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Acorns Review: Core, Later and Spend

Katy writes honest reviews of the latest services with an eye for budget and practicality.

Acorns Review

Is Acorns a good investment app? It’s a low fee investment option that can be a great gateway to investing.

Read to find out if Acorns is right for you. Learn about the different services they offer and which one could be right for you.

What Do You Think of Acorns?

Pros

  • Automatic Round-Ups
  • Automatically Balanced (Robo-Advisor) Portfolios
  • Flat Rate Fees
  • Low Minimums ($5)
  • Easy Sign Up

Automatic Round-Ups

Acorns is known as the app that invests your "spare change". They do this by rounding up your card transactions to the nearest dollar and investing that round-up amount.

Automatically Balanced (Robo-advisor) Portfolios

Since stocks and bonds tend to grow at different rates an unmanaged portfolio will gradually become heavier in stocks, exposing you to more risk than you originally intended. Active investors will go in and balance their portfolios manually.

But Acorns will do this for you. You don't have to remember and you don't even have to know which funds to invest in. They'll do it all for you.

Flat Rate Fees

Other robo-advisors like Betterment and Wealthfront charge a percentage for management. Acorns just charges $1/month. This is a pretty great deal if you have a large (above $5,000) account balance.

Low Minimums

The minimum balance to start investing with Acorns is just $5! Most funds have minimums in the $2,000-$10,000 range so this is huge for anyone who doesn't have a big lump sum to invest.

Easy Sign-Up

Also, they make signing up and investing your first $5 incredibly easy. Sign up at Acorns and they'll help you select a portfolio. Then link a bank account and invest your first $5! You can link a card to monitor for round-ups and watch your investment grow.

Cons

  • Limited Fund Selection
  • Flat Rate Fees

Limited Fund Selection

If you're someone who likes to choose the funds they invest in, Acorns is not the place for you. Robo-advisors help you select an asset allocation based on your risk tolerance and then

Acorns has a smaller fund selection than even Wealthfront and Betterment.

Flat Rate Fees

Flat rate fees can also be a con! With a small balance, you're better off with another robo-advisor that charges a 0.25% fee. The $12 a year Acorns charges will overpower any return you're likely to have on less than $500 invested.

One of Acorns portfolios.

One of Acorns portfolios.

Can You Make Money With Acorns?

I have an Acorns Core account myself (read what that means below). I've seen some good returns when the market is up. If you had more money invested you could absolutely make a lot of money with Acorns. It's only limited by how much you can contribute to your account and how the market performs.

I review the service but a review is not all you need. You need to know whether Acorns is right for you, which might not be the case depending on your financial situation and goals. Even the best investment company isn't a good choice for you if they don't fit your needs.

So I make recommendations that are contingent on your life situation. You'll need to think about your finances before you decide which version of Acorns to use.

Acorns now offers three tiers of services. They have various fees and different applications so let’s compare them:

Acorns Core (Brokerage)

  • Service: Core is Acorn’s original “round-up” or “pocket change” investment account.
  • Fee: $1 per month.
  • Good for: Anyone who doesn’t have a lot to invest right away or is new to investing.

Details

Acorn Core gives you a brokerage account, which means the money will be invested in the stock market. The term "brokerage" is often used to distinguish from tax-advantaged accounts like 401ks or traditional IRAs, whose gains are not taxed.

When you withdraw money from a brokerage account you will have to pay tax on the gains. So you're taxed (usually 15%) on the amount your account balance rises when you take out the money.

The Bottom Line

As long as you understand the basics of risk, taxes and fees Acorns can be a good option for first-time investors. Realize that the fees aren't great until you have a balance of at least $5,000.

Acorns Later (IRA)

Overview

  • Service: Acorns Core plus access to an IRA.
  • Fee: $2 per month.
  • Recommended for: Someone looking to supplement a healthy retirement savings rate with round-ups or

You can open an IRA through Acorns for $1 more a month. Then you can put your round-ups there and/or add in a recurring investment amount.

Just like the Core account, the fees are competitive for established accounts above about $5,000.

But be careful: Relying on round ups only will not get you enough to retire. As a general rule you need to save 10–15% of your income each year in order to retire. It's unlikely you'll contribute more than $1,000 in a year through round-ups.

The Bottom Line

Acorns Later can be a smart choice to supplement retirement savings.

Investment returns on Acorns account.

Investment returns on Acorns account.

Acorns Spend (Debit Card and Checking)

Overview

  • Service: Acorns Core and Later (IRA) plus a checking account and debit card.
  • Fee: $3 per month.
  • Good for: Someone already using Acorns Core and Later who decides they don’t want free checking.

Unless there’s something I’m missing here Acorns Spend isn’t worth it. You can get free checking with a debit card at your local credit union or Fidelity or almost anywhere else.

$1.00 per month might not sound like much. But you're using an app based on investing literally pennies at a time so saving where you can must be important to you.

Found Money “Cash Back”

How It Works

Certain companies give you “cash back” when you shop through Acorns. At first, I thought this meant Acorns I would earn cashback from purchases made on your linked cards. That would be a nice boost to the cashback I already get from credit card companies.

But that’s not the case. You have to make online purchases through the Acorn “Found Money” portal. It’s similar to Ebates or Dosh.

Found Money Review

Found Money isn’t something to get super excited about and I expect most users won’t use it.

The percentages are pretty low (1%–5%). There are only a few major retailers like Walmart or Macy’s. The others are obscure or only good on certain deals. If you’re lucky (or a big brand shopper) your next big purchase might match up to one of these deals. But it requires that a) you remember to use it and b) you complete the purchase during that online session.

It's nice that it's offered but I don't count it as a big perk.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2019 Katy Medium