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Continuously updated to reflect new app features, fixes, and developments.
If you are new to the world of investing, it’s easy to feel overwhelmed: Between all of the vocabulary, terms, and options, how are you supposed to know where to start?
The Acorns investment app was specifically created to make it as easy as possible for you to get started investing so that you can grow your money over time. It accomplishes this goal in a number of ways, bundling together automation, simplicity, and modern tech to take the mystery out of investing.
Below, we take a closer look at exactly what Acorns is, how it works, and how you can use the app to start investing and growing your wealth.
Want to learn the basics of investing? Check out our guide to the essential investment terms and definitions for beginners!
That being said, before we begin, I want to spell out the fact that if you read this article, click on the link that I provide to sign up for Acorns, and do actually sign up for the service, I do earn a little bit of money. Specifically, I earn $5 that will be deposited directly into my Acorns account. (To be fair, you will also receive $5 deposited directly into your account.)
This might seem like it’s incentive for me to talk up the app just to get people to sign up, but that’s honestly not the case. I wrote this article because I believe that Acorns is a.) a great service, b.) a great way for college students and complete newbie investors to start investing, and c.) an easy way to mindlessly start saving and investing money.
I personally use Acorns to manage my own investments, and I recommend it to literally everyone that I know who wants to get started investing. To date, I’ve convinced dozens of people to start using Acorns, including family members, friends, and even a couple of dates. (As you can see, I’m thrilling at dinner parties.) You can believe me when I say that I love the app, because I wouldn’t lie to my friends, family, and paramours.
Table of Contents
1. What is Acorns?
2. Opening an Acorns account
3. Using the Acorns app
4. Acorns fees
5. Acorns portfolios
6. How to make money using Acorns
8. Recurring Investments
9. Found Money
11. How much money can you make with Acorns?
12. Determining your account’s “potential”
13. Acorns Later
14. Acorns Spend
15. Acorns Early
16. Grow Magazine
17. The Bottom Line
- Acorns was founded in 2012, and since then more than 3.5 million people have signed up for an Acorns account.
- Taken together, Acorns has more than $800 million in assets under management, largely from low- and middle-income Americans.
- Users can not buy individual stocks with Acorns. Instead, they are encouraged to buy into specific investment portfolios that match their risk tolerance and investment timeline
- Acorns offers 5 different portfolios: Conservative, Moderately Conservative, Moderate, Moderately Aggressive, and Aggressive
- Acorns charges just $1/month, and is free for college students
- Acorns Later launched in early 2018 to allow for retirement savings
- Acorns Spend launched in the summer of 2018 as a debit card/banking service
- Acorns Early launched in June of 2020 as a custodial account for kids
Acorns is an investment app that was designed to make it easy for beginners to start investing, regardless of how much or how little money they have.
Originally, Acorns was built around the concept of micro-investing: Investing small sums of money over time by purchasing shares or fractions of shares in ETFs. It accomplished this thanks to its unique “round-ups” feature (more on this below).
The ability to invest small amounts of money at a time means that it takes just $5 to start investing with Acorns—not the hundreds or thousands that other investment apps and services often require. This makes it ideal for college students and other beginner investors who likely don’t have thousands of dollars to start investing.
But over the past six years, Acorns has evolved beyond the “spare change investment app” that it started out as, regularly adding new features and ways for users to save and invest. The app now consists of three separate products all living within a single app:
- Acorns Core: This is a regular investment account. You can put money in and take money out of this portfolio whenever you want without facing penalties, though you’ll need to pay taxes on any profits you make. When you first open an Acorns account, this is the account you are opening.
- Acorns Later: This is Acorns’ retirement option, essentially an IRA. You can contribute up to $6,000 per year ($7,000 per year if you are 50 or older) to either a traditional or Roth IRA managed by Acorns. These accounts come with great tax benefits, but if you withdraw from the accounts before you are retirement age you may face penalties. In order to gain access to Acorns Later, you must first already be an Acorns Core customer.
