Acorns and Robinhood are two popular investing apps for beginners. However, they aren’t interchangeable. Robinhood is designed for self-directed investors whereas Acorns offers managed financial solutions.
Keep reading for a comparison of Acorns vs. Robinhood and some tips for deciding which platform is right for you.
Note: This article contains affiliate links. If you sign up for Acorns using my link in this article, I’ll receive a small commission. Rest assured, however, that my goal is to provide as unvarnished a look at these two investment platforms as possible.
Acorns vs. Robinhood: Overview
| Acorns | Robinhood | |
|---|---|---|
| Type of platform | Robo-advisor | Self-directed |
| Minimum balance | $0 | $0 for standard trading; $2,000 for margin trading |
| Account fees | $1 monthly for Lite plan; $3 monthly for Personal plan; $5 monthly for Family plan | $5 monthly for Gold plan |
| Trading commissions | $0 | $0 |
| Availability | United States only | United States only |
| Spare change investing | Yes | No |
| Ideal for | Beginners or anyone who wants to invest passively without micro-managing their portfolios | Experienced investors prepared to be active and build their own portfolios from scratch |
| Special offer for Rinkydoo Finance readers | Earn a $10 bonus when you sign up with this link | None |
About Acorns
Acorns is what’s known as a robo-advisor. Whenever you make a deposit, Acorns will automatically invest your money in whatever portfolio it deems suitable based on the personal information you provide it. I’ll explore each portfolio in greater detail shortly.
Unique Acorns features
Here are the key features that distinguish Acorns from Robinhood.
Spare change investing
Acorns is arguably best known as a spare change investing app. It automatically invests the difference between each transaction amount and the nearest dollar. If you spend $4.55 on coffee, for example, Acorns will invest 45 cents.
Retirement investing
Acorns Later is the company’s individual retirement account (IRA) offering. It features recurring contributions and minimum deposits of just $5. For comparison, some IRA providers enforce minimum balance requirements of $1,000 or more.
Generational wealth building
If you have children and are looking to invest in their future, Acorns Early may be of interest. It’s a full financial system that includes both investment and checking accounts. You can also add multiple children within the same family at no additional cost.
Through this product, Acorns offers UTMA and UGMA accounts, which are designed to be a tax-efficient means of transferring wealth to the next generation.
Cashback
Acorns Earn is among the platform’s most unique features. It’s cashback with a twist; when you spend money at one of the more than 350 participating retailers, those stores will refund a percentage of your transaction. Acorns will then invest that money in your portfolio.
These aren’t small brands, either. Participating companies include:
- Apple
- Expedia
- Hotels.com
- Nordstrom
- Macy’s
- Nike
- Chevron
Flat fees
Most robo-advisors charge percentage-based fees. With this pricing structure, your fees grow along with your account balance.
Acorns does things differently. It charges a flat fee depending on your account type. You’ll pay $1 monthly for the Lite plan, $3 monthly for the Personal plan, and $5 monthly for the Family plan. Your fee remains the same whether your balance is $1,000 or $100,000. That’s advantageous if you have a larger amount of money to invest (or plan on building your way up to a substantial balance over time).
Banking
Acorns isn’t just an investing platform. The company also offers a checking account, meaning you could consolidate your finances (from investing to daily spending) entirely within the Acorns universe.
Portfolios offered by Acorns
Acorns offers two classes of investment portfolios – Core and Sustainable. Portfolios in either class are diversified, reducing the likelihood of a single asset’s decline having an oversized impact on your investments.
Core investment portfolios
Acorns assembled these portfolios without paying particular attention to the social, environmental, and ethical responsibility of the underlying assets.
| Portfolio name | Contains |
|---|---|
| Conservative | 100% bonds (BIL, JPST, ICSH, GBIL, SHV) |
| Moderately Conservative | 60% bonds (ISTB, AGG); 40% stocks (IJH, IXUS, VOO) |
| Moderate | 40% bonds (ISTB, AGG); 60% stocks (VOO, IJH, IJR, IXUS) |
| Moderately Aggressive | 20% bonds (AGG); 80% stocks (VOO, IJH, IJR, IXUS) |
| Aggressive | 100% stocks (VOO, IJH, IJR, IXUS) |
Sustainable investment portfolios
Acorns assembled these portfolios with ethical investors in mind.
| Portfolio name | Contains |
|---|---|
| Moderately Conservative | 60% bonds (SUSB, SHY, GOVT, MBB, SUSC); 40% stocks (ESGU, SUSA, ESML, ESGD, ESGE) |
| Moderate | 40% bonds (SUSB, SHY, GOVT, MBB, SUSC); 60% stocks (ESGU, SUSA, ESML, ESGD, ESGE) |
| Moderately Aggressive | 20% bonds (SUSB, SHY, GOVT, MBB, SUSC); 80% stocks (ESGU, SUSA, ESML, ESGD, ESGE) |
| Aggressive | 100% stocks (ESGU, SUSA, ESML, ESGD, ESGE) |
Signs Acorns is right for you
You prefer being a hands-off investor
Acorns is a great option if you want to invest without spending hours researching individual assets and subsequently maintaining your portfolio. This approach to investing has benefits beyond mere convenience, too. Data shows passive investing consistently beats active management.
