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Ebates Review Scam or Legit Money Saver

What is Ebates? Is Ebates legit, or is Ebates a scam? Can you really earn hundreds of dollars using eBates to shop online?

The eBates commercials promise cashback for shopping. Does this online website deliver, or is this just an Ebates scam? I took my own look after a cousin of mine (an extreme couponer) asked if I knew anything about them. So, without further ado, here is my review of Ebates.

Update: This review is still completely accurate, however, it turns out that Ebates is a good deal around holiday time. The reason is that many retailers have a boosted earnings rate during sales periods like Black Friday, and Cyber Monday. For example, many retailers that usually have just a 2% or 3% cash back rate have rates as high as 11% cash back during these periods.

During this weekend following the Thanksgiving holiday, I earned 11% at Kohl’s, and 11% at Macy’s, as well as 6% on toys from Walmart. There is 15% cash back with Dell Small Business, which could add up very fast. If you bought a $1,000 computer, that’s $150 in cash back with just one purchase. With rates like these, the cash back really does add up quickly. It still won’t pay your monthly electric bill, but I up over $100 in cash back just by making the holiday purchases I was going to make anyway.

Ebates pro tip: If you are going to shop with your phone, the Ebates app makes it much easier to make sure you are using the proper Ebates links and getting credit for your cash back.

If you sign up using this link, we both get a bonus cash payout that turns your first purchase, plus that 11% rate into a nice bonus. (Note: Your November holiday shopping cash back gets paid out on February 15th.)

Does Ebates really pay cash back? The answer is yes, but it takes time and isn’t as straightforward as it may seem, and if you are thinking of hundreds of dollars in rebates, you are going to have to spend some serious money.

Can SoFi really save me money?

Ebates Scam Detector

As always, our first order of business is to sniff around for a possible scam, especially when an offer sounds too good to be true. First up, we check to see if Ebates is not free and is actually a trick to get you to sign up for something that costs money like those free credit score offers that turn into subscriptions for a monthly service with a hefty fee.

ebates cash back review — The Ebates website promises cash back

Fortunately, Ebates gets a passing score here. In order to sign up, you only have to provide an email address. As always, I recommend using a secondary, or shopping email address. You will get “periodic shopping-related emails” from Ebates and their partners when you sign up. That isn’t bad, but you need to know what you are doing.

During all my clicking around, I was never asked for a credit card number. This is another good sign. If they don’t have your bank information or a credit card number, then they don’t have a way to charge you money. Keep it that way. Don’t enter a credit card number while using the site.

So, what is Ebates all about then?

Is Ebates Legit? Review Time.

Unfortunately, many free things online come with terrible software or other clients that have to be installed on your computer. The Ask Toolbar is one of the worst (if you have this installed, uninstall it right away). Fortunately, Ebates doesn’t require you to install anything. The exception to this is if you want to use the company’s mobile app.

Next up when deciding if something is legitimate is seeing if you can figure out their angle, or how does ebates make money? While it is true that there are hundreds of venture capital backed websites and services banging around Silicon Valley without hope of ever earning a dime, giving away money is a tricky proposition if there is no revenue. As it turns out, Ebates has a fairly straightforward business model.

Ever look into whether Credit Karma is legit?

Whether your know it or not, many online retailers offer a referral fee or commission to websites that send business their way. The user doesn’t have to do anything. Instead the person that publishes the website includes a code in the links you click on. That code tells the retailer where you came from.

Amazon is famous for its Amazon Affiliates program which pays a percentage of purchases to website owners that send buyers to the company. Many of these retailers offer a higher payout for those who send higher volumes of customers. Ebates uses this same model to send customers to dozens of retailers, and then offers part of that referral fee back to its users. They keep the rest of the commission and that is the profit.

Ebates Catch

There are two tricks involved here that may make it look to some like Ebates is a scam.

First, any online retailer only gives credit to one website for any sale. So, for example, if you visited my website and clicked this link to shop for finance books at Amazon, it puts a cookie on your computer marking you as “my shopper.” For the next 24 hours, if you buy anything from Amazon I get credit for that and make some money. (Not a lot. Don’t worry this doesn’t make me rich 🙂

Here’s the catch. If you go to Ebates after you already have been marked as my referral (or someone else’s) then Ebates would not get credit for your shopping trip, and would obviously not give you any cash back. Even worse, if you have already been to the shopping site, they may also not count you as a referral.

