Acorns Review 2020: Investing, Banking, Saving, and Fees

Nick Carroll
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Headquartered in Irvine, California, Acorns is a mobile app rounding up each debit or credit card purchase to the nearest dollar and then either saving or investing that difference into an account.  Acorns allow millions of consumers to invest money into well-diversified portfolios of Exchange Traded Funds, or ETFs. 

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Acorns App Review.png

Cofounders: Walter and Jeff Cruttenden (father and son)

CEO: Noah Kerner

Total Customers: 3.5 million, according to the CEO in 2018

Assets Under Management: Over $1 billion (according to ADV Part 2 Brochure)


What Is Acorns


Acorns was designed to simplify investing for millions of people who have trouble saving money to invest.  Walter and Jeff cofounded Acorns to help encourage people to save small amounts of money and frequently as many had a problem saving money to invest.  

The Acorns staff has teamed up with a Nobel Laureate, Dr. Harry Markowitz, who is best known for his pioneering efforts in creating the modern portfolio theory. 


How Does Acorns Work

Coined as "spare change" investing, Acorns scans your debit and credit card transactions to calculate the difference between the purchases and the nearest rounded-up dollar amount.  For example, if a customer spent $2.65 at a coffee shop on Monday morning, Acorns recognizes the transaction and deducts $0.35 from your bank account and applies that amount to the investment account the customer has set up.  

Another feature of Acorns is automatic investing.  Customers can set up their accounts to invest regularly.  If one decides to invest a dollar every day, Acorns will deduct one dollar from the bank account each day until the customer pauses or cancels the daily investing.  Other options include weekly or monthly investing.  

The money invested is automatically adjusted to maintain your portfolio balance.  For example, if a customer chose a conservative portfolio (very low risk), there is a mix of assets in the portfolio to ensure principal protection.  In this case, Acorns has a portfolio to match this containing 40% Short Term Government Bonds, 40% Ultra Short Term Corporate Bonds, and 20% Ultra Short Term Government Bonds.

Acorns will ensure that 40/40/20 mix is maintained.

If a customer is willing to take more risk, one may decide an aggressive portfolio is right for her or him.  In this case, the portfolio mix will reflect that which is depicted below.

Source: Acorns

Is There a Monthly Fee for Acorns


Acorns does charge a monthly fee for its services via ACH debit or ETF transactions. It is referred to as a Subscription Fee, and the amount of the subscription fee depends on which service a customer chooses. 


The fees range from $1-$3 per month until the account has $1 million in it, in which case the fee may jump up to $100 per $1,000,000 (see Acorns' ADV Part 2 Brochure).  Customers have three choices to select from with Acorns.


The Acorns Invest Account is $1 per month and includes the Round-Up investing, as mentioned above, plus one can earn bonus investments from their partners. For example, last week, when I was shopping at Wal-Mart, Acorns had a bonus agreement with Wal-Mart that if I purchased over $50, Wal-Mart would deposit $2 into my investment account. 

For $2 per month, customers will be signed up for the $1 Invest service, which includes everything mentioned in the previous paragraph plus Acorns Later.  It is called Acorns Later because this is money customers put towards retirement.  

Think about IRAs.  By making regular contributions, you can easily save for retirement.  

Acorns' final account, Acorns Spend for $3 per month, gets users everything mentioned above plus a checking account.  This checking account gets you a debit card access to reimbursed ATM fees.

While I don't like there is a fee for this checking account, hence the extra dollar fee, there are some great features to it.  For example, Acorns Spend has free bank-to-bank transfers with unlimited free or fee-reimbursed ATM access.  Also, there are no minimum balance fees, as well as, no overdraft fees.

This begs the question then about protection.  Acorns and Acorns Later are investment type accounts and are, therefore, SIPC-protected.  Acorns Spend is FDIC-insured up to $250,000 per account plus fraud protection.


What is Acorns Later

As mentioned earlier, Acorns Later helps customers save money for retirement.  For a two-dollar per month fee, customers can open an IRA and start saving money for the future.  

It is a great feature considering the majority of Americans aren't saving money for their future to include customers can save easily save money by putting their spare change to work rather than place it in a piggy bank.  

With Acorns Later, customers can make regular contributions, daily, weekly, or monthly, and can take advantage of the Round-Up contributions that will put spare change into one's retirement account.

Is Acorns a Good Investment

All investment Management firms and Investment Adviser firms must be registered with the Securities Exchange Commission, or the SEC. By taking a look at the company's Form ADV, an SEC requirement, you will quickly see they are a legit investment adviser. In the SEC filing of their ADV, Acorns has over a billion dollars in assets to include jurisdiction in all 50 states to include Washington, D.C., and Puerto Rico. 


But is Acorns a good investment?


Acorns isn't an investment, but it acts as an adviser to put your money into investments. Acorns relies solely on ETFs for investing portfolios. ETFs gained popularity in the 1990s as a manner to help customers invest in numerous companies at a fraction of the cost creating diversity and passive investing. 


Personally, ETFs are a great way to invest because of the exposure and opportunity to invest across multiple sectors, industries, and countries without having to shell out an arm and a leg. If you wish to learn more about ETFs, here is an excellent explanation by Investopedia


Once an account is established, Acorns will ask customers about their risk tolerance. The lower the risk, the more conservative the portfolio will be. The least risky portfolio will focus more on corporate and government bonds to protect an investor's principal. With less risk, there is less return.  


If a customer is more risk-averse, Acorns may recommend an ETF portfolio portfolios that focus on a blend of bonds and stocks or just stocks. For example, the ticker SPY is an ETF for the Standard & Poors 500. The S&P 500 is a collection of 500 stocks from banks to consumer goods.  


As of Friday, February 22, the SPY closed for $333.45 compared to the S&P 500 trading at $3,337.75. Having an ETF of SPY gains an investor to the same exposure with less month.

Is Acorns a Bank

With Acorns Spend, customers now have access to checking accounts that are FDIC-insured.  Acorns has teamed up with Lincoln Savings Bank to offer its customers banking access and protection.  

Acorns is not a bank and relies on its partnership with Lincoln Savings Bank to ensure accounts are FDIC insured up to $250,000.  Customers who sign up for their Acorns Visa debit card will be issued the card by Lincoln Savings Bank.

Pros & Cons of Acorns

Having used Acorns for over a year now, my opinions below may be biased.  Be sure to conduct your research to see if Acorns is right for you.


  • Helps households save and invest money

  • Cash back from retailers is extra money to invest

  • User-friendly app

  • Well diversified ETF portfolios

  • Refer your friends and family (You both get $5)

  • Easy access to IRAs

  • Acorns Spend accounts are FDIC insured and no overdraft fees



  • High fees when account balances are low

  • Limited investment opportunities (limited to ETFs only)

  • Referral dollars can take up to 2-3 weeks before being deposited into your investment account


Acorns Invest: $1/mo

Acorns Later: $2/mo

Acorns Spend: $3/mo

Accounts exceeding $1M may require additional fees


$5 to open account


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