“We were not taught financial literacy in school. It takes a lot of work and time to change your thinking and to become financially literate”
– Robert Kiyosaki –
There’s a lot of financial wisdom being shared all over the web. Tips, tricks, strategies, how to guides and step-by-step tutorials just to name a few. I’ve written a few blog posts about these things myself. Many of them offering valid advice and with the intent to help the average person gain financial wisdom.
But it’s not the how that’s the issue here, it’s the why.
What’s holding you back from accumulating financial wealth up to this point? It’s probably because you were never taught financial literacy when you were growing up. We are trained and conditioned from adolescence to become good employees that are dependent on getting a good job that we can survive off of.
Imagine this…
You’ve been working for this corporation for 24 years. You’ve been a solid employee that’s always arrived on time, worked hard and built up a reputation in your field as “the go to guy”. When shifts needed to be covered and staffing was short, you were the one who came through time and time again. You were the pinnacle of the ideal employee.
Now, you’ve just started working a 12 hour shift because they needed you to help them come in early to get things caught up. You step it up and manage to get things caught up to where they need to be and that’s just the first three hours into the shift. You work tirelessly all night to keep the chaos under control and finally get to the end of your shift. You’re called into an urgent meeting before you punch out just to be told you’re being let go.
Yep… been there… done that.
The problem with that is what happens when we no longer have that “good job” that we rely on to pay for our cost of living expenses? What were we taught to do when that happens? EXACTLY!
You see, the answer to that is to get another job that you have to hope won’t be lost again. Just continue to participate in the rat race until one day you can no longer work for whatever reason that becomes. And if you have no retirement savings to fall back on… then what?
You’re not broke because you can’t build wealth, you’re financially strapped because you weren’t prepared to build wealth from a young age. You were led to believe that making a lot of money means spending a lot of money on frivolous things and luxurious items because “you only live once” (YOLO).
The truth is that you don’t become wealthy because you make a lot of money. A person becomes wealthy because of how they manage the money that they make. The sad reality is that most don’t know how and that’s why people who make six and seven figure incomes still end up broke.
There are several key factors when it comes to building wealth, but two of them are extremely important. One of them is discipline. The fact is that no matter how well educated you are, if you’re not disciplined enough to manage your money properly, you won’t achieve financial freedom.
That’s where I kept messing up on my past attempts to build wealth. I didn’t focus on the discipline part and sabotaged my financial gains time and time again. I should be a lot further down the path to being financially independent than I am, but I haven’t given up and learn from my failures.
Which brings me to the second key factor to building wealth… perseverance. The ability to not give up and begin to rebuild a financial foundation with a better understanding of what it takes to be successful on this journey.
Too many people just accept that they will never become rich because they have the wrong mindset. Once again, they were conditioned to believe that financial wealth is for the “privileged” and the “lucky”. Simply because they were never taught financial literacy.
Because I know what it’s like to endure financial hardships and also because of my failed attempts to accumulate wealth in the past, I’m very empathetic to those who don’t know what they don’t know. It’s become my passion to educate and teach financial literacy so that others can avoid the mistakes I’ve made.
My goal isn’t just to achieve financial freedom for myself, but to achieve it with as many other people as possible a long the way. There’s no joy in taking the journey all alone.
The mission is to keep on teaching financial literacy as I make progress, however slowly, and track my progress to share with the readers of this blog. I believe in the philosophy of you teach what you learn as you learn what to teach.
In order for others to follow the path I forge, I feel it’s my duty to provide markers towards progress. Achieving financial freedom is a slow momentum process that gradually accelerates over time.
People don’t become successful because they quit. Building wealth isn’t easy but it also isn’t hard either. It’s about laying brick upon brick gradually over time. There is no “get rich quick” short cut to wealth that doesn’t come with high risk for the “reward”. Only fools fall for the dream of “overnight success”.
So the why in why I teach financial literacy is because I don’t want people to stay trapped in the rat race until they die. I want to see wealth and prosperity for the masses and less suffering.
I ask for you to be there with me as we lift up others who follow our lead and give back to those in need with encouragement, so that we can be the change we want to see in the world.
As I like to say… “the journeybegins with the first step”.
If you see value in this article then please be sure to like and subscribe to the blog if you haven’t done so already. I’ll be putting up more wealth building posts in the future and you can have them delivered straight to your email account.
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I’ll see you in the next post. Until next time… be sure to comment below and let’s get some dialogue going. I’m curious to know, what’s your opinion on teaching financial literacy?
401K contribution $177.30 – current value $15.637.43
Fidelity brokerage account $55.00 – current value $210.81
Acorns Roth IRA $0 – current value $103.35
Acorns investment account $0 – current value $142.77
– A part of what I earn is mine to keep –
You can create your own acorns account by clicking here.
Once again I’m not putting a lot into my brokerage account as I continue to pay down my debts. But I will maintain paying myself first no matter how little it might be. I do contribute 6% of my pretax income to my 401k since my employer matches dollar for dollar up to 6%. Unfortunately the employer match has been suspended until further notice due to the covid crisis.
