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In this Acorns review, we’re going to show you how Acorns works, what the potential savings and risks are, and help you determine whether Acorns is a smart investment tool for you.

Remember your piggy bank or loose change jar you had as a kid? How you would drop all your nickels, dimes, and quarters in there until it was packed full?

If you’re like me, every time you brought that change in the bank it added up to more cash than you thought.

Acorns wants to take this “out of sight, out of mind” savings strategy to the next level. They round-up your expenses to the nearest dollar, then invest your nickels and dimes for future goals.

Recently, the company added retirement accounts, a debit card account, and a $10 sign-up bonus.

But can this micro-investing strategy really grow your wealth? Let’s take a look.

What is Acorns?

Acorns app

Acorns is part spare change jar, part robo-advisor. This app rounds up your purchases on linked credit or debit cards — now with the option to boost those round-ups by 2x, 5x, or even 10x — and invests that money for you.

Acorns offers three levels of service:

Acorns pricing chart

Invest: $1/month

Summary: Round purchases up to the nearest dollar and invest the difference in a taxable account. Add cash to your investments regularly and get kickbacks to boost your investments from purchases at partner retailers.

For $1 per month, this is Acorns’ lowest cost option. To sign-up, you connect your bank account and link any credit and debit cards where you want round-up investments to occur.

Then you select the amount of money you want to contribute to your Acorns investment to get started. There is no minimum, but the app won’t actually begin investing for you until your Round-Up balance equals $5 or more.

Finally, you’ll answer some questions about your financial situation, goals, and risk tolerance. Acorns will use this to recommend one of its five ETF-based investment portfolios. You can override their selection if you want more or less risk in your portfolio.

In addition to your Round-Up investments, you can set recurring investments that occur daily, weekly or monthly. Acorns Found Money service is also partnered with over 200 brands that give you cash back, automatically invested, for purchases.

Note: This account level used to be free for college students for up to 4 years, but Acorns no longer offers this perk.

Invest + Later: $2/month

Summary: Original Acorns plus the ability to invest in an Individual Retirement Account (IRA).

In 2018, Acorns added retirement investments to their platform. Now you can invest in a Roth, Traditional, or SEP IRA with Acorns. Investments into your Acorns Later account occur the same way as with the original Acorns service.

Invest + Later + Spend: $3/month

Summary: Acorns online checking account with full bank services, FDIC insurance, and the ability to boost your Acorns + Acorns later investments with instant Round-Up and cash back from local retailers.

The most recent addition to the Acorns platform is a digital checking account. Acorns Spend is a full-service checking account allowing digital direct deposit, mobile check deposit and payment, and unlimited fee-reimbursed ATM withdrawals.

Acorns Spend allows for real-time Round-Ups, custom spending strategies to boost your savings, and increased Found Money cash-back with up to 10% invested from local places you regularly visit.

How Does Acorns Work?

Acorns’ investing service, like most robo-advisors, is based on Modern Portfolio Theory created by Dr. Harry Markowitz. It has five optimized portfolios to choose from and automatically rebalances your portfolio and reinvests all dividend payments regularly.

Each Acorns portfolio is made up of ETFs, or Exchange Traded Funds, with exposure across multiple asset classes. These ETFs have internal expenses that equal about 0.10% of your investment over time.

Here is how Acorns portfolios are broken down today:

Conservative:

Short Term Government Bonds 40%
Ultra Short Term Corporate Bonds 40%
Ultra Short Term Government Bonds 20%

Moderately Conservative:

Large Company Stocks – 24%
Small Company Stocks – 4%
Real Estate Stocks – 4%
Government Bonds – 30%
Corporate Bonds – 30%
International Large Company Stocks – 8%

Moderate:

Large Company Stocks – 29%
Small Company Stocks – 10%
Emerging Market Stocks – 3%
Real Estate Stocks – 6%
Government Bonds – 20%
Corporate Bonds – 20%
International Large Company Stocks – 12%

