Acorns review 2023

• 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.

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.  

Fractional shares

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.

Customer support

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

Pricing

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. 

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. 

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. 

Tax strategy

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.