For example, let’s say you go to Barnes and Noble website to look up some books. Then, you remember that you have Ebates, so you go to the Ebates website and click the Barnes and Noble cash back link. Depending upon the agreement between the two companies, that may or may not count as a cash back sale since you were already on bn.com and not actually referred over there. You can make sure that you get full credit by emptying your shopping cart (if you are logged in), and then starting a Private Browsing or Incognito Browsing session, and then going to Ebates first, and clicking through. (Private browsing prevents access to the cookies stored on your computer to track you.)

To avoid these problems, Ebates has certain procedures setup with some of the retailers that avoid this issue. For example, if you manually enter a referral coupon code, then that trumps my earlier automatic cookie that was set on your computer, thus giving Ebates the commission and you money back. However, if you did not use that coupon code, then no cash back. It’s not an Ebates issue per se, but it isn’t as clean as you might imagine.

Check out my Acorns review.

One final detail about the fine print. Ebates debits your account $2.00 if your account is inactive for 12 months. This helps with accounting because they don’t have to keep track of your $1.32 for years while you don’t use the service. But, it also means that dropping by every few months is necessary to keep your account balance active.

Ebates Payout Timing

The other kind of tricky thing is that your cash back is dependent upon the retailer paying Ebates first; it can take a very long time in some cases, but that isn’t always Ebate’s fault.

How long does it take Ebates to pay cash back?

It appears that Ebates has negotiated its own agreements with many large retailers, so they probably get paid a little faster than us regular website owner types. My affiliate payments usually are added up for a whole month. Then, another month goes by before that amount is actually paid, in part so the company can adjust for any returns or fraudulent sales. If the store doesn’t pay Ebates, Ebates won’t pay you.

Ebates pays out in a similar fashion. Every three months, your purchases are added up, then you get paid a month and a half later. For example, purchases from January 1st through March 31st are counted as one shopping period. Any cash back you earn during this time is then paid out on May 15th. In other words, if you buy something in January, you won’t see a penny from eBates for that purchase until May 15th. There is also a minimum payout amount of $5.01, so you won’t get a check for $3.27.

Is Ebates Worth It?

Ebates is not a scam. It’s been around for a long time and it does pay out cash back. The catch is that those Ebates TV commercials make it seem like that Mom is collecting a sizable check on a regular basis for just routine online shopping. Remember that Ebates only pays out four times per year, after a minimum 45 day delay. Also, it’s easy to be seduced by seemingly large percentages. When you add it up, it takes some serious online shopping to earn much money, and you have to remember to always do it through Ebates.com

For Amazon, Ebates shows 4 percent cash back for most items, although certain specialty categories say “up to 8 percent.” (Always beware the “up to” part of any offer.) If you bought $200 worth of Christmas presents for a freelance writer at Amazon, you would earn $8. If that’s all you end up doing, then those big fat checks from eBates are a myth. Even if you buy $200 per month worth of stuff, that’s still only $32 every three months. That’s not nothing, but it hardly, “helps make ends meet,” as the commercial says.

In other words, you’ll need to find either much higher paying offers (see that 12% from eBags?) or spend A LOT of money via eBates to ever earn hundreds of dollars. At 12% you have to spend $833.33 to get $100 from eBates. So, if you want to earn what those people in the commercials earn, think thousands of dollars in online shopping. At the standard 4% eBates rate from Amazon, you’ll have to spend $2,500 to get a $100 payout from eBates. “Hundreds of dollars,” would require $5,000 or $10,000 of spending.

In the end, if you buy a lot of things online, and you are consistent about shopping through Ebates, then you can really earn some cash back and make it worth your while. Otherwise, there is certainly no harm in collecting a little bit of money a couple of times a year, just don’t let those visions of thousand dollar payouts every month cloud your judgement.

If you want to sign up with Ebates, use this link to sign up and we’ll both get a cash bonus.

Is Zelle Scam or Legit? A Zelle Review

Written by Finance Gourmet 20 Comments

You may have seen the commercials for Zelle, the new payment app. They aren’t very specific about what Zelle does, or how it does it. Questions that may pop into your mind are things like, how does Zelle work? Is Zelle legit, or a scam? Why would I bother to use Zelle?

If you already use a payment app, your questions are probably more like, is Zelle better than Venmo, or is Square Cash better than Zelle? It’s time for our Zelle review.

