Acorns review 2023
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Acorns: Best for
- Newer savers and investors
- Parents looking to teach their children about investing
- Those looking to invest while spending
Acorns is a good app that’s particularly useful for new investors and can help people learn about the benefits of saving and investing, even in small amounts. With a minimum investment of just $5, investors can begin to build a portfolio of ETFs that meets their financial goals. Acorns also allows users to “round up” purchases to the nearest dollar, investing the additional money into their portfolio. These small investments can really add up over long periods of time.
While Acorns can be a good choice for those just starting out due to its low minimums and simple structure, its fees can be above-average for those with small sums to invest. You also won’t get certain features common among other robo-advisors such as advanced tools or tax-loss harvesting. Wealthfront and Betterment provide a more comprehensive offering overall and SoFi Automated Investing is also worth checking out for those looking to speak with financial advisors at a low cost.
Acorns: In the details
Pros: Where Acorns stands out
Two service tiers – plus custodial accounts
Acorns offers two tiers of service – Personal and Family – each of which gives you a type of investing account at a different monthly price point ($3 and $5, respectively):
- Personal – This tier gets you an individual investing account plus an IRA and a cash management account.
- Family – The highest offering gets you the benefits of the Personal tier, and also allows you to open any number of custodial accounts for your children.
The Personal plan will help you get started with investing, save for retirement and even comes with a cash management account. At $3 a month, it’s a pretty good deal unless you’re dealing with small sums. But as your account grows, the fee will decline on a percentage basis.
Your portfolio will be made up of ETFs that align with your overall investing goals and risk tolerance.
The perk of the family plan is that it allows you to set up custodial plans for your children. This feature is largely unavailable at other brand-name robo-advisors. So if this feature matters to you, it’s a solid reason to go with Acorns, helping your kids invest or investing for their benefit.
Simple plans to get you investing
Acorns ties spending to investing with some plans that get money into your accounts while you’re out spending. One of its best known is what Acorns calls “round-ups.”
When you set up round-ups, Acorns can automatically round up any purchase to the next dollar and move that extra amount from your linked bank account into your investing account. When you’ve accumulated at least $5 in round-ups, Acorns invests that amount in your target portfolio. If you don’t want to invest it every time, you can set up a manual transfer process, too.
In addition, you can have extra money deposited into your account through a program called Acorn Earns. Refer friends and receive a small bonus or receive a deposit when you spend at one of the more than 300 brands partnered up with Acorns, part of its Found Money program.
Of course, you can also use a recurring transfer to get money into your investing account. That’s a smart way to keep your portfolio growing relentlessly. And you’ll also be able to use the “smart deposit” feature to squirrel away funds from your direct deposits (more below).
Reasonable fund expenses
The ETFs used in Acorns’ portfolio are reasonably priced, with most funds costing in a range of 0.03 percent to 0.25 percent of invested assets annually, or a cost of $3 to $25 for every $10,000 invested. Many of the stock funds sit right at the low end of that range, too, so if you’re opting for the more aggressive portfolios, you’ll be paying fund expenses that are near the bottom of the industry.
Acorns does give customers the option of investing up to 5 percent of their portfolio in a Bitcoin ETF, which comes with an expense ratio of 0.95 percent. This approach only makes sense for investors with an extremely high risk tolerance given the volatility of cryptocurrencies and questions about their long-term viability.
Most of the funds come from Blackrock, an industry leader, while at least one fund from low-cost leader Vanguard tips the scales, too. And remember you’ll pay ETF fees regardless of which robo-advisor you choose, so it’s important to try to minimize those costs where you can.
Acorns also offers fractional shares on both new purchases and reinvested dividends. This feature is especially important for small investors who may only have a few dollars to invest because it allows their full savings to be invested, rather than waiting until they have enough saved to buy a full share of an ETF. While many robo-advisors offer fractional shares, some restrict it to only being available on reinvested dividends, so Acorns offering stands out here.
It’s not always easy to find customer support these days, with many financial services companies failing to offer phone options and having robots answer chat questions. But Acorns separates itself by offering live chat 24 hours a day, 7 days a week as well as email options. If you prefer to chat on the phone, Acorns is available 7 days a week from 8 a.m. to 10 p.m. ET. With all these options, you shouldn’t have any trouble getting your questions answered.
Cons: Where Acorns could improve
Three dollars each month for the personal tier of service doesn’t sound like much, but for the newer investors courted by Acorns, those fees may comprise a surprisingly large portion of their portfolio.
