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Betterment vs. Acorns: How They Compare



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Betterment and Acorns are two popular financial services that aim to automate saving and investing for their users. But what happens when you compare Betterment vs. Acorns head to head?

With Acorns, you round up your purchases to the nearest dollar and toss the spare change into a savings or investing account. 

On the other hand, with Betterment, you allow the app’s robo-advisor functions to automatically invest your money and balance a portfolio.

While both companies offer similar features, there are some key differences that will help you decide which app is right for your financial situation.

Betterment Acorns
Robo Advisor Quality Provides more flexibility and easier goal tracking Better if you’re beginning or just want a way to put your spare change to use
Mobile Banking Debit card and mobile money management plus a high-yield savings option Debit card and mobile money management
Promotions and Rewards Cashback rewards, no fees for asset management for bringing referrals Direct cash rewards for referrals, $1 million sweepstakes
Pricing Free basic plan Acorns charges a fee for all of its account tiers
Customer Support Direct one-on-one access to advisors, plus email and phone support Phone support but no advisory services
App Performance Secure, full encryption, identity verification, and fraud protection Secure, full encryption, identity verification, and fraud protection

Keep reading to learn how Betterment and Acorns compare so you can make that call yourself. 

or, jump straight to our in-depth Betterment vs. Acorns comparison

Betterment Review for 2022

Here’s everything you need to know about Betterment.

What is Betterment?

Betterment is a mobile investing app and robo-advisor service. It also offers access to checking and savings accounts as well as taxable accounts and tax-friendly accounts.

The app launched back in 2008. Recently, Betterment announced record growth during the first quarter of 2021, with net new clients up more than 100% year over year.

As of today, the platform has $31 billion in assets under management (AUM) and upwards of 650,000 customers. 

Betterment features

Here are the top features of Betterment.

Automated investing 

Betterment is a top hands-off investment option. 

When you open a Betterment account, the platform attempts to understand your unique financial situation and make investment decisions on your behalf. 

Betterment builds customized portfolios with low-cost, diversified exchange-traded funds (ETFs), which are one of the least risky asset classes. 

Betterment Tax Loss Harvesting+ 

Tax-loss harvesting involves selling investments at a loss to offset capital gains taxes. This is a sophisticated strategy that individual investors shouldn’t attempt on their own.

Betterment offers tax-loss harvesting on investment accounts, whereas Acorns doesn’t. The feature is known as TLH+. 

IRAs and 401(k)

Looking to set up a tax-friendly retirement account? Betterment offers traditional IRAs, Roth IRAs, SEP IRAs, and rollovers. Currently, the company doesn’t offer SIMPLE IRAs. 

Betterment also has a goal-based investment allocation system, which transfers money into various stocks and bonds. Additionally, the company features a tax coordination tool, which increases after-tax returns on retirement money.

Betterment lets you set up regular auto-deposits with automatic stoppages to prevent you from going beyond annual IRA limits.

No-fee checking

In addition to investing, Betterment offers a handy no-fee checking service. It comes with a tap-to-pay Visa debit card, along with access to mobile pay services like Apple Pay and Google Pay.

Betterment automatically reimburses all ATM fees and foreign fees and avoids overdraft fees. In addition, through a partnership with NBKC Bank, this platform offers insurance from the Federal Deposit Insurance Corporation (FDIC) that protects up to $250,000 per account.

To clarify, financial technology providers like Betterment and Acorns aren’t banks and don’t store or transfer money. Instead, they partner with banks to power the customer-facing digital experiences. 

Cash Reserve

Betterment also provides access to the Cash Reserve savings program, which makes it easy to manage money using a mobile device. 

This no-fee, high-yield account offers a variable APY, which tracks the fed funds rate. At the time of writing, the rate is hovering at 0.10% APY. 

Cash Reserve lets you create separate stashes of cash for specific goals and automatically save money to accomplish each. On top of this, the app provides spending analysis and guidance.

You can move money in and out of a Cash Reserve account without having to worry about transfer fees, and withdrawals take one to two business days.

What’s more, Betterment now offers joint Cash Reserve accounts, which are eligible for up to $2 million in FDIC insurance. 

Goal tracking

One of my favorite Betterment features is goal tracking, which helps you set financial goals and monitor your progress.