Moderately Aggressive:

Large Company Stocks – 38%
Small Company Stocks – 14%
Emerging Market Stocks – 4%
Real Estate Stocks – 8%
Government Bonds – 10%
Corporate Bonds – 10%
International Large Co. Stocks – 16%

Aggressive:

Large Company Stocks – 40%
Small Company Stocks – 20%
Emerging Market Stocks – 10%
Real Estate Stocks – 10%
International Large Company Stocks – 20%

As you add money to your account through Round-Ups or scheduled deposits, Acorns will invest that money for you based on your risk-profile. If you are using the basic Acorns account, this will occur in a taxable investment account.

You can withdraw your money from Acorns at any time, but investment withdrawals can take 5 to 7 business days. And the reality is, you don’t want to use your Acorns savings as a regular source of cash.

Investing is a long-term game. By pulling money from this account for day-to-day expenses and goals, you’ll increase the chance of losing money in the market.

Acorns Review: Frequently Asked Questions

With so many options out there, investors have questions. Here are the top queries we’ve seen around the web that we’d like to cover in our Acorns review.

Are small Round-Up investments enough to matter?

When it comes to saving for your future, every little bit helps.

At the same time, should Round-Up investments be the core part of your investing strategy? No.

But even investing $30 a month at a 7% market return adds up to over $4,900 in 10 years. Put that same amount in an online savings or money market account, and you’re only looking at just under $3,900. And the gap between investing and saving only increases over time. That’s the power of compound growth.

How much does Acorns cost?

Acorns offers three plans:

  • Invest, $1 per month
  • Invest + Later, $2 per month
  • Invest + Later + Spend, $3 per month

For small accounts, the $1 monthly fee is very high and offsets any reasonable potential gain from the investments.

Let’s assume you had 50 Round-Up transactions a month, at an average round up value of $0.40. The Acorns app would invest $20 for you each month but would take 5% of those savings in Acorns fees.

As your account value increased, that percentage would decline. But you would need to have $5,000 invested before Acorns’ fees were as low as Betterment at 0.25%. And Betterment offers those fees with no minimum investment threshold and with access to a retirement account. You would need $10,000 invested in an Acorns IRA to match Betterment’s fees.

What a $1/mo Fee Means for a Taxable Account:

Account BalanceAnnual Fee
$2504.80%
$5002.40%
$7501.60%
$2,0000.60%
$5,0000.24%

Are there risks with investing with Acorns?

As with any investment, performance isn’t guaranteed. Investing has risks which means the value of your portfolio can trend up and down over time. While the S&P 500 has consistently provided returns around 8% annually, year-to-year variations could mean your account loses substantial value — sometimes in excess of 10% or more.

The biggest risk for Acorns users is deciding to stop contributing to your account and keeping it small. Remember, the smaller your account balance remains, the more impact the monthly fee has on your overall account balance.

If you have plans for your money in the next three to five years, opt for a high-interest savings account instead. Some online banks, like Chime Bank, offer free checking accounts with automatic savings that don’t auto invest.

Is it okay to invest large sums of money with Acorns?

For hands-off investors with large sums to work with, the flat-rate fee may look attractive. For example: If you have over $10,000 to invest in the Invest + Later membership level and your fees drop to below the levels of top robo-advisor competitors like Betterment and Wealthfront, Acorns appears to be a cost effective option.

However, I would still not recommend investing large amounts with Acorns. Their investment options aren’t as robust as the bigger players. Portfolios include less diversification across asset types and no ability to customize asset allocation outside the five key portfolios.

In addition, if you are primarily investing in a taxable account (the basic Acorns level), you don’t get tax-loss harvesting to improve long-term returns offered by many competitors.

Finally, you don’t get access to professional financial support with Acorns. Larger robo-advisors provide some access to Certified Financial Planners (CFPs) to answer your burning questions. You might not have any today, but as your portfolio grows or we hit a downturn in the market, it can be a comforting option.

