OK, so let’s say you’re now saving $200/month. Where are you parking those savings? I’m not a financial advisor, but I do know that a checking or savings account doesn’t offer a great rate of return. If you invest what you save each month, you may be able to grow your savings at a faster pace. It’s important to note that investing in a portfolio of stocks and bonds does come with greater risk and is less “liquid” than your savings or checking account, meaning it may take a few days to withdraw money. And if you withdraw all or most of that money for a down payment, you’ll have to pay taxes on the gains.
How it works: Once you decide how much money you want to invest each month, Acorns will automatically transfer that amount from your connected bank account to buy shares in stocks and bonds. From there, you can watch it grow and make changes to your portfolio at any time.
So how do they decide where to invest? You’ll take a quick questionnaire about how much risk you are willing to take on, how much you plan to invest, and how long you are planning to invest your money before cashing out. After answering their questions, I was assigned a “moderately aggressive portfolio,” about 80% stocks and 20% bonds.
You can also enable “round-up” investments. When you choose to “round up” and connect your credit and debit cards, Acorns will round up each purchase you make to the nearest dollar and automatically invest it in your portfolio.
Pros:
- Makes investing more approachable and automated for those just getting started
- Hypothetical investment charts make it easy to visualize how your money will grow
- Round-up feature makes it easy (and fun!) to boost your savings
Cons:
- On your homepage you’ll be prompted to “earn more money” by selecting an online vendor like Chewy, Walmart or eBay. If you make a purchase in the same session, a dollar amount or percentage of your purchase will then be deposited into your account. While this promotion technically adds to your savings, you’re also being prompted to spend money you probably wouldn’t have otherwise spent
- There’s no way to customize your investments outside of selecting one of Acorns' 5 pre-determined portfolios. I’d appreciate the ability to add a few historically reliable stocks to my portfolio. Instead, my investments are now spread across multiple apps – but I suppose that’s where the benefit of something like Mint, the final app I researched, comes in!
Who should consider this app: Savers who are willing to take some risk to get a better rate of return, those who are new to investing.
