Acorns Review: Start Investing With Just $5

It’s difficult to keep track of all the money apps and new fintech companies out there. A few find success and become household names. But most struggle to offer anything different or better than the rest. 

Acorns is a robo-advisor, a micro-savings app, a checking account, and a cash-back app.

What makes Acorns interesting – and worth considering – is that it does all of these things. And it does them well. With over 9.25M customers, Acorns is clearly making a name for itself. 

What is Acorns?

Acorns is a multifunction financial app that offers automated “micro-savings”, investment portfolios, a checking account, and a shopping coupon and cash-back tool. Acorns offers five different products: “Invest”, “Later”, “Early”, “Earn”, and Acorns Checking. 

Each Acorns product works on its own or in conjunction with the others. 

Acorns Checking offers an easy-to-use checking option. You can set up recurring deposits to Invest and Later, as well as round up your purchases, with the spare change going toward your portfolio. But one of the best features with Acorns Checking is Smart Deposit. With this, Acorns lets you set up your direct deposits to automatically split between your checking, savings, and investments.

Acorns’ shopping savings and cash-back tool, Earn, is a free add-on for all members. With a free Chrome extension, you can earn cash automatically when you buy from any of their nearly 10,000 participating brands.

Whether you use one of Acorns’ features or all of them, the company’s goal is to provide members with all of the tools they need to set money aside for the future.

How does Acorns work?

Acorns’ foundation is the Invest product. Acorns Invest is a robo-advisor that invests your money for you in one of five automatically-managed portfolios. 

Although all robo-advisors offer the ability to schedule automatic investments from a linked bank account, Acorns Invest offers the option to turn on micro-investments. You can schedule automatic investments as often as daily. But you can also turn on “Round-Ups”. With Round-Ups, Acorns will automatically round up purchases made on your linked accounts and invest the difference.

Acorns Later works like Invest but adds the ability to invest for retirement in an IRA. You can make automatic investments of as little as $5 at a time in your Later account.

Acorns Checking is a full-featured, FDIC-insured checking account that comes with a cool tungsten metal debit card. Using the Checking account makes Round-Ups and other automatic investments instantaneous. The Smart Deposit feature can automatically set aside money from your deposits before you spend it. It’s an automatic, built-in way to pay yourself first. (This is, in my opinion, the very best savings habit you can have!)

Acorns Earn is a suite of cash-back and other savings tools designed to help you save and earn money in your everyday life. You can link debit and credit cards or use a Chrome browser extension to take advantage of special pricing and cash-back deals from over 350 top brands including Apple, Airbnb, Hotels.com, Nike, Walmart, and more. Acorns Earn also has job search tools to help you find better-paying work or even a side-hustle.

Acorns Early adds the ability to save for one or more children’s futures with UTMA/UGMA accounts.

Related: Roth IRA’s for Young Adults — Why Starting Early Pays Off

Acorns Pricing

Acorns pricing is straightforward. There are two plans:  “Personal” and “Family” that cost $3 and $5 per month, respectively.

For $3 a month, the Personal plan includes Acorns Later and Acorns Checking, as well as an investment account.

The Family plan, at $5 per month, adds Acorns Early and unlocks access to UTMA/UGMA accounts for multiple children. These acronyms stand for “Universal Transfer to Minors Act” and “Universal Gifts to Minors Act”. UTMAs are common in most states and provide modest tax benefits to set money aside for a child’s future. Unlike 529 plans, the funds in these accounts are not restricted to paying for higher education. The funds can be used for almost anything that benefits the child.

What Makes Acorns Unique

Let’s take a look at the features of Acorns’ product suite that makes the app stand out.

Round-Up

Perhaps Acorns’ most novel feature is the ability to link your credit and debit cards to the app and have it round up your purchases and invest the difference.

Acorns downloads the purchase history from your linked credit and debit cards, tallies the spare change from purchases, and once the change exceeds the $5 threshold, withdraws that amount from your checking account and invests it.

Using the Round-Up feature isn’t necessary to invest, but it’s a nice touch that’s in line with my belief that the best way to save and invest is to find ways to automatically set aside money before you even miss it. The Round-Up feature does just that.

Related: Your Automatic Investment Plan – Put Your Investments on Autopilot

Smart Deposit

Another great feature of Acorns Checking is Smart Deposit. After setting it up, you can have a portion of your paycheck or other regularly-scheduled deposits automatically deposited in your investment or retirement accounts. 

With Smart Deposit, you are paying yourself first. Your money is invested for you before it ever hits your checking account.

Bonus Investments

Using Acorns Earn, you can earn bonus investments when you shop at participating merchants via a linked credit or debit card or the Chrome browser app. Bonus rates vary by merchant. Acorns will automatically add the bonus to your investment account between 60 and 120 days following your purchase.

