How Good Is Acorns

By David Krug David Krug is the CEO & President of Bankovia. He's a lifelong expat who has lived in the Philippines, Mexico, Thailand, and Colombia. When he's not reading about cryptocurrencies, he's researching the latest personal finance software. 7 minute read

Spending less than they earn is a challenge for millions of people. Acorns is a new kind of investment software that brings together the best features of robo-advisor websites like Betterment and SoFi with the ease of use and low barrier to entry of savings applications like Digit.

Take a few minutes out of your day to read more about Acorns if you know you could save more if you tried, but you don’t know how to get started (or how to inspire yourself to get started).

In this article, we’ll take a look at the pros and cons of Acorn, as well as its most notable features.

The Fundamentals of Acorns

Essentially, Acorns is a tax-advantaged investing account that is easy to use and geared at millennials (Acorns Invest). The ideas of modern portfolio theory (MPT), established by Nobel Prize-winning economist Dr. Harry Markowitz, form the basis of the investment portfolios offered by Acorns Invest. (The platform’s tax-deferred retirement account, Acorns Later, is likewise MPT-compliant.)

The framework provided by Modern Portfolio Theory (MPT) aids investors in allocating their assets in line with their risk tolerance, allowing for the creation of diversified portfolios that strike a healthy balance between risk and return. Even though Dr. Markowitz is on the Acorns board, it is unclear how much input he has with the company’s strategic or operational decisions.

Basic Sign-Up Procedures

Simply download the Acorns app (Android or iPhone) and link your bank and credit card accounts to get started. You are not limited to the number of accounts or cards you initially link, and may always add more. When you open an account, you’ll receive a nice $5 bonus.

After linking your accounts, you’ll be asked to fill out a short profile that includes questions about your demographics and financial goals (such as retirement planning or saving for a car). This part should be familiar to anyone who has ever opened a bank or brokerage account.

Putting Together an Acorns Invest Portfolio

Your Acorns portfolio will consist of low-cost iShares and Vanguard ETFs based on the information you supplied at sign-up.

Each exchange-traded fund, or ETF, is an index fund that tracks the performance of a particular asset class, such as large- or small-company stocks, stocks from developing nations, stocks from the real estate industry, bonds issued by the government, or corporate bonds. Each of these ETFs gives investors exposure to the stock and bond markets of around 7,000 companies, according to Acorns.

The suggested portfolio for you is built around your age, income, investment goals, and time horizon, all of which are informed by your expected risk tolerance. Because of rebalancing, the exact asset allocation of a portfolio might shift over time. However, at each risk tolerance level, people tend to behave in one of the following ways:

  • This portfolio follows a conservative strategy by emphasizing government and corporate bonds while avoiding small-cap and emerging-market equities.
  • The Moderately Conservative Portfolio leans more heavily than the Conservative Portfolio toward government bonds and corporate bonds and away from small-company equities and emerging market stocks. This portfolio’s allocation is roughly equal across asset types.
  • Moderately Risky. This portfolio leans more heavily on small business stocks and real estate stocks than it does on emerging market stocks, large company stocks, emerging market stocks, government bonds, or corporate bonds.
  • This portfolio is considered aggressive because of its emphasis on small-cap stocks, real estate companies, and stocks from emerging markets at the expense of government bonds and corporate bonds.

Fees and Charges

There are two tiers of service fees for Acorns, each with its own set of perks and benefits.

  • Every Month You Pay Just $3 (Acorns Personal). In this tier, you’ll have access to Acorns Invest (a taxable brokerage account), Acorns Later (tailored IRA recommendations, automatic recurring SEP, traditional or Roth IRA contributions, and manual IRA contributions), and Acorns Checking (a checking account with a Visa debit card accepted at millions of merchants worldwide, access to more than 55,000 in-network ATMs, exclusive opportunities to earn up to 10% back on everyday purchases, and automated transfers to your Acorns I
  • It’s $5 Monthly (Acorns Family). In addition to the features included in Acorns Personal, this tier grants access to Acorns Early, a UTMA/UGMA investing account designed specifically with young investors in mind. If you want to instill a savings ethic in your child, Acorns Early is the way to go.

Acorns’ fees are higher than average since the exchange-traded funds (ETFs) it buys aren’t the cheapest available.

