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Robinhood and Acorns are two innovative financial technology companies that offer investing and trading services to individuals in the United States.
Acorns caters to long-term investors by offering automated, passively managed portfolios, while Robinhood is more suited for active traders who want to take advantage of the broker’s innovative portfolio of tools and services to place trades, regardless of the size of their accounts.
In the following review, we will take a closer look at how both platforms work and what they have to offer so you can make an informed decision on which best fits your needs.
Robinhood vs. Acorns: Overview
Both Robinhood and Acorns are relatively new companies, with the former founded in 2013 by two experienced high-frequency traders; the latter was launched in 2012 to serve retail investors by providing automated investing services.
|Our Verdict||Robinhood caters more to beginner traders who are just getting started in the investing scene. With its user-friendly trading platform, Robinhood emerges as the perfect choice for investors seeking a straightforward and hassle-free experience.||Acorns is particularly useful for new investors who are looking to invest passively, even in small amounts. Acorns offers a simple and automated investment platform and a wide range of investment accounts, including personal investing, retirement, checking, and investment accounts for kids.|
|Our Review||Full Robinhood review||Full Acorns review|
Acorns has been in business since 2012, and its main purpose is to allow individuals to build investment portfolios easily by relying on technology and time-tested investment methodologies that have yielded decent returns over the course of several years.
Their services function as a robo-advisor (which is an algorithm designed to build a portfolio based on each investor’s financial goals, income, and risk profile).
To achieve this without incurring significant costs, the platform uses low-cost exchange-traded funds (ETFs) to expose the client’s portfolio to the different available asset classes.
Users can start investing with Acorns with as little as $5. Acorns works as a subscription-based service. The user pays a monthly fee to access the company’s wide range of features. Check out our full Acorns review to learn more.
>> Read Aso: 7 Best Micro-Investing Apps
Robinhood is a self-directed trading platform that currently services more than 15 million users in the United States, with millennials in the U.S. making up nearly 80% of the broker’s investors.
Along with inexpensive brokerage services, Robinhood’s success has also been propelled by offering low margin rates and certain advanced features like instant deposits and stock rewards, combined with the possibility of trading innovative instruments like cryptocurrencies.
Robinhood’s mobile-first approach and user-friendly app make it an easy choice for investors who prefer a simple trading experience. However, what truly distinguishes Robinhood is its commission-free trading and Robinhood Retirement, as it offers an IRA with a 1% match (a 3% match for Robinhood Gold subscribers).
Despite facing criticism for “gamifying investing” and receiving payments for order flow, Robinhood remains one of the most popular online brokers today. To learn more about Robinhood, check out our full Robinhood review.
Robinhood vs. Acorns: Main Features
Robinhood and Acorns’ features are designed to cater to their distinctive audiences, with Robinhood mostly focused on improving the trading experience by offering zero-commission trades for multiple instruments — while Acorns offers an automated investing model that seeks to serve hands-off investors.
|Minimum Investment||$0||$5 to start investing|
|Fees||$0||$3 to $9 per month|
|Investment Types||Stocks, ETFs, Options and Cryptocurrencies||ETFs (5 portfolios available)|
|Account Types||Individual Taxable, Traditional IRA, and Roth IRA||Individual Taxable, Traditional IRA, Roth IRA, SEP IRA, and Custodial Account|
|Platforms||Web-based, Mobile (iOS / Android) and Watch (watchOS)||Web-based, and Mobile (iOS and Android) |
|Promotions||One Free Stock||Get $20 When You Sign Up|
|Robo Advisor Features|
|Round Up Features|
|Best For||Active Investors||Passive Investors|
Acorns functions as a robo-advisor, which means that upon providing certain personal and financial information, investors will receive a recommendation for a portfolio that best fits their needs and expectations.
The system currently offers a selection of five different portfolios that were designed with virtually all types of investors in mind. These portfolios are:
- Conservative: 100% bonds.
- Moderately Conservative: 60% bonds, 40% stocks.
- Moderate: 40% bonds, 60% stocks.
- Moderately Aggressive: 80% stocks, 20% bonds.
- Aggressive: 100% stocks.
This investment methodology is backed by years of research, and its foundation lies on the assumptions of Modern Portfolio Theory (MPT), a model that was conceived by Nobel prize winner Harry Markowitz, who assisted Acorns in building its portfolio selection.
