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When you look at the leftover change jingling in your pocket, you may wish it could magically grow into something more. But, given all the technicalities of investing, it can sometimes seem like an exclusive club. But investment apps like Acorns are living proof that this doesn’t have to be the reality. This innovative app has empowered over 8 million users, turning their spare change into a springboard for financial freedom. With billions of dollars invested collectively, Acorns proves there’s power in small beginnings.
People are hungry for investment opportunities that are accessible, engaging, and within reach. Businesses that can capitalize on this desire to break down financial barriers will not only be helping individuals achieve their dreams but also unlock significant growth potential in the ever-evolving financial services landscape. In this blog post, we’ll crack the code behind Acorns’ success and equip you with the knowledge to build your own micro-investing app, empowering others and reaping the rewards of a booming market.
What is the Acorns App?
Acorns, founded in 2012 by Jeff Crump and JD Roth, is a mobile investing app aiming to democratize investing. This user-friendly platform has garnered over 8 million downloads and billions of dollars in collective investment, proving its effectiveness. Acorns tackles the traditional hurdles of investing by allowing users to invest their “spare change.” Acorns helps users gradually build wealth by rounding up debit or credit card expenses to the nearest dollar and investing the difference without needing to manage their portfolios actively. It also offers a debit card to earn on spending and educational resources to learn about investing.
What Makes the Acorns App Unique?
Acorns’ charm lies in its ability to blend effortless investing with features that empower users seamlessly. Unlike traditional investment platforms that require significant upfront capital, Acorns utilizes a micro-investing approach. Their signature feature, “Round-Ups,” automatically rounds up debit or credit card expenses to the nearest dollar and invests the difference. This allows users to build wealth over time, even with small contributions, effortlessly.
Beyond its core functionality, Acorns offers features that cater to various financial goals. “Invest” allows users to set up recurring deposits and choose a diversified portfolio based on their risk tolerance. “Later” caters to long-term savings by offering a tax-advantaged IRA. Acorns even integrated a checking account option with their “Acorns Checking” feature, potentially making it a one-stop shop for managing daily finances.
Key Market Takeaways for Investing Apps
Source: Industrygrowthinsights
Smartphones are practically an extension of ourselves, making on-the-go access to financial services a reality. Traditional banks are feeling the heat as consumers flock to mobile apps for their convenience and flexibility. Furthermore, the expanding reach of high-speed internet and broadband is closing the geographical gap, allowing more people to participate in investing.
Underscoring this trend, investment app giant Robinhood recently announced a strategic partnership with investment research firm Morningstar. This collaboration aims to equip Robinhood users with educational resources and in-depth analysis tools, empowering them to make informed investment decisions.
Similarly, Acorns, another major player, has partnered with major financial institutions like PayPal to integrate their micro-investing platform with existing financial ecosystems seamlessly. These partnerships illustrate the collaborative spirit within the industry, with businesses recognizing the value of a user-centric approach. With a growing pool of potential investors seeking accessible and innovative financial tools, the investment app market presents a lucrative opportunity for businesses that can capitalize on this rapidly evolving landscape.
How Acorns Generates Revenue?
Acorns doesn’t rely on a single revenue stream but rather a combination of methods to keep the business running. Their primary source of income comes from subscription fees. Acorns offers tiered membership plans, each unlocking additional features and investment options. These plans typically range from a few dollars to several dollars per month.
Beyond subscriptions, Acorns also generates revenue through what’s known as “Found Money.” They partner with various retailers and service providers, offering users a small cashback reward (similar to a discount) when they make purchases through linked accounts. Acorns then collect a commission from these partner businesses to facilitate the transaction. This incentivizes users to shop with partnered brands while generating revenue for Acorns. By combining these approaches, Acorns creates a sustainable business model that benefits both users and partner businesses.