You may anticipate your total annual expenditure ratio (the sum of the management fees charged by all of the funds you own) to be anywhere from 0.05% and 0.15%, however the exact figure will vary depending on your asset allocation. Not including Acorns’ regular subscription cost.

It’s unclear if Acorns stops accepting deposits after your balance reaches $1 million, despite the fact that it’s targeted for investors with less than $1 million in investable assets.

Important Characteristics

The key aspects of Acorns are as follows:

Welcome Offer

New Acorns users who make their first contribution (minimum $5) between now and April 30 will get a $10 bonus investment. Some restrictions do apply.

Mobile App

Because of its focus on mobile use, Acorns centers on a simple and intuitive app for the Android and iOS operating systems. It lacks a desktop-friendly interface and trading platform, unlike most traditional brokerages and robo-advisors. The convenience of portability is both its strength and its weakness.

Investing in Groups

The slogan “Invest the Change” is a registered trademark of Acorns that encapsulates the app’s fundamental functionality.

Acorns is a debit card that automatically invests the spare change from your purchases by rounding up to the closest dollar whenever you use it or a connected debit card.
Say, for instance, that your upcoming shopping spend comes at $54.36. On your bank or credit card statement, the total charge will read $55.00; however, $0.64 will be contributed to your Acorns account.

If you link all of your spending accounts to your Acorns account, you can see how rapidly your savings may grow. In October 2012, the typical American family made 59 purchases, or roughly two each day, according to research by the Federal Reserve Bank of San Francisco.

Building a portfolio using leftover change from a few dozen transactions per month may not be cost-effective due to Acorns’ monthly costs. The $3 monthly charge, for instance, represents 10% of your contributed assets if you invest $30 per month in your Acorns Personal plan utilizing the round-up approach.

Continual Investments

You may set up automatic weekly or monthly deposits into your Acorns account from a connected bank account. This is a standard function of robo-advisors. Recurring investments can help you build wealth more quickly and lessen the blow of Acorns’ fees if you can afford to put away more than the amount of your round-up contributions.

Speculative Investments

Another popular feature of robo-advisors is the ability to arrange one-time investments. This is a fantastic option for either starting off your investment account or putting away money from one-time bonuses or tax returns.

Money discovered

Acorns’ Found Money feature functions similarly to the cash-back benefits you might earn from credit cards.
Acorns’ Found Money partners include some of the largest merchants in the country, and when you make purchases with them using a credit or debit card linked to your Acorns account, you’ll receive cash back that will be invested on your behalf. Partners may receive a cash rebate of up to 10%. Retail giant Walmart, lodging platform Airbnb, and food delivery service Blue Apron are all involved.

Tap & Save chances, which provide Found Money, require you to make a purchase from the partner’s website without leaving the Acorns app. (Using some, you need only pay with the associated card.) There may be a delay of up to 120 days before the “Found Money” shows up in your Acorns account.

Customer Service

Technical support agents for the Acorns app and investment specialists with the authority to offer broad recommendations on risk tolerance, asset allocation, and other topics make up Acorns’ customer support team. Acorns has an email address listed on their contact page.


The benefits of using Acorns’ investment portfolio solutions, checking account, and additional services are undeniable.

  1. Automatic round-up investments are hassle-free and convenient.
  2. Reduced Monthly Fees for Larger Accounts.
  3. No Minimums.
  4. Found Money Provides Substantial Cash Back Without Credit Card.


There are several drawbacks to using Acorns that you should be aware of before signing up.

  1. No absolutely free tiers.
  2. Fees Can Be Expensive for Low-Resource Users.
  3. Not ideal for do-it-yourselfers.
  4. Weak Customer Service.
  5. No Desktop Capabilities
  6. Risk of Principal Loss.

Bottom Line

Acorns and other robo-advisor systems are predicated on the flawed theoretical underpinning of modern portfolio theory. Skeptics point to MPT’s assumption of a constant correlation across asset classes, such as the idea that shifts in the price of equities lead to shifts in the price of bonds. This is not always the case.

MPT has been around for a long time, and despite its limitations, it nevertheless provides a solid foundation for millions of retail investors. For those who have never invested before, Acorns is a good starting point.

It’s important to maintain a sense of wonder and to regularly assess where you stand in terms of your financial and professional aspirations and capabilities. As it turns out, today’s solutions aren’t always tomorrow’s.

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