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

The stock market is more accessible today than ever before. All you need to do to invest is download an investment app, deposit some funds, and get started. 

Acorns and Robinhood are two of the most popular investment apps on the market today. Although they both fall into the investment app category, they’re quite different and thus suited to different types of investors. 

Can’t decide whether Acorns or Robinhood is the best way to start investing? Keep reading for a head-to-head comparison. 

Key Features of Acorns vs. Robinhood

To decide which investment app is right for you, you’ll want to consider several different factors. Account fees, investment options, account types, and functionality all make a difference in your overall experience. 

Here’s how the features on Acorns and Robinhood compare.

Investment Options on Acorns and Robinhood

If you have limited time or market knowledge, assets like exchange-traded funds (ETFs) offer diversified market exposure without extensive research or analysis.

On the other hand, if you’re interested in doing a bit of research and choosing your own investments in an attempt to be the market, you’ll need access to individual stocks. 

Acorns Investment Options

The Acorns app was developed as a robo-advisor that makes investing as easy as possible. 

One of the things the company has done to accomplish this goal is limit its investment options to ETFs. Acorns chooses the allocation to each of its 23 ETFs based on your risk tolerance and goals. While you don’t have the option to choose your own investments, you have access to lots of diversification potential. 

ETFs are bucket investments that collect investment dollars from a group of investors. Those investment dollars are then invested according to the fund’s prospectus. 

In most cases, these funds come with highly diversified portfolios that protect investors from significant losses should a single investment in the portfolio take a dive. They’re great for new investors or investors with low-to-moderate risk tolerance

There are several different types of ETFs on the Acorns app. You can invest in baskets of tech stocks like Apple (AAPL) and (AMZN), high dividend payers through Acorns Core Portfolios, or socially responsible companies through ESG Core Portfolios. On the alternative investments side, you can add exposure to crypto assets like Bitcoin (BTC) through ProShares Bitcoin Strategy ETF (BITO).

If there’s a category of asset you’re interested in, chances are Acorns has an ETF that provides exposure, but you usually don’t choose your own ETFs. Instead, Acorns picks your allocation based on your risk tolerance and goals. The only exception is the Bitcoin ETF, which Acorns offers as an optional add-on that you can invest in directly.

Robinhood Investment Options

Robinhood is more like a traditional stock trading platform, but it has the added benefit of recent innovation. The platform gives you access to individual stocks, ETFs, and options. It also supports cryptocurrency trading

Acorns doesn’t offer individual investments into any assets.

However, if you’re looking for an investment platform for mutual funds or bonds, you’ll have to look elsewhere. You won’t find either asset class on either platform, though there are a few bond-focused ETFs on each. 

Account Types Available on Acorns and Robinhood

The type of account you open dictates the rules associated with the account. 

For example, if you open a taxable investment account, you’ll pay income tax or capital gains tax on your investment earnings. 

In contrast, retirement accounts are often considered tax havens, but they have limitations on when you can withdraw your investments. 

Plans & Pricing

No matter who you invest with, you want to make sure you get what you pay for. Acorns and Robinhood each have different plans and pricing levels appropriate for different types of investors. 

Acorns Plans & Pricing

Acorns offers two different plans based on who’s investing:

  • Personal. Also known as Acorns Invest, this option costs $3 per month. It’s the company’s individual account option, so you should choose it if you’re the only person who plans to use the account. The plan includes access to Acorns Invest and Acorns Later accounts, explained in more detail below. 
  • Family. Acorns Family costs $5 per month. This plan lets you set up custodial accounts for your children with no limits to the amount of custodial accounts you can manage. The custodial accounts are called Acorns Early accounts. 

Robinhood Plans & Pricing

Robinhood also offers two different plans:

  • Robinhood Traditional. The traditional Robinhood account is free to use. You can trade domestic stocks and ETFs commission free and take advantage of the company’s cash management features. 
  • Robinhood Gold. Robinhood Gold costs $5 per month and unlocks margin trading, Level II market data from Nasdaq, professional research from Morningstar, and larger instant deposits. All other features, including commission-free trading, remain the same. 

Acorns Account Types

The Acorns app has three different investment account types. They include:

  1. Acorns Invest. Acorns Invest is the taxable investment account at Acorns. You can withdraw your money when you’d like with no penalties but must pay taxes on your capital gains. The good news is that you only have access to ETFs, which come with tax advantages of their own.
  2. Acorns Early. Acorns Early is a custodial account designed for parents to use as a means of teaching their children about investing. These accounts are managed by parents, but the investments in the accounts are the legal property of the child beneficiary. They are taxed according to IRS Kiddie Tax regulations, which limit taxes on the first $2,200 in investment income per child. 
  3. Acorns Later.  Acorns Later is a quirky name for the company’s retirement accounts. Acorns offers traditional IRAs, Roth IRAs, and SEP IRAs. These accounts come with tax advantages, but there are limitations on when you can access your investments. 

