Acorns Review

Jul 20, 2020 03:47 AM ET
Acorns Review

Acorns: How Does It Work

Acorns is a robo-advisor whose services aim to help save your spare change, by automatically investing it. The idea comes from the old technique that most of us have used in our lives that saving becomes big by collecting spare changes. Acorn is able to help you save money by rounding up the purchases made by you with a synced debit or credit card.

Acorns is a startup valued at $860 million. It is highly applauded by journalists and investors alike for successfully being able to get millennials interested in investing. 

What Are the Main Features?

Acorns Main Features

  • Roundups: The most distinguishing feature is roundups. What this feature does is for each credit card transaction, it rounds up to the nearest dollar and is invested in an Acorns account. These roundups add up to a whole lot.

  • Found Money: Acorns offers a cashback program that is slightly like what you may witness with a rewards credit card. The robo-advisor has partnered with over 350 companies including big names such as Walmart, Macy’s, Sephora, Nike, Airbnb, etc. to give you cashback when you utilize a linked payment method at one of these multiple partners. The Found Money rewards typically reflect in your account within 60 to 120 days.

  • Acorns Spend: Acorns has an FDIC-insured checking account plus debit card, called Acorns Spend. This can be pre-ordered by its core users. You are required to pay $3 per month if you have Acorns, Acorns Later and Acorns Spend.

  • Scheduled Deposits: Acorns provides set recurring daily, weekly, and monthly investments.

  • Acorns Later: Acorns offers an individual retirement account called Acorns Later. This is available to Acorns investing app users. People with IRA account can open an account with Acorns. Later the individual needs to pay $2 per month for both accounts.

  • Educational Content: Acorns provides educational content through its app and website. The content includes explanations of important investment terms, concepts essential for investing in easy language. You will get access to essential financial advice to help you make the most of your savings and investments. They also publish a magazine called Grow Magazine. It is an online personal finance site geared in the direction of millennials with advice about credit card debts, student loans, side gigs, and other financial topics.

  • Mobile Access: For user convenience, mobile access is offered for both Android and iOS users.

How to Start Savings with Acorns?

How to Start Savings with Acorns
To start savings with Acorns you must open an account by either going on their website or mobile app. The design of the app and its interface is extremely user friendly and has won several awards for its attractiveness. Acorns app asks you to enter important personal information and link a bank account. This information helps to set your financial goals and allows Acorns can understand your risk tolerance.

Based on the information Acorns collects from you, it will categorize you under one of the five pre-built portfolios. 

The portfolios include:

  • Conservative

  • Moderately Conservative

  • Moderate

  • Moderately aggressive

  • Aggressive

If your risk tolerance is high and time horizon longer then you will typically be invested in higher-risk assets that offer higher growth potential. There is no minimum amount for opening an account therefore you can start saving right away.

What Is Acorns Investment Strategy?

What Is Acorns Investment Strategy

Like its competitors, Acorns also incorporates the investment strategy called MPT or Modern Portfolio Theory. The conception behind Modern Portfolio Theory is investing in diverse portfolios across numerous asset classes. This is done to reduce the risk while maximising the returns. A fact that can back up their strategy success and reliability is that the father of Modern Portfolio Theory, Harry Markowitz, is an advisor for Acorns. Acorns uses ETFs from 7 asset classes including domestic and international large-company stocks, emerging markets, small company stocks, corporate and government bonds, and real estate.

What About the Fees & Commissions?

Here are the details of fees and commission which you need to be aware of when you are thinking about investing.

Account Management Fees:

  • $1 per month for taxable investment accounts

  • $2 per month for IRA account and investment account

  • $3 per month for checking account along with investment and retirement accounts

Investment expense ratio:

Exchange-traded fund expense ratios range between 0.03% and 0.18%

Account fees (transfer, annual, closing):

The charge for transferring your EFTs to another broker is $50 per ETF during the closing of your Acorns account. There is no fee for selling your investments or have your money transferred.

Acorns Pros, Cons, and who is it for?


  • Cashback at select retailers

  • It hides the intricacies of investment and does not demand you to understand Modern Portfolio Theory for using Acorns.

  • Educational content is available

  • Automatically invests the spare change

  • You can start investing without any money because it has no minimum deposit requirement.

  • Acorns is free for college students for the first 4 years.

  • Painless savings since the amounts pulled from your account are small which makes it invisible to your eyes and doesn’t bother you when it goes missing.


  • High fee on smaller account balances

  • Small investment portfolio

  • It is only here to boost your saving. This means it is not ideal for the 5% to 20% annual savings you do to put towards larger goals or retirement.

  • Chances of principal loss

  • Little transparency about investment options

  • Limited account types. The account types include checking and traditional IRA only.

After analyzing the pros and cons one can understand that Acorns is best suited for the following:

  • People who have hard time-saving money

  • Hands-off investors

  • College students that have little money or irregular incomes

  • People who are new to the investing world

The Bottom Line

Acorns app is a great way to start saving money or jump into investing for those who have little money to spare without having to disrupt your lifestyle. In other words, Acorns is ideal under the micro-savings category. If you wish to make the most of your spare change and receive occasional retail kickback then Acorn is the way to go.


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