How to Make Money Investing with Acorns
Investing can seem daunting, especially for beginners. However, with the rise of micro-investing apps like Acorns, it’s now easier than ever to start building your investment portfolio. In this guide, I’ll walk you through the process of making money with Acorns, from setting up your account to understanding how it works.
What is Acorns?
Acorns is a micro-investing app that allows users to invest small amounts of money automatically. The app rounds up your purchases to the nearest dollar and invests the spare change into a diversified portfolio of ETFs (Exchange-Traded Funds). It’s a simple and convenient way to start investing without needing a large amount of capital.
How to Sign Up for Acorns
Signing up for Acorns is a straightforward process:
- Download the Acorns app from the App Store or Google Play.
- Open the app and create an account by entering your email, creating a password, and providing some basic information.
- Link your bank account or credit card to the app. Acorns will use this information to round up your purchases and transfer the spare change to your investment account.
- Choose your investment goals and risk tolerance. Acorns offers five different portfolios, ranging from conservative to aggressive.
- Set up your initial investment. You can start with as little as $5.
Understanding Acorns’ Investment Strategy
Acorns uses a smart algorithm to invest your spare change into a diversified portfolio of ETFs. Here’s a breakdown of the different portfolios and their investment strategies:
| Portfolio | Investment Strategy |
|---|---|
| Conservative | Focuses on stable, income-generating investments like bonds and dividend-paying stocks. |
| Moderate | Allocates a mix of stocks and bonds, aiming for a balance between growth and income. |
| Balanced | Invests in a mix of stocks and bonds, with a focus on long-term growth. |
| Growth | Allocates a higher percentage of investments to stocks, aiming for long-term capital appreciation. |
| Aggressive | Invests heavily in stocks, aiming for high growth potential. |
Acorns rebalances your portfolio periodically to ensure it remains aligned with your chosen strategy.
Additional Features of Acorns
Acorns offers several additional features to help you manage your investments:
- Round-Up Investing: As mentioned earlier, Acorns rounds up your purchases to the nearest dollar and invests the spare change.
- Acorns Later: This feature allows you to set aside money for long-term goals, like retirement, by automatically transferring a portion of your earnings to a separate account.
- Acorns Spend: This feature helps you save money by offering cashback on purchases made with your linked credit card.
- Acorns Foundry: This is a platform where you can discover new investment opportunities and learn more about the market.
Is Acorns Right for You?
Acorns can be a great option for beginners and those looking to invest small amounts of money. However, it’s essential to consider the following factors before deciding if Acorns is right for you:
- Investment Fees: Acorns charges a 0.25% annual fee for managing your investments. This fee is lower than many traditional brokerage firms, but it’s still something to consider.
- Minimum Investment: While Acorns allows you to start with as little as $5, you may need to invest more to see significant growth.
- Investment Options: Acorns offers a limited number of ETFs compared to some other investment platforms. However, the portfolios are well-diversified and designed to meet various investment goals.
