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What Is Sofi Invest
SoFi, a.k.a. Social Finance, is an online personal finance company specializing in investing, banking, student loan refinancing, mortgages, and personal loans.
However, while these programs benefit a wide variety of people, for the purposes of this article, we will focus on SoFis investing arm, SoFi Invest.
SoFi Invest refers to a three-pronged platform for young investors planning their foray into the world of investments. SoFi is a relative newcomer to the investment community, but has already shown its value to its more than 7.5 million users
As mentioned earlier, SoFi breaks its service down into 3 parts. These three categories are Active Investing, Automated Investing, and Crypto.
The Standard Acorns Account Isnt Appropriate For Long
Acorns Core accounts are taxable brokerage accounts. If you are investing for a long-term goal like your young childs college expenses or your retirement, there are better-suited account types available.
For college savings, you should consider a 529 plan or Education Savings Account. You could even use a Roth IRA your contributions can be withdrawn early without penalty, if needed. These three accounts will all give you tax advantages and efficiencies that a taxable brokerage account will not.
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New And Upcoming Features
Acorns Earn Chrome Extension– This was added to make it easier to find and redeem bonus investment offers while you browse your favorite brands.Job Finder– In partnership with ZipRecruiter, Acorns recently added its Job Finder experience which make it easy to explore millions of full-time, part-time, and remote jobs to earn more money.
Acorns Harvest– In March 2021, Acorns acquired Harvest, a platform that negotiates bank and credit card fees on its customers’ behalf. In 2020, Harvest helped its customers earn back more than $4 million in bank fees and interest refunds. Harvest will soon be integrated into Acorns subscription tiers.ESG Investing– Acorns ESG portfolios launched in April 2021. It give customers a way to easily invest in firms that have high environmental, social, and governance ratings.
How To Get Started: Best Micro Investing Apps
From what I can gather, the two most popular true micro investing apps are Acorns and Stash.
I say true because some of the apps listed below start to expand beyond just micro investing, but they still let you invest small amounts of money. By that definition, they are micro investing platforms, just with some added bells and whistles.
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Acorns Vs Robinhood Vs M1 Finance Wrap Up
If youve made it this far, then you probably realize that each of these investment apps is best for a specific type of investors. So, your decision should be easy when deciding which investment app to use.
M1 Finance is best for investors who want pre-made investment portfolios and also have the option to pick and choose individual stocks and funds. Investors seeking a variety of investment accounts should consider M1. M1 Investors appreciate the rebalancing feature, too. The newly updated M1 Finance app is an added bonus!
Acorns is a good investment tool for the newbie with a small amount of cash to invest. New investors will appreciate Acorns automated round up investing and found money features as well as the retirement investing option. The Acorns robo-advisor investment management is best for the new investor, college student, or anyone seeking to get into the financial markets with a small amount of discretionary money. That said, its tough to build a substantial amount of money with tiny amounts. So, if youre using Acorns, consider opening and funding an IRA and dont rely on the round up for your future financial security.
Tips For Finding An Advisor
- Acorns doesn’t provide many features for investors who have more complex financial situations. If you have multiple types of investments or want to build a financial plan, you may want to talk to a financial advisor. SmartAsset’s free tool can match you with up to three advisors in your area. Get started now.
- The rise of robo-advisors has coincided with a bull market. But what do the algorithm-driven advisors do when there’s a major downturn? The general wisdom is not to panic when things head south, but an automated system of rebalancing may sell when prices are low.
More from SmartAsset
Also Check: How To Pick An Investment Advisor
Are Acorns Investments Good Portfolios
The idea of the Acorns automatic money savings app is that it rounds up all of your transactions and automatically invests that money for you. There are some nuances about how Acorns works you should understand first. Money is only transferred once the minimum round-up amount is $5, and it only happens once per day, unless you use the Acorns debit card or Acorns checking account.
Before we get too in-depth here, it is important to remember a few things. First, when you get started with Acorns, we are talking about a very small amount of money. That means that as far as real dollar amounts go, the difference in percentages wont be big. For example, if you have $100 in your Acorns account the difference between 10 percent and 8 percent is just $2. In other words, this not something to wring your hands over, especially in the beginning.
However, you can make lump sum, or recurring, investments with Acorns now, which may make your investment balance bigger faster.
Where Does Acorns Invest Money?
Of course, the whole point is for your automatic savings to add up and grow over time, so it is necessary to understand where Acorns is investing our money. So, lets take a look.
