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Acorns Review: Irritating or Ideal for New Investors?

acorns review featured
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Acorns is a micro-investing app that seeks to provide real returns on small investments you make. Sure, your Acorns holdings won’t soar in value overnight, but really they’re not meant to! Instead, it is based upon the old saying “mighty oaks from little acorns grow.” The key premise of the mobile-first investment app is to encourage slow and minimal investing over time. The idea is that it eventually grows into something more substantial. Our Acorns review will help you decide if the micro-investing platform is right for you. 

Acorns Review: What Acorns Is

What is Acorns?

Acorns is a user-friendly app that tries to make it easy for you to get started in the world of investment. This is done via investment in Exchange Traded Funds (ETFs), which make up all of Acorns holdings.

Acorns is also one of a slew of apps, commonly called micro-investing apps. 

They’ve arisen as recent years have seen the convergence of several trends in the market. Such trends are surely the ‘perfect storm’ in the minds of crusty old stock brokers who’d still like to trade stocks via a rotary phone! 

But for newcomers, they offer the following advantages:

  • An easy way to start investing
  • No intimidating amounts like stocks that cost hundreds if not thousands to invest in
  • The chance to easily keep track of investments and see progress via a user-friendly app

Acorns Review: Why Acorns?

If you’re a new investor it can be hard to know where to begin. The same applies if you’re an investor with little cash free to invest. And if you’re a new investor with little cash? It may seem like there are no options out there to grow their money. The only other option is putting it into a savings account. 

One that generates interest at a snail’s pace in today’s current low interest rate climate!

But in reality there are options out there. In turn, ones that are very user-friendly. Acorns exists in a field alongside many other micro investing apps, but Acorns was among the very first, and remains the most popular app out there today. So how does it actually invest for you?

>> Already sold on Acorns? Start saving and investing today by clicking here! <<

Acorns Review: How Acorns Works

How acorns works


Acorns seeks to make investing thoughtless – in a good way! They do this via an automatic process called “round-ups”. 

Acorns monitors your bank account throughout the day, and each time a purchase occurs for an uneven amount, the round up between the sum and the next full dollar is sent over to your Acorns investment.

For example, if you buy a coffee and donut for $4.50, Acorns will round the transaction up to $5.00 and dispatch 50 cents for your investment. Via this process, an Acorns user does not need to constantly be setting aside money regularly to add to their investment. 

Given how many newcomers to investment find the process intimidating given the size of sums involved – with stocks costing hundreds if not thousands of dollars per unit – Acorns seeks to remove the intimidation factor from making sizeable investments. 

It also looks to make building an ongoing budget for investing pain-free via this automatic process.

Acorns divides a user’s investment options into 5 categories: conservative, moderately conservative, moderate, moderately aggressive or aggressive. 

With the conservative category, there’s the lowest risk but also the lowest potential for growth. With aggressive, there’s a high risk/high reward dynamic. 

Found Money Partners

As well as its direct investment offerings Acorns also maintained a Found Money partnership program with a number of businesses. 

Hundreds of businesses participate in the program where a user who purchases goods or services through Acorns is rewarded by the business depositing an amount of cash into the user’s Acorns account. This is done via automatic transfers (AKA smart transfers)

These sums are usually small in the grand scheme of things, but investing in Acorns plus using Found Money can multiply a round up many times. 

For example, if you brought a coffee and donut combo for $4.50 from a chain that participated in the Found Money program, they could find instead of getting 50 cents back you’ll get 4x that at $2.00, and potentially even more! 

It is necessary to note the waiting period in this program can be lengthy. Acorns advises it will be between 90 and 120 days before you receive the cash in your account. 

In turn, as with any program like this, many users will find they prefer shopping with other businesses not participating in the program, so it may not have a daily use. 

Nonetheless, given major brands like Home Depot, Walmart, Old Navy, Sephora and more have signed up to Found Money, every user of the app is likely to find some use for it from time to time. 

Acorns Review: What Acorns is Good At

Acorns review

Excellent Visual Design

As well as commendably getting millennials interested in investing, Acorns has certainly made investing user-friendly. The sleek design of their website and app is a virtue that will not only continue to lure new customers, but is something all investment apps should take note of. 

Given how many trading houses – even old and famous names in the industry – continue to have an awkward and clunky interface, Acorns is on a real winner with its design.

Easy-to-Understand Investing

By dividing a user’s options into 5 categories Acorns takes the guesswork out of sophisticated investment. Even veteran investors will regularly find a great deal of time can be taken up shifting strategies as the market dictates. 

For example, when the Covid-19 pandemic first hit, many investors pivoted away from riskier holdings to more conservative investments. Now, with a vaccine program beginning, many have begun switching back into high-risk/high reward stocks.

With a regular investment portfolio, the transition in and out of such categories will not only take up a lot of time, but potentially a decent chunk of cash too when navigating brokerage fees. With Acorns, selecting a category – and switching from it when one desires – is straightforward. 

>> Ready to start with Acorns today? Click here to sign up for an account! <<

Acorns Review: The Downside of Acorns

The Fees

Acorns plans

An Acorns account can charge a monthly management fee of up to $5 a month. While many users will find their monthly fee is just $1, in reality even this can be an issue. 