Acorns Personal Plans Overview
| Feature Category | Acorns Personal ($3/mo.) | Acorns Personal Plus ($6/mo.) | Acorns Premium ($12/mo., first month free) |
| Investing | – An investment account featuring an expertly curated, diversified portfolio | – An investment account featuring an expertly curated, diversified portfolio | – An investment account featuring an expertly curated, diversified portfolio |
| – Utilizes Round-Ups® to save and invest leftover change | – Utilizes Round-Ups® to save and invest leftover change | – Utilizes Round-Ups® to save and invest leftover change | |
| – Offers an Acorns Later retirement account | – Offers an Acorns Later retirement account with a 1% IRA match on new contributions | – Offers an Acorns Later retirement account with a 3% IRA match on new contributions | |
| – Includes an investment account for kids | |||
| – Provides customization options for the portfolio, including individual stocks | |||
| Banking | – Features a checking account that saves and invests for users | – Features a checking account that saves and invests for users | – Features a checking account that saves and invests for users |
| – Enables Real-Time Round-Ups® to instantly invest leftover change | – Enables Real-Time Round-Ups® to invest leftover change instantly | – Enables Real-Time Round-Ups® to invest leftover change instantly | |
| – Ensures no overdraft fees | – Ensures no overdraft fees | – Ensures no overdraft fees | |
| – Provides access to 55,000+ fee-free ATMs nationwide and worldwide | – Provides access to 55,000+ fee-free ATMs nationwide and worldwide | – Provides access to 55,000+ fee-free ATMs nationwide and worldwide | |
| – Includes a heavy metal Acorns Visa™ debit card | – Includes a limited edition, tungsten metal Mighty Oak Visa™ debit card | – Includes a limited edition, tungsten metal Mighty Oak Visa™ debit card | |
| – Offers an emergency fund for unexpected expenses | – Offers an emergency fund for unexpected expenses | ||
| – Allows users to grow their money with 3.00% APY on Checking, 5.00% APY on Emergency Fund | – Allows users to grow their money with 3.00% APY on Checking, 5.00% APY on Emergency Fund | ||
| Earning | – Provides access to 450+ in-app partner brands for bonus investments | – Provides access to 450+ in-app partner brands for bonus investments | – Provides access to 450+ in-app partner brands for bonus investments |
| – Offers a Job Finder feature for finding side gigs | – Offers a Job Finder feature for finding side gigs | – Offers a Job Finder feature for finding side gigs | |
| – Includes a browser extension for earning bonus investments at 15,000+ partners | – Includes a browser extension for earning bonus investments at 15,000+ partners | – Includes a browser extension for earning bonus investments at 15,000+ partners | |
| – Provides a 25% match on bonus investments | – Provides a 50% match on bonus investments | ||
| Learning | – Helps users enhance their financial confidence with videos and tips for investors of all experience levels | – Helps users enhance their financial confidence with videos and tips for investors of all experience levels | – Helps users enhance their financial confidence with videos and tips for investors of all experience levels |
| – Offers live Q&As with investing experts | – Offers live Q&As with investing experts | ||
| – Provides educational courses | |||
| – Includes banking features for kids with GoHenry by Acorns | |||
| – Offers GoHenry debit card and learning app for kids | |||
| – Allows kids to choose from 45+ debit card designs | |||
| – Features a chores tracker and automated allowance for kids | |||
| – Provides parental controls with real-time spending notifications | |||
| – Includes award-winning videos and quizzes teaching kids and teens money skills | |||
| Premium-Only Benefits | – Offers a $10,000 life insurance policy for eligible customers | ||
| – Provides a no-cost Will to help plan for family’s future (valued at $259) |
Why Are Investment Apps Booming These Days?
Investment apps are exploding in popularity, with a whopping 115% increase in searches for them in just a year. This proves that people are ditching the old ways and embracing a new, accessible approach to managing their money.
But what’s driving this exciting trend? Let’s see,
1. Breaking Down Barriers to Entry
Traditionally, investing has been associated with high minimum investments and complex processes that require contacting a broker. This created a significant barrier to entry, particularly for younger generations with less disposable income. Investment apps like Acorns and Stash have shattered these barriers. Features like “round-ups,” which automatically invest the spare change from your everyday purchases, allow users to get started with just a few cents. This gamifies investing, making it feel less like a daunting financial task and more like a way to grow wealth over time effortlessly.