Each portfolio is built by using low-cost exchange-traded funds (ETFs), which hold a diversified basket of different asset classes that comprise the client’s portfolio.
Along with any monthly contributions that the investor can set to build their portfolio over time, Acorns also offers a feature known as “Round-Ups,” which allows the user to deposit any spare change left from disbursements made with the firm’s debit card, or any other linked card.
Once the amount of these Round-Ups reaches $5, the funds are automatically transferred into the investment account.
Additionally, users can enjoy the Acorns Earn feature — a rewards program that compensates Acorns users for making purchases with over 350+ affiliated brands.
These rewards are credited to the investment account between 60 to 120 days after the transaction is made. Specific offerings vary from one vendor to the other.
Aside from Acorns Investing services, the firm also offers the possibility of opening a retirement account (known as Acorns Later), using the same approach as the taxable account to build a retirement fund.
For investors who would like to build a portfolio for their children, Acorns offers a service called Acorns Early, which allows parents to open a tax-deferred investment account for their children.
The proceeds from these accounts will be distributed to the beneficiary once they reach the “age of transfer,” and they can be used to cover their college expenses or any other future major disbursement.
Finally, Acorns offers a banking product known as Acorns Banking, which is an FDIC-insured bank account provided by Lincoln Savings Bank that comes with a Visa™ debit card and offers zero ATM withdrawals and maintenance fees.
Acorns offers all of these features through a tiered fee-based system, with the basic package starting at only $3 per month.
- Acorns Investing: Acorns offers automated investing services through a robo-advisor that builds portfolios based on the client’s financial goals and risk profile.
- Time-tested Investing Methodology: The firm relies on the assumptions of Modern Portfolio Theory (MPT) to build broadly diversified portfolios that offer decent returns and low levels of volatility over long periods. These portfolios were built with the assistance of Nobel prize winner and the father of MPT, Harry Markowitz.
- Round-Ups: Acorns allows its users to enjoy a feature known as “Round-Ups,” which consists of transferring the spare change of any expenses made with the firm’s Visa™ debit card to the user’s investment account once they reach $5 in total.
- Acorns Later: Investors can open an individual retirement account (IRA) with this provider or rollover their existing 401(k)s or IRAs. These retirement portfolios will be built using the same technology used for regular taxable accounts.
- Acorns Early: Acorns’ users can open custodial accounts for their kids in which they can deposit money that the robo-advisor will subsequently invest. This money can be used to help them fund any future expenses, such as buying a house or paying for college.
- Acorns Banking: Acorns offers an FDIC-insured bank account provided by Lincoln Savings Bank that charges no fees on ATM withdrawals, along with other compelling benefits.
- Subscription-based pricing model: Acorns charges a monthly fee to access its different services. Fees start at $3 per month for Acorns Personal and go up to $9 per month for the firm’s premium package — Acorns Premium.
- ESG and Bitcoin ETF-like investments are available: Users have the option to access ESG portfolios, as well as a newly released Bitcoin ETF.
Robinhood offers investors zero-commission trades for multiple instruments, including US-listed stocks, exchange-traded funds (ETFs), American Depositary Receipts (ADRs), options, and cryptocurrencies.
The firm also offers the possibility of buying and selling “fractional shares,” which are portions of a stock that allow investors with a small account balance to expose their portfolio to high-priced securities.
A margin account can also be opened with this provider, allowing traders to borrow money to operate in the markets. The firm charges a flat 8% annual rate on these borrowed funds, and they offer zero interest margin for the first $1,000 for Robinhood Gold users. The margin rate is 12% for non-Robinhood Gold subscribers.
Aside from this, Robinhood Gold accounts can also access advanced information and research materials, including Level II data from the Nasdaq Stock Exchange, which showcases the bid/ask prices of any particular instrument traded in the exchange.
Investors can also place trades with Robinhood during the extended hours of the markets, while a feature called Instant Deposits allows them to have their funds cleared immediately after they are sent from the users’ bank accounts.
All of these features (except Level II data) are available for regular clients, while Robinhood Gold account holders can enjoy higher leverage ratios and a higher threshold for their instant deposits by paying a fixed $5 monthly fee.
Although Robinhood is considered a self-directed trading platform, its interface mostly aims to serve long-term investors rather than experienced traders, as the technical features it includes are fairly basic.
