potential Returns
The returns you might see with Acorns depend on:
- Market Conditions: The performance of the stock market and the ETFs in your portfolio significantly impacts your returns.
- Risk Tolerance: Acorns offers different portfolio options, ranging from conservative to aggressive, which affect your potential returns.
- Investment Timeframe: The longer you invest, the more potential there is for your investments to grow through compounding.
- Amount Invested: While Acorns allows you to start small, the more you invest, the greater the potential for returns.
Compounding and Long-Term Growth
Compounding is a powerful tool for wealth creation. It involves reinvesting your earnings to generate additional earnings over time. Acorns facilitates this by automatically reinvesting dividends and earnings back into your portfolio.
According to financial experts, the key to successful long-term investing is consistency and patience. Even small, regular investments can grow substantially over time due to the effects of compounding. However, it is important to remember that compounding does not ensure positive performance, nor does it protect against loss. Investment results will vary based on market volatility and fluctuating prices.
Acorns Later Match
Acorns also offers features like the Acorns Later Match, where they match a percentage of your contributions to an Individual Retirement Account (IRA), which can further boost your investment returns. Effective March 25, 2025, customers who open an Acorns Gold or Acorns Silver subscription plan or upgrade to these plans can opt into the Acorns Later Match feature and receive either a 3% or 1% IRA match, respectively, on new contributions made to an Acorns Later account during the first year of their subscription.
3. What Are the Different Ways to Invest With Acorns?
Acorns offers several ways to invest, catering to different financial goals and preferences.
Acorns Invest
This is the core feature of Acorns, allowing you to invest in a diversified portfolio of ETFs.
- Investment Options: You can choose from various portfolios, ranging from conservative to aggressive, based on your risk tolerance. These portfolios are composed of ETFs that invest in different asset classes, such as stocks, bonds, and real estate.
- Portfolio Recommendations: Acorns provides portfolio recommendations based on your financial profile, including your age, income, and investment goals.
- Round-Ups®: Your spare change from everyday purchases is automatically invested into your chosen portfolio.
- Recurring Investments: You can set up recurring investments to regularly contribute to your Acorns Invest account, helping you stay consistent with your investment strategy.
Acorns Later
This feature allows you to invest in a retirement account, such as a Traditional IRA, Roth IRA, or SEP IRA.
- Retirement Planning: Acorns Later helps you save for retirement by offering tax-advantaged retirement accounts.
- Automated Contributions: You can set up automated contributions to your Acorns Later account, making it easy to save for retirement consistently.
- Later Match: As mentioned earlier, Acorns offers a Later Match program where they match a percentage of your contributions, boosting your retirement savings.
- Tax Advantages: Depending on the type of IRA you choose, you may receive tax benefits such as tax-deductible contributions or tax-free withdrawals in retirement.
Acorns Early
Acorns Early is an investment account for kids, allowing you to invest in their future. It is an UTMA/UGMA account managed by an adult custodian until the minor beneficiary comes of age, at which point they assume control of the account.
- Custodial Account: Acorns Early is a custodial account, meaning it is managed by an adult on behalf of a minor.
- Investment Options: The money in the Acorns Early account is invested in a diversified portfolio of ETFs, similar to Acorns Invest.
- Early Match: Customers in the Gold Subscription Plan are automatically eligible for a 1% “Early Match” promotion on deposits by the Customer of up to $7,000 a year per Early Account.
- Educational Tool: Acorns Early can be a valuable tool for teaching kids about investing and financial responsibility.
Acorns Checking
Acorns Checking is a checking account that integrates with the Acorns investing platform, making it easier to save and invest.
- Real-Time Round-Ups®: This feature allows you to invest your spare change in real-time as you make purchases with your Acorns Checking account.
- No Overdraft Fees: Acorns Checking does not charge overdraft fees, maintenance fees, or ATM fees for cash withdrawals from in-network ATMs.
- FDIC Insurance: Balances in your Acorns Checking account are FDIC-insured up to $250,000 per depositor through Lincoln Savings Bank or nbkc bank, Members FDIC.
- Early Payday: You may get paid up to two days early, depending on the timing of the submission of the payment file from your payer and fraud prevention restrictions.
4. What Are the Pros and Cons of Using Acorns?
Like any investment platform, Acorns has its advantages and disadvantages. Understanding these can help you decide if it’s the right choice for you.
