Acorns vs. Robinhood: Which Investing App Is Better in 2022?

Acorns and Robinhood are two popular investment apps, but each has a different audience. Learn which one is the best pick for you.

SustainFi   Updated December 11th, 2021

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At a glance

  • Acorns and Robinhood target different types of investors. While Acorns will help you save and invest your money for you, Robinhood is best if you want to invest in stocks, ETFs, options, or even cryptos on your own
  • Best for beginners and hands-off investors: Acorns. Acorns helps you save and invest your spare change. You can fully outsource your investments to Acorns and even pick the socially responsible (ESG) portfolio
  • Best for active investors: Robinhood. Robinhood lets you pick individual stocks, buy fractional shares and borrow against your investment account

Keep reading to learn more.

Minimum

 $0

Minimum

$5

Fees

$0 for stock and ETF trades

$5 / month for Robinhood Gold

Fees

$3-5 / month management fee

0.03%-0.25% in fund expenses

Investments

Single stocks, ETFs, options, cryptos

Investments

5 ETF portfolios

Individual stocks

Yes

Individual stocks

No

Socially responsible investing

No

Socially responsible investing

Yes

Account types

Investment accounts

Account types

Investment accounts, retirement accounts, custodial accounts

What is Acorns?

Acorns is a robo-advisor that lets you invest spare change from everyday purchases in diversified portfolios made up of ETFs. The company was launched in 2014 by the father and son duo, Walter and Jeff Cruttenden, to make investing accessible to everyone. Acorns has since expanded to retirement and checking accounts that come with a debit card. They even offer investment accounts for children.

The robo-advisor grew its assets under management from $3 billion in 2020 to $4.7 billion in 2021. It has over 9 million users.

Acorns has no minimum balance, and it can make investing and saving easy if you usually forget to save. But Acorns will charge you $3 or $5 a month for their services.

Because Acorns is aimed at beginners, it doesn’t let you pick individual stocks or funds. Instead, it invests your cash in one of five portfolios, from conservative to aggressive, which are selected based on how much risk you want to take. You can choose the conventional portfolio or the socially responsible version, which picks funds that invest in companies with better environmental, social, and governance (ESG) scores.

🔔 Read the full review of Acorns (ESG Portfolios).

What is Robinhood?

Robinhood was one of the first commission-free apps that led to the low-cost trading revolution. After Robinhood started offering free trades, other brokers had to follow suit. Robinhood has seen a lot of success and, as of 2021, it’s a public company.

The app lets you trade over 5,000 U.S. stocks and funds, options on them, and 650 global stocks (ADRs). You can buy fractions of shares, a good solution if buying the entire share is more than what you would like to spend. Robinhood also lets you invest in crypto.

With instant deposits, you can start trading as soon as you deposit money, without having to wait for the transfer to clear. The interface of the app is great to boot.

However, trading is free because Robinhood accepts payment for order flow (PFOF), a controversial practice. (Effectively, Robinhood is being paid by market-making firms to process your trades. Your trades are the product they sell, which is how you get to trade for free. )

Further, Robinhood doesn’t support trading foreign-domiciled stocks, mutual funds, and some over-the-counter stocks. The app has also come under fire for making investing look like a game and potentially encouraging risky trading. And it experienced a backlash when it stopped letting investors buy GameStop (GME) at the height of the pandemic.

Acorns vs. Robinhood: Account types

Acorns supports many account types:

  • Individual and joint taxable investment accounts
  • Retirement accounts, including traditional, SEP, and Roth IRAs, plus rollover IRAs
  • Custodial (UTMA/UGMA) accounts for kids

Robinhood is offering individual taxable investment accounts only, though retirement accounts may be coming at some point.

💰 The winner: Acorns.

Acorns vs. Robinhood: Minimum investment

Neither Acorns nor Robinhood has a minimum to open an account. (Though Acorns will start investing your money when you have $5 in your account.)

💰 The winner: Tie.

Acorns vs. Robinhood: Fees and expenses

You can trade stocks, options, ETFs, and crypto on Robinhood for free. Robinhood also offers a Gold membership which costs $5 a month. The Gold membership gets you $5,000-$50,000 in instant deposits (based on how much you have in your account) and margin loans with a 2.5% interest. You can also access research from Morningstar and advanced market data from NASDAQ.

Acorns has two membership plans that cost $3 or $5 a month. As of September 2021, Acorns Lite ($1/month) is no longer offered. The two plans offered today are:

  • Acorns Personal ($3/month), which includes personal investment, retirement, and checking accounts plus a metal debit card
  • Acorns Family ($5/month), which includes all the Personal features plus Acorns Early, which adds investment accounts for kids

The fees are competitive for higher account balances. However, $3-$5/month may be expensive if you have very little invested. If you only have $1,000 in your account and sign up for Acorns Family, you are paying 6% each year. (You could argue that it’s still worth it because Acorns helps you save money you would have spent otherwise.) This also applies if you get the Gold membership with Robinhood.

