January 23, 2021

Is Acorns Legit or Safe?

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Acorns lets you invest spare change from every purchase. But is it safe to use? Learn just how secure the micro-investing app is.

With Acorns, you can round up spare change from daily purchases and invest the money in automated portfolios.

The app is simple and intuitive, and it does all the work for you. In addition to investing spare change, you can save for retirement and open a checking account - all on a single platform.

But is it really safe to link your bank account, passwords, and personal information to the mobile app?

Let's take a look at Acorns' security to answer these questions.

Is Acorns Secure?

Acorns uses security measures that comply with federal law (including digital safeguards, secure servers, and bank-level physical security). Here's a detailed overview on how they protect users' accounts and information:

  • SIPC-protected investment accounts: Securities in Acorns Invest and Later accounts are protected up to $500,000.

  • FDIC-insured Spend accounts: Deposits in Acorns Spend (checking) account are insured up to at least $250,000.

  • SSL encryption: Both the website and app are secured with 256-bit encryption. Your personal and financial information can only be accessed by you and Acorns.

  • Account alerts: Acorns will notify users if they detect unusual account activity as protection against fraud.

  • Bank-level security: Multiple layers of secure servers to safeguard financial information.

  • Account security: Automatic logouts and ID verification to prevent unauthorized access.

Rest assured, Acorns delivers secure data transmission (e.g., entering bank account information, passwords, etc.) and data storage (where your information is kept and protected).

Next, find out how the app works and what personal information they collect to set up an account.

How Does Acorns Work?

Investing ain't easy. If it were, everyone would do it. In fact, over 1 in 3 Americans are too afraid to invest.

That's why Acorns' "round-up" feature is so popular.

For example, if you buy a pair of Reeboks for $67.50, the app will round up the cost to the next dollar and invest the difference ($0.50) for you. You don't need to think about it at all and over time, you can build a nice nest egg.

The "round ups" from every transaction are automatically put into a diversified portfolio based on your goals and risk tolerance. Portfolios range from conservative (more bonds) to aggressive (mostly stocks and real estate). There's no minimum to open an account, but you need at least $5 to start investing.

Acorns also offers the Round-Up Multiplier. Your round-ups are multiplied by the amount of your choice (2x, 3x, 10x) on each transaction. If your purchase is $4.30, the difference invested would normally be $0.70. This means with a multiplier set to 2x, you can invest $1.40 instead.

To set up an account, Acorns will ask for:

  • Social Security number and account balances
  • Transaction history and income
  • Account transactions and checking account information
  • Your government-issued ID

The Acorns app lets you do a lot more than just invest spare change. Check the rest of their services below.

Acorns Features

There are five main ways to grow your money:

  • Acorns Invest: Invest your spare change. Just like with other online brokers, this is a taxable account, and your funds are subject to market losses. The minimum to start investing is $5.

    The app will automatically rebalance your portfolio and reinvest dividends on your behalf.

  • Acorns Later: Plan for retirement with a Traditional IRA, Roth IRA, and SEP IRA. The app automatically adjusts your investment portfolio to be more conservative as you get closer to retirement age.

    You can't add round-ups to IRA accounts. The minimum to invest in an IRA is $5.

  • Acorns Spend: Checking account that includes direct deposit, mobile check deposits, online bill pay, and a metal debit card. Members get access to 55,000+ fee-free ATMs and there are no overdraft fees.

  • Acorns Earn (Found Money): Shop with one of Acorns' 350+ retailer partners and a percentage of your purchase will be added to your Acorns Invest account. You must link the credit or debit card to your Acorns account.

  • Acorns Early: Set up an investment account (UTMA/UGMA) under your child's name. The minimum to start investing is $5. If the funds are used to benefit the child, you can withdraw from an Early Account penalty-free at any time.

Acorns makes money by charging users a subscription fee. Let's unpack what the micro-investing app costs every month.

What Does Acorns Charge?

The biggest flaw of Acorns is their monthly membership fees. They charge a monthly flat fee: $1, $3 or $5/mo., depending on your plan.

  1. Lite: $1/mo
    • Acorns Invest
    • Acorns Found Money

  2. Acorns Personal: $3/mo
    • Acorns Invest
    • Acorns Found Money
    • Acorns Later IRA
    • Acorns Spend

  3. Acorns Family: $5/mo
    • Acorns Invest
    • Acorns Found Money
    • Acorns Later IRA
    • Acorns Spend
    • Acorns Early

Note, Acorns' flat monthly fees are NOT worth it for small balances. The basic $1/mo. plan is $12 annually. If you have just $100 in your account, a $12 fee eats up 12% of your savings.

In contrast, other robo-advisors charge 0.25% annually and provide more portfolio management features, like tax loss harvesting.

You need at least $5,000 for the $12 annual fee to break down to 0.24% of your account value.

Does Acorns Actually Make You Money?

Acorns gets you in the habit of investing early, often and without thinking about it. You make money from your investments and from purchases with Found Money partners. You might also earn small amounts of dividends from your investments.

The app invests your money in seven asset classes:

  • Large Company Stocks
  • Small Company Stocks
  • Emerging Markets
  • Developed Markets
  • Government Bonds
  • Corporate Bonds
  • Real Estate

Your balance will fluctuate with the market and are subject to performance losses. The Acorns app is good for long-term wealth building, not short-term savings.

Bottom Line

Overall, Acorns is a safe and secure financial services app. They use some of the highest security measures and encryption methods to prevent your data from being stolen. Although nothing is 100% infallible, they take many steps to keep your account and information protected when you use Acorns.

Write to Amber K at amber.kong@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts. And remember that you can listen to CreditDonkey Radio any time.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

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