Acorn Investment: Smart Move Or Risky Business?

Acorns is a micro-investing app that offers a simple, low-cost, passive investing solution, making it well-suited to new investors. The app is designed for beginners and passive investors who want accessible mobile investment strategies without complex charting tools and dashboards. Its mobile-first approach to building a diversified portfolio of low-cost ETFs is geared towards those interested in opening their first brokerage account, custodial account, or IRA.

Acorns offers a unique micro-investing feature called Round-Up, which links your credit or debit card to your Acorns account and invests your spare change from every purchase. Your money will be invested once it reaches $5.

Acorns offers three membership plans, all of which charge flat monthly fees: $3 per month with access to Invest, Later, and Checking; $6 per month with access to all the features of the Bronze plan and access to Premium Education, Emergency Fund, and Earn Rewards Match; and $12 per month with access to all the features of the Silver and Bronze plans, plus access to Benefits Hub, Custom Portfolio, Earn Rewards Match, and Early, Acorns' UTMA/UGMA investment accounts.

While Acorns is a legitimate investment platform, its fees can be high compared to other investment apps, especially for those with low balances. Additionally, Acorns does not offer tax-loss harvesting or access to human advisors.

Overall, Acorns is a wise investment option for those who want a simple, automated way to invest their spare change and are not concerned about high fees or advanced features.

Acorns' flat fees

Acorns is a micro-investing app that offers a flat monthly fee structure, rather than charging a percentage of assets under management per year, as is more common among robo-advisors.

Acorns has three subscription plans:

• Bronze: $3/month
• Silver: $6/month
• Gold: $12/month

These fees may sound low, but they can be a high percentage of assets for investors with small balances. For example, if you only contribute by rounding up your spare change, your fee relative to your account balance will be fairly high. For context, Acorns' competitors such as Wealthfront and Betterment charge 0.25% per year. To achieve an equivalent fee of 0.25% with Acorns, you would need an account balance of $14,400 with the Bronze plan, $28,800 with the Silver plan, and $57,600 with the Premium plan.

However, if you invest in the Silver or Gold plans, you may be able to wipe out the account fee with Acorns' IRA contribution match of 1% for Silver members and 3% for Gold members.

In addition to the monthly fee, Acorns charges a $35 fee per ETF to transfer investments to another broker.

Acorns' investment options

Acorns is a micro-investing app that offers a simple, low-cost, passive investing solution. It is designed for beginners and passive investors who want accessible mobile investment strategies without complex charting tools and dashboards. Its mobile-first approach to building a diversified portfolio of low-cost ETFs is geared towards those interested in opening their first brokerage account, custodial account, or IRA.

Acorns offers three subscription plans:

Bronze ($3/month)

The basic Acorns Bronze brokerage option gives individuals access to customized, diverse investment portfolios and banking features. You can earn bonus investments when you shop at over 450 partnered in-app brands with the Acorns Earn feature. You can also discover a side hustle gig with the Job Finder tool and access educational videos and tips through the Acorns Learn platform.

Silver ($6/month)

Acorns Silver gets you access to more investing and savings tools, such as an emergency fund, bonus Acorn matches (up to 25% of your contributions), and access to live expert Q&As.

Gold ($12/month)

On top of the Silver features, Acorns Gold gets you access to Acorns Early custodial accounts and DIY stock investing. Acorns will make bonus match investments of up to 50% of your contributions. You'll also get access to educational courses, banking for kids, and a $10,000 life insurance policy.

All plans include banking features, IRAs, ESG portfolio opportunities, and Round-Ups.

Acorns offers five main saving and investing products:

• Invest: A taxable investment account that puts your money into exchange-traded funds (ETFs), chosen for you based on your risk tolerance and financial goals.
• Later: A tax-advantaged individual retirement account (IRA). Like Acorns Invest, your portfolio is made up of ETFs.
• Debit Card: A checking account that comes with a debit card and reimburses some ATM fees. It also has a Smart Deposit feature that allows you to automatically siphon money from a direct deposit in your Acorns debit card account into other accounts, like Invest.
• Earns: An online marketplace that offers a small percentage back on purchases made at hundreds of major retailers, including Walmart. The cash back that you earn is placed in your Acorns Invest account.
• Early: Available to those paying Acorns’ most expensive plan, this is a UTMA/UGMA account, allowing parents to set up accounts for their children.

