App Reviews

Acorns vs. Robinhood: Which is better?

I have been using Robinhood and Acorns for about 5 years. Both are great apps that provide many functions for beginner investors.

If you are looking into investing for the first time, or switching from Robinhood or Acorns this guide will help you pick the one that best fits your investing style.

Features

Robinhood is the more versatile investment app. With Robinhood you can buy most stocks/ETF’s listed on the NYSE and NASDAQ stock exchanges. You can also make put or call options. With Robinhood Gold, you can do margin trading, where you borrow money from Robinhood to invest.

Since Robinhood lets you invest in most US stocks of your choice, you can see the P/E Ratio, 52 week high, 52 week low, dividend yield, and more information to help you decide whether or not to buy. With Robinhood Gold you get extra features such as professional research and market data.

Acorns, on the other hand, gives you the choice of only 5 investment options: conservative, moderately conservative, moderate, moderately aggressive, or aggressive. They are all very diversified funds, so the “Aggressive” portfolio is not that risky as it is very diversified.

One of Acorn’s most helpful features is Round-Ups. Acorns tracks purchases made on any of your linked cards and rounds up each purchase to the nearest dollar to invest that money for you. If you buy a latte for $3.57, then Acorns would set aside $0.43 to be invested. (The money is only invested once your Round-Ups value hits $5.)

Acorns also has a Found Money feature that reinvests money from purchases with their business partners. Acorns has amassed several big companies for this program such as Nike, Amazon, Macy’s, and more.

Unlike Robinhood, Acorns offers a tax advantaged retirement account. You can set up a Traditional, SEP, or Roth IRA with Acorns, but you must upgrade to the $3 a month plan for these features.

Pricing

Robinhood is free or 5$ a month for Robinhood Gold, whereas Acorns is 1-5$ a month.

Acorns offers the Invest account for 1$ a month, this is their “Lite” pricing option. The “Personal Plan” gives you access to Acorns Invest, Acorns Later, and Acorns Spend for $3 a month. Which means a regular investment account, a tax-advantaged retirement account, and an Acorns debit card. For 5$ a month you get all the features of the Personal Plan plus access to Acorns Early which let’s you invest on behalf of your children (or other kids).

You can get a lot out of the free verion of Robinhood. I would only recommend Gold to investors who plan on doing serious day-trading. (Not that I personally recommend risky day trading.)

Privacy

Privacy is where Robinhood loses a lot of its credibility for some people. In order to make Robinhood free, Robinhood sells the data on trades its users make. Here is a really good post about how Robinhood uses it’s users data. Now, there is no conscensus on if Robinhood trading your data is bad. It is in the Terms and Conditions after all, so every user does agree to it. But, if you choose to use Robinhood, you should be aware of how they make 40% of their money.

Acorns makes money from their subscription service and not buy selling your data. You can read Acorn’s Privacy Policy here. As I understand Acorn’s privacy policy, their main goal is to use your data to help themselves advertise better to you and convince Acorns Spend partners to use the service.

How to pick Acorns vs Robinhood for yourself?

These are both great apps that I have used for years. The one that works best for you will depend on your investment style.

First you need to ask yourself if you want to invest aggressively or conservatively. Here is an article on the difference between conservative and aggressive investing if you need help.

If you want to be full on aggressive, making quick trades and trying to time the market, then Robinhood is better tailored for your needs. A lot of Robinhood traders are day-traders. Acorns is not meant for making quick trades nor do they encourage it. You will likely not make enough in gains on Acorns to cover the cost of selling often.

If you want to be conservative, then I would suggest Acorns, as Acorns builds itself around long-term investors. You can have a long-term portfolio on Robinhood, but you will have to research long-term picks on your own to make your portfolio. Even the Aggressive Acorns portfolio is a good choice for a conservative investor.

More than likely, you want to be conservative AND aggressive. This can be done using just Robinhood or Acorns with Robinhood.

I personally use Acorns for Index Funds and Robinhood for buying individuals stocks in companies I like. In both situations, I am thinking long-term. I could buy the same ETF’s I have in Acorns on Robinhood, this would be the cheapest option. I do not do that because I like Acorns’ extra features. Having an app that rebalances my portfolio, has an IRA, and invests extra money for me is well worth the 3$ a month for me. On average, I invest about $15 a month through round-ups. This is money I likely would have otherwise spent.

If you are an investor completely new to finance and do not wish to put much time into your trades, then pick Acorns. One of my favorite things about Acorns, is that it does not make it easy to withdraw money. This prevents investors from panic selling.

Acorns is meant to be an app that you set up and forget about. Set up weekly or monthly deposits and turn on round-ups, and let the market make its slow creep upward. I check my Acorns about once a month.

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