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Acorns Review | Is the Spare Change Investing Strategy Legit? (2021)

Acorns

8.2

Fees & Costs

5.0/10

Minimum Investment

10.0/10

Ease of use

9.0/10

Account Opening

8.0/10

Beginners

9.0/10

Pros

  • Start with a mere $5
  • Invest your change
  • Great automation

Cons

  • High fees
Disclosure: Please note that this article may contain affiliate links

Acorns is a robo-advisor app that invests your spare change and micro-invests your money in $5 increments.

Each purchase you make with your linked credit card, Acorns rounds up. It takes the spare change and keeps it in a savings account until you hit $5, at which point it invests the money in ETFs.

Is Acorns better than the other popular robo-advisors on the market? Is there something special that sets it apart?

Check out our review to see for yourself.

Start saving
Account Minimum
There is no account minimum.
Management Fee
There are 3 options: $1monthly for taxable investment account. $2 for an IRA account and investment account and $3 a month for checking, investment and retirement account.
Portfolio
ETFs, stocks, bonds
Rebalancing
Tax Loss Harvesting
Fractional Shares
Automatic Deposits
Smart Beta
SRI
401(k) Assistance
Human Advice
Best for
New investors who want to start saving with a hands-off approach.
Supported Accounts
individual, joint, traditional or Roth IRA
Summary
Acorns is a great service that makes saving and investing easy. The innovative and convenient approach lets the investor invest their spare change.
Start saving
Account Minimum
There is no account minimum.
Management Fee
There are 3 options: $1monthly for taxable investment account. $2 for an IRA account and investment account and $3 a month for checking, investment and retirement account.
Portfolio
ETFs, stocks, bonds
Rebalancing
Tax Loss Harvesting
Fractional Shares
Automatic Deposits
Smart Beta
SRI
401(k) Assistance
Human Advice
Best for
New investors who want to start saving with a hands-off approach.
Supported Accounts
individual, joint, traditional or Roth IRA
Summary
Acorns is a great service that makes saving and investing easy. The innovative and convenient approach lets the investor invest their spare change.

What is Acorns?

If investing overwhelms you and you wish someone would just take over, check out Acorns. This robo-advisor simplifies investing by investing your spare change.

Acorns is a robo-advisor app that invests your spare change and micro-invests your money in $5 increments. Each purchase you make with your linked credit card, Acorns rounds up. It takes the spare change and keeps it in a savings account until you hit $5, at which point it invests the money in ETFs.

It is great for hands-off investors that want automation and haven’t invested before. Moreover, it’s a great option for investors with short-term goals, such as buying a new car or saving for a down payment on a home.

You can link an external bank account/credit card for your round-ups or use the Acorns Visa debit card that instantly saves and invests for you in real-time. If you take advantage of the Acorns Visa debit card, your purchases instantly turn into investments.

Acorns has three tiers:

1. Lite

Acorns invests your spare change from your external account and provides the opportunities to earn ‘Found Money’ by making purchases at network retailers that give a percentage of your purchase back to your Acorns account. This is a taxable investment account and doesn’t include the Acorns Visa debit card.

2. Personal

Includes everything in the Lite account plus a ‘Later’ or retirement account and a ‘Spend’ or checking account. The ‘Later’ account invests your money in a recommended IRA that matches your retirement goals. This account includes the Acorns Visa debit card and provides up to 10% bonus investments.

3. Family

Includes everything in the Personal account plus an investment account for your kids. You can create recurring investments in your kids’ accounts, growing their money early in life, letting it grow. This account also includes family financial advice.

How does it work?

Account opening

You may sign up for an Acorns account online, but you must download the app to manage it. When you sign up, you’ll answer questions about your savings goals, timeline, and risk tolerance. Acorns uses this information to choose your portfolios. The quick set up is good for beginners or those in a hurry that want a fast and convenient way to invest.

Deposit and withdrawal

You need just $5 to open an Acorns account. You can deposit funds via your linked checking account, on a one-time basis or recurring basis. You can also set up round-ups with your most frequently used credit or debit card. Acorns will round up each transaction, withdrawing the ‘spare change’ from your linked account, and investing it.

