Acorns Review: Start Investing with $5! (2024)

Investing is an essential way to earn passive income. While investing in stocks with little money was challenging a few years ago, there are now platforms that let you start with minimal resources.

The Acorns app lets you make recurring investments and grow your net worth. In time, these contributions can compound into a small fortune.

This Acorns app review reveals how the platform can help new investors start investing and reach their financial goals.

What is Acorns?

Acorns is a micro-investing app that lets you invest as little as $5 into stock and bond index ETFs that are managed by Vanguard and BlackRock.

Unlike similar investing apps, you won’t have to self-manage your account. The platform lets you choose a premade portfolio that matches your risk tolerance and will automatically rebalance it.

Additionally, what began as a simple brokerage now offers retirement accounts and an FDIC-insured checking account. It’s even possible to earn bonus cash for investing by shopping at participating merchants.

Due to the many membership benefits and ease of use, Acorns has nearly ten million customers.

How Does the Acorns App Work?

It’s free to join Acorns if you’re at least 18 years old. You can get started by entering your email address.

The minimum balance to make your first investment is $5, and a monthly membership fee applies if you want to continue investing.

You will also select a Personal or Family membership plan to potentially open an investment account for each member of your household.

Your investment account options include:

• Taxable brokerage account
• IRA retirement account
• Custodial accounts

The IRA and custodial accounts are only available through the Family Plan.

You can fund your account by:

• Transferring money directly from your bank account or Acorns checking account
• Rounding up credit card and debit card purchases
• Shopping at “Acorns Earn” online shopping partners
• Receiving automatic cash back from cash back apps like Dosh

Many users make recurring investments by rounding up purchases from a linked payment card. The app automatically invests your cash when you reach the $5 investment minimum.

Investing your purchase round-ups is one of the most compelling reasons to use the app. For example, the platform will round up a $2.13 purchase to $3.00 and invests the $0.87 difference.

These modest round-ups can add up if you make several daily purchases. The app also offers cash rewards for shopping with over 15,000 brands.

This app is unique since it’s easy to invest with little money. You can buy fractional shares of the same index funds that other online brokers require you to buy an entire share of to invest.

For example, a broker may require you to buy whole shares of a Vanguard ETF that may be trading for as much as $200.

Instead of waiting until you have enough cash to purchase a single share, you can purchase a partial share to get exposure to this particular fund and several more to maintain a diversified portfolio.

Building a portfolio is easy since Acorns is a robo-advisor that recommends a portfolio for your investing goals. For example, you may pursue an aggressive asset allocation for the highest long-term growth potential.

The app will also automatically rebalance your asset allocation as you make new investments.If you’re looking for something a micro-investing app, read our guide on ways to invest $500 or less to identify other choices.

How Much Does Acorns Cost?

Depending on which plan you choose, you will pay a flat monthly fee of either $3 or $5. This fee covers all investment and banking transactions.

Here are the current monthly plans:

• Personal ($3/month): This is a single-user plan with taxable and retirement accounts. You can also open an Acorns Checking account with no account fees.
• Family ($5/month):This plan lets you open an investment account for your children. You also get access to exclusive offers and learning tools.
• Premium ($9/month): This plans gives the users the choice to select custom portfolios, live Q&A with financial experts, a 50 percent match on Acorns Earns rewards (up to $200 monthly), and $10,000 in life insurance.

The account fees can be a nuisance if you don’t invest frequently. However, the spending round-ups make it easy to offset the monthly fee and invest often.

According to Acorns, the average user invests $30 in purchase round-ups each month.

Remember, you don’t start paying the monthly fee until you make your first investment.

The initial minimum investment is $5 for the taxable Acorns Investing. This minimum also applies to an Acorns Later traditional or Roth IRA.

What Investing Options Does Acorns Have?

Investors can choose between a Core Portfolio and an ESG Portfolio (environmental, social, and governance) that invests in stock and bond index ETFs with various degrees of risk tolerance.

You can also get exposure to Bitcoin through your taxable account using the ProShares Bitcoin Strategy ETF (BITO). However, you must be comfortable with volatility, and you won’t have private key access.

Core Portfolios

Consider a Core Portfolio if you want exposure to more companies and industries since the funds don’t avoid controversial investments such as oil or tobacco stocks.

