That approach is certainly a useful tool to save more — especially with the launch of retirement accounts, called Acorns Later, this year. 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 and $2 a month for an individual retirement account.
- Management fee: $1 - $2/month
- Account minimum: $0
- Promotion: College students get up to four years free
How Acorns compares to other robo-advisors
cash bonus with deposit of at least $1,000 in first 30 days
The bottom line
Wealthsimple’s $0 minimum balance requirement, hands on human help and its no-fuss, streamlined design make it an attractive place for beginners to start their investing journey. But the company’s real standout feature among the robo-advisor competition is its lineup of socially responsible investment (SRI) portfolios, a refreshing addition for values-based investors. Another unusual offering that customers with taxable investment accounts will appreciate is free free tax-loss harvesting, no minimum account balance required.
Show pros & cons
Free access to human advisers
Free portfolio analysis
Free tax-loss harvesting
Socially-responsible investment options
No account minimum
Higher account management fees
Limited free-management promotion
Limited personal finance tools
Up to 1 year
of free management with a qualifying deposit
The bottom line
Betterment has maintained its status as the largest independent robo-advisor for a reason: The company offers a powerful combination of goal-based tools, affordable management fees and no account minimum.
Show pros & cons
No account minimum.
Fractional shares limit uninvested cash.
Robust goal-based tools.
No direct indexing.
Acorns is best for:
- College students
- Hands-off investors
- People who struggle to save
Acorns at a glance
|Account management fee||$1/month for taxable investment account; $2 a month for IRA account (up to $1 million balance)|
|Investment expense ratios||Exchange-traded fund expense ratios average 0.10%|
|Portfolio||ETFs from up to seven asset classes|
|Account minimum||$0 to open account; $5 required to start investing|
|Account fees (annual, transfer, closing)||None|
|Tax strategy||Not available|
|Automatic rebalancing||Free on all accounts|
|Customer support options||Phone support Monday-Friday, 9 a.m. to 8 p.m. Eastern. Email support.
|Promotion||Free for college students with a valid .edu email address for up to four years from sign-up date|
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. This is why 401(k)s, which take contributions directly out of your paycheck, work well, and why auto-enrollment in those plans has more people saving for retirement.
Though Acorns doesn’t manage 401(k)s, it piggybacks on this concept by sweeping 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.
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 100 companies — including Apple, Nike, Blue Apron 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. Acorns also offers a five-step financial literacy course for free to Acorns customers, on Udemy.com, an online learning marketplace.
Where Acorns falls short
Management fee: Whether Acorns’ fee is a pro or a con depends entirely on your account balance: Acorns costs $1 a month for taxable investment accounts and $2 a month for Acorns Later, which includes IRA accounts.
Flat fees like this are rare among robo-advisors, which typically charge a percentage of assets under management. A $1 or $2 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. Once your account balance tops $5,000, Acorns’ fee gets more competitive.
|Account balance||Acorns||Acorns Later|
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.
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.