Zelle Reviews

Zelle is actually two products from the same company. One version of Zelle is the behind the scenes payment system backed by, and used by, several American banks inside of their own banking apps. This is the part that the commercials claim is “already on your phone,” or “already in your banking app.” Since Zelle actually works directly with various banks, they play nicer with Zelle than maybe with others including transferring money with no fees, and allowing “instant” transfers and withdrawals.

Check out my Acorns app review for automatic investing.

The second piece of Zelle is a stand-alone money transfer app that isn’t inside of your banking app. The idea for both products is roughly the same. Your Zelle account gets linked to a bank account and that bank account can send and receive money via the Zelle app. If you already have a banking app on your phone and it already uses Zelle, you don’t really gain anything by getting the standalone Zelle app. However, if you have multiple banks, or if your bank or credit union doesn’t use Zelle, then the standalone app lets your play ball.

How Does Zelle Work?

Essentially, Zelle works by acting as a middle man between you and whoever you are paying’s banks. Traditionally, you can’t transfer money directly from your checking account to a friend’s checking account, even if you both have accounts at the same bank. With Zelle, the transfer works as withdrawal from your account to Zelle (which you authorized by setting up and using Zelle), and then a deposit from Zelle to the payee account (which they authorized by setting up and using Zelle). This brings us to the Zelle catch number one.

Zelle What’s the Catch?

In order to use Zelle you, and whoever is getting the money, both have to be setup and using Zelle. I can’t use Zelle to send money to my mom because she uses a credit union from work that isn’t a Zelle partner, and she certainly doesn’t have Zelle on her phone. None of the big Colorado credit unions like Bellco Credit Union, Public Service Credit Union, or Elevations Credit Union currently support Zelle. If you try and use Zelle to send money to someone who doesn’t have Zelle, they actually get an email with a link to setup Zelle. If they don’t signup for Zelle within a certain amount of time then, the transfer is cancelled and you get your money back.

The way around not having the right bank is to link a debit card from a non-Zelle supporting bank or credit union to the standalone Zelle app. My mom isn’t going to do this, of course, but if you have friends with Zelle and you want to play ball without opening a new bank account, this is how you do it. This brings us to the second catch.

In order to use your debit card with Zelle, it has to be “fast funds enabled.” There is no real way to see if your card qualifies other than trying to set it up and seeing if you get an error.

The third catch to Zelle is that even if both of us have it set up, one of us still has to have a bank or credit union that supports Zelle, so we can’t both be using the debit card trick, or it won’t work. The reason is that Zelle doesn’t actually take your money and hold it, like Venmo does. Instead, it stays with one of the bank’s during the transfer. For that to work, one of the banks has to hold the money.

The good news is that there are no fees for using Zelle, so at least that isn’t a catch, and we know that Zelle is not a scam unless it is also scamming 30+ banks.

This Digit app review could give you a way to automatically save money.

How To Use Zelle?

How do you use Zelle? Whether it is via the standalone app or the built-in Zelle banking app, you send money via an email address or phone number. It has to be the email address or phone number associated with the person’s Zelle profile, so it can’t just be any of the person’s email addresses or phone numbers. For example, if you know a person’s work email, but that account is not associated with their Zelle profile, then you can’t use it to send them money. Using the phone number is probably the most straightforward. And, for actual friends, you likely already have that information in your phone anyway.

In the commercial where the guy uses Zelle to buy food from random fundraising stands, I wonder what email or phone number they are using? Is the coach giving out his email or phone number to strangers so that they can pay him? In reality, for now, Zelle is probably best for transferring money to and from people you actually know. Remember, Zelle is a transfer of money it is not a purchase like with a credit card. There are no disputes or charge backs with Zelle.

If you don’t know the person, or aren’t sure you will get what you paid for (for example, items bought from an on-line bidding or sales site), we recommend you do not use Zelle for these types of transactions. – From the Zellpay.com website.

That being said, assuming you and whoever you are sending money to are both enrolled and setup in Zelle, the transfer process is actually pretty easy. Basically, the app uses your contacts list to give you a list of people to send money to. Again, since sending by phone number is an option, this is a nice touch. Then, you input how much money to send, and it gets transferred.

Theoretically, the transfer happens in “minutes.” This all seems to work, so long as you are already setup on both ends. Most of the problems with Zelle come from getting it setup. Once you (and whoever you are transferring money to) are past that hurdle, it starts to fulfill it’s promise of being easy and simple.

