Updated Feb 22, 2020

Acorns vs. Robinhood: What's The Best Investment App For Beginners?

Cam Secore

After a year of testing, I determined Robinhood is the best investment app for beginners because it’s completely free. However, Acorns is free for college students and has a cool “Round Up” feature.

I’ll explain how I reached my conclusion by comparing two apps (Acorns vs. Robinhood) while evaluating three categories: setup, fees, and trading options.



  • Setup: It positions itself as an app for beginners but doesn't provide guidance or basic investing information.
  • Fees: Everything is free. There's a subscription if you want excess to more cash.
  • Trading Options: You can trade individual stocks, ETFs, options, and crypto currencies.

Best for you if...

You don't want to pay trading or monthly fees. You have the freedom to buy any individual company’s stock or ETFs. If you’re willing to do your own research and find the same popular ETFs that are in Acorns, you should go with Robinhood.

hulu live


  • Setup: There are five ETFs (Conservative, Moderately Conservative, Moderate, Moderately Aggressive, and Aggressive).
  • Fees: There's a month trial, but it's $1/month after that. It's free for college students.
  • Trading Options: There are only five ETFs, which is a good thing for beginning investors.

Best for you if...

You want psychological incentives to save with Round-Ups. Your leftover change from your purchases is reinvested automatically. You have limited investing options which keeps it simple. It's a no-brainer for college students because it's free.

Investing Basics

  • Index funds are a type of mutual fund that have several companies from many industries put into one group. There are three indexes you’ve probably heard of:
    • S&P 500: Includes 500 companies and is used as a benchmark for how well the stock market is doing because it includes the majority of the market’s total value.
    • Dow Jones: Includes 30 companies. Apple, Nike, and Disney are a few notable ones.
    • Nasdaq: Includes 3,000 companies and skews more towards the tech sector.
  • The term ETF, which you’ll see in each of the apps, stands for exchange-traded funds. For our purposes, we’ll treat these similar to index funds. They’re vast groupings of individual stocks that are traded as a group. For example, the famous Vanguard S&P 500 ETF is a tradable fund that mimics the S&P 500 index.
  • The U.S. stock market has returned around 7% annually (when adjusted for inflation) and has bounced back from every downturn and collapse in its history. That doesn’t mean you’ll earn 7% every year, but if you’re confident in America’s long-term future (I am), index funds are a good bet. There will be bad years, but if you keep your money in the market without pulling out, you’ll be rewarded. Time is your friend.
  • You’re not as smart as you think you are. You’re not going to outsmart investors like Warren Buffet by buying individual stocks and day-trading them. Owning an ETF share that includes stocks from many industries helps diversify your portfolio.
  • A higher stock price does not indicate a higher company value. A company’s value is determined by the stock’s price per share multiplied by the number of shares outstanding. For example, while Apple’s share price is $170 and Google’s share price is $1,100. Apple’s value (or market capitalization) is $900 billion, while Google’s is $800 billion.
  • If you’re interested in learning more about investing and asset diversification, I recommend Tony Robbins’ book: MONEY Master the Game. In Robbins’ book, he interviews famous investors like Carl Icahn, Warren Buffett, Ray Dalio, and Steve Forbes. The book has the investors’ take on everything in the world of investing, then breaks it down into terms that regular people can understand.

How does Acorns work?

Short answer: Acorns is a mobile-first investment app that automatically withdraws small sums of money from your bank account to invest in the stock market via ETFs. For their services, you’ll pay $1/month or 0.25% if you have more than $5,000. Your first month is free.

Long answer: Once you’ve downloaded the app, you’ll be asked about your risk preferences and personal information. Acorns needs your social security number, and there’s no getting around it. All investment apps require you to register with a social security number. But Acorns is legit and has over a million users, so don’t worry.

After your initial investment (as low as $5), you’ll link a debit or credit card (you can link as many cards as you want) to your Acorns account, and they’ll take the spare change from every transaction with Round-Ups.

What are Round-Ups? Let’s say you buy a coffee for $2.73. Acorns will see your coffee purchase and round-up to $3 by marking $0.27 in your Acorns account. Once you accumulate $5 in Round-Ups, Acorns withdraws $5 from your bank account.

That may seem insignificant, but after a couple of months, I’d accumulated $40 in my Acorns account.

You can turn Round-Ups off anytime, and you can withdraw the money from Acorns any time as well.

Once you have money in your Acorns account, Acorns will recommend one of five ETFs based on your income, age and risk tolerance. Then Acorns automatically invests that money into the ETF you’ve picked.

What’s an ETF? ETF is an acronym for an exchange-traded fund, and it’s a type of mutual fund. They’re a selection of several individual stocks that are traded as a group. Most mimic popular index funds.

When the U.S. stock market does well, your ETF does well. Your returns will vary because there are different degrees of risk you can select. Keep in mind the stock market has gone up an average of 7% a year when adjusted for inflation.

