Acorns vs Betterment 2024

By: Cooper Haywood
Last Updated: April 07, 2020
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Acorns. One of the favorite apps of millennial investors based on the premise of stashing away small amount of money. It’s a perfect blend of ease, power, interface, and demographic targeting. Aspiring young investors with smartphones (that’s all of you) should be using this to get started.

Betterment. One of the most well-loved robo-advisers on the market today. Powerful design, simplistic user interaction, and great investment strategies at your fingertips. It handles retirement accounts with ease, manages tax efficiency, and tailors a plan to your specific needs. It’s a few steps more powerful than Acorns.

But which one is really better?

It might be hard to equitably compare the two, but that’s not going to stop me from trying!

Who Should Use Acorns?

Alright, since both platforms achieve very different goals let’s be clear about who should use Acorns.

Acorns is an app that’s meant to make saving and investing simple. It’s like “baby’s first investment app” which isn’t to say that you can’t use it if you’re an experienced investor. The app just happens to be suited and tailored to inexperienced investors to make the process smooth.

Acorns also has “Found Money” where purchases at participating retailers will return you up to 5% of your spending as cash back into your investment account. Popular retailers are Apple, Walmart, Dollar Shave Club, and many more trendy stores! This can actually add up quite quickly and if you’re shopping at these places anyways, it counts as a guaranteed return on your investment. You won’t find that in the stock market.

Once you start needing features like tax impact considerations, retirement accounts, or customizable asset allocations you’ll find Acorns can’t keep up. I still use the app anyways because it’s handy for helping me save money.

Who Should Use Betterment?

Betterment is essentially a full powered digital financial adviser. They’re not reinventing the wheel, the platform just uses a math-powered version of Modern Portfolio Theory and conventional investment wisdom.

That said, it also happens to be extremely powerful. Betterment has the capability to orchestrate a comprehensive investment strategy across multiple accounts. You can link external accounts, brokerage accounts, and retirement accounts. Betterment will conduct a beautiful symphony of investment optimization where the crescendo is a well crafted portfolio that meets your total needs.

You have a choice of four portfolios:

  1. Standard Betterment ETF portfolio - tried and true diversified equities portfolio.
  2. Socially Responsible Investing (SRI) portfolio - tailored for those who want to align their values with their investments, this portfolio favors investing in companies that meet or exceed criteria involving environmental, social, and governance impact.
  3. Blackrock Target Income portfolio - designed for those in retirement or seeking a low-risk alternative, this is a 100% bond portfolio with different income targets that seeks to provide steady income with low risk.
  4. Goldman Sachs Smart Beta portfolio - best suited for long-term goals, this portfolio follows multiple rules-based investment strategies that select stocks and bonds to outperform a traditional market index.

If you need more power for your investing but don’t want to learn all the details yourself, Betterment is a good choice.

Which App Is Best For Retirement Investments?

There’s really no two ways about it. Betterment takes the cake on this aspect.

Acorns is a platform that’s really designed with minimal control. You have 5 portfolios to choose from and they’ll keep new investors happy. If you’re more experienced or need customization to achieve your retirement goals, you’re out of luck. You can’t even have a Traditional or Roth IRA with Acorns - you’re stuck with a plain brokerage account with no tax advantages.

Betterment, on the other hand, supports multiple account types including retirement accounts. Of course this is a must for retirement investors. You’ll also be able to fine tune and modify your overall investment holdings with a greater degree of accuracy with Betterment.

Overall there’s really no contest - retirement investors should be skipping Acorns.

Advantages of Acorns

  • Referral bonus program earns you $5 when you sign up and $5 any time a friend signs up.
  • Saving money for those who have difficulty find enough money to set aside.
  • Simple use and powerful interface for beginner investors.
  • Easy to understand investment concepts and portfolios.
  • Found Money features gives you cashback from everyday purchases at popular retailers like Apple, Walmart, Jet and more!

Advantages of Betterment

  • Multiple account types - including retirement accounts.
  • Advanced portfolios tailored exactly to your needs using the “RetireGuide”.
  • Team of real financial advisers ready to help you.
  • Can be linked to external accounts.
  • SmartDeposit feature competes with Acorns by “finding money” in your accounts that can be invested.
  • Up to a year managed for free when you sign up with our link.

Are My Investments Protected?

Both Acorns and Betterment are registered with the SEC and protected under SIPC. If you’re curious about SIPC insurance and how it works, you can look into the details here.

SIPC does protect against failed brokerage firms from bankruptcy or other issues of insolvency that might cause them to be unable to pay you your money back. You’re insured up to $500,000 with each brokerage through SIPC for that.

SIPC does not protect against market decline or dumb decisions on your part. If your investments decline in value, that’s on you. The money is gone. Don’t expect SIPC insurance to magically pay your money back from an investment gone bad.

I will say that both Acorns and Betterment use very reasonable portfolio constructions principles. The investments each app will put your money into are quite reliable and they’re both very legit and above board with what they’re doing. That’s not a guarantee that your investments can’t decline, however.


And so we come to it at last. If you’re budget minded, pricing might be your ultimate factor. Of course, we have to remember that each app provides a quite different service. For that reason, we can expect them to each charge different fees.

Acorns Pricing

Acorns will charge you $12 / year for accounts up to $5,000 and then 0.25% on accounts above that. The fee-based $1 / month strategy may seem cheap, but it can really be pretty harsh on smaller accounts.

For example, on a typical account of $100 that many Acorns users have the $12 fee represents 12% of assets under management! Even the most aggressive hedge funds don’t charge their billionaire clients that high of a percentage!

However, on an account size of $4,500 that fee only represents a 0.26% fee which is much more reasonable and very similar to other online investment apps.

Betterment Pricing

Betterment will charge you either 0.25% or 0.4% of assets under management annually.

Why the difference? Because they offer two tiers of service. The Digital tier offers all the same investment power as the other, but it lacks the phone call service with their team of certified financial advisers; you can still contact them via text message though.

The Premium tier offers unlimited phone calls with a team of investment professionals for a 0.4% annual fee.

Most investors, I feel, will find that texting with an adviser is enough to keep them on track. I think if you’re needing monthly or weekly calls to your adviser, you’re probably better off hiring a personal adviser who can manage your wealth directly.


Is one app better than the other? It’s hard to say for sure because they fit different needs. Each app is designed well, based on a smart system, and ready to help you save and invest today.

Betterment has done a great job of creating a powerful and robust system that can nearly replace a traditional financial adviser.

Acorns will help you kickstart or supplement your investment savings in a painless and fun way.

I think most investors can find a sensible way to use both apps. I personally manage all my own investments and still like to use Acorns to earn that “Found Money” and save a little more. Why not use Betterment to manage your overall investments and still use Acorns to challenge yourself to save even more?

About the Author

Cooper is a former equity research professional/finance analyst who holds an MBA in Financial Instruments and Markets from New York University's Stern School of Business. He left the investment banking world in 2015 to become a full-time investor. He contributed to InvestmentZen as an financial product analyst from 2016-2017.