- Acorns Spend: This is a debit card/banking option that is newly offered by Acorns. In addition to offering banking services, Acorns Spend is designed to make it easier for users to earn cash back from Acorns Found Money partners, to track and understand their spending habits, and to round up purchases in real-time. In order to gain access to Acorns Spend, you must first already by both an Acorns Core and Acorns Later customer.
Opening an Acorns account is as easy as downloading the app. Once you’ve done so, you’ll need to link the app with a debit or credit card (or both), which is how money will be transferred into your account.
After your account is linked to your card, you will need to choose an investment portfolio that matches your risk tolerance, investment timeline, and investment goals.
Don’t know anything about risk or volatility? Luckily, the app comes with a built-in quiz designed to help you figure out which portfolio best matches your needs. It does this by asking you questions like:
- When do you expect to need your money? to help you figure out your investment timeline;
- How much volatility can you see in your investments without panicking? to help you figure out your risk tolerance;
- What do you want to use this money for? to help you articulate your goals.
Based on your answers, the app will tell you which of their five portfolios (below) it thinks is best for you. You can choose to ignore their advice if you want, but if you’re just getting started you might want to stick with their suggestion. Either way, you can always switch into a different portfolio in the future if you want.
Once you have opened your Acorns Core account, you can easily opt into Acorns Later and Acorns Spend (if you want). Opening an Acorns Later account will require you to answer some questions (for tax purposes and to choose your account type) and opening an Acorns Spend account will only require you to sign up for the waitlist.
Acorns has always been easy to use, whether on desktop or through the app. But 2018 was a big year for the company, seeing the addition of two new products to app—Acorns Later and Acorns Spend.
This expansion triggered a massive overhaul of the app in order to make it even more user-friendly. It is now built around four key concepts:
- Investing for the future
- Spending smarter
- Earning money
- Growing your investment knowledge
Now, when you first open the app and log in, you will be greeted with a quick snapshot of your account that tells you exactly how much money you have invested in Acorns. This figure will include both the money housed in your Acorns Core portfolio and your Acorns Later portfolio (if you have one).
The snapshot will then transition to the app’s home screen (below) which lets you drill deeper into your account.
Clicking on “Invest” will bring you to a screen that summarizes both your Acorns Core and Acorns Later investment accounts, allowing you to view and manage various settings, including:
- Your portfolio setting
- Whether or not you’ve activated round-ups
- Whether or not you’ve set a recurring investment
- Your portfolio’s performance
- Whether or not you’ve designated a beneficiary (Acorns Later only)
- Recent activity
Clicking on “Spend” will currently bring you to a screen asking you to sign up for the service (if you haven’t already done so). We don’t yet know what will live on this screen once the service goes live in October, but I expect it will allow users to:
- View transactions made with their Acorns Spend debit card
- Spot spending patterns and habits and offer suggestions on where users can save money
- View cashback rewards earned by shopping with partners
Clicking on “Earn” opens the Found Money portal, where users can see offers for cash-back deals and see how much they have already made by shopping with Acorns’ Found Money partners. (Learn more about Found Money below.)
Clicking on “Grow” will open Acorns’ in-app knowledge base, a condensed version of their online financial website Grow (also discussed below).
The app is incredibly cheap to use. College students with a valid .edu email have all fees waived for four years from sign-up, meaning that you can begin investing and growing your money for four whole years for free. That doesn’t happen in the real world, so take it while you can!
After that, Acorns offers three different pricing models:
- Lite: For $1 per month, you gain access to Acorns Invest and Found Money
- Personal: For $3 per month, you gain access to Acorns Invest, Found Money, Acorns Later, and Acorns Spend
- Family: For $5 per month, you gain access to Acorns Invest, Found Money, Acorns Later, Acorns Spend, and Acorns Early
In the past, Acorns charged $1 per month for accounts less than $5,000 in value, and .25% after your account has exceeded $5,000 in value. For those who are bad at math, that means that an account worth $5,000 would be charged $12.50 each year, (or $1.04 per month). As your portfolio grew, you would pay the same .25%, regardless of amount. So a portfolio with $100,000 would pay $150 per year, or $20.83 per month.
