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
Acorns is best for beginners to investing who prefer a straightforward, automated approach. It's particularly appealing for those with limited investment knowledge, offering a simple way to grow your wealth through automated investments and spare change round-ups.
Is Acorns worth it reviews? ›
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.
What is the average return on Acorns? ›
Acorns offers impressive high-yield checking and savings accounts. The checking account earns 3% APY and the savings account earns 5% APY, with no minimum balance to receive the interest rate. The checking account has no overdraft fees and access to 55,000+ fee-free ATMs.
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.
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.
About every two to five years, it's thought, oak trees will put out a really huge bumper crop of acorns. And the exact reason or trigger for it is not known. You know, weather can have a lot to do with flower production or aborting flowers in the spring, and if that happens, you can have less acorns, for instance.
Is Stash or Acorns better? ›
That depends on which features are most important to you. In general, Stash is most likely to appeal to DIY, hands-on investors, while Acorns tends to be a better fit for investors who want to outsource management of their investments.
Is investing in Acorns risky? ›
The Acorns website and the Acorns app are secured with 256-bit encryption. Acorns is a member of SIPC. Securities in your account are protected up to $500,000. For details, please see www.sipc.org.
How much money should I put into Acorns? ›
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.
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.
With Acorns, you start out with a free $5 bonus. With Acorns Spend, you'll get a $75 bonus after you enable direct deposit and receive your first two deposits in your Spend account.
What happens if Acorns shut down? ›
For example, with Acorns Checking, your accounts have FDIC insurance through our banking partners, Lincoln Savings Bank and nbkc bank. The FDIC insures more than 4,700 banks across the U.S. What that means is if an insured bank fails, the FDIC will reimburse you for your losses.
Is it possible to lose money on Acorns? ›
Yes. The securities you own are always subject to market fluctuations.
Is Acorns or Robinhood better? ›
Final take. Robinhood is the best choice for DIY investors who prefer to approach investing hands-on. Acorns is the better bet for investors who are hands-off and who prefer to do their checking in the same app where they do their investing.
Can you take money out of Acorns anytime? ›
You can withdraw from your Acorns Later account any time, but it's important to know that making a withdrawal before you meet certain IRS requirements can have tax implications for many people, with only a few exceptions.
Can you lose money investing with acorn? ›
Yes. The securities you own are always subject to market fluctuations. Market volatility can be unnerving, but it can also be an opportunity for investors. The big lesson we want all investors to remember is to keep going — over time, the market has bounced back from tough times.
Is there a penalty for withdrawing money from Acorns invest? ›
In conclusion, withdrawing money from Acorns Invest is a hassle-free process without any penalties from the platform itself. However, it's essential to consider potential tax implications and the time it takes for withdrawals to reach your bank account.
Is Robinhood or Acorns better? ›
Final take. Robinhood is the best choice for DIY investors who prefer to approach investing hands-on. Acorns is the better bet for investors who are hands-off and who prefer to do their checking in the same app where they do their investing. By comparing Robinhood vs.