Note that you will also have to pay the fees of the ETFs that Acorns puts in your portfolio. These ETFs cost anywhere between 0.03% and 0.25% each year (i.e., $3-$25 on a $10,000 investment). The money goes to the ETF provider, not to Acorns. If you buy an ETF through Robinhood, you will also have to pay the fund’s expense ratio. However, there is no expense ratio if you buy individual stocks because you are not paying a fund management company to put together a portfolio.

💰 The winner: Robinhood. We like that Robinhood has a free option where you don’t need to pay at all. However, if you pay for Robinhood Gold, Robinhood and Acorns are comparable. Also, you are paying Acorns to help you save and manage money on your behalf. Robinhood does none of that.

Acorns vs. Robinhood: Automated investing

Acorns is a robo-advisor, meaning that it invests your money using Modern Portfolio Theory. When you sign up, you answer a few questions about your investment goals and timeline. Based on your answers, Acorns will determine your risk tolerance and suggest a diversified portfolio made up of ETFs. (ETFs are diversified holdings of stocks and bonds. They frequently replicate an index such as the S&P 500). There are five levels of risks, and you choose between a conventional and a socially responsible option.

Robinhood is a brokerage app; you pick funds and stocks yourself.

💰 The winner: Acorns.

Acorns vs. Robinhood: Individual stocks and fractional shares

Fractional shares allow you to buy a piece of a share if buying the entire thing is more than you would like to spend. For example, one share of Tesla (TSLA) costs $1,000, but if you only want to spend $100, you can buy 1/10 of that share. Buying fractions of shares limits how much cash is sitting in your account unspent.

Acorns invests your money in a selection of ETFs, so they don’t let you buy individual stocks or fractions of them.

In contrast, Robinhood encourages investors to buy shares, including fractional shares. Other investment apps like M1 Finance also offer fractional shares, though many traditional brokerages still don’t support them.

💰 The winner: Robinhood.

Acorns vs. Robinhood: Options and crypto

Acorns doesn’t support options or crypto, but Robinhood does. As of December 2021, Robinhood offered the following coins:

  • Ethereum
  • Bitcoin
  • Litecoin
  • Dogecoin

💰 The winner: Robinhood.

Acorns vs. Robinhood: Margin lending

Margin investing is when you borrow against your investment account to make more investments.

Acorns targets hands-off, beginner investors who probably shouldn’t be borrowing to invest.

In contrast, Robinhood gives margin loans to Robinhood Gold members. Before you can get a loan, you need to apply for eligibility. The first $1,000 is included in your monthly $5 fee, but to borrow more you need to pay 2.5% in annual interest.

💰 The winner: Robinhood.

Acorns vs. Robinhood: Automatic rebalancing

Sometimes when one asset class, like stocks, does much better than another one, like bonds, your portfolio may “drift” and become riskier (or less risky) than it should be. Automatic rebalancing solves that because the robo-advisor will buy or sell investments to get to your optimal asset allocation, like 80% stocks and 20% bonds.

Acorns will automatically rebalance your portfolio.

Robinhood doesn’t create an investment portfolio for you, and it doesn’t offer rebalancing either.

💰 The winner: Acorns.

Acorns vs. Robinhood: Automatic savings

Acorns lets you save more through automatic round-ups. When you buy something with your Acorns debit card or another linked card, Acorns rounds up your transaction to the nearest dollar and invests the change into your Invest account portfolio. According to Acorns, the average user invests over $30 a month through round-ups. It’s a great way to save because you don’t have to decide to put more money in your investment account. Instead of round-ups, you can set up recurring transfers with as little as $5.

Robinhood doesn’t have round-ups, but they let you set up recurring investments, e.g., every Monday, they will invest $100 of your money in a stock.

💰 The winner: Acorns. Acorns supports more innovative ways of letting you save, such as round-ups.

Acorns vs. Robinhood: Cash management and banking

Acorns Spend. Acorns offers no-monthly-fee, no-minimum-balance checking accounts that come with a metal Visa debit card. The card gives you free access to over 55,000 in-network ATMs. Your account is FDIC-insured for up to $250,000 and includes fraud protection, direct deposit and mobile check deposit options. Acorns Earn lets you earn bonus investments when you shop with over 350 brands like Apple, Chewy and Sephora. However, there is no interest on the cash in your account, which is a major drawback. 

Robinhood Cash Management. Robinhood lets you earn interest on the idle cash sitting in your account. They currently pay a reasonably attractive 0.30% APY. Like with Acorns, there are no monthly fees and no balances. You also get an (optional) debit card that gives you access to 75,000 ATMs through the Allpoint and Moneypass networks.

💰 The winner: Robinhood. We like that Robinhood pays an attractive APY on your cash.

💰 The Overall Winner

  • There is no clear winner: the two platforms are designed for different types of investors
  • Best for beginners, hands-off investors: Acorns. Acorns Invest is a great option for beginners, especially those struggling to save. Acorns will create a custom portfolio to suit your needs like retirement goals and help you save by rounding up and investing your change. The Acorns ESG Portfolio is a good start for socially responsible investors
  • Best for active investors: Robinhood. Unlike Acorns, Robinhood lets you trade stocks, options, ETFs, and crypto. You can even borrow to invest 

🔔 Want to compare more options? Check out this list of the top 10 investing apps.

Compare:

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