Acorns vs. Betterment

Are you a new or small investor whose having difficulty getting started with the investing process? If you are, two of the best investment services are Acorns and Betterment. Both will provide complete investment management for the smallest portfolio – even as little as $5. But one can provide the kind of comprehensive investment management typically available to very large investors, while the other can help you begin saving money for investing if you’ve never been able to up to this point.

Let’s take a close look at both Acorns and Betterment, seeing where they’re similar, and where they’re different.

Acorns vs. Betterment: The Basics


acorns investingInvest your spare change – that’s the Acorns motto and the short sentence that best describes the service. Acorns is a micro-savings smartphone app design for people who can’t save and invest money. It does this by enabling you to save money out of the “spare change” from your regular spending activity.

You can link an unlimited number of debit and credit cards to the app, and it performs what is known as Round Ups with each transaction. For example, let’s say you make a purchase for $4.23. Acorns will round that up to an even $5.00. $4.23 will be paid to the merchant where you made the purchase, and $0.77 will be allocated to savings. Once you have at least $5 in spare change accumulated, the money is transferred over to your Acorns investment account. There it’s invested through the Acorns robo-advisor.

If you run 100 credit and debit card transactions per month, at an average of $.50 in spare change per transaction, you’ll save about $50 per month. But you can also set up recurring investments, where you contribute directly to your account through regular deposits.

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Thus far, the app has targeted primarily tech savvy Millennial’s, helping them to get into the savings habit early in life. But Acorns can be a benefit to anyone at any age who is having difficulty saving and investing money. The passive nature of the process enables you to save money without even realizing you’re doing it. More than 3 million people have taken advantage of the Acorns app so far.

You can download the app either the App Store or Google Play. You must be at least 18 years old, and a US citizen or resident.

Get started with Acorns


BettermentBetterment is the largest independent robo-advisor in the industry, with more than $13.5 billion in assets under management. The company was founded in 2008, and has continued to grow and evolve into one of the most advanced automated investment platforms available.

Betterment’s investment strategy is based on Modern Portfolio Theory (MPT), which holds that investment allocation is more important than individual security selection. The platform handles all investment management for you, including dividend reinvesting and portfolio rebalancing.

Your only responsibility in the arrangement is to fund your account. It’s a perfect investment platform for anyone who wants to invest, but lacks either the time or the expertise. Betterment will invest your money in a diversified portfolio, including stocks and bonds, both US and foreign.

Betterment is a major to order investment management service for new and small investors. With no minimum initial investment requirement, they provide professional management from portfolios of any size. This gives a person with even a few hundred dollars the ability to have a fully diversified and managed portfolio.

Get started with Betterment

Acorns vs. Betterment: Investment Methodology


As is typical with robo-advisors, Acorns enables you to invest in a completely passive fashion. Investment methodology is also based on MPT. Money moved into the investment account is invested in a mix of exchange traded funds (ETFs) that track underlying investment markets, otherwise known as index funds.

The ETF’s are designed to accommodate the following seven asset classes, with the ETFs used to represent that class:

  • Large companies, through Vanguard 500 Index Fund ETF Shares (VOO).
  • Small companies, Vanguard Small-Cap Index Fund ETF Shares (VB).
  • Developed market, Vanguard FTSE Developed Markets ETF (VEA).
  • Emerging market, through Vanguard FTSE Emerging Markets ETF (VWO).
  • Government bonds, through iShares 1-3 Year Treasury Bond ETF (SHY).
  • Corporate Bonds, through iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD).
  • Real estate stocks, through Vanguard Real Estate ETF (VNQ)

Each asset class will be represented by one ETF, selected from either Blackrock iShares or Vanguard. Collectively, the seven ETF’s will be comprised of more than 7,000 stocks and bonds. Imagine holding that many securities with an investment of just $50!

Exactly what you’re allocation is in each of those asset classes will depend on your risk profile.

Acorns Has Five Risk Categories

  1. Conservative
  2. Moderately Conservative
  3. Moderate
  4. Moderately Aggressive
  5. Aggressive

An aggressive allocation will include 100% in stocks, while a conservative allocation will be invested primarily in bonds, with a small allocation toward stocks.

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Your risk category will be determined by your financial goals, time horizon, occupation, and income.

Other Acorns Features and Benefits

Minimum Initial Investment

There’s no minimum initial investment, however, a minimum of $5 is required to begin investing.

Accounts Available

Regular taxable investment accounts, as well as both traditional and Roth IRAs. The IRA accounts are available through Acorns Later, which is specifically designed for retirement accounts.

Access To Financial Advisors

Not available.

Tax Minimization

Not available with taxable investment accounts.

Customer Service

Available by email directly from the website.

Found Money

Acorns participate with various merchants and service providers, who will make contributions to your account when you shop with them. Contributions are based either on a flat dollar amount, usually when you sign up for service or percentage of your purchase in the case of retailers. Participating retailers include Macy’s, Nordstrom, Sam’s Club, and Walmart.

