As a working professional we all want one place from where we can manage our expenditures, our investment portfolio and our Savings and there are several apps in the market. But there is always confusion which app to use and how to start saving our expenditures. There is an app called acorns which helps you to manage your financial services effectively. Let us know ‘How Do Acorns Make Money?’.
How Do Acorns Make Money?
Acorns is an America based fintech company which was founded in 2012 and situated in California. They are known for providing financial services to their customers and helping them to manage their investment expenditures and saving profiles.
They have their product “invest” which is a micro-investing account that allows their users to invest their money in spare charges. Acorns offer a facility to link accounts directly to the user’s credit card. Users can also manage their portfolio with simple steps and Acorns provides a platform according to the user’s appetite for Risk.
In this article, we are going to talk about the money-making model of accounts and how they provide services to their customers through investment apps.
Working Strategy of Acorns
Acorns is the most used investment app in the USA and it offers options for saving and investing without having much impact on their bank credit. As we already mentioned that through app investment users can “invest” in spare charges and can manage their portfolio easily.
Users have many options to create their portfolios within a few seconds and can choose custom strategies according to their appetite risk of investment. Through Acorns, users can also link their debit card or credit card directly to this platform and can directly start investing through the account.
This company offers the opportunity to shift its portfolio margins into an IRA product when they start gaining some profit. They have a very unique style of working and algorithms to permit their user to select portfolios.
Money-making model of Acorns
- Through subscriptions
Acorns offer different subscription options to their users in the form of personal, lite and family packs. Among these subscriptions, the lite package is one of the most affordable and most demanding subscription plans which has subscription fees of only $1.
Lite users can also earn a bonus with a transaction at one of the more than 340 funding partners. The subscription fee of the personal package is $3 per month which includes different investment plans and also different products to buy.
The fee for the family package is around $5 per month, which includes all features of the personal package and also the early access features for users. You can also set up an investment portfolio course for kids through Acorns.
- Through Referral
Acorns easily make money through their referral fee whenever their customer buys something through one of their brand partners like Nike or Walmart.
This referral fee is included in Acorns’ Earn product. Whenever their users shop through their partner brands in any domain, they earn a fixed amount of percentage through this purchase.
Acorns share a portion of their referral earnings with the members by directly investing in the account or by investing in other brands. They have a very extended referral partner which provides them with a suitable environment to collaborate.
- Through Interchange fees
The users of acorns can also apply for a checking account that is offered with a free debit card to every new customer. The card is issued on the behalf of their partner Visa.
Acorns Make their money from the fees generated through interchanging between merchants and users and they get a small fee through this transaction.
You can also earn extra fees by linking it through an earn cashback program. Through this, they can earn bonus profit when shopping through their partner brands.
- Through management fees
The other method of acorns to make money is through annual management fees of 25% which they charge on larger accounts. Any member who has less than $5,000 in their portfolio does not come in this Management fee criteria.
Management fees of 25% are under the lines of their Competing partner which also charge the same amount as this and offers some additional benefits.
Pros of Acorns
- It is a very easy platform to start investing in the stock market if you don’t have much experience with the Stock Market. Using acorns, you can invest with their charge and invest money in different brand partners.
- The automation process of acorns is very easy and can easily manage your portfolio depending on your goals and investment risk.
- They also provide a learning path to learn about the basics of investing to their uses. You can easily learn how the stock market works and how you can invest through their platform.
Cons of Acorns
- They have subscription fees for using their platform. They have different packages and you can choose according to your investing appetite.
- You have very limited investment options as compared to other competitors in the market. Users have no options to choose individual stocks.
- You also do not get any personalized advice if you are an absolute beginner. If you are a complete beginner, you might face challenges about where to start and how to start.
Acorns are one of the finest fintech companies which involve the assessment of their users with saving and investment profits. Although they also get the benefit of being the first mover in the market, they are also the first company to provide profits in this competition.
Over the last 10 years, many investing and wealth management companies have come into the market to provide profit to customers. Acorns Compete with the same printer companies like Robinhood, Betterment, Wealth front, personal capital, etc.
- Are Acorns worth putting money into?
If you checked it is to make money from the spare change and get the best retailers in one platform then Acorns is the best option for you to go with.
- Is Robinhood or Acorns better?
Both companies have their unique audience base to target but the main difference is that Robinhood is better for beginners who look for individual stocks while Acorns is a good choice for investors with hands-on experience.
- How much is Acorn’s withdrawal fee?
There are no withdrawal fees for any user. You can easily withdraw your funds from Acorns which takes up to 3 to 5 days to get your funds into your account.
- Why are Acorns charging $1?
Acorns charge a $1 per month subscription tier. The Lite package is one of the most affordable and most demanding subscription plans which has subscription fees of only $1.