For example, you can customize goals like “family vacation” or “new bike” and use Betterment’s tools to help reach them. Connect outside accounts, schedule deposits, and calculate how to reach your target with a goal forecaster. 

All-in-one financial dashboard

Betterment provides an all-in-one financial dashboard that makes it easy to see your net worth, connect outside accounts, view performance, and track savings progress. 

You can also add shared accounts and track deposits, spending, and transfers. 

Betterment pricing and fees

Betterment offers three pricing plans, including a free model and two paid plans. 

Betterment Checking and Cash Reserve (no fee)

  • $0 minimum balance 
  • No-fee checking account and Visa debit card 
  • ATM fee reimbursement 
  • FDIC insurance up to $250,000
  • Cash Reserve 
  • Financial goal setting and advice 
  • Retirement planning tools
  • Advice for third-party bank accounts

Betterment Digital Investing (0.25% annual fee) 

  • $0 account minimum 
  • Management fee of ~$2.50/ year for every $1,000
  • Digital investing with managed portfolios 
  • Socially responsible investing
  • Multiple account options (joint accounts, IRAs, and trusts) 
  • Automatic tools like automatic rebalancing
  • Dividend reinvestment
  • Add checking and Cash Reserve for no extra cost

Betterment Premium Investing (0.40% annual fee)

  • $100,000 minimum balance 
  • Management fee of ~$400/year for every $100,000
  • Access all digital investing features 
  • Unlimited calls and emails with Betterment’s CFP team
  • Access to human advisors 
  • Add checking and Cash Reserve for no extra cost

Betterment promotions for 2022

Here are the top promotions running now.

Betterment referral program

Betterment’s referral program offers thirty days of no-fee asset management if you bring a new customer to the platform. Meanwhile, your referral pal will get three months of free service — a win-win for both of you. 

Refer three friends and you can both earn an additional year of free service. You can refer up to five people, so if you have a group of like-minded friends, why not invite them all?

Betterment rewards 

When you use the Betterment Visa Debit Card, you can receive cashback rewards from leading brands and retailers like Adidas, Walmart, Staples, and Dunkin. If you like to shop, you might as well swipe with Betterment and get some cashback rewards. But I must say that spending money to get cash back is certainly not going to fast-track your journey to financial freedom!

Now that you have a better understanding of Betterment, let’s turn our attention to the second part of the puzzle: Acorns.

Acorns Review for 2022

Here’s everything you need to know about Acorns.

What is Acorns?

Just like Betterment, the Acorns app funnels money into investing, checking, and retirement accounts. It specializes in taking found money — or spare change — and putting it to work on your behalf.  

Acorns was a bit later to the game than Betterment, having entered the market in 2014. 

The company now has more than 4 million users and a total value of $2.2 billion. Acorns is planning to merge with Pioneer Merger Corp. later this year. 

Acorns features 

Here are the top features of Acorns.

Acorns Investing 

The main feature of Acorns is its investing account. Here’s how it works.

Acorns invests spare change through the Round-Up program, which helps you passively invest cash as you spend money.

When you make a purchase, Acorns rounds up the amount of money you spend to the nearest dollar and sets aside the remaining amount for investing.

Anytime you invest spare change, the company puts the money into diversified ETF portfolios with optimal expense ratios. Acorns provide automatic portfolio rebalancing for ongoing performance optimization.

In addition, Acorns has a smart deposit feature, which pulls money from a direct deposit for investing.

Acorns Checking 

Acorns Checking is an online checking service that you can use to store money, make direct deposits, transfer funds, and send checks. It used to be called Acorns Spend and is made possible through a partnership with Lincoln Savings Bank.

Open an account with Acorns, and you’ll also receive a tungsten metal debit card with a custom engraved signature. 

Like Betterment, Acorns accounts come with up to $250,000 of FDIC insurance. Unlike Betterment, Acorns doesn’t offer a high-yield savings account.

Learning resources

Acorns has a library filled with educational resources that you can use to learn more about investing.

If this sounds intriguing, check out Grow Magazine and the Money Basics knowledge center.

Acorns Sustainable Portfolios (ESG Investing)

A growing number of investors only want to put their money into eco-friendly organizations. This approach is called ESG (environmental, social, and governance) investing or socially responsible investing.

