Easily Invest Your Spare Change Automatically with Acorns (Our Review)


How to invest your money ought to be a basic life skill–like changing a tire, budgeting, and cooking for yourself.

The sad truth is that investing is intimidating to many people. It can feel impossible to fill in this particular skill gap. Thankfully, that’s where the Acorns comes in.

Acorns is a micro-investing platform that takes your spare change and invests it into a portfolio of Exchange Traded Funds (ETFs).

Let’s take a closer look at Acorns to learn more about their investing model and how it works.

What is Acorns Investing?

Acorns makes investing more accessible to the average person by taking micro-investing to the next level. Investments start at as little as $5. You can to build up a diverse investment portfolio through roundups on everyday purchases. They have access to over 7,000 stocks and bonds, and offer Fractional Share Ownership in their portfolio ETFs.

Acorns accounts can be accessed through their mobile app (available on iOS and Android) as well as online through the Acorns website. You’ll be able to access your investment account from just about anywhere around the world.

Acorns’ unique micro-investing concept takes some of the anxiety away when learning how to invest your money. Most customers won’t even notice money being moved to Acorns because the roundups are such small amounts. Often, the hardest part of saving and investing is getting started. Acorns makes it easy to “set it and forget it.”

Acorns offers users an introduction to investing that can help even the most nervous new investors to get over their mental blocks and master this life skill.

How does Acorns Work?

Much like the Bank of America Keep the Change program, the big hook for Acorns is the fact that it links to the spending account(s) of your choice. It uses a credit card, a checking account/debit card, or Paypal account and rounds up each transaction to the nearest dollar.

However, unlike Keep the Change, you will not see the money transferred from your account with each round-up. Instead, the Acorns software will keep track of what would have been rounded up. Then they make a transfer to your investment portfolio once you have reached a minimum of $5 in roundups. This transfer will come from the spending account of your choice–not necessarily the account from which the purchases were made.

In other words, you can put all your transactions on your credit card but have Acorns transfer money from your checking account once the $5 in roundups have accumulated.

This means that you must designate a single, specific checking account from which funds will be transferred into your Acorns investment portfolio.

How It Works for Us

My husband and I make the majority of our purchases with our Upromise reward credit card, which makes it the natural spending account for us to link to Acorns for rounding up.

We will also link one of our two checking accounts to Acorns as the designated account for withdrawals. Our Acorns round-ups will look like this:

  1. I link our Upromise credit card to Acorns.
  2. I purchase lunch for $13.23
  3. Acorns calculates the amount to round up as $0.77. The app does not transfer money yet, as we have not yet reached the $5 minimum.
  4. I make several more purchases, and Acorns keeps track of the rounded-up amounts until it reaches $5.
  5. At the $5 point, Acorns transfers the $5 from the designated checking account, even though the round-ups were on our credit card.

In addition to the round-up option, you may also set up a recurring transfer on a daily, weekly, or monthly basis, or you can make single lump sum transfers. The transfers will be listed as “Acorns Investment WEB PMTS” on your bank statements.

Choosing Your Investment Portfolio

The designers of the Acorns app partnered with Nobel prize-winning economist Dr. Harry Markowitz to create the optimized portfolios offered to users. Dr. Markowitz is widely considered to be the father of Modern Portfolio Theory, which serves as the basis for most online advisors’ investment methodology.

Once you have signed up with Acorns and provided information about your age, goals, income, and investing time frame, the app will recommend one of five investment portfolios ranging from conservative to aggressive. Each portfolio is exclusively made up of exchange-traded funds (ETFs) that are chosen and rebalanced by a group of advisors that includes Dr. Markowitz.

The ETFs come from investment firms such as iShares, Pimco, and Vanguard, and they include exposure to large-cap, small-cap, real estate and emerging market stocks, as well as government and corporate bonds.

While the app recommends a specific type of portfolio to each user, you can choose a different one if you prefer. You can also manually select an asset class you are interested in investing in. Once you have made your choices, you will click “Confirm Portfolio.”

