It’s no secret that investing is important. Whether you’re investing time, resources, or money, setting yourself up for success is a great way to reduce your stress levels now and in the future.
Many people are interested in learning how to invest their money wisely but are intimidated by how complicated and daunting the task might seem. If that sounds like you, investment apps are a great solution. These days there are many options for those looking to get started and you don’t need a financial background to make successful investment decisions. You can think of these apps as resources and financial tools as well as platforms to make investments.
Two of the most popular investment apps are Betterment and Acorn. If you’ve been looking into investing it’s likely you’ve heard of one or both of them as they’re used by millions of people around the world to take the first steps into their investment journey or continue building their portfolios. Today we’ll cover the pros and cons of each and help you decide which of the two apps you should use.
What is Betterment?
Betterment includes four major services. Firstly, there is a checking account aspect that is completely free. Use it like you would any checking account and you can also earn cash-back rewards from different businesses throughout the year.
Betterment also offers a Cash Reserve feature which is similar to a savings account but there are less fees as well as a significantly larger return. On average, the Betterment Cash Reserve will yield five times the return of a traditional savings account.
You can also prepare for your retirement with Betterment. The tools and resources available through Betterment will help you determine exactly what your savings goals should be based on your income, cost of living, insurance, and other relevant factors you might not even have considered.
And finally, Betterment helps you invest! Their automated tools will take the answers you give during a brief introductory survey you take when you set up your account and use that information to create viable savings goals and help you curate the ideal investment portfolio for you and your lifestyle. You can set up recurring investment amounts and Betterment can offer up personalized suggestions that will help you achieve your goals.
Betterment is available for iOs and Android.
Pros of Betterment
While there may be some fees associated with using Betterment, these are relatively small compared to similar services. The exact amount depends on which particular service you’re using from Betterment, but some options are free and others will require a small percentage of your investment which ends up being about $25 for every $10,000 in your investment accounts.
While Betterment offers email support to every user on the platform, if you choose to invest in Betterment Premium you will also have access to live support via phone if you are a current member. This is just another way that Betterment allows you to have a truly customized experience while you’re using their service.
Cons of Betterment
There aren’t many significant downsides to using Betterment. The main thing to consider is the lack of direct indexing as well as the customized features that are only available to Premium customers. While you might want to use the tools and resources Betterment offers, you might not be ready to pay $199 or more for a financial advisor or one of the other premium services that Betterment offers.
Who is Betterment right for?
Betterment is ideal for those who are looking for a regularly updating investment strategy that does not require huge fees or a daily hands-on experience. Betterment takes care of the day-to-day work for you but you can check in whenever you’re curious about your current portfolio. It’s also a great option for anyone who likes having concrete goals to help them focus.
What is Acorn?
Acorn is an app that allows you to automate the process of investment. Like Betterment, Acorn offers multiple financial services including banking. You can quickly set up a checking account and you’ll receive a card you can use with ease like you would use any other card, and you can also use multiple ATMs around the country without any hidden fees.
Acorn also offers services to help you save for your retirement. For example, their services can help recommend the ideal IRA plan for you based on your circumstances.
You can also invest your money using Acorn, either by setting up recurring amounts to be invested or by utilizing the Round-Up feature. You can also do both! Your spare change can really add up and turn into an investment portfolio that you can be proud of.
Acorn is available for iOs and Android.
Pros of Acorn
Acorn is extremely affordable – the basic plan will set you back just one dollar per month whereas the Personal plan costs $3. Acorn also offers a Family plan that costs $5 which allows you to set up accounts for your children.
Another great perk of Acorn is the automatic Round-Up feature which will literally round up your purchases to a set amount and invest that set amount for you. This can be a great option for anyone who wants to watch their investments grow but don’t have the energy or time to devote to the process daily.
Acorn prioritizes education and lifelong financial wellness. If you have children and are hoping to set up savings accounts for them, Acorn will offer you the tools to do that.
You can also try Acorn risk-free for thirty days to see if it’s a good fit for you!
Cons of Acorn
While the fees Acorn charges are ultimately quite low, if you’re only investing a small amount then these fees can be much higher than you’d be required to pay if using another service. Acorn will also charge you if you decide to move your funds out of Acorn accounts to another provider. While this might not be too much of an issue for you, there are other services that do not require fees for this.
Who is Acorn right for?
Acorn is great for anyone who wants a hands-off approach that can still lead to great investments. The educational features make it a good option for anyone who is new to investing as well. If you have children then Acorn is a great option as you can easily set up college funds or other savings options to set your child up for success later on.
So which one should you pick?
While the answer depends on your situation, you should definitely avoid Acorn if you’re only investing a small amount due to their fee structure. Betterment’s fees are calculated based on how much you have invested which makes it a great option regardless of how much you’re working with.
Both Betterment and Acorn are useful tools that allow you to invest without overthinking. Have you ever used a robo-advisor? Let us know in the comments!