I wound up selling my share of BIGC because I had read some articles discussing the share price being over valued and predictions of a massive decline in the share price. I wound up selling at 110.09 which isn’t a bad profit since I purchased it at 72.81.
I took that and added it to some dry powder I had sitting in my brokerage account to pick up a share of apple for 132.91 after the apple stock split but the share price started tanking right after I opened my position. I didn’t want to see all of my BIGC profit vanish so I sold AAPL at 122.99… it’s currently at 113.60 at the time of this writing.
I decided to take that and what I had left sitting on the sidelines in my brokerage account and purchased shares of BRG which is a REIT stock that pays an annual dividend of $.65 per share. I opened a position and purchased 23 shares at $7.56 per share. It’s time to start building that passive income portfolio.
I just added 7 more shares of BRG at $7.33 per share after adding the $55.00 to my account to make an even 30 shares.I’ll probably start picking up 1-2 shares a payday from this point on to add to that position. I’m researching some other stocks I’d like to open positions on in the coming paydays.
I’m not adding to the acorns account on this payday.
Be sure to keep track with me and if you’d like, share your payday plan in the comments section below.
Until next time… be sure to comment below and let’s get some dialogue going.
“The number one problem in today’s generation and economy is the lack of financial literacy”
– Alan Greenspan –
Looking back at my early years, I wonder why it was required that I had to study things like social studies and world history when in fact none of what I was forced to study has any value to my adult years in life. Yet the ONLY financial class in high school that I recall offered was accounting, and that was an elective so it wasn’t required learning.
It really miffs me to know that so many people in society have very little, if any, financial knowledge other than how to balance a checking account. And some people can’t even do that correctly! A huge chunk of banking profits come from overdraft fees.
Our education system is broken and too many kids are entering into adulthood without the real world knowledge that they need to be financially successful. Not only that, they aren’t encouraged to pursue entreprenuership endeavors, but instead indoctrinated into the belief of “get a good education to get a good job”.
Also, kids are led to believe that going into student loan debt of tens of thousands… if not hundreds of thousands of dollars is justifiable to become wage slaves dependent on employment. It isn’t until they graduate from college and attempt to enter the workforce that the reality of loan repayment sets in.
Then if they’re even fortunate enough to find a job in the field that they pursued an education in the first place is questionable. Often they have to settle for a job that they could’ve gotten without going to college in the first place. Oh, and those student loans still have to be paid back and can’t be charged off in bankruptcy!
Once they’ve entered the workforce they are now dependent on their employer for that after tax deducted paycheck. It’s rare that the youth think to put money aside in case of an emergency for unexpected expenses. And lets face it, retirement planning and managing their money like the rich isn’t a top priority for most twenty somethings.
So they’ve started their key working years in debt with student loans. Then there are cost of living expenses such as rent/mortgage payments, utilities, food and transportation to factor in. Typically credit card debt has accrued at this point as well. Credit card companies target students for good reason… they tend to have limited finances.
By the time the desire to build wealth sets in, they’re thousands (often tens of thousands) in debt and have limited, if any money left to put towards that goal. That’s when they turn to the advice of “financial gurus” who never seem to advise them to ALWAYS pay themselves first with the mantra “part of what I earn is mine to keep”. But instead they’re told to get out of debt and then invest in mutual funds that earn 7% (magically in guruland) annually.
Financial literacy is something that we can’t afford to not be teaching/learning. Since we can’t rely on the education system to make it required learning, we have to make it required learning for ourselves. I implore you to make this a priority in your life and encourage everyone that you know to do the same.
The reason I started this blog was to connect with people who are in pursuit offinancial knowledge and building wealth. Especially those who want to do so but can’t either because they are drowning in debt and/or have limited funds to do so.
The world is on the verge of bankruptcy and financial collapse. We as a society need to purge the consumerism obsession lifestyle out of us and make financial stability our mission. The societal financial safety nets of social security and medicare are unsustainable. Social security was never meant to be the sole source of retirement funding, but a supplement to it.
As unemployment surges and people have no financial reserves, they are turning to government assistance programs which are strained and reliant on tax revenues for funding. Food banks are maxed out and charities can only give so much.
So, let’s focus on solutions and strive to teach those willing to learn. Let’s be the change we want to see in the world by forging the path to financial freedom and lift up as many as we can a long the way.
As I like to say… “the journeybegins with the first step”.
If you see value in this article then please be sure to like and subscribe to the blog if you haven’t done so already. I’ll be putting up more wealth building posts in the future and you can have them delivered straight to your email account.
I’ll see you in the next post. Until next time… be sure to comment below and let’s get some dialogue going. I’m curious to know, what’s your opinion on teaching financial literacy?
“Financial freedom is a mental, emotional and educational process”
– Robert Kiyosaki –
Wow… here it is two weeks later since the last Payday Plan Post Time to do an update since the last one and document the planned investments for this payday.