If you need to access your money, you have the option of withdrawing your funds from your Acorns investment account at any time. The money will arrive in your checking account within five to seven business days. There is no limit on how much you can withdraw.

Related: Should You Invest with Exchange Traded Funds

Acorns Fees and Taxes

Acorns has three different fee structures. Users with more than $5,000 in their investment portfolios will pay 0.25% of their holdings per year. Those who haven’t hit the $5,000 mark pay $1 per month for the service. This cost can be pretty steep for Acorns beginners. For instance, a $200 portfolio will pay $12 over one year–which equals a painful 6% fee.

In addition to fees, don’t forget that the portfolios offered by Acorns are exclusively taxable investment accounts. That means you will owe taxes on any capital gains your Acorns investments realize, although capital losses can offset the tax you owe. Acorns does not offer assistance to users for mitigating their taxes, as other robo-advisors often do.

The “Lite” investing level of Acorns will cost you $1 per month. (The free student account option is no longer available.) Next, there’s the “Personal” level for $3 per month, which includes investment, “Later” (retirement) and Acorns Spend (checking). For the most robust type of plan, you may choose the “Family” plan. For $5 per month, you get all of the previously mentioned accounts as well as investment accounts for your kids. 

Related: How To Put Together a Winning Taxable Investment Portfolio

Is Acorns Safe?

Safety should be a concern any time you open a new account that involves money. It’s important to be sure you’re protected against fraudulent activity and that your money and information is secure.

Acorns offers its users the highest level of security available. Both the website and the mobile app are secured with 256-bit SSL encryption. The app uses multiple account safeguards such as automatic logouts after inactivity, multi-factor authentication, and ID verification.

You will also receive account alerts in the case of unusual account activity.

In the unlikely event that Acorns goes belly up, your invested money is Securities Investor Protection Corporation (SIPC) insured for up to $500,000, including $250,000 for claims of cash. (SIPC is the investing and brokerage version of FDIC insurance.) More information can be found on the SIPC website.

However, no investment is risk free, and you need to remember that SIPC insurance is only there to protect you from Acorns’ failure, not from losses to your principal due to market changes.

Acorns can’t guarantee stock market performance but it’s good to know that your money and personal information are protected. Acorns takes great pride in its security measures.

Other Acorn Accounts

Acorns also offers Acorns Later, an IRA account. Customers can save for retirement easily through Acorns. Acorns will take goals, income, and other shared information to recommend an IRA. Check with your tax professional that you’re eligible to open one of these tax-advantaged retirement accounts. The cost for Acorns Later is included in the Personal level of membership for $3 per month.

If you’re looking for a checking account with debit card access, Acorns Spend is a good option. Acorns Spend accounts can access ATMs nationwide for free or with fees reimbursed. There are no overdrafts and no minimum balance fees with Acorns Spend.

Acorns Spend provides the opportunity to earn up to 10% more with bonus investments in categories or vendors they specify. The cost for Acorns Spend is $3 per month, and you still get the basic investing and retirement accounts as well as your checking account with a debit card.

While Investing is the main function of Acorns, it’s nice to know that you can seek out other investment opportunities all in one place as well. Plus, you get the convenience of managing all of your accounts in one spot.

The Bottom Line

Acorns has created an app that makes investing money pretty much painless. By lowering the barrier to entry, the app offers excellent support to newbie investors as they learn the ins and outs of growing their money.

While the fees can be somewhat steep for new users, Acorns still may be a great option for new investors just starting out. 

It is my hope that young investors will use Acorns until they know the ropes and feel confident making investment decisions on their own.

Get started: Start automatic investing with Acorns!

Easily Invest Your Spare Change Automatically with Acorns (Our Review)

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  1. You could review Robinhood App. Free trades. Unfortunately it takes three days for funds to settle. That’s where they make money.

    Would love to hear your opinion.

    1. Avatar Philip Taylor says:

      Thanks, Jay. We will add that to our list of apps to review.

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