Acorns App Review: Automatically Invest Your Spare Change

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In today’s crazy world, we spend lots of time looking for ways to do everything quickly and with as little effort as possible. That’s what we’re going to be covering in this detailed Acorns review.

Now, usually, I would be very much against this.

That’s because I think as a species, we’re getting WAY too lazy for our own good.

But when it comes to investing money, I think coming up with ways to make the process mindless and automatic is probably a good idea.

The good news is that an app called Acorns has put in an extraordinary amount of time doing just that.

If you’ve been looking for a no-stress way to dip a toe into the wonderful, albeit dizzying complex world of investing, look no further than this easy-to-use app.

What it does is simplicity to the nth degree.

However, if you make a commitment to using it on a daily basis, has the potential to change your life.

What it does it to round up all your purchases to the nearest dollar.

And then, it takes the difference between the purchase price and the roundup and invests this money for you.

Table of Contents

What’s Micro Investing?

Acorns is a micro savings app, like Digit.

The micro-investing approach is to round up all your purchases to the nearest dollar and invest the difference.

All those pennies start to add up and compound over time.

Best of all, it all happens automatically on purchases you’d make anyway.

This is exponential growth, and it’s just as powerful whether we’re talking about bacteria or bank accounts that accrue interest.

Acorns is what would happen if you took a coin jar and welded it to a robo-advisor (if robo-advisors were actually robots).

Then, these hypothetical automatons would invest this change for you.

Perhaps somebody can do a Kickstarter that does just that!

A Real Game Changer

If you go the traditional route, it’ll take considerable time and attention to set up a robust investment program.

Acorns bypasses all of this by giving you a digital tool that’s infinitely easier to use than the way investing has been done for hundreds of years.

And by offering this tool, Acorns is revolutionizing the way people invest.

It’s a real game changer!

A Godsend For Those Who Have Difficulty Saving

If in the past you’ve struggled valiantly to save even small amounts of money but weren’t successful, Acorns can be just the thing you need.

However, just keep in mind you’re not the only one in the country with this problem, as nearly 7 in 10 Americans have less than $1,000 in savings.

Because it’s so incredibly easy to use, it has the potential to transform old-self defeating habits of living paycheck to paycheck into something that’s much more financially healthy for you.

It might even turn into a near borderline obsession to build a nest egg that will secure your financial future.

Build a Nest Egg

If you thought the number of people putting money away into a savings account was low, the situation with retirement accounts is even worse.

That’s because so many people blow all the money they should be socking away for their retirement on other things.

Retirement can be as long or even longer than your working career, so you want to make sure you properly prepare for it.

Unfortunately, most people aren’t.

This is dreadful, but it doesn’t have to be that way!

Everybody needs to start as early as possible to save for their retirement.

And Acorns makes it exceedingly easy to do that.

It’s a terrific way for college students who don’t have access to a 401(k) yet to start socking money away for retirement.

This way, they start the savings habit early.

Powerful Combination of Savings Tools and Robo-Advising

Keep in mind that you’re not just letting this money sit in a bank account—you’ll be making your money work hard for you by investing it.

This way, on only pennies a day, your investment portfolio will grow by leaps and bounds, until the amount of money you’ve accumulated utterly astounds you.

Acorns accomplishes all this by being both a robo-advisor type service and letting you wield potent savings tools, turning savings into an automatic activity.

It makes use of money that would be called “loose change” if we were talking about old-fashioned money.

So essentially, it takes the old-school practice of using a piggy bank as a way to save and updates it for the digital age.

CNBC was so enamored of the app that they called it “the new millennial investment strategy.”

However, the app isn’t just for millennials, but for all of us who don’t have wads of cash just lying around to use for stock market investing.

Perhaps right about now, the question you’re asking yourself is, “Is Acorns worth it?”

In this article, I’m going to try to answer that question.

So, read on and decide for yourself!

Perfect for Even Clueless Neophytes

If saving money has always been an incredibly arduous task for you, let Acorns remove baffling layers of complexity from the experience.

It’s 100% passive investing, so all you need to do it set it up and walk away.

And then, even in your sleep, the app’s algorithms will be hard at work for you, securing the financial future you’ve always dreamed of.

Its effortless functionality is perfect for clueless neophytes of all ages.

