Acorns Vs Betterment (The Key Differences Explained)

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Acorns and Betterment are two of the most popular investment apps out right now. These are great for people who do not have a lot to invest but want to start socking away money.

Acorns and Betterment both use a Robo-advisor system to manage your money. Acorns are great for people who want to invest their change or set up recurring transactions, while Betterment is better-suited home people who have more income they want to invest.

Acorns are great for people who do not have much to invest, while Betterment is great for people who want to invest larger amounts. Acorns have lots of consumer protections in place, but Betterment offers more tax-savings opportunities. Acorns and Betterment both offer low fees and tax benefits, but there are some key differences.

Let us understand the key differences between Acorns and Betterment:

Acorns Vs Betterment

  • On the basis of the Investment method:

Betterment uses a slightly good investment method as compared to Acorns. Acorn is more suitable for people who are very new to the market or do not have much idea about markets. Acorns offer pre-diversification, but this has a negative effect on return rates because different assets do not perform well together. On the other hand, Betterment offers a transparent portfolio.

  • On the basis of user interface:

Acorns have the most user-friendly interface. Acorns are simple to use and understand. Acorns alert you when your portfolio falls below a certain threshold, but Betterment only notifies you if your portfolio falls below a specific trading threshold.

  • On the basis of investment minimum:

Acorns offer micro-investing with an investment minimum of $5 only. Acorns don’t have a recurring investment minimum. Betterment offers micro-investing with an investment minimum of $500 per month, which is great for people who are just starting out with Acorns or have more belief that they can invest.

  • On the basis of Tax Loss Harvesting:

Betterment offers tax-loss harvesting, which Acorns doesn’t. Acorns only offer tax-free retirement accounts, while Betterment also offers Taxable accounts. Acorns have a lot of consumer protections in place, but there are no such consumer protections available on Betterment. Acorns offer better daily interest rates than Betterment does.

  • On the basis of availability:

Acorns are only available in the United States, whereas Betterment is available in several countries.

  • On the basis of customer support:

Betterment offers better customer support than Acorns. Acorns customer support is not as good as Betterments. Acorns offer a referral program to attract new customers, but Betterment doesn’t have anything like that.

  • On the basis of Human Advisor:

After reaching a certain level, Betterment provides the facility of Human Advisor. Acorns don’t offer this kind of facility. Acorns offer an Acorn Later feature that helps you save for a specific goal, such as travel, a wedding or even buying a couch, but Betterment doesn’t have anything like the Acorn Later feature. Acorns and Betterment both provide hands-off, total-portfolio management.

  • On the basis of Privacy:

Acorns are more transparent about their privacy policies, but Betterment is not. Acorns are more open to giving out information about your money to third parties, compared to Betterment. Acorns don’t share the data of its customers with any other third party, while Betterment doesn’t have a clear policy on this. Acorns have an excellent Acorns TV Channel, but Betterment doesn’t have something like Acorns TV.

Now let us understand each of them in detail:

What is Acorns?

Acorns began in September 2014, Acorns Review started with the goal to provide any person that was looking into using Acorn as their investment platform.

Acorn has quickly become the most popular automated investing service. Acorns Review has thrown it in the spotlight to compare and contrast with other Robo-investment alternatives like Betterment and Wealthfront, but also with more traditional investing options like Vanguard.

Acorn has brought automated investing to the masses, allowing for micro-investments at a manageable cost. When you think of saving money, most people want to save as much as they can. Unfortunately, that leads many people to try and save money by purchasing in bulk or finding coupons for discounts.

Acorn is praised for its ease of use, low costs, and automatic investing. Acorn has become very popular among millennials, who are looking to begin investing in order to build wealth for the future.

Acorn is a service that allows you to take the spare change from your everyday purchases and turn it into investments. Acorns invest in exchange-traded funds (ETFs), which are similar to mutual funds, but trade like stocks on an exchange.

Features of Acorns:

  • Acorns LLC is based in California.
  • Acorn was founded in 2012.
  • It uses modern portfolio theory to select investments.
  • It provides an app for investing your money on the go with minimal effort.
  • Acorns automatically invest your money for you.
  • Acorns are available to those who live in the US.
  • Acorns are free to use for Acorn customers.
  • Acorns automatically withdraw money from checking accounts every two days. Acorns invest the money in Acorn Account.
  • Acorns use fractional shares, which means that you don’t have to purchase an entire share of stock for Acorns to purchase it for Acrons Accts.

Pros and Cons of Acorns:

Pros:

  • Free Trial:

Acorns offer a free trial to anyone who wants to sign up for Acorns.

  • Automatic Investments:

Acorns allow you to choose which types of investments you want, and it invests your money into those investments for you. Acorn Accounts make investing affordable by letting you invest with as little as $5 per investment. Acorns are great for someone who wants Acorns to do the work of finding the best investments on your behalf.

  • Free Stock:

Acorns offer every customer a free share of stock when they sign up for an account. Acorns also offer commission-free trading, which means that you won’t have to pay commissions for trades.

  • Fractional shares:

When Acorns invests your money, Acorns will invest it in fractional shares. This means that you can own a small amount of many different companies with Acorns.

  • Customization:

Acorns lets you control the level of risk that you are willing to take on investment, so Acorns can be adjusted for any kind of investor. Acorns are great for anyone who wants to choose their own types of investments and risk level.

  • Easy Access:

Acorns make it easy to access funds, so you can withdraw money whenever you need it.

