Robinhood vs. Acorns: A Comprehensive Comparison for 2024

The good news is, there are lots of companies out there that can help you make smart choices about investing your money. But the downside is that it can be hard to choose between the best brokerage accounts and best investing apps from all the available choices.

How do you know what makes them different? How do you know which is the better fit for your financial goals?

If you're trying to decide between Robinhood vs. Acorns, this guide can help you make the choice that could better fit your personal finances and money needs.

In this article

• Robinhood vs. Acorns
• How does Robinhood work?
• How does Acorns work?
• What both investment apps excel at
• 4 Important differences between Robinhood and Acorns
• Which investment platform should you choose?
• FAQs
• Bottom line

Robinhood vs. Acorns

Robinhood and Acorns are both designed to simplify the investing process, but they do it in different ways. Acorns helps you build a portfolio of exchange-traded funds based on its recommendations, whereas Robinhood lets you invest in stocks, options, and funds that you choose yourself.

Here are some of the key differences between the two investment apps:

Robinhood

Acorns

Minimum investment $1 $5 Management fees None $1, $3, or $5 Asset classes Stocks and funds, options, cryptocurrency ETFs (including for real estate, government bonds, large companies, emerging markets, small companies, and corporate bond) Account types available Taxable accounts Taxable accounts; Traditional, Roth, and SEP IRA Features Free stock share for signing up or referring friends

Instant deposits

Lists of popular stocks and educational material for investors.

Acorns recommends a mix of ETFs based on your financial goals.

Round Ups allow you to invest automatically by rounding up your purchase to the nearest dollar

Distributions Withdraw up to $50,000 per day directly to your bank account. Transfer funds to a linked account or withdraw through an ATM

IRA funds may be subject to early distribution penalties if you aren't 59 1/2.

Taxes You're taxed on dividends and on gains when you sell assets You're taxed on dividends and on gains when you sell assets (except for in an IRA). Best for... Investing in stocks or cryptocurrency Hands-off investors Visit Robinhood
Visit Acorns

How does Robinhood work?

Robinhood is similar to a traditional brokerage firm that allows you to invest in many asset classes, but it tries to be more fun. You could invest in Robinhood with even a small amount of money because you have the option to buy fractional shares. These are partial stock shares, or fractions of shares, so you could own a small piece of companies with a high per-share price, like Apple or Amazon, without having to first save up thousands of dollars.

Robinhood has a lot of investment options, but it doesn't tell you what to invest in. That said, it offers lots of educational material as well as many curated investment lists that give you suggestions. You could also earn a free stock by signing up or by referring friends, and the Robinhood app is a great full-featured mobile experience that makes stock trading easily accessible and fun.

There are three different levels of Robinhood accounts:

• Robinhood Instant, which provides the option to trade on margin and make instant deposits.
• Robinhood Gold, which comes with larger instant deposits
• Robinhood Cash, which allows commission-free trades during standard and extended hours sessions but doesn't provide instant deposits.

With Robinhood Gold, you can pay $5 per month to be eligible for larger limits (up to $50,000). You'll also be able to have a margin account with Robinhood Gold, which basically means investing with borrowed money. In addition, you will receive "Level II market data," which is more in-depth information about what investors are bidding for stocks and what people are selling them for.

Read our Robinhood review to learn more.

How does Acorns work?

Acorns Invest is different from Robinhood because it doesn't give you the option to invest in as many different assets. You won't be able trade stocks or do cryptocurrency trading and you won't trade options with Acorns either. Instead, you'll answer a few questions and receive recommendations about a mix of ETFs that you'll build your investment portfolio from.

ETFs let you buy a small piece of many assets. A bunch of money is pooled from many investors and used to buy shares of stocks to track a financial index or give you exposure to a particular kind of company. If you buy an ETF that gives you exposure to small caps, for example, you'd be buying a very small ownership stake in a bunch of small companies.

Acorns is one of many online brokers that lets you easily build a portfolio of ETFs, and it also provides a mobile app. But it stands apart because of a feature called Round Ups. This micro-investing app feature lets you round up all your purchases if you use an Acorns debit card. The money is then invested, so you're automatically investing a little bit all the time.

There are also three different tiers for Acorns accounts:

• Lite, which is $1 per month and allows you to invest your spare change with Round Ups.
• Personal, which provides a taxable investment account, as well as a retirement and checking account and a metal debit card. You'll get bonus investments and financial advice with this tier, which costs $3 per month.
• Family, which adds investment accounts for kids to the list and costs $5 monthly. You can learn more about family-oriented features offered by Acorns in our Acorns Early review.

Read our Acorns review to find out more details about how this brokerage works.

What both investment apps excel at

Both Robinhood and Acorns make investing simple for new investors. They both have great mobile apps as well as tons of helpful educational content. And neither requires you to have a lot of money to start investing.

4 Important differences between Robinhood and Acorns

1. Investment process

Robinhood requires you to pick your own investments, and you get the chance to choose from many of them including stocks, ETFs, and cryptocurrency. This requires more effort on your part and it would be advantageous to have a basic understanding of how to invest money and how to buy cryptocurrency. Yet this hands-on approach also provides potential earning opportunities if you have a higher risk tolerance and take the time to learn to invest.

On the other hand, Acorns does much more of the work for you. After you answer a few questions, they'll recommend a portfolio of ETFs for you to buy.

In addition, Acorns offers options beyond just an investment account. For example, Acorns Spend offers a checking account option that comes with a debit card that helps you invest automatically when you spend money by rounding up your purchases to the nearest dollar and investing your change. And Acorns Later allows you to set up recurring contributions to an individual retirement account so you could more effortlessly save money for retirement. Robinhood doesn't offer these types of options.

And whether you choose the Robinhood or Acorns app, it’s important to remember that investing is always a risky proposition and there are no guarantees when it comes to your earnings.