Micro-investing apps like are breaking down the barriers to traditional investing and introducing new investors to the market. By investing your spare change, these apps are trying to prove that anyone can start investing and saving for the future.
But with so many micro-investing apps and robo-advisors on the market, is Acorns worth your time?
My Acorns review will cover how to start investing with Acorns, how much it costs, portfolio options, all about Round-Ups, why you should or shouldn’t check it out, and more.
Acorns Review 2020: Helpful Robo-Advisor or Waste of Time?
How does Acorns investing work?
Founded in 2014, is a micro-investing app and robo advisory tool that wants to help new investors enter the market. The idea behind Acorns is that “anyone can grow wealth,” and you can start by investing your spare change.
Acorns gives you a few different ways to do that, but the most popular method is with Round-Ups. The idea is simple:
- You sign up for Acorns
- Link a credit or debit card
- Use your linked card to make a purchases
- Acorns rounds your transactions to the next dollar amount
- Then Acorns invests the difference
This investment style (spare change investing or micro-investing) is investing with small amounts of money, which Acorns uses to buy micro shares of ETFs for your portfolio. I’ll explain more about portfolios further down in my Acorns review.
In the the Acorns app (available for Android or OS) or website, you can log in to your account and track your investments. You’ll see the value of your portfolio, dividends, losses, and more.
How much does Acorns investing cost?
Acorns has three different levels of service, with flat-fee pricing:
- Acorns Core $1/month, includes a taxable, personal investment account
- Acorns Later $2/month, includes your personal investment account and an IRA (Traditional, Roth, or SEP)
- Acorns Spend $3/month, includes the personal investment account, IRA account, and a checking account
Students with a valid .edu email address can open an Acorns Core account for free.
These fees are for accounts under $1 million, and when you hit the million dollar mark, pricing changes to $100/month.
While these management fees might not look very high, remember that you may have a pretty low balance when you start. And if your balance is, say, $20, $1/month is a 5% management. Robo-advisors like Betterment and Wealthfront only charge a 0.25% management fee.
With Acorns, you’re really paying for the two features I’m about to explain in my Acorns investing review. I bring this up because there are less expensive options if you plan on only setting recurring or one-time deposits.
M$M tip: Personal Capital is the free financial app that my wife and I use to keep track of our investments and net worth. Personal Capital has robust tools that analyze your fees, build a cash flow budget, and more. If you sign up using my exclusive M$M link , we’ll both get $20.
Round-Ups is the feature that Acorns is well-known for, and you can start using it after you sign up for Acorns and link a credit or debit card. Once you start spending with that card, Acorns will round transactions up to the next dollar amount. When you reach $5 in Round-Ups, that money will be withdrawn from your funding source and invested.
For example, say I spend $47.19 on gas, Acorns will round that up to $48 and invest the $0.81 difference.
But, if you want to super-charge your spare change, you can turn on Multipliers. You can apply 2x, 3x, or 10x Multipliers. Instead of $0.81 in the above example, I could be investing $1.62, $2.43, or $8.10.
For transactions that are whole dollar amounts, you can set a round-up amount between $0 and $1.
All of your Round-Ups settings can be adjusted and turned on and off in the app. You can set your Round-Ups settings for manual, which means you pick the round-up amount for each transaction.
You can link more than one card for Round-Ups, and all of your cards can use the same funding source. You can keep track of how close you are to reaching the $5 withdraw minimum on your dashboard.
The Found Money Feature
When you shop with your linked card at one of Acorns more than 350 different partner companies, you can earn extra money for your Acorns account. Found Money varies from company to company, but it can be a percentage of your purchase or a flat amount.
Here are a few of the Found Money offers available when this Acorns review was written:
- $30 from Hello Fresh for new customers
- $2 from Walmart Grocery
- 5% from Macy’s
- $0.50 per ride from Uber
The way you claim your offer depends on the company. For the Macy’s offer, you need to click on the link in Acorns, which will direct you to the Macy’s website for shopping. For the Uber offer, you need to book your rides through the Acorns app.
Found Money takes 60-120 days to be deposited into your account, and you can keep track of it in the app.
Recurring and one-time deposits
Round-Ups and Found Money are awesome, but if you want to start investing even more, Acorns gives you that option. You can make one-time and recurring deposits into your investment account with as little as $5.
One-time deposits will show up in 3-5 business days. The app makes this process incredibly easy, and it could be a good use of a work bonus, some extra side hustle cash, etc.
Recurring deposits can be set on a daily, weekly, or monthly schedule from Monday through Friday. If you need to adjust or pause your deposits, it’s just a simple tap in the app.
Acorns referral program
Acorns users are rewarded for referring new users with a $5 bonus that’s invested in your account. There are occasional promo periods where that bonus goes up — for New Years, Acorns ran a promo that earned you $250 if you referred four friends in January.
