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Acorns vs. Stash: Apps Compete for Novice Investors

Aug. 15, 2019
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.

Management Fee

$1 - $3/month

$1 - $3/month

Account Minimum

$0

$0

Promotion

Up to 4 years

Up to 4 years

free management for college students

Management Fee

$1 - $9 / month

$1 - $9 / month

Account Minimum

$5

$5

Promotion

1

1

month free management

Acorns at a glance

Overall
4.0 NerdWallet rating
Account minimum

$0 to open account; $5 required to start investing
Account management fee

  • $1 a month for taxable investment account
  • $2 a month for IRA account and investment account
  • $3 a month for checking account plus investment and retirement accounts
  • Investment expense ratios

    Exchange-traded fund expense ratios average 0.10%
    Account fees (annual, transfer, closing)

    None
    Portfolio mix

    ETFs from up to seven asset classes
    Accounts supported

  • Individual non-retirement accounts
  • Roth and traditional IRAs
  • Online checking account
  • Tax strategy

    Not available
    Automatic rebalancing

    Free on all accounts
    Human advisor option

    Not available
    Tools

    The app's Potential tool lets you adjust the dollar amount invested to see how your total investments will grow over time
    Customer support options (includes website transparency)

    Phone, email and in-app chat support. Response time is up to 48 hours, but a lot of information easily available on website
    Promotion

    Free for college students with a valid .edu email address for up to four years from sign-up date

    Stash at a glance

    Overall
    3.0 NerdWallet rating
    Account minimum

    $5
    Account subscription fee

    $1/month ($3/month to add a retirement account; $9/month to add custodial accounts and other services). Stash is not a robo-advisor and doesn't have discretion to manage customer accounts.
    Investment expense ratios

    Expense ratios average 0.30% for ETFs; no investment fee for stocks.
    Account fees (annual, transfer, closing)

    No annual, inactivity or outgoing transfer fee.
    Portfolio mix

    About 60 ETFs and about 150 individual stocks available.
    Accounts supported

    • Individual brokerage accounts.
    • Traditional and Roth IRAs.
    • Online debit accounts.
    • Custodial accounts.
    Tax strategy

    Not available.
    Automatic rebalancing

    Not available.
    Human advisor option

    Not available.
    Tools

    Stash offers a retirement calculator, and Stash Coach helps expand your investing prowess with guidance, challenges and trivia.
    Customer support options (includes website transparency)

    Phone support Monday-Friday, 8:30 a.m. to 6:30 p.m. Eastern, and Saturday-Sunday, 11 a.m. to 5 p.m. Eastern; email support.
    Promotion

    First month free.

    Management fees

    Management fees are one of the most important factors in how a portfolio performs. For $1 a month, Stash offers an investment account plus a bank account with a rewards debit card. (With Stash’s rewards program, instead of cash back, your rewards go to buy fractional shares of stocks.) For $3 a month, Stash will add on a retirement account (a traditional or Roth IRA), and for $9 a month you’ll also get two custodial investment accounts plus access to a higher-value rewards program.

    Acorns costs $1 a month for an Acorns Core taxable investment account; $2 a month for Acorns Later, an IRA account; and $3 a month for Acorns Spend, the bank account and debit card offering that includes the investment accounts.

    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. Plus, Stash offers access to about 150 individual stocks. 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.

    Both also offer nudges and automation to make saving and investing easier.

    Acorns lets you sweep the change from everyday purchases into your investing account. A similar feature called Found Money rebates you up to 10%, though most rebates are much lower, on purchases at select merchants — including Airbnb, Blue Apron and Lyft — and then have that cash deposited into your account in two to four months.

    Stash rounds up your purchases to the nearest dollar and, once those round-ups hit $5, sends that money to your investment account. The investment app also offers Stock-Back, a program in which purchases on a Stash debit card are rewarded with the purchase of fractional shares of a stock or ETF on the Stash platform. The app also offers a feature called SmartStash that analyzes your bank account’s ebbs and flows and, if it finds some extra money there, will sweep it into your savings.

    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.

    Winner: Because they offer many of the same features, it comes down to individual usability preferences.

    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 up to seven asset classes: real estate, corporate bonds, government bonds, large-cap stocks, small-cap stocks, international large-cap stocks, and emerging markets. Importantly, the fees on these investments average 0.10% — 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. For example, if you want to invest in green energy or socially responsible companies, you can buy the Clean & Green and Do the Right Thing ETFs. But investment expenses average about 0.30%  — that’s pricey compared to some other providers. Stash also offers access to about 150 individual stocks.

    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 0.30% for investment expenses and the $1 management fee, investors would need to fork over about 0.54% 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. 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, plus offers access to individual stocks. Overall, investors can expect to pay less with Acorns than Stash, and research shows that’s a key factor in total returns over time.

    Management Fee

    $1 - $3/month

    $1 - $3/month

    Account Minimum

    $0

    $0

    Promotion

    Up to 4 years

    Up to 4 years

    free management for college students

    Management Fee

    $1 - $9 / month

    $1 - $9 / month

    Account Minimum

    $5

    $5

    Promotion

    1

    1

    month free management

    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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