Acorns review: Using your spare change to invest

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By Carrie Smith

🗓️

Updated: September 19, 2024

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4.3

4.3

Commissions and Fees4.5

Customer Service3.8

Ease of Use 4.8

Education4

Savings Options4.3

Compounding4

For many of us, investing can seem overly complicated and somewhat intimidating if you don’t know the ins and outs. Acorns intend to simplify and demystify this process through a revolutionary mobile app. The Acorns app was created to remove any mental roadblocks or anxiety about becoming a regular investor. Using Modern Portfolio Theory, it recommends optimized portfolios and keeps them on track with automatic rebalancing and dividend reinvestment. Here's our Acorns review.

Pros and cons

Pros

• Painless way to save: Since the amounts taken out of your account are small, you won’t notice them missing from your checking account.

• Hides the complexities of investing: You don’t need to understand Modern Portfolio Theory to use Acorns.

• Start investing with no money: Acorns doesn’t require a minimum deposit to start using the service.

• Easy to set up custodial accounts: Acorns Early makes it easy to set up a custodial investment account for your children and start investing in their future.

Cons

• Only for “boosting” your savings: Acorns' savings amounts aren’t really suited to save the 5% to 20% annually you need to put toward retirement or larger goals.

• Can lose principal: It's possible to lose money with Acorns, although the recommended investments are pretty conservative.

• Expensive for small accounts: Monthly Acorns fees can be high for very small investment portfolios.

What is Acorns?

Acorns is a smartphone app that “rounds up” your spending to the nearest dollar and invests that difference. You link a credit card and checking account, and Acorns does the rest.This microsavings app makes investing almost painless because you're spending only pennies at a time.

The Acorns app is targeted at a much younger, more tech-savvy generation (Millennials) since the entire investment experience can be created and managed from a smartphone. However, Acorns recently unveiled a web-based version for desktop and portable users, as well.

Essentially, this app is a great starting point for anyone who hasn’t invested yet or needs a bit of guidance in the beginning.

How does Acorns work?

While microsavings is still Acorns' main driver, Acorns does more than just invest your spare change. You can invest for retirement, set up a checking account, and set up a custodial investment account for your children, among many other services.

By linking your credit card and checking account, Acorns reads your spending habits on your credit card and rounds each transaction up to the nearest whole number. It pulls the difference from your checking account and invests it in an Acorns account that you set up.

Acorns is a great starting point for anyone who hasn’t invested yet or needs a bit of guidance in the beginning, and you can actually make money using it for investing.

Acorns features

Acorns unique products

For each credit card transaction, Acorns rounds up to the nearest dollar and invests it into an Acorns account.

The Round-Up transfers come from monitoring your linked account and rounding up the purchases to the nearest dollar.

For example, I spent $22.43 at the gas station this week. That amount was rounded up to $23, and the extra 57 cents were added to my Acorns Round-Up balance. Once the Round-Up balance reaches $5, the money will be withdrawn from my bank account and added to my Acorns investment.

You can choose which transactions you want to include in your Round-Up amount or set it to “automatic,” in which case Acorns will apply the feature to all eligible purchases.

However, you can also use Round-Up Multipliers to boost your extra investment by two, three, or 10 times. So instead of pitching in just those 57 cents from my gas station purchase, I can elect to invest as much as $5.70 for that transaction automatically. The potential to magnify the savings is enormous.

Additionally, you can deposit cash reward bonuses from your bank or other rewards programs you currently have. Or you can choose to invest lump-sum amounts in addition to your Round-Up deposits. You can set up recurring deposits on a daily, weekly, or monthly schedule if you prefer.

Acorns Spend

Acorns has a checking account called Spend with a debit card that applies Acorns and Acorns Later investing functionality to every purchase you make.Spend lets you instantly do real-time Round-Ups, as well as automatic retirement savings and extra savings via Acorns Earn.

You can also invest up to 10% of your everyday purchases from local retailers that are not enrolled with Acorns Earn. The debit card is offered through Visa, and you can use it at over 55,000 fee-free  Allpoint ATMs across the country. Spend accounts are FDIC insured up to $250,000. Spend accounts are included with the Family account.

