2017 Review: Is Acorns App Safe? Is Acorns Worth It?
The day of the ceramic piggybank may be long gone, but creators of a newer investment option hope you’ll see the value of your spare change and view the Acorns savings app as a safe place for it.
Started by a father-son team from California, Walter and Jeff Cruttenden, this mobile investment app allows users to save the spare change from purchases and invest the funds into a personal portfolio.
The ease of this process leaves some questioning Acorns app security details, which is what our Acorns app review aims to address.
As the following Acorns app review will show, the digital risk to a user’s personal banking information is perhaps the same as the risk one faces when investing in a sometimes volatile market.
As with any financial investing platform, questions of security should always be addressed. Our Acorns app review hopes to answer consumer questions like "How safe is Acorns?" and "Is Acorns a safe app?"
By taking a close look at each aspect of the Acorns app, our Acorns app review will provide a comprehensive answer to the inevitable investing question: "Is Acorns worth it?"
How Does the Acorns Savings App Work?
If you’ve ever heard the adage “A penny saved is a penny earned” and wondered if a penny, especially nowadays, is even worth the saving, the developers of Acorns would likely answer with a resounding Yes!
They wanted to take the intimidation out of investing and make Acorns app security high enough to make the Acorns app safe for even the most reluctant investor to use. But how does the Acorns savings app make the most of spare change?
A user sets up an account with the Acorn app (either on a smartphone or via a computer on the new Acorn website platform).
Image Source: Acorns
Is Acorns Safe to Use?
If you are wondering, “Is the Acorns app safe?” for your money, you should take the time to understand the process.
The user’s bank account and credit card are linked to the Acorn app. When the user makes a purchase, the amount is rounded up to the highest dollar amount, and the difference is set aside for investing.
The Acorns app security features include encryption and SEC regulations. For those wondering "How safe is Acorns?" this high security is a positive trait of the app. While digital investing is not new, the measures used to safeguard users continue to grow.
Acorns app security utilizes measures similar to other major online banking institutions to transfer funds, making the Acorns app safe for anyone to use.
For example, if a user spends $2.83 for a coffee, the Acorns app “rounds up” the amount and puts $0.17 toward investing. Once the spare change reaches the $5 minimum, the money is invested into the chosen portfolio.
Acorns App Review
Is the Acorns App Safe to Use?
The developers of the Acorns app promote the safety, security, and peace of mind they claim users should feel while using the app.
Image Source: Is Acorns App Safe?
For those potential users who ask, “Is Acorns safe?” the developers point to a multi-pronged approach to security.
- All accounts associated with Acorns are SIPC insured up to $500,000 for fraud protection.
- Acorns app security uses SSL 256-bit encryption.
- The app utilizes account alerts, which contacts users whenever unusual activity is noticed.
- The servers and privacy measures are on par with bank-level security measures, a highlight of Acorns security.
- The app uses authentication procedures, automatic logout features, and verification of user IDs.
This is standard technology for tracking and recording development. However, the statement guarantees against the selling or renting of personal information.
One of the Acorns security measures as outlined in the Terms & Conditions gives the user the ability to choose to participate in offer promotions.
This may result in opportunities to earn deposits into their accounts from different businesses, websites, or other third parties.
Choosing a Portfolio
During the sign-up process, users will be prompted to select from a range of portfolio options. Our Acorns review found that the app will make a recommendation based on a user’s:
- Monthly cash flow
- Median net worth
- Reason for long-term investing
The information provided by the user is aggregated, and the Acorns app will suggest a portfolio with an associated level of risk. The risk is in terms of investment opportunity, not Acorns app security risk or questions of Acorns app safety.
There are five portfolio levels from which to choose:
- Moderately Conservative
- Moderately Aggressive
Users are not mandated to select a specific portfolio. The recommendations are simply measures to help investors with little background make decisions that might provide the most secure return.
A Closer Look at the Portfolios
A deeper look at the portfolios, whether the user is considering the Conservative or leaning towards Aggressive, reveals a relatively diverse investment platform.
As mentioned previously, questions as to how safe is Acorns revolve around two considerations: ETF risk and technology risk.
To further understand the ETF investment risk and questions of "Is Acorns worth it?" it is important to understand the types of funds offered through the Acorns app. These include:
- Large company stocks
- Small company stocks
- Emerging markets
- Real estate
- Corporate bonds
- Government bonds
For example, a Conservative portfolio through Acorns might include 9% of investments in Small Company Stocks and 40% in Government Bonds.
Conversely, an Aggressive portfolio could include 25% of investments in Small Company Stocks and 5% in Government Bonds.
Investing in Portfolios
Once a user selects a specific portfolio, it is time to start sending money toward that investment option. As with any diversified investment approach, there is inherent risk.
However, those who wonder "Is Acorns a safe app?" or "Is Acorns secure?" in terms of ETF investments should consider some of the behind-the-scenes resources.
Our Acorns app review found that the portfolio management team is assisted by Dr. Harry Markowitz, who is known as the father of the modern portfolio theory.