Acorns is a legitimate investment platform, but it does have some disadvantages. The fees can be high, especially for those with low balances, and there is no access to real-life financial advisors or tax-loss harvesting. Additionally, you have to pay fees to access the checking account, which is not the case with some other robo-advisors.

Overall, Acorns is a good option for those who want a simple, automated way to save and invest and are willing to pay a flat monthly fee for the convenience.

Acorns' diversification

Diversification is a key principle of investing with Acorns. The app offers a range of diversified, expert-built investment portfolios of ETFs designed for long-term investing. These portfolios are built by financial experts and managed by firms like BlackRock and Vanguard.

Acorns' investment portfolios are designed to be well-diversified, with a variety of different companies and asset classes. The ETFs in these portfolios cover large, medium and small company stocks, international company stocks, treasury bond ETFs, and more.

Acorns also offers a sustainable ESG portfolio option, which is built with iShares by BlackRock. This portfolio is designed to invest in companies that meet environmental, social and governance standards.

In addition, investors can allocate up to 5% of their portfolio to a Bitcoin-linked ETF to further diversify their allocation.

Overall, Acorns' diversification strategy is a key part of its investment offering, providing investors with a range of well-diversified portfolios to choose from.

Acorns' ease of use

Acorns is a micro-investing app with a user-friendly interface that is well-suited for beginners and passive investors. Its mobile-first approach to building a diversified portfolio of low-cost ETFs is geared towards those interested in opening their first brokerage account, custodial account, or IRA.

Acorns offers a single subscription that gives you access to three different accounts: individual investment accounts, IRAs, and UGMA/UTMA accounts. The app's Round-Up feature allows you to link your credit or debit card to your Acorns account, and it will round up your purchases to the nearest dollar, investing the change once it reaches $5. You can also set up recurring contributions as low as $5 at a time.

Acorns offers three membership plans:

• Acorns Bronze: $3/month, which gives you access to Invest, Later, and Checking.
• Acorns Silver: $6/month, which includes all the features of Bronze, plus access to Premium Education, Emergency Fund, and Earn Rewards Match.
• Acorns Gold: $12/month, which includes all the features of Silver, plus access to Benefits Hub, Custom Portfolio, higher Earn Rewards Match, and Early, Acorns’ UTMA/UGMA investment accounts.

Acorns' interface is designed to be easy to use, with automated investing and recurring contributions. The app also provides educational content, including videos, articles, and tips for investors.

Acorns' suitability for beginners

Acorns is a micro-investing app that is well-suited for beginners and passive investors. Its easy-to-use platform offers security and efficiency for beginners, with a mobile-first approach to building a diversified portfolio of low-cost ETFs.

Acorns is a good option for beginners who are interested in opening their first brokerage account, custodial account, or IRA. The app is designed for those who want to invest in mobile investment strategies without complex charting tools and dashboards.

Acorns offers a simple, low-cost passive investing solution. Its automatic savings features are particularly useful for beginners who want to save more. The app's interface is easy to navigate, and its educational content is designed for beginners.

Acorns offers three different accounts with a single subscription: individual investment accounts, IRAs, and UGMA/UTMA accounts. The portfolios are designed by experts and are selected based on the investor's profile.

Acorns' flat-fee structure, however, can be more expensive than percentage-based fees for beginners with low balances. The app may be better suited for those who need a nudge to save more rather than beginners looking for the cheapest option.

Pros

• Low minimum ($5) to start investing
• Personalized, diverse ETF portfolios
• Easy-to-use interface
• Automatic saving and investing tools

Cons

• Flat monthly fees ($3, $6, or $12)
• DIY trading and custodial accounts are only available with the Gold plan
• No advanced charting features
• Cannot directly invest in Bitcoin

Frequently asked questions