Is Acorns a Good Investment?

Have you seen a real-life acorn? They’re cute, in a way. But if you’ve ever been hit by an acorn falling from a tree, you know they can sting!

The Acorns investing program is much the same. Has anyone made money on the Acorns investing app? Is it your best investment option? We’ll explore these questions and more today.

Note: in this article, I mention several investment brokerages by name. I am not being compensated for mentioning them. My purpose for Semi-Retire Plan is to help connect you to the resources that will best serve you.

This post is written based on Acorns product offerings in August 2019, which are subject to change.

What Are the Acorns Investing App?

First, let’s cover the basics.

As you’ve likely heard, Acorns is an app and website that invests extra change from your checking account transactions. When you make purchases, it “rounds up” to the next even dollar amount and adds the difference to your Acorns account once it totals $5. The popular system (with over 3 million users) has garnered praise from the media to engage millennials to help them start investing.

I myself am a millennial, so I feel it’s appropriate to give this reality check.

Is Acorns a Legitimate Company?


The Acorns website and app are sleek and user-friendly, and it’s a fun concept.

So, is Acorns a scam? No — acorns is a legitimate company. When you break down the details, the program doesn’t make sense for users financially.

Has Anyone Made Money on the Acorns Investing App?

Definitely! You certainly can make money on the Acorns investing app. Acorns isn’t a bad product by any means, and it can be a great way to get experience investing in the stock market. The real question is, though, is Acorns the best way for you to invest your money? We’ll dig into this question more below.

Should I Go “Aggressive” on Acorns?

We’ll talk in more detail about this later in the post, but all investments expose your funds to risk. Aggressive stock market investments can have the potential for higher gains but are also generally riskier.

You can read my full, detailed thoughts on long-term investment strategies here, but I believe you should only invest in the stock market when you have long-term goals, like saving for your retirement. In my opinion, the negative side of going “aggressive” on the Acorns app is that most Acorns users aren’t investing for long-term goals. The high volatility of aggressive investments over short periods of time is a major concern, in my view.

How Much Does Acorns Cost?

Acorns costs as little as $1 per month for the “Lite” subscription level.

The Personal level is $3 per month, and the Family level is $5 per month.

Proportionately, though, this Acorns subscription cost can be quite expensive. I’ll dig into these details in point #3 below.

Can I Lose Money on the Acorns Investing App?

Yes. Any investment in the stock market or funds that own shares of stock is subject to risk and fluctuation — which means potential loss of value.

For any investing, It’s always best to first consider your goals before choosing an account type. Is this money for a specific purpose? How much will time pass before you need to access it? Should you expose the money to risk? Will the investment vehicle incur taxes?

Ultimately, Acorns does not account for what your goals are. Even if you have a clearly defined purpose for your money, there are more affordable options to help you meet your goals.

Is Acorns Worth It?

We’ve covered the basics, now let’s get to it. Is the Acorns investing app really the best place for your money? I would argue that Acorns is not a good investment.

Here are 5 reasons why you might want to consider investing elsewhere.

1. The Standard Acorns Account Isn’t a Good Investment for Long-term Goals

Acorns Core accounts are taxable brokerage accounts. If you invest for a long-term goal like your young child’s college expenses or your retirement, there are better-suited account types available.

For college savings, you should consider a 529 plan or Education Savings Account. You could even use a Roth IRA — your contributions can be withdrawn early without penalty if needed. These three accounts will all give you tax advantages and efficiencies that a taxable brokerage account will not.

For retirement savings (even for early or semi-retirement), employer-sponsored plans, IRA plans, or HSAs will be much more tax efficient.

Acorns offer an Acorns Later IRA account option, but it comes at an extra cost ($2 or $3 fee per month, depending on if you opt for an Acorns Spend checking account too). That cost may not seem huge, but it’s unnecessary when other IRA providers have no monthly subscription costs. Furthermore, the best brokerages offer hundreds or thousands of investment choices within the IRA plan, while Acorns only offers 5 pre-set portfolio choices. Vanguard, Schwab, and Fidelity are solid, low-cost brokerage options to use instead.