This theory describes how investors who want to avoid heavy risk can build portfolios which maximize returns in consideration of inherent market risk.
This theory is also why many feel that the Acorns app security is strong, because it works to benefit those newer, perhaps more timid investors. This method makes the Acorns app safe for inexperienced and experienced investors alike.
According to Markowitz, it is possible to build such a portfolio that an investor achieves maximum possible returns for a predicted level of risk when a specific set of characteristics are accounted for and accepted by the investor.
In essence, even those investors who are risk-averse will agree to a higher level of risk if there is reasonable assumption of a higher reward.
So, is Acorns safe for even relatively uniformed investors to confidently use?
Our Acorns app review found that this appears to be the goal of this platform – a safer investing tool for millennials who are hesitant and less inclined to bite the bullet.
Understanding Exchange Traded Funds
At the heart of any Acorns review is the idea that millennials are not investing enough, perhaps out of a combination of investing ignorance and lack of motivation.
Some millennials might also wonder is Acorns a safe app and is Acorns secure to use for their minimal investing dollars.
Investing in typical Vanguard ETFs often requires that users put down anywhere from $3000-$5000 for a similar range of portfolio options as offered through Acorns.
Through a managed fund approach, our Acorns app review found that the Acorns savings app can offer those same investment options without having to put forth such a large sum.
In fact, on average, Acorns users are putting in $100 each month – and they didn’t have to put forth a large chunk of change to get that started.
The portfolio managers of Acorns also rebalance allocations to account for market fluctuations and keep user’s investments aligned with each specific chosen risk level. This helps to build trust and assure users that their investments are secure via Acorns app security measures.
For a closer look at how investments might be allocated across the various portfolio risk levels, consider the following example of a moderately conservative portfolio.
Image Source: Acorns
Is Acorns Worth It?
For those asking "Is Acorns worth it?" the answer lies heavily with the personal investing needs of the user.
As mentioned previously in our Acorns review, this app is geared toward the millennial who has so far steered clear of investing for one reason or another.
Acorns security measures in both ETF risk and technology-associated risks aim to change those millennial fears.
Unfortunately for them, just slightly more than a quarter of people less than 30 years of age invest in the stock market.
When one compares that with the almost 60% of those people who are between the ages of 50 and 64 years, it is clear to see that the market is not an equal-attractor opportunity.
The attraction of the Acorns app is the fact that it addresses the question of “Is Acorns safe?” by putting together a quality management team and using bank-level security measures.
Other benefits include:
- Low investment of $1/month for balances below $5000 (0.25% after that)
- No minimum investment required
- Waived fees for adults younger than 24 years of age
- Waived fees for full-time students (18+)
- Withdraw money or close your account at any time
As is inherent with investing, there is no 100% guarantee of return. The market fluctuates, and so will returns on investments. Other drawbacks also exist, despite Acorns app security measures.
The smaller and less frequent the round up amounts are, the higher the flat monthly fee cuts into the original investments.
Our Acorns app review found that some individuals might just end up paying $1 to invest $3 or $4 each month. At these amounts, their time and efforts might be better spent elsewhere.
Acorns is also not a retirement account. Even though the Acorns app is safe for overall related purposes, users do not have the ability to invest in tax-free IRA accounts.
Also, as the app takes advantage of spare change investing, most users will never rise to the minimums needed to fully support their investment needs.
Will Acorns Last?
If recent activity is any indication, Acorns app security measures from both ETF and technology standpoints have helped to poise the platform for continued growth.
In April of 2016, PayPal backed the Acorns savings app with a $30 million injection. This type of financial infusion also seems to answer yes to those asking “Is Acorns a safe app?”
When that is combined with Rakuten, a participating Japenese e-commerce company, the financial future for Acorns continues looks bright.
Since 2015, users of Acorns app have opened 850,000 investment accounts, and 75% of these accounts were opened by those targeted millennials.
Co-founder Jeff Cruttenden says that some users invest only $5/month as they begin, but those numbers are still leading to large returns.
Those wondering “Is Acorns secure?” can look to the numbers as indications. Users have earned more than $25 million in investments, and there is no indication this will slow.
Conclusion: How Safe Is Acorns? Is Acorns Worth It?
So, is the Acorns app safe, and is Acorns worth it for every investor? Our Acorns app review found that these answers are both yes and no.
It rises to the occasion for providing a range of portfolio options to meet various risk levels, and it carries with it bank-level security measures, making the Acorns app safe for widespread use.
For those who are just entering the investing world, our Acorns app review found that these high security levels and variated risk options make the Acorns app safe for new or hesitant investors.
If you're wondering "Is Acorns worth it for new investors?" then these features will likely appeal to you, creating a resounding "yes."
However, for those with higher cash flows to invest, there may be better options, especially if those investors are looking for tax-free retirement options. Depending on your financial needs and goals, the question "Is Acorns worth it?" can be answered in different ways.
Ultimately, what matters most is that consumers take a close look at their personal investing goals and needs. This will help each consumer answer the question of "Is Acorns worth it?" relative to their unique financial goals.
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