At a Glance
The Acorns app makes it easy to invest your money in one of five different portfolios, from conservative to aggressive. Because Acorns is a robo-advisor, they recommend a portfolio that aligns with your financial goals and automatically invests your money with recurring deposits or its famous “Round-Ups” feature. Overall, the app offers a simple, passive investing experience that breaks down barriers to traditional investing.
Recommended for:
- New Investors
- Retirement Investors
- Passive Investors
Pros:
- Low barrier to entry
- Easy to use app
- Passive investing
- Diverse portfolios
Cons:
- High fees on low account balances
- Not for hands-on investors
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Table of Contents
If you’ve wanted to invest but don’t know where to put your money, the Acorns investing app offers a simple solution. They’ll recommend one of five pre-built Acorns portfolios, help you invest your spare change, and you can get started for as little as $3/month.
To help you decide if Acorns is right for you, our Acorns review is breaking down all five portfolios, the fees and costs of investing with Acorns, and more. Let’s dive in.
About Acorns
Acorns is a robo-advisor app that’s built for people who want a simple, low-cost, and passive investing experience. When you sign up, Acorns asks you a series of questions about your risk tolerance and goals, and then its algorithm will recommend a portfolio that aligns with your needs.
Acorns offers five main savings and investing products:
- Acorns Invest: A taxable investment account that invests your money in exchange-traded funds (ETFs). You can set up recurring deposits to fund your account or use Acorns’ most well-known feature, Round-Ups.
- Acorns Later: A tax-advantaged retirement account that’s funded the same way your Invest account is funded.
- Acorns Spend: A checking account, including a debit card, some reimbursed ATM fees, and a Smart Deposit feature that lets you automatically move money between your accounts.
- Acorns Found Money: This feature lets you earn money back when you make a purchase from hundreds of major retailers in the Acorns Found Money Marketplace. The cashback you earn goes directly into your Invest account.
- Acorns Early: You can set up UTMA/UGMA accounts for your children when you have an Acorns Family account.
Round-Ups, Acorns’ most popular feature, is designed around micro-investing — investing small amounts of money in fractional shares of ETFs, stocks, bonds, or other assets.
Round-Ups work by having you link a card to the Acorns app, and then for transactions you make with a linked card, Acorns rounds the transaction up to the next dollar amount and invests the difference. For example, if you spend $4.63 on a latte, Acorns will round that charge up to $5 and invest the $0.37 difference in your investment account.
You can use the Round-Ups feature or set up recurring deposits to fund your account, and Acorns automatically invests your money in one of their five diverse portfolios, ranging from conservative to aggressive.
How Acorns Manages Your Money
Acorns uses Modern Portfolio Theory (developed by Nobel Peace Prize winning economist, Harry Markowitz) as a strategy to determine the best asset allocation for your needs. MPT is used to design portfolios intended to provide maximum returns depending on the level of risk you are comfortable with.
One of our M$M staff signed up with a profile for a 30-something, middle-class worker with a long investing outlook. Acorns recommended a moderately-aggressive portfolio that allocated:
- Medium Company Stocks (IJH) 4%
- International Company Stocks (IXUS) 12%
- Short Term USD Bond (ISTB) 18%
- US Aggregate Bond (AGG)
- Large Company Stocks (VOO) 24%
Acorns automatically rebalances your portfolio every quarter, and it’s also done whenever a percentage holding one or more ETFs fluctuates 5% above or below its target allocation. Rebalancing also happens if you request a change to your portfolio, like if you want to switch from a moderately aggressive to an aggressive portfolio.
Overall, the expense ratios on the ETFs Acorns uses are pretty minuscule. That’s unless you decide to invest in Acorns’ new ESG (environmental, social, governance) portfolios, which have considerably higher expense ratios. It’s pretty standard for ESG funds to have higher fees, but it’s something to keep in mind if you’re considering them.
Acorns offers ESG options for their moderately conservative, moderate, moderately aggressive, and aggressive portfolios. It’s not offered for Acorns’ conservative portfolio.
The difference between Acorns investment portfolios
Acorns has five Core portfolio options for investors, and they’re recommended to you based on your risk tolerance, current financial outlook, and long-term goals. Acorns’ conservative portfolio aims to bring in steady returns, while Acorns’ aggressive portfolio is more volatile.
Generally, Acorns recommends a conservative portfolio to someone who has a much shorter investment horizon and wants to preserve their principal. An aggressive portfolio would be recommended for someone who has plenty of time to ride out normal market volatility.
