Investing doesn’t have to be difficult (or expensive). Both Acorns and Robinhood have understood this and offer intuitive mobile apps that are so easy to use that even Caveman a new investor can understand this.
acorns is an automated investment application that rounds up your extra change and invests the difference. Robinhood is the original commission-free stock trading app that made the entire financial industry follow suit, helping lower fees across the board and, in their words, “democratize finance for everyone.”
And acorns and Robin Hood offer inexpensive investments and access to ETFs with low fees. They are both meant for beginners, but which one is best for you?
We have reviewed features, fees, trading tools, available assets, customer service and security to help you determine which trading platform is right for you.
Review of Acorns and Robinhood
Both Acorns and Robinhood offer access to a wide variety of ETFs for a diversified investment. Both of them also offer recurring investments, which allows you to buy investments on a regular schedule.
Acorns connects to your financial accounts, rounding up purchases to the nearest dollar and depositing the difference.
Robinhood offers free trading in stocks, ETFs, options and cryptocurrencies.
| acorns | Robin Hood | |
|---|---|---|
| Trading fees | Trading is not available on Acorns accounts | ● No commissions for trading stocks, ETFs, options or cryptocurrencies. ● Robinhood charges a “spread” fee, which is the difference between the buy and sell price of a trade. |
| Pay per account | Personal – $3 per month
Family – $5 per month. |
● $75 (partial/full) ● $5 per month for Robinhood Gold. |
| Trading assets | Acorns portfolios are built from a combination of ETFs. Individual stocks, bonds or other investments are not available. | ● Promotions ● ETFs ● Options ● American Depositary Receipts (ADRs) ● IPO (for certain companies) ● Cryptocurrency |
| Account Minimums | $0 to open ($5 to invest) | $0 |
| Mobile app available? | Yes | Yes |
| Education | Financial Literacy Content from CNBC (Grow Magazine) | News feed, main articles and videos |
| Customer service | Phone and email support seven days a week, 6:00 am to 7:00 pm PST. | 24/7 email, social media and in-app phone call |
About acorns
Acorns is a robotic advisory service that allows you to round up your purchases to the nearest dollar and deposit those funds into an investment account. Once the balance reaches $5, the funds will be invested in a pre-selected investment portfolio.
Acorns offers five portfolio options based on risk tolerance, ranging from conservative to aggressive. It also offers four distinct Environmental, Social and Governance (ESG) portfolios for investors who wish to invest in ESG eligible funds. These portfolios consist of a combination of widely diversified ETFs with low annual fees and a wide range of investments.
Read more: Socially Responsible Investing: How to Become a Conscious Investor
Acorns charges a monthly fee for its services and offers two plan options for investors:
- Private. This account charges $3 per month and gives you access to a taxable investment account, an Individual Retirement Account (IRA), and a checking account. You can use the in-app rounding feature and also access cashback with partner brands through the app.
- A family. This account costs $5 per month and includes everything in the personal plan plus access to an investment account for kids (deposit account).
All in all, Acorns is a solid app for beginner investors who want to automate their long-term investments, including the ability to invest small amounts with the rounding feature.
Try Acorns or read our full review.
About Robinhood
Robinhood is a popular stock and cryptocurrency trading app that offers access to free stocks, ETFs, options contracts, and cryptocurrency trading. You can also access leveraged trading margin, a feature usually reserved for accredited investors but available to regular investors on Robinhood.
Read more: How to Invest in Cryptocurrency: A Beginner’s Guide
Note: While the “no trading fees” feature sounds great, Robinhood charges a hidden fee called a spread fee, which is the difference between the buying and selling price of an asset. This may end up costing you more as you end up overpaying when buying and selling for less than the market value of your asset.
The Robinhood mobile app is one of the easiest investing apps for beginners, with built-in tutorials on how to place trades, simplified charts and pricing information, and a very simple order form. Robinhood also offers in-app options trading but makes it easier to understand for new investors. In addition to the US market, Robinhood offers access to over 600 international investments through American Depositary Receipts (ADRs).
Overall, Robinhood struggles with being transparent about its fees, but is still a decent trading platform for beginners. Just don’t get a margin call when investing with maximum leverage in penny stocks!