Sustainable Investing

When you invest using Acorns, you aren’t just putting money toward your own future. You can invest using Acorns’ ESG (Environmental, Social, and Governance) portfolios to add sustainable companies to your portfolio and invest in companies you truly believe in. 

No Hidden Fees

Acorns’ simple monthly pricing is all-inclusive. 

With Acorns Invest, there are no trading fees or commissions. 

With Acorns Checking, there are no overdraft fees, maintenance fees, or ATM fees at ATMs within the Allpoint network (55,000 ATMs nationwide).

Bank Fee Recovery

If you’ve been charged for insufficient funds or purchase interest, Acorns can help. Acorns will identify unnecessary banking fees and, thanks to built-in technology from Harvest by Acorns, you’ll have the tools necessary to dispute them.

My Experience Using Acorns

Signing up for Acorns is easy and takes just minutes whether you do it online or via their iOS or Android apps. 

You will need to select your plan (Personal or Family) when you sign-up. After creating your account, you will need to link a checking or savings account. This account will be used for investments and also to pay your monthly membership fee.

To get started with Acorns Invest, you’ll answer a few questions about:

• Your investing goals.
• How long you have to achieve those goals.
• Your comfort level with risk.

Acorns recommends one of their five diversified portfolios based upon your answers:

• Conservative.
• Moderately Conservative.
• Moderate.
• Moderately Aggressive.
• Aggressive.

You can go with the portfolio Acorns recommends or choose another, but that’s it – you’re limited to investing in one of the five options.

After you have selected your portfolio, you can set up your automatic investment schedule and, optionally, the Round-Up feature. That’s it! Acorns will pull your investments from your linked account according to the rules you set up and automatically rebalance your portfolio as the market moves.

To be honest, all robo-advisors make it easy to open an investment account. But Acorns might just have the smoothest onboarding process of the ones I’ve seen. You can go from no account to set-up for automated investing in less than 15 minutes. You could probably even do it in less than 10.

My experience with Acorns is limited to the Invest product. As much as I’d like to personally try every app that offers a checking account, I’ve simply tired of opening (and later closing) dozens of new bank accounts to test them all. Establishing new accounts is also costly to the banks if I’m not intending to use them for years.

But as you can imagine, a checking account is a checking account. Acorns Checking offers mobile check deposit, no minimum deposit requirements, and a Visa debit card. You have access to 55,000 free ATMs in the Allpoint network. There is a $500 daily withdrawal limit on the account.

The one thing to note about Acorns Checking is that it’s not free – you’re paying $3 a month to have access to Acorns Checking and Acorns Later. Although $3 a month is cheaper than many checking accounts at national banks, there are many competitive online checking accounts that are entirely free. 

The primary benefit (other than an arguably cool matte green metal debit card) is the Smart Deposit feature that can automatically divert a portion of your direct deposits into your investment account. Is that worth a couple of bucks a month? Honestly, I think so. $30 a year is pretty cheap if it helps you get in the investing habit.

Who is Acorns Best for?

I think Acorns is an excellent product if you: 

• Could use some help sticking to a savings plan.
• Don’t know a lot about investing and don’t have a lot of money to invest, but want to start putting something into the market.
• Just want a really simple investing app or combination investing and savings app.

Here’s the thing: Acorns could be a beautifully simple total money management tool. By offering investment, checking, and retirement accounts in one app, you don’t need much else.

The big thing that’s missing is an interest-bearing FDIC-insured savings account. I’m actually quite surprised Acorns doesn’t offer this. We’re seeing other robo-advisors like Betterment and Wealthfront start to add cash accounts to their products.

If Acorns were to add a savings account component, I could easily see someone needing only an Acorns account and, perhaps a credit card, to manage their money. It would be beautiful in its simplicity. 

Even when I was 25 years old, I had checking, savings, and investment accounts at three different financial institutions. Today, I have accounts at more than a half dozen different financial institutions (not counting probably a dozen more I’ve opened for review purposes). How wonderful it would be to have one app and be done with it!

Who Shouldn’t use Acorns?

Acorns is not the app for investors who want a high level of control over their portfolios. You cannot trade individual stocks or options with Acorns as you can with Robinhood. You are limited to five pre-designed portfolios, and that’s it.

Additionally, Acorns is not a replacement for an emergency fund held within an FDIC-insured savings account. If you have the Acorns Personal plan, your money will be stored in one of two places: a checking account that doesn’t earn interest or an investment portfolio comprised of stock and bond exchange-traded funds (ETFs).

Unlike cash in a savings account, investment accounts can lose value. They are the best way to grow your money over years and years, but they are volatile in the short-run. You want your emergency savings to be there for you when you need it (at a moment’s notice). 

An investment account is a great way to save for goals that are many years in the future. But you should always keep some cash in an interest-bearing savings account in case you need it in a hurry.

Finally, you should think carefully about choosing Acorns Invest over a different robo-advisor if it will take you a long time before you invest $5,000 or more invested. Why is that?

