Acorns Review: How It Works, Pros & Cons

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If you’re looking for companies to help you invest your money, one big player is the Acorns platform. In this Acorns review, I’ll explain how Acorns can turn the change you get from making everyday purchases into the building blocks of a healthy investment portfolio — with almost no effort on your part.

I’ll also address whether the platform’s fees are worth, it so you’ll understand who should — and shouldn’t — pay for this service.


Table of Contents


Acorns Review: Quick Look

Company NameAcorns
Company TypeAutomated micro-investing
Key FeaturesAutomatically invests change on purchases
DownsidesExpensive fees
Best ForPeople who need to be forced to save

What Is Acorns?

Acorns launched in 2012 as a micro-investing app.

Its name explains what it does in a metaphorical way. To paraphrase an old saying, a mighty oak tree starts with a tiny acorn. The same can be true of investing if you subscribe to Acorns’ way of doing things.

Acorns rounds the amount of your purchases up to the nearest dollar and automatically invests the change in exchange-traded funds (ETFs). It charges a monthly fee between $1 and $5. You can also save for retirement, open a checking account or invest for your children through Acorns.

The “Round-Ups,” Acorn’s name for its loose change method, are not the only way to fund an Acorns account. You can make traditional money transfers and deposits. You can even increase your balance by shopping with the company’s retail partners (more on that later).

Acorns had more than 6.8 million users as of February 2020, the last time it publicly shared those numbers. The company has raised more than $200 million from the likes of NBCUniversal, BlackRock, PayPal, Jennifer Lopez and Alex Rodriguez.

The fintech company is also considered a robo-advisor because it automatically invests your money into one of several pre-designed plans.


How Does Acorns Work?

When you make a purchase from a checking account, credit or debit card linked to your Acorns account, Acorns rounds up to the nearest dollar and sets aside your change. For example, if you buy your favorite candy bar for $1.20 at a gas station, Acorns would set aside 80 cents.

This modern version of a piggy bank sweeps the change from your linked account into your Acorns account. And you can make automatic daily, weekly or monthly investments or even one-time deposits. You can also set up multipliers that will, for example, double or triple the loose change on your purchases. You can also tell Acorns to invest a quarter, 50 cents, 75 cents or even a dollar when a purchase comes to an even dollar amount — or nothing at all. The system’s pretty flexible.

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Acorns invests your change in Exchange Traded Funds (ETFs), which tend to spread your investments across a large spectrum of companies and asset classes. The Acorns website claims that every dollar you invest is automatically diversified into more than 7,000 stocks and bonds through fractional share purchases.

The company offers five portfolio types: conservative, moderately conservative, moderate, moderately aggressive and aggressive. Acorns gives you a recommendation based on your age, goals, income and time horizon. You can accept that recommendation or choose your own risk level when you set up your account. Well-known investment management companies Vanguard and BlackRock designed the portfolios.

Acorns claims that its average user invests more than $30 per month through its “Round-Ups.”


How Much Does Acorns Cost?

Acorns offers three monthly membership tiers:

  • Lite ($1). The Lite tier unlocks an automated investment account.
  • Personal ($3). The Personal tier adds access to Acorns Later, a retirement plan that allows you to contribute to a Roth, traditional or SEP IRA. It also gives you access to Acorns Spend, an FDIC-insured checking account that includes mobile deposit, ATM access and a debit card (that’s made out of tungsten!).
  • Family ($5). The Family tier adds access to Acorns Early, which unlocks investment accounts for kids through UGMA and UTMA custodial accounts.

Here’s the math: The three tiers cost $12, $36 or $60 per year. Many asset management companies charge a variable fee equal to a small percentage of your overall investment dollars. Any reasonable Acorns review will mention that the company’s flat rates can be expensive for the amount you’re investing.

Here’s some more math: If you’re on the Personal tier and you have a balance of $100, you’re paying a management fee of 36%. For context, competitor Betterment charges 0.25% per year. It would require a balance of more than $10,000 to reach that figure with Acorns.

“What you’re paying for is the forced, automatic savings,” money expert Clark Howard said.

“If $12 a year gets you to change your habits with money, then it’s a well-spent $12. The reality is, if somebody doesn’t need that, they’re better off with free stock trading and online banks with no fees. If you have the discipline, I’d rather you not pay fees you don’t need to pay.”