To add some perspective, most managed accounts can charge upwards of .75–1.5% or even 2% a year, making these rates as close to free as you could get without building your own portfolio from scratch. (And even then, you’d be paying fees on every transaction you make.)
With the new pricing structure, you are charged $1, $2, or $3 per month (depending on which services you want) until your portfolio is worth $1,000,000.
That means that every dollar you add to your portfolio LOWERS the effective cost of your investments, which is truly unheard of. If your portfolio is worth $5,000 and you pay $1 per month, then your expense ratio is .24%. Jump up to $10,000 and your rate drops to .12%, because you are still just paying $1 per month. Jump up to $100,000 and your expense ratio become .012%. And if you manage to build your portfolio up to $1,000,000? Your expense ratio drops to an insanely cheap .0012%.
I’m not sure what the expense ratio will become for accounts worth more than $1,000,000, but I would expect it to be at least .25%. If I ever hit that amount (or talk to someone who has!) I will update.
Long story short, a portfolio is simply your collection of investments. Broadly speaking, portfolios are split into a number of different “asset classes” like stocks and bonds, which vary in terms of how “risky” they are. Stocks are usually considered riskier, and bonds are considered less risky. The exact breakdown of your portfolio, and what percentage is taken up by each asset class, will depend on your risk tolerance and timeline.
Note: You can only choose your own portfolio for your Acorns Core account. Your Acorns Later portfolio will be automatically chosen for you based on your age and how long you have until retirement. Like a target date fund, it will start off aggressive and become more conservative as you near retirement age.
Acorns offers 5 portfolios that investors can choose from: Conservative, Moderately Conservative, Moderate, Moderately Aggressive, and Aggressive. The conservative portfolio is the “safest” portfolio, consisting mostly of bonds, while the aggressive portfolio is the “riskiest,” consisting entirely of stocks.
The Conservative portfolio is made up mostly of bonds. Because bonds are a safer investment, you shouldn’t see too much volatility in terms of the value of your account; it’ll be relatively stable. The bonds will give you access to some small growth, while the few stocks you are invested in will hopefully help you capture more growth, without risking too much of your investment. Unfortunately, because there is so little risk, there is also much less reward: Being invested mostly in bonds should allow you to at least keep up with inflation, but you won’t substantially grow your money. The conservative portfolio is best for someone who can’t stomach volatility or who expects to need their money in the short term. Though some people might use the conservative Acorns portfolio to build an emergency fund, the truth is that even this portfolio comes with risk; there are much better places to keep your emergency savings. Save this fund for your investment goals.
2. Moderately Conservative
The Moderately Conservative portfolio still consists mostly of bonds, but incorporates more stocks into its allocation. This will help keep your investments stable while allowing you to grow your money and hopefully outpace inflation. This portfolio, along with the next two, is suited for people who expect to need their money in the short- to mid-term.
The Moderate portfolio holds 40% in bonds and 60% split amongst a number of types of stocks. This will allow your account to stay stable while also helping you capture growth. Most investors are probably the most comfortable with an asset allocation like this one, since it pairs growth and stability fairly evenly. That being said, if you are young, have a long investment horizon, and can stomach some volatility, pursuing a more aggressive portfolio like the two below may allow your money to grow even more over time.
4. Moderately Aggressive
The Moderately Aggressive portfolio consists mostly of stocks, allowing it to potentially gain a lot of value. It does still hold some bonds, though, for stability. The aggressive portfolio is best for an investor with a high tolerance for risk and a longer investment timeline, which would allow them to regain money if their investments lose value in the short term.
And then, of course, comes the Aggressive portfolio, which is made completely out of stocks. This allocation opens the door for quite a bit of growth, but it also opens the door for a lot of volatility, meaning that your account value can fluctuate wildly from week to week or even day to day. The aggressive portfolio is best for someone who has quite high risk tolerance and who has a long (20+ year) investment timeline.