The problem is that if you try to invest sustainably on your own, you may wind up taking unnecessary risks (i.e., picking random stocks) that hurt your portfolio.

To solve this problem, Acorns offers a Sustainable Portfolios feature that automatically disperses your funds across ESG-friendly assets — allowing you to help the planet and your portfolio at the same time. 

Acorns pricing and fees

Acorns charges a fee for all of its account tiers. There’s no free plan like Betterment.  

Here’s a breakdown of the features included with Acorns’ three paid account types. 

Lite ($1 per month) 

  • Access to Acorns Investing
  • Set up recurring investments
  • Earn bonus investments from more than 350 partners
  • Access hundreds of articles from financial experts

Personal ($3 per month)

  • Access to all Lite features
  • Retirement planning options
  • Get a checking account with a cool metal debit card 
  • Access to 55,000 fee-free ATMs
  • Bonus investment opportunities

Family ($5 per month)

  • Access to all Lite and Personal features
  • Ability to set up shared family investing and banking
  • Retirement planning 
  • Personal investing 
  • Personal checking

Acorns promotions for 2022

Here are the top promotions Acorns is offering.

Acorns referral program

Refer a friend to Acorns and you can both earn a $5 bonus once your buddy invests $5 or more.

There are occasional referral incentives to keep an eye out for as well. For example, during August 2021, Acorns had a special referral bonus that paid up to $1,000 for five referrals. There were also recent bonuses of up to $50 for one referral and $600 for three referrals.

Acorns Earn

Acorns Earn is a Chrome extension that unlocks special discounts when you shop online at over 12,000 retailers. Similar to how you can earn cash back with the Betterment Visa Debit Card, you have to spend money to “earn” rewards. 

As the saying goes, there’s no such thing as a free lunch!

Path to $1 Million Sweepstakes

All Acorns customers will be automatically enrolled in the Path to $1 Million Sweepstakes. You can earn additional entries by completing qualifying activities.

One lucky winner will receive a $1 million deposit to their Acorns Invest account. 

Comparing Betterment vs. Acorns

​Now that we have covered the nuts and bolts of each company, let’s see how they compare side by side.

Robo advisor quality 

🏆 Winner: Betterment 

Both Betterment and Acorns offer robo-advisory services for automated investing. 

Of the two, Betterment is a better option for serious investors who want to maximize their returns because the platform provides more flexibility and easier goal tracking. 

Acorns is a better option if you’re beginning or just want a way to put your spare change to use. 

Mobile banking

🏆 Winner: Betterment

I like the fact that Acorns offers a debit card and mobile money management. However, Betterment has a very similar package along with a high-yield savings option, which Acorns lacks.

For that reason, I think it’s clear that Betterment has the stronger banking product. 

Promotions and rewards 

🏆 Winner: Acorns 

Both programs have enticing rewards programs. However, Acorns provides some better incentives — including direct cash rewards for referrals instead of a free service.  

Acorns also has a $1 million sweepstakes going on. So, to me, when it comes to promotional packages, Acorns is the winner.

Of course, referrals and incentives don’t mean all that much in the grand scheme of things. It’s important to use a financial app because you like what it has to offer. Rewards are just icing on the cake. 

Signing up and getting started 

🏆Winner: It’s a tie

Both Acorns and Betterment are super-easy to use. With both services, all you have to do is sign up, download the app, and link your bank accounts.

Neither app requires a lengthy approval process or credit pull. As long as you live in the U.S., are 18 years old, and have a valid Social Security number and email address, you should be able to start using these apps in a matter of minutes.

Customer support 

🏆 Winner: Betterment

Acorns provides phone support at 1 (855) 739-2859. However, the company doesn’t really offer advisory services. 

For this reason, my vote goes to Betterment for customer support. The company provides direct one-on-one access to advisors. In addition, Betterment offers technical support via email ([email protected]) and over the phone at 1 (646) 600-8263.

App performance 

🏆 Winner: Acorns

Both mobile apps perform very well for Android and Apple. 

Betterment has a score of 4.8/5 stars in the App Store and 4.4/5 stars in the Play Store. 

Likewise, Acorns has a score of 4.7/5 in the App Store and 4.3/5 in the Play Store.