– Designated funds from this payday –
401K contribution $172.10 – current value $15.825.30
Fidelity brokerage account $75.00 – current value $184.92
Acorns Roth IRA $5 – current value $100.13
Acorns investment account $5 – current value $143.44
– A part of what I earn is mine to keep –
You can create your own acorns account by clicking here.
I’m not putting a lot towards investments currently since I’m paying down debts. But the goal is to pay myself first each payday and put that money to work before anything else.
I wanted to catch the ARKF eft for $36.50 last payday, but it never went back down to that level and instead went back up into the $38 range. So I decided to add another $25 to the fidelity account and pick up a share of BIGC (Big Commerce) for $72.81. I watched it go down to the $66 range for two days before popping back up into the $140 range so I’m up huge on that buy at a 93.65% gain since the purchase. There’s been a lot of volatility on the price in an upward trend for three days straight.
I purchased a share of ARKF etf a few weeks back before the first payday plan post at $38.50 and its currently at $40.23. So I’m up 4.49% on that position. I’m thinking about picking up another share or two if it dips back down again.
I’ve been considering starting a small position in another stock or etf so I’ll see where the price goes in the next couple of days and share my decision on the 9/11/2020 payday plan post.
Be sure to keep track with me and if you’d like, share your payday plan in the comments section below.
Until next time…please like, follow and be sure to comment below and let’s get some dialogue going.
“Wise spending is part of wise investing. And it’s never too late to start.” – Rhonda Katz –
I LOVE fintech and I’ll be posting about that soon. However, in my previous post I mentioned that this post would be about how you can start investing for as little as $5 a month. I think it’s pretty amazing that the innovation of modern technology makes is possible for anyone to invest from anywhere and with little money to start. There once was a time when it required a large sum of money to start and paying expensive brokerage fees on top of that. Now you can purchase equities without fees and do so from your cell phone from anywhere depending on the type of account(s) you have.
I’ll talk about acorns, which requires a monthly fee depending on which account type you set up. Acorns is a micro-investing app that allows you to set up an account in just a few minutes and contribute funds to your account in a few different ways.
Set up a one time contribution.
Set up a daily, weekly or monthly contribution.
Use the round ups feature and contribute spare change from your purchases into your acorns account.
As with anything, there are pros and cons to the acorns micro-investing app to consider.
Pros:
Easy to set up and make contributions automatically.
Can start investing for as little as $5… options vary from one time contributions you can make at your convenience or automatically on a daily, weekly or monthly basis.
Depending on what bank account you have, you can set up the round ups feature to round up purchases to an even dollar and contribute the spare change into your acorns account. This feature is currently limited to specified banks and credit institution accounts.
Dividends earned on investments are automatically reinvested.
Can open up investment accounts for kids and easily transfer the account the the child later.
Can set up an IRA plan for retirement.
Cons:
As with most subscription services, there are fees to consider. Depending on the account type selected will depend on the monthly subscription fee automatically withdrawn monthly from the contributions deposited. Currently there are three plans to choose from… lite ($1), personal ($3) and family ($5). My acorns account is the $2 Plus which is no longer available to new customers.
Limited investment options. Once the account(s) are set up, you then choose from five portfolio types: conservative, moderately conservative, moderate, moderately aggressive and aggressive. IRA accounts are based off your age and timeline until retirement and invested accordingly.
Not able to purchase equities of your choice. Your investment choices are limited to the options available. Investment types and percentages can be viewed by clicking here.
Personally I like acorns and don’t mind paying the $2 monthly subscription fee. I know that there are those who view the fees as eating into the investments, but I view the fees as separate from what’s actually invested. So if I contribute $20 a month I know I’m actually investing $18 of it. I pay more than that for a cup of coffee so to me it’s putting my money to good use on a hands off investment.
The following is an article I found reviewing acorns compared to other investment options available. I think it’s extremely informative and explains things in great detail to better inform you.
All reviews, research, news and assessments of any kind on The Tokenist are compiled using a strict editorial review process by our editorial team. Neither our writers nor our editors receive direct compensation of any kind to publish information on TheTokenist.io. Our company, Tokenist Media LLC, is community supported and may receive a small commission when you purchase products or services through links on our website. Click here for a full list of our partners and an in-depth explanation on how we get paid.
Do you have difficulty saving money?
It’s hard to invest when saving is an issue. That’s why Acorns jumped on the scene.
The micro-savings investment app rounds up your daily purchases to a whole dollar amount, and invests your “spare change”. Let’s say you purchase a daily necessity — coffee ☕️ — for $2.43. With Acorns, you just invested $0.57 cents.
Doesn’t sound like a lot? You might be surprised at how quickly it adds up. Users can also invest directly, to make sure a certain monthly contribution amount is met.
If Acorns sounds like a good option, there’s a lot more you need to know. Let’s dive in.
Acorns rounds up everyday transactions, using the “spare change” to fund investments. Those who find it difficult to save on their own love the service, while most people in general are a fan of the flat fee structure.
