Like most other robo-advisors, Acorns gives its customers a diversified portfolio of low-cost ETFs suited to their risk tolerance and goals, based on how they answer a handful of questions.
You’ll be asked your age, net worth, income and when you may need to access the funds. Acorns picks your portfolio from a roster of nearly 25 ETFs. Forbes Advisor signed up with a profile for a young, upper-middle-class worker with a long investing horizon. Acorns came back with an “Aggressive Portfolio” that allocated:
- 55% to large domestic companies through Vanguard S&P 500 (VOO)
- 30% to international stocks through iShares Core MSCI International Stock (IXUS)
- 10% to mid-cap stocks through iShares Core S&P 500 Mid-Cap (IJH)
- 5% to small-cap stocks through iShares Core S&P 500 Small-Cap (IJR)
Unlike other competitors such as Wealthfront, our Acorns portfolio consisted of just four low-cost ETFs, all with miniscule expense ratios—the operating fees charged by the funds you invest in. This simplified approach makes your investments much easier to understand without sacrificing returns.
On the other hand, a portfolio consisting entirely of stocks, even for a risk-tolerant younger worker, may be a bit too risky. You can change to a different portfolio, but be careful: Your customized portfolio is based on the questionnaire, so by going against the grain you may end up holding too little risk, rather than too much.
Those so inclined may opt for Acorns’ new socially responsible investing (SRI) portfolio. This is a pretty standard course of action for robo-advisors, especially as younger investors have shown an interest in them. Wall Street loves these funds because they have higher fees. The problem is many of the companies you end up investing in often fail a common-sense SRI test.
For instance, Acorns uses the iShares ESG Aware MSCI USA (ESGU) that comes with a 0.15% expense ratio, which is five times as high as the Vanguard S&P 500 ETF (VOO) that Acorns uses in its non-SRI fund.
To get a sense of how much, consider the following: if you seed your account with $1,000 and contribute an additional $300 monthly for 30 years with a 7% return, you’ll pay nearly $10,500 in fees with ESGU compared to more than $2,100 with VOO.
Perhaps you’re fine forgoing those funds in the name of socially responsible investing. But you should ask yourself what that really means. ESGU’s top investments include Apple, Alphabet (Google) and Facebook, all of which have engaged in questionable social practices (from claims of inhumane work conditions to pilfering privacy to facilitating child p*rnography). Maybe you’re better off going with the cheaper ETF and donating the savings to a cause of your choosing.
FAQs
Is Acorns Worth it? Acorns charges monthly membership fees, starting at $3 per month. Even though it is a very easy way to get started investing, if you don't make enough purchases each month to round up and set aside enough money, the monthly fee could outweigh the benefit.
Is Acorn really a good investment? ›
Bottom line
For those who want to invest their money but don't know where to start, Acorns is an approachable platform for beginners. It has a simple interface and a micro-investing feature that goes to work every time you make a purchase. Plus, your investments will be safe in low-cost, diversified funds.
Will Acorns actually make me money? ›
Acorns is not a side hustle or money-making app that pays you. Think of it as a tool to grow the money you already have with consistent saving and investing. Generally, you'll earn money from your investments and by making qualifying purchases if you link your card to the Acorns account.
Is Acorns worth 5 a month? ›
A fee of only $3, $5 or $9 a month might sound cheap, but it can be a high percentage of assets for investors with small balances. If you only contribute by rounding up your spare change, one of Acorns' signature features, your fee relative to your account balance will be fairly high.
Is investing in Acorns risky? ›
Banking insurance: Acorns works with partners Lincoln Savings Bank or nbkc bank, Members FDIC, to make sure your funds are federally insured up to $250,000. It's also a member of the Securities Investor Protection Corporation (SIPC) which is a protection measure for customers if their brokerage firm fails.
What is better than Acorns? ›
We cover some of the best apps like Acorns that you can use to save money and put your investing on autopilot.
- Chime. Get started with Chime. Chime review. ...
- Oportune. Get started with Oportun. Oportun review. ...
- Qapital. Get started with Qapital. Qapital review. ...
- UNest. Get started with UNest. ...
- Betterment. Get started with Betterment.
Robinhood and Acorns each have a unique target audience, but the biggest difference between the two is that Robinhood may be better for beginners looking to choose their own individual stock and ETF investments, while Acorns may be a good choice for hands-off investors who want help building a diversified, long-term ...
Why is Acorns charging $3? ›
Acorns Fees and Costs
There are two Acorns membership tiers, both of which charge flat monthly fees: Personal: $3 per month. You get access to Invest, Later and Checking. Personal Plus: $5 per month.
Is Acorns or stash better? ›
Stash caters to new investors who want to build long-term wealth and may be best for investors who want to choose their own individual stock and ETF investments. Acorns completely automates investing, which appeals to investors who want a truly simplified set-it-and-forget-it investing approach.
Does Acorns charge a fee to withdraw? ›
No, Acorns does not charge fees for withdrawing funds from your investment account.
From there, many experts recommend the 50/30/20 rule - with 20% of your take home pay allocated towards saving and investing for financial goals. If 20% feels like a lot, do not despair. You can start small with as little as $5.
How much does Acorns cost per month? ›
However, a significant drawback of Acorns is its fee structure. The app offers three plans, priced at $3, $5, or $9 monthly, based on the services you need. The $3 monthly fee is relatively high for accounts with smaller balances.
What is the 50 30 20 rule on Acorns? ›
Using the 50/30/20 rule of thumb, you'll divide your monthly after-tax income like this: 50% for essential spending. 30% for flexible spending. 20% for financial goals.
How do you make a lot of money on Acorns? ›
How to make money on Acorns
- Get started while you're in school. “The best time to start investing was ten years ago. ...
- Automate – add small and consistent amounts of money monthly. ...
- Boost your round-ups. ...
- Use Acorns Earn. ...
- Download the Acorns extension. ...
- Use Acorns Spend Smart Deposit. ...
- Use credit cards with rewards points.
Furthermore, the long-term average annualised return in a balanced investment of the exchange-traded funds in which Acorns invests is closer to 7.5 per cent. Meaning that over the long-term there is a high probability that account balances of less than $200 will have all their gains eaten up in fees.
Is Robinhood or Acorns better? ›
Robinhood and Acorns each have a unique target audience, but the biggest difference between the two is that Robinhood may be better for beginners looking to choose their own individual stock and ETF investments, while Acorns may be a good choice for hands-off investors who want help building a diversified, long-term ...
Is Acorns later good for retirement? ›
An Acorns Later IRA can help you easily invest in yourself, while receiving potential tax advantages. For example, you may be able to defer some taxes until retirement or even pay less in taxes. To learn more about investing in an IRA plan, check out the articles below.
