Any avid users/haters of the Acorns platform?

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wannabricer
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Any avid users/haters of the Acorns platform?

Post by wannabricer » Thu Apr 21, 2016 11:39 am

Good morning Boglers,

I was curious to know if anyone out there had any experience (either good or bad) using the Acorns platform as an investment tool. While I was aware of their model: investing your spare change into a variety of managed funds, I did not know that they had 6 ETfs available to choose from as well (four of which are Vanguard).

Vanguard ETFs:
1. Small Cap ETF (VB) @ .15%
2. REIT ETF (VTQ) @.12%
3. S&P 500 ETF (VOO) @ .09%
4. FTSE Emerging Markets ETF (VWO) @ .15%

Other ETFs:
5. Inv. Grade Corp Bonds ETF (LQD) @ .15%
6. 1-3 yr Treasury Bonds ETF (SHY) @ .15%

My understanding is that these require no minimum amounts for purchasing shares and I thought it might be a simple way to add some ETFs to a portfolio. I would love to hear your thoughts about the platform for those that have had experience with it. I look forward to the discussion!

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Taco Knight
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Re: Any avid users/haters of the Acorns platform?

Post by Taco Knight » Thu Apr 21, 2016 11:52 am

From what I've heard from friends off-forum, it seems like a waste of time. The amounts are too small, unless you are a very new investor with no portfolio.

If you want a similar concept, there are debit and credit cards that round all purchases up to the next dollar and transfer that .73$ to a savings account, so you automatically increase your savings rate, which seems more tangential. I'd rather save $2-4/day and imagine that added up over time than consider it an "investment".

dziuniek
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Re: Any avid users/haters of the Acorns platform?

Post by dziuniek » Thu Apr 21, 2016 12:27 pm

I use Acrons.

It is my vacation fund. That and actual change. :)

No complaints really, I log on my phone to check it sometimes. There's also a wallpaper widget that displays the value of your account in real time. (atleast on Android phones)

Overall experience is good. I did get a 1099 timely, but a corrected one came end of March I think so I have to re-check my taxes, eeeh.

Platform is ok, no issues.

The one highly limiting factor is no real access on a computer - or at least there wasn't a few months ago. As far as I know.

Also - does NOT WORK with MINT just yet...

wannabricer
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Re: Any avid users/haters of the Acorns platform?

Post by wannabricer » Thu Apr 21, 2016 12:48 pm

@ Taco Knight - my understanding is that the accounts can go as high as you'd like. In theory one could operate $10k via Acorn ETFs and continue to consistently contribute. I personally wouldn't it $10k in Acorns but auto investing isn't a waste of time. Plus, those checking/savings accounts that take my $.17 roll it into an account with less than .1% interest anyway...

@dziuniek - vacation fund sounds like an awesome way to think about it. with respect to the computer access limitation and the interface with Mint - I am a firm believer that these will be remedied soon. PayPal invested another $70mm and I think it will be the defacto means for millenial investment for the coming years.

Any reason to think Betterment, or Robin Hood are necessarily "better"/"worse"?

4th and Inches
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Re: Any avid users/haters of the Acorns platform?

Post by 4th and Inches » Thu Apr 21, 2016 1:40 pm

You should also look into an Acorns competitor called "Clink". They are actually cheaper than Acorns. Acorns is quite expensive when your account is small and in the long run will always be more expensive than Clink. Acorns however may give you a bit more portfolio flexibility.

I made a thread about Clink about a week ago. viewtopic.php?f=10&t=188987&p=2867506#p2867506



There is no minimum balance, but you do have to invest at least a dollar every other week. You can set up several different investing strategies such as a percentage of how much you spend on a credit card or a given amount per week such as $50. There is no administration fee unlike Acorns.

You get access to six Vanguard ETFs. However, you don't really get to directly choose how much of each fund you want. You fill out a risk tolerance questionnaire and they assign you a portfolio with the requisite slices of the ETFs below.

The Asset allocation is as follows, using Vanguard for all of the ETFs.

