Category: 5. Acorns review

For the microsavings category, we think Acorns is the best service available.

Acorns is a good start if you want to invest with little money or need a nudge to start investing without affecting your lifestyle. And with Acorns adding a checking account, retirement accounts, and custodial accounts, it’s becoming even more appealing in recent years.

However, we think Betterment is a better option for larger deposit amounts with lower annual fees. In response to Acorns’ microsavings service, Betterment has SmartDeposit, automating investing once your bank account is above a specified dollar amount. However, nothing is stopping you from using both services to boost your savings rate.

Ultimately, most individuals don’t save enough for a rainy day, and Acorns will help start you down this path.

Looking for an alternative to Acorns? There are a lot of brokers and robo advisors out there that allow you to invest for free or at low fees. Here are some of our favorites:

Highlights	Betterment	digit	Stash
Rating	9/10	7/10	8.5/10
Minimum to Open Account	$0	$0	$0
401(k) Assistance	True	False	False
Two-Factor Auth.	True	False	False
Advice Options	Automated, Human Assisted		Automated
Socially Responsible Investing	True	False	False

We prefer Betterment for long-term investing and if you’re ready to invest a lump-sum upfront. Acorns is great for building good habits, but Betterment has more portfolio selection and flexibility and is a leading robo advisor for good reason.

As for Stash, it’s a useful Acorns alternative if you like Acorns’ round-up feature but still want to invest in individual stocks.

Finally, we like Digit since it has automatic budgeting and bill payment features to help you stay on top of your finances. If you find yourself missing bill payments or overspending, it could be the best Acorns alternative for you.

• Robinhood vs. Acorns vs. Stash Invest
• Acorns vs Stash | Which Microsavings Service is Better?

Signing up for an Acorns investment account is a relatively easy process. It starts with signing up on the web or downloading the app for free from iTunes, Amazon, or Google Play. The app is available for iPhone or Android mobile devices.

The three-step signup process starts with entering a PIN access code, which you will use when you log into the app in the future. Creating an Acorns account is currently available only to U.S. citizens.

1. Choose a Round-Up Account

Your main Round-Up account is the one you will monitor; choose which transactions you want to round up and invest the change. Choose from the most popular banks, including Chase, Bank of America, Citibank, Wells Fargo, U.S. Bank, USAA, etc. If your bank isn’t listed, click the “Next” button and type your bank’s name in the search bar.

Then you’ll be prompted to log into your bank using your online sign-in credentials. Next, click the account you’d like to use in your round-ups. You can connect to more than one account if you’d prefer.

2. Connect Your Checking Account

Your checking account is different from your Round-Up account (this was confusing to me at first, too) and is the account from which funds will be transferred into your Acorns account. Connect an existing checking account from the list and sign in using your online credentials, or input your routing and account numbers manually from a different bank.

It took several minutes for my Chase Bank account to sync using my online ID and password. And don’t worry about connecting your banking information, because Acorns encrypts and protects all of the data with bank-level security.

3. Create an Investment Account

You’ll be asked to type in your first and last names, phone numbers, and birth dates and to choose a security question/answer. Then it’s time to fill in your address and check if you’re a U.S. citizen or not.

The next screen prompts you to fill in your employment information, net worth, yearly income, and your reasons for investing. The answers to these questions will help Acorns generate customized advice and a recommended portfolio created by its team of experts, including a Nobel Prize-winning economist.

You can choose from five different reasons for investing:

• Long-term investment
• Short-term investment
• Major purchase
• Children
• General

Finally, you need to fill in your Social Security number, which, according to the app, is used for ID verification, tax reporting, and fraud prevention.

Once you check all the signup boxes in green, click the “Get Started!” button.

4. Start to Invest With the Acorns App

Logging into the Acorns app allows you to view your portfolio, check your index funds’ performance, see what the market is doing, and much more.

Jeff Cruttenden, the co-founder and COO of Acorns, says:

We focus less on beating the market and more on index portfolios where we can capture the market and keep fees low.Jeff Cruttenden

It’s important to note returns are not guaranteed, and it’s possible to lose principal. Acorns invest in the stock and bond markets and is both FDIC insured and SIPC insured.

Yes, Acorns is a legitimate, regulated company. Its broker and custody services are regulated by the Securities and Exchange Commission and it’s also a member of the Financial Industry Regulatory Authority (FINRA), a self-regulating organization.  It’s also a member of the Securities Investor Protection Corporation (SIPC). Not only is Acorns legally obligated to submit information to federal regulators, but it also must uphold the rules of FINRA and SIPC.

Keep in mind that there are risks with any type of investment. The stock market can be fickle and you can lose money.