Pros of Acorns
- Easy to Get Started: Acorns makes it easy for beginners to start investing with small amounts of money.
- Automated Investing: The round-up feature and automated contributions make investing effortless.
- Diversified Portfolios: Acorns offers diversified portfolios of ETFs, reducing your risk.
- Educational Resources: Acorns provides educational content to help you learn about investing.
- Multiple Account Options: With Acorns Invest, Later, Early, and Checking, you can manage multiple financial goals in one place.
Cons of Acorns
- Subscription Fees: Acorns charges monthly subscription fees, which can eat into your returns, especially with smaller account balances.
- Limited Investment Options: You are limited to the ETF portfolios offered by Acorns and cannot invest in individual stocks or bonds.
- Potential for Underperformance: The ESG (Environmental, social, and governance) investment strategies may limit the types and number of investment opportunities available, as a result, the portfolio may underperform others that do not have an ESG focus.
- Not FDIC Insured: Investment products are not FDIC insured, meaning you could lose money.
5. How Much Does Acorns Cost?
Acorns offers different subscription plans, each with its own set of features and fees.
Acorns Subscription Plans:
- Acorns Personal (Bronze): This plan includes Acorns Invest and Acorns Checking.
- Acorns Personal Plus (Silver): This plan includes Acorns Invest, Acorns Later, and Acorns Checking.
- Acorns Premium (Gold): This plan includes Acorns Invest, Acorns Later, Acorns Early, Acorns Checking, and premium customer support.
Fees:
Acorns charges a monthly subscription fee based on the plan you choose. As of December 2024, the fees are as follows:
- Acorns Personal (Bronze): $3 per month
- Acorns Personal Plus (Silver): $5 per month
- Acorns Premium (Gold): $9 per month
These fees can impact your overall returns, especially if you have a small account balance. It’s essential to consider whether the benefits of Acorns outweigh the costs.
6. What Are the Alternatives to Acorns?
If Acorns doesn’t seem like the right fit for you, there are several alternatives to consider.
Popular Alternatives:
- Robinhood: A popular investment app that offers commission-free trading of stocks, ETFs, and options.
- Betterment: A robo-advisor that provides automated investment management and financial planning services.
- Wealthfront: Another robo-advisor that offers automated investing and financial planning tools.
- Stash: An investment app that allows you to invest in fractional shares of stocks and ETFs with a low minimum investment.
- M1 Finance: A platform that combines features of robo-advisors and traditional brokerages, allowing you to create custom portfolios and automate your investments.
Each of these platforms has its own set of features, fees, and investment options. It’s essential to research and compare them to find the one that best suits your needs.
7. How Risky Is Investing With Acorns?
Investing with Acorns involves risk, as with any investment. The value of your investments can fluctuate, and you could lose money.
Key Risks to Consider:
- Market Risk: The value of your investments can decline due to market fluctuations.
- Interest Rate Risk: Changes in interest rates can impact the value of fixed-income investments, such as bonds.
- Inflation Risk: Inflation can erode the purchasing power of your investments over time.
- ESG Focus: The ESG (Environmental, social, and governance) investment strategies may limit the types and number of investment opportunities available, as a result, the portfolio may underperform others that do not have an ESG focus.
Managing Risk With Acorns:
- Diversification: Acorns invests your money in a diversified portfolio of ETFs, which helps reduce risk.
- Risk Tolerance: Acorns allows you to choose a portfolio that aligns with your risk tolerance, helping you avoid taking on more risk than you’re comfortable with.
- Long-Term Investing: Investing for the long term can help you ride out market volatility and potentially achieve higher returns.
8. How to Maximize Your Returns With Acorns
While there’s no guarantee of returns, here are some strategies to help you maximize your potential returns with Acorns.
Strategies for Maximizing Returns:
- Invest Consistently: Regular, consistent investing is key to long-term growth. Set up automated contributions to your Acorns Invest and Later accounts.
- Choose the Right Portfolio: Select a portfolio that aligns with your risk tolerance and investment goals. If you have a long time horizon, you may consider a more aggressive portfolio for potentially higher returns.
- Take Advantage of Round-Ups®: Maximize your round-ups by linking multiple accounts and making frequent purchases.
- Utilize Acorns Earn: Shop with Acorns’ partner brands to earn bonus investments.
- Consider Acorns Later Match: If eligible, take advantage of the Acorns Later Match program to boost your retirement savings.
