Acorns Review: Is It the Right Investment App for You?

If you’ve never invested your money before, it’s totally normal to feel intimidated by the process. You want your money to make money, but how exactly do you get started? 

One of the best ways to start investing is with an investment app. There are a lot of them out there — Stash, Betterment, RobinHood, Investr, etc. In this article we’re going to explore one of the most popular apps in use today: Acorns.

What is Acorns?

Acorns is something of an all-in-one finance app: you can use it for investing, saving, regular banking (the company now offers a checking account), financial education and more.

Headed up by CEO Noah Kerner and President David Hijirida, Acorns is all about helping new people build their financial futures. According to the company’s website,

“Our mission is to look after the financial best interests of the up and coming, beginning with the empowering step of micro-investing.”

The idea is that users can use the app to learn about investing via real-world and relatively low-risk investments. They use “Round-Ups” from your bank and other financial accounts (like credit cards) to fund your portfolio. 

Acorns investing uses your spare change

“Round-Ups” is Acorns’ word for spare change. Here’s how they work:

When you set up the app, you’ll connect the app to your bank account (and to other debit and credit card accounts if you want to do that). Every time you make a purchase, Acorns’ algorithm rounds up that purchase to the nearest dollar. It then sets aside the difference between the dollar amount and what you paid.

For example: If you buy a churro for $1.50, Acorns rounds that up to $2.00 and sets 50 cents aside. 

However, Round-Ups don’t get taken out with each purchase. Instead, Acorns tracks the total. When the amount “set aside” reaches $5.00, Acorns will debit that $5.00 from your bank account and add it to your investment funds. 

You can also agree to invest a specific dollar amount on top of your Round-Ups to grow your fund faster. This is called a “recurring investment.” Whatever amount you decide to invest will be deducted from your bank account once a day, once a week, or once a month — whichever you choose. 

Right now, Acorns probably sounds like every other “spare change” app out there. What sets Acorns apart, however, is that it invests your money for you, giving your money the opportunity to make money. 

This means that you’ll be able to build that emergency fund you’ve been meaning to start (don’t worry, a lot of Americans don’t have one yet either) even faster than you would by just tucking away a few cents here and there.  

Another difference between Acorns and other spare change apps is that Acorns allows you to use multiple sources for your investment fund. You aren’t limited to just one checking account. You can also link your account to as many debit and credit cards as you like. Doing this will help you grow your savings/investment fund even faster.

Acorns is a Robo-Advisor

Sounds great, but what if you have no idea where to invest the money Acorns is saving for you? That’s okay! The Acorns Robo-Advisor will do that work for you.

The app will ask you a few questions about what type of investments you want to make. For example, do you want to maximize savings/earning potential or minimize risk? Then, based on your answers, the Robo-Advisor will create a diverse portfolio. Your work is now done. The app will take care of the rest.

Acorns is best for:

  • People who have a hard time-saving money
  • People who want perks like cash back rewards, financial education, etc. all in one place
  • People who prefer to take a hands-off approach to investing

Acorns pricing

Acorns offers two different price plans, the Personal Plan for $3.00/month and the Family Plan for $5.00/month.

Acorns Personal: $3 per Month

The Personal Plan is for people who are only investing for themselves. It includes:

Acorns Invest

This is the core of Acorns platform. Invest allows you to build your investment fund in small increments using Round-Ups. Invest also comes with built-in portfolio rebalancing, financial educational tools, and cash back (when you shop at partnered merchants).

Acorns Later

Acorns Later is Acorn’s version of a retirement account. Enter your information, answer a few questions and Acorns will recommend an IRA that best suits your needs and investment ability. As the Acorns site acknowledges: the way people view retirement has changed. That’s why instead of calling it a “retirement” account, they named it “Later.” 

Acorns Banking

Acorns Banking is an FDIC-insured checking account. Using their checking account will allow you to opt into real time Round-Ups, which can be helpful for many users. Users can also get paid up to two days early via early direct deposit. It also gives you the ability to set aside a portion of every paycheck for your investment fund. Banking gives users a Visa debit card (a fancy one made of metal, with your name engraved in it) and access to the All-Point ATM network.

Acorns Family: $5 per Month

Acorns Family gets you everything in the Personal tier plus some other features. The most important extra feature is access to Acorns Early.

Acorns Early

Acorns Early is an Acorns-managed UGMA/UTMA account (or accounts) you set up for your kids so help them build up savings for their futures. 

What is an UGMA/UTMA?

Most states do not allow minors to open their own banking or investment accounts. The Uniform Gift to Minors Act (or Uniform Transfers to Minors Act) allows parents or legal guardians to set up accounts for their children and act as custodians of those accounts until their child is of legal age.

UGMA/UTMA accounts aren’t just for someone’s legal ward. They can also be used to set up accounts for other relatives, friends, or other beneficiaries. For example, a grandparent can open one of these accounts for their grandchild. 

Acorns fees

One of the great things about Acorns is that it doesn’t require you to have or keep a minimum balance in any of your accounts. That said, those accounts must contain some funds if you want to actually use any of Acorns’ products.