Acorns Later is how you can start saving for retirement with Acorns. The platform offers three kinds of IRAs (Individual Retirement Account):
- Roth IRA: Best for individuals who make less now than they’ll make in retirement.
- Traditional IRA: Better for those earning more now.
- SEP IRA: Good for self-employed people who want to make tax deductible contributions to a retirement account.
Your Later portfolio is selected based on your age now and time it will take to reach retirement age (59.5 years old), and Acorns automatically rebalances your Later portfolio as you get closer to retirement age. You can also roll over existing IRAs to Acorns Later, and there are tax implications if you withdraw funds before retirement.
This is Acorns checking account that is available for $3 a month, which also includes your personal investment and IRA accounts. Round-Ups will happen in real time, and you still have access to Found Money and up to 10% invested when you use your card at local retailers who aren’t part of Acorns Found Money program.
Acorns Spend also features:
- No minimum balance
- No overdraft fees
- No fees or fee-reimbursement for ATMs
Acorns Spend accounts are FDIC-insured up to $250,000.
Learn more at Best Online Savings Accounts in 2020
Acorns investing strategy
Acorns, like many other robo-advisors, uses Modern Portfolio Theory (MPT) to determine the best asset allocation for your needs. To select the right portfolio for you, you’ll have to answer a few questions after signing up that ask about your age, income, and financial goals.
Then you are matched with one of five different portfolios:
- Conservative: 40% short term government bonds, 40% ultra short term corporate bonds, 20% ultra short term government bonds
- Moderately Conservative: 24% large company stocks, 4% small company stocks, 4% real estate stocks, 30% government bonds, 30% corporate bonds, 8% international large company stocks
- Moderate: 29% large company stocks, 10% small company stocks, 3% emerging market stocks, 6% real estate stocks, 20% government bonds, 20% corporate bonds, 12% international large company stocks
- Moderately aggressive: 38% large company stocks, 14% small company stocks, 4% emerging market stocks, 8% real estate stocks, 10% government bonds, 10% corporate bonds, 16% international large company stocks
- Aggressive: 40% large company stocks, 20% small company stocks, 10% emerging market stocks, 10% real estate stocks, 20% international large company stocks
Each portfolio is made up of low expense ratio ETFs from well-known companies like BlackRock and Vanguard. The expense ratios average 0.10%. Acorns automatically rebalances your portfolio to maintain your specific asset allocation.
Things like a big a raise or having a child can affect your recommended asset allocation, and Acorns sends out regular emails that remind you to update your investor portfolio as your financial situation changes.
If you want to change to a different portfolio then Acorns recommends, you can access it on your dashboard. Because switching portfolios might not be the smartest choice, you need to go through a couple of extra clicks.
Related to investing with Acorns:
When you sign in to Acorns, you can toggle between three screens that show your account’s historical and potential performance.
- Past shows total investined, dividends, total gain/loss, Found Money, referrals, amount withdrawn, and a log of all of the money going in and out of your Acorns account.
- Present tells you how much is currently in your investment account, and this screen is where you can change the settings on Round-Ups, recurring deposits, etc.
- Potential is a hypothetical projection of what your investment account could look like in the future. It uses your current settings to project a model. You can “Change your potential” to see how recurring deposits will increase the projection.
And to be very clear on this, your potential is not a performance guarantee — it’s hypothetical. Acorns cannot make any promises, and no good advisor or brokerage should.
“Grow your knowledge”
This is the Acorns learning center and you can find it in the Present section of your dashboard. There are articles and answers to FAQs. The articles range from weekly money news to investing basics. It’s not a huge, but it’s better than nothing.
How does Acorns compare to other apps?
Acorns is just one of several different micro-investing apps and robo-advisors on the market, and I’m going to tell you about two of the closest options.
Stash vs. Acorns
Stash is a millennial-friendly micro-investing app that also uses round-ups, but Stash lets you pick how you invest your money. You can pick investments based on your values or interests, and you can even invest in micro shares of stocks.
Learn more at Stash Review 2020 | A Great Investment App for Beginners, and to see how these two apps stack up against one another, check out Acorns vs. Stash: Which Is Better, How Much They Cost, and Should You Use Them?
Betterment vs. Acorns
In a lot of ways Betterment and Acorns are very similar — both robo-advisors let you buy micro-shares of ETFs. However, Betterment feels much more like a traditional brokerage. There are even financial advice packages so you can speak to a CFP about how to prepare for major life events.
Acorns pros and cons
There are a few things we LOVE about it.
There are a few things we dislike about it.
Acorns review final word
If the reason you haven’t started investing yet is because you don’t think you have enough money, a micro investing app like Acorns is worth checking out. And, all you need is $5 to get started.
My only warning is that you can’t rely on micro-investing alone for your retirement savings. Acorns is a good way to get your feet wet and learn how to start investing, but create a plan that allows you to make larger contributions to your investment account.