Robinhood vs. Acorns: Automated Investing or a Vast Number of Funding Choices

Fintech corporations and investing apps have made it simpler than ever to get began with investing. Nevertheless, with so many various corporations to select from, it may be difficult to decide on the very best for you.

Robinhood and Acorns are two of the preferred fintech investing platforms available on the market. They each simplify investing and take away a number of the purple tape of conventional brokerage corporations. Every of those platforms has some key advantages, from their funding choices to numerous account varieties. Nevertheless, every firm is greatest for a sure kind of investor. If you happen to’re in search of a hands-off funding strategy, Acorns is the best way to go. If you happen to favor extra lively investing and entry to a wider array of funding choices, I’d take into account Robinhood as a substitute.

If you happen to’re making an attempt to resolve between Robinhood vs. Acorns, this information will help you make the selection that might higher suit your private funds and cash wants.

Robinhood vs. Acorns

Robinhood and Acorns are each designed to simplify the investing course of, however they do it in several methods. Listed below are a number of the key variations between the 2 funding apps:

	Robinhood	Acorns
Minimal funding	$1	$5
Administration charges	None	$3, $6, or $12
Asset courses	Shares and funds, choices, cryptocurrency	ETFs (together with for actual property, authorities bonds, massive corporations, rising markets, small corporations, and company bond)
Account varieties accessible	Taxable accounts; Conventional and Roth IRA	Taxable accounts; Conventional, Roth, and SEP IRA
Options	Free inventory share for signing up or referring mates Prompt deposits Lists of well-liked shares and academic materials for traders Robinhood Money Card	Acorns recommends a mixture of ETFs based mostly in your monetary objectives Spherical Ups permit you to make investments routinely by rounding up your buy to the closest greenback
Distributions	Withdraw as much as $50,000 per day on to your checking account	Switch funds to a linked account or withdraw by an ATM IRA funds could also be topic to early distribution penalties when you aren’t 59 1/2
Taxes	You are taxed on dividends and on good points if you promote belongings	You are taxed on dividends and on good points if you promote belongings (aside from in an IRA)
Greatest for…	Lively traders	Arms-off traders
	Go to Robinhood	Go to Acorns Paid Non-Shopper Promotion FinanceBuzz doesn’t make investments its cash with this supplier, however they’re our referral accomplice. We receives a commission by them provided that you click on to them from our web site and take a qualifying motion (for instance, opening an account.)

When to go together with Robinhood

Robinhood is just like a conventional brokerage account that lets you spend money on many asset courses, however it tries to place a enjoyable spin on it. This commission-free buying and selling platform is a pacesetter within the fintech motion. It makes investing extra accessible for the common investor and provides a extra user-friendly and visually interesting platform than you could be used to.

Robinhood could be the suitable funding platform for you if:

• You need to select your personal investments
  
• You need quite a lot of funding choices
  
• You need to commerce on margin
  
• You need to keep away from a month-to-month price

Extra flexibility on funding decisions

Robinhood is the higher brokerage for you if you wish to decide and select your personal investments. Relatively than providing an automated portfolio like Acorns does, Robinhood provides all kinds of securities that you may purchase and promote as you would like. Robinhood additionally has commission-free buying and selling on shares, exchange-traded funds (ETFs), and choices, making it a great choice for frequent merchants.

It’s value noting that whereas Robinhood markets itself to newbies, its mannequin does require extra effort in your half, and it’s essential to have a primary understanding of the best way to make investments cash and the best way to purchase cryptocurrency. But this hands-on strategy additionally supplies potential incomes alternatives if in case you have a better danger tolerance and take the time to be taught to take a position.

Robinhood may very well be a good selection when you’re able to step up together with your investing technique. Personally, I used a robo-advisor after I began investing as a result of I wished another person to take the wheel. However as soon as I realized extra and have become extra assured in investing, I wanted a platform the place I might decide and select my very own investments.

Wider number of funding choices

Robinhood has a greater variety of funding choices to select from. Whereas Acorns provides solely ETF investing, Robinhood provides shares, ETFs, choices, and cryptocurrency.

You might spend money on Robinhood with even a small amount of cash as a result of you could have the choice to purchase fractional shares. These are partial inventory shares, or fractions of shares, so you possibly can personal a small piece of corporations with a excessive per-share worth, like Apple or Amazon, with out having to first save up hundreds of {dollars}.

If you happen to go for a cryptocurrency account, you should buy, promote, and commerce 18 cryptocurrencies, together with Bitcoin, Ether, Cardano, and extra. You possibly can deposit funds, commerce at market costs, or use restrict and cease orders. You possibly can retailer your cryptocurrencies on Robinhood or switch them to exterior accounts. Robinhood additionally helps receiving digital currencies from different platforms.

After all, this isn’t to say ETFs aren’t a great choice. Loads of folks construct their total portfolios with ETFs. However that is probably not proper for everybody.

Margin buying and selling (not accessible with Acorns)

Robinhood is the one of those two brokerages that gives margin investing, the place you borrow cash to purchase shares, providing you with extra buying energy and suppleness. To make use of this characteristic, it is advisable to change into a Robinhood Gold member, apply for margin investing, and have a minimum of $2,000 in your account.