2. User-Friendly Interface and Financial Education
Gone are the days of deciphering complex charts and jargon-filled reports. Investment apps leverage technology to create a user-friendly and educational experience. Information is presented in clear, concise visuals, and educational resources are readily available within the app itself. This empowers a new generation of investors, particularly millennials and Gen Z, who are comfortable navigating the digital world and hungry for knowledge. They may, however, lack experience with traditional investment methods.
3. Building Trust and Community
Investment apps are further broadening their reach and appeal by partnering with financial influencers and educational platforms. This fosters a sense of community and trust among users. For instance, Robinhood partnered with Charles Schwab to offer educational resources within its app. This collaboration provides users with a springboard to build their financial literacy. By combining accessibility, education, and a user-friendly interface, investment apps are propelling themselves toward the mainstream, making them a significant force in the financial landscape.
What are the Different Types of Investment Apps?
Let’s explore the various types of investment apps currently present in the market,
1. Stock Trading Apps
Stock trading apps like Robinhood and Charles Schwab empower users to buy and sell stocks, ETFs, and other securities directly from their smartphones. Real-time market data, research tools, and various order types allow users to make informed investment decisions. This fosters a more active and engaged investor base, potentially increasing trading volume for businesses.
2. Robo-Advisors
Robo-advisors like Betterment and Wealthfront offer automated portfolio management services. These apps take the guesswork out of investing by creating diversified portfolios tailored to an individual’s risk tolerance and financial goals. This not only simplifies investing for busy professionals but also reduces the barrier to entry for those unfamiliar with the complexities of the financial markets. As a result, a new wave of investors can participate in the market, potentially expanding the customer base for investment management companies.
3. Cryptocurrency Exchanges
Cryptocurrency exchanges like Coinbase cater to the growing interest in digital assets. These platforms help app users buy, sell, and trade cryptocurrencies, providing them with market information, portfolio tracking, and even advanced trading tools. This fosters the growth of the cryptocurrency ecosystem, potentially creating new business opportunities for companies involved in blockchain technology and digital payments.
4. Mutual Fund and ETF Platforms
Platforms like Vanguard and E*Trade provide access to a vast array of mutual funds and ETFs. These apps offer users a range of investment options, research tools, and sometimes even access to financial advisors. This simplifies the process of investing in pre-built baskets of securities, potentially increasing investment diversification for everyday investors. As a result, mutual fund companies and ETF providers can see a rise in assets under management.
5. Peer-to-Peer Lending Apps
Peer-to-peer lending apps like LendingClub and Prosper connect borrowers directly with lenders. These platforms offer loan filtering, risk assessment tools, and even automated investment options. This innovation disrupts traditional lending models, potentially creating new avenues for both borrowers and lenders to access financing and investment opportunities.
6. Real Estate Investment Apps
Real estate investment apps like Fundrise and RealtyMogul allow app users to invest in real estate properties or REITs. These platforms offer property listings, investment analysis tools, and even crowdfunding opportunities for real estate projects. This democratizes access to real estate investing, which was traditionally reserved for high-net-worth individuals and institutions. As a result, more people can participate in the real estate market, potentially increasing liquidity and deal flow.
7. Retirement Savings Apps
Retirement savings apps like Acorns and Stash help users save for their golden years. These platforms allow for easy management of IRAs and automated contributions, and they even utilize tools like “round-up” features that invest spare change from everyday purchases. This encourages a culture of long-term saving and financial planning, potentially leading to a more financially secure future for a broader population.
8. Micro-Investing Apps
Micro-investing apps like Robinhood and SoFi allow users to invest small chunks of funds in diversified portfolios. These platforms make fractional share purchases possible, allowing anyone to start investing with minimal capital. This removes a significant barrier to entry, potentially bringing a whole new generation of young investors into the market.
Features To Add In an Investment App Like Acorns
Here are some must-have features to include while developing a finance management app similar to Acorns,
1. User Panel Features
User panel features are the tools within an app that allows app users to manage their accounts, data, and preferences.
Transaction History
Users of services like Acorns can access a transaction history section to review past investment activities. This includes details on purchases, sales, dividend payments, and other relevant transactions.
Performance Tracking
An investment app typically offers performance tracking tools, allowing app users to monitor the growth and performance of their portfolio over time. It may include graphical representations, such as charts or graphs, illustrating the portfolio’s returns and comparing them to benchmarks.
