Acorns Review: Invest Spare Change for a Big Change

.Photo by Alexander Klarmann on Unsplash acorns
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Acorns is one of the most popular micro-savings and micro-investing apps targeted at Millennials. The seven-year-old company based out of Irvine, Calif. closed its latest funding round in January 2019 at a valuation of $860 million, on its way to becoming one of the growing class of tech unicorns.

Nobel Laureate Harry Markowitz, the father of Modern Portfolio Theory, helped build Acorns’ investing strategy, the company says. Acorns has invested more than $1 billion for its users to date, and as of April 2019, had over 4.5 million accounts open. Its retirement savings platform Acorns Later, launched last April, serves over 350,000 investors and manages more than $40 million.

Monthly Cost
for basic accounts
Management Fees
for accounts over $5,000
Minimum Deposit

  • Cool in-app tools and learning resources
  • Save easily with spare change round-up feature
  • Cash back on select purchases
  • Not as many customization options as competitors
  • Fees eat into small account balances

How Acorns Works

Acorns is well-known for its spare-change savings tool and its cash-back rewards program. After linking with users’ credit and/or debit cards, the app rounds up purchases and automatically invests the change into a computer-managed investment portfolio. For example, if you buy a metro ticket for $2.75, the app will automatically invest $0.25.

Acorns invests your money in “smart portfolios” based on your individual risk tolerance and distributes it across ETFs from up to seven asset classes. Customers with the Acorns’ Spend checking account and card will still receive Round-Ups on purchases, invested in the Acorns Core account in $5 increments.

Why Acorns is Worth Your Time

Acorns’ hands-off nature is a major draw, as the platform was built to be mobile-first. Additionally, the company does not charge a fee for assets under management, in which many micro-investing competitors charge a minimum of 0.25% on the account balance.

Additional bonuses include educational tools and insights provided on the app, including a “Potential tool” that allows users to adjust the dollar amount invested to see how much their total investments are projected to increase over time. Acorns’ new Spend card offers up to 10% cashback on qualified purchases and no overdraft or ATM fees.

How to Get Started with Acorns

Once you download the Acorns app or sign up through the web app, you’ll need to submit:

  • A valid email address,
  • Your online banking login information to link your accounts,
  • Your physical address, social security number, and general information for your profile.

You may also need to upload a photo of your government-issued ID or other documentation to help verify your identity. Most accounts are approved within one business day, per Acorns. The app is available to all U.S. residents 18 or older with a valid SSN, as well as Australian residents.

The app requires $5 to start investing, but there is no account minimum. Unlike rival platforms such as Wealthfront, which offers users a variety of customization options, Acorns gives investors just five default portfolios to choose from on a scale of conservative to aggressive.

How Does Acorns Make Money?

Acorns is free for four years for college students if they use a valid .edu email address to sign up. All other users pay a standard $1 per month fee for a taxable investment account, $2 a month to add on an individual retirement account, or $3 per month to also include an Acorns checking account called Acorns Spend.

Individuals should be aware of how much they are paying as a percentage on their savings for the Core Account. If you make an average of 5 transactions per day over the month, with an average round-up of $0.25, you will investment $37.50 over thirty days. Acorns then effectively charges a 2.7% fee. That being said, Acorns says most customers take advantage of its other services, which allow for larger recurring deposits, referral bonuses and extra cash rewards, making the $1 fee more reasonable.

Is Acorns Legit?

Acorns is a regulated brokerage. While it is not FDIC insured, it is a member of the Securities Investor Protection Corporation (SIPC). This means that investors are insured for up to $500,000.

As of 09/07/19, the app had a 4.7/5 rating on the iTunes App Store, based off of the average of 462,500 ratings and ranking #17 in the Finance category. The company is led by CEO Noah Kerner, a three-time entrepreneur, and widely acclaimed advisor, speaker, author, and investor.

Final Thoughts

Acorns is particularly attractive for college students, given the waived fee, and for hands-off investors or those who struggle with budgeting and saving money. Depending on how many transactions you have per month, the $1 fee could be a bargain. For individuals with less than a few hundred dollars to invest, a high yield savings account might be a better option.

For more on how to save, read our Micro-Investing: What It Is, Why It’s for You and How to Start.

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