Along with Robinhood’s investing account, Robinhood also offers a product known as the Robinhood Cash Card, which is a prepaid debit card issued by Sutton Bank to a selected group of investors.
- Zero-commission trades: Robinhood users can enjoy zero-commission trades for a wide variety of instruments, including US-listed stocks, ETFs, ADRs, options, and cryptocurrencies.
- Fractional shares: Robinhood offers the possibility of trading fractional shares, which are fractions of a stock.
- Margin trading: Margin trading with Robinhood has an added advantage in that the first $1,000 in margin doesn’t generate an interest charge (for Gold accounts only), while any additional borrowing will pay a highly competitive 8% flat annual interest rate (12% for non-Robinhood Gold subscribers).
- Instant deposits: This feature allows investors to get their deposits cleared immediately.
- Real-time access to Level II market data: Level II data shows the volume of buy and sell orders and their respective bid/ask prices, coming straight from the Nasdaq stock exchange. This information can be used to support advanced trading strategies.
- Advanced features for Robinhood Gold accounts: This includes more advantageous margin rates, a higher threshold for the instant deposits feature, and the possibility of being enrolled for Robinhood’s Cash Card solution.
- Easy-to-use platform: Although Robinhood’s platform lacks certain advanced charting features, investors can still enjoy a user-friendly trading platform while relying on third-party services to conduct this kind of analysis.
- Robinhood Retirement: Users can open a traditional or Roth IRA and receive a 1% match on their deposits (a 3% match for Robinhood Gold subscribers).
>> Read Also: 12 Best Online Brokers for Stock Trading
Robinhood vs. Acorns: Investment Options
Since Acorns is not a trading platform, the firm does not have a portfolio of instruments that users can pick from to build their portfolio themselves.
Robinhood, on the other hand, offers a wide selection of US-listed stocks, ETFs, and other similar instruments that investors can actively trade with.
Acorns is not a trading platform, which means that investors are not allowed to actively trade securities.
Instead, the firm’s robo-advisor performs the trades based on the portfolio allocation selected for each user, and these trades do not generate a commission.
All of the securities that comprise Acorns’ portfolios are a blend of exchange-traded funds (ETFs) and bonds offered by American asset management firm Blackrock.
Acorns recenlty introduced ESG portfolios so users can invest in companies rated for their impact on environment, social, and governance issues, as well as a Bitcoin ETF which uses a ProShares Strategy ETF (NYSEARCA: BITO) to invest in Bitcoin futures.
Robinhood is a zero-commission investing/trading platform for active users. This means that investors can buy and sell any of the securities offered by the platform without incurring a fee.
This provider currently offers access to thousands of individual stocks listed in US exchanges, along with other instruments like exchange-traded funds (ETFs), American Depositary Receipts (ADRs), options, and cryptocurrencies.
Fractional shares are available for any stock whose value is equal to or higher than $1 and has a market capitalization higher than $25 million.
Bonds, Forex pairs, foreign stocks, OTC products, and penny stocks cannot be traded within Robinhood.
Robinhood vs. Acorns: Account Types
Acorns offers an ample selection of account types (including retirement accounts) while Robinhood only supports individual taxable accounts, traditional IRAs and Roth IRAs as of this writing.
Acorns currently supports the following types of accounts:
- Individual taxable account
- Traditional IRA
- Roth IRA
- SEP IRA
- Custodial account
Robinhood only supports taxable individual investment accounts, traditional IRAs and Roth IRAs as of this writing.
Meanwhile, there are various types of accounts that give traders a certain degree of access to the different features offered by this provider. These are:
- Robinhood Cash: The basic account offered by Robinhood that allows the user to trade all the products offered by the firm during regular and extended market hours. This account does not provide access to margin trades.
- Robinhood Margin: A taxable margin account that gives traders access to the instant deposit feature along with a margin balance that varies based on the account’s balance.
- Robinhood Gold: This is Robinhood’s premium account, which offers traders access to Level II market data, a higher margin balance, and a higher threshold for instant deposits.
- Robinhood Retirement: A tax-deferred retirement account. Robinhood currently supports traditional IRAs, Roth IRAs, and rollover IRAs.
Robinhood vs. Acorns: Promotions
Both Robinhood and Acorns offer sign-up bonuses and referral programs to reward their users for registering with their platforms or for inviting their friends to sign up.