Once you’ve selected the portfolio that best matches your needs, you can start investing and making money! And Acorns offers four ways for you to start growing your wealth.
If you’re considering signing up for Acorns to manage your investments, then you undoubtedly want to know how you can use the tool to make money. While most investment apps or services have just one way (making lump sum investments/deposits), Acorns offers four ways for you to increase your account balance and begin growing your money.
When Acorns got started, “round-ups” were the app’s main selling point: It was how you used Acorns to invest. Over time, the additional options below were added, but at its core Acorns was always about the round-ups.
Round-ups work by turning every purchase you make into an opportunity to invest. Whenever you make a purchase with a debit or credit card linked to your Acorns account, Acorns rounds up to the nearest dollar and sets that money aside. So, for example, if you bought a $0.75 pack of gum, Acorns would round up to $1 by setting $0.25 aside. Once your round-ups reach $5, that money is withdrawn from your bank account and invested in your Acorns portfolio. It sounds complicated, but it’s really simple. The video below will hopefully clarify things in case I butchered the explanation.
The great thing about Acorns is that it’s a sort of “mindless” way to invest. You don’t need to think about investing, you don’t need to consciously do it every day or week or month. It just happens every time you make a purchase. And because it happens in such small increments each time, it is ultimately money that you don’t really miss (unless you use your credit/debit card a lot). But even though you are essentially only investing pocket change, your account will grow slowly and surely over time.
That’s where they get their slogan—”From acorns, mighty oaks do grow!”
For college students, recent graduates, or other beginner investors without a lot of money in their budgets to invest, round-ups are a must and a really easy way to get started seeing some growth before investing more heavily.
Once you’ve had the round-ups activated for a few months, you’ll eventually realize that, though they’re a great way to mindlessly save and invest, on their own they are not going to be enough to let you hit your investment goals, especially if you’re investing for something big like retirement or buying a house. The good news is, if you decide you want to invest more money, you can—through either a lump sum or recurring investments.
A lump sum investment is exactly what it sounds like: A one-time investment into your account. They’re great when you come into some money (think: tax refund, holiday bonus, or birthday money) and want to put it to work growing for you.
Recurring investments, on the other hand, are a regularly-scheduled deposit into your account. You choose how much you want to invest, when you want to invest (daily, weekly, or monthly), and that’s it. The app will do the rest of the work for you, investing the money for you as scheduled until you turn off the recurring investment.
Recurring investments are another great way of automating your investments so that you can help your money grow without actively having to think about it. If you have room in your budget, I highly recommend you turn on a recurring investment for whatever you can afford. Not only will it help you grow your money now, but it will help get you in the mindset of automatic investing which will be helpful in the future if you land a job that comes with 401k opportunities.
Found Money is the newest way that Acorns is helping its customers grow their money, and it really is as simple as it sounds: You “find” money by shopping with Acorns’ partner (technically, the partner is depositing money into your account after you make a purchase), and you shop directly through the app.
Though when the program first got started it only offered a couple of partners, there are now more than 250 Found Money partners in the program, from Airbnb to Dollar Shave Club, Jet, Nike, Walmart, and more, and Acorns is adding more partners to its network all the time.
The best part is, you’ll know up front what kind of investment you can expect from your purchase: The app spells it out for you. You’ll either receive a percentage of your purchase deposited into your account, or a flat-rate reward (it depends on the retail partner).
But what about people who don’t want to shop through the Acorns app? Luckily, Acorns recently launched the Found Money Chrome Extension, which allows you to earn Found Money rewards from Acorns partners while shopping online. All you need to do is add the free extension, log into your Acorns account, and select the partner that you want to shop with. Clicking on the “Activate Offer” button will open the partner’s website, allowing you to shop and earn your cash back.
I won’t lie, shopping online is definitely easier than making purchases directly through the Acorns app, so this was definitely a smart move by the company.
