Robinhood vs. Acorns: Which Broker Is Right for You? | The Motley Fool (2024)

Robinhood and Acorns both aim to make investing easier, but they take different approaches. Robinhood is a discount broker that simplifies the process of tracking and buying stocks, ETFs, and cryptocurrency. Acorns is a robo-advisor that manages your accounts for you.

We'll compare Robinhood vs. Acorns features so you can decide which best fits your investment strategy. Take a look below so you can pick with confidence.

Robinhood and Acorns take different approaches to fees. Acorns charges a monthly fee of $3 to $9, depending on which account type you prefer. Robinhood charges no monthly fees, but offers the optional $5 Robinhood Gold subscription for extra perks.

Acorns provides hands-on management, including Round-Ups and access to pre-built portfolios. Acorns automatically rebalances portfolios, so you stay invested at your preferred risk level (also known as risk tolerance). Its robo-advisory features are baked-in.

What are Round-Ups? Acorns lets you round up your purchase to the nearest dollar. For example, a $9.15 lunch purchase would round up to $10. Acorns saves the $0.85 difference, and when you save up $5 total, Acorns invests this into your brokerage account.

Robinhood gives you the tools to DIY invest -- without paying any fees. You'll be on the hook for managing your investments, but you could potentially earn high returns by investing in individual stocks (Acorns offers diversified portfolios, lower risk/reward). Robinhood offers an optional subscription unlocking advanced features, and these may benefit some investors.

Acorns Invest creates pre-built portfolios based on your risk tolerance. Your money is put into a mix of exchange-traded funds (ETFs), and Acorns shuffles investments around to maintain your desired mix.

Thus, you give up some measure of control over your investments. In return, Acorns saves you time by rebalancing and diversifying your investment portfolio with the help of experts. If you're interested in exploring one of the best robo-advisors out there, it's worth a look.

Robinhood lets you choose exactly where to invest. You can select ETFs, but can also buy stocks, cryptocurrencies, and options. Robinhood is also among the best options trading platforms because it charges no contract fees for options trading.

Robinhood offers fractional shares, letting you purchase portions of stocks for as little as $1. Among other things, fractional trading and a wide range of fee-free investments earn Robinhood a spot among the best online brokers for beginners.

Acorns provides access to robo-advisory accounts, retirement accounts, and custodial accounts, depending on what monthly plan you sign up for. When you open any Acorns account, you also get a checking account that earns you interest on deposits.

Robinhood offers taxable brokerage accounts, margin accounts, and retirement accounts. Its top-rated mobile platform makes it one of the best brokers for IRAs. However, Robinhood banking options are less full-featured than Acorns.

Both Robinhood and Acorns offer cash management solutions. Acorns offers Round-Ups when you use the Mighty Oak Debit Card or another linked card. Robinhood also offers a Spending account linked to a debit card that earns users weekly round-ups -- this option has fewer perks. Both brokers offer a suite of extra services.

Both Robinhood and Acorns are well known for their user-friendly and intuitive apps. Apps by Robinhood and Acorns received 4.2 star and 4.7 ratings, respectively, from the iOS store.

But they're a bit different. Acorns gives you a bird's-eye view of your finances. Robinhood offers a more in-depth look at individual investments.

Robinhood is the best choice for DIY investors who prefer to approach investing hands-on. Acorns is the better bet for investors who are hands-off and who prefer to do their checking in the same app where they do their investing.

By comparing Robinhood vs. Acorns, you're already taking strides toward earning long-term income the right way. Feel free to compare these investment platforms with best-in-class stock brokers that steer you toward the highest possible returns, and for cheap.

Remember, you're not locked in -- you can transfer stocks from one broker to another to earn the best returns on investment. But the most important thing is to start -- start early, start now. Whether you pick Robinhood, Acorns, or another platform, growth awaits.