For example, that modest $36 a year is a solid 3.6 percent of a $1,000 portfolio. Even at $10,000, an investor would be paying 0.36 percent annually – still solidly above the standard management fee (0.25 percent) of many robo-advisors.
That said, Acorns’ fees remain constant as you grow your portfolio, so that fee could become tiny as your portfolio grows much larger.
The transfer-out costs for ETFs in the Acorns investing account are at the high end of the industry. Acorns charges a steep $50 per ETF to transfer your account to another broker. That’s in contrast to $75 per account at many robo-advisors and free at some companies. So that fee seems excessive relative to Acorns’ peers.
That said, you can always sell the ETFs and move your money cost-free out of the account. That might ding you a little in capital gains taxes, but it still might be better than coughing up hundreds of dollars to keep your ETFs, depending on what kind of gains you’re sitting on.
Tools and rebalancing
Acorns offers only bare-bones planning tools, compared to sophisticated offerings from Wealthfront and Betterment, for example.
Acorns rebalances investment positions, typically on a quarterly basis, when they’ve diverged more than 5 percent from their target allocation. In practice what it may mean is that outperforming assets are trimmed as they rise too much (relative to target allocations) and underperforming assets are purchased after they fall too far. Rebalancing can be a sensible practice and many robo-advisors offer it.
Where Acorns might improve, however, is to move newly deposited cash into a lagging fund rather than selling the outperforming fund and likely incurring a taxable gain. The net effect is a rebalanced portfolio without the taxable consequence. It’s a small point, but worth noting.
Acorns doesn’t offer a tax strategy to help minimize clients’ tax bills. Many robo-advisors offer this through tax-loss harvesting strategies or by including municipal bonds in some portfolios. Tax-loss harvesting involves realizing investment losses to offset gains or claiming the losses to reduce your taxable income.
Wealthfront, Betterment and Schwab Intelligent Portfolios all offer tax-loss harvesting as part of their services, but you’ll need at least $50,000 in assets to take advantage of it at Schwab and $100,000 at Wealthfront.
Untimely addition of Bitcoin to portfolio options
Acorns gives customers the option to invest up to 5 percent of their portfolio in a Bitcoin ETF, which charges a 0.95 percent annual fee. The decision to offer Bitcoin was likely a response to customer demand, but it came at a bad time for investors. Bitcoin and other cryptocurrencies have plummeted since reaching all-time highs in late 2021, with many down more than 50 percent since then.
Acorns has built its business by targeting new investors who have small amounts to initially invest. Giving investors like this the option to buy one of the most speculative assets available looks like a mistake after its 2022 performance.
Betterment5.0 Bankrate Score
Betterment offers a high level of service and features across every aspect of its robo-advisor, from its core investment management to low-cost funds to premium features such as tax-loss harvesting. You can also upgrade your service if you need unlimited access to human advisors, and get access to a feature-rich cash management account, too.
Axos Invest3.0 Bankrate Score
Axos Managed Portfolios offers a strong robo-advisor service with some premium features, all at a reasonable price. Clients also receive a wide choice of funds, including socially responsible funds, though the associated cash management account forces clients to jump through some hoops to receive what is only a mediocre interest rate.
Interactive Advisors4.5 Bankrate Score
Interactive Advisors has upped its game this year, with new features such as tax-loss harvesting that put it among the top robo-advisors. That’s on top of one of the widest range of investing choices, low-cost funds and low overall fees. As strong as all these features are, though, the robo-advisor doesn’t offer access to human advisors, not unusual among robo-advisors.
SigFig3.0 Bankrate Score
SigFig keeps costs low whether it’s account fees, fund fees or the annual management fee. You’ll also get access to human advisors and benefit from automatic rebalancing and tax-loss harvesting. But the lack of a cash management account and relatively high account minimums may cause some investors to look elsewhere.
E-Trade Core Portfolios3.5 Bankrate Score
E-Trade Core Portfolios offers a capable robo-advisor, one that may work best for customers looking to keep their accounts with the broker while having someone do the investing for them. Clients will get low-cost funds as well as less-common choices such as socially responsible funds, though the service doesn’t offer tax-loss harvesting or many tools.
Titan Invest3.0 Bankrate Score
Titan offers something unusual in the robo-advisor space: Titan combines its own actively managed investments with passively managed ETFs, something no other major robo-advisor does. It also hedges those portfolios, does not charge a management fee for the passive funds – a rarity among rivals – and has a low minimum, making it easy to get started.
Morgan Stanley Access Investing3.5 Bankrate Score
For younger investors looking to invest based on their values or certain themes, Morgan Stanley’s Access Investing provides a suitable option among robo-advisors. Investors can choose between impact portfolios that focus on environmental, social and corporate governance (ESG) issues, market-tracking portfolios that minimize fees and performance-based portfolios that attempt to outperform through active management.
