Acorns Review 2021: 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.

Alana BensonJun 24, 2021
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Our Take

4.0

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

$10 Sign Up Bonus

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
Betterment
SoFi Automated Investing
NerdWallet rating 
NerdWallet rating 
NerdWallet rating 
Fees

$1 - $5

per month

Fees

0.25%

management fee

Fees

0%

management fee

Account Minimum

$0

Account Minimum

$0

Account Minimum

$0

Promotion

$10 Sign Up Bonus

Promotion

Up to 1 year

of free management with a qualifying deposit

Promotion

Free

career counseling plus loan discounts with qualifying deposit

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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

0.03% to 0.18%.

Account fees (annual, transfer, closing)

$50 per ETF to have them transferred to another broker when you close your taxable Acorns account; no charge to sell your investments and have the resulting cash transferred.

Portfolio mix

Portfolio mix is generally well-diversified but lacks significant exposure to international bonds.

Sustainable portfolio available for free.

Socially responsible portfolio options

Sustainable portfolio built with ESG ETFs available for no extra cost.

Accounts supported

  • Individual non-retirement accounts.

  • Roth, traditional and SEP IRAs.

  • UTMA/UGMA accounts for kids.

Tax strategy

Not available.

Automatic rebalancing

Free on all accounts.

Human advisor option

Not available.

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.

Customer support options (includes website transparency)

Customer service is available every day from 6:00 a.m. to 7:00 pm PST through phone and email support.

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 accounts or 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.

Acorns Earn: 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 Earn essentially lets you do that: It’s cash back for your investment account.

Acorns has partnered with nearly 10,000 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 rewards will usually land in your account in 60 to 120 days. According to Acorns, customers are now earning between $5 and $25 a month in bonus investments from everyday purchases.

Acorns also created a Job Finder feature to help connect clients with career opportunities. The tool is powered by ZipRecruiter and lets clients set up job alerts. Acorns also provides career development content on Job Finder.

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.

Sustainable portfolio: Acorns now offers a sustainable portfolio made up of ETFs graded using ESG, or environmental, social and governance criteria. The platform makes it easy for existing customers to switch their portfolios over from the Core option to the sustainable one, but also recognizes that clients may experience tax complications if they do so.

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.

Key terms in this review

Robo-advisor

Acorns is a robo-advisor, also known as an automated investing services or online advisor. Robo-advisors use computer algorithms and advanced software to build and manage your investment portfolio, and are much cheaper than an-person human financial advisor. Robos are best for hands-off investors who want to outsource portfolio management; if you would rather take a DIY approach to picking and choosing your investments, Acorns may not be the right fit. (Consider an online broker instead.)

Account management fee

An account management fee is the fee an advisor or robo-advisor charges to manage your investments. A typical fee is 0.25% of your assets.  Acorns charges a flat fee instead of a percentage of assets. Flat fees often benefit investors with higher account balances. Investors with smaller balances should take care to compare fees across other advisors.

Tax-loss harvesting

Tax-loss harvesting is an investment strategy that can significantly reduce capital gains taxes. In taxable accounts, the practice involves selling losing investments to offset the gains from winners. It’s widely available among other robo-advisors, often for free, but is not offered by Acorns.

Expense ratio

An expense ratio is an annual fee charged by mutual funds, index funds and exchange-traded funds, as a percentage of your investment in the fund. If you invest in a mutual fund with a 1% expense ratio for example, you’ll pay the fund $10 per year for every $1,000 invested. If high, these fees can significantly drag down your portfolio returns. The expense ratios of the funds used in Acorns’ portfolios range from low to above average. Expense ratios are paid in addition to your Acorns account management fee.

IRA

An individual retirement account lets you save money for retirement and get tax breaks for doing so. Acorns offers IRA accounts if you sign up for Acorns Personal.

Automatic rebalancing

Automatic rebalancing is regular rebalancing of your portfolio in response to market fluctuations or other factors that shift your portfolio out of its intended investment allocation. The market moves and over time, your allocation will move, too. So if your target was having 60% in stocks and 40% in bonds and stocks are doing well, you could end up having 70% in stocks, which may be more risk than you are comfortable with. With automatic rebalancing, the computer monitors your allocation and will automatically adjust your investment if it gets out of line. Acorns offers this service.

on Acorns's website

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