Primary account is fee-free

Robinhood would not cost for a primary account, and you will not pay any commissions for buying and selling. Acorns costs between $3 and $12 monthly, relying in your account kind. Robinhood is the higher choice if you need a very no-fee account.

If you happen to improve to Robinhood Gold by paying $5 monthly, you will be eligible for bigger limits (as much as $50,000). You may additionally have the ability to have a margin account with Robinhood Gold. As well as, you’ll obtain “Stage II market information,” which is extra in-depth details about what traders are bidding for shares and what individuals are promoting them for.

Learn our Robinhood evaluation to be taught extra.

When to go together with Acorns

Not like Robinhood, Acorns isn’t a full-service brokerage. As a substitute, it’s a micro-investing app. It’s recognized for its round-up characteristic, which lets you spherical up the quantity in your purchases and switch the spare grow to be your funding account, so that you’re routinely investing a bit of bit on a regular basis.

You will not have the ability to commerce shares or do cryptocurrency buying and selling, and you will not commerce choices with Acorns both. As a substitute, you will reply a couple of questions and obtain suggestions about a mixture of ETFs with which you will construct your funding portfolio.

Acorns could also be a greater choice for you within the following conditions:

• You need funding suggestions
  
• You need a hands-off portfolio
  
• You’re investing on your baby
  
• You need an all-in-one monetary platform

Helps you hit your funding objectives

Acorns is an effective choice if you need funding suggestions relatively than having to decide on your personal. Acorns does much more of the give you the results you want than Robinhood. While you join, you’ll reply a couple of questions, and the platform will suggest an ETF funding portfolio that can show you how to attain your objectives.

Whereas it’s much less preferrred for hands-on traders, these ETF suggestions are nice for anybody who needs to take a position to achieve their objectives however doesn’t need to do the analysis required to decide on particular person investments.

Extra automated options

In order for you a hands-off investing expertise, Acorns can present that. Its automated investing goes past simply recommending an ETF portfolio. It additionally provides automated recurring investments, automated portfolio rebalancing, and automated dividend reinvesting.

Custodial accounts (not accessible with Robin Hood)

Acorns is the one considered one of these investing platforms that provides custodial accounts. A custodial account is an account an grownup can arrange for his or her baby. They contribute and make investments cash, after which the kid will get management of the account once they flip 18.

It’s an effective way to take a position on your youngsters in a approach that’s separate from your personal investments and may even be a chance to incorporate them within the course of. Moreover, family and friends can simply make reward contributions to your baby’s account.

Because the mother or father of a younger baby, I’m commonly excited about how I can set her up for achievement. Whereas there are many different custodial funding accounts, it’s interesting to have a hands-off choice with a dealer that additionally provides taxable investing and retirement accounts. It may very well be a strategy to do your entire investing in a single place.

Acorns could be an all-in-one monetary platform

Acorns is an effective choice for somebody who needs to do their banking and investing in a single place. Whereas Robinhood is targeted on investing, Acorns additionally supplies banking companies. This account comes with options like:

• Tungsten steel debit card
  
• 3.00% APY in your checking (as of September fifteenth, 2024)
  
• 5.00% APY in your emergency fund (as of September fifteenth, 2024)
  
• Mechanically make investments a chunk of each paycheck
  
• Receives a commission two days early
  
• Make investments your spare change
  
• No account charges

After all, the all-in-one platform isn’t proper for everybody. Simply because a platform provides quite a lot of monetary companies doesn’t imply it’s the very best in any respect of them. It’s typically value having completely different accounts elsewhere to get the very best options.

Learn our Acorns evaluation for extra particulars about how this brokerage works.

What each funding apps excel at

Although Robinhood and Acorns are two very completely different funding platforms, there are some things they each do nicely:

• Simple-to-use platforms: Each Robinhood and Acorns are user-friendly platforms which can be well-suited to the common investor. If you happen to’ve discovered extra conventional brokerage platforms to be too clunky or dense, you would possibly respect these platforms.
  
• Investor schooling: Robinhood and Acorns each have sturdy instructional libraries the place customers can be taught all about investing and private finance, each on and off these particular platforms.
  
• Retirement accounts: Each Robinhood and Acorns supply retirement accounts. Robinhood provides conventional and Roth IRAs, whereas Acorns provides conventional, Roth, and SEP IRAs.

FAQs

Backside line

Conventional brokerage corporations are sometimes costly and make investing really feel extra sophisticated than it must be. Happily, fintech platforms like Robinhood and Acorns simplify the method and permit you to get began with little cash.

Robinhood and Acorns are each nice choices, however they’re greatest fitted to very completely different traders. Robinhood is an effective choice for somebody who needs commission-free buying and selling and the flexibility to select from many various investments. Acorns, then again, is greatest for somebody who needs a easy, automated investing course of.

On the finish of the day, these two funding apps largely achieve offering low-cost investing choices which can be simpler for newbies to navigate. However as a result of they work in another way and have completely different pricing, you will need to take into account fastidiously which is a wiser match on your wants and monetary objectives.

And when you favor a extra conventional strategy, you would possibly need to examine our listing of the greatest brokerage accounts.