How to Invest Spare Change with Acorns
What if every coffee you buy could quietly grow into a retirement fund? Today, I’ll show you exactly how Acorns can sweep your digital spare change into a diversified investment portfolio. We’ll walk through the setup, fees, hidden perks, and features, and finish up with pro tips to supercharge your tiny deposits. So grab your phone, and let’s turn your pocket change into wealth!
The Core Idea of Acorns
Acorns links to your debit or credit card, rounding up each purchase to the next dollar. The difference—usually between five and ninety-five cents—is invested into an ETF portfolio designed by investment experts. This combination of a robo-advisor and a digital piggy bank embodies the modern portfolio theory.
Account Types and Pricing
Acorns offers three membership plans:
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Personal Plan: For about $3 a month, you’ll get roundups, investments, and FDIC-insured Acorns checking. This plan is ideal for beginners.
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Personal Plus (Acorns Silver): Priced at around $6 (or $5 in some countries), this plan includes early custodial accounts for kids and a paycheck splitter, making it suitable for parents and side hustlers.
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Acorns Gold (Premium): This plan costs around $9 to $12 per month, depending on your region. It provides custom portfolios, live CFP video calls, and a 4% yield vault, best for serious automatic investors.
All fees are flat rates based on your account type, not percentage-based, and apply under balances of $5,000. This pricing is pricier than some competitors, such as Vanguard, but the convenience of automation is the value proposition here.
Setting Up Roundups
To begin using Acorns, download the app on iOS or Android and create an account. Then, link your primary spending card through the secure “Play” feature, which uses 256-bit encryption for safety.
Next, toggle the round-up multipliers: I recommend starting with 1x and moving to 2x as you become comfortable. Additionally, enable “Smart Deposits” so that every Friday, Acorns automatically moves your accumulated roundups (minimum of $5) into your portfolio, ensuring you never miss a payment.
Portfolio Choices and ECG Options
Acorns offers five risk levels, from conservative to aggressive, with portfolios ranging from US bond-heavy to 90% global equities. Recently, Acorns introduced an ECG (Environmental, Social, and Governance) sustainable version across all risk tiers. You can easily compare these options and switch risk levels without tax implications within an IRA.
Boosting Growth with Found Money
You can shop through the in-app portal or Chrome extension at over 15,000 brands, including major retailers like Nike, Walmart, and Airbnb. When you shop with these brands, you’ll receive cash back of 1% to 10%, deposited directly into your Acorns account within 45 days. Consider pairing this with a rewards credit card for double investing benefits.
New Feature: Vault High Yield Cash
Premium members now have access to a Vault with a 4% APY, FDIC-insured sub-account. Use this for short-term goals, such as quarterly taxes or upgrades, while your roundups grow long-term. Transferring money between the Vault and investment accounts is instant and fee-free.
Automating Payroll Splits
Inside the Acorns app, navigate to settings and click on “Get Paid Early.” You can enter your employer’s direct deposit information, allowing you to allocate a percentage (e.g., 5%) of each paycheck straight to Acorns. This method can effectively create a stealth 401(k).
Tax-Advantaged Options: Acorns Later and Early
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Acorns Later: You can open a Traditional or Roth IRA with one tap, allowing your roundups to autoflow into a tax-advantaged account. Contribution limits follow IRS guidelines, currently at $7,450.
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Acorns Early: This option provides custodial UTMA/UGMA accounts for kids, turning spare change into college cash, which transfers to the child at the age of majority.
Real-World Impact of Spare Change
The average American makes around 50 transactions a month, with an average roundup of 50 cents—this equates to $25 monthly. If you apply a 2x multiplier, you’d accumulate around $50 each month, which could grow to approximately $8,400 in 10 years at a historical 7% return. By turbocharging with a $25 smart deposit, you could exceed $20,000.
Security and Drawbacks
Acorns employs bank-level TLS and SIPC insurance for investments up to $500K, along with FDIC coverage for checking accounts up to $250,000. However, flat fees can hurt those with tiny balances, and the limited manual stock choices (unless on a premium plan) may not be ideal for everyone. While Acorns is excellent for building habits, it should not be your sole retirement solution.
Pro Tips and Closing Thoughts
To enhance your Acorns experience, turn on “Found Money” alerts, review your risk annually, and consider bumping the multiplier each time your income increases. Freelancers can pair Acorns with a Solo 401(k) for additional tax benefits. If spare change automation keeps you consistent, Acorns is worth every penny.
To get started, download the Acorns app from the Google Play Store or App Store, and check the description box below for all mentioned tools. Thanks for reading, and I’ll catch you in the next article!