If you’re a brand new investor just learning the ropes, you’ll find lots to like here.

No Complex Lingo

And, there’s no overly complicated lingo on the app—everything is in plain-as-day English.

This is great for investors who lack knowledge because every key investing term is defined with piercing clarity.

The fact of the matter is, investing is so dizzyingly complex that LOTS of people avoid it altogether.

However, this app is superb at stripping layers of complexities from the process, making building a killer portfolio a piece of cake.

The app does everything in its power to make your investing journey as easy and painless as possible.

Replaces Financial Willpower

It’s a veritable godsend for people who have every intention of getting into the stock market.

But then, engage in the self-defeating practice of blowing the cash they’ve set aside for investing on frivolous nonessentials.

So, if you’ve always wanted to dabble in stocks but lacked financial willpower, give Acorns a shot.

So, if you’re experiencing lots of difficulty in getting the investing ball rolling, this can be a way to kickstart your efforts.

No Minimum Balances

There’s no minimum balance required, so it’s fantastic for small potatoes investors who don’t have a lot of money to play around with.

This further obliterates any excuse you have for not starting your investing journey.

A Note For Serious Investors

If you’re a serious investor with loads of cash you’re itching to invest, you still might want to use Acorns.

Just don’t make it your primary market strategy because more robust portfolio management is available at more traditional brokerages.

Acorns does offer six different asset classes that are reasonably diversified.

However, hundreds more can be found if you deal with a more traditional investment firm like Fidelity or Wells Fargo.

Acorns offers less diversification across asset types and no ability for customization outside the five profiles.

Also, you don’t get access to financial support from an actual human being with Acorns.

In contrast, some larger robo-advisers offer Certified Financial Planners (CFPs) to answer your every question.

No Tax Loss Harvesting

Also, if you’re primarily investing in a taxable account, which is the basic Acorns level, you won’t reap the benefits of tax-loss harvesting.

These days, just about every automated investment service offers a version of this.

Tax-loss harvesting is used by many to offset losses incurred in the securities market.

With this, when we suffer a loss, we can go ahead and write it off on our tax return.

But not only can we write it off, but we can also try to sell it and with the proceeds, buy something new to add to our portfolio.

Because Acorns doesn’t allow us to make decisions about individual securities, tax loss harvesting isn’t something we can do with the app.

So, if this is important to you, you’re going to have to try using a more traditional investing service.

Acorns Can Supplement Your Larger-Scale Investing Efforts

Even if you use roundup investing as an adjunct to larger-scale investing efforts, $50 a month at a 6% market return adds up to $22,671.93 at the end of 20 years.

That’s the power of compound growth, which you can achieve with an investment but not a savings account.

And, even a robo-advisor service like Acorns lets you experience the exhilarating power of compound growth.

Five Dollars is All it Takes to Get Started

Acorns is an app that lets you start experiencing all the joys of investing without having to have insane piles of cash just lying around.

So, with as little as $5.00, you can start putting together a diversified portfolio of ETFs that help you build a solid financial future.

The App or Their Web-Based Application-Take Your Pick

If you’d prefer to use your smartphone to manage your ever-increasing Acorns portfolio, download the app.

Or, if using a web-based application is more your style, bookmark their website.

You can choose either or both—it’s totally up to you.

Not for the Risk Averse

Investing isn’t for the faint of heart.

And when you use Acorns, you’re investing in the securities market.

Although your returns will probably be substantial if you keep your investment account for twenty years or more, there are no guarantees.

With Acorns Invest, how much you make is entirely dependent on the market’s pendulum swings, which can be wild and unpredictable.

While the S&P 500 has had consistent annual returns of around 8%, variations in the amounts means that for any given year, your accounts could lose much of its value.

And sometimes, these losses can exceed 10% or more.

So, if you don’t have a lot to invest and are risk-averse, put your money into a high-yield savings account instead.

This way, interest is guaranteed, and unlike Acorns, most of them don’t have monthly fees.

Plan to Keep Your Money Parked

If you think you might be needing that money in the next five years or so, you should instead go with a high-interest savings account.

You want your money to stay parked squarely in your account, so you can harness its power to grow exponentially.

Some online banks offer free checking accounts with automatic savings, and these savings aren’t invested.

So, you can withdraw funds without taking out the money that’ll seed your investments.

