Acorns Review: A Robo-Advisor That Invests Your Spare Change

Acorns is a robo-advisor, but it does much more than invest for you. The app actually makes getting your money into the market effortless by rounding up your purchases to the nearest dollar and investing the difference. 

While Acorns fees can be higher for those with small account balances, its unique round-up feature combined with flexibility in choosing from multiple portfolios sets it apart from competitors and makes it an ideal choice for those who may have difficulty building savings into their budget. But while Acorns has a lot going for it, is it right for you? This Acorn review will help you decide.

Acorns is an all-in-one financial solution that combines banking, investing, retirement savings, and saving for your children's future.

The app aims to simplify the investing process by rounding up your purchases to the nearest dollar through your linked credit or debit cards and investing the spare change.

Acorns also offers other features including cash back with more than 15,000+ offers from the brands you love.

How does Acorns work? 

When you sign up for Acorns, you can choose between a personal or family plan. These plans come at a cost of $3 per month and $5 per month respectively. Each includes:

• An investing account, which features Round-ups that put your spare change to work plus bonus investments from over 15,000 offers from your favorite brands.
• An IRA account which offers up to 3% match on new contributions.
• A checking account that offers fee-free access to more than 55,000 ATMs.
• Robo-advising services, which allow you to invest in one of several expert-built portfolios, including some that give you exposure to sustainable investments.

The family plan also provides investment accounts for multiple children, so parents can start saving for their kids' futures. 

Who can invest with Acorns? 

You can invest with Acorns if:

• You are a United States resident
• You have a valid Social Security number
• You are at least 18 years old (or a parent opens an Acorns Early account for you)

Effortless Investing

Once you set up your account, it’s easy  to invest for your future. You can transfer money automatically into your investment account on a scheduled basis, such as transferring $5 per day, week, or month. You can also use Round-Ups so your spare change from linked credit or debit cards is invested, and SmartDeposit to deposit a portion of your paycheck when using direct deposit.

The money you invest is put into one of several diversified portfolios built by experts, so you don't have to select investments yourself. And portfolio rebalancing ensures that your mix of investments changes as your investing timeline and risk tolerance shift.

Multiple portfolio options 

When you invest with Acorns, you answer a few simple questions, and the ideal investment mix is chosen for you. There are multiple portfolios offered by the app, including the following:  

• A conservative portfolio with investments split across different bonds
• A moderately conservative portfolio, with investments in different bonds as well as the stocks of medium and large companies
• A moderate portfolio with a mix of large, medium, and small company stocks as well as bonds and international stocks
• A moderately aggressive portfolio which devotes a larger percentage of your money to stocks in large, medium and small companies and international stocks, and less of your money to bonds 
• An aggressive portfolio which invests in stocks only and no bonds 
• Conservative, moderate, moderately aggressive, and aggressive sustainable portfolios 

Multiple account types

Acorns allows you to combine your banking and investment accounts using one platform. You also have the option to open investment accounts for each child, if you opt for the upgraded family plan. Although you pay $12 per month for the Gold plan you can invest for an unlimited number of children and gain access to other amazing features that help you focus on your family’s financial wellness.

Account fees are high, especially for small accounts 

The minimum fee is $3 per month. This can be an expensive fee if your investment account balance isn't very large. Many other robo-advisors charge just 0.25% of assets being managed, although these accounts may be lacking features Acorns offers, such as round-ups.

No tax loss harvesting 

Many other robo-advisors offer tax loss harvesting. This can lower the capital gains taxes you owe by strategically selling losing investments. Acorns does not, so those investing in Acorns in a taxable account could face higher IRS bills.

Like any investment platform, making money depends on the performance of the investments in your portfolio. Acorns invests your money in exchange traded funds (ETFs) that give you exposure to common asset classes, such as large cap, mid-cap, and small cap stocks as well as emerging markets and bonds.

ETFs that invest in these broad categories of assets tend to perform reasonably well over time with minimal risk.  However, you do need to remember that your potential returns may be impacted by Acorns’ subscription costs. In order to mitigate the impact of these costs it is encouraged that customers utilize Round-Ups® and recurring deposits in order to give their money the best chance at growth.

How do I make money with Acorns

You can make money with Acorns when you use Round-Ups, automated investing, or Smart Deposit to transfer your money from your checking account to your investment account. You can also move money directly from checking into investing by initiating a transfer.

After money is moved into your investment account, it's invested in a specific portfolio based on your answers to questions. If the assets in the portfolio perform well, you will make money on asset value appreciation.

You can also make money by earning cash back if you shop through Acorns' apps with one of more than 350 participating merchants including Chewy, Apple, and Old Navy. 

How do I cash out with Acorns

You can sign into your Acorns investment account using your mobile device and choose the 'Withdraw" option to move money from your Acorn investment account to your funding source. 

If you've used an Acorns checking account, you can write checks out of your account, use your metal debit card that Acorns provides to charge purchases, or withdraw money fee-free at one of more than 55,000 ATMs. 

Acorns vs traditional investing 

Acorns works differently than most investment accounts because of features like Round-Up, Smart Deposit, and automatic recurring investments. 

These tools help encourage you to transfer more money into an investment account, since you don't have to manually make the decision to invest. Many people find this works better for them because they have trouble saving and putting their money into the stock market manually.

However, unlike a discount brokerage firm, you don't get to pick investments—Acorns selects a portfolio for you. You also pay a higher fee for services with Acorn than you do with most other investment alternatives such as working with a discount brokerage firm or another robo-advisor. 

Acorns has received many positive reviews, with some Reddit users indicating the app's fees are worth paying because they can earn great returns. Others indicated Acorns really did make it effortless to save, even when they thought they didn't have enough money to invest.

However, others have complained that the fees resulted in earning minimal returns and that the ETFs that Acorns chooses are not the cheapest or most efficient on the market.

Acorns can be a great investment account if you find it difficult to find spare money to put into the stock market and you want an all-in-one solution that automatically invests for you. But if you want to keep your fees as low as possible or you prefer to pick individual stocks to invest in rather than having a robo-advisor choose a mix of ETFs, then Acorns likely isn't for you.