Five different Acorns ETFs:

  1. Conservative: 12% Vanguard S&P, 2% Vanguard Small Cap, 2% Vanguard REIT, 40% iShares 1-3 Year Treasury Bond, 40% iShares Inv. Grade Corp. Bond, 4% Vanguard FTSE
  2. Moderately Conservative: 24% Vanguard S&P, 4% Vanguard Small Cap, 4% Vanguard REIT, 30% iShares 1-3 Year Treasury Bond, 30% iShares Inv. Grade Corp. Bond, 8% Vanguard FTSE
  3. Moderate: 29% Vanguard S&P, 10% Vanguard Small Cap, 3% Vanguard Emerging Markets, 6% Vanguard REIT, 20% iShares 1-3 Year Treasury Bond, 20% iShares Inv. Grade Corp. Bond, 12% Vanguard FTSE
  4. Moderately Aggressive: 38% Vanguard S&P, 14% Vanguard Small Cap, 4% Vanguard Emerging Markets, 8% Vanguard REIT, 10% iShares 1-3 Year Treasury Bond, 10% iShares Inv. Grade Corp. Bond, 16% Vanguard FTSE
  5. Aggressive: 40% Vanguard S&P, 20% Vanguard Small Cap, 10% Vanguard Emerging Markets, 10% Vanguard REIT, 10% Vanguard FTSE

Acorns App


Setup (A+):

  • It’s intentionally basic with limited options. There are five ETFs (Conservative, Moderately Conservative, Moderate, Moderately Aggressive, and Aggressive) to pick from. The ETFs aren’t created by Acorns. They’re combinations of already-notable ETFs (Vanguard S&P, Vanguard Small Cap, Vanguard Emerging Markets, Vanguard REIT, Vanguard FTSE, iShares Inv. Grade Corp. Bond, iShares 1-3 Year Treasury Bond). You give Acorns your information and it matches you to the ETF combination that suits your risk profile best. (You can change your level of aggressiveness anytime).
  • Acorns does Round-Ups. It records every purchase you make and rounds up to the nearest dollar. At the end of the week, Acorns takes all that “spare change” from Round-Ups and deposits it into your Acorns account. For example, if you buy something for $1.50, $0.50 will be sent to your Acorns account to make it an even $2. Although it isn’t a significant advantage since you could auto-deposit a fixed amount every week, there’s a cool psychological element to it that makes investing fun. You can link as many credit or debit cards as you want. You can use multipliers on your Round-Ups too. You’ll be surprised how quickly it adds up.
  • The Found Money system is excellent! This is similar to cash-back apps like Rakuten or Honey. In the Acorns app, tap on one of the stores you want to shop at, shop as you normally would, and you’ll get a percentage of your purchase deposited into your Acorns account when you’re done. For example, if you buy a $1,000 MacBook from Apple through Acorns, you’ll be credited $12. It’s free money!
  • Acorns has lots of resources on basic investing and glossary terms. There’s an investment graph that shows you how much money you’ll have at each age depending on how much you invest.

Trading Options (D):

  • There are only five ETFs. It’s not easy to see what individual companies are inside each ETFs through the app, but you can do your research. I think the limit of ETFs is a good thing for beginning investors.

Fees (C+):

  • Acorns is free if you’re in college and under 24 years old, but Acorns is expensive otherwise, with the same fee structure as Stash. You get the first month free, but after that, it’s $1 per month if your account is under $5,000.
  • The fee is 0.25% if your account is over $5,000. Only $12 a year, so what? Let’s do some math. If you keep $200 in your account and the market goes up by 7% (its average), you’ll have a return of around $214. But after taking out Acorn’s $12 fee, you’re only $2 richer (and that’s before you pay capital gains tax on your earnings).



Setup (B):

  • Robinhood (the company) doesn’t understand who its customers are. It positions itself as an app for beginners but doesn’t provide guidance or basic investing information.
  • You can buy Fractional Shares of individual stocks. Stocks like Google and Amazon have prices over $1,400 per share, so this makes it easier for beginners to purchase a portion of company that they want.
  • I’m not sure how competent their support staff is. Two years ago, my friend signed up and provided Robinhood with his information. Even after reaching out to them, his application is still pending. However, Robinhood is growing fast and that sort of issue is common with startups, and things might’ve changed.

Trading Options (A+):

  • You can trade cryptocurrencies like Bitcoin and Ethereum for free. For reference, the largest cryptocurrency exchange, Coinbase, charges between 1.5 to 4 percent per trade.
  • You have more freedom with over 5,000 stocks and ETFs listed on Robinhood. Unlike Acorns, you can buy individual stocks and see what you’re buying.
  • Robinhood Gold is an optional monthly service that lets you double your buying power, and give you instant funds on your deposits. Different fee tiers depend on how much money you have. For example, I have $2,000 in my account and to get my buying power doubled to $4,000 it’s $10/month.
  • You can transfer your stocks from your previous broker to Robinhood for free.

Fees (A+):

  • Robinhood was the first app or company to offer free trades to everyone. There are no monthly fees either. That’s huge considering most companies charge at least $8. How are regular people going to buy $100 in stock when there’s an $8 fee? You’d need an 8% return on your stock just to get your money back.

Other Gadget Comparisons