No app is perfect, and you’re bound to experience some issues from time to time regardless of which version you’re using. However, both apps are pretty solid and trustworthy. 

On top of this, both apps are also very secure, with full encryption, identity verification, and fraud protection.

Out of the two apps, I prefer the mobile experience on Acorns because it’s highly effective at helping you save and invest extra money. So if you’re looking to optimize your savings strategy, you can’t go wrong with Acorns.

Pricing

🏆 Winner: Betterment

It’s hard to look past Betterment’s free package, which provides access to checking, high-yield savings, and planning tools. That plan definitely beats Acorns’ minimum or premium plans. Ultimately, you get more without having to spend any hard-earned cash. 

Betterment charges more for its paid managed services, with annual fees of 0.25% and 0.40%. However, Betterment offers more robust investing services, so it’s worth it for serious investors.

Overall winner: It’s a tie

At the end of the day, it isn’t a matter of saying one app is better than the other. It’s a matter of choosing which one is right for your needs.

If you’re just starting out and want a way to start investing small amounts of capital, Acorns is probably the better bet. If you want to use a powerful robo-advisor, Betterment is superior. 

Since you’ve made it this far, why not check out Acorns and Betterment and see which one you like better? Both apps are flexible, so you don’t have to worry about signing any binding contracts.

And remember: If you don’t like one service, you could always switch over to the other.  

Alternative Investment Platforms to Consider

Here are alternative investment platforms to consider.

Best mobile experience: Wealthfront 

Wealthfront is an automated investing and savings app that caters to customized portfolios. You can either build a portfolio yourself or let Wealthfront handle the job for you.

Best for beginners: Robinhood 

Robinhood offers commission-free investing over a user-friendly app. When you sign up for Robinhood, the company will send you a free share of stock.

Robinhood is generally for beginner investors who want to dip their toes into the market. If that sounds like you, why not give it a whirl?

Best overall advisor: BlackRock

BlackRock is a leading asset manager that provides access to a wide array of funds and portfolios. The company offers great mutual funds and ETFs, among other products.

Best for low-cost index funds: Vanguard

Vanguard offers low-cost, high-performing index funds. If you’re looking for funds that can give you broad market exposure and solid long-term growth, you should strongly consider Vanguard.

Frequently Asked Questions 

Here are the most frequently asked questions about Betterment vs. Acorns.

How does Acorns work?

Acorns rounds up each transaction to the nearest dollar, taking the “spare change” and automatically investing it on your behalf. For example, if you buy something for $7.12, Acorns will invest 88 cents for you, and the total transaction will show up as $8 on your statement.

Basically, Acorns offers a way to passively invest, without having to manually transfer money. This is a very convenient feature for new investors — and people who simply want to invest more without doing any legwork.

Is Acorns worth it?

Acorns doesn’t cost much, which means you can put more into growing your account balances instead of paying fees. I am all for low-fee financial tools. 

The only real downside to Acorns is that it doesn’t offer much control over investments. For example, you can’t buy individual stocks, fractional shares, government bonds, corporate bonds, real estate, or cryptocurrencies. 

If you prefer to take more of a hands-on approach, stick with a traditional online brokerage account.

What is a robo-advisor?

A robo-advisor is an investment algorithm that automatically allocates assets on your behalf. Robo-advisors study your overall financial situation to learn your goals and automatically invest to help reach your target objectives. It’s a bit like working with a digital financial advisor.

The best robo-advisors can help you diversify your portfolio without stressing your risk tolerance.

As a disclaimer, no robo-advisor is perfect, and all investing carries risk. 

Does Betterment have account minimums? 

Betterment’s premium plan has a $100,000 account minimum. There’s no minimum investment requirement or account minimum for Betterment’s free or digital plans.

The Bottom Line

Betterment and Acorns are top-rated financial planning and investment apps. 

Both can help you build an investment portfolio and generate passive income from the stock market — with very little effort required on your end, thanks to automation. 

In my opinion, Acorns is better for beginners who are looking to save extra money, while Betterment is well-suited for experienced investors that have more capital. However, you can’t go wrong with either one, and there’s no rule that says you can’t use both.

Whatever you decide, if you’re investing and saving money that you would have otherwise spent, you’re already headed in the right direction.