US Stocks — Vanguard 500 ETF (VOO)
European Stocks — Vanguard FTSE Europe ETF (VGK)
Emerging Markets — Vanguard FTSE Emerging Markets ETF (VWO)
World Bonds — Vanguard Total Bond Market ETF (BND)
US Corporate Bonds — Vanguard Intermediate-Term Corp Bonds ETF (VCIT)
TIPS — Vanguard Short-Term Inflation Protected Securites ETF (VTIP)

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CyclingDuo
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Re: Any avid users/haters of the Acorns platform?

Post by CyclingDuo » Sat Apr 15, 2017 9:27 am

4th and Inches wrote:You should also look into an Acorns competitor called "Clink". They are actually cheaper than Acorns. Acorns is quite expensive when your account is small and in the long run will always be more expensive than Clink. Acorns however may give you a bit more portfolio flexibility.

I made a thread about Clink about a week ago. viewtopic.php?f=10&t=188987&p=2867506#p2867506

There is no minimum balance, but you do have to invest at least a dollar every other week. You can set up several different investing strategies such as a percentage of how much you spend on a credit card or a given amount per week such as $50. There is no administration fee unlike Acorns.

You get access to six Vanguard ETFs. However, you don't really get to directly choose how much of each fund you want. You fill out a risk tolerance questionnaire and they assign you a portfolio with the requisite slices of the ETFs below.

The Asset allocation is as follows, using Vanguard for all of the ETFs.

US Stocks — Vanguard 500 ETF (VOO)
European Stocks — Vanguard FTSE Europe ETF (VGK)
Emerging Markets — Vanguard FTSE Emerging Markets ETF (VWO)
World Bonds — Vanguard Total Bond Market ETF (BND)
US Corporate Bonds — Vanguard Intermediate-Term Corp Bonds ETF (VCIT)
TIPS — Vanguard Short-Term Inflation Protected Securites ETF (VTIP)
Update to this thread. Clink is no longer "free" or "cheaper" except for those who signed up before the cut off date last year, and which the company has pledged to honor.

Acorns uses Modern Portfolio Theory and the portfolio was set up by Dr. Harry Markowitz using the following Vanguard, PIMCO, and Blackrock ETF's:

Large Company Stocks: VOO
Small Company Stocks: VB
Emerging Market Stocks: VWO
Real Estate: VNQ
Corporate Bonds:AQD
Government Bonds: SHY

You can choose (and swap) between risk profiles and the percentages held in the 6 ETF's. Changing your preference simply changes the AA to match the risk profile:

Conservative
Moderately Conservative
Moderate
Moderately Aggressive
Aggressive

As pointed out, the fee is $1 per month on balances below $5K, and then it switches to .25 plus the underlying ETF ER fees. All Robo Investing - no matter what company - includes the underlying ETF or fund fees. The annual fees on top of that are where differences could be found in terms of .25 - .89 (Vanguard's is .3, but you have to have $50K to start). So the .25 is not out of the ordinary for robo competitors to Acorns, but that is on balances over $5K.

Obviously, there are pros and cons. It's easy to use. A great interface, a well designed mobile app, and desktop/laptop website as well. It's automatic and you don't have to think about it. It's DCA throughout the entire year without having to think about it. It's a great beginner tool for investors just starting out. It's also a fun little app for long time investors such as ourselves who can just consider it "mad money" if we choose to keep the app and funds beyond our testing/reviewing period.

One can easily set up an automatic monthly electronic bank transfer to Vanguard or Fidelity or name your favorite brokerage. One could simply set aside the same amount of money Acorns is accruing for you each month into a savings account, and then send a check to your favorite mutual fund every quarter. One could also easily have a set dollar amount taken out of each paycheck to go into your savings account for vacations/emergency savings fund (which we do as well).

A reasoned review of the costs here:

https://www.policygenius.com/blog/bewar ... vestments/

That being said, we are currently using and reviewing the Acorns product for 2017 for a charitable project we are involved in. As of April 15th, using the roundups, the balance has grown to $265 and change since January (market gain and dividends included). Without adding any additional investments, it is clear it would take at least 17 - 20 quarters (5 years) to grow to a $5K balance based on current use with our account. At that point, the annual fee would be $12.50 on a $5K balance where it is now $12 on any balance below $5K (so a much higher percentage of course) over and above the underlying ETF fees. Obviously, we could also use the feature where you can invest various amounts at any time to grow the balance quicker.

Bradiator
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Re: Any avid users/haters of the Acorns platform?