Acorns has five different investment portfolios that it uses and automatically re-balances for all users. This is a typical robo-advisor setup.
The five types of Acorns investment portfolios are Conservative, Moderately Conservative, Moderate, Moderately Aggressive, and Aggressive.
Mass Transit And Freight Services
Bus and shuttle services
Local bus routes are operated by the .
The city of Irvine has operated its own mass-transit bus service called the iShuttle since 2008. Four weekday commuter shuttles serve major employers, residential areas, shopping centers, and transportation facilities. Two lines, Route A and Route B, connect the to the Irvine Business Complex area. Route A provides service between the and with stops along Von Karman Avenue. Route B heads along Jamboree Road before continuing through Main Street and Michelson Drive. The remaining two lines, Route C and Route D, offer connections between the Irvine Station and the Irvine Spectrum Area, which includes major employers, the , and residential communities The Park and The Village. Route C follows Irvine Center Drive and ends at the campus, while Route D serves the , , and .
At one time Irvine intended to build a tram / guideway, but in February 2009 the city of Irvine canceled the project. Initially plans were underway to connect the Orange County Great Park to the and surrounding businesses with a fixed-route transit system, also stopping at the . In 2008, two possible routes were selected, but neither will be developed now. The entire $128 million in funding will be returned to the Measure M fund, and be available for other cities in Orange County.
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Acorns Vs Stash: What Is The Best Investing App In 2022
SustainFi Updated January 5th, 2022
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Betterment Vs Acorns: Pricing And Fees
Neither Betterment nor Acorns requires a minimum deposit to open an account. But, the pricing structure is different in important ways.
Betterment charges a flat fee of 0.25% per year based on the amount of money in your investing accounts, regardless of what types of accounts you have. Money in a Betterment checking or savings account is not counted for this annual fee.
Acorns, on the other hand, charges a $1 per month subscription fee for a standard investment account of a $3 per month fee for a standard investment account, retirement account, and checking account. This pricing is cheaper than Betterment if you have at least $5,000 in a standard investment account or $15,000 across standard and retirement accounts.
Notably, the ETFs that Betterment invests your money in also tend to have slightly higher fees. The platforms most expensive ETFs charge around 0.4%, compared to less than 0.2% for the ETFs that Acorns invest in. While this is a small difference, it can add up to a significant amount of money in fees over decades of investing.
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The Standard Acorns Account Isnt The Best Choice For Medium
We said before that a taxable brokerage account likely isnt the best choice for long-term investing, and its too volatile for short-term investing. So, you might be tempted to think Acorns could be a good choice for medium-term goals. In a way, that is the best possible use case for Acorns, but its still not the best option for users with this time period in mind.
In this scenario, the $1 monthly fee is lowering your future account value by $378.41.
Investment And Asset Class Options
- Acorns: ETFs.
- Robinhood: Stocks, ETFs, Options, Cryptos.
- Betterment: ETFs.
Last, Acorns and Betterment both have limited investment options, but this is not surprising given the type of investment platform they are.
For passive investors using Acorns and Betterment, the selection of low-cost ETFs that they offer is solid.
Robinhood offers the most investment options vs Acorns and Betterment, but typically offers less than its traditional broker competitors. While Robinhood is one of the only traditional brokerages to offer cryptocurrency investments, it does not offer any mutual funds or index funds on its platform.
Therefore, a majority of people using Robinhood end up either buying individual stocks or ETFs.
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Acorns Fees And Costs
Acorns bills itself as a low-fee option, but that really depends on how you measure this platforms fees. There are two Acorns membership tiers, both of which charge flat monthly fees:
- Personal: $3 per month. You get access to Invest, Found Money, Later and Spend.
- Family: $5 per month. In addition to all the features of the Personal tier, Family grants access to Early, Acorns UTMA/UGMA investment accounts. These are essentially investment accounts for kids.
While those fees appear manageable, theyre actually pretty expensive on an annual percentage basis, which is how many other investment apps and robo-advisors charge their fees. Younger workers just starting outthe types of investors who Acorns is trying to attractwill end up paying more than they would at other robos.
Imagine you opened a new investment account with just $100. If you used Betterment, which charges an annual percentage of 0.25% for its basic Betterment Digital offering, your annual cost would be $0.25. If you opened an Acorns Personal account, the one-year cost for that $100 investment would be $36.
Naturally, the fees become a smaller and smaller proportion of your balance the more you invest, but that could take a while.