Try Robinhood or read our full review.
Acorns vs Robinhood Investment Performance
Both Robinhood and Acorns offer access to thousands of ETFs, while Robinhood offers individual stocks and crypto investments. But how do these investments work? The performance of any investment portfolio will vary depending on the investment chosen, and most users will have a different investment choice.
While Robinhood does not offer standardized portfolios, Acorns offers ready made investment portfolios based on risk tolerance. These portfolios are built using a combination of low cost ETFs that help users diversify their investments with minimal fees.
Read more: How to invest in ETFs
Unfortunately, Acorns does not publish data on the performance of its portfolio, but you can see what investments each portfolio consists of on the Acorns website.
Pros and cons of acorns
pros
- Rounding function to invest extra changes.
- Automated investment management.
- Earn cashback when using the Acorns trading portal.
Minuses
- Cryptocurrency or stock trading is not available.
- The monthly fee is expensive for small accounts.
- $50 for an ETF to transfer to another firm.
Pros and Cons of Robin Hood
pros
- Trading without commissions.
- Access to individual shares and crypto.
- There is no account minimum.
Minuses
- Spread fees are not transparent.
- No automated portfolio management.
- Commission for outgoing transfer $75.
Why Choose Acorns
Simple mobile application
Acorns is an app that doesn’t have complicated investment jargon and makes it easy to invest regularly, even when making daily purchases. If you’re looking for a “set it and forget it” approach to long-term investment, the Acorns app makes it easy.
Automated investment
Managing your investments may seem complicated, but Acorns is built to take care of the details for you. With the ability to set up recurring investments, automatic rebalancing of your portfolio, and ready-made portfolios of diversified, low-cost ETFs, Acorns automates the most painful investment steps.
Earn bonuses
Acorns has partnered with over 12,000 major retailers to offer cash rewards for purchases through the Acorns app or free Chrome extension. When shopping online, you can activate a bonus offer and receive a refund, which will be credited to your Acorns account and invested in your portfolio.
Try opening an investment account with Acorns.
Why Choose Robinhood
Investments without commission
Robinhood offers free trading on selected stocks, ETFs, option contracts and American Depositary Receipts (ADRs) for international investment. But be aware that spread fees apply, which can result in overpayments for investments.
Access to crypto
Robinhood is one of the few stock trading apps that allows you to directly invest in cryptocurrencies, offering access to Bitcoin (BTC), Ethereum (ETH) and several other cryptocurrencies options. It will also launch a cryptocurrency wallet in 2022, allowing you to directly store your cryptocurrency.
Margin trading
Robinhood offers margin access for investors with an account balance of $2,000 (or more). While this may seem like an excessive requirement, most other firms require Accredited Investor status to access Margin, which means you earn $200k a year or have a net worth of $1M (outside your primary residence). So a minimum of $2,000 is quite generous, as are the interest rates on margin balances.
Try opening an investment account with Robinhood.
Summary
Both Robinhood and Acorns are designed to help beginners start investing. Both offer low fees and access to a wide range of ETFs to help build a diversified investment portfolio.
But while Robinhood is for active traders who need access to individual stocks, cryptocurrencies and options trading, Acorns offers a more passive approach to investing, automating the process with pre-built portfolios and automatically investing your excess changes.
Robinhood offers new investors an easy way to access thousands of commission-free trading assets, as well as more advanced trading features such as margin trading and options trading. Acorns, on the other hand, offers fully managed investment accounts that focus on investing small amounts over time.
Active traders and those looking to try their hand at options or crypto trading will benefit from Robinhood’s intuitive trading interface and commission structure, while new investors looking to save small amounts for retirement can take advantage of Acorn’s streamlined investing approach.
Featured Image: MM Vieira/Shutterstock.com
Advertiser Disclosure – This advertisement contains information and materials provided by Robinhood Financial LLC and its affiliates (“Robinhood”) and MoneyUnder30, a third party not affiliated with Robinhood. All investments involve risk, and the past performance of a security or financial product does not guarantee future results or returns. Securities offered through Robinhood Financial LLC and Robinhood Securities LLC, which are members of FINRA and SIPC. MoneyUnder30 is not a member of FINRA or SIPC.”