Acorns Vs. Robinhood Differences – Which Is Better for Your Investments?

The inventory market is extra accessible right now than ever earlier than. All you should do to speculate is obtain an funding app, deposit some funds, and get began. 

Acorns and Robinhood are two of the preferred funding apps available on the market right now. Although they each fall into the funding app class, they’re fairly completely different and thus suited to various kinds of buyers. 

Can’t resolve whether or not Acorns or Robinhood is one of the best ways to start out investing? Keep studying for a head-to-head comparability. 

Key Features of Acorns vs. Robinhood

To resolve which funding app is best for you, you’ll wish to contemplate a number of various factors. Account charges, funding choices, account varieties, and performance all make a distinction in your general expertise. 

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Here’s how the options on Acorns and Robinhood evaluate.

Investment Options on Acorns and Robinhood

If you have got restricted time or market data, belongings like exchange-traded funds (ETFs) provide diversified market publicity with out in depth analysis or evaluation.

On the opposite hand, if you happen to’re thinking about doing a little bit of analysis and selecting your personal investments in an try to be the market, you’ll want entry to particular person shares. 

Acorns Investment Options

The Acorns app was developed as a robo-advisor that makes investing as straightforward as potential. 

One of the issues the corporate has executed to perform this purpose is restrict its funding choices to ETFs. Acorns chooses the allocation to every of its 23 ETFs primarily based in your danger tolerance and objectives. While you don’t have the choice to decide on your personal investments, you have got entry to a lot of diversification potential. 

ETFs are bucket investments that gather funding {dollars} from a bunch of buyers. Those funding {dollars} are then invested based on the fund’s prospectus. 

In most instances, these funds include extremely diversified portfolios that shield buyers from important losses ought to a single funding within the portfolio take a dive. They’re nice for brand spanking new buyers or buyers with low-to-moderate danger tolerance. 

There are a number of various kinds of ETFs on the Acorns app. You can spend money on baskets of tech shares like Apple (AAPL) and Amazon.com (AMZN), excessive dividend payers by Acorns Core Portfolios, or socially accountable corporations by ESG Core Portfolios. On the choice investments facet, you’ll be able to add publicity to crypto belongings like Bitcoin (BTC) by ProfessionalShares Bitcoin Strategy ETF (BITO).

If there’s a class of asset you’re thinking about, chances are high Acorns has an ETF that gives publicity, however you often don’t select your personal ETFs. Instead, Acorns picks your allocation primarily based in your danger tolerance and objectives. The solely exception is the Bitcoin ETF, which Acorns affords as an non-obligatory add-on that you may spend money on immediately.

Robinhood Investment Options

Robinhood is extra like a standard inventory buying and selling platform, nevertheless it has the additional advantage of current innovation. The platform provides you entry to particular person shares, ETFs, and choices. It additionally helps cryptocurrency buying and selling. 

Acorns doesn’t provide particular person investments into any belongings.

However, if you happen to’re in search of an funding platform for mutual funds or bonds, you’ll must look elsewhere. You gained’t discover both asset class on both platform, although there are just a few bond-focused ETFs on every. 

Account Types Available on Acorns and Robinhood

The kind of account you open dictates the foundations related to the account. 

For instance, if you happen to open a taxable funding account, you’ll pay revenue tax or capital features tax in your funding earnings. 

In distinction, retirement accounts are sometimes thought-about tax havens, however they’ve limitations on when you’ll be able to withdraw your investments. 

Plans & Pricing

No matter who you make investments with, you wish to ensure you get what you pay for. Acorns and Robinhood every have completely different plans and pricing ranges acceptable for various kinds of buyers. 

Acorns Plans & Pricing

Acorns affords two completely different plans primarily based on who’s investing:

  • Personal. Also referred to as Acorns Invest, this selection prices $3 monthly. It’s the corporate’s particular person account choice, so you must select it if you happen to’re the one one that plans to make use of the account. The plan consists of entry to Acorns Invest and Acorns Later accounts, defined in additional element under. 
  • Family. Acorns Family prices $5 monthly. This plan helps you to arrange custodial accounts on your youngsters with no limits to the quantity of custodial accounts you’ll be able to handle. The custodial accounts are referred to as Acorns Early accounts. 

