Investing is a great way to grow your money. With so many different investment solutions to choose from, it can be difficult to know which investment app to choose. That’s why we’re here today.
We’re going to break down the differences between Betterment and Acorns so that you can choose which financial advisory company is right for you.
What is Betterment?
We’ll start with Betterment first. Betterment is geared towards general investing. It is designed to help investors grow their net worth and get the most out of their returns.
They are a robo-advisor that uses algorithms to determine your best investment without requiring you to speak directly to an advisor the way some financial companies require. Plus, this helps you save money because robo-advisors are much cheaper than services provided by a financial advisor.
Betterment also understands that there are many different ways for people to invest. What works for you may not work for someone else and Betterment knows that. That’s why Betterment has many advantages that can make it the right financial company for you.
Betterment Investor Overview
1. Pricing Plans
Betterment is extremely affordable for investors and they have two pricing plans you can choose from.
- 25 Annual Fee – Digital Investing
- $0 minimum balance
- Joint accounts, trust accounts, and IRAs
- Portfolio rebalancing
- Dividend investments
- Auto-adjustable
- Tax-loss harvesting
- Asset location
- Cash and checking funds can be added with no additional fees
- 40 Annual Fee – Premium Investing
- All digital investing features listed above
- Unlimited calls and emails with Certified Financial Planners
- Specialized investment advice with Certified Financial Planners
2. Portfolios
Betterment designs their portfolios with something to offer everyone. You can build a general investment portfolio, specialty portfolio, or build your own custom portfolio with the Betterment Flexible Portfolio options.
The general investment portfolios are the most common. There are two types of general investment portfolios that you can choose from with Betterment: Betterment Core portfolio or Goldman Sachs Smart Beta portfolio.
The Betterment Core portfolio focuses on global diversification which means that assets can be located all across the world. They are low-cost and tax-efficient exchange-traded funds (ETFs).
The Goldman Sachs Smart Beta portfolio focuses on market-capitalization Goldman Sachs ETFs which means that the value of the stock is determined by taking the price of the stock and multiplying it by its total number of shares.
What is Acorns?
Acorns is a micro-investing financial service that you can use by linking your bank account to your investment account to make everyday purchases. Acorns will round up your purchase to the nearest dollar amount using their Round-Ups feature. Round-Ups automatically deposits the difference into a diversified ETF portfolio.
Acorns takes all of the guesswork out of investing. It will automatically rebalance your portfolio. This means that if your investments are starting to stray from your target allocation, Acorns will automatically rebalance your portfolio to put your assets back in line with your target allocation.
Acorns Investor Overview
1. Pricing Plans
There are two types of Acorns plans you can choose: personal or family. You can use Acorns for 30 days before you’re charged a fee. Just make sure to cancel before those 30 days are up; otherwise, you will be charged for the first month.
- Personal – $3/month or $36/year
- Investment account, retirement account, and checking accounts all-in-one
- Metal debit card
- Bonus investments from 350+ Acorns partners
- Portfolio rebalancing
- Round-Ups investing from checking account(s)
- Direct deposit investing with Acorns Smart Deposit
- More than 55,000 ATMs with no fees
- No low-balance or overdraft fees
- Up to 10% in bonus investments
- Family – $5/month or $60/year
- All of the features of a personal plan
- Investment accounts for individuals and kids
- Retirement and checking accounts
- Multiple children can be added at no cost
- Automatic recurring investments
- Exclusive bonus investments
2. Portfolios
There are many different portfolios you can choose from when investing with Acorns. You can choose your risk tolerance level or how conservative you want to be when you invest with Acorns.
Core portfolios invest in the following ETFs:
- Ultra Short-Term Government Bonds (BIL)
- Ultra Short-Term Corps Bonds (JPST, ICHS)
- Short-Term Government Bonds (SHV)
- Medium Company Stocks (IJH)
- International Company Stocks (IXUS)
- Short-Term USD Bond (ISTB)
- US Aggregate Bond (AGG)
- Large Company Stocks (VOO)
- Small Company Stocks (IJR)
The percentage at which you invest in each ETF will be determined by the risk you choose. For example, a conservative core portfolio will invest an even 20% in 5 areas while a moderate core portfolio will invest larger amounts into riskier ETFs and smaller amounts into more conservative ETFs.
Sustainable portfolios invest in the following ETFs:
- Large and Mid-Cap US Stocks (SUSA)
- Small Company Stocks (ESML)
- International Company Stocks (ESGD)
- Emerging Market Stocks (ESGE)
- 1-5YR Corporate Bonds (SUSB)
- Short-term Treasury Bonds (SHY)
- US Treasuries (GOVT)
- US Mortgage-Backed Bonds (MBB)
- US Corporate Bonds (SUSC)
Sustainable portfolios range from moderately conservative to moderately aggressive.
So, Betterment vs Acorns? Which One Should I Choose?
There’s no right or wrong answer for which micro investing app you should choose. Each platform has an abundance of benefits that it offers its users and each platform is successful. It simply comes down to asking yourself what type of investing you will be doing and what fits your financial lifestyle.
For simplicity or beginners? Acorns is the best. You can easily set it and forget it with Acorns. Simply link your bank account and credit or debit card and Acorns will automatically start investing the rounded-up amount into an ETF. And with automatic portfolio rebalancing, your portfolio will automatically stay on track.
For those who want more control with their investing, including speaking to a Certified Financial Planner, then Betterment is for you. Betterment is best for those investors who are focused on investing and maximizing their returns. Betterment also has its tax-loss harvesting feature that ensures you pay as little in tax as legally possible. Acorns does not offer that type of feature.
Conclusion
Choosing the right micro-investing app can be difficult, especially when comparing two applications that have so many beneficial features.
For more information on portfolio management and additional Betterment information, check out our article on Betterment vs Robinhood.