The “Conservative” portfolio only invests in bonds, while the “Aggressive” portfolio only holds stocks. The “moderate” portfolios invest in stocks and bonds.

Here are the five core portfolios you can invest in:

• Conservative (100 percent bonds)
  • 40 percent short-term government bonds
  • 20 percent ultra short-term government bonds
  • 40 percent ultra short-term corporate bonds
• Moderately Conservative (40 percent stocks and 60 percent bonds)
  • 24 percent U.S. large company stocks
  • Four percent U.S. small company stocks
  • Eight percent foreign large company stocks
  • Four percent real estate stocks
  • 30 percent government bonds
  • 30 percent corporate bonds
• Moderate (60 percent stocks and 40 percent bonds)
  • 29 percent U.S. large company stocks
  • 10 percent U.S. small company stocks
  • 12 percent foreign large company stocks
  • Three percent emerging market stocks
  • Six percent real estate stocks
  • 20 percent government bonds
  • 20 percent corporate bonds
• Moderately Aggressive (80 percent stocks and 20 percent bonds)
  • 38 percent U.S. large company stocks
  • 14 percent U.S. small company stocks
  • 16 percent foreign large company stocks
  • Four percent emerging market stocks
  • Eight percent real estate stocks
  • 10 percent government bonds
  • 10 percent corporate bonds
• Aggressive (100 percent stocks)
  • 55 percent U.S. large company stocks
  • 10 percent U.S. medium company stocks
  • Five percent U.S. small company stocks
  • 30 percent foreign company stocks

Younger investors might choose more aggressive portfolios because stocks have more long-term growth potential than bonds. You can shift to a conservative portfolio as you near retirement to lower your risk.

The target asset allocations are similar to other investing apps with risk-based ETF portfolios.

This investment strategy uses the Nobel Prize-winning Modern Portfolio Theory to minimize risk while letting you invest in multiple asset classes.

As your long-term investing goals change, you can switch your recommended portfolio allocation. The platform will automatically rebalance your portfolio as necessary.

ESG Portfolios

There are four ESG portfolios that have a similar asset allocation as the core portfolios. When possible, they avoid investing in institutions that threaten environmental sustainability or are a moral hazard.

They primarily achieve this goal by investing through the iShares ESG Aware MSCI USA ETF (ESGU) and iShares MSCI USA ESG Select ETF (SUSA).

The ESG asset allocations include the following:

• Moderately Conservative (40 percent stocks and 60 percent bonds)
  
  • Three percent U.S. large and medium stocks (SUSA)
  • One percent U.S. small company stocks
  • Three percent international company stocks
  • 24 percent U.S. large company stocks (ESGU)
  • Three percent emerging market stocks
  • 23 percent U.S. corporate bonds
  • 14 percent U.S. mortgage-backed bonds
  • 23 percent Treasury bonds
• Moderate ESG (60 percent stocks and 20 percent bonds)
  • 35 percent U.S. large company stocks (ESGU)
  • Five percent U.S. large and medium stocks (SUSA)
  • Two percent U.S. small company stocks
  • 13 percent international company stocks
  • Five percent emerging market stocks
  • 15 percent U.S. corporate bonds
  • 16 percent Treasury bonds
  • Nine percent mortgage-backed bonds
• Moderately Aggressive ESG (80 percent stocks and 20 percent bonds)
  
  • 47 percent U.S. large company stocks (ESGU)
  • Six percent U.S. large and medium stocks (SUSA)
  • Three percent U.S. small company stocks
  • 18 percent international company stocks
  • Six percent emerging market stocks
  • Seven percent corporate bonds
  • Eight percent Treasury bonds
  • Five percent U.S. mortgage-backed bonds
• Aggressive ESG (100 percent stocks)
  • 55 percent U.S. large company stocks (ESGU)
  • Ten percent U.S. large and medium stocks (SUSA)
  • Five percent U.S. small company stocks
  • 22 percent international company stocks
  • Eight percent emerging market stocks

Unfortunately, there isn’t a portfolio with a conservative risk profile.

Additionally, the Acorns ESG expense ratio for these mission-minded portfolios is higher. For example, your fund fee might be 0.15 percent instead of 0.03 percent for a core ETF.