Acorns currently offers a $20 bonus if users sign up using this link.
The user doesn’t have to do anything else besides filling in some basic personal information and answering a few questions to complete this process. The funds will be credited into the investment account immediately after you make your first investment.
Additionally, users can also gain a $5 reward for referring friends to Acorns. This can be done by clicking the customer referral link within the web-based platform or mobile app and the reward is credited once the person has deposited the first $5 into the account.
>> Read Also: 12 Best Robo-Advisors: Automate Your Investments
Robinhood currently offers a registration bonus consisting of a free stock valued between $1 and $213.57 that will be credited into the users’ account once the sign-up process is completed.
However, keep in mind that there is a 98% chance that you’ll get a stock valued between $2.50 and $10 (according to the Robinhood’s website).
Additionally, Robinhood also offers a referral program in which users can earn up to $500 in stock by getting friends to open an account with Robinhood. Each of these friends will also get a free stock once they complete their registration.
Robinhood vs. Acorns: Fees & Pricing
Robinhood currently charges no trading fees for the transactions made within their platform, while Acorns charges a monthly subscription.
|Account Transfer Fees||$75||$50 per ETF fee to transfer ETFs.|
|Account Maintenance Fees||$0 to maintain account ($5 monthly for Robinhood Gold account)||$3 per month (Personal), $5 per month (Personal Plus), $9 per month (Premium)|
Acorns currently offers a tiered subscription model that includes three alternatives that give users access to the different features offered by this provider.
Here’s an overview of each:
- Acorns Personal – $3 per month: This plan gives the user access to the automated investing program along with the Round-Ups feature. The Acorns Earn rewards program, and Acorns Banking features are also available for Acorns Personal users.
- Acorns Personal Plus – $5 per month: Aside from the features offered by the Personal plan, Personal Plus investors have access to more Banking and Earning features.
- Acorns Premium – $9 per month: This is the most advanced package offered by Acorns, and it includes all of the features described above, along with the possibility of opening custodial accounts for the account holders through the Acorns Early program.
These subscription fees apply to accounts with a balance lower than $1 million. Clients who have a higher account balance may be subject to other fees.
Finally, the ETFs included in each of the portfolios built by Acorns’ robo-advisor charge an annual expense, typically calculated as a percentage of the funds held with each ETF.
Robinhood does not charge any fees for trading any of the securities available within their platform.
That said, the firm does charge a $5 monthly fee for Robinhood Gold accounts.
Other fees include a 8% interest rate on margin trades (12% for non-Robinhood Gold users). However, for Robinhood Gold accounts the first $1,000 in margin are free of charge.
>> Read Also: 12 Best Investment Apps For Beginners & Pros
Robinhood vs. Acorns: What We Like
Here is a summary of the best things that Acorns and Robinhood have to offer.
- Acorns is a regulated US-based financial services provider with over $6.2B in assets under management and over 5 million registered users.
- Acorns offers an automated investing service for as little as $3 per month.
- The company’s seemingly effortless investing solution facilitates the process of building a portfolio, especially for inexperienced investors.
- Acorns’ Round-Ups feature and stock rewards are very attractive and should help investors increase the amount they contribute to their investment and retirement accounts.
- The firm’s Early solution allows parents to plan ahead for their children’s future by offering an investment account that parents can set up in their children’s names.
- Robinhood is a US-based brokerage firm with over 15 million registered users.
- This broker offers zero-commission trades for a wide variety of US-listed instruments.
- Robinhood offers fractional shares, an innovative instrument that allows investors with a small account balance to buy multiple instruments without having to commit significant money for full shares.
- The firm’s margin rates are lower than the industry’s average.
- Investors are entitled to one free stock once they complete their registration with this provider.
- Robinhood provides access to cryptocurrencies, an instrument that other providers have not made available yet.
- The broker provides access to advanced market data and features through its Robinhood Gold account.
Robinhood vs. Acorns: What We Don’t Like
Although both platforms have plenty to offer, there are also a few things that we don’t like about them that you should be aware of.
- Although seemingly low, Acorns’ fee structure can end up being more expensive compared to its rivals if the balance of the account is lower than $15,000.
- Acorns does not allow investors to build customized portfolios or pick individual instruments they would like to include in their investment accounts.
- Investors also can’t actively trade securities with this provider.
