Robinhood vs Acorns: Legit or Scam | Pros & Cons | 2022

Robinhood vs acorns

If you just want to start integrating investing into your everyday life with most of it done automatically for you, then a cool micro-investing app like Acorns is a great option to try. On the other hand, if you want to get your hand on real investment like stock trading, ETFs and cryptocurrencies, your right pick should be Robinhood.

In this article, we’ll be placing the two trading apps side by side. While Acorns is known for remodeling and giving much value to that little change you feel has no value, Robinhood is giving value through trading on stocks, ETFs, and cryptocurrencies. It’s Robinhood vs Acorns!

Robin in the famous ‘Robin Hood’ movie was keen on protecting his lover, ‘Maid Marian’ from whatever he felt is capable of causing harm. Will he have done all these if he never presumed his actions an investment in the right direction?

Well-well, don’t get lost yet, we’re not talking movies here.

See the table of contents below to get an overview of this article.

What Is Robinhood?

Robinhood is a commission-free stock trading app that allows you to trade stocks, ETFs, options, and crypto. It is suitable for beginners and pro alike who want to invest in the simplest way possible. The brokerage is intentionally basic with a fantastic user interface.

The trading app is 100% commission-free.

The app makes it simple and walks you through the trading process, but you won’t get any investing guidance.

How To Get Started With Robinhood

Opening a Robinhood account doesn’t let a sweat down. You can do it online from your smartphone, tablet, or computer device. See the steps below.

  1. To start your account, Click here and key in your contact info and other necessary background details.
  2. You’ll receive a notification email with a link which you’ll use to launch stellar investments.

Unlike other investment platforms, Robinhood doesn’t demand cash to open the account or get it rolling. However, to invest you need enough to give it a shot.

If you don’t have enough money to keep it rolling, you can start small while you grow conversant with the trading app.

Additionally, if you wish to invest on intervals, you can set up automatic deposits out of your bank account weekly, biweekly, monthly or quarterly.

Robinhood uses instant verification with many top banks. Bank transfers of up to $1,000 are available immediately for investing, and the same goes for profits of up to $1,000 from selling stocks. Deposits larger than $1,000 will take around five business days to process.

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What Are The Pros and Cons Of Using Robinhood?

Robinhood is quite suitable for newcomers who want to trade small quantities, including fractional shares, and require little in terms of research beyond seeing what others are trading.

The app and website are user-friendly and very easy to use and charging zero commissions attract extremely cost-conscious investors who trade small quantities.

That said, the offerings are very light on research and analysis, and there are serious questions about the quality of the trade executions and areas of strength.

Here’s a list of the pros and cons.

Robinhood Pros

  • Zero-Commission trades on stocks, ETFs, crypto, and options.
  • A Cash Management account enables passive money to gain meaningful interest.
  • On Robinhood, it is easy to access tax documents and important information regarding the account.
  • It is very easy to open up a brokerage account.
  • Get a free stock worth up to $200 when you sign up with the link below.
  • Offers access to cryptocurrency including Bitcoin and Ethereum.
  • The Robinhood app is user-friendly.
  • Instant access to $1,000 upon deposit.
  • Fractional shares are open for many users.
  • Bonus reinvestment allows you to earn compound interest.

Robinhood Cons

  • Customer support is only accessible in market hours.
  • Margin trading is only open to Gold members.
  • Restricted access to educational materials.
  • Limited access to research reports without a Gold membership.
  • Robinhood doesn’t provide a technical trading platform to perform analysis.

Is Robinhood Legit?

Robinhood is a free-trading app that allows investors to trade stocks, options, exchange-traded funds, and cryptocurrency without paying commissions through any of its subsidiaries; Robinhood Financial, Robinhood Securities, and Robinhood Crypto.

Securities trading is offered to self-directed customers by Robinhood Financial. Robinhood Financial is a member of the Financial Industry Regulatory Authority (FINRA).

Robinhood is only licensed to trade securities in the United States (US), to US citizens and residents, and will not authorize anyone who is not a legal US resident to purchase or sell securities through its application until such time as it is approved to engage in the securities and investment business by the appropriate regulator(s) of a foreign jurisdiction.

The trading platform is currently available to legal US residents over 18 years of age only.

The user-friendly web and mobile app are best for newcomers to investing who want to trade small quantities, including fractional shares, and demand little in terms of research beyond seeing what others are trading.

To sum it up, Robinhood seeks to empower this new generation to take greater ownership in their financial future, which will definitely lead to a healthier, more robust global economy. Click here to get register.

What Is Acorns?

Acorns is an investing app that automatically invests your spare change. Each charge to your bank account is rounded up to the next dollar (Acorns calls these “round-ups”) and put in a diversified portfolio. If you buy breakfast for $6.25, Acorns rounds it up to $7 and invests the difference (75 cents).

By rounding up your change and keeping the difference, Acorns makes investing as easy as it can be; however, they do charge a fee.

Typically, it costs from $1 to $5 a month to invest with them. Instead of buying individual stocks, your money is reinvested in 1 of 5 prebuilt portfolios.

Acorns lookout for the financial best interests of the up and coming generations of investors, harnessing the strength and empowering step of micro-investing. 

Now the next question is; how do I get started on Acorns?

How To Get Started With Acorns

To register on Acorns, you need to click here to set up your account then follow the steps below.

