
Investing
Acorns vs. Robinhood: Which is Better for Beginning Investors?
These days, there are plenty of FinTech apps that help everyday people manage their money. Nevertheless, when I think about platforms meant to help consumers dip their toes into investing, two main apps come to mind: Acorns and Robinhood. Both of these options are aimed at would-be investors who may be intimidated by the world of brokerage firms, commissions, and more, yet both also take different approaches to meeting this goal. This then begs the question: which is better for beginning investors?
Before we get to an answer for that question, let’s take a look at how Acorns and Robinhood work, what each has to offer, and where both could be improved.

How the Acorns and Robinhood Apps Work
How Acorns works
Acorns is what’s known as a micro-investing app. In fact the platform will allow you to start investing with as little as $5. Additionally, Acorns has a clever way to ensure that you’re consistently funding your account and building your portfolio.
The main feature of Acorns is called Round-Ups, with the idea being that you’re investing your spare change. To achieve this, Acorns will ask you to link your credit and debit cards so that it can monitor your transactions and total up your “change” by rounding up each purchase to the nearest dollar (hence the name). Once you reach more than $5 in Round-Ups, Acorns will pull the money from your linked account and invest it in a selection of stocks and bonds for you. To that point, you can select from a few different portfolio options based on your risk tolerance.
Beyond Round-Ups, users can also elect to make one-time contributions or set up recurring transfers. Plus the app’s Earn section (formerly Found Money) features offers from various retailers. By completing these offers, you can score a little extra money that will be added to your account. You can see Acorns in action in my video review:
How Robinhood works
Robinhood’s selling point is fairly straightforward: buy and sell stocks without fees. That’s exactly what the app offers, enabling users to purchase real stocks from real companies, all at face value. Sure it may sound like a simple idea, but it was actually quite revolutionary — although several other platforms have since followed suit.
Despite it being a free service, Robinhood doesn’t skimp on features. When it comes to buying and selling stocks, this means having the ability to set limit orders (where you can state how much you’re willing to pay for a stock and have Robinhood execute your order if it becomes available) among other options. Like with Acorns, Robinhood also allows you to set up automatic transfers to your account or make one-time contributions on the fly.
Although stocks were the main game on Robinhood for some time, they’ve also expanded to bring new investment opportunities to the platform. For example, Robinhood Crypto allows users to buy and sell Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and Dogecoin. Other notable features include fractional shares, dividend reinvestment, options trading, and more.
The Pros and Cons of Acorns and Robinhood
Where Acorns succeeds
The biggest benefit Acorns has is that it makes investing simple, automatic, and accessible. From the Round-Ups feature that shows doubting users that they do have enough money to start investing to the Earn features that further incentivize you to contribute to your account, the app does a great job of keeping users engaged. Also motivating are the projection charts the app provides, showing users how much money they’ll accrue if they stay on their current course.
Another way Acorns makes investing easy is that it doesn’t ask users to build their own portfolios but instead allows them to choose from five options. These range from conservative to aggressive, with the mix of stocks and bonds shifting each time. Furthermore, with Acorns sharing what each portfolio option consists of, those investing rookies who do want to learn more about best practices can find value in these resources.
Where Robinhood succeeds
As I’ve said before, if Acorns is investing 101, Robinhood is likely the 201. With this app, users can select which companies they invest in and become full-fledged shareholders. This includes the ability to vote on shareholder matters and receive dividends (I should note that Acorns also enables users to earn dividends).
Even though it may be a more advanced experience than Acorns, Robinhood still has a lot to teach its users — especially with the recent updates to their options trading platform. The app not only allows you to monitor your current positions as well as a watchlist of other stocks but also includes a feed of financial news that can help users stay informed about the markets and beyond. At the same time, Robinhood also succeeds in demystifying investing by erasing the images of brokers yelling over a telephone to a guy on a crowded sales floor and replacing it with an elegant, easy to use interface.

Where Acorns could improve
My single biggest complaint about Acorns is that it isn’t free. Instead, their Lite service is $1 a month. That might not sound like a lot but, in the old days when the fee was deducted from your investment funds, you could see how much it cut into your earnings. These days the app pulls its monthly fee from your linked bank account instead, which does make it so you can continue to earn on your money but also makes it so you don’t notice how these dollars are adding up. Meanwhile, if you want to unlock other features including the Acorns Spend debit card and the Acorns Later retirement account, you can upgrade to the Personal plan for a total of $3 per month.
One other slightly annoying aspect of Acorns is that Round-Ups don’t actually happen right away, leaving you to wait until you’ve crossed that $5 threshold before your money is transferred. That said, the aforementioned Acorns Spend debit card does enable instant Round-Ups among other perks. Still, it’s up to you if that benefit is worth the added monthly expense.
Finally, one of the aspects of Acorns that’s a “pro” for some may be a “con” for others. In this case I’m referring to their pre-set investment mixes. While these five options do allow some flexibility, it’s not hard to imagine some users would like to have a bit more control over their own investment destiny. Therefore those who don’t want to leave their investment portfolio up to algorithms may want to look elsewhere.
Where Robinhood could improve
Speaking of controlling your destiny, one downside of Robinhood is that you’re really on your own. If you choose to buy a stock that goes from $40 to $5 overnight, you’re really S.O.L. Meanwhile, it seems less likely that Acorns’ investment mixes would experience nearly as much volatility, easily making it the “safer” choice — if there is such a thing when it comes to investing.
Of course, a more pressing issue that needs to be addressed is Robinhood’s recent run-ins with regulators as well as moves they’ve made that have angered traders. While the platform has made more than a couple of missteps along the way, their decision to disallow customers from buying certain stocks at a time when these assets were booming caught the attention of users and lawmakers alike, many of which saw the move as a betrayal of the company’s ideals. Ultimately, while the Robinhood app remains a top contender based purely on its features, it’s understandable that some might now prefer to avoid this option.
Acorns vs. Robinhood — The Verdict
At the risk of it sounding like a cop out, the answer to the “Which is better: Acorns or Robinhood?” question is, “it depends.” Personally, I took more of a shine to Robinhood because of how it allowed me to invest in the stocks of my choosing and does so without costing me a thing. Meanwhile, those who aren’t quite ready to take the plunge and purchase their own hand-picked stocks will likely prefer the “set it and forget it” options Acorns provides — although they may start to resent that $1 a month fee like I did.
Since initially writing this article, I actually ended up closing my Acorns account since I wasn’t making much use of it. However, as I continue to diversify my portfolio, I’m considering starting it up again. Meanwhile, although I still hold money with Robinhood and wasn’t personally impacted by their recent blunder, I’ve also been trying other free brokerage options including SoFi Invest and Public.
Overall, the choice between Robinhood (or other brokerage options) and Acorns comes down to where you are in your investment journey and what your goals are. Luckily, with Robinhood being free and Acorns costing just a $1 for your first month, there’s little risk in trying out each of these options for yourself and seeing which one you prefer.