Betterment vs Acorns vs Robinhood – An Experiment
It’s time for the ultimate robo-investor showdown. I decided to download all three apps last year and find out which one I liked the best.
Acorns and Betterment are true robo-investors where you set your risk tolerance and send them money as/when you can
Acorns is a very simple but effective app for roboinvesting.
You attach a bank account, can make one time investments, or set up recurring investments. I decided to try the reoccurring investing.
What I liked about this program is that there are other ways to invest. They have something called “round ups” where you can attach a credit card and if you spend say 28.77, the next .23 will be taken aside and when you hit $5.00 total, it gets moved over and invested.
You also get your choice on how you want to invest your money. It’s broken down in very simple terms
As you can see, I choice the highest risk.
I’ve been doing it for about 6 months now and my current return is 4.73%
Not bad. Not great, but not bad. I’ve been dollar cost averaging and I started this testing as the market was nearing all time highs, so it’s to be expected.
Likes and Dislikes? Honestly there is very little I dislike about it. The app is very easy to use, they have a easy to use webpage and the growth seems nice.
Would highly recommend this one. Click the link above for an invite and they will deposit funds into your account when you sign up.
I’ve heard a ton about betterment and it was truly one of the first roboinvestors to start. Why didn’t I try them first? I’ll be honest, I’m not sure.
They have some very interesting features, some I’m not taking advantage of, but very interesting indeed. Instead of round ups, betterment has a feature where you can attach it to an account to take excess cash. Let’s say you have a savings account where you keep your emergency money. You can tell betterment what minimum you want to keep in that account and anything excess they can then take to invest. Very unique and interesting idea.
I set up a simple reoccurring investment to move money over weekly.
They also allow you to simply choose how you want your funds to be invested. Aggressive, moderate, conservative, etc.
They also have professional advice available. From a retirement guide to upgrading for a CFP (certified financial planner) to look at your account, go over your goals, and give you professional advice.
That sounds like a great feature for me.
I’ve only been with betterment for two weeks so I can’t speak to all the features or performance. Frankly it’s flat for me right now. If anything I lost a few cents, but I will keep this one up along with acorns.
Their website is nice and easy to navigate, and the choices are plenty for investing. I’m not sure I like their take your extra money part, but of course that’s optional.
Now this is a very different type of roboinvestor. This app – and currently strictly just an app right now, the website is in beta, is for those who want to do strictly stock investing.
So you can buy shares of ROKU, or Ford, or whomever… for FREE! That’s right, you read that correctly, no brokerage fees at all.
This company will also allow you to move money weekly into the account, it gets deposited into cash waiting for you to then invest it.
I’ve currently been moving money slowly over weekly and when it gets to be enough I purchase a share or two of a company. It does allow for day trading and has day trading protections. In the two weeks I’ve been using this one, I’m up 11% already on my money. I guess I can pick them!
Really enjoying this app. This is good for the buy and hold investor, those that want to purchase individual stocks, but can only do 1 at a time. Large companies such as Schwab or Fidelity only charge ~ $5.00 per trade now a days, and that’s fine if you’re purchasing 50 or 100 shares, but at 1 share a time, those fees would just simply eat away and any profit you might make.
So this is a great alternative for those of us that can only afford 1 share a time.
Great way to get introduced to the stock market and purchasing individual shares at a very low risk.
Eight Month Update:
Acorns: 2.76% Gain
Betterment: 0.5% Gain
RobinHood: 9.54% Gain
Obviously Robinhood is the winner here, but that’s also due to the stocks I’ve picked. One’s that have great income potential and are on the low side so great capital growth potential too.
Acorns is hands down the winner on the robo-invester side. In the past 8 months the market went from an all time record high to a still high, but lower and has been clawing its way back towards that record high.
Betterment, I’m just very unhappy with. It only recently came back into positive territory. They’re claiming that new stuff is coming, so I might hold out until the new features show before closing the doors on this one.
An odd net positive as I’ve just been using side play money to fund these accounts, it’s forced me to save even more money. Normally I would just blow these funds on frivolous stuff – you know, twenty dollars here, twenty dollars there – not really thinking about it and adding up. Instead of been saving the twenty dollars here and there and it has added up to almost $3000 over the past 8 months. Not a bad side effect on an experiment.
Ten Month Update:
So it’s been a while and another follow up.
Robinhood: Thumbs up. Love it. I’ve been buying individual stocks and ETF’s…. learning more and doing well. Up about 10% for the year. Granted that rate is very dependent on the individual and what you choose, but I like having the choice.
Acorns: My set it and forget it version has returned me just slightly over 3%
Not the greatest, but better than a CD right now, so I can’t fully complain either. Hasn’t been 12 months yet… Will be in November I believe.
Betterment: I would just like to cancel this one. Return has been a dismal 0.8%
I almost killed betterment today, but decided I would let it fully run to the 12 month mark.
Seriously though, get robinhood, buy ETFs… or go the Acorns set it and forget it route… Thank me later.
I have officially killed Betterment.
I was going to hold out for a year, but just couldn’t take it anymore. Total return now is .2%
I would have done better in a simple savings account.
What I learned from this 12 month experiment?
Robinhood performed the best. Not because I’m the next Warren Buffet can’t-go-wrong stock picker, but because I picked good companies that I felt were undervalued. I did not pick the next long shot stock to maybe make me rich. That’s gambling, not investing.
Of course Robinhood allows you to gamble more by trading for nothing. When there is skin in the game, even if it’s only a $5 fee, you think twice before trading.
Acorns performed the best for the set it and forget it investor. I liked the round ups also. For those of us that need that polite nudge to save, this worked very well.
Betterment performed the poorest, despite being side by side with Acorns and with the same investing profile.
So my recommendation? Open up an account a Fidelity Investments.
Note: There are links, but no affiliate links here. This is just honest, first-hand information.