Post by Bradiator » Sat Apr 15, 2017 1:21 pm

I have not personally used Acorns but I have counseled a few friends to avoid it. I would not say I identify as a "hater" though. Here is my rationale for suggesting that people look elsewhere:

1) Their costs are high on a ratio basis for micro accounts (arguably this is valid as they are expensive to service), and add what seems to be an unnecessary layer of costs (25 bps) for larger accounts. While this is not an exorbitant fee for a robo-advisor, services to maintain a balanced asset allocation come much cheaper in the form of balanced funds or target date funds from the likes of Vanguard or Fidelity.

2) The convenience and automation of "rounding up" purchases is one of those things that sounds appealing when only briefly considered, but makes no sense when considered at any length. (I could "keep the change" savings plans like that at Bank of America in this bucket too.) It is very easy to accomplish this through other means. For instance, suppose I am a tech savvy millennial and use a credit card to purchase nearly every meal I eat, or roughly 100 times a month in total. On average, I would guess that there will be a 50 cent "round up" on each of those transactions. It is very easy to figure out the mathematical equivalent of this type of savings or investing and plan it proactively.

This is equivalent to investing $50 per month on a recurring basis, as again one can do with a provider like Vanguard. I can actually plan and budget knowing exactly how much I am investing ... and I can schedule it whenever it is most convenient. (And to my point above, it is costing me less).

3) As the example of Clink just above and Betterment's recent price increase show, many of these FinTech or Robo-Advisors are very young companies that are still figuring out their business models. I believe the progression is inevitable: first, burn VC money to market and enroll lots of customers, then your Board members will get impatient and want to see profits, then management will increase their prices (many of their customers never noticing, as they are signing up for a set-it-and-forget-it service), then maybe they'll get sold to a large financial institution. The costs will keep increasing along each step of the journey.

4) There is something that strikes me as perverse about any model that pretends to be helping people to learn to and begin investing by spending their money. Already Acorns is courting a set of merchants to provide "bonuses" in the form of their Found Money program. It could not be more self evident to me that Acorns is essentially an advertising model, sucking up customers' spending information only to use it to help their merchant partners market to their customers more efficiently. I doubt I need to point out that this is in direct opposition to the customer's investment aims.

So, in the end, I guess this is my assessment: Acorns gives you the opportunity to pay more for widely available offerings, with a high likelihood of that cost increasing in the future. And for that additional cost, you pay for the privilege to give away your personal information so that you can be better marketed to ... and presumably in turn, have less money to serve your goals as an investor.

So, I don't think I'm a hater per se, I just have absolutely no idea why anyone would be interested in the first place.

ACM4297
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Re: Any avid users/haters of the Acorns platform?

Post by ACM4297 » Sat Apr 15, 2017 6:26 pm

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Last edited by ACM4297 on Sun Jun 18, 2017 6:53 pm, edited 1 time in total.

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StevieG72
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Re: Any avid users/haters of the Acorns platform?

Post by StevieG72 » Sun Apr 16, 2017 6:50 am

A friend asked me to check it out as he was looking for a referral bonus.

I saw the fees and decided against it.
Fools think their own way is right, but the wise listen to others.

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CyclingDuo
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Re: Any avid users/haters of the Acorns platform?

Post by CyclingDuo » Sun Apr 16, 2017 10:34 am

Bradiator wrote:I have not personally used Acorns but I have counseled a few friends to avoid it. I would not say I identify as a "hater" though. Here is my rationale for suggesting that people look elsewhere:

1) Their costs are high on a ratio basis for micro accounts (arguably this is valid as they are expensive to service), and add what seems to be an unnecessary layer of costs (25 bps) for larger accounts. While this is not an exorbitant fee for a robo-advisor, services to maintain a balanced asset allocation come much cheaper in the form of balanced funds or target date funds from the likes of Vanguard or Fidelity.

No doubt, the $1 a month management fee is high for a small account until it grows to the $5K and beyond point. The underlying ETF fees are not too bad for the types of ETF's that they are (REITS, Small Caps, Emerging Markets, and Bond ETF's all have higher ER fees than a typical stock index fund).

