What to Expect from Acorns.com

When considering acorns.com, managing expectations is key, particularly given its blend of convenience and inherent ethical concerns.

Users should anticipate a seamless entry into conventional micro-investing and automated saving, but also be aware of the underlying financial principles at play.

Automated Micro-Investing

• Round-Ups: Expect your spare change from everyday purchases to be automatically collected and invested. This is the cornerstone of the Acorns experience. For example, if you spend $4.50 on a coffee, $0.50 will be rounded up and saved. Once these round-ups accumulate to $5, they’re invested.
• Recurring Investments: You can set up regular, automatic transfers from your bank account to your Acorns investment account (e.g., $50 every week or month). This helps build consistent savings habits.
• Passive Growth: The platform is designed for a hands-off approach. Once set up, it largely runs on its own, managing investments and rebalancing portfolios without much user intervention.

Diversified Portfolio Options (Conventional)

• Pre-Built Portfolios: Acorns provides a selection of pre-built portfolios ranging from conservative to aggressive, composed of various Exchange Traded Funds (ETFs). These ETFs typically include a mix of domestic and international stocks, and often, bonds.
• ESG Option: Expect an option for “Sustainable ESG portfolios,” which invest in companies meeting certain environmental, social, and governance criteria. However, understand that “ESG” does not necessarily equate to adherence to specific ethical financial principles that prohibit interest or certain industries.
• Market Risk: It’s crucial to expect market fluctuations. Acorns investments are subject to market risk, meaning the value of your portfolio can go up or down. As stated on their site, SIPC protection doesn’t cover market losses.

Integrated Banking and Retirement Features

• Acorns Checking: Anticipate a checking account with a debit card, designed to integrate seamlessly with your investment activities. Features like direct deposit and automatic round-ups linked to the debit card are central.
• Acorns Later (IRAs): Expect access to Individual Retirement Accounts (IRAs) – typically Traditional, Roth, and SEP IRAs – for long-term retirement planning, often with tax advantages. Promotions like an IRA match might be tied to specific premium tiers.
• Acorns Early (Kids’ Accounts): For parents, expect the ability to open and manage investment accounts for children (UGMA/UTMA), aimed at teaching financial literacy and building future wealth.

Monthly Subscription Fees

• Flat Fee Structure: Do not expect a percentage-based fee structure like many traditional investment advisors. Instead, Acorns charges a flat monthly subscription fee (e.g., $3, $5, or $9 per month), depending on the tier of service you choose.
• Impact on Small Accounts: Be prepared for these flat fees to disproportionately impact your returns if you are investing small sums. For very small balances, the fees can easily outweigh any investment gains initially.

Ethical Considerations (Crucial Expectation)

• Interest (Riba): The most critical expectation from an ethical standpoint is that Acorns’ core investment mechanisms and the returns generated are fundamentally based on interest. This includes returns from bonds, the general operations of the underlying banks, and the concept of “compound interest” itself. For those avoiding riba, this is a pervasive and unavoidable element of the platform.
• Speculation (Gharar): Expect the option to invest in a “Bits of Bitcoin Bitcoin ETF.” This introduces exposure to a highly volatile and speculative asset. If you adhere to ethical principles that discourage excessive speculation, this feature will be problematic, even with a small allocation limit.
• Limited Ethical Screening (Beyond ESG): Do not expect comprehensive ethical screening that aligns with specific religious or moral prohibitions (e.g., against alcohol, gambling, interest-based finance, or other impermissible industries). Acorns’ ESG criteria focus on broader sustainability, not necessarily specific ethical guidelines.

In summary, expect Acorns.com to deliver on its promise of easy, automated, conventional investing and saving.

However, it’s essential to set your expectations regarding the inherent reliance on interest-based financial instruments and speculative assets, which are central to its operation and fundamental concerns for ethical finance.