Acorns Review for 2021

It’s true that mighty oaks grow from tiny acorns, literally and metaphorically. For instance, the investment app, Acorns, applies this saying to another old and wise concept — saving your spare change. It’s a platform that goes the extra mile to help users grow their savings through a variety of investment options.

Acorns

Acorns is growing in popularity here at home and abroad, with more than nine million users worldwide. So, what does this platform do, and how does it work? More importantly, what does it have to offer – and is it legitimate? Here is a comprehensive Acorns review to answer all your questions.

What Is Acorns?

Acorns is a relatively new robo-advisor platform introduced in 2014. It’s one of the most versatile robo-advisors, and it also functions as a micro-savings and micro-investing app, a cash-back tool, and a checking account, in a nutshell.

Some of Acorns’ most notable tools include:

  • Acorns Invest
  • Acorns Early
  • Acorns Later
  • Acorns Earn
  • Acorns Checking

Acorns’ primary goal is to enable users to save and grow their money. The platform is fully automated, making it easy for anyone to use. As a result, anyone of legal age can sign up for an Acorns account (for a small fee) and use its products and services.

The Acorns app differs from other robo-advisors mainly because it is built around spare change, based on the old philosophies discussed before. However, it also excels in many other aspects – and falls short in a few. We will review the features and functionality of Acorns in more detail below.

How Does Acorns Work?

Acorns offers a variety of financial tools and services, all designed to help you save, manage, and grow your money, even if it is just spare change. The platform does this by rounding off all of your purchases to the nearest dollar, and providing a checking account (discussed in detail later) that you can link to your credit or debit card.

Let’s say you buy a $4.57 cup of coffee using a card linked to the platform. Your Acorns invest account receives the balance rounded to the nearest dollar ($5).

Minimum Investment

Acorns rounds up all of the money you spend, and regardless of how little it is, invests it into a portfolio of exchange-traded funds (ETFs). You can invest as little as $5 (or as much as you can afford).

Services Offered

Acorns offers five core services, including the following.

Acorns Invest

One of its best features is the Acorns Invest account. Users can round up small change from their day-to-day expenses and invest it automatically. It uses an innovative financial tool known as Acorns Round-Up to automatically collect and invest your spare change into various ETF portfolios. You can also fund your investment account directly.

Acorns invests your money into asset classes and exchange-traded funds comprising more than 7,000 stocks and bonds. Some of the most notable ETFs include the S&P 500 and the Dow Jones Industrial Average. Additional asset classes include government bonds, stocks, emerging markets, small company stocks, large-company stocks, and real estate.

The Acorns investing account is fully automated through automatic portfolio rebalancing. Additionally, users can set recurring investments of as little as five on a periodic (daily, weekly, or monthly) basis.

Acorns Later

Acorns Later is a system for automating retirement. It works by recommending an ideal Individual Retirement Account (IRA) and investment portfolio depending on your unique financial situation. Users can then set up recurring contributions (starting from as little as $5) on a recurring basis.

Acorns Later is very keen to select an IRA account that best suits your financial needs and preferences. Additionally, the platform updates your IRA account requirements as your needs and preferences (and overall financial situation) change over time.

Acorns Checking

The Acorns Checking account (also known as Acorns Spend) comes automatically with an Acorns personal account, meaning that everyone gets one after registration. The platform’s checking account offers all of the features typically found in an ordinary bank account and more. Some of the available banking services include mobile check deposits, sending checks, and direct deposit.

The checking account comes with a heavy-metal debit card that you can use at more than 55,000 fee-free ATMs across the U.S. Additionally, the financial account comes with a built-in Smart Deposit feature designed to automatically invest your money before you can spend it, making it easier to save and invest. The checking account also makes it easier to take advantage of the Round-Ups feature, ensuring that every penny goes to good use.

This Acorns account holds as much credibility as a banking account with a mainstream financial institution — it’s FDIC-insured for up to $250,000 and secured using robust fraud protection.

Acorns Early

Acorns Early is essentially a UTMA/UGMA investment account for your children’s future. The idea is to save up (and invest those savings) towards something that benefits your kids’ futures, whether their education or overall financial stability.

Acorns Early is fully automated. All you have to do is set a recurring investment starting from as little as $5 per day, week, or month. The Acorns app then invests this money in a range of diversified portfolios to grow it as much as possible, ultimately maximizing your investment’s ROI – and making more for your little ones. 

The account also offers a wealth of financial advice and money tips on how you can save money. More importantly, it offers financial education to help your kids understand the value of money and start investing early. You can also give your kids a chance to earn bonus investments with their favorite channels: Disney+ and ABC Mouse.

Acorns Earn

The Acorns app offers users an opportunity to earn and save more in two ways: shopping with Acorns Found Money partners or utilizing the app to find a part-time or full-time remote job. Acorns Earn is one of this platform’s best features, as discussed in detail later.

Pricing & Fees

Acorns is fairly affordable, depending on factors such as the type of account you want and how much you are willing to invest. Here is an overview of its pricing structure depending on the type of Acorns account.