How It Works

Creating an Acorns account is currently open only to US citizens, and you must be 18 years of age.

To get started, you’ll have to sign up on either the app or the website.

Next, link your checking account, debit card, or a credit card.

To get even more mileage from all your purchases, consider getting a credit card that gives you cashback.

Then, you’ll have to decide how you want money to get deposited into your Acorns account.

You can set up it to only deduct a certain amount from a bank account at regular intervals as I do.

This kind of recurring investment is a kind of “set it and forget it” approach to your investing activity.

However, instead of cooking up a delicious stew in your slow cooker, you’ll be creating a rosier financial future for yourself.

What could be better than that?

Also, as previously mentioned, you can have the app collect all your “virtual spare change” by rounding up your purchases to the nearest dollar.

This sure beats a stranger messing up your sofa by taking the cushions off and seeing if there are any loose pennies, dimes, and nickels there.

You can also combine the two methods.

For example, I spent $58.16  at PriceRite the other day, which is a supermarket near me.

That amount was bumped up by Acorns to $59.00, adding $0.45 to my roundup account.

When the amount in that account reaches $5.00, this money is automatically transferred to my investment account.

These automatic roundups make investing surprisingly easy to do, and most investors will be astonished at how quickly their pennies accumulate.

Once there, your money is invested in a professionally managed portfolio of funds that represents thousands of individual securities.

You can also supercharge your investing by multiplying your roundups by a factor of two, three, or even 10.

The potential for magnifying your investment activity by doing this is enormous.

You can choose what type of purchases you want to be included in your roundups or choose “automatic,” and they’ll be applied to every purchase you make.

Or, select roundups manually by going through your purchases on the app.

Then, decide which of your roundups to transfer to your investment account.

If you think roundups are small potatoes and you want to do large lump sums, you can—even $10,000, $20,000, or $30,000 deposits are possible if you’ve got this much money laying around.

Acorns’ Fees

Acorns receives its fees by withdrawing them from your funding source instead of taking them from the money you’ve invested.

If you’re only investing small amounts of money at Acorns, fees could be a relatively high percentage of what you’re putting in.

A few bucks a month might not sound like much.

Still, if you’re a small investor, these few bucks could be considerable when you compare how much you have in your investment account.

And then, your Acorns fees could be exorbitant–much more than you’d pay at similar services.

This could offset any potential gain from your account.

For example, say you had 30 roundup transactions every month, at an average roundup value of 35 cents.

The Acorns app would invest $10.50 for you every thirty days but would eat up 9.5% of that in fees.

Of course, the more your account value increased, the lower that percentage would be.

However, you would have to accrue $5,000 before what Acorns charged was as low as the cheapest of the robo-advisors.

For example, Betterment has a percentage instead of a flat fee, and it’s only 0.25%.

So, to make it worth your while, you should be investing more significant amounts at Acorns.

What you don’t want to do is to keep your account small by not regularly contributing to it.

The smaller your account balance, the higher your monthly fees will be relative to how much money you have.

ETF Transfer Fees

If you want to decide you want to close out your Acorns account and have your ETFs transferred to another broker, they’ll charge you $50.00 for each ETF.

As far as online investment services go, this is a bit on the high side.

A flat fee per fund is extraordinarily rare among robo-advisers, as most charge a percentage of assets under management.

The “Hidden” Fee

Every single penny you’re socking away in your investment account doesn’t go towards growing it.

There’s also a “hidden” fee, which is the internal expense of managing your fund that, over time, equals about 0.10% of your investment.

Creating Your Profile

If you know a thing or two about investing, you can put together your own portfolio.

But if you don’t know much about the often-byzantine intricacies of this world, Acorns can put together one for you.

If you’re choosing the second option, you’ll have to answer a few questions.

These are things such as your age, investment goals, your level of risk tolerance, and your employment status.

Your answers will help Acorns to offer you customized investment advice.

To finish creating your Acorns account, you’ll also need your email address, online banking login, physical address, social security number, and a few other things.

Acorns will take all this information and start building you a killer portfolio so you can start achieving your investment objectives.

Acorns does this by using something called Modern Portfolio Theory, or MPT, which was formulated by Dr. Harry Markowitz.

What this theory says is that by diversifying the kinds of financial assets you have rather than just owning one type, you minimize your risk.

