Acorns Review – Millennials have survived two recessions in their career history so far. Not surprisingly, this demographic has a distrust of the stock market and seems less likely to invest. To combat this, several companies have created robo-advisor platforms that simplify the investment process. In this Acorns review, we’ll take a look at the pros and cons of this fintech invention.
Table of contents
Acorns Review Features
The biggest pull factor for Acorns and other robo-advisors is that investors only need to inject capital into the system. From there, algorithms do the work of choosing good investments and diversifying portfolios. Acorns also rounds up purchases and invests the balance. These are additional features it brings to the table:
- Offers easy-to-use mobile app for tracking and revising investments
- Supports investment accounts, such as 401(k) rollovers and IRAs
- Educational content on the basics of investing and money management
- Provides three main plans to choose from: Lite, Personal and Family
- Provides cash back at specific stores that can also be invested
Acorns Reviews and Ratings
At a first glance, Acorns sounds like a dream come true to get young people investing. However, as people become more financially literate, Acorns itself becomes a bad investment. It charges monthly fees ranging from $1 to $3 per month. To the unseasoned investor, this may not sound like much. Seasoned investors know better.
Business Insider, for instance, shares that even with monthly fees of $1, Acorns is more expensive than almost every other option on the market. In fact, most robo-investment companies have zero fees or charge a tiny percentage of the capital. Add the fact people may only be investing their spare change and the ROI begins to shrink.
Because of this, Acorns reviews regularly rank at three or four stars. It has a robust app and runs on an excellent premise to get people investing. However, with such high fees and limited portfolios, we also rank it at 3.5 stars.
Why Choose Acorns
If you struggle with saving or investing and only want to invest your spare change, Acorns is an excellent choice. When wary of investing, you may feel more comfortable putting only your spare change at risk until you better understand how it works. Parents who want to give their children headstarts in the investment world may also appreciate the custodial accounts and family plans provided.
Finally, if you have a low income, you may appreciate needing no money to open a count and being able to start investing with only $5. Ironically, however, because of the high fees, Acorns is more profitable for people with very high investment account balances.
Acorns Review – When To Consider Its Top Competitors
No Acorns review is complete without showing you how this micro-investor compares to other robo-investors. Seeing a comparison makes it easier to understand why it does not often receive more than three or four stars.
Betterment
Betterment is a nationwide favorite because of its robust investment options and low management fee. In fact, like Acorns, it also allows you to open an account with $0. Unlike Acorns, Betterment provides access to certified financial professionals for a slightly higher fee of 0.4% for accounts of $100,000 and higher. Betterment does not round up spare change, but you can automate deposits. You also have access to a high-interest savings account, a checking account, retirement accounts, net worth tracker and goal settings tools.
Wealthfront
Wealthfront offers perks that are almost identical to Betterment, but it has an account minimum requirement of $500. This makes it more popular with established investors who are ready to invest more than just spare change. Unfortunately, it does not allow fractured shares and its app is not as robust as Betterment. Unlike Betterment and Acorns, Wealthfront offers 529 savings plans, which are tax-free.
Quick Questions
It’s a great way to get started with investing but as you become more experienced their are other more sophisticated and better value products
You are limited to a small pool of possible investments offered by Acorns and cannot simply choose your own investments
Acorns is backed by big name investors. So, while we cannot be 100% sure, if it is a scam, some other people got scammed for a lot more money than you ever will.
The Bottom Line
Acorns is a great product for young and early investors who want to experiment with spare change. It may also serve professionals with high balances, to whom $1 fees are cheaper than balance-percentage fees. However, when it comes to long-term profitability, everyday investors are probably better off using Betterment or Wealthfront.