Investor Warning: Investing with Acorns involves risk, including loss of principal. Any references to past performance, regarding financial markets or otherwise, do not indicate or guarantee future results. Forward-looking statements, including without limitations investment outcomes and projections, are hypothetical and educational in nature. The results of any hypothetical projections can and may differ from actual investment results had the strategies been deployed in actual securities accounts. Prospective investors should consult their own financial and legal advisors about risks associated with securities and the suitability of investing in such securities.
What is Acorns?
Acorn has been in the news a lot lately thanks to CEO Noah Kerner, who has been called a pioneer in fintech for the mobile investment app that invests your change. Round-up investing has never been as easy as it is now thanks to this mobile investing app.
The start-up has become more and more hopeful of an IPO, but for now, its robo-advisor tools are becoming more popular with millennial investors as all eyes focus on investing with AI.
However, fintech is becoming much more than an investment app. With recent investors like Jennifer Lopez and Alex Rodriguez investing in Acorn’s technology, the CEO looks to help everyone invest without even thinking about it.
In June of 2020, Acorns expanded its investment model with Acorns Early. The program allows parents to create investment accounts for their children. To celebrate its launch, Acorns is providing a free account for all children born in the year 2020 — no fees until the child turns 18 and becomes the account owner.
While the app has grown extremely popular, there are some drawbacks to this innovative new investing strategy. We show you why Acorns may not be the right pick for certain portfolios.
Acorns Compared
Accounts & Fees
Management fees
$1, $2, or $3/month
0.25%
None
Account Minimum
$5
$0
$0
Account Types
Individual non-retirement accounts
Traditional & roth IRAs
Cash account
Traditional, Roth, SEP, & rollover IRAs
Joint and individual and non-retirement accounts
Trusts
Individual and joint taxable accounts
Traditional, Roth, SEP & rollover IRA
Trusts
General
Best for
Hands-off investing
Investors who have difficulty saving
Hands off investors
Retirement accounts
Low fees
Socially responsible investors
Promotion
None
1 year of free management, with qualifying deposit
None
Human advisor?
Yes, but only with Betterment Premium (0.40% fee)Rating6.0/10Visit Acornson Acorns’ website9.5/10Visit Bettermenton Betterment’s website9.0/10Visit M1 Financeon M1 Finance’s website
Quick Summary of Acorns’ Features
Management Fees
$0 to open account, $5 required to start investing
$1 a month for taxable investment accounts, $2 a month for IRA account and tax-advantaged accounts, $3 a month for checking account plus retirement and investment accounts
To close your account, investors must pay $50 per ETF to have ETFs transferred to another broker
No charge to sell investments and transfer money
Score: 8.5/10 Acorns is made to be low-cost, so it’s no surprise that they required deposits and monthly subscription fees. While it may not seem like a lot, it could be if you only invest $50.
Expense Ratios
Acorns has average expense ratios that start at 0.03% and go to up to 0.18%
Score: 9/10 The expense ratios can be a little high for Acorns with certain funds, but overall, the company keeps their ETF investment costs low.
Account Types
Individual non-retirement accounts
Traditional IRAs and Roth IRAs
Online checking account with debit card
Score: 6/10 You really do not get to diversify your accounts as much as you would think. There aren’t many retirement or savings plans options either.
Investment Options
7 different ETFs chosen based on risk tolerance
Uses small round-up investments from your accounts to invest in ETFs
Investments are Vanguard S&P 500, Vanguard Small-Cap, Vanguard FTSE Developed Markets ETF, Vanguard Emerging Markets Stock, Vanguard REIT, iShares iBoxx Investment Grade Corporate Bond, and iShares 1-3 Treasury Bond
Offers fractional shares
Score: 8/10 There are over 7,000 stocks and bonds available with Acorns, and you can invest in fractional shares.
Tax-Loss Harvesting
No tax-loss harvesting or tax efficiency benefits
Score: 0/10 You won’t find any of the bells and whistles like with Betterment or Wealthfront using Acorns. This is pretty bare-bones when it comes to investing services and tax strategies.
Rebalancing
Available and free for all accounts
Investors pick from five portfolios and Acorns automatically rebalances, reinvesting dividend payments regularly
Score: 7/10 Threshold-based rebalancing helps keep investors on track, but it’s not as sophisticated as other robo-advisors like Betterment and Wealthfront.
Human Advisors
Not available
Score: 0/10 The service is pretty low-cost and does not ask for much of an investment, but there are no options, not even premium ones, to help out beginner investors. Since this app is based on novice investing, wouldn’t it be better to have some broker assistance or financial planning for an additional cost?
Socially Responsible Investing
Not available
Score: 0/10 If you want this feature, you’ll need to head somewhere else. While you have some flexibility with the “Change Your Potential” tool, it’s not based socially responsible factors.
Instead, you can pick and change investments to simply boost account value. Other options and research into SRI factors are not available.