Cons:

  • No tax-loss harvesting:

Acorns Accts don’t use tax-loss harvesting.

  • High Transfer fees:

Acorns Accts transfer fees are too high. Acorns Accts have a $1 a month fee for both buying and selling stocks, which is higher than the industry average of $4.95 per transaction. Acorns Accts also have a trading fee of .5% to 1%, which is the highest in the industry.

  • Lack of Guidance:

Acorn does not offer a lot of guidance with its service. It doesn’t have a lot of customer service options and it doesn’t have educational resources on its Acorns website.

What is Betterment?

Betterment was founded in 2008 by Jon Stein, who previously worked at E-Trade. It uses Modern Portfolio Theory to create an efficient mix of investments to help you reach your long-term financial goals. Betterment is about more than just investing. Betterment makes saving money easy by minimizing fees and making goals clear.

Betterment is a company that provides financial advice and management. It allows you to manage portfolios using index funds, which are investments designed to follow the fluctuation of a market or sector in order to maximize your money. Betterment allows its customers to invest both large and small sums of money into a diversified portfolio.

Betterment has recently received $70 million in funding to expand its services. It has recently done an upgrade to their website which allows more customers to use Betterment’s services. Betterment is currently offering some promotional pricing, allowing new users to get Betterment for free for one year. Once Betterments clients reach a certain amount of money, Betterment charges a management fee that is based on the Betterments policy.

Since its inception, Betterment has provided a method for investors to manage portfolios using index funds, which are investments designed to follow Betterment in order to maximize your money.

Features of Betterment:

  • Robo advisor for beginners: Betterment’s automated services allow new investors to get Betterment for free for one year. Betterment charges a management fee that is based on Betterments policy once Betterments clients reach a certain amount of money within their account.
  • Customizable portfolios: Betterment allows its customers to invest both large and small sums of money into a diversified portfolio.
  • Betterment has a variety of different portfolios you can choose from which range in risk and reward.
  • Betterment’s automated services allow Betterments clients to invest their money automatically, ensuring they don’t make any mistakes with their investments.
  • Betterment also creates Betterments portfolios based on customers’ goals and objectives.
  • Betterment performs admirably well compared to other financial service providers. Betterment provides a great service and has solidified its place as one of the top Robo advisors.

Pros and Cons

Pros:

  • Goal tracking:

Betterment allows Betterments clients to set goals and track their progress until they reach those goals.

  • Customizable portfolios:

Betterment allows Betterments clients to invest their money automatically, ensuring they don’t make any mistakes with their investments.

  • Multiple risk levels:

Betterment provides a variety of different portfolios you can choose from which range in risk and reward.

  • Transparency in portfolios:

Betterment provides its clients with a detailed report of portfolios.

  • Account syncing:

Betterment is interconnected with clients’ banks, savings, and credit cards to help Betterments clients save time.

Cons:

  • No margin lending:

Betterment doesn’t allow Betterments clients to lend money on margin. Betterment only allows Betterments clients to use Betterment for cash or stock positions.

  • Can’t choose specific stocks:

Betterment uses index funds, which are investments designed to follow the fluctuation of a market or sector in order to maximize your money. Betterment can’t pick specific stocks for Betterments clients.

  • High fees:

Betterment charges a management fee that is based on Betterments policy once its clients reach a certain amount of money within their account. Betterment also doesn’t allow clients to trade on margin.

Who should use Acorns?

  • Acorn is a great option for someone who wants to start building wealth early. It’s also a good choice if you’re looking for an investment service that allows you to invest your money without too much thought or effort.
  • Acorns are the best option for someone who wants to plan for retirement. It allows you to choose which types of investments you want, and it invests your money into those investments for you.
  • Acorns also allow you to set up recurring investments, so if you want to start saving small amounts of money each week, Acorns is the best option for you.
  • Acorns are great for someone who wants to invest their money occasionally. Acorns allow you to set up one-time or recurring investments that are as little as $5 per investment.
  • Acorns are great for someone who has a budget and wants to invest their money. Acorns allow you to create budgets, track your spending, and receive weekly updates about your investments.

Acorn is a great choice for any of the above types of people, but if you’re only looking to invest your money occasionally, you might be better off with Acorns.

Who should use Betterment?

Betterment is great for beginner investors. Betterment’s automated services allow Betterments clients to invest their money automatically, ensuring they don’t make any mistakes with their investments. Betterment also creates Betterments portfolios based on customers’ goals and objectives.

Betterment performs admirably well compared to other financial service providers. Betterment provides a great service and has solidified its place as one of the top Robo advisors. Betterment gives Betterments clients the opportunity to invest their money automatically, ensuring Betterments clients don’t make any errors.

The Bottom Line:

Acorns and Betterment both offer similar services which allow you to start investing your money easily with little thought or effort. Acorns and Betterment both offer Robo-advisor services that create portfolios based on clients’ goals and objectives.

Acorns and Betterment both offer automatic services that ensure their clients don’t make any errors with their investments. Acorns and Betterment both offer services that allow their clients to invest money automatically, so Acorns and Betterment are great for beginner investors.

I lead product content strategy for SaltMoney. Additionally, I’m helping our broader team of 4 evolve into a mature content strategy practice with the right documentation and processes to deliver quality work. Prior to Instacart, I was a content strategy lead at Uber Eats and Facebook. Before that, I was a content strategist at SapientNitro, helping major Fortune 500 brands create better, more useful digital content.

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