Trouble With Zelle

The Zelle reviews in the App Store are dreadful. Many complain about the support, and some even go so far as to allege a big Zelle scam. In other words, this isn’t always as easy as it seems.

The biggest issue is getting setup. The company makes it sound like anyone can use it with just a few clicks, when in fact, there are many limitations both technical and otherwise. Remember, even if you have an existing banking app with a supported Zelle partner company, you still have to setup a Zelle profile. It isn’t integrated. Like most things, this works best if you decide to do it ahead of time, when you aren’t rushed. Trying to set it up in order to pay someone now, is a recipe for disappointment.

Want to see a free credit score? Check out my Credit Karma reviews.

For security purposes, you cannot use Zelle over WiFi. That’s all fine and good, but that means you need to have a good, solid data connection to use it. And, if your phone number was linked to another account, including a ClearXchange account, you need to call the company to disconnect it. Also, changing where the money goes when someone sends it to you requires a phone call as well.

Also, if you are not already setup on Zelle when someone sends you the money, it can take several days before the money is available to you, especially if you have to set it up through a debit card instead of a participating bank.

Zelle Security

Is Zelle safe?

Well, that depends on how you feel about the security of your phone. Like Apple Pay, or any other banking or payment app, hacking into your phone from the outside probably isn’t a huge concern. But, if someone gets a hold of your phone and can log in, then they are in business. It takes a password to use Zelle, but that is only as safe as your password. An angry spouse or significant other might be able to use your “usual” passwords to rob you blind, for example.

The security within Zelle is as good as any other banking app. The weakness is if someone can get into it, they have access to your whole bank account up to the maximum amount Zelle allows you to send.

Zelle Review – 3 Stars

As is so often the case with banking and payment apps like this, the answer to whether or not Zelle is worth it depends on why and how you plan to use it. It works a lot better as part of a banking app if you bank with one of the banking partners, than as a stand alone app.

For me, I don’t often have the need to pay people money like this. Maybe it’s a function of being in my mid-40s, or a function of socioeconomic status. If I owe someone money, it is usually because they bought something for me because we are doing it together, i.e. tickets to Denver Comic-con, for example. That also means that I’ll see them, like at Comic-con, and I can grab a $100 out of the ATM and just hand them some cash. If we are splitting something like dinner, most of my friends and I work on the “I’ll get the next one” system.

I suppose for college students, or those with a tighter budget, waiting a few days, or even weeks to get the $50 someone owes you isn’t an option, and I guess that this is one of many ways to be able to pay someone quicker.

And, maybe, I’m just too old. I don’t mind carrying a wallet with some credit cards and a couple of $20 bills in it. That covers me in 99.99% of all my spending cases. But, maybe your average 20-something doesn’t roll like that.

Once it is setup, it works just fine, so that might be a 4-star app. However, so many people have so many issues with setup that I can’t rate it that high. For people like me, this app is a waste of space, and yet one more way for someone to hack into my money should I lose my phone, so that makes it a 2-star app for me. However, it isn’t fair to downgrade an app just because I don’t happen to find it useful. I mean, it does what it says, so if you think that would be useful, then who am I to tell you not to use it? If you think this will come in handy, and the people that you are likely to pay have it too, then it is probably worth it. If you are looking to do a one-time thing, then I’d just stick with heading to an ATM to get some cash.

So, in the end, I give Zelle 3 stars for this review.

Final answer.

Ibotta Review Cash Back for Buying Stuff

Written by Finance Gourmet 1 Comment

A friend of mine keeps going on about Ibotta. For those of you who don’t know, Ibotta is a shopping app that gives you cash back rebates for various items you buy. What makes it such a huge deal for my friend is that those offers often include beer and wine, and often for a few bucks at a time, so that can add up. But, does that make Ibotta a legit deal for other, or is Ibotta a scam that takes more than it gives?

What Is Ibotta?

Ibotta is an app for either Android or Apple. You can also use it online via the webpage. It works a lot like many grocery store apps where you go through a list of coupons and select which ones you want to use. However, unlike my King Soopers app, or Safeway app, the offers on Ibotta are rebates, not coupons. In other words, while the coupons take 50 cents off of my grocery bill, the Ibotta rebates have no affect on the cost of my groceries. Instead, they go into a virtual account that I can withdraw as cash.

Ibotta is a private company backed by various venture capital companies, and it seems to have a fairly decent amount of offers.

How Does Ibotta Work?