Acorns Overview
Pros
There is no minimum investment to get started
You can invest your spare change through round-up investments
Service is free for college students
Access fractional shares, gift cards, and over 7,000 stocks and bonds
Five investment portfolios ranging from conservative to moderate to aggressive
Cons
Fees are pretty high for small balances and could impact small business owners adversely
No tax-loss harvesting or tax services of any kind
No financial planners or human advice available
Very little investment options in comparison to other robo-advisors and brokerages
No socially responsive investments and very little flexibility on selections
How Much Does Acorns Cost?
We hate to see it, but Acorns is not exactly cheap unless you invest more than $5. Even though Acorns markets itself as a low-cost way to save, there are some fees, and they can lead to bigger costs depending on your account balance.
Although Acorns presents itself as a cheap investment platform, good options are available only for higher investments.
For example, you will pay $1 a month for “Acorns Core,” which is a taxable account, $2 a month for “Acorns Later,” and $3 a month for “Acorns Spend.” While you gain access to more services and accounts, is it worth paying almost $40 a year if your change does not make you more than $10?
It’s difficult to find any other robo-advisor that charges a flat fee like this because it can be very problematic for low balance accounts.
Here is a visual of what your fees are when converted to percentages of assets:
Account Balance
Acorns
Acorns Later
Acorns Spend
$100
12%
24%
36%
$500
2.4%
4.8%
7.2%
$5,000
0.24%
0.48%
0.72%
$10,000
0.12%
0.24%
0.36%
The fee system is meant to make accountholders invest more, but other competitors such as Better and Wealthfront only take 0.25% of your total account balance. In addition, Stash offers a $1 flat fee for a brokerage account plus a bank account that comes with a debit card. And, if you upgrade to the $3 a month plan, Stash offers you a traditional or Roth IRA, in addition to your other accounts.
There are also other fees that are problematic for Acorns users. For example, if you decide that you want to move your investments out of Acorns and to another brokerage, then you must pay $50 per ETF to transfer any investments.
While this fee is sometimes charged by other brokerages, it’s extremely high for Acorns. For example, if you are invested in all 7 ETFs, then you would spend $350 to move your money. Most firms only charge investors $75 for transfers no matter what the ETFs.
Overall, Acorns may seem sweet and innocent, but there are some steep costs if you are not constantly investing more into your accounts.
What We Like About Acorns
Acorns works by rounding up your change and investing your dollars through modern portfolio theory. This means that diversification is more important than the actual stock selection. This can benefit investors by investing in the best stocks, markets, bonds, and other options available.
The company is also headed towards an IPO, so it has to be doing something right. CEO Noah Kerner believes that Acorns users do not need much to invest, and that’s the beauty of it.
While Acorns feels like it’s affordable, the fees may not be for everyone. However, they do offer some financial breaks to certain users.
College Students Get Free Account Management with Acorns
It makes sense that Acorns would market itself to college students. After all, most of them are probably not thinking about investing, but the lure of turning change into pocketfuls of beer money is a big draw. These millennial investors do not have a whole to invest, which is why round-up investing makes so much sense.
Acorns aptly waives fees for this group as long as students register with an .edu email address. College students get the most advantages when they use this service because it’s completely free, and at graduation, they may have a nice pile of money after fours of rounding up their change.
Automated Investing
It’s easy to save money with Acorns. It’s not complex. The app connects to your accounts for you and rounds up your change, investing in stocks that will likely earn you a small profit.
Sometimes the hard part about saving is actually investing in yourself. Acorns makes this easy to do by automating the process for you. Investors don’t even have to think about it, and so money simply grows over time.
How does Acorns do this? The app connects to your linked accounts and moves all change from every purchase into your investment accounts.
You can connect as many debit cards as you need to, but all the round-up investments come from a linked checking account. Acorns will round up to the nearest $1 and offer you the option to transfer your change into your portfolio.
It’s best to set this process to automatic so that each purchase is earning you an investment, but you can also select manually and view your purchases, then select which roundups you want to send to your investment accounts.
Acorns also allows users to invest larger sums manually as well. For example, you can set up a recurring direct deposit that happens daily, weekly, or monthly. These transfers can be as little as $5.
Found Money
Acorns offers a cash back program that is pretty intuitive and amazing to help their investors grow money out of thin air. The Found Money program allows you to use your Acorns debit card with our chesting account and earn cash back at certain partners.
Found Money program lets you earn your cash back while buying at Acorns’ cashback partners.
These cashback partners include:
Nike
Walmart
Warby Parker
Airbnb
Sephora
Whenever you use your card with a linked payment method at these stores, then your cash back is automatically invested in your portfolio. Again, Acorns excels at allowing you to invest money when you didn’t know you even had any.
Expertly Created, Nobel Prize-Winning Portfolios
It’s easy to sign up for an Acorns account, whether you are online or on your phone. The guide takes you through each step, and then you fill in your reasons for investing.
Based on your answers, Acorns creates a customized plan with a recommended portfolio that was created by experts, which includes a Nobel Prize-winning economist.