And we’re not talking pocket change: Found Money can really add up to big bucks. Walmart, for example, will invest 1% of your purchase into your Acorns account (up to $40 per account per month). Casper (a mattress company) will invest $75 into your account when you make a purchase of $500 or more. Check out this article to learn more about Acorns’ Found Money program.
Think you’ve got a friend or family member who might like investing with Acorns? Once you’re a member, you get a referral link just like the one that I have, which means that you can invite other people you know to sign up.
If they do sign up, then both you and your friend will have $5 deposited into your Acorns account, which you can watch grow. Sure, it isn’t a ton of money, but every little bit helps, especially when you’re first getting started.
Need some more incentive to convince your friends to sign up? Sometimes Acorns holds special promotions to help encourage more referrals. A few months ago, for example, they increased their referral reward to $10 for each friend referred, and in October 2017 they planted a tree for every new person who signed up through the referral program—a double win for nature lovers.
In January of 2018, Acorns kicked off the year with the first-ever $1,000 referral bonus. According to the rules, anyone who signed up 10 friends through their referral link would earn $1,000. That’s a huge referral bonus and one that they’ve repeated a number of times over the years since.
How much money can you make with Acorns?
As with any investment, it’s impossible to predict exactly how much money you’ll make by investing through the Acorns investment app. There are just so many variables to take into account: Which portfolio you choose, the assets that make up that portfolio, etc.
That being said, I am currently invested in the Aggressive Acorns portfolio, and I’ve seen a 1-year return of just under 14 percent for 2017. This return will vary by year (2017 was a rockstar year for the stock market, after all). But all in all, not too shabby!
The specific portfolios that Acorns has built have not been around long enough for us to analyze their average 1-year, 5-year, 10-year, or lifetime yields (as we typically get with more established investment portfolios), but I expect that this information will become available as the portfolios age.
To me, one of the coolest features of the Acorns app is the “Potential” tab on the homepage. When you click on this tab, you’ll be presented with a graph that plots out a likely scenario of how your account will grow in value. The “potential” graph is designed to help you understand why everyone tells you that investing is a long-term game, and how even just a small amount of money invested now could really grow over the years.
It works by taking into account your current balance, whether or not you have set up a recurring investment, and how much that recurring investment is. Using that information, it applies historical averages to model what your return could, theoretically, look like. The central line shows what your portfolio would look like with an average yearly return of 6%, the pale inner band shows what your portfolio would look like with an average yearly return between 4% and 8%, and the outer band shows what your portfolio would look like with an average yearly return between 2% and 10%.
You can drag the vertical line along the curve to see what your potential balance might be at any given age. For example, below we can see what my account might be worth next year compared to what it might be worth when I am 70 years old.
It’s pretty cool, and actually, a very helpful tool to help you figure out about how much money you should be investing each week/month to hit your goals. By clicking on the “Grow Even Faster” button, the app allows you to see how adding a recurring investment (or increasing your current recurring investment) will affect your account balance in the long run. All in all, it’s an extremely fun and cool tool.
That being said, there is no way to guarantee a specific return on your investments. The potential graph simply shows you what your returns would look like if the market continues to perform as it has averaged in the past. Your returns could ultimately be higher or lower but should be relatively close to what is projected here.
In 2017, Acorns purchased Vault, another financial app that was focused on offering retirement accounts (in the form of traditional, Roth, and SEP IRAs) to consumers who didn’t have access to 401ks through their employer.
Afterwards, Acorns announced that they would be launching a new retirement account service (called “Acorns Later”) thanks to this merge. Though there was some delay in actually offering accounts to Acorns users, Acorns Later officially launched in the spring of 2018.
Acorns Later is a new service offered by Acorns specifically designed to help people save and invest for retirement. (It’s called “Acorns Later” since it is designed to be, well, for later.)
Below are some of the basics, but you can learn a bit more about Acorns Later and why it’s such a big deal here.
- Acorns Later allows users to open either a traditional, Roth, or SEP IRA to begin investing for retirement.
