Robinhood vs. Acorns: Automated Investing or a Wide Variety of Investment Options

Fintech companies and investing apps have made it easier than ever to get started with investing. However, with so many different companies to choose from, it can be challenging to choose the best for you.

Robinhood and Acorns are two of the most popular fintech investing platforms on the market. They both simplify investing and remove some of the red tape of traditional brokerage firms. Each of these platforms has some key benefits, from their investment offerings to various account types. However, each company is best for a certain type of investor. If you’re looking for a hands-off investment approach, Acorns is the way to go. If you prefer more active investing and access to a wider array of investment options, I’d consider Robinhood instead.

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.

Robinhood vs. Acorns

Robinhood and Acorns are both designed to simplify the investing process, but they do it in different ways. Here are some of the key differences between the two investment apps:

	Robinhood	Acorns
Minimum investment	$1	$5
Management fees	None	$3, $6, or $12
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; Traditional and Roth IRA	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 Robinhood Cash Card	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...	Active investors	Hands-off investors
	Visit Robinhood	Visit Acorns Paid Non-Client Promotion FinanceBuzz doesn’t invest its money with this provider, but they are our referral partner. We get paid by them only if you click to them from our website and take a qualifying action (for example, opening an account.)

When to go with Robinhood

Robinhood is similar to a traditional brokerage account that allows you to invest in many asset classes, but it tries to put a fun spin on it. This commission-free trading platform is a leader in the fintech movement. It makes investing more accessible for the average investor and offers a more user-friendly and visually appealing platform than you might be used to.

Robinhood might be the right investment platform for you if:

• You want to choose your own investments
• You want a variety of investment options
• You want to trade on margin
• You want to avoid a monthly fee

More flexibility on investment choices

Robinhood is the better brokerage for you if you want to pick and choose your own investments. Rather than offering an automatic portfolio like Acorns does, Robinhood offers a wide variety of securities that you can buy and sell as you wish. Robinhood also has commission-free trading on stocks, exchange-traded funds (ETFs), and options, making it a good option for frequent traders.

It’s worth noting that while Robinhood markets itself to beginners, its model does require more effort on your part, and it’s important 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.

Robinhood could be a good choice if you’re ready to step up with your investing strategy. Personally, I used a robo-advisor when I started investing because I wanted someone else to take the wheel. But once I learned more and became more confident in investing, I needed a platform where I could pick and choose my own investments.

Wider selection of investment options

Robinhood has a wider variety of investment options to choose from. While Acorns offers only ETF investing, Robinhood offers stocks, ETFs, options, and cryptocurrency.

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.

If you opt for a cryptocurrency account, you can buy, sell, and trade 18 cryptocurrencies, including Bitcoin, Ether, Cardano, and more. You can deposit funds, trade at market prices, or use limit and stop orders. You can store your cryptocurrencies on Robinhood or transfer them to external accounts. Robinhood also supports receiving digital currencies from other platforms.

Of course, this isn’t to say ETFs aren’t a good option. Plenty of people build their entire portfolios with ETFs. But that may not be right for everyone.

Margin trading (not available with Acorns)

Robinhood is the only of these two brokerages that offers margin investing, where you borrow money to buy stocks, giving you more purchasing power and flexibility. To use this feature, you need to become a Robinhood Gold member, apply for margin investing, and have at least $2,000 in your account.

Basic account is fee-free

Robinhood doesn't charge for a basic account, and you won't pay any commissions for trading. Acorns charges between $3 and $12 per month, depending on your account type. Robinhood is the better option if you want a truly no-fee account.

If you upgrade to Robinhood Gold by paying $5 per month, you'll be eligible for larger limits (up to $50,000). You'll also be able to have a margin account with Robinhood Gold. 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.

When to go with Acorns

Unlike Robinhood, Acorns isn’t a full-service brokerage. Instead, it’s a micro-investing app. It’s known for its round-up feature, which allows you to round up the amount on your purchases and transfer the spare change into your investment account, so you’re automatically investing a little bit all the time.

You won't be able to 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 with which you'll build your investment portfolio.