Robinhood Account Types

Unlike Acorns, Robinhood only offers two types of investment accounts and no access to tax-advantaged retirement accounts or custodial accounts. The two account types are:

  1. Traditional. The traditional Robinhood investment account is a taxable account. This means you’ll pay taxes on your gains at either your standard income tax rate or the capital gains tax rate. You can withdraw your funds at any time with this account.
  2. Margin Accounts. You can also open a margin account with Robinhood Gold. Margin accounts are taxable accounts like traditional investment accounts. The difference is that you can borrow money to buy stocks, increasing your leverage and potentially magnifying your gains or losses. 

Automated Investing Features of Acorns vs. Robinhood

Technology has simplified so many processes over the past couple of decades, and investing hasn’t been left behind. Automated investing is a popular feature with multiple investment apps, but how do Acorns and Robinhood compare in this area?

Acorns Automated Investing

Acorns is a robo-advisor. The app handles all investing activities, from picking investments to making deposits and rebalancing your portfolio for you. 

There are two ways to take advantage of the company’s hands-off investing services:

  • Round-Ups. Acorns automatically rounds up your debit card purchases to the nearest dollar and invests the change in your investment account. If you spend $2.81 at the store, the purchase rounds up to $3 and $0.19 goes into your investment account. This is known as micro-investing, and it can turn your spare change into meaningful balances over time. 
  • Scheduled Contributions. You can also schedule regular contributions to your investment account. When you do, the amount of your choice transfers from your bank account to your investment account on a weekly, bi-weekly, or monthly basis. 

You can take advantage of both funding options to maximize your investing contributions. Acorns takes the lead once you decide how to fund your investment account. 

Robinhood Automated Investing

Robinhood is more of a traditional investment platform rather than a robo-advisor. 

There’s only one option that comes with a small level of automation. You can set up automatic recurring investments in the stocks and ETFs you’re interested in, specifying how many shares you want to buy and how frequently. However, you’re in charge of picking your investments and balancing your portfolio. 

Children’s Investment Services

One of the best ways to give your kid a financial leg up is to teach them the basics of investing. 

While some investment apps offer accounts for children, others don’t. Acorns and Robinhood illustrate this gulf. 

Acorns Children’s Investment Services

The Acorns Early account is a custodial account that benefits from favorable IRS tax treatment — though it’s not an education savings account. 

You can open and manage as many custodial accounts as you’d like with Acorns Family. Whether you’ve got one baby or 12 of them, one Family account is all you’ll need. 

When you open an Acorns Early account, investments and cash in that account become your child’s legal property, but you decide how it’s invested and withdrawn. This gives you the opportunity to teach your children how to use the stock market as a means of creating financial stability. It’s also a great option for setting up college funds and other milestone-based savings funds for your kids.

Robinhood Children’s Investment Services

Robinhood only offers taxable investment accounts for adults. You may be tempted to open a taxable account in your name for your child, but doing so could be a mistake. Children receive tax advantages that you won’t get on an adult’s taxable account, which could cost you quite a bit of money in the end. 

Fees of Acorns and Robinhood

You’re investing because you want to make money, so you don’t want to pay exorbitant fees that cut into your earnings. The good news is that both Acorns and Robinhood are low-cost investment apps. Here’s how their fees work:

Acorns Fees

All investments on Acorns are ETFs, which come with their own expense ratios. Those expense ratios generally range from 0.05% to 0.18% on the platform. These fees accrue on top of the $3 or $5 monthly fee you agree to when you sign up. 

Robinhood Fees

Robinhood is a commission-free trading platform, so you won’t pay fees when you trade stocks, ETFs, or options. However, you will pay a small regulatory fee with each transaction that amounts to a fraction of a penny per share. 

Margin rates are also highly competitive at just 3.5% APY. 

Additional Investing & Banking Features

Investing is at the core of both platforms, but they both also offer other services. Here’s a quick glimpse at the additional investing and banking features that didn’t make the cut to be featured above:

Additional Features of Acorns

Aside from the features mentioned above, you’ll find the following in the Acorns App:

  • Bank Account. Your membership comes with a free Acorns checking account complete with a debit card made of metal. You can use the account for direct deposits and access your cash through a network of ATMs across the country. The money in your account is FDIC insured, and you won’t be charged overdraft fees. 
  • Automatic Rebalancing. You won’t have to worry about regularly rebalancing your portfolio. As a robo-advisor, Acorns handles that for you. 
  • Access Sustainable Portfolios. Invest in sustainable portfolios to grow your wealth while doing your part to improve the global environment. When you invest in sustainable portfolios, you invest in companies that work to improve environmental conditions and solve social issues in the world, such as clean energy companies and electric vehicle companies. 
  • Set Goals. This personal finance app also lets you set long-term goals and track your progress as you work towards achieving them. 

Additional Features of Robinhood

Robinhood also has a few features that are worth a quick glance. Those include:

  • Cash Management Account. The platform comes with a free cash management account that pays a respectable 1% interest rate. That’s far higher than the 0.07% interest paid on traditional savings accounts in the United States, according to Bankrate
  • Free Stock. You’ll get one share of free stock when you sign up and make a qualifying deposit. You’ll also get a free share of stock when you refer a friend who makes a qualifying deposit. 
  • Fractional Shares. Access expensive stocks without sacrificing diversification. You can buy fractional shares of stocks in increments as low as $1. 
  • Intuitive Mobile App. Finally, the Robinhood app has all the features found on the desktop platform. That makes it easy to invest on the go. 

