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Acorns App Review | Micro-Investing Made Easy

Jeff Rose, CFP® | August 23, 2021

When investing app Acorns was conceived in 2012, it was lauded as a smart way to invest your spare change.

“Anyone can grow wealth,” Acorns asserts on its website. And due to the way the mobile app operates, it really does practice what it preaches.

With the Acorns mobile app, anyone can build wealth by saving tiny sums of money — sometimes just $.10 or $.25 — at a time. 

Acorns also promises to help it users grow wealth by charging low fees and investing their dollars into diversified portfolios which are tailored to each person’s penchant for risk.

The catch? Acorns fees can add up to significant sums if you don’t spend enough for the rounding up of your purchases to count for much.

Also, Acorns investing options are somewhat limited.

How Does The Acorns AppsWork?

grow wealth by rounding up all your purchases and investing the difference.

If you use the Acorns app and purchase a coffee for $2.75, for example, Acorns will round the purchase up to $3.00 on your behalf.

While investing $.25 here and $.37 there may not make you feel like you’re building anything meaningful, keep in mind that rounding up these small purchases can add up over time.

If you make two purchases per day for thirty days and round each bill up an average of $.50, that’s $30 you’re investing every month.

It’s not a lot, but it’s certainly better than nothing, and it helps that Acorns takes care of each transaction on your behalf.

Where Is Your Money Invested?

According to exchange-traded funds, also known as ETFs.

ETFs consist of stocks and bonds and are made to model an asset class or indexes like the Dow Jones Industrial Average or S&P 500.

Through this process, the money you invest is instantly diversified across 7,000 stocks and bonds. According to the Acorns app, this is a possibility because of Fractional Share Ownership in their portfolio ETFs.

When it comes to the portfolio you wind up in, Acorns does the heavy lifting for you.

Every portfolio Acorns invests your money in is structured with ETFs from popular investment brokers like Vanguard and BlackRock.

When it comes to choosing your investments, all you need to do is choose from five different set portfolio options:

  • Conservative
  • Moderately conservative
  • Moderate
  • Moderately aggressive
  • Aggressive

Each of these portfolios is set up to satisfy investors’ various desires for risk.

If you’re a young investor and have plenty of time to ride the ups and downs of the stock market, you may be more inclined to invest aggressively, for example.

If you’re nearing retirement and using Acorns to beef up your retirement portfolio, on the other hand, you may want to go with a conservative or moderately conservative portfolio option. At the end of the day, it’s totally up to you.

How Much Does Acorns Cost?

While Acorns can make it easy to invest small sums daily, this service isn’t free.

Acorns charges a monthly fee that varies based on how much you have in your Acorns account — a fee structure that broadly favors those who have been using the app for the longest.

When you sign up for Acorns, you can expect to pay the following for their three tiers of service:

 Acorns CoreAcorns Core + Acorns LaterAcorns Core + Acorns Later + Acorns Spend
Fees$1 per month$2 per month$3 per month
Services Included•Automated investing
•Smart portfolio options
•Grow Magazine
•Found Money feature that lets brands reward you when you shop
•Customer support
•All the features of Acorns Core
•IRA and portfolio recommendation
•Automatic updates
•Recurring contributions option
•Additional savings features
•Assisted rollovers
 
•All the features of Acorns Core and Acorns Later
•Real-time roundups, automatic retirement savings, spending strategies, and more
•Digital direct deposit, mobile check deposit and check sending, free bank-to-bank transfers, unlimited free or fee-reimbursed ATMs nationwide, and more
•Found Money feature
•Spending strategies
•No overdraft or minimum balance fees and unlimited free ATM use nationwide
•FDIC protection up to $250,000

While Acorns Later and Acorns Spend seem like they could be valuable for a select number of consumers, the majority of people who use Acorns opt for the $1 per month plan.

According to Acorns, over 4 million people have used the app to invest, but only 250,000 people pay for the Acorns Later plan.

Also note that, if you’re a college student, you can access the basic Acorns app and investing plan for free.

Pros and Cons of Using Acorns

While rounding up all your purchases and throwing your spare change into an ETF sounds like a smart concept (and it is), this app isn’t perfect for every consumer.

Here are some of the pros and cons you should be aware of before you sign up:

Advantages of Using Acorns

  • The basic Acorns app is free for college students and as cheap as $1 per month for everyone else.
  • Your purchases are rounded up automatically so you invest with each purchase you make.
  • Acorns invests your spare change into diversified portfolios made up of ETFs from major brokerage firms.
  • You can choose from five different portfolio options based on your desired level of risk.
  • You can earn additional “found money” when you shop with participating brands

Disadvantages of Using Acorns

  • Fees can add up if you don’t make a lot of purchases every month and the “rounding up” doesn’t accumulate very much cash.
  • You only have five portfolio options to choose from, which could be a big downer if you’re someone who likes to choose your investments yourself.
  • It can take a long time to save up considerable sums of money if you don’t make many purchases each month.

Who Should Sign Up for Acorns?

While Acorns investment options are limited and there is a monthly cost involved, this app is still perfect for a select number of consumers.

If you are struggling to save and invest for the future and like the idea of someone doing the heavy lifting for you, for example, Acorns could be exactly what you need.

And even though there aren’t a ton of investment options available, many consumers probably prefer it that way.

Not everyone is especially knowledgeable about stocks and bonds, so many consumers may not mind selecting a portfolio of ETFs aimed at their desired level of risk.

Paying just $1 per month to have your purchases rounded up and the money invested on your behalf is also a good deal — especially if you make a ton of purchases each month.

The Bottom Line

If you are looking for a way to save more money and need some help pulling the trigger, the Acorns app can help.

Signing up is easy and the basic version of the app costs just $1 per month. You have a lot to gain if you use the app frequently and let your investments accrue until you’re ready to cash them in or retire.

On the flip side, the Acorns app can be pricey — even at $1 per month — if you don’t make a lot of purchases. 

Let’s say you make ten purchases per month and each purchase is rounded up an average of $.50.

In that case, you would only rack up $5 in monthly savings but would pay a $1 fee — or 20% of your total investments.

Is Acorns right for you? Run the numbers and figure out how much you’ll be able to invest each month before you decide.

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About the Author

Jeff Rose, CFP® is a Certified Financial Planner™, founder of Good Financial Cents, and author of the personal finance book Soldier of Finance. He was a financial planner for 16+ years having founded, Alliance Wealth Management, a SEC Registered Investment Advisory firm, before selling it to focus on his passion - educating the masses on the importance of financial freedom through this blog, his podcast, and YouTube channel.


Jeff holds a Bachelors in Science in Finance and minor in Accounting from Southern Illinois University - Carbondale. In addition to his CFP® designation, he also earned the marks of AAMS® - Accredited Asset Management Specialist - and CRPC® - Chartered Retirement Planning Counselor.

While a practicing financial advisor, Jeff was named to Investopedia's distinguished list of Top 100 advisors (as high as #6) multiple times and CNBC's Digital Advisory Council.

Jeff is an Iraqi combat veteran and served 9 years in the Army National Guard. His work is regularly featured in Forbes, Business Insider, Inc.com and Entrepreneur.

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