Sure $1 may not sound like much to you, but such fees eat away at the returns an investor would otherwise get, especially if they begin investing with a small amount of $100 or less. So while these fees are not quite horrific, they’re certainly not ideal. 

Arguably,  a new investor could easily open a brokerage account and pool some money into the S&P 500 index ETF to get the same – if not better – growth, and with lower fees. 

In turn, Acorns provides another lesson here for new investors surrounding the nature of investment fees generally. 

As a good rule of thumb, investors should ensure their investment fees do not exceed 1 per cent per year, and ultimately work towards such fees not exceeding 0.2 per cent as their assets grow. Anyone seeking to pursue this prudent strategy while using Acorns could have a very hard time indeed. 

An Investment Strategy Isn’t Automatic

Yes, Acorns has its advantages. For people short on time, cash – or both! – but want to start investing ASAP it can be decent. For anyone learning about investing with no investments currently, using Acorns plus continuing to read can blend learning and real experience.

But it is also important to recognize beyond the pros and cons of Acorns particularly, there’s the greater challenge it presents to anyone seeking to build their investing skills and acumen. 

While Acorns will not delay anyone from building their investing knowledge, it won’t really progress it in a meaningful way.

Investing wisely with Acorns

Ultimately, good investing requires expertise – not simply automation. By no means does the acquisition of this expertise start overnight, but ultimately we’ve all got to start somewhere. 

It’s here that the old Chinese adage about planting a tree is apt, ‘the best time to plant a tree was 20 years ago – the second best time is today’. Acorns’ drawback for any new investor is it’s at best a lateral step in terms of building your investment knowledge.

As someone will find they can begin to reap some returns from the market – but without really having much understanding about how it works, why their stocks are performing as they are, and so on. 

Given that any investment in Acorns will take a longer time to deliver a reasonable return in comparison to another avenue for a small or first-time investment, prospective investors would do well to consider carefully what stage they’re at in life before starting down this path. 

If you’re recently out of high school or simply want to dabble in a little investing as a practical exercise, then Acorns could be a solid pick. 

But like learning to ride a bike, anyone who is really keen to start making meaningful progress will at some point have to take off the training wheels and drive their own momentum. 

Acorns Review: The Low-Interest Factor

Acorns interest rates

The merits of any investment must be considered alongside other ones in the market. This is because even if one investment option is solid, there could be another that is much better. A key example of this is the performance over the past five years of Disney and Netflix stock. 

The former is an iconic American company. Those who bought stock at $95.31 in late February 2016 would today find their stock has more than doubled. It is worth over $191 as of February 2021. 

Yes anyone who bought Disney and held it for 5 years would be happy. However, anyone who brought Netflix across the same timeline would be happy as well. In late February 2016 Netflix stock cost around $94 – in late February 2021 it’s trading at over $530!

This should be a key consideration for you when it comes to Acorns.

Historic Low-Interest Rates

Interest rates are at a historic low. The days where a young investor’s parents or grandparents could put their spare cash in a savings account and get a reasonable return are now are distant.

In such an economic climate, it makes zero sense to keep cash in the bank. Instead, that cash could  be invested. Acorns may not offer a flaw-free starting point for newbie investors. However, taking all into consideration, it’s got very strong odds of providing a better ROI than simply leaving cash in the bank. 

Acorns Review: Acorns Alternatives

Robinhood a free trading app

For anyone who finds much of what Acorns offers enticing but wants an alternative there’s other options out there. Betterment and Robinhood are two popular competitors, and each can fill different niches.

Just as Acorns does, Betterment allows a user to invest in ETFs with customization of the strategy possible. This depends on an investors risk tolerance and broader investment goals.

At the same time, it also has ongoing fees. This can take a significant bite out of any return an investor would otherwise enjoy. Robinhood is also designed for new investors. However, instead of micro-investing, it offers users the chance to trade specific assets. In lieu of ease-of-use, investors get easy access to a wide array of stocks and ETFs. 

As with any investment, what app may be ideal depends on the particular needs and goals of the individual. Using Acorns plus another app here may be a good starting point for a new investor looking to learn as much as possible. 

The variety on offer here illustrates for any investor the ideal approach does not involve picking an investment platform and then tailoring your strategy to its features. Instead, it is about devising a strategy and then finding a platform that allows them to pursue it.

A Question of Timing

Acorns review timing

There’s no doubt the Acorns app has rightfully won considerable acclaim for getting new investors – particularly millennials – who have interest in investing. This is unquestionably a terrific feature of the app and its arrival on the scene. 

Acorns can introduce a newcomer or someone with little cash to the stock market. However, it doesn’t ultimately make it the best vehicle for such investors.

Many of the same features that make Acorns appealing are also its greatest drawbacks. It will offer a new investor with minimal spare cash the chance to dip their toes into the markets. 

Acorns will not make you rich. However, it can help you start better savings habits.

Yes, you’re absolutely in close range of real momentum – but until you’re actually in the right vehicle you won’t be going anywhere fast.

>> Is acorns for you? Sign up today and start micro-investing with the Acorns app by clicking here! <<


Jessica is a published author and copywriter specializing in personal and investment finance. Her expertise is in financial product reviews and stock market education.