Acorns Spend

Acorns bills this as “the only checking account with a debit card that saves, invests, and earns for you”. It comes with the Get Acorns + Acorns Later + Acorns Spend plan (see description underpricing). The debit card enables you to take advantage of all the benefits of Acorns, including Found Money.

Acorns Gift Cards

You can give someone an Acorns account for $25. The card can be sent by email, text, or you can deliver it yourself. It enables a friend or family member to enjoy all the benefits of saving and investing through Acorns.


As is common with robo-advisors, Betterment determines your investor profile by first determining your investment goals, time horizon, and risk tolerance.

Much like Acorns, Betterment constructs your portfolio using index-based ETFs. Below is a list of the 13 asset classes Betterment allocates your money into, as well as the ETFs used for each allocation. There are two or three ETFs for most asset classes, which are used as part of Betterment’s tax-loss harvesting strategy (see “Tax Minimization” under the Other Betterment Features and Benefits section below).


  • US Total Stock Market, through Vanguard US Total Stock Market (VTI), Schwab US Broad Market ETF (SCHB), and iShares S&P 1500 Index Fund (ITOT).
  • US Value Stocks – Large Cap, through Vanguard US Large-Cap Value (VTV), Schwab US Large Cap Value ETF (SCHV), and iShares S&P 500 Value ETF (IVE).
  • US Value Stocks – Mid Cap, through Vanguard US Mid-Cap Value (VOE), iShares Russell Midcap Value Index (IWS), and iShares S7P MidCap 400 Value Index (IJJ).
  • US Value Stocks – Small Cap, through Vanguard US Small-Cap Value (VBR), iShares Russell 2000 Value Index (IWN), and iShares S&P SmallCap 700 Value Index (IJS).
  • International Developed Market Stocks, through Vanguard FTSE Developed Markets (VEA), Schwab International Equity ETF (SCHF), and iShares Tr/Core MSCI EAFE ETF (IEFA).
  • International Emerging Market Stocks, through Vanguard FTSE Emerging Markets (VWO), iShares Inc/Core MSCI Emerging (IEMG), and Schwab Emerging Markets Equity ETF (SCHE).


  • US High Quality Bonds, through iShares Barclays Aggregate Bond Fund (AGG), and Vanguard Total Bond Market ETF (BND).
  • US Municipal Bonds, through iShares National AMT-Free Muni Bond (MUB), and SPDR Nuveen Barclays Capital Muni Bond (TFI).
  • US Inflation-Protected Bonds, through Vanguard Short-term Inflation Protected Securities (VTIP).
  • International Developed Market Bonds, through Vanguard Total International Bond (BNDX).
  • International Emerging Market Bonds, through iShares Emerging Markets Bond (EMB), Vanguard Emerging Markets Government Bond (VWOB), and PowerShares Emerging Markets PCY Debt (PCY)
  • US Investment Grade Corporate Bonds, through iShares iBoxx $ Investment Grade (LQD), Vanguard Intermediate-Term Corporate Bond (VCIT), and SPDR Portfolio Intermediate-term Corporate Bond (ITR)
  • US Short-term Treasury Bonds, through iShares Barclays Short Treasury Bond (SHV).

Your specific allocation in each of the above asset classes and ETF’s will be based on your investor profile.

Other Betterment Portfolios

In addition to its Core portfolio, Betterment offers four additional portfolios:

Socially Responsible Investing (SRI)

Betterment has a separate portfolio designated for SRI. It offers increased weight in stocks of companies that meet certain social, environmental and governance criteria.

Goldman Sachs Smart Beta

This is a diversified portfolio strategy using certain factors that attempt to outperform the market.

BlackRock Target Income

This portfolio is invested 100% in bonds. They use different income yields to help insulate your portfolio against the ups and downs of the stock market.

Flexible Portfolio

This portfolio is available for accounts with a minimum of $100,000. It allows you to adjust your individual asset class weights, based on your own investment preferences. It gives investors more control over the allocations in their portfolios. You start with the Betterment portfolio, then make adjustments in the allocations.

Two Different Betterment Plans

Betterment offers two different plans, Digital and Premium. The services offered for each plan are as follows:


  • Personalized financial advice, which is uncommon among robo-advisors.
  • Low-cost, globally diversified investment portfolios.
  • Automatic rebalancing.
  • Advanced tax-saving strategies, including tax-loss harvesting, and asset location (income generating assets in tax-sheltered accounts, capital gains generating assets in taxable accounts).
  • Sync external accounts to your Betterment platform.
  • Access to licensed financial experts anytime, anywhere.


  • Includes all the services available in the Digital plan.
  • In-depth advice on investments outside Betterment, including 401(k) plans, real estate, and individual stocks you own.
  • Unlimited access to certified financial planners for guidance on life events, such as getting married, having a child, retiring, or managing equity-based compensation.

The Premium version essentially offers the type of services ordinarily provided by comprehensive financial planning, as well as regular investment management.