Most robo-advisors charge an annual fee as a percentage of the money you have invested. Many companies charge 0.25%. On a $1,000 investment account, that works out to just $2.50 a year compared to the $12 you’d pay with Acorns. The breakeven amount is $4,800. 

Now, the interesting thing is that as your investment balance grows, Acorns Invest starts to become an incredible deal. If your balance grows to $100,000, you’re still just paying $12 a year with Acorns but you’d be paying $250 a year with the other guys. Now, other robo-advisors offer additional investment features like tax-loss harvesting and Smart Beta that Acorns does not. They also do not charge extra for IRAs like Acorns. For retirement accounts, you need to have an account balance of $14,400 before Acorns Later becomes cheaper than the competition.

Related: The Best Robo Advisors

Acorns Vs the Competition

There are dozens of stockbrokers and robo-advisors. But Acorns isn’t trying to directly compete with most of them. Acorns is squarely focused on helping new investors get in the investing habit. Its closest competitor is Stash, an investment app offering both an investment account and a checking account.

Stash

Like Acorns, Stash offers a user-friendly investment account for just $3 a month. Unlike Acorns, Stash users have the option to invest in fractional shares of any stock or exchange-traded fund (ETF). The ability to buy fractional shares means that you can buy just $10 worth of Apple stock, for example, even though stock trades above $100 per share.

The $3 per month Stash Growth plan gets you the investment account and a checking account with a debit card and no hidden fees plus a retirement account. The most expensive plan is Stash+ which adds two investing accounts for kids and doubles the “stock back” percentage you earn with debit card purchases.

Stash does not offer the Round-Up and Smart Deposit features that make Acorns so appealing to users who want help putting money aside to invest.

The Stash+ plan isn’t a great value when compared to the Acorns Family plan unless you plan to spend a lot on the Stash debit card. It’s $4 a month more expensive to access two-child investment accounts whereas Acorns does not limit the number of child accounts. What might make it worthwhile is if you plan to spend a lot using the Stash debit card because the Stash+ account gives you 2% back in the form of stock in your investing account. 

Wealthfront

Wealthfront is a popular robo-advisor that’s geared more towards long-term investors with sizeable balances. I don’t consider it a direct competitor to Acorns, but I think a comparison is useful. Wealthfront offers both investing and checking accounts.

A Wealthfront investing account requires a $500 minimum investment and costs 0.25% of your invested assets per year. That works out to $2.08 per month for every $10,000 invested. This makes Wealthfront’s investing accounts considerably more expensive than Acorns or Stash for larger balances. But you also get more for your money.

For example, all accounts at Wealthfront benefit from tax-loss harvesting, a feature that strategically sells underperforming investments to reduce your annual capital gains taxes. Accounts with $100,000 or more unlock more powerful tax-loss harvesting at the stock level and Risk Parity, an enhanced asset allocation strategy. Accounts with $500k or more unlock the Smart Beta feature which uses AI to future fine-tune your stock allocation.

All Wealthfront users can take as much control as they’d like over their investments by adding or deleting ETFs as they like. It’s also possible to build your own portfolio from scratch using ETFs that are vetted by Wealthfront’s team or by investing in its US Direct Indexing Strategy. 

Wealthfront’s checking account is free and actually pays interest – 4.55% APY at the time of writing this review. All it requires is a $1 opening deposit. Wealthfront’s Self-Driving Money™ feature can use AI to automatically pay your bills and divert money to other savings and investment accounts. You can also organize your money into specific savings buckets, like an emergency fund and vacation fund.

Ironically, investors with balances of less than $5,000 will pay less at Wealthfront because their 0.25% annual fee is less than Acorns’ flat $1 per month. After that, Acorns becomes less expensive. But investors with balances over $100,000 may benefit from increased returns thanks to Wealthfront’s advanced investing features – potentially offsetting the increased fee. I say potentially because everyone’s investment returns will differ.  

Summary

Acorns has competitors that both cost (a little bit) less or offer (a little bit) more. But I don’t know of any other product that makes it easier to start investing and develop the investing habit. 

You don’t need to know anything about the stock market. And you can invest as little as $5 at a time – literally the spare change that’s leftover after a few debit card purchases. You’ll also earn bonus investments while you shop, with your spending tracked in the background.

Acorns isn’t for everybody. Investors who want to trade stocks or simply want a bit more than five portfolio choices will want to look elsewhere. As your balance grows, you may consider paying more for features that might increase your returns. But I think Acorns is an excellent product for anyone looking to invest for the first time or find a painless way of investing a few more dollars each month. It could also be a great way to simplify your finances and use one app for your everyday checking account, IRA, and investment account.

Learn more about Acorns or register for an account here.

Read more:

• The Pros And Cons of ‘Spare Change’ Investment Apps
• 7 Easy Ways to Start Investing With Little Money