Understanding Acorns and the Power of Spare Change Investing

What is Acorns and Micro-Investing?

Acorns has revolutionized the investing landscape by creating a user-friendly platform specifically designed with beginners in mind. This innovative app removes the intimidation factor from investing, making financial growth accessible to everyone regardless of experience level.

At its core, Acorns offers expertly curated investment portfolios built around Exchange-Traded Funds (ETFs). These diversified portfolios are constructed by financial professionals to promote long-term growth while managing risk appropriately for different investor profiles.

The app embraces the concept of micro-investing—a game-changer for those who previously felt investing was out of reach. With micro-investing, you can start with as little as $5, purchasing fractional shares of stocks or ETFs instead of needing enough money for complete shares. This approach breaks down barriers to entry, especially for premium stocks like Amazon or Google that might trade at hundreds or thousands of dollars per share.

Acorns offers a comprehensive ecosystem of financial products to support your money journey:

• Acorns Invest: A personal investment account for general wealth building
• Acorns Later: Dedicated retirement accounts (IRA options)
• Acorns Checking: A full-featured digital banking solution
• Acorns Early: Investment accounts for children’s future needs

As explained on the Acorns platform, these services work together to create a holistic approach to financial wellness.

How Acorns’ Round-Ups® Feature Works

The genius of Acorns lies in its signature Round-Ups® feature—a painless way to invest without changing your spending habits. When you make a purchase with a linked card, Acorns automatically rounds the transaction to the nearest dollar and sets aside the difference for investment.

For instance, buy a coffee for $4.75, and Acorns rounds up to $5.00, setting aside $0.25 for your investment account.

These small amounts add up surprisingly quickly across all your daily transactions.

The system works by monitoring purchases on all your linked debit and credit cards. Once your round-ups total reaches the $5 minimum threshold, Acorns transfers that amount from your primary linked checking account into your Acorns Invest account. It’s important to note that the funds come from your checking account, not directly from the cards used for purchases.

For those with an Acorns Checking account, there’s an added benefit: Real-Time Round-Ups® that process immediately after purchases clear, without waiting to reach the $5 threshold. This accelerates your investment pace, as detailed in Acorns’ Round-Ups explanation.

The Benefits of Investing Small Amounts: Compounding and Diversification

The true power of Acorns’ approach becomes apparent when we understand compound interest—what Einstein reportedly called “the eighth wonder of the world.” When your investments generate returns, those returns themselves begin earning more returns, creating an accelerating growth cycle.

To put this in perspective, investing just $10 weekly with a modest 6% annual return could grow to $7,115 over a decade—significantly outperforming traditional savings methods.

The earlier you start this process, the more dramatic the results, as your money has more time to compound and grow.

Beyond growth potential, investing through Acorns helps protect against inflation, which steadily erodes the purchasing power of uninvested cash. Money sitting in low-yield savings accounts often loses real value over time.

Acorns’ portfolios provide automatic diversification across more than 7,000 stocks and bonds, spreading risk efficiently. This diversification—typically difficult for small investors to achieve on their own—balances your exposure across different asset classes, industries, and geographic regions, reducing vulnerability to market volatility. As Acorns investment guides explain, this sophisticated approach to risk management becomes available to everyone, regardless of investment amount.

Getting Started with Acorns: Your Step-by-Step Guide

Setting Up Your Acorns Account

Ready to turn your spare change into investments? Getting started with Acorns takes just a few minutes. First, you’ll need a valid email address where you’ll receive important account information and updates. This email will be your main communication channel with Acorns.

Next, you’ll need to link your bank account by providing your online banking credentials. Don’t worry – Acorns uses bank-level security to protect your information. This link is crucial as it’s how Acorns will fund your investments, enable Round-Ups®, and collect subscription fees. Make sure you’re listed as an owner on any bank account you connect, as Acorns can’t accept accounts where you’re not named.

When entering your address, use your permanent physical residence. P.O. Boxes and business addresses aren’t accepted since Acorns needs to verify your primary residence for security purposes.

For tax and identification purposes, you’ll need to provide either your Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN). This is standard practice for all financial institutions under U.S. regulations.

Acorns will also ask about your financial situation and goals. Be prepared to share details about your income, occupation, investment timeline, and risk tolerance. This information helps Acorns recommend the most suitable investment portfolio for your specific needs.

Some users may need to complete additional verification steps, such as uploading a government-issued photo ID. Don’t worry if this happens – it’s just an extra security measure. Once you’ve completed all steps, your account is typically approved within one business day.

Linking Accounts and Activating Round-Ups®

After your account is set up, it’s time to activate the Round-Ups® feature that makes Acorns famous. Start by tapping your avatar on the home screen, then selecting ‘Settings.’ From there, tap ‘Linked Accounts’ to verify your primary checking account is properly connected – this is where Round-Ups® money will be pulled from.

Next, link all debit and credit cards you use regularly. Remember, these cards only track purchases – the actual investment money comes from your primary checking account. To turn on Round-Ups®, simply tap the ‘Round-Ups®’ button on your Invest screen. You can manage these settings anytime by tapping the gear icon in the top right of the Round-Ups® screen.

Once everything is linked and activated, Acorns will automatically track your purchases and round them up, collecting your spare change for investment.

Boosting Your Investments: Multipliers and Recurring Contributions

Want to grow your investments faster? The Round-Ups® Multiplier lets you multiply each round-up by 2x, 3x, or even 10x. For example, if your coffee costs $3.75, a regular round-up would invest $0.25, but with a 3x multiplier, you’d invest $0.75.

Beyond spare change, set up Recurring Investments to automatically add as little as $5 daily, weekly, or monthly to your account. You can also make one-time deposits whenever you have extra cash to invest.

Acorns offers three subscription tiers: Bronze ($3/month), Silver, and Gold, with varying features. Even the basic Bronze plan includes Round-Ups®, a diversified investment portfolio, and access to retirement and checking accounts. These subscription plans provide different levels of service based on your investment needs and goals.