There are five different options that you can select for investing:
Long-term investment (retirement)
Short-term investment
Major purchase
Children
General
Once you log in, you can connect your accounts and start earning money from your round-up investments. You can see what index funds you invest in as well and how the market is doing.
Set Up Your Retirement Using Your Change
Acorns offers easy IRA setup and lets you invest in your IRA with small amounts.
This is the best part of Acorns and what it was meant to do. Many younger investors and beginners shy away from long-term investing due to all of the planning and paperwork over setting up an IRA. With Acorns, you can set one up in seconds, and you don’t have to worry about funding it.
The interface makes it extremely easy to link your accounts and start rounding up your spending. As soon as you have $5, it’s transferred into your IRA, and the robo-advisor adjusts your shares accordingly. It could not be more simple to grow a little nest egg.
Where Could Acorns Improve
We do think that the fees are quite atrocious from Acorns since advertising suggests that it rounds up your change without much cost. However, the fees have actually proven to be quite significant to those who do not invest more than their change and also do not deposit any other sums manually into their investment accounts with Acorn.
There are a few more things that Acorns should consider changing:
Difficult to Transfer Accounts
Acorns does not want you to take your accounts away, but that should not be a reason to punish. If you have to leave Acorns, you may not be able to take your investments with you unless you can pay $50 per ETF that you have invested in.
We believe Acorns does this to prevent customers from “stealing” their strategy after a week and just paying a small fee to transfer over like so many do in other brokerages, but it just seems wrong to charge hundreds of dollars or lose everything to cash out.
No Human Advisors
For beginners using Acorns, everything seems so simple, but what if you don’t know what you want to invest in? Are you making the right move by putting your money into those stocks and bonds?
The automated features may be impressive but the human advisor is necessary in some cases.
The robo-advisor will select stocks and bonds based on your answers to a questionnaire, but what if you don’t want to invest in something? What if you aren’t sure how to buy stocks?
You can’t change your selections, and your investing options are extremely limited. You have 7 different asset classes to choose from, but once your picks are made, Acorns expects you not to look into it any further.
That is the goal of a robo-advisor: to provide completely hands-off investing. However, most robo-advisors do include a human touch to ensure that investments are in line with the client’s needs.
There are No Tax Benefits
Tax-loss harvesting is not included with your Acorns account. There virtually is no tax assistance, including no advice or education articles about it.
In fact, Acorns will only send you something about taxes during tax season when you receive a 1099 in the mail. Most robo-advisors today include this service to help reinvest earnings and save clients from capital gains tax.
Smaller Portfolios
Even though Acorns is like other robo-advisors in that it takes inspiration to invest from your questionnaire, the app also uses your data such as income, age, and goals to recommend one of five portfolios. These portfolios range from aggressive to super conservative, meaning only bonds. You can accept the portfolio given to you or you can opt for a different one that is more suited to your risk level.
There are just five portfolio options to choose from. With an aggressive portfolio, most of your investments are in stocks. On the opposite end, conservative portfolios stick to bonds. Here is a quick comparison:
Portfolio
Stocks
Bonds
Real Estate
Aggressive
90%
0%
10%
Moderately Aggressive
72%
20%
8%
Moderate
54%
40%
6%
Moderately Conservative
36%
60%
4%
Conservative
18%
80%
2%
The portfolios on their own are actually much smaller than what you would receive at places like Betterment or Wealthfront. These are portfolios consisting of low-cost Vanguard and iShares ETFs that only cover around five to seven different asset classes. These typically include real estate, small-cap stocks, large-cap stocks (international and domestic), emerging markets, and corporate bonds.
While this can diversify your portfolio, it feels too restrictive to actually have a well-rounded portfolio. If you want more options, then Betterment is likely better because of its many options and larger asset class array.
Acorns Platform, Mobile Access, and Ease-of-Use
Acorns is easy-to-use on the web and on mobile. The navigation is quick and simple, allowing you to review investments, check your accounts, and see your “Found Money.” There is no minimum to open, so as soon as you earn $5, it is automatically put into your diversified portfolio.
On mobile, Acorns users will have an even easier time investing their money and seeing their savings. When you login, there are three panels including Past, Present, and Potential.
These panels give you more insights into your portfolio. Each tab offers more information including analysis and current values of your accounts as follows:
Present Tab
This tab refers users to an overview of their current accounts. You can use this panel to make fast changes to your round-ups, deposits, and see the most recent offers from Acorns’ Found Money partners. It’s the best way to gauge the overall health of your investments with Acorns.
Past Tab
If you want a more in-depth analysis, then the Past tab is the best way to look at all of your previous round-up transfers, check on deposits, look at your earned FoundMoney, and more features.
For example, if a user has earned money from dividends or referrals, then these will be shown in the Past tab, too. It’s easy to see how your investments are compounding and also how quickly your accounts are earning you more money.
Potential Tab
Most investors want to grow their money. The potential tab is where you can see the projected value of your accounts based on your current selections for investment.
If you do not like the projects, you can tap “Change Your Potential,” which will let you alter some investments in order to boost your account value. However, beginner investors do not get much education here, so they have to be careful not to change too much.