- These accounts come with a number of powerful tax benefits that can help your money grow compared to a regular investment account.
- If you are younger than 50 years old, you can invest up to $6,000 into your Acorns Later account; if you are older than 50, you can invest up to $7,000. (These are the legal limits as of 2019.)
- Benefits like round-ups, Found Money, and referrals can’t be tied to an Acorns Later account.
- You need to opt into the Acorns Personal plan to open an Acorns Later account, which costs a total of $3 per month and includes access to Acorns Invest and Acorns Spend.
Like Acorns Later, Acorns Spend is a newer service offered by Acorns, and it’s one that is getting a lot of hype.
At its core, Acorns Spend is an Acorn-branded debit/checking card. As such, it offers a number of basic banking services (including direct deposit, digital check deposit, bank transfers, etc.). But where it really shines is in the additional benefits and perks that help users to save and invest more money.
By incorporating other key features from the Acorns investment app, Acorns Spend (in theory) makes it easier than ever to make investing an automated, thoughtless process—which is a good thing. The less a person needs to think about saving or investing, the more likely they are to keep doing it over the long run.
The original Acorns investment app was built around the idea of “round-ups”—i.e., rounding up the spare change left over after each purchase, and depositing that change into an investment account where it could earn money and add up to big bucks over the years. Users manage round-ups from within the app, by either manually approving each purchase to round up or by enabling automatic round-ups (where every purchase is rounded up automatically). These round-up funds are then set aside until a balance of $5 is reached, at which point the money is transferred from your checking account to your Acorns portfolio
Where Acorns Spend is different is in the real-time aspect of the round-ups. While the traditional Acorns user must wait until their round-up “balance” reaches $5 before the funds are transferred and invested, users of the card will have their round-up funds transferred immediately into their accounts following a purchase. Though this seems like a small improvement, over the course of a few years or decades, this can have a tremendous impact on investment growth: The longer your money is in the market, the longer it can grow.
Another really cool feature of the Acorns investment app is that it is designed to teach its users about the basics of investing and personal finance. For that reason, a few years ago the company launched Grow Magazine, an online magazine with the sole purpose of exploring personal finance. Last year, the magazine was tied directly to the Acorns app through a portal offering articles that investors might find particularly helpful. This includes trending financial news as well as information about investment basics to help users understand how investing works.
In addition to the magazine tab, the Acorns app occasionally incorporates educational messages and lessons directly into the main screens as pop-ups. These messages tend to occur whenever the market is particularly volatile (since that would be when investors see the wildest of swings in the value of their portfolio) and are designed to keep you from panicking.
All in all, it’s a really smart move on their part, and something that probably helped keep a lot of newbie investors from making big mistakes.
The bottom line here is that I love the Acorns investment app, and I think that all of you will too. Acorns is great for college students and newbie investors because:
- If you have a valid .edu email address, then your account is free for 4 years from the date that you sign up. This means you have four years to invest and grow your money for free, which is unheard of.
- After those four years are over, you pay just $1 per month until your account reaches $1 million in value.
- You don’t need to go through the trouble of building a portfolio from scratch. Acorns has 5 fully-diversified portfolios for you to choose from, making it easy to get started and keeping you from getting overwhelmed.
- You can start investing with as little as $5, meaning you don’t need to have hundreds or thousands of dollars to begin—perfect for college students and other beginner investors with tight budgets.
- The app offers four ways for you to invest: Round-ups, recurring investments/lump sums, Found Money, and referrals.
- In addition to investing for everyday goals, with Acorns Later you can begin investing for your retirement.
- Acorns Spend offers the ability to round-up your spare change investments in real time, while bringing a whole slew of amazing benefits that honestly put other debit cards to shame.
- Acorns Early offers parents and adults a path to begin investing for children early on in life.
- Acorns has its own online magazine called Grow that aims specifically to teach new investors the ropes and help them figure out all things personal finance.
If you’ve been wanting to start investing but don’t know where to start, Acorns is a great place to begin.