Table of Contents
Introduction
Investing can often seem complicated and is often thought to be the domain of wealthy people, however, with the help of new financial services, investing has become more available and affordable than ever. One of the most popular modern platforms that emerged recently is Acorns Investing. In this article, we will find out how Acorns Investing works and how it can help you make your spare change work for you and create a profitable future.
What is Acorns Investing?
Acorns Investing is a micro-investing app that allows users to invest their spare change from day-to-day purchases. The idea of Acorns is quite simple: it rounds up your spending to the next dollar and invests the change. For instance, if you buy a coffee that costs $2.50, the Acorns app will round up to $3.00 and invest the remaining $0.50. Then, this spare change is invested into a diversified portfolio of exchange traded funds (ETFs) based on your risk appetite and investment goals.
How Does Acorns Investing Work?
The way Acorns Investing works is that you have to link your bank account or credit card to the app. Once you link your accounts, Acorns will be able to monitor your spending and suggest rounding up your spare change to invest. The app offers different portfolio strategies from conservative to aggressive, enabling you to identify your level of risk. Acorns also has a feature called “Round-Ups” where you can increase the round up to 2x, 5x or 10x your spare change to boost your investment.
Furthermore, there is such a feature as “Recurring Investments” which enables you to make recurring transfers of funds from your bank account to your Acorns account once every day, weekly or monthly. This guarantees that you are able to invest regularly and thus see your portfolio grow.
The Advantages of Acorns Investing
1. Accessibility: Acorns Investing brings investing to the masses and for this, it does not ask for a lot of money. It means that regardless of your financial status, you can begin investing and seeing your money grow over time.
2. Automatic Investing: Acorns removes the need to invest manually by directly investing your spare change. This means that you will not have to make transfers yourself and you will be investing without even thinking about it.
3. Diversification: Acorns invests your spare change into a diversified portfolio of ETFs. This helps to minimize the risk because the money is not put into one investment and it will not affect the total portfolio a lot. It also allows you to take advantage of the growth prospects of various assets.
4. Education: Acorns offers educational material and tools to ensure that users are informed and can make wise investment decisions. The app provides articles, videos, and suggestions to help users learn the basics of investing and get the most out of their money.
Case Study: How Sarah Got Started with Acorns Investing
Sarah, a recent college graduate, was thinking about investing but she didn’t have a lot of money to put towards it. She decided to give Acorns Investing a go and began by connecting her bank account to the app. Sarah chose a recurring investment of $10 every week and enabled the Round Ups feature with a 2x multiplier.
Slowly, Sarah’s change began to accumulate. She was rather amazed to see how the investments grew, despite the fact that the amounts were small. When Sarah’s financial situation got better, she increased her recurring investment to $25 every week and changed her portfolio to a more aggressive one in order to increase her returns.
After using Acorns Investing for a few years, Sarah was able to save a good amount of money and achieve her financial goals. She was able to use her investment returns to pay off her student loans and started saving up for a down payment on a house. This is because Sarah was able to achieve financial freedom through Acorns Investing and this shows how micro-investing can change the financial status of an individual.
Acorns Investing Numbers
Here are some numbers that show the effectiveness and popularity of Acorns Investing:
- Acorns has more than 9 million signups till 2021.
- The average Acorns user saves $30 each month through Round-Ups.
- Since its launch, Acorns’ users have invested more than $3 billion.
- More than 70% of Acorns’ users are new investors.
Conclusion
Acorns Investing is a revolutionized and new way of investing with the help of spare change. This is because Acorns rounds up your purchases and invests the change for you, making the entire process simple and affordable. Acorns has provided various portfolio choices, educational materials, and auto-investing features that have helped many people with their spare change to build a successful future. Whether you are new to the investment world or already have some investments, Acorns Investing is something you should consider.
