Acorns at a glance
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 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 0.25 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.
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’ 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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