Keep in mind that Acorns doesn’t trade individual stocks or ETFslike investing services that cater to DIY investors.

Bits of Bitcoin

You can invest up to five percent of your funds in a Bitcoin-linked ETF. Your asset allocation is determined by your tolerance for risk and other factors such as your age, income, and goals.

For example, an aggressive portfolio allocates five percent, but conservative investors can invest one percent. This investment asset is optional, and you can stay with a core or ESG portfolio of stocks and bonds if you prefer.

Account Types

Acorns sets itself apart from competitors by offering numerous account options. Here are the choices you have when opening an account.

Round-Up Account

You can round up your purchases and invest your spare change by linking your existing debit card or credit card to your taxable account.

To supercharge your investments, you can also multiply your round-up amount by two, three, or ten. The round-up amount plus the multiplier comes from your linked bank account.

Consider this account if you plan on withdrawing your balance before retirement to avoid early redemption penalties. However, your ETF sales and dividend income are subject to taxes yearly.

Traditional IRA

The tax-advantaged traditional retirement account allows your contributions to grow tax-deferred.

You can deduct your annual contributions from your tax return for upfront tax savings, but your distribution is subject to income taxes.

In addition to the Acorns Later traditional IRA, you can also open these two retirement plan types:

• Roth IRA: You pay income taxes immediately on your deposits but can withdraw the contributions tax-free.
• SEP IRA: Self-employed workers can have higher contributions than a regular IRA. Your contributions are tax-deductible, similar to a traditional IRA.

You can schedule recurring deposits of at least one percent of your paycheck into these tax-advantaged accounts to save for retirement effortlessly.

Acorns Early

Choosing the Family plan tier ($5 per month) lets you open a custodial investment account for each of your children.

Unlike a 529 college savings plan, your child has the freedom to use these funds for non-education expenses in adulthood.

Acorns Features

Being able to make small investments on demand is the best reason to use Acorns. However, several additional features can also help improve your finances.

Mobile App

In addition to the web platform that is accessible from any browser, you can access your investing and banking accounts directly from the Android or iOS mobile app.

This makes it simpler to manage your investments without having to be in front of a computer.

Acorns Spend

Investing is not the only financial need Acorns fulfills for its users. The company also offers banking services, including a complimentary online checking account.

This account provides:

• The ability to receive direct deposit payments up to two days earlier
• A metal debit card for purchases
• Over 55,000 fee-free ATM locations
• Mobile check deposit
• Digital checks for paying bills
• FDIC Insurance of up to $250,000

The Acorns spending account and payment card can make it easier to monitor your cash balances, pay bills, and invest regularly.

Another banking-related perk available to every account is the “Found Money” online shopping portal.

This cash back apppartners with over 350 online and local stores to invest at least one percent of your purchase. Some of the brands include Walmart, Chevron, and Blue Apron.

The rewards take between 60 and 120 days to deposit into your investing account. You can earn rewards by using your debit card, another linked payment card, and the iOS or Android Acorns app.

You can even start shopping from the Acorns website or Google Chrome extension.

Scheduled Deposits

The Smart Deposit feature lets you schedule recurring investments from a linked bank account into your investment accounts.

Automating the investment process makes it easy to be a hands-off investor so that you can focus on other priorities.

Plus, the investing app can help you visualize how recurring deposits and compound interest can increase your net worth.

This tool calculates your potential portfolio based on your current contribution amount, and you can adjust your future contribution rate. As a result, it can motivate you to invest more often.

Money Basics

You will find a “Money Basics” section within the app. This features educational articles to help you learn how to investand manage money.

Few micro-investing platforms have similar in-depth resources since they only offer free trades and barebones research tools.

Grow

Grow is a free online platform with articles and videos from Acorns and CNBC. You can keep up with current events and improve your money skillson topics like:

• Investing
• Making money
• Saving money
• Spending wisely
• Borrowing

This is a helpful resource to use if you want to improve your finances holistically.

Free GoHenry Account

GoHenry is an app that helps parents teach their children about the basic of managing money. This is done primarily via a debit card children use, equipped with resources to help guide purchasing decisions.

Parents receive real-time purchasing alerts. They can also assign chores through the app and manage allowance payments.

Access to the GoHenry account is free of charge for all Premium account holders.

Is Acorns Legit and Safe?