Other Betterment Features and Benefits

Minimum Initial Investment

No minimum investment for the basic Digital plan; $100,000 minimum for the Premium plan.

Accounts Available

Individual and joint taxable accounts; traditional, Roth, rollover, and SEP IRAs; trusts.

Access To Financial Advisors

Betterment has added human advisors to their product mix. This is uncommon among automated investment platforms.

Tax Minimization

Betterment offers tax-loss harvesting on all taxable accounts, regardless of account balance. It reduces your capital gains by selling losing positions, then replacing them with parallel investments shortly after. It’s a form of backdoor tax deferral on taxable accounts.
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Customer service

Contact is available by phone and live chat, Monday through Thursday, 9:00 AM to 8:00 PM. Live chat is also available on weekends, from 11:00 AM to 6:00 PM (all times Eastern). Betterment can also be contacted by email.

Betterment Mobile App

Betterment’s mobile app is available with all the functions of the website version. It’s available for download at the App Store and on Google Play.

Features Unique to Each Platform


Acorns’ main feature is its micro-savings capability. It not only functions as an investment platform, the way other robo-advisors do, but it assists you in accumulating the money you will need to invest. The Round Up process makes it easy to save money, just by going about your regular spending activity.


Betterment provides more advanced investment management than Acorns. Not only do they offer more services, but they also provide more portfolio options as your investment nest egg grows. Also unlike Acorns – and most other robo-advisors for that matter – Betterment provides access to live financial advisors. Your portfolio is being automatically managed, but you’ll still get the benefit of input from direct advice.

Betterment does something else unique in the robo-advisor space. They invest your money in value stocks. Those are stocks with strong fundamentals, but are underpriced relative to their competitors. It’s a time-honored way to invest, that offers an opportunity to outperform the general market over the very long term.



Acorns is currently offering three different plans, each with a different price level:

  1. Acorns (basic), $1 per month. This plan includes automated investing and smart portfolios, your subscription to Growth Magazine, and Found Money.
  2. Acorns + Acorns Later, $2 per month. This plan includes the basic investment account, plus an IRA. It offers all the features of Acorns, plus automatic account updates, the ability to create regular contributions, and assisted rollovers from 401(k) plans and other IRAs.
  3. Acorns + Acorns Later + Acorns Spend, $3 per month. Has all the features of the previous two plans, but also adds real-time Round Ups, automatic retirement savings, and custom Spend Strategies. You also get digital direct deposit and mobile check deposit, and unlimited free or fee reimbursed ATM access. Also comes with fraud protection, all-digital card lock, 256-bit data encryption, and FDIC insurance for accounts up to $250,000 per depositor.

Get started with Acorns


Betterment has a single advisory fee of 0.25% for its basic Digital Account. With a minimum balance of $100,000, you can also qualify for the Premium plan, at 0.40% per year.

Get started with Betterment

Current Promotions


Acorns is currently offering a $5 referral bonus if you invite friends who join the service. In addition, the friend who you refer will also receive $5. In addition, Acorns is free to use for college students.


Betterment is currently offering to manage your portfolio free for between one month and 12 months. The offer applies to funds deposited into your account within 45 days of opening. For example, if you deposit $10,000 within the 45-day timeframe, that balance will be managed free for one month. Additional deposits made after 45 days are not included in the offer.

The amount of time your account will be managed free will depend on the size of your deposit. The schedule is as follows:

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Which Is Better – Acorns or Betterment?

The answer to this question depends on what it is you’re looking to do.

Acorns specialize in turning non-savers into savers and investors.

Betterment can enable even the smallest investor to develop an incredibly sophisticated portfolio.

Acorns should be the choice if you have no money saved, and haven’t been able to get into ongoing savings habit up to this point. It enables you to save money in the easiest way possible – from change generated by your regular spending activity. There’s no easier way to save money, and it’s completely passive. You go about your ordinary routine, spending money through your credit and debit cards, and your Acorns account is steadily funded. With each $5 increment, your money is transferred over to the Acorns investment account, where it’s fully managed for you.

If you’ve been able to accumulate a small amount of money, but don’t know where to invest it, Betterment is the better choice. You can invest in a fully managed portfolio, complete with tax-loss harvesting to minimize the tax liability of your investment activities. You can even set up automatic deposits, to gradually increase the size of your account.

Either platform will be a good choice for a new investor. Because of services like these, a lack of a large nest egg – or even any money at all – is no longer reason to avoid investing. Pick either Acorns or Betterment get started!


Susan Wright, CLU, ChFC, RHU, REBC, ADPA, CITRMS, CIPA has been in the insurance and financial field for over 27 years. Even with years of experience, she continues to create new resources for others. Everything from books to training material.

Susan received her MBA from St. Louis University and her BA from Michigan State University.

She has worked in several areas but excels in writing material for both finances and insurance. Her goal is to give professionals credibility and assist in streamlining the sales process.

She has written countless articles for a variety of websites.

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