Acorns is a popular investment app that allows users to invest their spare change by rounding up purchases to the nearest dollar and putting the difference into a diversified portfolio. Over time, these small contributions can grow into a significant sum, making Acorns an attractive option for those looking to get started with investing. However, there may come a time when you want to access your funds. Whether it’s for an emergency, a major purchase, or simply to change your financial strategy, understanding how to cash out an Acorns account is important.
This article will provide a detailed guide on how to withdraw money from your Acorns account, explain the process step-by-step, and discuss some important considerations before cashing out.
Understanding Your Acorns Account
Before diving into the process of cashing out, it’s essential to understand how your Acorns account works. When you sign up for Acorns, your spare change and any additional funds you deposit are automatically invested in a diversified portfolio of ETFs (Exchange-Traded Funds). These portfolios range from conservative to aggressive, depending on your risk tolerance and investment goals. The money in your Acorns account isn’t just sitting in cash—it’s actively being invested and fluctuating with market movements.
When you cash out, you’re selling your investments at their current market value. Depending on market conditions, the value of your account may have increased or decreased since you started investing. Withdrawing funds from Acorns means you’ll liquidate these assets and transfer the cash to your linked bank account.
The Process of Cashing Out
Cashing out your Acorns account is a relatively simple and straightforward process. Follow the steps below to access your funds.
1. Log Into Your Acorns Account
The first step is to open the Acorns app or log in to your account on the Acorns website. You’ll need to use your email address and password to access your account.
2. Navigate to the “Withdraw” Section
Once you’re logged in, locate the “Withdraw” option. In the Acorns app, you’ll find this option under the “Invest” section. On the web version, look for it in your account dashboard. The “Withdraw” option allows you to access your invested funds.
3. Select the Amount You Wish to Withdraw
After you’ve located the “Withdraw” option, the next step is to decide how much money you want to withdraw. You have the option to either withdraw the entire balance or a partial amount. If you choose to withdraw only a portion of your account, the remaining funds will continue to stay invested and grow according to your selected portfolio.
It’s essential to carefully consider how much you wish to withdraw. If you’re withdrawing for a specific purpose, it may be a good idea to check the performance of your investments beforehand to make sure you’re comfortable with the timing of your sale.
4. Confirm Your Withdrawal Request
Once you’ve selected the amount you want to withdraw, Acorns will ask you to confirm the withdrawal. Review the details to ensure that the amount is correct. This step is crucial, as you don’t want to mistakenly withdraw more than you intended.
Acorns will also provide an estimate of how long the withdrawal process will take. While the platform aims to be efficient, it typically takes 3-6 business days for the funds to be fully processed and transferred to your bank account.
5. Transfer to Your Linked Bank Account
After confirming the withdrawal, Acorns will sell the corresponding amount of investments from your portfolio. The proceeds from the sale will be transferred to the bank account that is linked to your Acorns account. It’s important to ensure that your bank account details are accurate and up to date to avoid any delays in receiving your funds.
Considerations Before Cashing Out
While cashing out your Acorns account is a straightforward process, there are a few important factors to keep in mind.
1. Market Timing
When you cash out your Acorns account, you’re selling your investments at their current market value. The stock market can fluctuate daily, meaning that the value of your account might be higher or lower depending on market conditions. If the market is down at the time you decide to withdraw, you could end up selling your investments at a loss.
If possible, it’s wise to consider the timing of your withdrawal. If you don’t need the money immediately, waiting for a market recovery could help you avoid selling your investments during a downturn.
2. Tax Implications
When you sell investments, there can be tax consequences. The money you make from selling your investments—referred to as capital gains—may be subject to taxes. The tax rate depends on how long you’ve held the investment. If you’ve held your investments for more than a year, they are considered long-term gains and are taxed at a lower rate. However, if you sell after holding for less than a year, they are considered short-term gains and are taxed at your ordinary income tax rate.
Acorns provides users with tax documents at the end of the year, so you’ll have the information you need when filing your taxes. It’s essential to consider these tax implications when deciding how much to withdraw.
3. Impact on Your Investment Goals
Cashing out your Acorns account can affect your long-term investment goals. Acorns is designed as a tool for passive, long-term investing. Withdrawing funds prematurely can interrupt the growth potential of your investments, especially if you’re still in the early stages of building wealth. Consider whether withdrawing money aligns with your broader financial goals before proceeding.
see also: How Do I Know What to Invest In?
Alternatives to Cashing Out
If you’re considering cashing out your Acorns account because you need quick access to cash, it may be worth exploring alternative options. For example, you could explore taking out a personal loan, using an emergency savings fund, or adjusting your monthly budget temporarily.
Cashing out investments should generally be reserved for financial emergencies or when you’ve reached a specific investment milestone. Pulling funds too early could hinder your long-term financial progress.
Conclusion
Cashing out your Acorns account is a simple process that involves logging in, selecting the “Withdraw” option, choosing how much to withdraw, and confirming the transfer to your bank account. While it’s easy to access your funds, it’s important to think carefully about the timing of your withdrawal, the tax implications, and how cashing out may affect your long-term financial goals.
For many investors, Acorns is designed to be a long-term investment tool. If possible, consider holding your investments to take full advantage of market growth and compound interest over time. However, if you need immediate access to funds, Acorns provides a convenient and straightforward way to cash out. Understanding the full process and considering all factors can help ensure you make the best decision for your financial situation.