  1. To start your account, choose a password and provide your:
    • Email address
    • Online banking login
    • Physical address
    • Social Security Number
    • Estimated net worth
  2. Link any credit or debit cards you want to earn “round-ups” with. (As many or as few as you want).
  3. Input your age, investment goals, timeline, and risk tolerance to determine your ideal portfolio.
  4. Based on your info and the Modern Portfolio Theory, Acorns suggests a perfect portfolio for you.
  5. To get your account running, you can then add an initial investment as little as $5+.
  6. Finally, customize your account by adjusting your round-ups and setting up recurring deposits to grow your investments more quickly.

What Are The Pros and Cons Of Using Acorns?

The easy to invest trading app offers users options to automatically trade daily, weekly, and monthly. This one feature makes it highly flexible. Additionally, the platform has options for every demand which comes with little change to spare.

Contrarily, Acorns leaves users with little investment options. You’ll only have approximately 7 asset classes to choose from. Some investing services spread asset allocation over 10+ classes.

Just like every other thing holds an advantage and disadvantage, Acorns has areas that make it flaccid and areas that give it an edge over other investment platforms.

Lets have a look…

SEE ALSO: Acorns investing app: How to cash out Easily in 2022

Acorns Pros 

  • Acorns is highly automatic.
  • On Acorns, you can invest spare change with ease.
  • The platform has lots of educational resources to look through to help clients learn.
  • There is room for automatic daily, weekly, or monthly funding schedule.
  • You can earn bonus investments by spending at certain stores and businesses through Found Money.
  • During setting up an account, you will have to select a portfolio that works for you and satisfies your risk tolerance.
  • You can easily accelerate investing with a one time deposit, recurring deposit, or a round-up multiplier.
  • You will have access to tax-advantaged retirement accounts for investing.
  • Create custodial accounts to start saving for future generations.
  • Support the planet by planting a tree when you sign up for the platform.

Acorns Cons

  • The $1 fixed fee for lite and $3 fixed fee monthly for personal may sound low but significantly cut into investment returns for small accounts.
  • You won’t have access to specific stocks or investments.
  • Most users feel the high automation feature has its own negative ends.
  • Lack of access to fundamental investment research.

Is Acorns Legit?

Acorns is an SEC Registered Investment platform.  Brokerage services are rendered to clients of Acorns Advisers by Acorns Securities, LLC, an SEC-registered broker-dealer, and member FINRA.  Member of SIPC. Securities in your account protected up to $500,000. Still in doubt?

Acorns now offer two new services, one for saving for retirement called Acorns Later, and another called Acorns Spend, which is a debit card that is combined with their other services.

The firm’s mission is to look after the financial best interests of the up-and-coming, beginning with the empowering step of micro-investing.

That small change of yours might mean a whole lot.

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Robinhood vs Acorns: Which is better?

Both investment and trading platforms offer unique features that are capable of tweaking your personal finance by opening doors of investment: Nonetheless, they have their differences.

If you want to start investing automatically, you might fancy a micro-investing app like Acrons. This app provides a spare change round-up feature that invests money for you.

Also, on Acorns, you won’t feel the impact of the cost implication since the management fee is just $1 a month.

For someone who’d like to exert control over their investments, you might not find options to invest in individual stocks, mutual and index funds, or bonds with Acorns – so if that’s you, Acorns might be a no-no.

On the other hand, if you’re keen on stock trading, managing your own securities, and want more investment options, the Robinhood investment app will offer you a better and more fruitful experience.

On Robinhood, you can trade on stocks, ETFs, and cryptocurrencies. More so, Robinhood offers $0 stock trades by cutting out physical offices and manual account management.

Lastly, Acorns is perfect for beginners and “hands-off” investors, while Robinhood is better for those who want a more active role in choosing their investments. And although they offer more customization, Robinhood’s trading is completely commission-free.

What Are The Differences Between Robinhood and Acorns?

The two trading apps have a $0 minimum fee. On Robinhood, you can buy individual stocks, ETFs, and cryptocurrency. On the other hand, Acorns gives you the option to choose from 5 portfolios based on your financial level and risk tolerance. These portfolios are put up and monitored by dozens of financial experts.

If you just want to start integrating investing into your everyday life with most of it done automatically for you, then a cool micro-investing app like Acorns is a great option to try. With its spare change round-up feature that invests money for you, you’ll feel less of a pinch and be able to gradually grow your portfolio.

You also won’t need to worry about high management fees as Acorns charges only $1 a month. Though for someone who’d like more control over their investments, there’s no option to invest in individual stocks, mutual and index funds, or bonds with Acorns – so if that’s you, it may not be the best investment app for you.

On the flip side, if you’re curious about stock trading and managing your own portfolios, and want more investment options, then the Robinhood investment app will likely offer you a better and more fruitful experience. You can choose from different financial instruments, including cryptocurrencies, as is FDIC insured.

It comes down to whether you want to be in charge or not.  If you want to build a portfolio from scratch and pay zero fees, Robinhood allows you to do exactly that.

If you are looking for some hand-holding for a small fee, or you are bad at saving money, Acorns is a perfect fit. 

Final Thoughts

These micro-investing apps are something for everyone.

If you’re a novice in the game that has never saved much, Acorns is likely your cup of coffee. This investment app automatically rounds up and invests your spare change whenever you make a purchase.

If you’re a seasoned investor and want to play around with individual stocks, ETFs, or cryptocurrency trading options, Robinhood is a nice option. Its commission-free trade structure provides a great way to practice evaluating stocks or experimenting in day trading.

Cheers!

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