This maximizes any potential returns.

When Acorns gives you customized advice, it’ll also give you some ideas, tips, and tricks you can use to help you with your investing journey.

Keep in mind that Acorns doesn’t let you invest in individual stocks and bonds—only ETFs.

BTW, What The Heck are ETFs?

An ETF, or exchange-traded fund, combines what’s best about stocks and index funds into one glorious package.

Like index funds, they’re a basket of stocks and bonds in a particular market segment.

So, for example, a home construction EFT could consist of a bunch of stocks in the home construction industry.

Like stocks, they can be bought or sold at any time during the trading day—which you cannot do with index funds.

And just like stocks, their price can fluctuate wildly throughout the day.

But like index funds, most ETFs are passively managed and low cost.

One good thing about ETFs is you don’t need to be wealthy to buy and trade them, and they’re easy to buy and sell.

This combination of the best traits of both index funds and stocks is responsible for the skyrocketing popularity of EFTs as an investment vehicle.

In 2018, there were a total of 6,748 ETFs on the planet, with 6.18 trillion dollars in assets under management.

What’s Your Investing Style?

There are five kinds of portfolios to choose from:

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

So, choose one, and when you’re ready, just click “Confirm Portfolio.”

That’s all there is to it!

How much of each fund you’ll be invested in depends on your profile.

For example, if your profile is “Aggressive,” 100% of your money will be invested in stock ETFs.

If your profile is “Conservative,” then only 20% will be in stocks, with the remainder in bonds.

The Different Asset Classes

Acorns selects securities from seven different asset classes, and each one is represented by a single ETF.

With just these seven EFTs, your money will be invested across literally thousands of individual securities.

These are the different asset classes:

  • Large Company Stocks
  • Small Company Stocks
  • Emerging Markets
  • Developed Markets
  • Government Bonds
  • Corporate Bonds
  • Real Estate

You only have seven investment classes to choose from.

Some individuals who’ve used other investment services might feel limited by Acorns offerings.

That’s because many others let you spread your asset allocation to over 10 different classes.

When it comes to investing, Acorns lets you be as aggressive as you want to be.

So, if you’re the bold type, you’re able to turn up your risk level and put more money in stocks instead of bonds.

But no matter your risk level, just remember that Acorns has an impressive $1 billion in funds under management, so they clearly know what they’re doing.

Automatic Rebalancing

However, one thing you won’t have to pay for is automatic rebalancing of your investment accounts.

This means the app will bring funds that have deviated from your target allocation back to where they should be.

This helps keep your account on track.

Each investor profile allocates money in its own unique way to achieve the desired level of risk.

This way, if one of your funds has a great month and there’s extra money in it, it’s reallocated to another account, so you won’t have too much tied in that sector after the rally.

This limits the risk of losing these gains.

If the level of risk you want to incur changes, you can choose a new profile.

No Withdrawal Fees

There’s no charge whatsoever for withdrawing funds, but it might take 3-6 business days to do so.

That’s because the SEC imposes a two-day waiting period after a security is dissolved.

Also, sometimes Acorns imposes a five-day waiting period to make sure there’s no fraudulent activity on your account.

To get money out of Acorns, simply sign in and go to the “Present” tab.

Then, click on “Invest for Your Future,” click “Withdraw” in the upper right-hand corner, and enter the amount you want to withdraw.

It must be in increments of $5.00, and if you want more than 95% of the total amount, you’ll have to withdraw everything.

Found Money

There’s also something called “Found” money, which is cash they’ll send your way as a reward for shopping at one of their plentiful corporate partners.

Usually, this amount is one to two percent of the purchase price.

In most cases, you’ll get the money back automatically, without an additional step.

You simply use a linked card to make the purchase, and the rewards will be deposited into your account within 60 to 90 days.

The day I decided to check out these deals, I saw one at Sprint where if you added a line of service, they’d give you $25.

There was another one with Instacart where they’ll deposit $50 into your account after you become one of their shoppers and make your first delivery.

Acorns Later

With Acorns, you can also set up an IRA using only your spare change.

You get to decide which type of IRA you’d like to have, whether that’s a  Roth, Traditional, or SEP IRA.

And just like their other accounts, the minimum amount to set an IRA up is only $5.00.