Round-Up Investing
One of the Acorn app’s notable features is round-up investing, where users can link their bank accounts and automatically invest spare change from day-to-day purchases. A similar feature may be available in other investment apps like Acorns, allowing users to save and invest small amounts incrementally.
Account Dashboard
The user panel usually includes a dashboard that provides an overview of the user’s investment accounts on apps similar to Acorns. It displays key information such as account balances, portfolio performance, and current market values.
Portfolio Summary
Users can examine a breakdown of the assets in their portfolios using this feature. It could provide information on how to distribute investments among several asset classes, including equities, bonds, and exchange-traded funds.
2. Admin Panel Features
Next comes the Admin panel, which focuses on managing the app and its data, while user panels are for interacting with the app’s core functionalities.
User Management
This feature in investment apps like Acorns provides admins tools to manage user accounts and profiles. This includes user registration, account activation/deactivation, password resets, and user verification processes.
Investment Product Management
Administrators can manage the investment products available on the investment app, such as Acorns. They can add new investment options, update existing ones, set investment parameters, and configure fees associated with different products.
Transaction Monitoring
The admin panel allows the monitoring of user transactions and investment activities. It provides a centralized view of user deposits, withdrawals, trades, and other relevant transactions for compliance and security purposes.
Risk and Compliance Management
Administrators can define risk management parameters and compliance rules within an investment app like Acorns. This includes setting investment limits, monitoring user activities for regulatory compliance, and implementing necessary risk mitigation measures.
Reporting and Analytics
The admin panel typically includes reporting and analytics tools to generate insights on user behavior, portfolio performance, and app usage. It may offer visualizations, charts, and data exports to facilitate data-driven decision-making.
How to Develop an Investment App Like Acorn?
Developing a finance app like Acorns involves multiple steps and careful planning. Companies aiming to create a successful investment platform need to consider several core features and functionalities that appeal to users. Here are some essential steps to develop an app similar to Acorns,
Step 1: Research and Planning
Businesses must start with thorough market research to understand user needs and preferences. Trying to analyze competitors and identifying gaps in the market can provide valuable insights. Companies should also define their target audience and determine the key features their app will offer.
Step 2: Integrating Essential Features
Create a system similar to Acorns’ Round-Ups, which rounds up spare change from daily purchases and invests it. This will encourage users to save and invest effortlessly. Additionally, it’s important to enable automated investing. Allow app users to set up recurring investments to help grow their portfolios regularly without needing active management.
Step 3: Offering Portfolio Options
Provide diversified portfolios based on different risk tolerance levels. Offering customization options or premium features, such as selecting individual stocks, can enhance user experience. Additionally, enabling investments in fractional shares allows users to start investing with any amount, making investing accessible to everyone.
Step 4: Implementing Banking Features
Offer checking accounts with no monthly fees, mobile deposits, and access to a network of ATMs. Linking these accounts with the investment platform can streamline the user experience. Implement a debit card that triggers Round-Ups for investing with every purchase, promoting continuous investment growth.
Step 5: Facilitating Retirement Planning
Include options for Traditional, Roth, or SEP IRAs. These accounts provide significant tax advantages and help users save specifically for retirement.
- Traditional IRAs provide tax-deferred growth, which means investors will not pay taxes on their investments until they withdraw the funds during retirement.
- Unlike traditional IRAs, Roth IRAs allow tax-free withdrawals during retirement since contributions are made with after-tax dollars.
- SEP IRAs are tailored for self-employed individuals and small business owners, offering higher contribution limits compared to traditional and Roth IRAs.
Providing these options allows users to choose the best retirement saving strategy that aligns with their financial goals and employment status.
Step 6: Investing for Kids
Offer investment accounts for children, such as UTMA/UGMA accounts. These accounts can provide tax benefits and help parents invest in their children’s future. The UTMA and UGMA accounts allow adults to transfer assets to minors without the need for a formal trust.
These funds can be used for educational expenses or other costs that benefit the child. By investing early, parents can take advantage of compound growth over many years, potentially building substantial savings for their child’s future needs. Including features that allow parents to manage and track these accounts can enhance the app’s appeal to families looking to invest in their children’s futures.