In addition to these features, Acorns also offers a blog that provides some knowledge of different investing terms and savings. You can also catch up on the latest investing news and learn what trends are currently swaying the stock market.
There are also a number of different frequently asked questions if you get stuck. Overall, the blog and education section are pretty extensive and will help you learn more if it’s your first time investing in anything.
What Type of Investors Should Use Acorns
Acorns appeals to the beginner investor who does not want to fully understand the market in order to participate. If you don’t have the time to figure out investing, then Acorns will seem simple and quite low cost. Since it mostly relies on the mobile app, it’s mainly geared towards millennials who want to grow money from their purchases with round-up investments.
The Acorns platform facilitates investing for people who don’t plan on becoming professional investors.
If you are a college student, Acorns has significant benefits, and it’s free. You can save for the future one purchase at a time, and it helps you start planning for a new house or even retirement.
Passive investors get a kick out of Acorns because you can set it and forget it. Once you return to check on your investments after a couple of weeks, you may be surprised to see that your round-up investments have earned you $20 to $50 or more.
Investors who don’t have a lot of time also appreciate Acorns because there’s nothing to it. This is one of those completely hands-off investment tools that does not even require you to manually make deposits or check on your investments to ensure that they stay within your risk tolerance. Everything is automated and easy.
For those who are not interested in learning about investing but want to save money, Acorns is the perfect mobile app. You don’t even have to think about investing with this robo-advisor.
All of the investments are made automatically, which lets you save without even a thought. It was also named one of the most innovative companies in 2019.
While Acorns would like it to be so simple, many knowledgeable investors have criticized the platform for the amount of fees and high costs associated with closing your account. While there are no costs for selling and transferring money from your investments, many investors see the inability to transfer investments without paying $50 per ETF as a huge blow.
How will you diversify your strategy when you earn $5,000 or $10,000 with your round-up investments? Acorns may not want you to get that far because you could start to take this investing thing seriously.
Frequently Asked Questions About Acorns
Should round-up investments be central to your investing strategy?
Some people have a hard time saving money even when they make a lot of it. The idea with Acorns is that you don’t even have to think about your savings to start saving.
However, we don’t think that round-up investments are central to a strong investing strategy. You add up your earnings slowly, and Acorns does not offer enough asset classes and flexibility to really provide the best portfolios.
We did the math, and if you invest on average $50 a month through your round-up investments with Acorns, using a 7% market return, then you will have over $3,200 after five years. In comparison to simply sending your change to a savings account at a bank, you probably would only earn $2,500 in five years.
Can you invest larger sums with Acorns?
Yes, it is possible to deposit larger sums manually into your Acorns account, but should you? If you have extra money to play with and your returns have been generous with your Acorns portfolio, you may see nothing wrong with adding $10,000 to your account. In fact, your costs in fees drop considerably when you invest larger sums like this.
However, their investment options simply do not offer what you can achieve with another robo-advisor like Betterment or even a full-service brokerage where you can make more with your money. Acorns has less ways to diversify than most other brokerages, and you don’t have any flexibility to customize asset allocations unless you pick from one of the other five portfolios.
In addition, there are no broker-assisted trades or financial planning help. You are on your own with Acorns, although their education area continues to expand. It’s still not comparable to a service like Betterment or Charles Schwab that would help you with advice.
What are Acorns gift cards?
Acorns announced a new gift card portal in 2019. You can choose the amount and send to your recipient so that they can have that automatically invested in their Acorns account.
All the amounts sent with the Acorns gift card are automatically invested in the recipient’s Acorns account.
There are some restrictions including that you must be a legal US resident and be over the age of 18.
Aggressive portfolios seem to have a higher rate of return, but there is also a lot of risk. Most investors using Acorns are not familiar with some investing terms and may not understand the differences in stocks and bonds as relative to aggressive and passive strategies.
This could lead to bigger losses, but it’s really the fees that are problematic for most savvy investors who say that Acorns is ripping off millennials since they don’t know any better.
Can I withdraw money from my Acorns account?
Yes – Acorns allows you to withdraw money to an external checking or savings account at any time without any fees.
How long does it take to withdraw from Acorns?
Most withdrawals from Acorns will take 5 or 6 business days, after which the funds in question will be available to you in your bank account.
When you place a withdrawal request, you’ll receive a confirmation email within one business day. Once you verify that you’ve placed the request, Acorns will place trades to raise the required amount of cash. Requests that are placed before 11AM PST will typically be processed within the same day.
When that is done, it takes another 3 days for the trades to settle, and an additional day or two for the ACH transfer to be completed.
Is there a penalty for withdrawing from Acorns?
No, there are no penalties or fees associated with withdrawing money from your Acorns account.
Do you pay taxes on Acorns?
Yes, you will be required to pay taxes for investments made with Acorns. Even if you did not withdraw any money or sell any of your investments within a single year, you may still be liable for taxation.
