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Is Acorns a Safe Way To Begin Your Investment Journey?

Hey there! If you‘re new to investing, you may be wondering if Acorns is a secure platform to get started with. I totally get it – investing your hard-earned money can be scary, and you want to make sure an app like Acorns is safe before linking your accounts.

After all, we’ve all seen the headlines about data breaches and cyberattacks on big companies. You don’t want your personal info falling into the wrong hands.

Well, you’re in the right place to learn all about Acorns‘ security, how it works, and tips to use it safely! I‘ll walk through everything you need to know about whether Acorns is legit and can actually help grow your money over time.

Let‘s get to it!

How Exactly Does Acorns Work?

Before we dive into safety, let‘s quickly cover what Acorns even is!

Acorns is a financial app that offers automated investing. The goal is to make investing easy and affordable for beginners.

Here are Acorns’ key features:

  • Round-Ups – Acorns’ most popular feature. It rounds up your purchases to the nearest dollar and invests the spare change. So if you buy a $3.50 coffee, it rounds up to $4.00 and invests the $0.50.

  • Automated Investing – Acorns builds you a diversified portfolio based on your age, timeline, income, and risk tolerance. No stock picking required on your part.

  • Micro-Investing – You can invest as little as $5 at any time, making investing doable even with limited funds.

  • Cash Back Rewards – Acorns offers bonus investments when you shop with partner brands through their “Found Money” program.

  • Retirement & Checking – Higher tier plans add IRA accounts and an Acorns checking account.

The basic Acorns Personal plan starts at just $1 per month. They also take an annual 0.25% – 0.50% fee based on your total assets invested through the platform.

So in a nutshell, Acorns invests micro-amounts for you over time to grow your money in the long run. But how does it actually go about investing your money?

How Does Acorns Invest Your Money?

Acorns isn’t investing your spare change in random stocks. Don’t worry, you won’t see it putting $5 into the latest meme stock!

Instead, Acorns builds you a diversified portfolio primarily using exchange-traded funds (ETFs).

What are ETFs?

ETFs are basket funds that package together investments tracking an index, like the entire S&P 500. This instantly spreads your money across hundreds of stocks and bonds.

Investing in ETFs provides:

  • Instant diversification
  • Low costs
  • Passive management

For example, $100 invested in an S&P 500 ETF gives you a tiny stake in the 500 largest U.S. companies.

Acorns selects the right mix of stock, bond, and real estate ETFs for you based on your investing goals. This creates a tailored portfolio matching your risk tolerance and timeline.

The spare change you invest through Round-Ups is put to work in your personalized ETF portfolio. Acorns handles everything automatically behind the scenes.

Over months and years, consistently investing those small amounts builds your wealth as the market trends upwards.

Alright, now that you know how Acorns actually works, let‘s talk about…

Is Acorns Safe to Use?

Whenever you’re putting your hard-earned money into an investing app, safety should be your top question. You want to make sure your money and personal information are protected.

The good news is Acorns takes security seriously in a number of ways:

  • 256-bit Encryption – Acorns uses bank-level AES-256 encryption or higher to secure all account data and transactions. This encryption method would take an unimaginably long time for even supercomputers to crack.

  • PIN/Biometric Login – You can login using your email and password. But Acorns also offers enhanced security by letting you use a unique PIN code or your fingerprint/FaceID instead of a password. This protects your account if your phone is lost or stolen.

  • Two-Factor Authentication – When logging in from a new device for the first time, Acorns requires you enter a special one-time code generated on another trusted device. This optionally adds an extra layer of account protection.

  • FDIC Insurance – For Acorns checking accounts, balances up to the $250,000 FDIC limit are insured against the bank failing.

  • SIPC Insurance – Investments have up to $500,000 of coverage (with $250,000 for cash) through SIPC if Acorns as a brokerage ever failed.

  • PCI DSS Compliant – Acorns complies with the payment card industry standard for securely handling debit/credit card data.

  • SEC Registered – Acorns is registered with the Securities and Exchange Commission, giving it strict regulatory oversight.

Acorns also has not experienced any major data breaches. Overall, it takes the security steps you’d hope for from a financial app.

Of course, there are always ways you can take additional precautions:

  • Use a strong unique password for Acorns, and turn on enhanced security settings like PIN login and two-factor authentication.

  • Routinely check statements for any unauthorized account activity.

  • Avoid public WiFi when accessing Acorns, and use a VPN to encrypt traffic.

  • Install antivirus software and scan all devices used to access Acorns.

  • Consider proactive identity theft monitoring services to protect your personal information.

With reasonable safety precautions on your end as well, Acorns provides a secure platform to grow your money.

Acorns Privacy & Data Collection

Along with security, you also want to know how Acorns handles your personal information. Data privacy is a big concern these days with companies sharing user data.

Acorns does collect a good amount of personal information when you sign up, including:

  • Name, address, SSN, income
  • Employment, education history
  • Full bank/card account numbers
  • Transaction data

Acorns needs this information to open and manage your investment accounts and build your investment portfolio strategy.

Acorns does share your data with third parties for business purposes outlined in its privacy policy. This is common for financial apps and services with lower monthly fees that rely on data sharing for revenue.

However, Acorns allows you to opt out of certain data sharing. You can call Acorns or change your preferences in the app‘s settings. If privacy is a major concern, be sure to check what you’re agreeing to during sign up.

So Acorns gives users some control over data sharing, but isn’t as strictly focused on privacy as some other financial apps. As with any company, there’s a tradeoff between lower fees and data collection.

Who Is Acorns Best For?

While Acorns checks the boxes for security, who is it actually a good fit for?

Acorns is ideal for:

  • Beginning investors with limited funds
  • Hands-off investors seeking an automated solution
  • Those focused on long-term growth over years

Acorns may not be the best choice for:

  • Trading investors who buy/sell stocks actively
  • Those wanting to beat the market substantially
  • Anyone seeking to get rich quick

The key is having realistic expectations – Acorns is built to help beginners slowly grow wealth over decades. You fund your account over time through Round-Ups and incremental deposits.

Acorns projects that investing $5 daily can grow a portfolio of over $150,000 in 30 years:

Investment Timeline Portfolio Value
5 years $9,100
10 years $28,700
20 years $93,600
30 years $153,800

This demonstrates the power of compound growth over long time horizons. While $5 a day seems small, it adds up through the Round-Ups program and regular contributions.

So if you‘re a beginner ready to get started investing for the future, Acorns provides a secure platform to passively grow your money over decades.

Bottom Line

At the end of the day, Acorns offers a legitimate way for investing newbies to dip their toes into the market and build long-term wealth. The automated, passive approach makes it easy for anyone to begin growing their money without much investment knowledge.

However, you still need to take reasonable security precautions – unique complex passwords, two-factor authentication, reviewing statements, and identity theft protection.

Acorns isn‘t some get rich quick scheme, but it can help you accumulate compound growth through small, regular investments over many years. If you go in with realistic expectations around your timeline and returns, Acorns provides a secure platform for investing spare change.

Hope this helped explain whether Acorns is safe to use and a good fit for your investment needs! Let me know if you have any other questions.


Streamr Go

StreamrGo is always about privacy, specifically protecting your privacy online by increasing security and better standard privacy practices.