The Acorns app uses bank-level 256-bit security to protect your data and money. While the service isn’t hack-proof, other reputable investing apps use similar security metrics.

Your investing accounts have up to $500,000 in SIPC insurance if the broker closes. Be aware that this insurance doesn’t reimburse you for normal investment losses.

Your Acorns Checking accounts are FDIC-insured up to $250,000.

Using Acorns to invest can be worth it if you use the spending round-ups, take advantage of Earn shopping partners, and appreciate the premade expertly-picked portfolios.

Investing in stock and bond index funds gives you a diversified Acorns portfolio that can be less volatile than making your own portfolio. However, no investment is risk-free.

While the account fees are small, they might not be worth it if you only plan on funding your account with regular bank transfers or if you don’t want to schedule recurring transactions.

Other micro-investing platforms have similar investing options and may charge lower fees for small account balances.

Pros and Cons

As with any investing platform, it’s important to evaluate the positives and negatives before signing up. Here is what to consider when looking at Acorns Investing.

Pros

• Invest spending round-ups
• ESG portfolios and Bitcoin-linked ETFs are available
• Invest in low-fee index fund ETFs
• Low $5 minimum investment to buy fractional ETF shares
• Taxable, retirement, and custodial investment accounts
• Open an account with $0
• Choose an investment strategy
• Banking account and shopping offers for all members

Cons

• Monthly fee of either $3 or $5
• Cannot invest in individual stocks or sector ETFs
• No tax-loss harvesting
• ESG portfolios have higher expense ratios

Acorns makes it easy to invest your spare change and build your savings. New investors may appreciate the simple saving and investing strategy.

Active investors may consider using the app to supplement their current investment portfolio.

Alternatives to Acorns

Investing can be overwhelming, particularly for newer investors. Thankfully there are numerous platforms that make it easy to get started.

Here are the top alternatives to Acorns to start investing, including some that don’t charge account management fees.

SoFi Invest

You can create a self-directed SoFi Active Invest account and trade fractional shares of stocks and ETFs with slices as small as $5. There are no trading fees or fees required, making it easy to invest in the stock market.

If you prefer a managed account, the SoFi Automated Investing platform offers premade stock and bond index fund portfolios similar to the Acorns core portfolios.

There are no required fees, and the investment minimum is $1.

You can also have online banking access through SoFi Wealth as well as a wealth of other financial resources.

Robinhood

Robinhood is one of the best free investing apps for DIY investors. You can buy fractional shares of stocks and ETFs with a $1 trade minimum using this alternative to Acorns.

Unlike Acorns, there are no premade ETF baskets. However, you can copy the portfolios if you’re comfortable managing your own portfolio so that you can avoid the $5 monthly fee for Robinhood Gold.

This platform also offers a free interest-bearing cash management account with up to $1.25 million in FDIC insurance. Your uninvested cash can deposit into this account, and you may also request a debit card for fee-free ATM access.

Read our Robinhood review to learn more.

Stash

Stash is likely the closest competitor to Acorns. It hassimilar pricing as you pay either $3 or $9 per month. However, there are some differences in the plan features.

To begin with, this platform lets you buy individual stocks and ETFs with a minimum $0.01 investment, while Acorns only offers five risk-based ETF portfolios.

When it comes to account types, you can open a self-directed or automated account. Custodial accounts are available with the more expensive plan.

In addition, investors can utilize spending round-ups and a fee-free banking account. The Stash Stock-Back feature gives you partial stock shares when you shop at certain online stores.

Purchases at non-participating stores go into an S&P 500 index ETF. Read our Stash review to learn more.

Is Acorns Actually Worth Using?

With Acorns, it’s easier to invest small amounts of money since you can find several ways to invest spare change. Small and frequent investments can turn into a large nest egg over time.

However, be sure to invest more than the monthly fee. While it is affordable, it does add up when you’re trying to build wealth.

What do you look for in a brokerage?

SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.

1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.

2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA/SIPC, (“Sofi Securities”). Clearing and custody of all securities are provided by APEX Clearing Corporation.

3) SoFi Crypto is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.

For additional disclosures related to the SoFi Invest platforms described above, including state licensure of SoFi Digital Assets, LLC, please visit SoFi.com/legal.

Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Bank, N.A.

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