2. The standard Acorns account isn’t a good investment for short-term goals

In the long run, the stock market tends to rise (though past performance is no guarantee of future results). For example, the U.S. stock market has never lost money over any 20 year period. However, along the way, there is a lot of volatility. For that reason, I and others do not recommend investing in the stock market if your money will be needed in the short term.

Personally, I would not invest money unless I was planning not to need the money for 7 years or longer. I’ve seen other financial minds recommend 5 or 10 years as their rule of thumb.

Worse still, if you may need to withdraw your money for an emergency, it will take 3-6 business days for your withdrawal to fully process.

If you need to access your money in the next 5 years, I recommend that you invest it in a high-interest savings account instead.

I also recommend keeping 3-6 months of expenses in a readily accessible “emergency fund” savings account so that you do not need to draw down on your investments in the event of a surprise expense.

3. Acorns fees — they’re killing your returns

In 2014, the average debit cardholder used it for 21.2 transactions per month. It’s a bit of a challenge to find detailed, recent statistics on debit and credit card transactions. The major card companies tend to report sales volume instead of transaction numbers. So, to give Acorns a fighting chance, let’s assume the average person is making 40 transactions per month.

If, on average, the “round up” from each transaction is $0.50, that would be $20 invested in Acorns each month.

The $1 per month base plan subscription fee for Acorns is costing you 5% of your monthly contribution. Any other brokerage charged you 5% per month on your contributions would be written off as a scam.

You’re charged $3 or $5 per month for access to additional Acorns investment account types. Using the same $20 investment per month assumption, those fees amount to 15% and 25%.

So, if you’re debating “Is Acorns a good investment?” this is a major negative factor.

4. (You guessed it) the standard Acorns account isn’t a good investment for medium-term goals

We said before that a taxable brokerage account likely isn’t the best choice for long-term investing, and it’s too volatile for short-term investing. So, you might be tempted to think Acorns could be a good choice for medium-term goals. In a way, that is the best possible use case for Acorns, but it’s still not the best option for users with this time period in mind.

Consider the impact of the $1 per month fee over 15 years compared to an account where you are not charged a subscription fee. Many low-cost brokerages do not charge subscription fees or transaction fees on their own ETFs (my brokerage account, IRA, and Roth IRA are with Schwab, so I know first-hand that they do not charge commissions on over 250 Schwab ETFs.).

Monthly investment $19 ($20 – $1 Acorns fee) $20 (no monthly fee)
Annual growth rate 9% 9%
Time period 15 years 15 years
Future value $7,189.71 $7,568.12

In this scenario, the $1 monthly fee is lowering your future account value by $378.41.

5. Acorns Isn’t a Good Investment Because It Gives a False Sense of Accomplishing Your Financial Goals

The most dangerous effect of the media praise of the Acorns investing app is that it makes subscribers feel like they are doing something big for their future. Most of the positive coverage focuses on inspiring young people to invest for the first time.

Your savings rate should be based on your specific plans for the future, so I don’t want to say there’s one number that is “right.” However, most people should be saving 10-15% of their income if they’d like to retire at a traditional age. For those of us pursuing semi-retirement, 20% or more will move the needle.

$19 per month is fine if you’re just getting started but is not a long-term solution.

So, is Acorns a good investment?

Honestly, the Acorns investing app is a fine product if you would like to use it for entertainment instead of already meeting your other financial goals.

Alternatively, investing with Acorns can be a good “sandbox” for beginner investors to learn the stock market basics.

I do want to caution you, though — other low-cost savings vehicles are likely more appropriate to help you meet your goals.

Do you use Acorns? How would you describe your experience and results with the program?

If you’re not feeling good about Acorns and you want to learn about the investment strategy that I fully endorse, check out this post: Our Self-Imposed Rules for Investing in the Stock Market