In terms of investment costs, the expense ratios range from 0.03% to 0.25% . This is what youll pay if you invest in Early, Invest or Later.
Other Traditional Investment Brokers:
- Charles Schwab: a leading investment broker that offers high-quality index funds and ETFs, superior customer service, as well as commission-free stock trading.
- Vanguard: the pioneer of index investing and a top choice for passive, long term investors.
- Fidelity: another well-established brokerage firm, and the first to offer $0 expense ratio funds.
- Webull: a new online broker designed for a day trader or active trader. Webull offers in-depth charts and analysis tools for a low cost.
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Acorns Vs Robinhood: Account Types
Acorns supports many account types:
- Individual and joint taxable investment accounts
- Retirement accounts, including traditional, SEP, and Roth IRAs, plus rollover IRAs
- Custodial accounts for kids
Robinhood is offering individual taxable investment accounts only, though retirement accounts may be coming at some point.
The winner: Acorns.
Why Are There So Many Asset Classes
Options are great for everything, and certainly for investment portfolios. Thats because investors require a diverse range of investment vehicles that allow them to reach their goals. Asset classes each accomplish different goals that can align with the goal of your portfolio.
For example, one factor investors should consider is their risk tolerance, which means whether they are equipped to endure the ups and downs of the stock market, either financially or emotionally.
Another is their time horizon, which refers to how long investors have until they need the money. For example, a 20-something who is just starting to save for their future retirement has a long time horizon, while someone who is nearing retirement has one that is short.
Your risk tolerance and time horizon combine to give you insight into whether you should create an aggressive or conservative portfolio, and that will help dictate which asset classes should be included. While many asset classes offer a variety of options that could suit an investor on either end of the spectrum , there are other asset classes, such as bonds, that tend to lean toward a specific propensity, in this case, a more conservative asset class.
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A Short History Of Acorns
Acorns, headquartered in Irvine, California, was founded in 2012 by father and son duo Walter and Jeff Cruttenden.
Walter, the father, led E-Trades transition into becoming an online investment platform in the late 1990s with the launch EOffering. He frequently spoke about investing at the familys dinner table and parts of that seemed to have rubbed off on Jeff.
In late 2011, Jeff began talking to his father about taking advantage of the rising popularity of smartphones. The idea was to make investing more appealing to the general public, especially since its distrust in financial institutions post the Great Depression was at an all-time high.
As a result, only 26 percent of all adults under 30 were owning stocks at all. More than 50 percent of these people simply dont have enough money to invest, while another 30 percent state a lack of knowledge about investment opportunities as the reason.
For the next two years, the Cruttendens went into stealth mode and started working on the app. They even received help from Nobel Laureate and economist Harry Markowitz , whos ideas about diversifying ones investments to minimize risk while maximizing returns have become the foundation of modern-day portfolio theory.
In March 2014, Acorns officially launched into beta. The companys first product was Acorns Invest, which invested a users spare change for a minimum monthly fee.
Webull: Best Stock Trading App For Beginners
- Available via desktop, Apple iOS and Google Android.
- Price: Free trades
Webull came into the stock trading world in 2018 when it started challenging Robinhood for market share.
This best stock trading app for beginners and experts alike offers commission-free stock trading as well as commission-free trades on ETFs, options and cryptocurrencies . Acorns only allows low-cost ETFs.
The company also recently added the ability to trade fractional shares, making this a great app for micro investing.
Like most investment apps available, the company provides access to trade on your smartphone, tablet or desktop.
Further, it charges no commissions for the trades because Webull makes money on other actions you take, like Payment for Order Flow , margin loans, interest on cash and service fees for their Nasdaq TotalView Level 2 Advances quotes subscription.
Webull also provides you access to several powerful tools you can use for in-depth trading analysis.
If these account features sound attractive, the best part might also come with knowing setting up a Webull account is free and comes with no account minimum requirements you must meet or maintain.
Finally, to de-risk your sign up, Webull also runs frequent promotions that give free stocks. Webull does not offer a bank account at this time.
Read more in our Webull review.
While the app primarily caters to hands-off investors looking to automate their investing, you can also actively select stocks to trade. Acorns only allows ETFs.
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Can You Get Rich From Acorns
Given the fact that Acorns involves rounding up your spare change and that the average amount of investments through the app each month is $30, youre probably not going to get rich from Acorns.
That said, you can definitely build significant wealth by investing and if Acorns helps you learn how to do that so you can start investing larger amounts going forward, then its worth giving it a shot.