Other perks of Acorns Spend include:

• Smart deposit: With Acorns Spend, you can automatically allocate a portion of your paycheck into your Invest, Later, or both accounts.
• Acorns later: Acorns users can invest in a specially designed individual retirement account (IRA). Acorns Later is included in the Bronze and Family account. Acorns will boost current customer accounts with a 3% or 1% IRA match on new contributions.
• Scheduled deposits: Set recurring daily, weekly or monthly investments.
• “Learn”: Acorns features an education section that includes investing basics, FAQs, and a glossary.
• “Grow”: Interviews, news, and how-tos are available on the website or within the app.
• “Potential”: This tool allows users to see the impact that a theoretical additional investment (daily, weekly, or monthly) would have on their account.

Right now you can get a $75 bonus if you sign up for direct deposit and get two deposits.

Acorns Later

How to get the match? 

Customers with a $6 Silver or $12 Gold subscription have three ways to contribute to their Later account to get 1% or 3% percent matched respectively. 

1 Recurring contributions
2 One-time contributions
3 Contributions made when you split your pay check and a portion goes to your Later account

When are match contributions made?

All contributions must be successfully invested in your Later account to qualify for the Later Match. Once the contribution has been successfully invested, the Acorns match will be paid out and invested automatically in your Later account.

Approved Match Lines 

● Earn 3.00% match on new contributions to your Acorns Later IRA with a Gold subscription. 

● Earn 1.00% match on new contributions to your Acorns Later IRA with a Silver subscription.

Acorns early accounts

This service lets parents, guardians, and family members set up a custodial account for a child. 

If you invest $5 a day when your child is born and if that investment makes the average stock market return of 7%, then you could give your kids around $60,000 when they turn 18.

With Acorns Early accounts, it's easy to set up a custodial account. All you need is your child's name and social security number. It's a UTMA/UGMA account, which means it can be used for anything that benefits your kids.

Invest your spare change in your children's future or set up reoccurring payments, and Acorns does the rest. You can potentially get tax advantages for investing for your children.

Early accounts are included in all Acorns Family accounts. For only $5 a month, you can get Acorns Early for all your kids, plus all-in-one investing, retirement, and checking accounts, Smart Deposit, personalized insurance options, and other tools to save money.

Acorns Earn

One of Acorns' unique features is Acorns Earn. With this feature, every time you use an Acorns-linked credit or debit card at a partner retailer, that retailer will contribute an extra amount to your Acorns account.

When you shop with Acorns Earn partner brands — which currently include Airbnb, Blue Apron, Macy's, and Warby Parker, among others — the extra money will be added to your Acorns account. You can also download the Acorns Chrome extension to earn from your online purchases.

There are over 12,000 partnered brands and 350 Top Brands to earn rewards from.

Acorns investing portfolios: what's available?

After the signup process is complete, and you’ve created your investment account with Acorns, the app will process your portfolio. View your portfolio to see a list of advice, tips and ideas.

The Moderately Conservative Portfolio was recommended for me based on my variable cash flow (as a self-employed taxpayer), median net worth, my long-term investment reason, my age, and my above-average income. However, I chose to go with a Moderate Portfolio for this review.

To see a change in projected value over time, you drag the graph (either right or left and up or down) to change the amount invested each month. You don’t have to stick with the recommended portfolio. Just click on the different types of portfolios to find one that’s a better fit.

Acorns offers 5 core portfolios to choose from:

1. 1.

   Conservative: 100% Bonds

2. 2.

   Moderately Conservative:  40% Stocks, 60% Bonds

3. 3.

   Moderate: 60% Stocks, 40% Bonds

4. 4.

   Moderately Aggressive: 80% Stocks, 20% Bonds

5. 5.

   Aggressive: 100% Stocks

Next, you can explore the ETFs and select an asset class you want to invest in. The Acorns app offers a number of index funds offered through iShares and Vanguard including:

1. 1.

   Large Company Stocks — Vanguard S&P 500 ETF (VOO)

2. 2.

   Small Company Stocks — Vanguard Small-Cap ETF (VB)

3. 3.