J.P. Morgan Automated Investing3.0 Bankrate Score
J.P. Morgan Automated Investing provides portfolio management services with automatic rebalancing and may be a good fit for existing J.P. Morgan customers. But you’ll also pay above-average management fees and have limited account types to choose from. There’s also no tax strategy included in the offering.
Vanguard Digital Advisor3.0 Bankrate Score
Vanguard Digital Advisors keeps it simple: an investment portfolio comprised of four funds at a low all-in price, and then adds on helpful tools and educational components. The combination should do well for clients who don’t need a robo-advisor to provide everything under the sun but want competent investment management from a proven and knowledgeable leader.
Fidelity Go4.5 Bankrate Score
Fidelity Go offers a solid robo-advisor offering that beginning and cost-conscious investors will especially appreciate. However, investors looking for features such as tax-loss harvesting or comprehensive goal planning may be disappointed.
Personal Capital4.0 Bankrate Score
Personal Capital customers will get an experience that more closely resembles that of a traditional financial advisor than a robo-advisor, but you’ll need at least $100,000 to get started. You’ll also get a comprehensive tax strategy to help minimize what you owe to Uncle Sam. But this higher level of service does come at an above average cost compared to the rest of the robo-advisor industry.
Stash3.5 Bankrate Score
Stash’s managed portfolios might appeal to small investors who are looking to save as they spend, but the monthly fees can be high for investors who don’t have a large balance built up and there are only a few types of accounts available.
M1 Finance4.5 Bankrate Score
M1 Finance takes some of the best of what brokers and robo-advisors do and mixes it into a new service that provides automated investing in a fully customizable portfolio – all for no cost. If you want to take it up a notch, you can pay an additional fee and receive a host of upgraded features, including one of the best cash management accounts out there.
Wealthfront5.0 Bankrate Score
Wealthfront offers a strong lineup of features – sophisticated portfolio management using low-cost funds – that showcase why it’s one of the leading independent robo-advisors. It provides a strong cash management account, a robust planning tool and premium features such as tax-loss harvesting that may more than pay back your annual fee.
Ellevest3.5 Bankrate Score
Ellevest brings a competent and well-considered robo-advisor, pitching itself to women, whose financial needs are traditionally underserved. But don’t think it won’t work for anyone who needs nuanced investment management, since it offers low-cost funds, socially responsible funds and – unlike most rivals – a flat monthly fee, making it advantageous for those with more to invest.
Schwab Intelligent Portfolios5.0 Bankrate Score
Schwab Intelligent Portfolios provides a top robo-advisor experience that should be a good fit for many investors. The basic plan comes with no management fee and a low-cost portfolio, plus you’ll get Schwab’s top-notch customer support and easy-to-use platform. The premium plan comes with unlimited access to human financial advisors, but both plans come with above-average account minimums and tax-loss harvesting isn’t an option until you reach at least $50,000 in assets.
Wells Fargo Intuitive Investor4.0 Bankrate Score
Wells Fargo Intuitive Investor is a solid robo offering that gives customers easy access to human financial advisors at no additional cost along with tax-loss harvesting that can help you save on taxes. However, the management fee is above average unless you’re an existing Wells Fargo banking customer.
Ally Invest Managed Portfolios4.0 Bankrate Score
Ally Invest Robo Portfolios are a good option for new investors who pay particular attention to costs. Existing Ally clients may also appreciate having all their finances in one place. Unfortunately, Ally doesn’t offer tax-loss harvesting or provide human advisors to help with those especially difficult questions.
Merrill Guided Investing3.5 Bankrate Score
Merrill Guided Investing offers a credible investing service for Bank of America customers, but its high management fee makes it less attractive among a competitive field of robo-advisors. Merrill offers several positives, including access to human advisors and low-cost investment funds, but premium features such as tax-loss harvesting are missing.
SoFi Automated Investing4.5 Bankrate Score
SoFi Automated Investing gives cost-conscious investors a solid robo-advisor offering that comes with access to human financial advisors at no additional cost. But the lack of tax-loss harvesting and no socially responsible investing options may cause more sophisticated investors to look elsewhere.
Marcus Invest4.0 Bankrate Score
Marcus Invest offers the core feature of a robo-advisor – portfolio management – and then adds some twists, such as several portfolio types, all for a cost-competitive fee. It’s a great add-on for current Marcus customers, though some features of higher-end robo-advisors such as tax-loss harvesting and an expansive toolset are missing.