Step 7: Creating Reward Programs
Partner with brands to provide users with bonus investments when they shop, incentivizing more engagement with the app. Additionally, reward users for referring friends, increasing user acquisition, and expanding the app’s reach.
Step 8: Promoting Financial Literacy
Provide comprehensive educational content on investing basics and financial planning. This empowers app users to make informed decisions and enhances their financial knowledge.
Step 9: Development Process
Emphasize the creation of an intuitive and user-friendly interface with a clean, easy-to-navigate, and visually appealing design. Select the appropriate technology stack for app development, taking into account backend and frontend technologies that support scalability and performance.
Conduct comprehensive testing to detect and resolve bugs, guaranteeing a seamless and error-free user experience. Strategically plan the launch to capture initial users’ attention and generate excitement.
Step 10: Marketing and Growth
Implement effective marketing strategies to acquire users, utilizing social media, and partnerships to reach the target audience. Focus on retaining users by continuously improving the app and offering new features. Providing excellent customer support can enhance user satisfaction.
How Much Does It Cost To Make an Investment App Like Acorns?
| Development Stage | Cost Range | Details |
| Research | $5,000 – $20,000 | |
| Competitor Analysis | $2,000 – $8,000 | Cost depends on detail level; analyzing a few key competitors is cheaper than a wider range analysis. |
| Market Research | $3,000 – $12,000 | Involves user surveys, focus groups, market trend analysis; cost varies by methodology and sample size. |
| Regulatory Compliance Research | $1,000 – $5,000 | Costs vary by target market and regulation complexity; financial compliance expert consultation might be needed. |
| Front-End Development | $15,000 – $40,000 | |
| User Interface (UI) Design | $5,000 – $20,000 | Simple UI costs less; complex, visually appealing design costs more. Consider UI/UX agency or experienced freelancer. |
| User Experience (UX) Design | $5,000 – $20,000 | Smooth user flow for tasks like investing/account management impacts cost; complex features require more UX design. |
| Mobile App Development (iOS/Android) | $5,000 – $30,000 | Native app for one platform costs less; cross-platform frameworks like React Native might reduce costs but need extra expertise. |
| Back-End Development | $25,000 – $75,000 | |
| API Integrations | $5,000 – $30,000 | Cost depends on number and complexity of APIs (financial institutions, payment processors, market data providers). |
| Security Features | $10,000 – $45,000 | High-grade security (data encryption, user authentication, penetration testing) is crucial and expensive. |
| Data Management | $10,000 – $30,000 | Secure, scalable backend for user data, investment info, transactions; costs depend on technology stack and storage needs. |
| App Features | Highly Variable | |
| Basic Features | $15,000 – $30,000 | Login, account management, portfolio viewing, basic investment options; cost influenced by calculation and data visualization complexity. |
| Advanced Features | $30,000 – $100,000+ | Automated investing, goal-based investing, educational resources, fractional shares trading, external financial account integration. |
| Testing | $10,000 – $20,000 | |
| Functionality Testing | $5,000 – $10,000 | Ensuring features work as intended across devices and operating systems requires thorough testing. |
| Security Testing | $5,000 – $10,000 | Identifying and patching security vulnerabilities is critical; cost depends on testing tools and security expertise level. |
| Total Cost Range | $70,000 – $255,000+ |
While many factors influence the development cost of any app, building an investment app like Acorns presents some unique elements that can impact the budget:
1. Regulatory Labyrinth
Investment apps are subject to a complex web of financial regulations depending on the target market. Ensuring compliance with these regulations can be expensive. Consulting with financial compliance experts is often necessary to navigate this intricate landscape, adding to the overall development cost.
2. API Integration
Acorns seamlessly connects users with various financial institutions and investment vehicles. Integrating these APIs (Application Programming Interfaces) significantly affects the cost. The number and complexity of these integrations can quickly inflate the development budget. For instance, integrating with a single payment processor is less expensive than connecting to multiple investment platforms or complex financial data feeds.