In other words, investing with Acorns won’t just be more convenient than maintaining your own Robinhood portfolio. Your portfolio may perform better in the long run as well.
You need tax-efficient accounts
As I mentioned earlier, Acorns offers tax-advantaged accounts for retirement savings and generational wealth building. This isn’t the case with Robinhood, which doesn’t currently offer tax-advantaged accounts.
Robinhood’s poor tax efficiency could leave you paying tens of thousands of dollars more in taxes than you would if you used a service such as Acorns.
You want banking and other services included
Acorns has grown to offer a variety of financial tools, including checking accounts and debit cards. This is great news if you’re looking for a single financial solution that can meet your investing and banking needs.
An investing platform such as Robinhood, meanwhile, would sit separately from your other financial accounts.
You have more than a few hundred dollars to invest
While Acorns doesn’t impose restrictive minimum account balances, the platform’s fee structure doesn’t make sense if you’re looking to invest just a few hundred dollars. The $3 monthly plan, for example, would leave you paying $36 annually. That’s 7.2% of a portfolio worth $500.
Once your portfolio grows to $5,000 or more, Acorns becomes more reasonably priced relative to other robo-advisors.
About Robinhood
Robinhood is what’s known as a self-directed investment platform. With it, you can assemble your own investment portfolio by purchasing stocks, exchange-traded funds (ETFs), bonds, and options contracts.
Unique Robinhood features
Here are the key features that set Robinhood apart from Acorns.
Self-directed investing
While Acorns funnels you towards one of its pre-assembled portfolios, Robinhood places you right in the driver’s seat. Choose from more than 5,000 stocks. Through Robinhood, you can also access options contracts.
As Uncle Ben once said, however, with great power comes great responsibility. Self-directed investing is not necessarily a superior strategy. In fact, data shows the average investor’s returns lag those offered by passive portfolios. Nonetheless, Robinhood’s self-directed investment features are major selling points in the eyes of many.
Cryptocurrency trading
I’d be remiss to write a piece comparing Acorns vs. Robinhood without highlighting that the latter platform offers cryptocurrency trading. The list of digital assets you can buy and sell through the platform includes:
- Bitcoin
- Litecoin
- Ethereum
- Dogecoin
Acorns, meanwhile, does not provide direct exposure to cryptocurrencies.
Margin
Margin trading is among Robinhood’s most dangerous yet acclaimed features. It allows you to invest with borrowed money, which can multiply your returns – and losses.
Robinhood is among the first online brokerages to make margin trading so accessible to the masses. This isn’t necessarily a good thing, though. Many people (such as this guy) have gone bankrupt as a result of trading on margin with Robinhood.
Options trading
An options contract grants its owner the opportunity to buy or sell an asset at an agreed-upon price (known as the “strike price”). The idea is that an investor would buy an options contract if they believe the strike price would be advantageous to them.
It’s a relatively complicated type of investment most people would be wise to stay far away from. Robinhood is all about bringing complicated financial tools to the masses, though, and options are no different. Users can purchase options contracts from right within the app.
Signs Robinhood is right for you
You enjoy actively picking stocks and maintaining your own portfolio
If the ability to pick stocks is important to you, Robinhood is really your only option between it and Acorns.
However, I’d discourage you from using Robinhood if you’re primarily drawn to active investing because you believe you’ll earn more through it. Mountains of data have confirmed that passive investing through apps such as Acorns yields better results for the vast majority of investors.
You’ve already maxed out your tax-advantaged accounts
As I mentioned earlier, Robinhood does not offer tax-advantaged investment accounts. Any profits you reap through the platform will be subject to capital gains taxes.
Consequently, it arguably makes little sense to invest through Robinhood unless you’ve already maximized contributions to a tax-advantaged account elsewhere. Otherwise, you’ll be forgoing tens of thousands of dollars in tax benefits.
You have an appetite for risk
Stick picking, options trading, and trading on margin have two things in common. First, they’re all very risky investment strategies. Second, they’re all highly popular features of Robinhood.
If you’re drawn to Robinhood by the thought of how much money these features could net you, don’t ignore forget to account for the risks. You need to be capable of living with those risks (which includes pushing through periods of significant losses).
Acorns vs. Robinhood: Conclusion
I hope this article has helped you understand the key differences between Acorns and Robinhood. To summarize, these platforms target two very different types of investors.
Acorns is for passive investors looking to build wealth slowly. Robinhood, meanwhile, appeals most to active investors who want access to advanced strategies such as options and margin trading.
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