Once you download and install Ibotta, you open the app on your phone and choose to “unlock” offers. Basically, this is the same thing as adding a coupon to your grocery app. Unlock is weird terminology, but basically it means that you can now get that rebate. Rebates are sorted by store, although it seems there is a lot of overlap. The list of stores seems to have most of the big ones. There’s the Kroger, King Soopers, Vons, BJs, plus Target, Costco, Sams, and so on.

Once you pick which store, you touch the “Unlock” button to add the offer into your account. Then, you go to the store and buy the item. When you get home, you have “Verify” your purchases. For some stores, you can link your loyalty card and skip the whole scanning and taking receipt pictures part. However, that list isn’t as big, and my local stores aren’t ones that can be linked.

To verify a purchase on Ibotta, you first scan the bar codes of the things you bought. Then, you scan the receipt that has those purchases on them. You want to scan all the bar codes first, then scan the receipt once you are ready.

My first question was how do I scan a long receipt in Ibotta. As it turns out, Ibotta is well aware of the fact that receipts can be pretty long. To scan a long receipt in Ibotta, you just start at the top and take a picture of as much of the receipt as you can fit. Then, once you have OKed that picture, you click the plus button to add another section of the receipt. Repeat as necessary. One of my recent grocery receipts took six pictures, so just keep going until you reach the end.

When you are finished, it totals up what you inputted and then you have to wait up to 24 hours for them to verify your purchases and credit your account. My first submission was reviewed and money credited to my account in just over an hour.

You can also get credit for buying things via the app like gift cards or

How Do I Get My Money From Ibotta?

Ibotta lets you link either a PayPal account or a Venmo account. You have to have a minimum of just $2.00 to get your cash, so that’s pretty easy to hit.

Once your money is in PayPal or Venmo, you just trasnsfer it into your linked bank account, or use your PayPal card to withdraw it from an ATM.

Is Ibotta Worth It?

The crux of any Ibotta review has to be is Ibotta worth it, or is Ibotta a scam and waste of time.

So, does Ibotta really work? Here in the Denver area, King Soopers and Safeway both offer grocery apps that allow you to ad electronic coupons to your card. It’s a great way to get coupon savings without having to find, cut out, keep track of, and remember to use coupons. Before I go shopping, I add the coupons to my card shoppers card for anything that I buy, whether I plan to buy it that trip or not. The idea is that if I do buy something and there is a coupon for it, I’ll get it. That’s great, and over time, I’m sure it saves me a fair amount of money.

I subscribe to the idea that you should only buy what you were going to buy anyway. So, when there is a coupon for 50 cents off of Frosted Flakes, that is a good deal, because I’m going to buy those anyway. But, a coupon for $1.00 off of 4 boxes of Lucky Charms, isn’t such a good deal because I don’t really eat that. The one trick to Ibotta isn’t a scam so much as a detail you need to pay attention to. Some of the deals expire, and it doesn’t matter if you already unlocked it. You have to verify it first.

In the end, my average grocery receipt never has more than a few dollars worth of coupon savings. So, while I every penny counts, it’s not like my life is any better because I paid $142.97 for groceries instead of $144.38.

That brings us to Ibotta. Ibotta has plenty of the same kind of offers you see everywhere else. There is a 75 cent rebate on Charmin, for example. But, it also has some bigger, and more interesting rebates. Again, if you stick to the mantra of only buying what you buy anyway, then, there is no way for Ibotta to harm your spending. And, if you do hit on some of these offers, you can actually make some money from Ibotta’s cash back style offers.

Right now, there is a 75 cent rebate on Charmin, a $1.00 rebate on trash bags, $1.00 off of kitty litter, 50 cents off of any bananas, any eggs, and any milk, plus $2.00 on Mike’s Hard Lemonade. All of these are things I was going to buy anyway. So, I will get $6.25 in rebates for just these few items. That’s a pretty good deal.

For maximum impact, I might now withdraw my money for a while. With savings interest rates a laughing stock right now, it doesn’t exactly hurt anything to let this build up to say $20, or if I really got going maybe $50. Then, I could use the funds to make a purchase I wouldn’t have spent the money on, or if you need, maybe make an extra credit card payment.

In the long run, I’m not sure how worth it Ibotta will be. In the beginning, every single rebate is there for the taking, but over time you use them up, and I haven’t been using the app long enough to know how quickly new ones come in. However, the effort isn’t that much, and if you are buying your normal items, then it’s like finding free money. The above transaction will take me less than 10 minutes total to process, making it a nice return on my time for $6.