It takes no money to open an Acorns account and only $5 to start investing. It costs $50 per ETF if you want to transfer your portfolio to another broker, but you can sell your holdings instead and transfer the resulting cash at no charge.


What Is the “Acorns Earn” Program?

“Acorns Earn” is the company’s version of a cash back program.

Acorns holds partnerships with more than 350 companies including Walmart and Nike. You’ll get what Acorns calls “found money” when you buy from one of those partners and use a linked payment method.

For example, if you make a qualifying purchase from Nike with an Acorns-linked account, Nike will contribute 5% of your purchase amount to your Acorns investment account.

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Acorns has created a Chrome extension to make sure you don’t miss any deals when you shop online. The Acorns Earn feature also includes a job posting section as well as the company’s referral program.


Acorns Review: Where It Shines

Acorns is a good investment platform for beginners who want automated (robo-advisor) investing.

Acorns can be a good tool for people who don’t have the discipline to save money on their own. Here are some of its best attributes:

  • Helps build good financial habits. Americans are notoriously bad at saving money. Acorns makes the process automatic. It can help people save and invest who might not do so otherwise.
  • Features educational, digestible content. The Acorns website uses less technical language than the sites of many investment companies. That makes it accessible for beginners. Acorns also publishes Grow Magazine, an online personal finance site, and it integrates that content into the Acorns app.
  • Offers unique perks. There are too many to list here. But, for example, you get a free children’s book when you sign up for the Family ($5) tier. Some of the perks are small, but they’re a nice feel-good touch.

Acorns Review: Where It Falls Short

If you have less than $10,000 to invest, Acorns' management fees cost more than most alternatives like Robinhood or Betterment.

My Acorns review has already revealed one major downside: fees. Here are details and a mention of some of its other shortcomings:

  • Expensive management fees. Many robo-advisors charge you a percentage of your assets rather than a flat fee. Acorns’ approach can lead to deceivingly high fees especially if you have a low balance.
  • Costly transfers. It’s common to charge customers who want to transfer their portfolios to another brokerage. For example, Robinhood charges a flat fee of $75. Because Acorns charges per ETF, if you have four ETFs, you’ll pay a $200 fee. But you can always sell your holdings and cash out for free.
  • Narrow selection of portfolio options. The portfolios themselves cover a maximum of seven asset classes (real estate, domestic large-cap stocks, international large-cap stocks, small-cap stocks, emerging markets, corporate bonds and government bonds). That’s plenty diversified, but other robo-advisers have an even wider selection of asset classes.
  • Notable missing features. Acorns offers customer support, but it doesn’t offer human investment advisors. It also doesn’t offer tax-loss harvesting which most traditional brokers and many fintech companies do. And there’s no Acorns 529 plan, but that offering isn’t common among fintechs.

Who Should Use Acorns?

If you fit into one of these groups, Acorns could be an excellent option for you.

  • New investors. If you’re still in school, just beginning your career or you’ve never invested before, Acorns can be a good stepping stone toward building healthy habits with your money.
  • Poor savers. I know we live in a digital age. But if the phrase “the money was burning a hole in my pocket” applies to you, perhaps Acorns can be the nudge you need to start saving.
  • Passive investors with at least $10,000. If you want someone reputable to manage your portfolio with a diversified, automated long-term strategy, Acorns could be a good solution. That’s especially true if you have $10,000 or more. At that level, Acorn’s flat fees start to get competitive with the other options you could pursue.

Clark says that if you have discipline and you’re just interested in Acorns because of its novelty approach, there are probably better investment platform options.

Some of those include:

  • Free stock brokers. Companies like Robinhood, Webull, Fidelity and Schwab fit this category.
  • Online banksAlly and Discover are just two of the companies that handle your banking needs without charging you fees.
  • Robo-advisors that charge a percentage. Betterment, one such company, offers similar hands-off investment but charges 0.25% of your investment dollars.
  • Fee-free automated investing. Much like Acorns, Fidelity’s Rewards Visa Signature Card allows you to set up automatic contributions to your investment account when you make purchases. However, Fidelity does not charge fees for its investment account.

Final Thoughts

Passive, automated investing for as little as $1 per month sounds like quite a deal. But because Acorns offers flat rates, its management fees can be exorbitant if you have just hundreds or even a few thousand dollars in your account.

Still, Acorns can help people develop good habits. It can make saving and investing seem more accessible to people who may not do it otherwise. It executes the “invest your change” concept well and also offers some interesting perks.

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