Apples to apples would be to compare it to another Robo in terms of cost. Fidelity's Go Robo charges .35 and has a minimum $5K investment, plus the underlying investment ER fees. Betterment is .25 - .50 (they will give you one free month of management with an initial $10K investment), plus the underlying investment ER fees. Wisebanyan and Schwab charge no management fees, just the underlying ETF fees (tax loss harvesting fees do apply). Vanguard's Robo is .3 with a $50K minimum investment, plus the underlying ETF ER fees. Wealthfront has a $500 minimum investment, and charges .25 and goes to no management fee on $15K or more, plus the underlying ETF ER fees. In terms of balanced funds/target date funds from Vanguard and Fidelity - keep in mind Vanguard charges $20 a year on any fund less than $10K, plus the underlying fund's ER fee (.16 for target date funds). Fidelity's minimum investment is $2500 for a fund, and the underlying fund fee (.77 for the target date funds).

Bottom line - there's no free lunch when it comes to fees as we all know. Good thing we're not talking about 403b and annuity fees. :shock:


2) The convenience and automation of "rounding up" purchases is one of those things that sounds appealing when only briefly considered, but makes no sense when considered at any length. (I could "keep the change" savings plans like that at Bank of America in this bucket too.) It is very easy to accomplish this through other means. For instance, suppose I am a tech savvy millennial and use a credit card to purchase nearly every meal I eat, or roughly 100 times a month in total. On average, I would guess that there will be a 50 cent "round up" on each of those transactions. It is very easy to figure out the mathematical equivalent of this type of savings or investing and plan it proactively.

Yes, you can use the BofA bucket, that is going into a savings, not a diversified ETF. Again, for those that set aside a monthly amount to go into savings/mutual fund/ETF - you are correct. It's easy to automate that as well.

This is equivalent to investing $50 per month on a recurring basis, as again one can do with a provider like Vanguard. I can actually plan and budget knowing exactly how much I am investing ... and I can schedule it whenever it is most convenient. (And to my point above, it is costing me less).

See the apples to apples comparison above, and the associated costs/account minimums/annual management charges/ER fees - as there is no free lunch.

3) As the example of Clink just above and Betterment's recent price increase show, many of these FinTech or Robo-Advisors are very young companies that are still figuring out their business models. I believe the progression is inevitable: first, burn VC money to market and enroll lots of customers, then your Board members will get impatient and want to see profits, then management will increase their prices (many of their customers never noticing, as they are signing up for a set-it-and-forget-it service), then maybe they'll get sold to a large financial institution. The costs will keep increasing along each step of the journey.

They will not all survive. Surprisingly, Acorns sheer number of customers is trouncing the competition. For whatever reason, millennials have taken to it. It will be interesting to see how the Robo's survive and what unfolds within that category of investment vehicle. Acorns is beating everyone on scale for now: http://wmtoday.com/2016/03/07/why-acorn ... 1-billion/

4) There is something that strikes me as perverse about any model that pretends to be helping people to learn to and begin investing by spending their money. Already Acorns is courting a set of merchants to provide "bonuses" in the form of their Found Money program. It could not be more self evident to me that Acorns is essentially an advertising model, sucking up customers' spending information only to use it to help their merchant partners market to their customers more efficiently. I doubt I need to point out that this is in direct opposition to the customer's investment aims.

So, in the end, I guess this is my assessment: Acorns gives you the opportunity to pay more for widely available offerings, with a high likelihood of that cost increasing in the future. And for that additional cost, you pay for the privilege to give away your personal information so that you can be better marketed to ... and presumably in turn, have less money to serve your goals as an investor.

So, I don't think I'm a hater per se, I just have absolutely no idea why anyone would be interested in the first place.

If we all hearken back to what we were doing investment wise at age 18 - 28, most of us would probably be able to say - in retrospect - we could have done better, we could have learned more, we could have avoided some of the obnoxious fees we paid (remember those front end load fees!!!). It's obvious Acorns is one little piece of the investing pie that may indeed get young, early investors "in the game" enough that they learn something about investing - including management and ER fees, how to set aside money, how to grow a nest egg, etc... . Micro investing may seem rather odd to those of us who have been at it for decades as we sock away thousands and thousands per year. But to a young, early investor who might be looking for the discipline via help of an app that does it for them - it's not a terrible vehicle to get the discipline started.

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