Acorns Review 2020: Pros, Cons and How It Compares

Acorns’ spare-change savings tool and cash-back rewards program make investing easy. But the management fee on small accounts is steep.

Andrea CoombesJuly 14, 2020

Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own.

Our Take

3.5

NerdWallet rating 

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, $3 or $5 a month sounds cheap, but can be a high percentage of assets for investors with small balances.

Acorns

on Acorns's website

on Acorns's website

Fees

$1 - $5

per month

Account Minimum

$0

Promotion

None

no promotion available at this time

Pros & Cons

Pros

  • Automatically invests spare change.

  • Cash back at select retailers.

  • Educational content available.

Cons

  • Small investment portfolio.

  • High fee on small account balances.

Compare to Other Advisors

Acorns
SoFi Automated Investing
Wealthfront
Fees

$1 - $5

per month

Fees

0%

management fee

Fees

0.25%

management fee

Account Minimum

$0

Account Minimum

$0

Account Minimum

$500

Promotion

None

no promotion available at this time

Promotion

Free

career counseling plus loan discounts with qualifying deposit

Promotion

$5,000

amount of assets managed for free

Full Review

Acorns has modernized the old-school practice of saving loose change, merging the robo-advisor model with an automated savings tool. Acorns works by rounding up your purchases on linked credit or debit cards, then sweeping the change into a computer-managed investment portfolio. That approach is certainly a useful tool to save more. Acorns offers three levels of membership:

  • Lite: $1 a month. Includes a taxable investment account.

  • Personal: $3 a month. Adds on an individual retirement account and a checking account.

  • Family: $5 a month. Includes everything in the lower tiers, plus Acorns Early, which lets you open investment accounts for kids.

(Note for existing Acorns users: If you joined before May 20, 2020, you may still be on their previous pricing structure. The main difference is that there is no longer a $2-a-month tier offering just a taxable investment account and an IRA. If that’s the tier you already are on, you can stay there. Or you could move to the $3-a-month tier and get a checking account as well.)

Acorns is best for:

  • Hands-off investors.

  • People who struggle to save.

  • Custodial accounts for kids.

Acorns at a glance

Account minimum

$0 to open account; $5 required to start investing

Account management fee

  • Lite: $1 a month for taxable investment account.

  • Personal: $3 a month for an investment account plus an IRA and a checking account.

  • Family: $5 a month for all of the above plus investment accounts for kids.

Investment expense ratios

Exchange-traded fund expense ratios range from 0.03% to 0.18%

Account fees (annual, transfer, closing)

$50 per ETF to have your ETFs transferred to another broker when you close your Acorns account; no charge to sell your investments and have your money transferred

Portfolio mix

Five portfolio types that weight 7 ETFs based on risk tolerance

Accounts supported

  • Individual non-retirement accounts

  • Roth, traditional and SEP IRAs

  • Online checking account with debit card

  • UTMA/UGMA accounts for kids

Tax strategy

Not available

Automatic rebalancing

Free on all accounts

Human advisor option

Not available

Tools

The app's Potential tool lets you adjust the dollar amount invested to see how your total investments will grow over time

Bank account/cash management account

Personal and Family members get access to Acorns Spend, a checking account with a debit card, mobile check deposit and reimbursed ATM fees. No interest is paid on the account.

Customer support options (includes website transparency)

24-hour phone and chat support; response time is up to 48 hours, but a lot of information easily available on website

Promotion

None

Where Acorns shines

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 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 account, mobile check deposits and free ATMs (or reimbursed ATM fees). It requires no minimum balance and is available on the  Personal and Family plans only.

» 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 350 companies — including Airbnb, Warby Parker, Walmart, Nike and Sephora — 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 usually land in your account in 60 to 120 days.

Investing for kids: The Family tier includes Acorns Early, which makes it easy to create UTMA/UGMA accounts for your kids. These custodial accounts allow parents to invest on behalf of a minor child, and use the money for expenses that benefit the child. Once the child reaches the age of majority, they gain ownership of the account and can use the money for any reason.

It’s worth noting that custodial accounts are not the same as 529 savings accounts. 529 accounts are less flexible, as they’re designed for education expenses, but they also offer more tax advantages and are generally considered a better way to save for college. Be sure to do your research or consult a financial advisor to determine the best account for you.

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 a taxable investment account; $3 a month to add Acorns Later (an IRA account) and Acorns Spend (the checking account and debit card offering); and $5 a month for those benefits plus Acorns Early, investment accounts for kids.

Flat fees like this are rare among robo-advisors, which typically charge a percentage of assets under management per year. A $1, $3 or $5 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 an annual percentage of assets under management:

Account balance

Lite

$1/month ($12/year)

Personal

$3/month ($36/year)

Family

$5/month ($60/year)

$100

12%

36%

60%

$500

2.4%

7.2%

12%

$5,000

0.24%

0.72%

1.2%

$10,000

0.12%

0.36%

0.60%

For context, Acorns’ competitors like Wealthfront and Betterment charge 0.25% per year, and generally offer a higher level of service, with tax assistance, better user interfaces and more diversified portfolios. Stash charges $1 a month for a brokerage account, plus a bank account with a debit card that offers rewards. For $3 a month, Stash gives you those offerings plus a retirement account (a traditional or Roth IRA), which is very similar to Acorns Personal. We would argue that Acorns provides more value than Stash,  which does not offer portfolio management.

Account fees: If you decide to move your investments out of Acorns to another provider, you'll pay a steep fee for that convenience. Acorns charges $50 per ETF to transfer investments. Acorns isn't alone in charging this type of fee, but theirs is on the high side. If you have, say, five ETFs, you're looking at a $250 fee. A more common scenario among providers is to charge $75 to transfer all investments out.

Still, you can always choose instead to sell your investments and transfer your cash to a bank account. There's no charge for that, though you might face capital-gains taxes in a taxable account.

Small-ish 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.

That's enough asset classes for a diversified portfolio, no doubt. But if it 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 since 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