Acorns review 2021

Bankrate senior reporter James F. Royal, Ph.D., covers investing and wealth management. His work has been cited by CNBC, the Washington Post, The New York Times and more.

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Acorns Logo

Best For

  • Newer savers and investors
  • Parents looking to teach their children about investing
  • Those looking to invest while spending

Acorns offers a useful app for managing many aspects of your financial life, from basic spending to saving with its “round-up” feature to investing in a diversified portfolio of securities. This intersection is where Acorns works best, getting you started on investing with a portfolio of low-cost funds while the app tracks your spending. With this focus, Acorns is trying to do something different from a typical robo-advisor, and that may be why it’s drawn more than nine million users to its easy-to-use app. 

While it succeeds in many ways at this tie-up, it’s not truly a stand-out in any area – investing, cash management account or cost. Those looking for a more sophisticated robo-advisor might consider turning to Wealthfront, which likely offers the best cash management account in the space. Others looking for a cheaper, but still high-quality experience could opt for Schwab Intelligent Portfolios instead. 

Acorns at a glance

Star Rating

3.5
  • Cost: 3.5 of 5
  • Investments and Portfolios: 4 of 5
  • Account Types: 4 of 5
  • Features and Tools: 3 of 5
  • Customer Experience: 4 of 5
  • Account Minimum:
    $0 to open an account; $5 to start investing
  • Management Fee:
    $1 a month for basic investing account; $3 a month for investing account, IRA and checking account; $5 a month for investing, checking, IRA and kids account
  • Account fees:
    $50 transfer-out fee for each ETF
  • Portfolio Mix:
    11 ETFs across 7 asset classes
  • Fund Expense Ratio:
    Range: 0.03%-0.18%
  • Account Types:
    Individual taxable accounts; Roth, SEP and traditional IRAs; rollover IRAs; custodial investment account for kids
  • Cash Management Account:
    Yes, with mobile check deposit, 55,000 free ATMs, debit card
  • Customer service:
    Phone, 9 a.m. ET - 10 p.m. ET 7 days a week, email
  • Tax Strategy:
    None
  • Rebalancing:
    Yes
  • Tools:
    Basic planning tools
  • Promotion:
    None

Pros: Where Acorns stands out

Three service tiers – plus custodial accounts

Acorns offers three tiers of service – what it calls Lite, Personal and Family – each of which gives you a type of investing account at a different monthly price point ($1, $3 and $5, respectively): 

  • Lite – This entry-level tier gets you the basic individual investing account. 
  • Personal – This middle tier gets you the individual investing account plus an IRA and a cash management account. 
  • Family – The highest offering gets you the benefits of the lower tiers, and also allows you to open any number of custodial accounts for your children.

A dollar a month is not exactly a heavy toll for an account, and you’ll step into the world of investing right away with a preset portfolio of ETF funds that you can change at any time.

But if you want to move up to an IRA or a cash management account – elements that are offered without additional fees elsewhere – it will cost you a little more. 

The real 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 350 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, costing in a range of 0.03 percent to 0.18 percent of invested assets annually, or a cost of $3 to $18 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. 

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.  

Quick comparison of Robo-Advisor options:
Robo-Advisor Overall Rating Cost Rating Investments and Portfolios
Acorns logo
3.5 4 of 5
Wealthfront review 2021 logo Read Our Review
5 5 of 5
SoFi Automated Investing review 2021 logo Read Our Review
5 4 of 5
Betterment review 2021 logo Read Our Review
5 5 of 5

Cons: Where Acorns could improve

Pricing

A dollar a month for Acorns’ basic investing account doesn’t seem like a lot, and it isn’t really. Even three dollars for the personal tier doesn’t sound too rough. 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. 

Transfer-out costs

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. 

Cash management account 

Acorns’ cash management account sits in the middle of the pack, a less favorable place to be when industry leaders such as Betterment and Wealthfront have made attractive cash management accounts available for free – even if you don’t use their investing features. 

Acorns’ account provides the key functions of an FDIC-insured checking account, including mobile check deposit, direct deposit and a (metal) debit card. You’ll also get access to 55,000 fee-free ATMs in the U.S. and abroad. If you have a direct deposit at Acorns, you can also set up “smart deposit” to move a portion of your check right to your investing accounts. That kind of automatic investing is valuable because it keeps you on your long-term financial plan. 

That said, rival cash management accounts such as Wealthfront’s offer interest (albeit a low rate today), access to paychecks two days early and the ability to take a loan on your investments. 

Portfolio management

Acorns’ portfolio management looks basic by the standards of rival robo-advisors but that doesn’t necessarily mean it’s set up to perform worse. So much in the finance world is made to look more complex than it actually is. But the thing is, Acorns offers only modest tailoring to your personal needs. In contrast, most robo-advisors often have a more detailed questionnaire to assess your risk tolerance so that you’re set up with a more risk-appropriate portfolio

Acorns strips the portfolio management process to its essentials, offering customers five preset portfolios ranging from conservative to aggressive. Portfolios are composed of three to five ETFs, from the conservative all-bond portfolio to the aggressive all-stock portfolio.

And again Acorns strips down the selection of ETFs to the fundamentals – 11 are on offer – where many robo-advisors offer dozens. Again, that’s not to say the portfolio is worse but only (perhaps) less sophisticated. Vanguard Digital Advisor, for example, offers just four ETFs. 

And if you’re shooting to simply roll up your nest egg for a long-term goal or retirement, Acorns sets your retirement age to 59 ½ and recalibrates your retirement portfolio against that target. That is, it will slowly move your investments to become more conservative as you near that date. This lack of a flexible target age seems like it could be easily remedied. 

Tools, tax strategy and rebalancing

Acorns offers only bare-bones planning tools, compared to sophisticated offerings from Wealthfront and Betterment, for example. It also doesn’t offer a tax strategy, such as tax-loss harvesting, to help minimize your taxes. 

Acorns rebalances investment positions when they diverge 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. 

Bottom line

Acorns’ app offers some valuable features, especially if you’re a newer investor and starting to learn about investing. While Acorns’ fees are not large in an absolute sense, they can dent the nest egg of newer investors, though investors bringing a lot of money to the table may really like the fixed costs. Despite some highlights (such as low-fee funds) overall Acorns just doesn’t offer the same quality of features as rivals and may charge more than they do despite that fact.

Investors focused on low management costs could turn to SoFi Automated Investing or even Schwab Intelligent Portfolios (if they can bring some money to the account.) Wealthfront and Betterment are also solid picks for their investing chops and strong cash management accounts, while Ellevest may be a pick for those looking for a friendly fixed-cost pricing structure. 

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