An Acorns account is an investment account that automatically invests small amounts of money for you
Acorns is a brokerage account that rounds up your everyday purchases to the nearest dollar and invests the difference. If you buy coffee for $3.50, Acorns rounds it to $4 and invests the extra $0.50. Those small amounts accumulate in a diversified portfolio of exchange-traded funds (ETFs) — baskets of stocks and bonds that spread your money across many companies and asset types.
The account is designed for people who want to invest but don't have large sums to start with or don't want to think about picking individual stocks. You link a debit card or bank account, and Acorns handles the rest: it rounds up transactions, collects the money, and invests it according to a risk profile you choose when you open the account.
Acorns is not a savings account or a checking account. It is a taxable investment account, which means the money you invest can grow or shrink depending on how the stock and bond markets perform. You can withdraw your money at any time, but if you sell investments when their value has dropped, you lock in a loss.
Key Takeaways
- Acorns rounds up your card purchases to the nearest dollar and invests the spare change in a portfolio of ETFs you choose based on your risk tolerance.
- The account charges a monthly subscription fee (typically $2 to $5 depending on your account tier) plus a small percentage of your balance if you have more than $5,000 invested.
- Your money is invested in the stock and bond markets, so the balance can go up or down — it is not protected like money in a bank savings account.
- You can also make one-time investments and set up recurring deposits beyond the round-up feature if you want to invest more.
- Acorns offers a checking account and a savings account as add-ons, but the core product is the investment account.
How the round-up feature works in practice
Every time you make a purchase with a linked debit card or credit card, Acorns calculates the difference between what you spent and the next whole dollar. That difference goes into a holding account until you have accumulated enough to invest — usually $5 or more, depending on your settings.
Once the threshold is met, Acorns automatically buys shares of the ETFs in your chosen portfolio. If you link multiple cards, round-ups happen on all of them. A person who spends $50 a day on small purchases could accumulate $15 to $20 a month in round-ups without thinking about it.
You can also pause round-ups, adjust the threshold before investing, or skip a round-up if you want to keep the money. The feature is optional — you can use Acorns purely for one-time or recurring investments if you prefer.
The investment portfolios and risk levels
When you open an Acorns account, you answer questions about your age, income, and comfort with risk. Based on your answers, Acorns suggests a portfolio — typically labeled Conservative, Moderate, or Aggressive — that determines what mix of stocks and bonds your money goes into.
A Conservative portfolio might be 20% stocks and 80% bonds, while an Aggressive portfolio might be 90% stocks and 10% bonds. Stocks have higher potential returns but larger swings in value. Bonds are more stable but grow more slowly. You can change your portfolio at any time, though doing so frequently can trigger unnecessary tax events.
All portfolios are built from low-cost ETFs, not individual stocks. This means your money is spread across hundreds or thousands of companies, which reduces the risk that any single company's poor performance will hurt your balance significantly.
Fees and what they cost you
Acorns charges a monthly subscription fee that varies by account type. The basic Acorns Invest plan costs $2 per month for accounts under $5,000 and 0.25% per year (charged monthly) for accounts over $5,000. Acorns+ costs $5 per month and includes additional features like a checking account and higher investment limits. Acorns Later, a retirement account option, has its own fee structure.
These fees are charged whether your investments gain or lose value, so they reduce your net return. On a $500 balance, a $2 monthly fee is 4.8% per year — a significant drag on growth. On a $10,000 balance, the same $2 fee is only 0.24% per year, which is much less painful. This is why Acorns works better for people who plan to invest regularly and build a larger balance over time.
Acorns also charges no trading fees when it buys or sells ETFs on your behalf, and there are no account opening or closing fees.
How your money grows or shrinks
Your Acorns balance changes based on two things: the money you invest (through round-ups or deposits) and the performance of the ETFs in your portfolio. If the stock market rises, your balance typically rises. If the market falls, your balance typically falls. You do not earn interest like you would in a savings account — you earn returns through the price appreciation of the ETFs and any dividends they pay.
Because Acorns invests in diversified ETFs, your balance is less volatile than if you owned a single stock, but it is still exposed to market risk. A person who invests $100 per month for five years might see their balance grow to $6,500 in a strong market or shrink to $5,200 in a weak one, depending on when they started and what the markets did.
You can see your balance and performance in the Acorns app at any time. The app shows your total invested, your current balance, and your gain or loss in dollars and as a percentage.
Withdrawing money and tax implications
You can withdraw money from your Acorns account at any time with no penalty. The money typically arrives in your linked bank account within one to three business days. However, when you sell an investment at a profit, you owe capital gains tax on that profit — either short-term tax (if you held it less than a year) or long-term tax (if you held it a year or more). Long-term capital gains rates are usually lower.
If you sell at a loss, you can use that loss to offset other gains or, in some cases, to reduce your taxable income. Acorns sends you a tax form (Form 1099-B) each year that reports your gains and losses to the IRS.
Because Acorns is a taxable account, not a retirement account like an IRA, there are no contribution limits and no tax-deferred growth. Every gain is taxable in the year you sell, even if you reinvest the money immediately.
Acorns versus other investment and savings options
Acorns is one of several micro-investing platforms. Competitors include Stash, Wealthfront, and Betterment, which all offer automated investing with low minimums. Traditional brokerages like Fidelity and Schwab also allow small investments but require you to decide what to buy yourself.
If you want may provide returns and no market risk, a high-yield savings account or money market account at a bank pays interest and protects your principal. These accounts are slower to grow but safer. A high-yield savings account might pay 4% to 5% annually, while a diversified stock portfolio historically averages 7% to 10% annually over long periods — but with ups and downs along the way.
Acorns is best for people who want to invest regularly, can tolerate market fluctuations, and like the automatic round-up feature as a way to build the habit. It is not a substitute for an emergency fund (which should stay in a savings account) or a retirement account (which offers tax advantages that Acorns does not).
Frequently Asked Questions
Can I lose money in an Acorns account?
Yes. Because Acorns invests in stocks and bonds, your balance can fall if the markets decline. If you sell when your balance is lower than what you invested, you lock in a loss. However, if you leave your money invested and the markets recover, you may regain the loss over time.
Is my money safe in Acorns?
Acorns is a brokerage, not a bank, so your money is not protected by FDIC insurance. However, Acorns is regulated by the SEC and holds your investments with a custodian (a third-party financial institution). If Acorns fails, your investments are still yours. The risk is market risk, not company risk.
How much do I need to start an Acorns account?
You can open an account with $0. You pay the monthly subscription fee regardless of your balance, so starting with a small balance means the fee takes up a larger percentage of your money. Most people find Acorns worthwhile once they have invested at least a few hundred dollars.
Can I use Acorns as my main savings account?
No. Acorns is an investment account, not a savings account. Your money is in the stock and bond markets and can fluctuate. You should keep your emergency fund (three to six months of expenses) in a separate high-yield savings account where the balance does not change.
What happens to my Acorns account if I stop using it?
Your money stays invested and continues to grow or shrink with the markets. However, you continue to pay the monthly subscription fee. If you do not want to pay the fee, you can withdraw your money or close the account. Acorns does not automatically close inactive accounts.