Robinhood vs. Acorns [2022]: Which Investing App is Right for You?

Robinhood and Acorns both simplify investing, but they work differently. Here’s how to figure out which of these two investing platforms could be a fit for your goals.
Last updated Sept. 6, 2022 | By Christy Rakoczy
Robinhood vs. Acorns

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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

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

Robinhood

Acorns

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
  • 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... 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 types 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.

Robinhood Benefits

  • When you sign up, a surprise stock appears in your account
  • Commission-free trading with no account minimums
  • Trade stocks, options, and cryptocurrencies

2. Account types

Acorns allows you to invest in a Roth IRA, traditional IRA, or SEP IRA, as well as to open accounts for your kids. Robinhood just offers taxable investment accounts and no retirement accounts.

3. Cost

Robinhood doesn't charge for an account and you won't pay any commissions for trading. Acorns charges between $1 and $5 per month depending on your account type.

4. Contribution process

Robinhood requires you to deposit money from your bank or savings account. You'll get instant access to deposited funds.

Acorns allows you to make contributions, but you could also use Round Ups to have money invested automatically for you. Purchases you make will be rounded up to the nearest dollar and the money will be invested.

Which investment platform should you choose?

You might choose to invest with Robinhood if you want to buy individual stocks, options, or cryptocurrency; if you want to trade on margin; and if you don't mind doing the work to select your own investments.

If you want more guidance and a unique way to invest extra money through Round Ups, you might consider choosing Acorns as long as you don't mind paying a monthly fee. You'll also need to choose Acorns over Robinhood if you want to open an IRA, as Robinhood doesn't offer that option.

Acorns Benefits

  • Bonus $5 after your first investment
  • No surprise fees
  • Get started for just $1 per month
  • Protected by bank level security

FAQs

Is Robinhood, Acorns, or Stash better?

Robinhood, Acorns, and Stash 1 are different, and the smarter choice for you will depend on your financial goals and your investment approach. If you want a hands-off investment platform, Acorns or Stash might be a smart choice, but you should make yourself aware of fees. If you want to buy stocks or trade options or invest in cryptocurrency, Robinhood might be the smarter choice for you. Check out this Robinhood vs. Acorns vs. Stash comparison for more details.

Is Robinhood good for beginners?

Opening a Robinhood account requires you to have some investment knowledge since you will need to select your own investments. However, it is designed for beginners and so it has many features that can help you learn what you need to know. Investing always carries risk, though, especially when you're just getting started, so be sure to take the time to learn about assets you could invest in.

Is Acorns legit and safe?

Acorn is Securities Investor Protection Corp.-protected and Acorns Spend is Federal Deposit Insurance Corp.-insured. This means the bank and brokerage are backed by federal guarantees up to certain amounts if the company goes bankrupt. As with any account, it’s always a good idea to read and understand the terms and coverages.

Can you actually make money on Robinhood or Acorns?

Both Robinhood and Acorn are investing platforms. If your investments perform well, you could make money. If they perform poorly, you could lose money. Historically, investing in the stock market and building a diversified portfolio have helped some people make a certain amount of money, but there are inherent risks.


Bottom line

For far too many people, investing money feels complicated and expensive. Fortunately, it doesn't have to be that way. The best investment apps simplify the process and allow you to get started investing with little money. If you prefer a more traditional approach, you might want to investigate our list of the best brokerage accounts.

At the end of the day, both Acorns and Robinhood 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.

Robinhood Benefits

  • When you sign up, a surprise stock appears in your account
  • Commission-free trading with no account minimums
  • Trade stocks, options, and cryptocurrencies

Author Details

Christy Rakoczy Christy Rakoczy has a Juris Doctorate from UCLA Law School with a focus in Business Law, and a Certificate in Business Marketing with an English Degree from The University of Rochester. As a full-time personal finance writer, she writes about all things money-related but her special areas of focus are credit cards, personal loans, student loans, mortgages, smart debt payoff strategies, and retirement and Social Security. Her work has been featured by USA Today, MSN Money, CNN Money and more, and you can learn more at her LinkedIn profile.