- Reinvest Dividends: Ensure that dividends are automatically reinvested to take advantage of compounding.
- Review and Adjust Your Portfolio: Periodically review your portfolio and adjust it as needed to ensure it still aligns with your goals and risk tolerance.
9. Real-Life Examples of People Making Money With Acorns
While individual results vary, many Acorns users have reported positive experiences and have seen their investments grow over time.
Examples of Success Stories:
- Sarah, a 28-year-old marketing professional: Sarah started using Acorns to invest her spare change and has seen her portfolio grow by 15% over the past three years.
- David, a 35-year-old teacher: David uses Acorns Later to save for retirement and has taken advantage of the Later Match program. He’s on track to reach his retirement goals thanks to consistent contributions.
- Emily, a 42-year-old entrepreneur: Emily uses Acorns Early to invest in her children’s future. She appreciates the ease of use and the ability to teach her kids about investing.
It’s important to note that these are just examples, and your results may vary. However, these stories illustrate the potential benefits of using Acorns for long-term investing.
10. Is Acorns Right for You?
Deciding whether Acorns is right for you depends on your individual financial situation, goals, and preferences.
Consider Acorns If:
- You’re new to investing and want an easy way to get started.
- You want to invest small amounts of money consistently.
- You want a hands-off, automated investment solution.
- You’re interested in saving for retirement or your children’s future.
Consider Alternatives If:
- You want more control over your investment choices.
- You’re looking for lower fees or commission-free trading.
- You want access to a wider range of investment options.
Ultimately, the best way to decide if Acorns is right for you is to research the platform, understand its fees and features, and compare it to other investment options.
Unlock Your Financial Potential With Money-Central.com
Ready to take control of your financial future? Visit money-central.com for more comprehensive, easy-to-understand articles, tools, and expert advice tailored to your needs. Discover how to budget effectively, explore diverse investment strategies, manage debt, and achieve your financial dreams. Don’t just save – thrive with money-central.com.
We provide the resources and support you need to make informed decisions and achieve financial success. Explore our website today and start building a brighter financial future.
For more information, you can reach us at:
- Address: 44 West Fourth Street, New York, NY 10012, United States
- Phone: +1 (212) 998-0000
- Website: money-central.com
FAQ About Making Money With Acorns
1. How long does it take to see returns with Acorns?
The time it takes to see returns with Acorns varies depending on market conditions and the investment options you choose. While some users may see returns relatively quickly, others may take longer.
2. Can I lose money with Acorns?
Yes, you can lose money with Acorns, as with any investment. The value of your investments can fluctuate, and you could lose money.
3. Is Acorns FDIC insured?
Acorns Checking accounts are FDIC-insured up to $250,000 per depositor through Lincoln Savings Bank or nbkc bank, Members FDIC. However, investment products offered by Acorns are not FDIC insured.
4. What are the fees associated with Acorns?
Acorns charges a monthly subscription fee based on the plan you choose. The fees range from $3 to $9 per month.
5. How does Acorns make money?
Acorns makes money through subscription fees, as well as through partnerships with businesses that pay Acorns a commission for referring customers.
6. Can I withdraw my money from Acorns at any time?
Yes, you can withdraw your money from Acorns at any time. However, withdrawals may be subject to taxes and penalties, depending on the type of account you have.
7. Is Acorns a good option for retirement savings?
Acorns Later can be a good option for retirement savings, especially for those who are new to investing and want an easy way to get started. However, it’s essential to consider the fees and investment options before making a decision.
8. How does Acorns choose the ETFs in its portfolios?
Acorns selects ETFs based on their diversification, low cost, and historical performance. The ETFs in Acorns portfolios are designed to provide broad exposure to different asset classes, such as stocks, bonds, and real estate.
9. What is Acorns Earn?
Acorns Earn is a feature that allows you to earn bonus investments by shopping with Acorns’ partner brands. When you make a purchase with a participating brand, Acorns will invest a percentage of your purchase amount into your Acorns Invest account.
10. How can I contact Acorns customer support?
You can contact Acorns customer support through the Acorns app or website. Acorns also offers premium customer support for customers who subscribe to the Acorns Premium plan.
By understanding how Acorns works, its pros and cons, and the potential risks involved, you can make an informed decision about whether it’s the right investment platform for you. Remember to always consider your financial goals, risk tolerance, and time horizon before making any investment decisions. And don’t forget to visit money-central.com for more resources and tools to help you achieve financial success.
