A pair of micro-investment applications have hit the investment universe in the past couple of years. Acorns and Stash Invest are smartphone-based investment apps that enable you to save and invest very small amounts of money. They then offer professional investment management to help you invest and grow your portfolio.
Acorns bills itself as the first mobile investment application that lets you open an account on your smartphone. Acorns will literally allow you to invest your “spare change.” You do this by connecting your mobile phone to your bank accounts and credit cards, and the application will automatically invest your change. There is no limit to the number of accounts and credit cards you can link.
That change is small amounts of money, often less than a dollar, that are adding to your Acorns investment account each time you make a purchase. For example, let’s say you purchase a latte at Starbucks for $4.25. The purchase will be rounded up to $5, and 75¢ of that will automatically go into your investment account. In that way, small amounts will be invested for each purchase, enabling you to save money without even noticing it’s happening.
Acorns refers to this as Round-Ups, because the amount of your purchases is rounded up to the next increment. You can round up to the nearest dollar or choose a higher amount so your investment growth will happen even faster. You can also set scheduled investment deposits, occurring daily, weekly or monthly.
About Stash Invest
Stash Invest is an automated investment app for your smart phone. You can invest with as little as $5, which makes it a micro-savings application. Unlike Acorns, which actually does the investing for you, Stash Invest simply makes investment recommendations, leaving it up to you to do the actual investing.
Your investment portfolio is based on one of 30 investment themes, which are comprised of exchange traded funds (ETFs) set in an asset allocation that is consistent with the chosen theme. They give those themes creative names such as “Defending America” and “Delicious Dividends.”
Stash Invest is available for iOS and Android and can be downloaded in minutes. You will link the app to your bank account, enabling you to move money back and forth between the app and the bank account. You can link only a single bank account to the app. Uninvested cash balances will earn interest.
Features Both Acorns and Stash Invest Offer
Both applications enable you to invest very small amounts of money. In doing so, you can accumulate an investment portfolio without even knowing you’re doing it. Both also enable you to invest additional amounts, so you can fast-forward your investment progress.
Both are also available as mobile apps, which means you can invest on the go. Both offer investment management, though Stash Invest is more democratic in this regard. And of course, they have identical fee structures.
Features Unique to Acorns
You can sign up for Acorns on the web or by downloading the free app from iTunes, Amazon or Google Play. Once your account has been created, you choose a Round-Up Account. You can choose which transactions you want to round up and invest the change from, then connect the account to your bank accounts and credit cards.
There is no minimum initial deposit. They allow regular investment accounts only — no retirement accounts. The app is available for both website and mobile, including iPhone and Android.
Found Money feature — Acorns is currently beta testing partnering with certain brands, including 1-800 Flowers and Dollar Shave Club, with more on the way, in which the merchants will also invest in your Acorns account.
Features Unique to Stash
In addition to accepting investment recommendations from Stash Invest, you can supplement your portfolio with your own investment choices. This will provide you with more investment options. They also pay interest on uninvested cash balances.
Stash Invest offers social media sharing, so you can swap investment ideas with friends and online contacts. However, they make sure that not all information is available to be shared on the social media in order to prevent disclosure of personal financial information. You can also opt out of this feature if you so choose.
Acorns vs. Stash Feature Comparison
|Minimum Deposit||$0; $5 to start investing||$5|
|Account Fees||$1/month for accounts under $5,000; 0.25%/year for accounts over $5,000; Free for under 24 years of age and attending college||Free for the first three months; $1/month on account balances up to $4,999; 0.25%/year for $5,000 greater|
|Mobile App||Apple iOS and Google Android||Apple iOS and Google Android|
|Web Site Access||Yes||No|
|Promotions||None||Get $5 When Joining|
When you open up your Acorns account, you will be asked to provide personal financial information. This information will be used as the basis to create a recommended portfolio for you.
The platform allows you to choose different investing goals, including long-term investments, short-term investments, a major purchase, children or general. Based on those goals and your financial information, your portfolio will be constructed around your risk tolerance, as follows:
- Moderate Conservative
- Moderately Aggressive
You can then choose the asset class you want to invest in, which will be represented by a corresponding exchange traded fund. Your Acorns portfolio is constructed from just six ETFs that represent most of the global investment universe.
This is what is known as modern portfolio theory, or MPT. This theory holds that asset allocation is more important to investment success than individual security selection. Since your portfolio will include the six most important asset classes, the related ETF, being based on an asset class index, represents a broad diversification into stocks and securities in each class.
ETFs available through Acorns include:
- Large Company Stocks — Vanguard S&P 500 ETF (VOO)
- Small Company Stocks — Vanguard Small-Cap ETF (VB)
- Emerging Markets — Vanguard FTSE Emerging Markets ETF (VWO)
- Real Estate — Vanguard REIT ETF (VNQ)
- Corporate Bonds — iShares iBoxx$ Investment Grade Corporate Bond ETF (LQD)
- Government Bonds — iShares 1-3 Year Treasury Bond ETF (SHY)
As with Acorns, you complete a risk tolerance questionnaire for Stash Invest. From there, they give you a list of investment options to choose from. The advantage here is you also have the option to add investments of your own choice to the mix. This is a departure from most robo-advisors, including Acorns.
Your risk tolerance is determined based on your age, your investment goals and your time horizon. You will be evaluated as conservative, moderate or aggressive, and investment recommendations will be consistent with that risk tolerance level. You will be given a choice of 30 investment themes that match your risk level.
Where Acorns limits investments to just six ETFs, Stash Invest takes advantage of thousands of ETFs and even individual stocks. Stash Invest has much more flexibility.
WINNER — Stash Invest
Acorns charges $1 per month for accounts under $5,000 and 0.25% for account balances over $5,000. However, if you are under age 24 or attending college, the service is free to use. There are no commissions when you purchase shares in ETFs.
Stash Invest is currently offering the service free for the first three months. After that, the fee is $1 per month for account balances of under $5,000. Balances of $5,000 or more are subject to a monthly fee of 0.25% of your balance.
Acorns has a slight edge in cost only if a college student. Otherwise both services are equal in costs.
Acorns has apps for iOS and Android mobile devices. Acorns also recently introduced web access.
Stash Invest currently has only mobile apps for iOS and Android; if you want to access via a web browser you are currently out of luck. This leaves out many users who still access websites via desktop computers. Even though the target audience of both services is Millenials, who use mobile devices as their primary and only device, this is somewhat of a limitation when using Stash Invest.
WINNER — Acorns
Acorns does not have a minimum deposit. You can open an account today, link up your credit card and start immediately.
Stash Invest, on the other hand, has a $5 minimum deposit.
Granted $5 is not much, but of course Acorns has a slight edge in minimum fees.
WINNER — Acorns
And The Overall Winner Is…Acorns
It is a close race between the two, but Acorns has a slight edge.
While Stash Invest has some neat features individuals might prefer, we recommend Acorns for its simplicity and ease of use for beginning investors.
If you are somewhat more down the path of investing and want more flexibility, then choose Stash Invest.
But you won’t go wrong with either service if you are just starting to invest and want to get on the path of saving for future goals.
Our best guess is that if you are a new investor, it wouldn’t be a mistake to go with either of these apps.