Robinhood Plans & Pricing

Robinhood additionally affords two completely different plans:

  • Robinhood Traditional. The conventional Robinhood account is free to make use of. You can commerce home shares and ETFs fee free and reap the benefits of the corporate’s money administration options. 
  • Robinhood Gold. Robinhood Gold prices $5 monthly and unlocks margin buying and selling, Level II market knowledge from Nasdaq, skilled analysis from Morningstar, and bigger instantaneous deposits. All different options, together with commission-free buying and selling, stay the identical. 

Acorns Account Types

The Acorns app has three completely different funding account varieties. They embrace:

  1. Acorns Invest. Acorns Invest is the taxable funding account at Acorns. You can withdraw your cash whenever you’d like with no penalties however should pay taxes in your capital features. The excellent news is that you simply solely have entry to ETFs, which include tax benefits of their very own.
  2. Acorns Early. Acorns Early is a custodial account designed for folks to make use of as a way of educating their youngsters about investing. These accounts are managed by dad and mom, however the investments within the accounts are the authorized property of the kid beneficiary. They are taxed based on IRS Kiddie Tax laws, which restrict taxes on the primary $2,200 in funding revenue per youngster. 
  3. Acorns Later.  Acorns Later is a unusual title for the corporate’s retirement accounts. Acorns affords conventional IRAs, Roth IRAs, and SEP IRAs. These accounts include tax benefits, however there are limitations on when you’ll be able to entry your investments. 

Robinhood Account Types

Unlike Acorns, Robinhood solely affords two forms of funding accounts and no entry to tax-advantaged retirement accounts or custodial accounts. The two account varieties are:

  1. Traditional. The conventional Robinhood funding account is a taxable account. This means you’ll pay taxes in your features at both your customary revenue tax fee or the capital features tax fee. You can withdraw your funds at any time with this account.
  2. Margin Accounts. You may open a margin account with Robinhood Gold. Margin accounts are taxable accounts like conventional funding accounts. The distinction is that you may borrow cash to purchase shares, rising your leverage and doubtlessly magnifying your features or losses. 

Automated Investing Features of Acorns vs. Robinhood

Technology has simplified so many processes over the previous couple of many years, and investing hasn’t been left behind. Automated investing is a well-liked characteristic with a number of funding apps, however how do Acorns and Robinhood evaluate on this space?

Acorns Automated Investing

Acorns is a robo-advisor. The app handles all investing actions, from choosing investments to creating deposits and rebalancing your portfolio for you. 

There are two methods to reap the benefits of the corporate’s hands-off investing providers:

  • Round-Ups. Acorns robotically rounds up your debit card purchases to the closest greenback and invests the change in your funding account. If you spend $2.81 on the retailer, the acquisition rounds as much as $3 and $0.19 goes into your funding account. This is called micro-investing, and it might flip your spare develop into significant balances over time. 
  • Scheduled Contributions. You may schedule common contributions to your funding account. When you do, the quantity of your alternative transfers out of your checking account to your funding account on a weekly, bi-weekly, or month-to-month foundation. 

You can reap the benefits of each funding choices to maximise your investing contributions. Acorns takes the lead when you resolve how one can fund your funding account. 

Robinhood Automated Investing

Robinhood is extra of a standard funding platform quite than a robo-advisor. 

There’s just one choice that comes with a small stage of automation. You can arrange automated recurring investments within the shares and ETFs you’re thinking about, specifying what number of shares you wish to purchase and the way incessantly. However, you’re accountable for choosing your investments and balancing your portfolio. 

Children’s Investment Services

One of one of the best methods to offer your child a monetary leg up is to show them the fundamentals of investing. 

While some funding apps provide accounts for youngsters, others don’t. Acorns and Robinhood illustrate this gulf. 

Acorns Children’s Investment Services

The Acorns Early account is a custodial account that advantages from favorable IRS tax remedy — although it’s not an training financial savings account. 