Here’s a breakdown of each of Acorns Core Portfolios:
Acorns Aggressive Portfolio
- Large Company Stocks (VOO) 55%
- Medium Company Stocks (IJH) 10%
- Small Company Stocks (IJR) 5%
- International Company Stocks (IXUS) 30%
Acorns Moderately Aggressive Portfolio
- Large Company Stocks (VOO) 47%
- Medium Company Stocks (IJH) 6%
- Small Company Stocks (IJR) 3%
- International Company Stocks (IXUS) 24%
- Short Term USD Bond (ISTB) 6%
- US Aggregate Bond (AGG) 14%
Acorns Moderately Aggressive Portfolio
- Large Company Stocks (VOO) 47%
- Medium Company Stocks (IJH) 6%
- Small Company Stocks (IJR) 3%
- International Company Stocks (IXUS) 24%
- Short Term USD Bond (ISTB) 6%
- US Aggregate Bond (AGG) 14%
Acorns Moderate Portfolio
- Large Company Stocks (VOO) 35%
- Medium Company Stocks (IJH) 5%
- Small Company Stocks (IJR) 2%
- International Company Stocks (IXUS) 18%
- Short Term USD Bond (ISTB) 12%
- US Aggregate Bond (AGG) 28%
Acorns Moderately Conservative Portfolio
- Medium Company Stocks (IJH) 4%
- International Company Stocks (IXUS) 12%
- Short Term USD Bond (ISTB) 18%
- Small Company Stocks (IJR) 12%
- US Aggregate Bond (AGG) 42%
- Large Company Stocks (VOO) 24%
Acorns Conservative Portfolio
- UltraShort Term Govt Bonds (BIL) 20%
- UltraShort Term Corp Bonds (JPST) 20%
- UltraShort Term Corp Bonds (ICSH) 20%
- Short Term Govt Bonds (GBIL) 20%
- Short Term Govt Bonds (SHV) 20%
Over time, the funds and percentages in each portfolio can change to keep up with the market. The funds and percentages above reflect when this Acorns review was written.
Here’s what’s in each of Acorns Sustainable ESG Portfolios:
Acorns Aggressive ESG Portfolio:
- Large Company Stocks (ESGU) 55%
- Large and Mid Cap U.S. Stocks (SUSA) 10%
- Small Company Stocks (ESML) 5%
- International Company Stocks (ESGD) 22%
- Emerging Market Stocks (ESGE) 8%
Acorns Moderately Aggressive ESG Portfolio:
- Large Company Stocks (ESGU) 47%
- Large and Mid Cap U.S. Stocks (SUSA) 6%
- Small Company Stocks (ESML) 3%
- International Company Stocks (ESGD) 18%
- Emerging Market Stocks (ESGE) 6%
- 1 5-YR Corporate Bonds (SUSB) 3%
- Short Term Treasury Bonds (SHY) 3%
- U.S. Treasuries (GOVT) 5%
- U.S. Mortgage-Backed Bonds (MBB) 5%
- U.S. Corporate Bonds (SUSC) 4%
Acorns Moderate ESG Portfolio:
- Large Company Stocks (ESGU) 35%
- Large and Mid Cap U.S. Stocks (SUSA) 5%
- Small Company Stocks (ESML) 2%
- International Company Stocks (ESGD) 13%
- Emerging Market Stocks (ESGE) 5%
- 1 5-YR Corporate Bonds (SUSB) 6%
- Short Term Treasury Bonds (SHY) 6%
- U.S. Treasuries (GOVT) 10%
- U.S. Mortgage-Backed Bonds (MBB) 9%
- U.S. Corporate Bonds (SUSC) 9%
Acorns Moderately Conservative ESG Portfolio:
- Large Company Stocks (ESGU) 24%
- Large and Mid Cap U.S. Stocks (SUSA) 3%
- Small Company Stocks (ESML) 1%
- International Company Stocks (ESGD) 9%
- Emerging Market Stocks (ESGE) 3%
- 1 5-YR Corporate Bonds (SUSB) 9%
- Short Term Treasury Bonds (SHY) 9%
- U.S. Treasuries (GOVT) 14%
- U.S. Mortgage-Backed Bonds (MBB) 14%
- U.S. Corporate Bonds (SUSC) 14%
Acorns does not offer a conservative ESG portfolio.
Acorns Fees and Costs
Acorns offers subscription-based pricing on three different account levels, starting at $3 per month.
- Acorns Personal – $3/month: Includes a personal investment account, tax-advantaged retirement account, and access to Spend, Acorn’s checking account option. Spend is a no-fee checking account with access to over 55,000 fee-free ATMs.
- Acorns Family – $5/month: In addition to personal, retirement, and checking accounts, this plan comes with custodial investment accounts for children.
Subscription fees are for accounts under $1 million. It’s not clear if Acorns will continue accepting deposits once your account hits the million-dollar or if the fee structure changes from there.
On the surface, Acorns looks like an affordable way to start investing. However, the affordability depends entirely on your account balance.
