This investment app is perfect if you want to start small and grow steady

Investing isn’t easy. It usually takes decades of smart and consistent investing and riding the unprecedented ups and downs of market volatility to grow an egg nest to meet your financial aspirations and retirement goals.

Investing a large chunk of money in one go or putting all of your money in one basket isn’t always the best way to go. Diversification is key, but knowing the investment style that works for you is more important. 

Global interest in investing has piqued since 2020, when millions of beginners felt the urge to invest early in life. Unfortunately, many don’t know where to start nor do they have enough savings to buy whole shares or mutual fund units. 

Although the popular fractional share investing feature allows buying portions of a share that is lowering the money required to invest, most people aren’t able to set money aside from their monthly budget exclusively for investments. A survey during the pandemic estimated that nearly half of US adults are only left with $250 after paying debt and bills and regular monthly spending.   

An Easy Way to Invest – Even on a Tight Budget

The Acorns app offers to round up your everyday purchases to the nearest dollar and invest the spare change in exchange-traded portfolios (ETFs) in alignment with your financial goals. Acorns attempts to gauge your risk appetite, sensitivity to market volatility, and financial aspirations through a few quick questions on the app to match you with a diversified portfolio built by experts.

Think of ETFs as a basket of stocks and bonds generally following a broad index like the S&P 500 or an asset class like technology or manufacturing. When you complete your investor profile on the Acorns app, link your credit and debit cards to automatically invest the spare change on every swipe. 

When your round-up amount reaches $5, Acorns’ fractional shares feature automatically invests that amount in diversified ETFs of over 7,000 stocks and bonds. Diversification protects you from market upheavals as well as improves your chances at a steady growth.  

Millions of Acorns users benefit from hands-off investing that automatically rebalances their portfolio to stay within their personalized asset allocations. You may also set up recurring investments of an investment amount (not less than $5) and frequency of your choice.

Acorns Later

This feature is for those who want to start an individual retirement account (IRA) with investments as low as $5. You may also make a single lump sum contribution or set up recurring deposits as per your preference. IRAs, just like 401(k)s, offer several tax advantages and penalty-free withdrawal starting at 59 1/2 years of age.

Although you can withdraw from your Acorns IRA any time, premature withdrawals could come with tax implications and possible disruption to the power of compounding, which is essential for steady growth. You are required to link your primary bank account on their secure platform, to begin with.

In addition, Acorns attempts to improve your financial literacy with a trove of financial guides and content curated by financial experts and powered by CNBC. 

Acorns Banking 

Did you know that you could lose hundreds of dollars in banking fees every year? Forbes reported that traditional banks cost you an average of $8.34 every month just for having a bank account, $2.35 for every time you swipe at an out-of-network ATM, and overdraft fees as high as $29.50. Plus, if you withdraw more than six times from your savings account in a month, the Federal Deposit Insurance Corp. states that banks could charge $15 for exceeding the monthly limit. 

Losing hundreds of dollars to banking fees really doesn’t make any sense. Acorns offers to open a checking account completely online, facilitated, and FDIC-insured to an amount of $250,000 by Lincoln Savings Bank, Member FDIC. 

With fraud protection and an all-digital card lock, you can safely set up direct deposits and enjoy features like mobile check deposits, a heavy metal debit card that automatically invests spare change with every swipe and a 55,000 no-fee ATM network globally. Unlike traditional banks, direct deposits through Acorns could reflect in your account up to two days earlier than usual. 

Bottom Line

The intuitive app offers a great way to monitor and automate investments in amounts that don’t hurt your monthly budget. It offers an all-in-one ecosystem where you can learn about finance, invest and track your progress, grow retirement savings, and enjoy new-age banking features – all for only $3 a month.