Withdrawals take 3-6 business days, depending on the time it takes to sell the securities. There is a required 2-day settlement period, and then time to transfer the funds between banks. The exact time it takes depends on your bank’s policies. In some cases, Acorns places a 5-day hold on the funds to prevent fraudulent activity. This is for your safety, and we see it as an advantage to avoid theft.

Interface

Acorns offers a user-friendly interface that even beginners can understand. They use layman’s terminology and walk you through each step. It’s not a very intuitive user-interface for advanced users, but it offers quick investments for hands-off investors.

Trading options

Acorns has five pre-built portfolios to choose from:

  • Conservative
  • Moderately conservative
  • Moderate
  • Moderately aggressive
  • Aggressive

You can change your portfolios at any time. If your risk tolerance changes due to changes in your life, for example, you may want a more aggressive or more conservative portfolio. Acorns doesn’t charge a fee to change your portfolios.

What can you trade?

Acorns accounts are Limited Trading Authority accounts. You can choose the prebuilt portfolio from among the five options, but you can’t choose the investments within the portfolios. Acorns chooses the investments within the portfolios, which are usually ETFs.

Some see this as a disadvantage as you have very little say in where your money goes except for your chosen portfolio based on your risk tolerance.

Costs

Acorns operates on pricing tiers as follows:

  • Lite – $1 per month
  • Personal – $3 per month
  • Family – $5 per month

Some see this as an advantage and others see it as a disadvantage because it’s costly. For example, if you have $40 invested, a $1 charge is 2.5%, which is much higher than what standard robo-advisors charge, which is usually 0.025%.

Additional features

  • Automatic Investments – Set up recurring investments whether daily, weekly, or monthly. This is in addition to the round-up rules you set, maximizing your investments and increasing your ability to reach your financial goals.
  • Educational content – Acorns helps new investors by providing simple language and defining important terms. They also have an online finance website with plenty of financial advice geared mostly toward millennials, which you can access through the app.
  • Modern portfolio theory – The modern portfolio theory diversifies investments in a diversified portfolio to decrease your risk. You invest in multiple assets that offset one another. Acorns invests in ETFs from bonds (corporate and government), stocks (domestic and international), emerging markets, and real estate.
  • Customer service – Acorns doesn’t offer phone customer service, which is a limitation. You must contact them via email through your dashboard to get assistance.

Tutorial

Thanks to Everyday Investing for making this awesome tutorial

Acorns Pros and Cons

PROs
Everything’s automatic – If you don’t like thinking about depositing funds or making investments, let Acorns do it all for you from the savings to the investments.
CONs
Transfer fees – It costs $50 per ETF to have them transferred to another broker.
Connect as many cards as you wish – Acorns sweeps the spare change from every purchase on your cards into your investment account and then invests the money once you accumulate enough.
High monthly fees – You pay a monthly fee of $1 - $3 for Acorns. If you have $5,000 invested, that’s a 0.24% fee and you don’t get as many benefits as you would at say Wealthfront.
Small balance requirements – You only need $5 to start investing. While you obviously want more, it’s easy to get started and stay motivated.
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Great for new investors – If you’re trying out something new, Acorns is a great place to try it. They offer plenty of educational opportunities and guidance. 
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PROs
Everything’s automatic – If you don’t like thinking about depositing funds or making investments, let Acorns do it all for you from the savings to the investments.
Connect as many cards as you wish – Acorns sweeps the spare change from every purchase on your cards into your investment account and then invests the money once you accumulate enough.
Small balance requirements – You only need $5 to start investing. While you obviously want more, it’s easy to get started and stay motivated.
Great for new investors – If you’re trying out something new, Acorns is a great place to try it. They offer plenty of educational opportunities and guidance. 
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CONs
Transfer fees – It costs $50 per ETF to have them transferred to another broker.
High monthly fees – You pay a monthly fee of $1 - $3 for Acorns. If you have $5,000 invested, that’s a 0.24% fee and you don’t get as many benefits as you would at say Wealthfront.
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FAQ

Is Acorns worth it?