- Robinhood’s portfolio of securities does not include Forex pairs, foreign stocks, OTC securities, penny stocks, or futures.
- Robinhood’s platform has experienced downtimes during situations of extreme market volatility.
- Robinhood provides a fairly limited number of account types compared to Acorns.
- Robinhood lacks an automated investing feature.
Robinhood vs. Acorns: Security
Both platforms offer protection for your investments, so you don’t have to worry about whether your money is safe.
Acorns is regulated by the Securities and Exchange Commission (SEC) of the United States, and the firm is also a member of the SIPC, which means investors’ accounts are protected for up to $500,000.
Additionally, the bank accounts offered by Acorns enjoy a protection of up to $250,000 from the FDIC.
Robinhood Financial LLC is a member of the SIPC, an agency that provides coverage for investors’ accounts for up to $500,000 (including $250,000 in cash claims).
That said, investors’ accounts are subject to market volatility, and any losses caused by market downturns are not covered by SIPC protection.
Furthermore, all the banking products offered by Robinhood are issued by FDIC member banks. The FDIC covers up to $250,000 in cash held in these bank accounts.
Robinhood vs. Acorns: Platform and App
Acorns and Robinhood’s platforms and mobile apps are both user-friendly and have been designed with beginner investors in mind. However, their features are quite different. as these providers cater to different audiences.
Acorns offers both a web-based app and a mobile app to access all of the firm’s services.
The web-based app can be accessed through the firm’s official website by clicking the “Log in” button located in the upper right corner of the site, while the mobile apps are available for Android and iOS devices.
The iOS app has been granted 4.7 stars in Apple’s App Store with over 878,000 opinions submitted by users, while the Android version has received a 4.6-star rating in Google’s Play Store with more than 288,000 votes.
Robinhood’s trading platform was designed with beginner investors in mind, as it lacks the complexities of more advanced trading systems, while it relies on an intuitive search bar and multiple buttons that can be used to buy and sell securities, browse through the different research tools, or set alerts and notifications for different events like dividend payments or earnings announcements.
The research tools provided by Robinhood include a newsfeed, analysts’ reports for multiple securities, and basic fundamental data for individual stocks.
Additionally, the charting tool comes with multiple basic indicators that traders can use to analyze the different securities offered by this provider.
As with Acorns, Robinhood offers a web-based version of its trading platform along with a mobile app supported by Android and iOS devices.
The Android app has received a 4.1 star rating in Google’s Play Store with over 478,000 votes, while the iOS app has received a 4.2 stars rating with over 4.2 million reviews from its users.
Who is Robinhood Best For?
Robinhood is more suitable for active traders who can benefit from the firm’s inexpensive brokerage services and low-cost margin trades, along with the instant deposit feature, which allows them to have money cleared for trading in a matter of minutes.
Additionally, hands-on investors with small account balances can also benefit from fractional shares to build broadly diversified portfolios with small amounts of cash.
In A Nutshell
- Account Minimum: $0
- Fees: Zero-commission stock, ETF and per-leg options trading
- Promotion: 1 free stock
Who is Acorns Best For?
Acorns is a great automated investing solution that can be used by hands-off investors to easily build portfolios with the assistance of the firm’s robo-advisor, which can quickly determine the investor’s optimal portfolio allocation based on their financial goals and risk profile.
That said, although the firm’s monthly subscription fee seems inexpensive, portfolios under $15,000 will typically find similar services with other providers at a much lower cost in relative terms.
In A Nutshell
- Account Minimum: $0 to open an account, $5 to start investing
- Fees: $3 per month (Personal), $5 per month (Personal Plus) and $9 per month (Premium)
- Promotion: A $20 welcome bonus for new accounts
Both Robinhood and Acorns offer innovative financial services that were once significantly expensive to access, giving more people the chance to grow their wealth.
However, each platform is designed to cater to different audiences. Robinhood specializes in trading services, while Acorns is a solution primarily designed for long-term investors.
With that said, you’ll want to pick which of the two is the best for you based on what kind of activity you’ll be pursuing — whether you want to build an investment portfolio or actively trade securities based on your own expertise and methodology.
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Alejandro is a financial writer with 7 years of experience in financial management and financial analysis. He writes technical content about economics, finance, investments, and real estate and has also assisted financial businesses in building their digital marketing strategy. His favorite topics are value investing and financial analysis.