The Verdict: Should You Choose Acorns or Robinhood?

At first glance, Acorns and Robinhood may seem similar, but they’re two very different services designed for two very different audiences. So, which should you choose? 

You Should Use Acorns If…

Acorns is a better fit if:

  • You’re a New Investor. If you’re a beginner with little to no market knowledge, Acorns is a great way to get started. This robo-advisor handles all the work for you, offering access to the stock market without asking you to manage your own portfolio immediately. 
  • You’re a Busy Investor. Acorns is a breath of fresh air if you don’t have the time it takes to research investment opportunities and build a portfolio of individual stocks. You can set up your account in five or 10 minutes and trust the app to take it from there.
  • You’re Risk-Averse. The platform is also a great fit if you’re risk-averse. Even the most aggressive portfolio on the platform consists of multiple ETFs, offering a high level of diversification that protects you from significant drawdowns.  
  • You’re OK With Benchmark-Like Returns. Some investors take on risks in an attempt to beat the overall market. However, with ETFs, your gains and losses are about the same as the benchmark the fund tracks. They’re best for investors who are more interested in steady portfolio growth than taking risks in an effort to produce outsized returns.  

You Should Use Robinhood If…

Robinhood is a better fit if:

  • You Have at Least Some Investing Experience. You choose your own investments on Robinhood, which takes a bit of research and market know-how. It’s important that you have at least some investment experience and the ability to do the required research to make profitable investment decisions.  
  • You Want Control. When you invest in investment-grade ETFs, the fund manager chooses your investments for you and retains voting rights on your shares. It’s best to choose your own investments with Robinhood if you want control over your investments and a say in proxy votes.  
  • You Want to Beat the Market. You won’t beat the market with Acorns because you become the market when you invest in ETFs. However, it’s possible to beat the market by making wise investment decisions with Robinhood.  
  • You Want to Trade Options. Acorns gives you access to stocks through the ETFs that hold them. However, there’s no way to gain exposure to options. By contrast, options trading is available and totally free with Robinhood. You won’t pay any commissions or contract fees.  

Both Are Great If…

Both Acorns and Robinhood are excellent options if:

  • You’re Ready to Try Your Hand at Investing. If you’re ready to get your feet wet as an investor, the best move might be to keep most of your funds in Acorns for professional management and use Robinhood to test your investing strategies with individual equities.  
  • You Want to Trade Individual Stocks While Investing in ETFs. Diversification is crucial and a few stocks won’t make a diversified portfolio. If you’re only interested in a few stocks and don’t have the time to research and build an entire diversified portfolio, use Robinhood to invest in the stocks you want exposure to and Acorns to manage the rest of your portfolio.  
  • You Want to Trade Options. Both are also a perfect mix if you want to diversify your investments by adding in a bit of options trading. Let Acorns manage your stock portfolio and trade options with Robinhood.  

Honorable Mentions

Robinhood and Acorns are just two online brokers that make it easy to invest and save. Some other options include:

  • Betterment. Betterment is one of the most popular robo-advisors online today. Like Acorns, the company invests your money in ETFs based on your risk tolerance and goals. 
  • WeBull. WeBull is similar to Robinhood. You invest in your own individual stocks, ETFs, but you won’t have access to bonds or mutual funds. Nonetheless, active traders enjoy the platform’s advanced charting and technical analysis capabilities. 
  • Personal Capital. Personal Capital mixes robo-advisor services with real-life financial advisors to create a long-term investing plan that’s perfect for you. The platform is also an overall wealth-management service where you can budget, track spending, and more. 
  • E*Trade. Finally, E*Trade is one of the most popular discount brokers online today. You can invest in your own list of stocks, bonds, ETFs, and mutual funds or invest in the company’s Core Portfolios. This is its version of a robo-advisor. 

Final Word

Acorns and Robinhood are popular investment apps because they offer what most people want – a simple way to access the stock market. Although both apps are easy to use and effective, they’re also exact opposites in some respects. 

If you want to take a laid-back approach to investing, Acorns is the best way to go. This is true whether you’re a beginner who needs time to learn or an experienced investor who wants a break. 

If you want to take an active, engaged approach to investing Robinhood is the better option. It’s also superior if you’re comfortable taking risks in an attempt to beat the market.

For many, a mix of the two options will also be a good fit. The key is establishing your goals as an investor, then choosing the platform that aligns best with those goals. 

Joshua Rodriguez has worked in the finance and investing industry for more than a decade. In 2012, he decided he was ready to break free from the 9 to 5 rat race. By 2013, he became his own boss and hasn’t looked back since. Today, Joshua enjoys sharing his experience and expertise with up and comers to help enrich the financial lives of the masses rather than fuel the ongoing economic divide. When he’s not writing, helping up and comers in the freelance industry, and making his own investments and wise financial decisions, Joshua enjoys spending time with his wife, son, daughter, and eight large breed dogs. See what Joshua is up to by following his Twitter or contact him through his website, CNA Finance.