You can open and handle as many custodial accounts as you’d like with Acorns Family. Whether you’ve acquired one child or 12 of them, one Family account is all you’ll want. 

When you open an Acorns Early account, investments and money in that account grow to be your youngster’s authorized property, however you resolve the way it’s invested and withdrawn. This provides you the chance to show your youngsters how one can use the inventory market as a way of making monetary stability. It’s additionally an amazing choice for organising faculty funds and different milestone-based financial savings funds on your children.

Robinhood Children’s Investment Services

Robinhood solely affords taxable funding accounts for adults. You could also be tempted to open a taxable account in your title on your youngster, however doing so may very well be a mistake. Children obtain tax benefits that you simply gained’t get on an grownup’s taxable account, which may value you fairly a bit of cash ultimately. 

Fees of Acorns and Robinhood

You’re investing since you wish to become profitable, so that you don’t wish to pay exorbitant charges that minimize into your earnings. The excellent news is that each Acorns and Robinhood are low-cost funding apps. Here’s how their charges work:

Acorns Fees

All investments on Acorns are ETFs, which include their very own expense ratios. Those expense ratios typically vary from 0.05% to 0.18% on the platform. These charges accrue on prime of the $3 or $5 month-to-month charge you comply with whenever you join. 

Robinhood Fees

Robinhood is a commission-free buying and selling platform, so that you gained’t pay charges whenever you commerce shares, ETFs, or choices. However, you’ll pay a small regulatory charge with every transaction that quantities to a fraction of a penny per share. 

Margin charges are additionally extremely aggressive at simply 3.5% APY. 

Additional Investing & Banking Features

Investing is on the core of each platforms, however they each additionally provide different providers. Here’s a fast glimpse on the extra investing and banking options that didn’t make the minimize to be featured above:

Additional Features of Acorns

Aside from the options talked about above, you’ll discover the next within the Acorns App:

  • Bank Account. Your membership comes with a free Acorns checking account full with a debit card manufactured from metallic. You can use the account for direct deposits and entry your money by a community of ATMs throughout the nation. The cash in your account is FDIC insured, and also you gained’t be charged overdraft charges. 
  • Automatic Rebalancing. You gained’t have to fret about usually rebalancing your portfolio. As a robo-advisor, Acorns handles that for you. 
  • Access Sustainable Portfolios. Invest in sustainable portfolios to develop your wealth whereas doing all of your half to enhance the worldwide atmosphere. When you spend money on sustainable portfolios, you spend money on corporations that work to enhance environmental situations and remedy social points on this planet, corresponding to clear power corporations and electrical car corporations. 
  • Set Goals. This private finance app additionally helps you to set long-term objectives and observe your progress as you’re employed in direction of reaching them. 

Additional Features of Robinhood

Robinhood additionally has just a few options which can be price a fast look. Those embrace:

  • Cash Management Account. The platform comes with a free money administration account that pays a decent 1% rate of interest. That’s far greater than the 0.07% curiosity paid on conventional financial savings accounts within the United States, based on Bankrate. 
  • Free Stock. You’ll get one share of free inventory whenever you join and make a qualifying deposit. You’ll additionally get a free share of inventory whenever you refer a good friend who makes a qualifying deposit. 
  • Fractional Shares. Access costly shares with out sacrificing diversification. You should buy fractional shares of shares in increments as little as $1. 
  • Intuitive Mobile App. Finally, the Robinhood app has all of the options discovered on the desktop platform. That makes it straightforward to speculate on the go. 

The Verdict: Should You Choose Acorns or Robinhood?

At first look, Acorns and Robinhood could appear related, however they’re two very completely different providers designed for 2 very completely different audiences. So, which do you have to select? 