If you’ve received dividends totaling more than $10, sold investments for $20 or more, or withdrawn money from your Acorns account, you will certainly have to pay taxes.
Acorns doesn’t offer tax advice, but they will send you tax forms on an annual basis – just remember to consult a professional and take care of that unfortunate and inevitable bit of business on time.
Which is better: Stash or Acorns?
While Stash and Acorns might look similar at first glance, they do differ from each other in a variety of aspects.
Acorns is a robo advisor, while Stash isn’t. Stash allows you to hand-pick your investments, and also allows for the purchase of individual stocks, while Acorns invests your money solely into ETFs.
Stash has a bigger focus on educational materials – although Acorns doesn’t lag far behind them in that respect. Stash also offers a wider variety of investments to choose from.
On the other hand, Acorns will end up costing you less – their fees are lower, and the rounding-up feature is a quite useful way to passively set aside money for investing. Looking at both services, it’s too close to call. The biggest difference is the approach that you’ll get with either – hands-on and active with Stash and hands-off and mostly passive with Acorns. If you’d like to see an in-depth review of how these two services stack up against each other, check out our comparison of Stash and Acorns.
Competitor Comparison
Compare Acorns
Find out how Acorns stacks up against the competition.
For our Acorns robo-advisor review, here is the criteria we used to rate the company:
Low-to-no management fees: We look at the fees assessed by the robo-advisor, which is typically a percentage of your assets charged annually. This number should be low, equating to less than .23% annually.
Expense ratios: Many mutual funds, index funds, and ETFs have low-to-no expense ratios. Your robo-advisor should invest in funds that do not have high expense ratios. It’s also important to know the average expense ratios by fund type.
Available account types:Robo-advisors should have retirement accounts for tax advantages and taxable accounts to cater to both passive and active investors.
Available investments: What does the robo-advisor like to invest in? Most use a combination of low-cost index funds and ETFs.
Tax-loss harvesting: Robo-advisors should be able to identify losing investments and cut losses by eliminate taxes you would owe on capital gains.
Rebalancing: Automated investing also means remembering goals and bringing back allocations when necessary. Robo-advisors should check this daily and ensure they are investing with your goals in mind.
Human advisors: Some free robo-advisors do not offer any financial advice from a human, so this isn’t always important, but if you are new to investing and want to ensure your money is spent right, you may want this option.
Socially responsible investing:Most robo-advisors have a quiz or survey at the beginning to understand your SRI or socially responsible investing type. These are values that may exclude some industries, such as fossil fuels or guns.
As I like to say… “the journey begins with the first step”.
If you see value in this article then please be sure to subscribe to the blog if you haven’t done so already. I’ll be putting up more wealth building posts in the future and you can have them delivered straight to your email account.
I’ll see you in the next post. Until next time… be sure to comment below and let’s get some dialogue going. I’m curious to know, what tips do you have on how to build your wealth portfolio?
“I believe that through knowledge and discipline, financial peace is possible for all of us” – Dave Ramsey –
So you might wondering what the financial blog is about. Since this is the inaugural post, let’s get into more detail about that.
I’ve been through some serious financial turmoil in the past. At the time I was going through those difficult moments, it was extremely overwhelming. What I didn’t realize at that time is that I would come out of it all much wiser and resilient than I could’ve ever imagined.
Even though I never want to go through that again, I can truthfully say that I’m happy I did. Not because I’m a gluten for punishment, but because:
I can now put the wisdom I gained to good use. Hence, the conception of refresh financially as the result.
Inform people on ways to build wealth from scratch with very little money to start.
Provide content covering a variety of financial topics.
Mentor those who currently going through what I’ve already endured.
Putting a bad experience to good use so that others may benefit gives it value. And value is what I plan to provide to the readers of this blog.
I know for a fact that there are a lot people out there going through what I experienced and feeling what I felt. If you’re one of them, know that I can relate and plan to provide guidance on how to tough it out until things get better.
Know this though… things will get better, but might get worse before then. Please subscribe to the blog because I will be posting in the future about solutions that you may find beneficial.
Also, in the blog posts to come, I will be writing about not only those experiences, but ways for everyone to become better informed about financial issues and investment options for you to consider. I’m not the most astute financial person on the planet. In fact, I’m far from it. However, I do have enough financial acumen to mentor while still constantly striving towards higher aspirations.
If you’re just starting out and/or only have a small amount to put towards investing, you will benefit from this blog as well.
Because I’ve had to rebuild my wealth from scratch, and started out being able to invest with just a small amount. I discovered investment opportunities that don’t require very much to get started.
Did you know you can start investing for as little as $5 a month? Seriously, that’s not much, but it’s someplace to start if that’s all you can afford at the moment. Even someone on the strictest of budgets can commit to that. Then,as your financial situation improves and you have more money to invest, you can start designating more funds toward your wealth building goals.
Be sure to subscribe to the blog if you haven’t done so already because I’ll be putting up posts on how you can do that in the future.
Until next time… be sure to comment below and let’s get some dialogue going.
building wealth 