If you’ve been toying with the idea of micro-investing or simply saving for retirement, chances are that you’ve come across dozens of tools and platforms that claim to help. But as we all know, a vast majority of those so-called tools are rip-offs.

And that’s why when we came across the Robinhood vs Acorns debate we naturally became curious. Is there anything good about these two? Also, which one of the two would work best for your investing style?

We’ll have that conversation in the next few paragraphs to enable you to make the right decision.

Quick Overview of these Two

Both Robinhood and Acorns are popular in that they make it easier for virtually anyone to invest. The systems are mobile-friendly and quite easy to get accustomed to.

Robinhood provides a wide variety of investment products to work with. They enable you to easily purchase stocks, options, ETFs, and lately cryptocurrencies.

Acorns, on the other hand, stands out from the pack thank to the fact that they provide ready-made investment plans. All you need to do is pick a package depending on your trading habits, amount of cash, and risk appetite.

Robinhood has been there since 2014. Acorns was launched fairly recently in 2017. What you also need to know is that these two platforms mainly target the US market.

According to CrunchBase, Acorns had 6.2 million subscribers as of September 2019. Likewise, Robinhood was reported to have 10 million subscribers by the CNBC in December 2019.

Similarities between Robinhood and Acorns

One of the features shared by these two is “commission-free trading.” When it comes to commissions charged for trading, zero seems like the new normal.

Even leading brokerage firms including Schwab and TD Ameritrade have also eliminated commissions for all stock trades done online.

So, what’s the catch? Generally, most brokerages recoup the trading fees by increasing the bid/ask spread.

The two firms in focus seem to have done a great job in keeping up with the industry trends. And so far, that decision has seen them grow from strength to strength.

1. No Minimum Account Balance

Normally, most of the top-tier brokerage firms require you to maintain a certain minimum account balance to open trades. That can be quite limiting especially if you’re just getting started and have limited funds.

The two firms in comparison have scraped their minimum balance requirements. So, if you’re looking for the best investment apps for minimizing fees, either one of these two might suffice.

2. Fractional Shares

A vast majority of the good shares available out there are way too expensive. If Google shares’ $1500+ price tag is too intimidating for you, why not buy a fraction of it?

That’s the power of fractional shares (micro-investing). And the good news is that you get to take advantage of that through both the brokerage firms in focus today.

So, you don’t have to limit yourself to the controversial penny stocks. With fractional trading, you get the opportunity to swim with the big sharks without breaking the bank.

That’s kind of a big deal, you know.

A Look At The Differences: Robinhood vs Acorns

Now that we have seen just how similar these two mobile-first investment platforms are like, it’s time to focus on the factors that set them apart. This should provide you with a clear picture of which one of the two might be best suited for your unique investment approach.

1. Investment Portfolios

These two firms provide different products on their menus. As we stated earlier, Robinhood has greater variety thanks to the fact that they allow you to make your own picks from stocks, options, ETFs, and cryptocurrencies.

So, if flexibility is what you are after, we think Robinhood might be the better choice. However, in some cases, you need to work with a company that enables you to pick from ready-made options.

The beauty about that is that you can have an easy time making your picks. Plus, you can benefit from different market opportunities simultaneously.

Acorns predominantly focuses on ETFs. When you join the platform, they’ll provide you with different done-for-you investment plans e.g.

  • Conservative: Comprising short-term government bonds, ultra-short-term corporate bonds, ultra-short-term government bonds.
  • Moderately Conservative: Large company stocks, small company stocks, real estate stocks, government bonds, corporate bonds, international large company stocks.

2. Investing Goals

We find that Robinhood is more focused on short-term and medium-term investment goals. So, if you’d like to consolidate some quick wins and are willing to embrace a hands-on approach, that might be the better option to work with.

However, if you’re after safe, low-risk, long-term investments, we think that Acorns offers a really unique opportunity for you.

If anything, you won’t find any retirement accounts on Robinhood’s menu but you’ll find them on Acorns’.

In our view, if you’re thinking long-term or saving for retirement, Acorns is a really good investment app to aim for.

3. Automation

Simply put, Robinhood is a good platform to sign up for if you’re a hands-on investor willing to do all the basic stuff all by yourself. However, not everyone is capable of doing that. With a busy work schedule, you might find it difficult to complete some basic tasks every investor needs to undertake e.g. depositing and withdrawing cash.

If you’re the busy type, the level of automation provided by Acorns is unrivaled. For instance, the platform can automatically rebalance your portfolio to maintain the ideal ratio of bonds and stocks.

Plus, with Acorns, you can automate your personal finances. All you need to do is link your debit or credit card and the system can automatically initiate selected transactions on your behalf. For instance, it can transfer selected cash amounts from your bank account to your investing account.

Also, there is a “round up” function which the system uses to round up every transaction amount to the nearest dollar.

We think that this level of automation is quite good because it gives you the discipline to save while investing on a gradual basis. For example, you can instruct Acorns to be transferring $300 from your checking account into your investment account every month.

That’s such an important feature if you’re looking for a way to save for your retirement without having to make bulk transfers.

And of course, the option to safely turn off these transfers exists if you feel that you prefer to take back the full control of your investment account.

4. Customer Support

We think that Robinhood still has room for improvement as far as customer service goes. The firm currently offers email-based customer service. And as you know, most companies take a couple of hours to respond to email queries.

The company doesn’t provide a live chatbot or a phone number. This can be quite frustrating especially if you have some really unique queries not covered in their FAQs page.

We think that Acorns fares better here (but only slightly so). The company provides both email and phone-based support.

They don’t have a chatbot feature available.

A potential issue we’d like to raise about Acorns’ customer support is that they’ve buried their phone number in an unexpected corner of their website (the gift cards section). Thank God for Google as you can easily find it through Google search suggestions.

5. Pricing

Both platforms offer services that are competitively priced. You don’t need any cash to use Robinhood. Everything is completely free of charge.

But just in case you need more flexibility, you can opt-in for the Robin Gold package which goes for $5 per month. With the Gold tier, you can invest on margin and deposit your cash faster.

Also worth noting is that a Gold account with Robinhood entitles you to unlimited access to Level II trading data and Morningstar stock research reports.

On its part, Acorns is mostly free of charge but to actively use it, you’ll at the minimum require an Acorns Lite account which will set you back $1 per month. There’s also a $5 tier available which provides you with additional options if you need them.

Which One Is the Better Option?

There’s no straightforward answer to this question. Both platforms are quite well-made and offer good value for money to investors.

We, however, think that your choice should be influenced by your style of trading. If you’re looking for the freedom to test-drive a variety of stocks, options, cryptos, and so forth, Robinhood is the platform for you.

But as you know, those markets can be highly risky to navigate especially if you’re a beginner or someone looking for a low-risk but long-term approach. If that describes you, we’d suggest going for Acorns. They have some really good done-for-you investment plans that provide you with a healthy supply of ETFs to match your risk appetite.

Final Thoughts

Each one of these two firm have their strengths and weaknesses. Robinhood has been around longer and, obviously, has had more time to grow its user-base. Acorns isn’t doing badly off either. The company is growing quite fast.

Both firms still have room for improvement. For instance, we feel that they might need to invest more in their customer support infrastructure.

But if you’re into microinvesting, we’re confident that either of these two can provide you with the platform you need to make the most of your investment forays.