   Developed Markets — Vanguard FTSE Developed Markets ETF (VEA)

4. 4.

   Emerging Markets — Vanguard FTSE Emerging Markets ETF (VWO)

5. 5.

   Real Estate — Vanguard REIT ETF (VNQ)

6. 6.

   Corporate Bonds — JP Morgan Ultrashort Term Corporate Bond (JPST)

7. 7.

   Government Bonds — iShares 1-3 Year Treasury Bond ETF (SHY)

When you’re ready, click “Confirm Portfolio.”

ESG options

Besides their core portfolio, you can also opt to invest in sustainable ETFs. These are portfolios that are focused on environmental, social, and governance or ESG. These ETFs provide similar returns as a traditional investing portfolio, but gives you exposure to companies that are sustainable.

Acorns uses iShares to build their ESG portfolios. Each company in the ETF is scored by MSCI, a research and data company that uses a companies response on big issues like climate change.

Acorns offers four categories in their sustainable portfolio: Moderately Conservative, Moderate, Moderately Aggressive and Aggressive. While the composition is similar to their core portfolio, Acorns sustainable portfolio offers more variety of ETFs.

Bitcoin ETF

In March 2022, Acorns launched its news product – a Bitcoin-linked ETF. This new offering allows Acorns you to invest up to 5% of your portfolio in the ProShares Bitcoin Strategy (BITO) ETF. For each portfolio type, here's the percentage that will be allocated towards Acorns Bitcoin ETF:

• Conservative: 1%
• Moderately conservative: 2%
• Moderate: 3%
• Moderately aggressive: 4%
• Aggressive: 5%

Note that investing in a Bitcoin ETF is not the same as buying actual bitcoins on a crypto exchange. However, this new Acorns product could be a good option if you'd like to gain some indirect exposure to Bitcoin inside your overall investment portfolio.

What's the best Acorns portfolio?

Choosing the best portfolio on Acorns depends on your investing goals and level of risk tolerance. Moderately and Aggressive portfolios are best if you want higher growth potential and have a long-term investing timeframe. More conservative portfolios are better if you are investing for the short term or want fixed-income from bonds.

Acorns pricing and plans

For $3 a month, you can get an Acorns Bronze account, including an investing account, checking account, and retirement account. And for $5, you can get an Acorns Family account, which includes custodial accounts for your kids, along with the features in the Bronze account plan.

There aren't deposit or account minimums to maintain, no commission fees, and no penalties when withdrawing funds.

Is Acorns worth it?

Acorns is worth it if you need a helping hand with investing and want to build good habits. It's one of the best microinvesting apps out there, and it has enough portfolio variety to suit a wide range of investing goals. Plus, its newer features like Acorns Earn can help you earn even more.

However, Acorns isn't worth it if you want comprehensive investment research or to make your own trading decisions. In this case, you're better off using a leading stock broker rather than apps like Acorns. Robo-advisors like Betterment or Wealthfront also have way more portfolio selection and customization available than Acorns' five portfolios.

And when deciding if Acorns is worth it or not, be careful with fees if you're only investing a small amount of money. Paying $3 per month for Acorns Bronze might not sound like much, but that's $36 per year. If you're only investing $20 a month through round-ups, you're paying a 15% fee to invest that $240. In contrast, robo advisors such as Betterment only charges 0.25% annually.

And, for reference, it takes almost $15,000 of investing through Acorns for its $36 annual fee to reach 0.25%, so the fees can be steep for small portfolios.

Of course, if you're a frequent card user who makes many more purchases per day, Acorns starts to make a bit more sense. And the main goal of the app is to help newer investors build good habits by consistently investing.

Is Acorns legit?

Yes, Acorns is a legitimate, regulated company. Its broker and custody services are regulated by the Securities and Exchange Commission and it's also a member of the Financial Industry Regulatory Authority (FINRA), a self-regulating organization.  It's also a member of the Securities Investor Protection Corporation (SIPC). Not only is Acorns legally obligated to submit information to federal regulators, but it also must uphold the rules of FINRA and SIPC.

Keep in mind that there are risks with any type of investment. The stock market can be fickle and you can lose money.