You can sign up for Ibotta using this link. If you do, I get $5, and you get $10 so it’s a win-win for both of us.

I’d go ahead and recommend trying Ibotta. It’s basically easy, free money.

Ibotta Bonuses and Teams

Ibotta currently offers various bonuses. As a new app, I’m sure these aren’t cheap and probably won’t be around for ever, but they are probably a good way to boost use. For example, I used my friend’s code like above, and I got a $10 bonus for the first rebate I submitted. If I redeem 5 more rebates within 30 days of signing up, I get another $2 bonus.

Then, you can do teams. I haven’t messed with this yet, but the idea, is that by linking with your friends you can earn other bonuses. For example, there is a bonus where you earn an extra $0.50 if you redeem 6 rebates in the month AND your team earns $6.00 worth of total rebates during the same month. I suppose the value of this depends on who your friends are.

Acorns Investment Portfolio Review

Written by Finance Gourmet 13 Comments

Recently, I did a review of the Acorns app. If you are not already familiar with the Acorns savings and investing app, you should read that for an introduction how to use Acorns first.

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.

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 won’t be big. For example, if you have $100 in your Acorns account the difference between 10 percent and 8 percent (whether up or down) 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, let’s 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 Acorns app helps you pick which portfolio based on your age, and various risk tolerance questions, or you can pick for yourself. The five portfolio types are very traditional, even if what is in them is not. The five Acorns portfolios are Conservative, Moderately Conservative, Moderate, Moderately Aggressive, and Aggressive.

The Acorn portfolios are pretty typical as far as the stock to bond ratio is concerned.

Aggressive Portfolio – 90% stocks / 10% bonds
Moderately Aggressive Portfolio – 75 / 25
Moderate Portfolio – 60 / 40
Moderately Conservative – 50 /50
Conservative 40 / 60

What Investment Does Acorns Use

One of the interesting things about Acorns investment strategies is that all five portfolios use the same six investments. All the investments are index-based Exchange Traded Funds, or ETFs. All six ETFs are regular, publicly traded ETFs. They are not specific to Acorns. In other words, you can look up the prospectus, history, and ticker symbol on any finance website or tool you like.

The six Acorns ETFs are (Name, Ticker Symbol, Discussion):

Vanguard S&P 500 ETF – VOO – The bread and butter of stock investing, this is an index-based ETF that attempts to replicate the SP500 index by investing in large U.S. companies.
Vanguard Small-Cap ETF – VB – This is the small-cap stock ETF for Acorns. It invests in small U.S. companies. Specifically, it is designed to track the CRSP US Small Cap Index.
Vanguard FTSE Emerging Markets ETF – VWO – This is the international component of the portfolio. Specifically, this portfolio invests in a “sampling” of companies based in so-called emerging markets. The largest investments are in China, Taiwan, Brazil, India, and South Africa.
Vanguard REIT ETF – VNQ – This fund invests in Real Estate Investment Trusts, or REITs, and is designed to track the MSCI US REIT Index. A REIT is a way to invest in the real estate market through stocks. So, assuming everything goes according to plan, REITs would go up when real estate is going up, and vice versa.
iShares 1-3 Year Treasury Bond ETF – SHY – This is the low-risk investment in the line-up. Nothing lowers your risk like short-term U.S. Treasuries. There is probably a way to take the riskiest investment in the world, combine it with short-term Treasuries and come up with a Moderately Conservative portfolio. This fund is essentially one-step riskier than a money market fund.
PIMCO Investment Grade Corporate Bond Index ETF – CORP – This ETF is the “bonds” part of the Acorns investment portfolios. These are investment-grade bonds (not junk bonds) and is designed to track the BofA Merrill Lynch US Corporate Index.

So are Acorns investment strategies good?

Acorns Investments Performance?

As I’ve written multiple times before, when it comes to investing, what matters far more than investment selection is the amount of money you invest, and how long you keep it invested. That is true here as well. Remember, compound interest takes a long time to work its magic. The good news is that the whole point of the Acorns app is to keep you investing steadily over time. That is going to be a far bigger component of your long-term investing success, than how your investments are tweaked.

That being said, the Acorns investment strategies are solid, if somewhat unusual. The good news is that because all Acorns portfolios use publicly traded ETFs, it is relatively easy to watch Acorns portfolio performance.