Acorns investing uses a flat fee structure while most robo-advisors, like Betterment, charge a percentage of assets under management (AUM). The flat fee costs more for accounts with small balances.
For example, if you have $100 in your Acorns account, paying $3/month for a personal account means you are paying a monthly management fee of 33.3%. The monthly management percentage shrinks as your balance grows, but it can take a while to reach that threshold.
Comparing Acorns flat fee pricing to Betterment — Betterment charges an annual fee of 0.25% AUM — Acorns becomes significantly more expensive.
The other part is that if you are only funding your Acorns investment account with micro-investments, it will take a considerable amount of time for the flat fees to make sense. Many people still decide to go with Acorns because it’s such a simple and user-friendly approach.
Acorns Pros and Cons
Pros
- Low barrier to entry. Subscriptions start at $3/month, and there are $0 account minimums.
- Ease of use. The Acorns app is easy to navigate, so you can see where your account stands, set deposits, etc.
- Passive investing. Acorns makes investing a mindless experience. This is an automatic system that takes the complexities out of investing.
- Diverse portfolios. Acorns offers everything from a conservative to an aggressive portfolio, plus there are ESG portfolios for investors interested in an SRI strategy.
Cons
- High fees on low account balances. While the low monthly fee feels minimal, Acorns costs more than other robo-advisors if you have a low account balance.
- Not for hands-on investors. Acorns is only built for people who want a passive experience. It’s not for hands-on investors who want to be in control of exactly where their money goes.
Acorns Investing is Best for
Acorns is best for anyone who has been intimidated by a traditional brokerage in the past. We’ve talked a lot about how the monthly fee is more expensive than a percentage of assets under management, but it still feels affordable enough for people to start investing.
That’s why Acorns still isn’t a bad option — many people aren’t investing as they should be. If it takes a $3/month subscription fee and fun things like Round-Ups to start, then there’s still a lot of good that can come from this investment app.
The Final Word: What Is the Best Acorns Portfolio?
Acorns believes there isn’t a one-size-fits-all approach to investing, and that’s because every investor has a different financial situation and goals. The best portfolio is the one that aligns with your current position and future goals.
For example, Acorns Aggressive Portfolio is better for an investor who isn’t planning on retiring for 10+ years and who can stomach seeing their positions swing up and down with the market. While a conservative portfolio is more appropriate for someone who wants to access their funds in the next couple of years.
If you’re looking for a simple and passive investment app, Acorns has options for all kinds of investors. Remember, the fees are a little high on accounts with low balances, but the simplicity might make it worth it for you.
FAQs
If you’re interested in the concept of investing your spare time, then Acorns is a great option.
When you balance is low, Acorns flat-fee model is relatively high, but it begins to balance out as your account grows. One of the other issues is that with the spare change model, you can’t count on that alone for retirement investing.
Hey Bobby,
This is a nice balanced review showing the pros and cons, specifically that while the monthly fee is low at $1, it can be a high percentage fee if you have a low balance. But at the same time, while your balance grows, that small fee becomes a much smaller percent than advisors that charge a % of assets.
I personally use Acorns Core, not as my primary brokerage account, but as a nice supplementary investment account. The ‘spare change’ adds up quickly, plus I also have it set to invest a set $ amount every 2 weeks when my paycheck hits.
Overall I like it because it is simple, and simple works to get people investing and saving for their future.
Glad you like the review! I’m with you – these micro investing apps are awesome for getting people started, so I don’t have much of a problem with them at all. My hope is that someone sees a review like this, jumps in, and after they get comfortable, move on to a normal brokerage account.
Hi Bobby,
Thanks for the review!
I personally am a BIG fan of Acorns. I initially found it researching for my college bound child.
For cash strapped students it offers an ideal way to get an introduction to saving and investing.
I read many reviews before signing up and what every one pointed out as a negative (many making it a deal breaker) was the $1/ month cost, yet failed to show how easy that cost is to offset. Through utilizing the “Found Money” and referrals it becomes a non-issue. You get $5 just for signing up and I received a $5 referral for my child signing up, so my first 10 months of expense… gone. College students go free.
Then I was surprised by how many of the Acorns partners I use on a regular basis. I set a rule to only shop and buy items I need and would have shopped for anyway. My account is up over $30. (For the last 6 months) in Found Money. For example, I just received 5% back to my Acorns account from the Vitamin Shoppe, and since you go to the stores website to shop you still can get membership points, can apply coupons, and pay with your cash back credit cards. What’s not to love!
As for the argument you will never save enough for retirement on spare change, true, but there is no limit to how much you can invest in your account. If you have some extra money to invest, a simple anytime transfer will get it done.
I agree it shouldn’t be your only investment account but I believe it can serve a huge market, especially those who are just scraping by and also to the many who don’t know or want to know the nuances of investing. I’m also happy they use Vanguard Funds.