When most people think of starting to invest, they are often under the common misconception that it takes thousands of dollars to get started. In the digital age, financial technology companies have made it far easier to begin an investment account with lower barriers to entry regarding initial account value and management fees.
Investment apps make it possible for everyday consumers to join the ranks of seasoned investors while learning about the investment process, its inherent risks, and its potential benefits. Betterment, Stash, Acorns, and Robinhood are all heavy hitters in the investment app space, but each has unique advantages and drawbacks of which new investors should be aware.
Stash vs. Acorns vs. Betterment vs. Robinhood Investment App Comparison
0.02% – 0.03%
Receive up to 12 months free based on initial deposit
Long-term investments, goal oriented portfolios, 401(k)s & IRAs
0.02% or $11
Instantly receive $5 to invest & first month free after opening an account
Long-term investments, asset class oriented portfolios
0.02% or $11
Standard accounts free for college students
Novice investors, frequent & hands-off contributions
$0 or $102
Novice investors, frequent stock trading, traditional investing
¹Depends on account balance.
²For Robinhood Gold.
Betterment is an investment platform which allows investors to participate in a variety of investments with no minimum account balance and relatively low fees. Similar to other investment applications, Betterment asks for personal information from an investor when an account is established, and then makes recommendations on where money can or should be invested in the platform. Investors are able to deposit a lump sum from a checking or savings account into their Betterment investment account, and automatic transfers can be set-up at any time, in any amount.
Like other investment apps, Betterment offers a wide range of investments available to investors based on their personal preferences for risk and their timeline for investments. Account holders with Betterment have the option to choose from thousands of low-cost exchange-traded funds, researched and approved by the company’s expert investment analysts. The portfolios available through Betterment range from conservative to aggressive and each portfolio option includes automated management.
Betterment does not impose an account minimum to investors, but an annual fee is charged for all account holders. The Digital Plan charges an annual fee of 0.25 percent of the account balance for investors who have less than $100,000 invested. The Premium Plan with Betterment requires a minimum balance of $100,000 and charges an annual fee of 0.40 percent, but also includes features not available with the basic, digital account.
on Betterment’s secure website
Stash is a mobile application intended to help individuals start making relatively small investments with low fees. The SEC-registered investment advisor takes each new account holder through a series of questions when signing up for an investment account to help understand what investments may be the most suitable for their unique risk tolerance and time frame for their investment. Once Stash has an understanding of an individual investor, it offers a curated list of investment options of which investors may be fractional shares over time. Stash allows investors to establish an account with as little as $5, deposited from a linked checking account, and investors can set-up automatic transfers into their Stash account at any time.
Stash keeps the process of selecting investments fairly straightforward for each individual investor, starting with the personal information that is collected at the time is created. Through technology-based algorithms, Stash makes recommendations on a portfolio mix that best fits the investor’s needs. Currently, Stash provides access to more than 30 investment options, all of which are exchange-traded funds. The investments are hand-picked by Stash, based on criteria for the internal expense ratio, the historical performance, and risk profile.
Stash holds itself out to be a low-cost investment app, but investors do pay fees to utilize the platform. The company assesses a monthly fee of $1 for accounts that have a balance less than $5,000. Once an investor reaches the $5,000 mark, Stash charges an asset under management fee of 0.25 percent of the account balance, per year. There are no fees associated with transactions, nor are there fees for transferring funds in or out of a Stash account.
on Stash’s secure website
Acorns in another investment app that allows investors to start down the path of investing with a small amount of money. Instead of investing through one-time deposits or automatic transfers initiated by the account holder, Acorns asks investors to link their credit cards and bank accounts used on a regular basis. Through these account links, Acorns rounds up each transaction to the nearest dollar and invests the difference in fractional shares of a variety of investments. Acorns investors do have the option to establish recurring transfers from a checking or savings account, or they can make lump sum deposits into the investment account at any time.
Based on information provided by investors at the time an Acorns account is established, the company suggests a portfolio aligned with an investor’s risk tolerance and investment timeframe. The portfolios available through Acorns are invested in low-cost exchange-traded funds, spanning more than 7,000 stocks and bonds from a variety of companies throughout the world. Investors may be directed toward any one of Acorns’ five portfolios of exchange-traded funds, ranging from conservative to aggressive.
Acorns is focused on offering a low-cost method to micro-investing, and the company charges $1 per month for accounts with balances under $5,000. Once an investor’s account grows to more than $5,000, an annual fee of 0.25 percent is charged on the account balance. Acorns does offer a free account for college students who provide a valid school e-mail address for up to four years from the account opening date.
on Acorns’ secure website
Robinhood is a technology-based trading platform that makes low-cost stock buying and selling available to the masses. Instead of offering investment guidance based on risk tolerance and investment timeframe, Robinhood gives investors a way to trade stocks through a mobile app without charging trading fees or commissions. The company is able to provide this service to investors with no minimum account balance because of its low-cost, completely digital operations structure.
Investors with a Robinhood account are not directed toward one portfolio over another based on personal information provided at the time an account is established. Instead, Robinhood provides access to publicly traded stock of domestic and foreign companies, and investors are free to pick and choose the stocks they would like to purchase or sell. Fractional shares are available through the Robinhood app, making it easier for investors with smaller amounts to invest in the market.
Robinhood does not charge fees on accounts for investors, and no minimum account balance is required. The company is able to make money by offering a Robinhood Gold account which charges $10 per month for investors who want to leverage their stock buying capabilities through extended trading hours and enhanced features. The company also collects interest on account balances that are not invested, but the app remains free of charge as it relates to placing trades, maintenance, and transfers.
on Robinhood’s secure website