Acorns Review

For many of us, investing can seem overly complicated and somewhat intimidating if you don’t know the ins and outs. But Acorns intends to simplify and demystify this process through their revolutionary mobile app. The father-son team, who are based in California, created Acorns with the intention of removing any mental roadblocks or anxiety about becoming a regular investor. With help from the father of Modern Portfolio Theory, Dr. Harry Markowitz, Acorns recommends optimized portfolios and keeps them on track with automatic rebalancing and dividend reinvestment.

What Is Acorns?

Acorns is a smartphone app that “rounds up” your spending to the nearest dollar and invests that difference. You link up a credit card and checking account, then Acorns does the rest. This microsavings service makes investing almost painless because you are literally investing pennies at a time. Obviously, the Acorns app is targeted at a much younger, more tech-savvy generation (Millennials), as the entire investment experience is created and managed from a smartphone. Acorns recently created a web-based version as well for desktop and portable users. Essentially, this app is a great starting point for anyone who hasn’t invested yet or needs a bit of guidance in the beginning.

Acorns Features

  • Minimum Deposit —$0; $5 to start investing
  • Account Fees — $1/month for accounts under $5,000; 0.25%/year for accounts over $5,000; Free for individuals under 24 years of age and attending college
  • Mobile App — Yes — Apple iOS and Google Android
  • Website Access — Yes —
  • Available Accounts — Individual only. Retirement accounts are not available.
  • Round-Ups — For each credit card transaction the Round-Up to the nearest dollar is invested into Acorns.
  • Scheduled Deposits — Set recurring daily, weekly or monthly investments.
  • Found Money — When you shop with Acorn’s Found Money partner brands, add money to your Acorns account. As of publication Acorns has partnered with these companies: Jet, Hotel Tonight, Blue Apron, Airbnb, JackThreads, Boxed, Hulu, and Dollar Shave Club.
  • Learn  — Education section that includes investing basics, FAQs and a glossary.
  • Grow  — Interviews, news and how-tos that are available on the website or within the app.

Signing up for an Acorns investment account is a relatively easy process and starts with signing up on the web or downloading the app for free from iTunes, Amazon or Google Play stores. The app is available for iPhone or Android mobile devices. The three-step signup process starts with entering a PIN access code, which will be used when you log into the app in the future. Creating an Acorns account is currently available only to U.S. citizens.

  • Choose a Round-Up Account Your Round-Up account is the one that will be monitored for you; choose which transactions you want to round up and invest the change. Choose from the most popular banks, like Chase, BoA, Citibank, Wells Fargo, U.S. Bank, USAA, etc. If your bank isn’t listed, just click the “Next” button and type in 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, you click the account you’d like to use in your round-ups. You can connect more than one if you’d prefer.
  • 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 are 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, as Acorns encrypts and protects all of the data with bank-level security.
  • Create an Investment Account You’ll be asked to type in your first and last names, phone number and birth date and 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. Next, you’ll be prompted to answer three questions:
    • Are you or have you been affiliated with a broker-dealer?
    • Has the IRS notified you of being subject to backup withholding?
    • Are you a 10% shareholder of a publicly traded company?

If none of these apply to you, just leave them unchecked. These are standard questions required by the SEC when opening any brokerage account. The next screen will prompt you to fill in your employment information, net worth, yearly income and your reasons for investing. The answers to these questions will help them create customized advice and a recommended portfolio created by their 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, your Social Security number will need to be filled in, which, according to the app, is used for ID verification, tax reporting and preventing fraud. Once all the signup boxes are checked green, click the “Get Started!” button.

Your Recommended Portfolio

After the signup process is complete and you’ve created your investment account with Acorns, the app will process your portfolio. Simply 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), a median net worth, my long-term investment reason, my age, and above-average income. However, I chose to go with the Moderate Portfolio for the purpose of this review. To see a change in projected value over time, you simply 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. There are five types to choose from:

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

Next, you can explore the ETFs and select an asset class you want to invest in. When you’re ready, simply click “Confirm Portfolio.”

How Round-Ups Work

Once your account is approved, they will withdraw the initial deposit and your account will be ready for investing. 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, and $0.57 was added to my Round-Up balance. Once the total reaches $5, the money is 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 and it will calculate all of your transactions that are eligible. Additionally, you can deposit cash reward bonuses from your bank or other rewards programs you participate in. Or choose to invest lump sum amounts in addition to your Round-Up deposits. If you prefer, you can set up recurring deposits on a daily, weekly or monthly schedule. CFO Mark Dru explains: “You can also invest up to $20,000 or $30,000 in a lump sum investment, so we’re not only attracting investors interested in doing the Round-Up, but more sophisticated investors as well.”

