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Acorns vs. Stash: Apps Compete for Novice Investors

Aug. 22, 2017
Investing
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Acorns and Stash are investment apps aimed at beginners who want their money to grow but may not have the time or the expertise to manage it. Each one mixes education and automation to help users understand what they’re doing and reach their goals, but which one is the better pick? In this head to head, it’s Acorns.

Neither is a full-powered robo-advisor, deploying algorithms and advanced software to manage a varied portfolio of investments. If that’s what you’re after, consider the range of services and funds that larger rivals such as Wealthfront and Betterment offer. Acorns and Stash are more like “robo-advisor meets automated saving tool meets app,” focused as much on ease of use as on tools and performance. But with a stronger advisor component that builds a portfolio based on a user’s preferences and lower-cost funds, Acorns is the clear winner. Still, each corrects one of beginning investors’ biggest mistakes — not saving often enough — and that’s a win whichever app you choose.

Acorns
stashsmall
Management fees
$1/month for taxable investment accounts; $2/month for IRA accounts (Acorns Later)$1/month for accounts under $5,000; 0.25% for accounts of $5,000 or more
Account minimum
$0 to open account; $5 required to start investing$0 to open account; $5 required to start investing
Account types
  • Individual non-retirement accounts
  • Roth and traditional IRA accounts
  • Individual non-retirement accounts
  • Roth and traditional IRA accounts
  • Portfolio
    ETFs from six asset classes, with expense ratios ranging from 0.05% to 0.15%, average 0.10%Over 30 ETFs available, with expense ratios ranging from 0.07% to 0.95%; average 0.39%
    Human advisors available
    NoNo
    Standout features
    • Excess change sweep
    • “Found money” feature that saves up to 10% at various merchants
    • Thematically named, “mission-driven” investment options
    Best for
    • College students
    • Hands-off investors
    • People who struggle to save
    • Investors who want guidance selecting investments
    • New investors
    • Thematic or impact investors
    Promotion
    College students get up to four years freeFree for the first month
    How to open an account

    Management fees

    Management fees are one of the most important factors in how a portfolio performs. Stash charges $1 per month for accounts with balances below $5,000 and an annual 0.25% of assets for balances above $5,000. Acorns recently changed its pricing to charge flat fees on all balances: $1 a month for a taxable investment account, and $2 a month for Acorns later, which includes IRA accounts.

    You can see the cost for various balances in the table below.

     
    Account balance
    Acorns
    Stash
    $5,000Fee: $1/month for taxable accounts; $2 a month for IRAs

    What that costs: $12 or $24
    Fee: $1/month for accounts under $5,000

    What that costs: $12
    $20,000Fee: $1/month for taxable accounts; $2 a month for IRAs

    What that costs: $12 or $24
    Annual fee: 0.25%

    What that costs: $50
    $50,000Fee: $1/month for taxable accounts; $2 a month for IRAs

    What that costs: $12 or $24
    Annual fee: 0.25%

    What that costs: $125
    $100,000Fee: $1/month for taxable accounts; $2 a month for IRAs

    What that costs: $12 or $24
    Fee: 0.25%

    What that costs: $250

    A flat-fee structure is not the friendliest for starting investors. While $1 a month sounds small, it could be a significant portion of their total assets. For accounts with $500, for example, that’s a 2.4% annual fee — and that doesn’t count fees charged by the actual investment funds themselves. Once account balances top $5,000, the fees of both services are more in line with the industry standard, although larger rival Wealthfront manages the first $5,000 free for NerdWallet readers.

    But with Acorns you’re getting some management for those fees. It will put you in investments that match your individual situation — age, time horizon, goals, income and risk tolerance — and allocate accordingly. And it will rebalance your portfolio should one investment grow beyond its allocation. So the app provides some valuable direction for beginners. (And college students can have their fees waived for up to four years, making it an even better bargain.)

    Stash gives you a set of investment funds with some basic information but less guidance. Its biggest appeal to investors is its creative, potentially helpful thematic renaming of funds based on what they invest in. For example, the Defending America fund invests in aerospace and defense companies, while Clean & Green focuses on clean-energy firms. But Stash doesn’t offer much portfolio management — how much you should buy of each fund — beyond the occasional suggestion or warning.