You Should Use Acorns If…

Acorns is a greater match if:

  • You’re a New Investor. If you’re a newbie with little to no market data, Acorns is an effective way to get began. This robo-advisor handles all of the be just right for you, providing entry to the inventory market with out asking you to handle your personal portfolio instantly. 
  • You’re a Busy Investor. Acorns is a breath of recent air if you happen to don’t have the time it takes to analysis funding alternatives and construct a portfolio of particular person shares. You can arrange your account in 5 or 10 minutes and belief the app to take it from there.
  • You’re Risk-Averse. The platform can also be an amazing match if you happen to’re risk-averse. Even probably the most aggressive portfolio on the platform consists of a number of ETFs, providing a excessive stage of diversification that protects you from important drawdowns.  
  • You’re OK With Benchmark-Like Returns. Some buyers tackle dangers in an try to beat the general market. However, with ETFs, your features and losses are about the identical because the benchmark the fund tracks. They’re finest for buyers who’re extra thinking about regular portfolio progress than taking dangers in an effort to supply outsized returns.  

You Should Use Robinhood If…

Robinhood is a greater match if:

  • You Have at Least Some Investing Experience. You select your personal investments on Robinhood, which takes a little bit of analysis and market know-how. It’s vital that you’ve at the least some funding expertise and the flexibility to do the required analysis to make worthwhile funding selections.  
  • You Want Control. When you spend money on investment-grade ETFs, the fund supervisor chooses your investments for you and retains voting rights in your shares. It’s finest to decide on your personal investments with Robinhood in order for you management over your investments and a say in proxy votes.  
  • You Want to Beat the Market. You gained’t beat the market with Acorns since you grow to be the market whenever you spend money on ETFs. However, it’s potential to beat the market by making sensible funding selections with Robinhood.  
  • You Want to Trade Options. Acorns provides you entry to shares by the ETFs that maintain them. However, there’s no approach to acquire publicity to choices. By distinction, choices buying and selling is on the market and completely free with Robinhood. You gained’t pay any commissions or contract charges.  

Both Are Great If…

Both Acorns and Robinhood are glorious choices if:

  • You’re Ready to Try Your Hand at Investing. If you’re able to get your toes moist as an investor, one of the best transfer may be to maintain most of your funds in Acorns for skilled administration and use Robinhood to check your investing methods with particular person equities.  
  • You Want to Trade Individual Stocks While Investing in ETFs. Diversification is essential and some shares gained’t make a diversified portfolio. If you’re solely thinking about just a few shares and don’t have the time to analysis and construct a complete diversified portfolio, use Robinhood to spend money on the shares you need publicity to and Acorns to handle the remainder of your portfolio.  
  • You Want to Trade Options. Both are additionally an ideal combine if you wish to diversify your investments by including in a little bit of choices buying and selling. Let Acorns handle your inventory portfolio and commerce choices with Robinhood.  

Honorable Mentions

Robinhood and Acorns are simply two on-line brokers that make it straightforward to speculate and save. Some different choices embrace:

  • Betterment. Betterment is among the hottest robo-advisors on-line right now. Like Acorns, the corporate invests your cash in ETFs primarily based in your danger tolerance and objectives. 
  • WeBull. WeBull is much like Robinhood. You spend money on your personal particular person shares, ETFs, however you gained’t have entry to bonds or mutual funds. Nonetheless, energetic merchants benefit from the platform’s superior charting and technical evaluation capabilities. 
  • Personal Capital. Personal Capital mixes robo-advisor providers with real-life monetary advisors to create a long-term investing plan that’s good for you. The platform can also be an general wealth-management service the place you’ll be able to price range, observe spending, and extra. 
  • E*Trade. Finally, E*Trade is among the hottest low cost brokers on-line right now. You can spend money on your personal listing of shares, bonds, ETFs, and mutual funds or spend money on the corporate’s Core Portfolios. This is its model of a robo-advisor. 

Final Word

Acorns and Robinhood are common funding apps as a result of they provide what most individuals need – a easy approach to entry the inventory market. Although each apps are straightforward to make use of and efficient, they’re additionally precise opposites in some respects. 

If you wish to take a laid-back method to investing, Acorns is one of the best ways to go. This is true whether or not you’re a newbie who wants time to be taught or an skilled investor who desires a break. 

If you wish to take an energetic, engaged method to investing Robinhood is the higher choice. It’s additionally superior if you happen to’re comfy taking dangers in an try to beat the market.

For many, a mixture of the 2 choices may even be match. The secret is establishing your objectives as an investor, then selecting the platform that aligns finest with these objectives.