Acorns is similar to Bank of America’s Keep the Change program, which rounds up purchases made with your debit card to the nearest dollar and then moves the difference into a savings account. With Acorns, however, the money goes into an investment account with the intention of long-term savings and growth potential, rather than a simple savings account.

Investing and Pricing Features

Logging into the Acorns app allows you to view your portfolio, check the performance of your index funds, 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.”

Within your preset investment portfolio, the Acorns app gives six options for basic index funds offered through BlackRock and Vanguard.

  • Large Company Stocks — Vanguard S&P 500 ETF ([stock_quote symbol=”VOO” show=”Name” nolink=”” class=””])
  • Small Company Stocks — Vanguard Small-Cap ETF ([stock_quote symbol=”VB” show=”Name” nolink=”” class=””])
  • Emerging Markets — Vanguard FTSE Emerging Markets ETF ([stock_quote symbol=”VWO” show=”Name” nolink=”” class=””])
  • Real Estate — Vanguard REIT ETF ([stock_quote symbol=”VNQ” show=”Name” nolink=”” class=””])
  • Corporate Bonds — iShares iBoxx$ Investment Grade Corporate Bond ETF ([stock_quote symbol=”LQD” show=”Name” nolink=”” class=””])
  • Government Bonds — iShares 1-3 Year Treasury Bond ETF ([stock_quote symbol=”SHY” show=”Name” nolink=”” class=””])

There are no deposit or account minimums to maintain, no commission fees, and no penalties when withdrawing funds. Acorns’ fees have recently been lowered. It’s $1 per month for your first $5,000, or 0.25% annually for accounts greater than $5,000. This puts their service more in line with companies like Betterment than their previous higher fees. According to Vanguard the average mutual fund management fee is 1.02%, so Acorns fees are relatively low by comparison. However, since you’re investing such small amounts, which do add up of course, the monthly $1 fee adds up to taking a large piece of your investment pie. And this fee gets even larger as your balance increases over $5,000. It is important to note returns are not guaranteed and it is possible to lose principal. Acorns invests in the stock and bond markets and is not FDIC insured, though investments are SIPC insured. At the time of this article update, they have $87 million of assets under management.

Free for College Students

Acorns is targeting the younger generation with a great deal — no fees on any accounts of any size for college students. You must have a valid .edu address and employment status as “Student” for up to four years from the date of registration. Students are looking at saving $1 per month for accounts under $5,000. For accounts over $5,000, students will save 0.25%.

What Would Make Acorns Better?

A major drawback is the funds in the investment account with Acorns is taxable, because the funds transferred are after-tax money. As a young adult starting a career, a tax-deferred 401(k) plan with a company match is a better investment than putting money into an Acorns account. It would be nice if they offered an IRA account in which you can start retirement savings. It’s been reported 20% of employees do not have access to a retirement account, and Acorns could easily fill this need.


  • 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 have a minimum deposit to start using their service.
  • Free For College Students — To attract young savers/investors Acorns is free to use for any college student for the first four years.


  • No Retirement Accounts — Unfortunately Acorns does not have the option to put your savings into a traditional or Roth IRA account. All investing is taxable.
  • Only for “Boosting” Your Savings — Acorns savings amounts aren’t really suited to save the 5% to 20% annually you need to put towards retirement or larger goals.
  • Can Lose Principal — It is possible to lose money with Acorns, though the recommended investments are pretty conservative.
  • High Annual Fees — When investing under $5,000 their fees are high when compared to robo-advisor services. This annual fee will eat away at your returns.


Acorns is a good start if you have little to invest or need a nudge to start investing without affecting your lifestyle, though the monthly deposits are way too small to be considered a serious method for saving towards retirement. Betterment is a better option for larger deposit amounts with lower annual fees, and it offers retirement accounts. In response to Acorns’ microsavings service, Betterment has introduced SmartDeposit, automating investing once your bank account is above a specified dollar amount. With that said, in the category of microsavings, I rate Acorns the best service available. Betterment, rather than Acorns, is our recommended investing service for beginners. However, there is nothing 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: I have an account opened with Acorns for two years.


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