Who is Acorns best for?

Acorns is best for new investors who are looking for a hands-off solution to growing their savings.

Acorns App Review Summary

When it comes to round-up investing apps, Acorns is among the best in the business. It’s easy to use, has an excellent education platform for new investors, and simple, straightforward fees.

However, whether the $1-3 monthly fee is a benefit or a detriment really depends on your account balance. If you’re only adding a few dollars a month to your Acorns account, that $1 a month will hinder your investment growth.

$0 Account minimum You'll need $5 to start investing.
$1-$3/mo Monthly Fees
DollarSprout Rating

How Acorns stands out:

The Acorns app is very easy to use, which is perfect for new investors who are learning the ropes. Users' everyday purchases are rounded up and the change is invested, which makes investing a daily habit.

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Pros:

  • Free investing for college students
  • Completely automated
  • No account minimum
  • $10 sign-up bonus

Cons:

  • They charge an account fee and other fees for IRAs.
  • Limited portfolio options.
  • Monthly fee can be a high percentage on smaller account balances.

Account Types:

  • Taxable investment accounts
  • Retirement accounts
  • Checking account with debit card

Author

Hi! I'm Chelsea. A personal finance expert, I'm here to bring the knowledge from my Wall Street career to you so you can maximize your investments while earning and saving extra money. I want you to know that money shouldn't be scary and that you can achieve great things!

12 comments
Andrea van Enter

Hello!

Is this open for Canadians as well? Also, would this be good for a stay at home mom?

Thanks,
Andrea

Hey Andrea,

I don’t they’ve gone International yet. It’s apparently been in the works for years but I don’t see where they’ve gone live anywhere outside of the U.S. (I could be wrong here). Finance regulations are probably making the move even harder. It does appear there is a Canadian equivalent, though, named Mylo. I don’t know much about it but it does appear to work in a very similar way!

Todd w Sieverts

How do I get started. Can you send me an application?

There should be plenty of links in the article you can click to sign up!

Venita

If there is a recession what happens to my Acorn account?

Nothing will happen per se — the account will remain in good standing. That said, the value of the assets in your portfolio may decrease. (i.e. you invest $1,000, but the overall stock market drops 15%, you can expect a similar decrease in your portfolio value, depending on your allocation/appetite for risk).

Andrea

I have two college students 1st and 2nd year and an 8th grader. I want to set up an account that I can invest for them that they will forget even exist until later in life. I don’t have a lot of money but they give me $300.00 each every 5 months or so. I want to receive any options even small monthly investment.

Hey Andrea!

You should look into either a 529 or Coverdell ESA — they’re both tax sheltered savings accounts that allow you to put aside money for a child’s secondary education later in life — even at $300.00 every 5 months, you can save up quite the nest egg for both children.

We did a guest post here on the topic that you might find helpful!

https://www.financesuperhero.com/coverdell-esa-and-529-plans-choosing-best-college-savings-options/

Alex

Hello, do you know if it still free for college students? I tried to get the student discount and they told me that they “recently stopped offering it”?

Hmm — that’s super disappointing — I looked on their website and in their FAQ section, they’ve deleted two articles that pertained to students (and college students) getting Acorns free for 4 years with a valid .edu address.

I’ll reach out to them and see if we can get an answer either way.

(Equally disappointing is the fact that they seem to be sweeping it under the rug, and did not tell any of their advertising partners (like us) about the move.)

Dionne H.

What happens to your account info if you choose to discontinue investing?

Acorns will likely be required to keep all of your information on hand for a number of reasons:

1) To issue you tax statements (such as a 1099).
2) To have a record of gains/losses for future tax years depending on when you sell an asset.

As such, it’s reasonable to expect they will encrypt and protect your information as long as they’re in business as required by law.

You can read more about closing your account on this support page.

Hope that helps!

– Ben

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