You may also be charged management fees if you want to transfer your portfolio from another brokerage to Acorns. Acorns charges $50 per individual ETF (Exchange-Traded Fund) transferred. That’s cheaper than some of Acorns’ competitors (RobinHood charges $75) but is still expensive for the market. 

Of course, if you want to avoid paying management fees, you can always sell your holdings for free and then re-invest the funds with another broker. The problem is that this can cause complications come tax time. It’s good to talk to a financial advisor before you decide how to proceed.

Acorns and “Found Money” 

Acorns “Found Money” feature works sort of like a cash-back system. Acorns has partnered with a variety of retailers (more than 350). When you shop at one of them (via Acorns’ link, of course), Acorns will invest a portion of what you spend into your Acorns account. 

Pros and cons of Acorns

Pros

  • Automatic investing makes the app easy for beginners to use
  • Offers affordable EFTs from iShares, Vanguard, and others
  • Taxable brokerage accounts
  • Offers IRAs
  • Checking account with debit card
  • Perks include bonus investments for referring people to the app and other unique offers
  • Can help users build or improve their good financial habits

Cons

  • Management fees are expensive compared to other investment apps
  • Monthly fees are costly—way higher than competitors—and can feel especially burdensome if you have a small balance
  • Not a lot of selection for funds
  • It doesn’t offer a tax strategy to keep customers’ tax bills to a minimum
  • Robo-Advisors are not as good as human advisors. Acorns does not provide access to human advisors, so you won’t be able to use them to get individualized financial guidance

What’s included In an Acorns investment portfolio?

This will depend on which sort of portfolio you choose from Acorns’ options. There are five basic core portfolios that vary depending on your tolerance for risk and the strategy you want to use for investing:

  • Conservative
  • Moderately Conservative
  • Moderate
  • Moderately Aggressive
  • Aggressive

Acorns investment options

Your Acorn portfolio will be made up of ETFs. An ETF is a holding comprised of stocks and bonds. 

Depending on the portfolio you choose, your money will be invested into a variety of companies, corporate bonds, and markets. You’ll see familiar names included in your portfolio like Vanguard and iShares. Acorns also offers you the chance to invest in Bitcoin if you’re into cryptocurrency

Acorns sustainable portfolios (ESG)

ESGs (Environmental, Social, and Governance) are a type of portfolio that focuses on sustainability. The idea is that your portfolio’s ETFs will provide exposure to companies that are more sustainable while still performing as well as a non-ESG portfolio. 

How does Acorns handle portfolio rebalancing?

Portfolio rebalancing is when your investments are realigned to correspond to your original risk level. Occasionally, as investments grow, one or two funds may grow faster than others, causing your risk exposure to shift. Periodic rebalancing will protect your asset alllocations.

Basically, it’s the process of ensuring your portfolio contains equal parts stocks, bonds, etc. 

Acorns automates this process for its Invest product holders. 

Want to know more about Acorns? Check out this video for a complete tutorial:

Acorns app

The Acorns app is straightforward and easy to use. The onboarding process can feel a little tedious — there are a lot of terms and conditions to review. Then you’ll have to set up your accounts. It can take some time to get everything up and running. Once you’ve finished, though, it’s smooth sailing. The app takes care of everything. 

Acorns customer reviews

Acorns only gets 2.3 (out of 5) stars on TrustPilot. The reviews seem to focus on the same couple of issues. The company continues to charge monthly fees even after someone has closed their account, and people requesting payouts/refunds and having them take forever to process (or not end up getting processed at all). 

From Bret Harper on TrustPilot: 

The rating even worse at the Better Business Bureau. The BBB hasn’t officially rated Acorns (listed as Acorns Grow), but the reviews give it a collective 1.18 out of 5 stars. 

BBB Member Elise S left this review:

It’s important to note that there are a few positive reviews, including this comment from Lucie D.:

The bottom line

Investing is an important element of financial success. The sooner you get started, the easier it will be to save for retirement, build up an emergency fund, etc. Whether you use the Acorns app to automate the process is up to you. If you’re just starting out, the automation and relatively low risk of micro-investing can provide a great learning experience. Just make sure you read all of the fine print! 

FAQs

What are the benefits of investing in the stock market?

Basically, the stock market is a way to use your money to make even more money. It is also easier to dabble in stock investment— buying and selling stocks is easier and cheaper than, say, joining a mutual fund. If you stick with it long enough, you should also be able to build some equity. There will be some market fluctuation, though, so it’s best to invest money you may not need to access in the immediate future, so you can ride out any market downturns.

What is modern portfolio theory?

Modern Portfolio Theory is a fancy name for figuring out how to build an investment portfolio that will earn you the biggest return with the lowest possible risk. The primary component of MPT is diversification. MPT says you’re better off investing in a variety of stocks, bonds, mutual funds, commodities, etc.

Does Acorns charge an annual fee?

No, Acorns doesn’t offer an option to pay annually. Instead, it charges a monthly fee based on the features you choose.

What are some alternatives to Acorns?

Stash is a good alternative for learning how investing works. For an automated process, Acorns’ biggest competitors are Robin Hood, Betterment, Ellevest, Webull, Wealthfront, and others. Before you choose one for yourself, take the time to do some research. That way your decision will be an informed one.

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