First, this is all index investing. That means these investments are cheap. Fees won’t be eating into your returns, and you don’t have to worry about “beating the market” since the point of index-based funds and ETFs is not to beat the market, but rather to BE the market. If the market is up 7 percent, so are you (more or less). This is good.

Second, the diversification in the Acorns portfolios is good, but not traditional. Again, while we are only talking about hundreds or a few thousands of dollars, it really isn’t material, but if you ever did end up with a lot of money in your Acorns investment account, you would want to ensure that you compensate, if necessary, in other areas of your portfolio.

Typically, a financial advisor or financial planner would divide up your money in stocks and bonds to achieve a portfolio that matches your risk tolerance. At most major brokerages or investment firms, that would entail mutual funds or ETFs just like with Acorns. The difference is in two major areas, and one minor one.

First, most diversified portfolios include some exposure to international stocks, and so does Acorns. However, Acorns only includes emerging markets, that is economies that are still developing. That means your Acorns portfolio does not include much investment in Europe, Japan, or Australia. This isn’t necessarily good or bad, but it is different. Since emerging markets are more volatile this choice means dialing back the international exposure quite a bit for the more conservative portfolio choices.

Second, the inclusion of a REITs part of the portfolio is non-traditional as well, at least one this big. The Aggressive portfolio, for example, includes 30 percent invested in REITs. The theory is that real estate is a non-correlated asset to the stock market and therefore might do well when stocks are declining (or vice versa). The catch here is that REITs are still stocks, and stocks, even real estate stocks, don’t fully decouple from the correlation of the markets. If there is one area that gives me pause about how good the Acorns portfolios are, it is the large allocation to REITs.

Here is my point. Below, you’ll see the annual performance of the specific REIT ETF that Acorns invests in. While the size of the moves are different, there is a lot in common with the ups and downs of the stock market. Part of that is because good economy is good economy (and in 2008 vice versa).

The next image is a similar chart to the above for an S&P 500 ETF. In this case, this is for the SPY S&P 500 ETF. This is for example purposes because the actual Vanguard SP500 ETF used by Acorns is not old enough to have the years before 2011 included. So, there are some differences but a lot of the overall direction and magnitude are in the same ballpark.

Here is what we are looking at. The REITs are indeed different, but often move in the same direction, with the very notable exception of 2007 when real estate was falling apart, but the stock market hadn’t figured that out yet. Obviously, there is some value in including REITs in a diversified portfolio, but the 30 percent number seems an odd way to push for more aggressive returns. Let me be clear, this is not wrong or bad, just not traditional.

The final, smaller difference is the lack of a mid-cap investment option. Perhaps this is where that extra REIT allocation is coming from. Mid-cap stocks often end up being the best performers over a 10 year period, partly because they are bigger enough than small-caps to not have such volatile swings (especially in down markets) but smaller enough than large-caps to have plenty of room to grow and innovate.

Again, the lack of a mid-cap investment isn’t wrong, but the typical financial advisor will send you home with a portfolio that has a mid-cap option (maybe even split into mid-cap growth and mid-cap value) and with a smaller amount allocated to REITs. In some ways, this difference in portfolios offers even more diversification for your overall assets.

In the end, the Acorns investments are solid portfolios. Acorns investment performance will be about as good as any mutual fund portfolio your financial advisor would come up with. They are built using low-cost ETFs which is important both for you the investors, and for the company. For you, the anchor of higher fees isn’t weighing down your returns. For Acorns, the ability to get into and out of ETFs cheaply is important to its low-cost, no minimums fee structure.

Finally, Acorns automatically rebalances your portfolio for you. This is huge, and maybe more important to your long-term success than getting the particular investments or percentages just right. The reality is that if you look at a chart of which asset class performed best each year, you’ll see that it varies greatly. Sometimes, small cap stocks are the big winners, and then the big losers in the next year or two. If you don’t rebalance your portfolio, you end up just riding the wave up and down. However, with rebalancing, you pull money out at the top, and put it in at the bottom. This is how to buy low and sell high without ever knowing anything about stocks, and like everything with Acorns, it’s automatic.

Acorns rebalances your funds by taking your incoming contributions and investing them where you are low. More importantly, it will actually transfer funds between investments quarterly if things get more than 5 percent out of balance. That means that Acorns will be selling after that 30 percent run up to lock in some gains.

If you like the idea of automatically investing over the long-term to build up a nice portfolio, then these Acorns portfolios are going to be just fine for achieving that.