  • Acorns Lite – Acorns Lite charges only $1 per month (alternatively, you can pay an annual fee of $12). The Lite program only comes with a taxable investment account.
  • Acorns Personal – Acorns Personal costs $3 per month. It comes with three offers, including taxable investment accounts, taxable retirement accounts, and checking accounts.
  • Acorns Family – Acorns Family is $5 per month. It offers taxable investment accounts for you and your kids, taxable retirement accounts, and checking accounts.

Acorns Investing Strategy

As mentioned previously, Acorns encourages users to round up their purchases and invest their spare change because every little bit counts.

Acorns asks users a range of questions when signing up to determine their risk tolerance levels. Common questions include your net worth, income, age, and when you may need to access the funds in your investment account. The platform then uses this information to choose an ideal diversified portfolio suitable for your needs. 

There are five portfolio categories:

  • Conservative
  • Moderately Conservative
  • Moderate
  • Moderately Aggressive
  • Aggressive

The portfolios contain a range of about 25 exchange-traded funds, including:

  • Corporate bonds
  • Government bonds
  • Small-company stocks
  • Large company stocks
  • International company stocks
  • Emerging marketing stocks
  • Real estate stocks

Each portfolio contains a varying mixture of these asset classes, depending on your risk tolerance. Investing is automatic, and the Acorns app simplifies the process to be easy to understand, even for novice investors. Additionally, the platform monitors your investment accounts’ growth and adjusts your investment portfolios accordingly. Ideally, the money grows and accumulates over time.

It’s also worth noting that investors can also fund their investment accounts directly from a linked bank account and through recurring investments, in addition to Acorns Round-Ups. Recurring investments start as low as $5 at a time, and there is no limit to how much you can deposit.

What Are The Key Benefits Of Acorns?

Acorns is relatively new, but it’s already one of the most popular robo-advisors with close to ten million users worldwide and dozens of benefits to offer.

Portfolio Diversification

Acorns offers access to diverse investment portfolios with more than 700 stocks and bonds. These include 25 ETFs comprising some of the most valuable stocks globally, both domestic and international. This helps reduce risk and maximize potential ROIs, although investing involves risk.

No Up-Front Investment Required

Most robo-advisors require hundreds of thousands of dollars to invest on their platforms. However, Acorns doesn’t have a minimum investment requirement. Each cent you collect as loose change goes into your investment portfolio.

However, it’s worth noting that you will need at least $5 in your Acorns account to start investing. Additionally, students with a valid .edu email address can use Acorns Core for free.

Industry Experience

The industry’s leading figure, Dr. Harry Markowitz, provides Acorns with invaluable industry experience.

Known as the father of modern portfolio theory, Dr. Markowitz recommends diversifying an investment portfolio’s assets and asset allocations quantitatively to maximize returns and minimize risks. This theory has proven so successful that it won him the 1990 Nobel Memorial Prize in Economic Sciences.

Acorns derives its ETFs from BlackRock and Vanguard, two of the leading investment advisory groups. The platform also employs talented investors and other experts in related fields to ensure that everything runs smoothly behind the curtains.

Educational Resources

Due to its wealth of educational resources, Acorns is ideal for novice investors new to the industry. This robo-advisor offers hundreds of educational articles about saving money, investing, and managing money on its blog. There is something for everyone to learn here, from those just starting their investment journey to those planning for retirement.

Minimal Management Fees

Acorns is all about affordability, considering that the investment strategy is based on investing your spare change. So, the platform charges an affordable management fee ranging from $3 to $5 per month, depending on the type of Acorns account you have. You don’t have to worry about excessive transfer, trading, closing, or overdraft fees either.

Earn With Spare Change

Investing in rewarding index funds is a better alternative to saving loose change in a piggy bank or spending it carelessly. Investing money with Acorns is easy and affordable — round-ups are automatic and usually total a few cents at a time. You can invest these round-ups in an ordinary investment account for yourself or your children, or in a retirement account.

Cash-Back From Your Favorite Retailers

Can you think of a better way to save than getting cash back every time you shop? Acorns is one of the very few robo-advisors that offer a cash-back program when you shop with any of hundreds of Acorns Found Money partners. 

To participate in this program, all you have to do is use the platform’s checking account (Acorns Spend) and the provided debit card when you shop. You will also need the Acorns extension for Google Chrome, which is easy to install.

Automation

Acorns is fully automated, which makes it one of the best robo-advisors for beginners. The platform identifies your needs and preferences during registration. Then, it collects round-ups and invests in a suitable portfolio.

Acorns manages the investment accounts automatically at a low monthly fee, which can be worth the convenience. You may be required to perform some of the actions manually, though, such as setting up recurring investments.

What Are Some of the Drawbacks of Acorns?

Acorns also has some shortcomings, like all other robo-advisors. Here are five of them.

Risk of Loss

Investing always involves an underlying risk of loss, regardless of how advanced the robo-advisor may be. The same is the case with Acorns, but the platform tries to minimize this risk.

It’s worth noting that losses seem exacerbated when investing small amounts, as with Acorns. As a result, Acorns fees and losses could wipe out any returns, or even your principal.

