The Bottom Line: Acorns merges the robo-advisor model with an automated savings tool, making it easier to build a nest egg. But whether Acorns' flat fees are a pro or a con depends on your account balance: $1, $2 or $3 a month sounds cheap, but can be a high percentage of assets for investors with small balances.
Pros & Cons
Free management for college students
Automatically invests spare change
Cash back at select retailers
Educational content available
Small investment portfolio
High fee on small account balances
Acorns has modernized the old-school practice of saving loose change, merging the robo-advisor model with an automated savings tool.
The app rounds up your purchases on linked credit or debit cards, then sweeps the change into a computer-managed investment portfolio. That approach is certainly a useful tool to save more — especially with the launch of retirement accounts, called Acorns Later.
Acorns is free for four years for college students with a valid .edu email address. Other investors pay $1 a month for a taxable investment account, $2 a month to add on an individual retirement account, or $3 a month for an Acorns checking account — called Acorns Spend — investment and retirement accounts.
Acorns is best for:
People who struggle to save.
Where Acorns shines
Free management for college students: Acorns goes after its target market — young, would-be investors who have little money to invest — by waiving management fees for up to four years for college students who register with an .edu email address. College students are ripe for this kind of service and could wind up with a nice little pot of money after four years of rounding up.
Automated approach: We’re behind any tool that encourages mindless, automatic saving. If you don’t have to think about saving, you’re more likely to do it.
Acorns sweeps excess change from every purchase using a linked account into an investment portfolio. You can connect as many cards as you want, though all roundups are taken from the same linked checking account. With each purchase, Acorns rounds up to the nearest $1 and gives you the option to transfer that change into an investment portfolio. You can do that either automatically, so every purchase is rounded up and the change transferred, or manually, by going through recent purchases on the app and selecting which roundups to transfer.
Although these roundups are the bread and butter of Acorns’ platform, you can also invest lump sums manually or set up recurring deposits on a daily, weekly or monthly basis. Lump-sum transfers may be as small as $5.
The new Acorns Spend account is an online checking account and debit card (not just any plastic card, though — this one is made of tungsten, a heavy metal). Acorns Spend offers real-time roundups to your investment or retirement account, mobile check deposits, free ATMs (or reimbursed ATM fees), and requires no minimum balance.
» Want to choose your own investments? See our best online stock brokers round-up.
Minimum investment: There’s no minimum to open an account, but the service requires a $5 balance to start investing in one of Acorn’s five pre-built portfolios.
Found Money: The only thing better than building an investment portfolio out of a bunch of spare change is building an investment portfolio out of someone else’s money. Acorns' Found Money program essentially lets you do that: It’s cash back for your investment account.
Acorns has partnered with more than 200 companies — including Apple, Hulu, Amazon and Airbnb — to give you cash back when you use a linked payment method at one of the partners. In most cases, you get the cash back automatically, without an additional step. You simply use a card linked to an active Acorns account to make the purchase, and the Found Money rewards will land in your account in 60 to 120 days.
Educational content: We found the website well-suited to new investors, as it defines key terms and uses clear language. Acorns also publishes Grow Magazine, an online personal finance site geared toward millennials with advice about side gigs, credit card debt, student loans and other financial topics. Grow content is also integrated in the Acorns app.
Where Acorns falls short
Management fee: Whether Acorns' fee is a pro or a con depends entirely on your account balance: it costs $1 a month for an Acorns Core taxable investment account, $2 a month for Acorns Later, an IRA account, and $3 a month for Acorns Spend, the checking account and debit card offering, which includes the investment accounts.
Flat fees like this are rare among robo-advisors, which typically charge a percentage of assets under management. A $1, $2 or $3 a month fee sounds cheap, but can be a high percentage of assets for investors with small balances. If you make only roundup contributions, you could hover in that zone for quite a while.
Here's a look at Acorns' fees expressed as a percentage of assets under management:
For context, Acorns competitors like Wealthfront and Betterment charge 0.25%, and generally offer a higher level of service, with tax assistance, better user interfaces and more diversified portfolios. Stash charges $1 a month for balances up to $5,000 and 0.25% for balances over $5,000. We would argue that Acorns provides more value than Stash by way of roundups and portfolio management.
Small portfolio: Like other robo-advisors, Acorns takes the investing reins from the user. The app considers your data — including age, goals, income and time horizon — and then recommends one of five portfolios that range from conservative to aggressive. You can accept that recommendation or choose a different portfolio that takes more or less risk.
The portfolios themselves, though, are smaller than the average robo-advisor portfolio, made up of low-cost iShares and Vanguard exchange-traded funds that cover just five to seven asset classes, depending on the portfolio: real estate, large-cap stocks (domestic and international), small-cap stocks, emerging markets, and corporate and government bonds.
If that feels too restrictive, you might prefer to build your own portfolio without the help of a service like Acorns. Our guide to how to invest in stocks will get you started.
»Want to compare more providers? See our picks for best robo-advisors.
Is Acorns right for you?
If you want to make the most of your spare change and get the occasional retailer kickback, there’s really no better place to do that — especially now that Acorns offers IRA accounts. The automatic roundups at Acorns make saving and investing easy, and most investors will be surprised by how quickly those pennies accumulate.
The downside? At small balances, Acorns fees can cut into or completely wipe away investment returns.
on Acorns's website