published 2022-08-15 13:00:00 3 Acorns Review: Micro Investing App /content/thumbnails/p-24-acorns-1-small.webp acorns Acorns is an investing app that automates saving and investing in the stock market. The app has several features with the main purpose of simplifying investing by employing the set-it-and-forget-it strategy.

Acorns Review: Micro Investing App

Micro Investing App - How to Invest with Acorns

Acorns is a micro-investing app that automates saving and investing. The app has several features with the main purpose of simplifying saving money and investing in the stock market by employing the set-it-and-forget-it strategy. With Acorns, there is no need to pick your investments, balance and optimize your portfolio, or stress about other things that accompany active investing.

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Acorns Features

The most notable and unique feature is called Round-Ups. Acorns Round-Ups automatically invests the spare change from transactions you make using your debit and credit cards. For example, when you spend $3.60 on a cup of coffee using a card that is linked to your Acorns account, the app will round up this amount to $4 and invest the $0.40 difference in your portfolio. You can increase the invested amount by turning on the "round-up multiplier" option, which lets you multiply your spare change by two, three, or ten times.

In addition to investing your spare change, Acorns lets you set up daily, weekly, or monthly recurring investments so you won't forget to contribute towards your financial goals.

Acorns Earn is another feature that lets you earn cash back on purchases from major retailers and automatically invest the earnings into your Acorns investment portfolio.

Where is My Money Invested?

You probably think that's great but where is my money invested? Acorns is aimed toward new and passive investors, and its goal is to take the guesswork out of choosing investments for your portfolio. Acorns is a Robo advisor - a financial service that uses software to automate investing based on the information you provide about yourself and your financial situation.

When you sign up for Acorns, the app prompts a brief questionnaire that asks about your investment objectives and your financial goals.

Based on your answers, the Robo adviser recommends an investment portfolio from one of Acorns' prebuilt portfolios that aligns with your goals.

Acorns has five prebuilt portfolios - conservative, moderately conservative, moderate, moderately aggressive, and aggressive. You can choose a low-risk moderate growth asset allocation, an allocation with high growth potential, or anything in between. You can change your portfolio type at any time, and you don't need to worry about not choosing the right type of portfolio from the beginning.

Each prebuilt portfolio is comprised of exchange-traded funds (ETFs), and your investments are diversified across thousands of stocks and bonds. When the asset allocations of your chosen portfolio grow out of proportion, Acorns automatically rebalances your investments to stay in its target allocation.

Related: Why Mutual Funds and ETFs are Considered Less Risky than Stocks?

Other Features

"Acorns Later" is the name for their IRA (Individual Retirement Arrangements/Account). "Acorns Banking" is an online checking account. "Acorns Early" is a UTMA/UGMA account that lets parents, guardians, and family members create a custodial account and invest in a child's future.

Acorn Fees

Understanding the fees you pay is a crucial part of investing. Investors should always carefully review all fees to purchase, maintain, and sell their investments.

Acorns doesn't charge commissions to buy or sell any of your investments, but instead, Acorns charges a fixed monthly fee. Acorns offers two plans, "Acorns Personal" which costs $3, and "Acorns Family" which costs $5 per month.

At first, the fee looks like a negligible amount of money, but this is a matter of perspective. Let's say you invested $100 a month. The three-dollar monthly fee is a 3% loss on your investment. For small accounts, the monthly fee will offset any realistic gain from the investments. Of course, the more money you invest, the less this fee affects your portfolio. If you have $1000 worth of investments in your portfolio, the monthly fee equates to 0.3% percent, which is much smaller but still significant compared to other options.

In addition to the fixed monthly fee, the funds held in Acorns portfolios have annual expense ratios. The annual expense ratios of the funds range from 0.05% to 0.18%.

This table will help you understand the annual fee based on your Acorns account balance. The percentages don't include the expense ratios of the funds.

Account Balance Annual Fee
$300 12%
$700 5.14%
$1,000 3.60%
$3,000 1.20%
$5,000 0.72%
$10,000 0.36%

An Acorns portfolio with less than several thousand dollars is not the cheapest option. Mutual funds and ETFs offered in traditional brokerage accounts at Vanguard and Fidelity range from zero to 0.04% in annual fees for most of their funds. Even with the additional 0.20% fee on top of the annual fees for the Robo adviser, Vanguard is still a cheaper option.

On the other hand, if you are not ready for a traditional brokerage account and wouldn't have invested anything if not for the app that makes investing a mindless exercise - Acorns may be a good way to dip your toes into investing with small amounts of money. And the way Acorns makes investing and saving easy and simple without ever having to think about it - may be worth the fees.

Related The Hidden Costs of Investing: How Fees Can Devour Your Returns

Are There Risks with Investing with Acorns?

Remember, you are not investing in Acorns. You are investing in the stock market using Acorns' brokerage account. Investing in the stock market always poses risk, no matter what investing platform you use. Although Acorns is a registered member of The Securities Investor Protection Corporation (SIPC) that protects customers if their brokerage firm fails and covers up to $500,000 per account, there is nothing to protect you from the market swings and corrections. This applies not only to Acorns but to any brokerage firm.

Besides making investing a simple and less intimidating process, Acorns makes staying invested easier. Staying invested can be as difficult as picking what to invest in, perhaps even harder. Active investors are more likely to give in to their emotions during market downturns and sell their investments at inopportune times. Read about how emotional investing can cost you.


Acorns takes the complexities out of the investing and makes it accessible to anybody, regardless of income level or knowledge of the stock market. But their fee structure makes Acorns more expensive in comparison to other investing platforms. Some people will save money on fees by choosing other investing platforms, although this may require more involvement in the investing process. For some, investing with Acorns would be better than not investing at all.

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