The Possibility of Minimal Returns

One of the basic laws of investing is that your ROI depends on how much you invest. Acorns focuses on investing users’ spare change, which often doesn’t add up to much in the short term. As a result, investment portfolios may be risky and not very rewarding.

No Tax-Loss Harvesting

Tax-loss harvesting is a standard offer among most robo-advisors. Unfortunately, Acorns doesn’t offer tax-loss harvesting, regardless of how much you fund your account.

No Human Financial Advisors

The financial technology industry is advancing at an incredible rate. However, many experts still argue that the human factor is irreplaceable. Human financial advisors can read indicators that would puzzle even the most advanced algorithms. Unfortunately, Acorns doesn’t offer access to human financial advisors but instead emphasizes automation, as explained earlier.

Fees For Small Accounts

Acorns charges only $3 for a personal account and $5 for a family account. This is affordable in an ordinary investment arrangement, but it may be expensive when working with small change amounts. Because of this, the management fee could clear your account balance unless your portfolio is added to consistently and is profitable.

What Is The “Acorns Earn” Program?

Acorns argues that it’s in everyone’s best interest to earn, save, and invest more money. Acorns Earn is a program that gives users two money-making options: shopping with Acorns Found Money partners or finding a part-time or full-time remote job.

The easiest way to earn with the Acorns app is by taking advantage of the Acorns Found Money program. This is essentially a cash-back tool, where you get some of your cash back when you shop with the approved partner brands. 

Some of the approved brands include household names such as:

  • Airbnb
  • Apple
  • Blue Apron
  • Chevron
  • DirecTV
  • Dollar Shave Club
  • Earnest
  • Groupon
  • Hotels.com
  • Lyft
  • Macy’s
  • Me Undies
  • New Balance
  • Nike
  • Old Navy
  • Sam’s Club
  • Samsung
  • Walmart

You need to download the Acorns Earn Chrome Extension to make this program work. The extension identifies and tracks your purchases from these brands and activates the cash-back program. The platform will also require you to link to your Acorns Spend account – the platform sends your money-back bonus investments to the same linked checking account within 60-120 days.

The Acorns jobs program is also rewarding for anyone looking for a full-time job or side-hustle. It takes advantage of the ongoing shift towards remote working and offers access to hundreds of thousands of opportunities, depending on your skills.

Should You Use Acorns?

Are you still wondering whether Acorns is the right robo-advisor for you even after reading this comprehensive Acorns review? It all comes down to your needs and preferences. So you should choose Acorns if:

  • You have difficulty saving, you spend a lot, and get a lot of spare change. 
  • You are new to investing and seek to start small as you learn (the platform provides educational resources).
  • You don’t want to concern yourself with the technical aspects of investing (by taking advantage of Acorns’ advanced automation).

However, Acorns may not be ideal if you are a seasoned investor looking to make the most of your investments. The platform lacks key features such as tax-loss harvesting and human financial advisors.

How To Sign Up For Acorns

Anyone of legal age can sign up on Acorns and start investing in minutes, thanks to a quick and easy registration process. Here is a step-by-step on how to sign up on the platform.

  1. Download the Acorns app on your Android or iOS mobile device (you can also access Acorns’ desktop website using any compatible desktop browser).
  2. Create an Acorns investment account by providing your email address and developing a strong password.
  3. Connect your Acorns account to your bank account to take advantage of the Acorns Found Money feature – you can connect to multiple bank accounts, but you can only use one at a time.
  4. Enter your personal information.

Acorns requires your personal information to understand your investment needs and preferences, as explained. Some of the required details include:

  • Your legal name
  • Your current address
  • Your personal phone number
  • Your date of birth
  • Your social security number
  • Your citizenship status 
  • Your current employment status, income, and net worth

The platform will also ask you about your reasons for investing and how soon you may need access to the money. It is important to provide accurate information for a smooth and personalized process.

5. Review your recommended portfolio and ensure that it suits your investment needs and preferences.

6. Familiarize yourself with the platform and start investing. 

Alternatives To Consider

Acorns is only one of the many other robo-advisors, so it’s understandable if the platform doesn’t meet your needs. Fortunately, you have many other alternatives, including Betterment and Digit.

Betterment is the largest and most popular robo-advisor in the industry, with more than $14 billion in assets under management. It doesn’t require a minimum to open an investment account, just like Acorns. Additionally, it offers a wide range of account types and has a dedicated team of financial advisors for its high-end customers.

Digit doesn’t require a minimum to open an investment account, either. However, it offers a limited range of account types and hasn’t yet adopted socially responsible investing.

Bottom Line

Acorns offers an innovative solution to not only save your spare change but also grow it through smart investments. It’s perfect for investors who are looking to start from scratch and work their way up. It offers a range of convenient features and solutions, including a checking account and debit card that you can use for shopping as well as a cash-back program. Overall, it is an excellent robo-advisor if it suits your needs and has a credible global following.

Samantha Hawrylack
Meet the author

Samantha Hawrylack is a personal finance expert with a passion for writing and SEO who has been featured in publications like Grow, MSN, CNBC, Clever Girl Finance, Credit Donkey, and more. She writes about various personal finance topics including credit, loans, real estate, investing, and more.