    Winner: Acorns offers more, though on some balances the advisor’s costs can be higher for those who use Acorns Later retirement accounts. Portfolio management can be important to an investor’s success over time, and Stash doesn’t offer it. As noted in our full-length review of Stash, “With a small amount of research, you could find the ETFs that Stash offers, or suitable alternatives, through many online brokers commission-free.”

    » MORE: Learn about what robo-advisors do

    Features

    The best features of both Acorns and Stash automate the process of investing, helping investors overcome their biggest hurdle — themselves.

    Each app has the ability to invest automatically based on investment preferences that you set (your goals, your time frame, your tolerance for risk, etc.). Both offer basic tools for starting investors and both require little money to get started. They also both work for individual taxable accounts and Roth and traditional IRA accounts.

    One neat aspect of Acorns is that it allows a user to sweep excess change from everyday purchases into their investing account. The app rounds purchases up to the nearest dollar and rolls that amount into your investments. A similar feature called Found Money rebates you up to 10%, though most rebates are much lower, on purchases at select merchants — including Jet, Airbnb and Blue Apron — and then have that cash deposited into your account in a month or two.

    With these programs, you’re not going to retire a tycoon, but they’re a little salve for your conscience when you spend, knowing that you’re also saving a bit, too. They also keep Acorns, and thus your investments, on your mind.

    Stash doesn’t provide any comparable bells or whistles.

    Winner: While they offer many of the same base features, notably automatic investing, Acorns’ extras add some juice to your portfolio.

    Human advice

    Nope. These apps are all about low-frills investing, so don’t expect a lot of handholding on your investments and how they perform. If you need human advice, consider Betterment or one of the other robo-advisors offering a more personal touch, such as Schwab Intelligent Advisory, Vanguard Personal Advisor Services or Personal Capital.

    Investments and fund expenses

    In addition to management fees, investors are also on the hook for investment expenses charged by the funds themselves. Acorns uses low-cost exchange-traded funds from iShares and Vanguard that comprise six asset classes: real estate, corporate bonds, government bonds, large-cap stocks, small-cap stocks and emerging markets. Importantly, the fees on these investments range from 0.05% to 0.15% — about as cheap as they come.

    Stash offers low-cost ETFs as well as more expensive ones in investing niche themes that might interest investors. So if you want to invest in green energy or socially responsible companies, you can buy the Clean & Green and Do the Right Thing ETFs, or Equality Works for companies sponsoring workplace equality. Investment expenses range from 0.07% to 0.95%, with an average of 0.39%. That’s cheap at the low end, but starting to get pricey at the high end.

    So what’s the whole package cost, soup to acorns? Let’s take a $5,000 account balance:

    • Acorns: Assuming an average price of 0.10% for investment expenses and the $1 management fee, investors would end up paying a reasonable 0.34%. ($1 a month on $5,000 is 0.24% per year.)
    • Stash: Assuming an average price of 0.39% for investment expenses and the 0.25% management fee, investors would need to fork over about 0.64% of assets annually — and it could be more if you pick the pricier funds. With a little legwork you could probably lower that figure, but you might not get that thematic fund you wanted.

    Winner: Acorns comes out on top here, with lower fund expenses leading to lower overall costs. Stash would win if it were all about choice, since it offers many more funds.

    Which one is right for you?

    Acorns comes out as the winner in this face-off, with similar base features as Stash but more useful portfolio management as well as some neat extras. Both offer low-cost funds; Acorns’ are cheaper on the whole, but Stash lets investors select their thematic interests from a wider pool of ETFs. Overall, investors can expect to pay less with Acorns than Stash, and research shows that’s a key factor in total returns over time.

    Acorns provides some real value at a reasonable cost, even giving some of the larger robo-advisors a run for novice investors looking to get in the game. Its simplicity, along with basic but real investment advice and planning, means Acorns should appeal to starting investors, even if it didn’t make our list of top robo-advisors.

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