This makes Acorns Later an attractive retirement account option.

This is especially true because there are lots of financial institutions out there who have minimum balances for IRAs that are even higher than their taxable accounts.

The fee for management of this account is one dollar a month until your account value reaches $1,000,000.

And once it reaches this amount, your fee will go up to 0.25% a year of every million you have invested.

Which turns out to be $100 for each of your millions.

Acorns Spend

There’s also Acorns Spend.

This is a checking account that comes with a free Visa debit card manufactured from heavy-duty tungsten steel.

And, zero minimum balance requirements, no overdraft fees, and unlimited ATM use across the entire country.

However, your account won’t accrue any interest, unfortunately.

Acorn Gift Cards

You can also give Acorns gift cards as presents.

How it works is you choose your gift amount, and your recipient will have that amount automatically deposited into their very own Acorns account.

This way, they too can embark on their very own stress-free investment journey.

You can buy Acorns gift cards at participating stores or online.

Acorns Grow

There’s also the Acorns’ finance blog, which is called “Grow.”

You can access it from either the app or the Acorns website.

If you want to grow your confidence, the educational material on the site will help you to learn the fundamentals of investing.

Here is where you can enjoy informative articles on investing, saving, and other things you might want to know.

This can make your Acorns investing a richer, more meaningful experience.

With all the articles you can access, you’ll be able to finely hone your investing knowledge, helping you transform from a struggling newbie into the savviest of investors.

You can also catch up on exciting developments in the fast-changing world of the stock market, and what you can expect from it in the coming week.

This is also where you’ll find Acorns’ FAQs if you have any questions.

The Cost of Subscriptions

Each of their three subscriptions—Acorns Invest, Acorns Later IRA, and Acorns Spend with a checking account and debit card—cost $1.00 per month.

There are no transactions or withdrawal fees.

The Three Categories

The app is organized into three different categories: “Past,” “Present,” and “Potential.”

The “Past” tab shows your “Invest” account activity, including the total amount invested and total gain/loss.

It also shows much you’ve withdrawn, pending withdrawals, your found money, referrals, and total dividends earned.

The “Present” tab gives you the current value of your Invest account.

And if you decide you need to make changes to either your recurring deposits or your roundups, you can do so here.

Also, if you have “Later” and “Spend” accounts, you can see their value at this tab.

Additionally, this is where you can access the “Grow” section of the app or website and find out about “Found Money” opportunities of which you can take advantage.

“Potential” gives you a sneak peek into your future by showing you the projected value of your account based on what you’re currently investing.

Feel free to tinker with your recurring withdrawals and roundups to give yourself a more robust financial outlook.

How Safe is Acorns?

The SIPC (Securities Investors Protection Corporation) insures Acorns investments up to $500,000, including up to $250,000 for cash balances in their checking account.

However, this, of course, doesn’t include any market losses, which is a risk you’re implicitly agreeing to when you buy securities.

So, Acorns is about as safe as most of the other companies out there offering investment accounts.

Final Thoughts

I hope this article helped you answer the question, “Is Acorns worth it?”

With their incredibly easy-to-use app, Acorns attempts to demystify the baffling arcane world of investing.

It makes the process fun and incredibly easy.

Then, you can start reaping the rewards of socking away your spare change so you can have a better financial future.

It only takes a few cents a day to start building a robust portfolio that will provide you with immense future benefits.

If you have a burning desire to invest but detest how tedious learning about it can be, Acorns is the app for you.

Acorns makes it exceedingly easy for the average investor to start reaping the financial and psychological rewards of investing.

Financial, because you’re creating a better financial future for yourself.

Psychological, because this gives you greater peace of mind.

And in these uncertain times, the value of that is incalculable.

If you want a painless way to do your investing a little at a time, then Acorns might be the perfect app for you.

Acorns is terrific for rookie investors, hands-off investors, those who valiantly struggle to save, or those who have zero confidence when it comes to investing in an often-wildly unpredictable stock market.

If any of this describes you, download the app today and use your spare change to start creating a prosperous future for yourself.

If you don’t have a big pile of cash to invest in the stock market, Acorns makes it exceedingly easy for you to dive in.

So, stop procrastinating—download the app today and start building a more secure financial future! If you have anything else you’d like to add to this Acorns review, let us know in the comments below.

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