3. Security
Protecting user data and financial information is paramount for any investment app. Acorns goes a step further by implementing robust security measures like data encryption and penetration testing. These crucial security features are expensive to develop and maintain, but they are essential for building trust with users and ensuring the safety of their financial assets.
4. Data Security Certifications
Depending on the target market and regulations, obtaining data security certifications like SOC 2 can be an additional cost factor. These certifications demonstrate an app’s adherence to rigorous security standards, further enhancing user trust but requiring additional development resources to achieve.
What are the Tech Stacks Used to Develop an Investment App?
To develop an investment app like Acorns, understanding the tech stack is crucial. Here are the typical technologies and frameworks used:
1. Frontend Development
For the UI and UX, frameworks like React Native or Flutter are popular choices. These frameworks allow for cross-platform development, ensuring the app works seamlessly on both iOS as well as on Android devices.
2. Backend Development
A robust backend is essential for handling user data and transactions and integrating with financial institutions. Technologies such as Node.js or Python (Django/Flask) are commonly used for backend development because of their scalability and ease of integration with databases.
3. Database
Relational databases like PostgreSQL or MySQL are preferred to store user information securely and manage transactions. These databases offer ACID compliance and are suitable for financial applications requiring data integrity.
4. Cloud Services
Utilizing cloud platforms such as AWS or Google Cloud Platform provides scalability, security, and reliability. Services like AWS Lambda for serverless computing or Google Firebase for real-time database management can enhance app performance.
5. Security
Given the sensitivity of financial information, implementing robust security measures is crucial. Techniques like HTTPS for secure communication, encryption algorithms (AES-256) for data encryption, and two-factor authentication (2FA) ensure data protection.
6. Payment Gateway Integration
Integrating with payment gateways like Stripe or PayPal enables seamless transactions within the app. This involves handling payment APIs securely to process deposits, withdrawals, and investment transactions.
7. Analytics and Monitoring Tools
Implementing tools for app analytics (e.g., Google Analytics) and monitoring (e.g., Sentry or New Relic) helps track app performance user behavior and identify potential issues proactively.
8. Microservices Architecture
Adopting a microservices architecture allows for modular development and scalability. Each component (e.g., user authentication and transaction processing) operates independently, facilitating easier updates and maintenance. This approach enhances flexibility and agility, which are crucial for adapting to changing requirements and scaling operations as user bases grow.
Conclusion
The traditional world of finance can feel intimidating and exclusive, leaving many people on the sidelines when it comes to investing for their future. But what if there was a way to break down those barriers and empower everyone to take control of their financial dreams? That’s the power behind investment apps like Acorns. These innovative tools make investing accessible and engaging, turning spare change into a springboard for a brighter tomorrow.
For businesses, developing an investment app isn’t just about tapping into a growing market; it’s about creating a positive impact on people’s lives.
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FAQs
Q1: How do I create an investment app?
A1: Developing an investment app requires a multi-step approach. Start with thorough market research to identify user needs and potential niches. Partner with an experienced development team to design a user-friendly interface and secure back-end systems. Ensure regulatory compliance and integrate with financial institutions to facilitate transactions. Rigorous testing and ongoing maintenance are essential before launch. It’s a complicated process, but with meticulous planning and the right team, anyone can develop a successful investment application.
Q2: How much does it cost to make an investment app?
A2: Building an investment app like Acorns requires expertise across several disciplines. Development teams need to craft a user-friendly interface that fosters trust and security. Additionally, robust integrations with financial institutions and market data providers are crucial. Strong back-end infrastructure ensures smooth operation and protects sensitive user information. By successfully combining these elements, businesses can create an investment app that empowers users to take control of their financial future.
Q3: How do investment apps make money?
A3: Investment apps generate revenue through various models. Transaction fees for buying and selling investments are common. Some apps offer premium subscriptions that unlock advanced features or higher investment limits. Additionally, partnerships with financial institutions might involve revenue sharing for referring users to certain investment products.
Q4: Is creating an app a good investment?
A4: The success of an app as an investment depends on several factors. A well-developed app addressing a specific user need with a clear value proposition can be a great investment. However, competition is fierce, and development costs can be high. Thorough market research, a strong development team, and a data-driven marketing strategy are crucial for app success.