How to create an Acorns account

Signing up for an Acorns investment account is a relatively easy process. It starts with signing up on the web or downloading the app for free from iTunes, Amazon, or Google Play. The app is available for iPhone or Android mobile devices.

The three-step signup process starts with entering a PIN access code, which you will use when you log into the app in the future. Creating an Acorns account is currently available only to U.S. citizens.

1. Choose a Round-Up account

Your main Round-Up account is the one you will monitor; choose which transactions you want to round up and invest the change. Choose from the most popular banks, including Chase, Bank of America, Citibank, Wells Fargo, U.S. Bank, USAA, etc. If your bank isn’t listed, click the “Next” button and type your bank’s name in the search bar.

Then you’ll be prompted to log into your bank using your online sign-in credentials. Next, click the account you’d like to use in your round-ups. You can connect to more than one account if you’d prefer.

2. Connect your checking account

Your checking account is different from your Round-Up account (this was confusing to me at first, too) and is the account from which funds will be transferred into your Acorns account. Connect an existing checking account from the list and sign in using your online credentials, or input your routing and account numbers manually from a different bank.

It took several minutes for my Chase Bank account to sync using my online ID and password. And don’t worry about connecting your banking information, because Acorns encrypts and protects all of the data with bank-level security.

3. Create an investment account

You’ll be asked to type in your first and last names, phone numbers, and birth dates and to choose a security question/answer. Then it’s time to fill in your address and check if you’re a U.S. citizen or not.

The next screen prompts you to fill in your employment information, net worth, yearly income, and your reasons for investing. The answers to these questions will help Acorns generate customized advice and a recommended portfolio created by its team of experts, including a Nobel Prize-winning economist.

You can choose from five different reasons for investing:

• Long-term investment
• Short-term investment
• Major purchase
• Children
• General

Finally, you need to fill in your Social Security number, which, according to the app, is used for ID verification, tax reporting, and fraud prevention.

Once you check all the signup boxes in green, click the “Get Started!” button.

4. Start to invest with the Acorns app

Logging into the Acorns app allows you to view your portfolio, check your index funds' performance, see what the market is doing, and much more.

Jeff Cruttenden, the co-founder and COO of Acorns, says:

We focus less on beating the market and more on index portfolios where we can capture the market and keep fees low.

It's important to note returns are not guaranteed, and it's possible to lose principal. Acorns invest in the stock and bond markets and is both FDIC insured and SIPC insured.

Acorns alternatives

Looking for an alternative to Acorns? There are a lot of brokers and robo advisors out there that allow you to invest for free or at low fees. Here are some of our favorites:

We prefer Betterment for long-term investing and if you're ready to invest a lump-sum upfront. Acorns is great for building good habits, but Betterment has more portfolio selection and flexibility and is a leading robo advisor for good reason.

As for Stash, it's a useful Acorns alternative if you like Acorns' round-up feature but still want to invest in individual stocks.

Finally, we like Oportun since it has automatic budgeting and bill payment features to help you stay on top of your finances. If you find yourself missing bill payments or overspending, it could be the best Acorns alternative for you.

• Robinhood vs. Acorns vs. Stash Invest
• Acorns vs Stash | Which Microsavings Service is Better?

Bottom line

For the microsavings category, we think Acorns is the best service available.

Acorns is a good start if you want to invest with little money or need a nudge to start investing without affecting your lifestyle. And with Acorns adding a checking account, retirement accounts, and custodial accounts, it's becoming even more appealing in recent years.

However, we think Betterment is a better option for larger deposit amounts with lower annual fees. In response to Acorns' microsavings service, Betterment has SmartDeposit, automating investing once your bank account is above a specified dollar amount. However, nothing is stopping you from using both services to boost your savings rate.

Ultimately, most individuals don’t save enough for a rainy day, and Acorns will help start you down this path.

Disclosure: For testing purposes, I opened an account with Acorns.

Carrie Smith Freelance Contributor

Carrie Smith Freelance Contributor

Carrie was an accountant for the past 10 years and has a background in editing. In 2011 she founded carefulcents.com a site that helps other entrepreneurs and small businesses make more money in less time.

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