Acorns is worth it if you need a helping hand with investing and want to build good habits. It’s one of the best microinvesting apps out there, and it has enough portfolio variety to suit a wide range of investing goals. Plus, its newer features like Acorns Earn can help you earn even more.

However, Acorns isn’t worth it if you want comprehensive investment research or to make your own trading decisions. In this case, you’re better off using a leading stock broker rather than apps like Acorns. Robo-advisors like Betterment or Wealthfront also have way more portfolio selection and customization available than Acorns’ five portfolios.

And when deciding if Acorns is worth it or not, be careful with fees if you’re only investing a small amount of money. Paying $3 per month for Acorns Personal might not sound like much, but that’s $36 per year. If you’re only investing $20 a month through round-ups, you’re paying a 15% fee to invest that $240. In contrast, robo advisors such as Betterment only charges 0.25% annually.

And, for reference, it takes almost $15,000 of investing through Acorns for its $36 annual fee to reach 0.25%, so the fees can be steep for small portfolios.

Of course, if you’re a frequent card user who makes many more purchases per day, Acorns starts to make a bit more sense. And the main goal of the app is to help newer investors build good habits by consistently investing.

For $3 a month, you can get an Acorns Personal account, including an investing account, checking account, and retirement account. And for $5, you can get an Acorns Family account, which includes custodial accounts for your kids, along with the features in the Personal account tier.

There aren’t deposit or account minimums to maintain, no commission fees, and no penalties when withdrawing funds.

Choosing the best portfolio on Acorns depends on your investing goals and level of risk tolerance. Moderately and Aggressive portfolios are best if you want higher growth potential and have a long-term investing timeframe. More conservative portfolios are better if you are investing for the short term or want fixed-income from bonds.

In March 2022, Acorns launched its news product – a Bitcoin-linked ETF. This new offering allows Acorns you to invest up to 5% of your portfolio in the ProShares Bitcoin Strategy (BITO) ETF. For each portfolio type, here’s the percentage that will be allocated towards Acorns Bitcoin ETF:

• Conservative: 1%
• Moderately conservative: 2%
• Moderate: 3%
• Moderately aggressive: 4%
• Aggressive: 5%

Note that investing in a Bitcoin ETF is not the same as buying actual bitcoins on a crypto exchange. However, this new Acorns product could be a good option if you’d like to gain some indirect exposure to Bitcoin inside your overall investment portfolio.

Besides their core portfolio, you can also opt to invest in sustainable ETFs. These are portfolios that are focused on environmental, social, and governance or ESG. These ETFs provide similar returns as a traditional investing portfolio, but gives you exposure to companies that are sustainable.

Acorns uses iShares to build their ESG portfolios. Each company in the ETF is scored by MSCI, a research and data company that uses a companies response on big issues like climate change.

Acorns offers four categories in their sustainable portfolio: Moderately Conservative, Moderate, Moderately Aggressive and Aggressive. While the composition is similar to their core portfolio, Acorns sustainable portfolio offers more variety of ETFs.

After the signup process is complete, and you’ve created your investment account with Acorns, the app will process your portfolio. View your portfolio to see a list of advice, tips, and ideas.

The Moderately Conservative Portfolio was recommended for me based on my variable cash flow (as a self-employed taxpayer), median net worth, my long-term investment reason, my age, and my above-average income. However, I chose to go with a Moderate Portfolio for this review.

To see a change in projected value over time, you drag the graph (either right or left and up or down) to change the amount invested each month. You don’t have to stick with the recommended portfolio. Just click on the different types of portfolios to find one that’s a better fit.

Acorns Offers 5 Core Portfolios to Choose From:

1. Conservative: 100% Bonds
2. Moderately Conservative:  40% Stocks, 60% Bonds
3. Moderate: 60% Stocks, 40% Bonds
4. Moderately Aggressive: 80% Stocks, 20% Bonds
5. Aggressive: 100% Stocks

Next, you can explore the ETFs and select an asset class you want to invest in. The Acorns app offers a number of index funds offered through iShares and Vanguard including:

1. Large Company Stocks — Vanguard S&P 500 ETF (VOO)
2. Small Company Stocks — Vanguard Small-Cap ETF (VB)
3. Developed Markets — Vanguard FTSE Developed Markets ETF (VEA)
4. Emerging Markets — Vanguard FTSE Emerging Markets ETF (VWO)
5. Real Estate — Vanguard REIT ETF (VNQ)
6. Corporate Bonds — JP Morgan Ultrashort Term Corporate Bond (JPST)
7. Government Bonds — iShares 1-3 Year Treasury Bond ETF (SHY)

When you’re ready, click “Confirm Portfolio.”