If you are a hands-off investor or a new investor that doesn’t regularly put money aside for investing, Acorns can be a great tool. At only $1 – $3 per month, depending on the chosen account, it’s a great deal, especially as your account balance increases. If you initially only invest $5, the fee seems steep, but as time goes on, it becomes a much lower percentage of your assets under management.

Is Acorns best for beginners?

Experienced investors may find Acorns a bit boring or too easy. Beginners enjoy the automation and hands-off investing. You can still learn about investing and how it works while taking advantage of Acorns services. Even if you use it for round-ups only, it’s a great way to get your investments underway.

Is Acorns only for long-term investing?

You should consider most investments long-term, as that gives your money time to ride out the storms. But, anyone can invest in Acorns with short or long-term goals. If you have short-term goals, the taxable account ‘Acorn Lite’ is your only option.

Is the Acorns Spend Account FDIC insured?

Yes, the FDIC Spend Account has FDIC insurance up to $250,000 like any standard bank account with FDIC insurance.

Does Acorns offer traditional and Roth IRAs?

Yes, Acorns offers three IRA options – traditional, Roth, and SEP for self-employed individuals.

Where do your round-ups come from?

Acorns does two types of round-ups. If you have the Acorn Later account and use your Acorns Visa, Acorns invests your round-ups in real-time sweeping the change right from your spend account. If you have a linked account to an external checking account, Acorns transfers the funds from your checking account and they then invest the funds once it reaches your Acorns account.

How quickly is Found Money invested in your account?

Found Money takes between 90 and 120 days after your purchase to land in your Acorns investment account.

How does Acorns make money?

Acorns makes its money on the monthly fees charged above. They don’t have any free accounts, so they don’t have to rely on advertising or pushing other accounts on you to make money.

Alternatives

Acorns vs RobinHood

Robinhood pioneered the commission-free investing. Investors trade stocks, options, and ETFs in Robinhood, but it’s not a robo-advisor. You manage your investments.

Robinhood guides you with plenty of educational material and a user-friendly app, but you make the transactions. Robinhood doesn’t have a minimum opening balance requirement and they offer the purchase of fractional shares.

Acorns vs Stash

Stash is an automated savings tool, much like Acorns. It automatically rounds up your purchases and invests funds once you have a $5 balance. Like Acorns, Stash doesn’t have human investors and they also invest in ETFs, but they have more specialty niches, such as socially responsible investments. Stash’s monthly fees range from $1 to $9 and they offer a Stock Back program similar to Acorns Found Money program.

Acorns vs Betterment

logo of bettermentLike Acorns, Betterment doesn’t have a minimum opening balance requirement. However, Betterment is a stronger robo-advisor with higher fees of 0.25% of assets under management. Betterment offers tax loss harvesting to decrease your tax liabilities and automatically rebalances your portfolio if it gets off course. Betterment has a user-friendly, yet simple app with 32 ETFs and a wealth of research and education to help you.

Acorns vs Sofi Invest

sofi-automated-investingIf you want free investing, you’ll find it with Sofi Invest. This robo-advisor has no account management fee and has 10 investment strategies to choose from based on your risk tolerance. Sofi focuses on low cost ETFs with low expense ratios and every investor has access to Certified Financial Planners for free financial advice.

Current Promotions

There are currently no promotions.

Worth It or a Scam?

Acorns is legit and for the beginning investor, can be helpful. If you can’t find the extra money to invest or you forget about it until you’ve spent your last dime, Acorns helps you start with your spare change. It sounds like a scam, who could invest their spare change, but Acorns does it well.

Acorns takes security seriously. In addition to the FDIC insurance, they use bank-level security, SSL encryption, and your investment accounts have SIPC protection up to $500,000.

Summary

If you’re tired of saying ‘I’ll start investing next month,’ Acorns may be right for you. Start with the spare change from your purchases and watch your money add up.

While you won’t get rich overnight or anytime soon investing with Acorns, it’s a great way to start.

Everyone must start somewhere, and today is better than tomorrow. Your money will grow faster the sooner you start, even if it’s with $0.50 from your Starbucks purchase today.

Robo Chooser

Use the following Quiz and find out which robo advisor is best for you.

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