Acorns may be a better option for you in the following situations:

• You want investment recommendations
• You want a hands-off portfolio
• You’re investing for your child
• You want an all-in-one financial platform

Helps you hit your investment goals

Acorns is a good option if you want investment recommendations rather than having to choose your own. Acorns does a lot more of the work for you than Robinhood. When you sign up, you’ll answer a few questions, and the platform will recommend an ETF investment portfolio that will help you reach your goals.

While it’s less ideal for hands-on investors, these ETF recommendations are great for anyone who wants to invest to reach their goals but doesn’t want to do the research required to choose individual investments.

More automated features

If you want a hands-off investing experience, Acorns can provide that. Its automatic investing goes beyond just recommending an ETF portfolio. It also offers automatic recurring investments, automatic portfolio rebalancing, and automatic dividend reinvesting.

Custodial accounts (not available with Robin Hood)

Acorns is the only one of these investing platforms that offers custodial accounts. A custodial account is an account an adult can set up for their child. They contribute and invest money, and then the child gets control of the account when they turn 18.

It’s a great way to invest for your kids in a way that’s separate from your own investments and can even be an opportunity to include them in the process. Additionally, friends and family can easily make gift contributions to your child’s account.

As the parent of a young child, I’m regularly thinking about how I can set her up for success. While there are plenty of other custodial investment accounts, it’s appealing to have a hands-off option with a broker that also offers taxable investing and retirement accounts. It could be a way to do all of your investing in one place.

Acorns can be an all-in-one financial platform

Acorns is a good option for someone who wants to do their banking and investing in one place. While Robinhood is focused on investing, Acorns also provides banking services. This account comes with features like:

• Tungsten metal debit card
• 3.00% APY on your checking (as of September 15th, 2024)
• 5.00% APY on your emergency fund (as of September 15th, 2024)
• Automatically invest a piece of every paycheck
• Get paid two days early
• Invest your spare change
• No account fees

Of course, the all-in-one platform isn’t right for everyone. Just because a platform offers a variety of financial services doesn’t mean it’s the best at all of them. It’s sometimes worth having different accounts in different places to get the best features.

Read our Acorns review for more details about how this brokerage works.

What both investment apps excel at

Though Robinhood and Acorns are two very different investment platforms, there are a few things they both do well:

• Easy-to-use platforms: Both Robinhood and Acorns are user-friendly platforms that are well-suited to the average investor. If you’ve found more traditional brokerage platforms to be too clunky or dense, you might appreciate these platforms.
• Investor education: Robinhood and Acorns both have robust educational libraries where users can learn all about investing and personal finance, both on and off those specific platforms.
• Retirement accounts: Both Robinhood and Acorns offer retirement accounts. Robinhood offers traditional and Roth IRAs, while Acorns offers traditional, Roth, and SEP IRAs.

FAQs

Bottom line

Traditional brokerage firms are often expensive and make investing feel more complicated than it needs to be. Fortunately, fintech platforms like Robinhood and Acorns simplify the process and allow you to get started with little money.

Robinhood and Acorns are both great options, but they are best suited for very different investors. Robinhood is a good option for someone who wants commission-free trading and the ability to choose from many different investments. Acorns, on the other hand, is best for someone who wants a simple, automated investing process.

At the end of the day, these two investment apps largely succeed in providing low-cost investing options that are easier for beginners to navigate. But because they work differently and have different pricing, you'll want to consider carefully which is a smarter fit for your needs and financial goals.

And if you prefer a more traditional approach, you might want to investigate our list of the best brokerage accounts.

Learn More

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  Charges zero commissions on stock, ETF, options, and crypto trades
• 
  Requires no account minimum to start investing
• 
  Simplifies investing with a user-friendly mobile app
• 
  Offers up to 3% match on Robinhood Gold IRA contributions

VS

Learn More

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  Invest on autopilot in expert-recommended portfolios
• 
  No surprise fees; plans start at just $3/mo
• 
  Ability to earn up to a 3.00% match on new contributions to your Acorns Later IRA
• 
  Bonus $20 after your first investment

Paid Non-Client Promotion

FinanceBuzz doesn’t invest its money with this provider, but they are our referral partner. We get paid by them only if you click to them from our website and take a qualifying action (for example, opening an account.)