Acorns vs Robinhood vs Digit - Financial Analyst Insider
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Acorns vs Robinhood vs Digit

If you’re looking for an app to help you with financial management, there are several great ones to consider. A good financial app can help you save money, spend less, and reach your goals.

This article will cover three popular financial apps – Digit, Acorns, and Robinhood. We will discuss how to use each app and compare the differences.

Acorns App

The Acorns app is similar to Digit in that it is designed to help you save extra money automatically. However, Acorns approaches the goal of helping you save differently than Digit.

How Does Acorns Work?

Acorns combines saving and investing automatically. After opening an Acorns account, you link credit and debit cards to your Acorns account.

When you make purchases using a linked credit or debit card, Acorns automatically rounds up your purchases to the nearest dollar. This extra amount is automatically swept into an Acorns investment account.

A Simple Savings Example

For example, if you purchased gas for $21.45, Acorns would round the amount up to $22. The $21.45 would be used to pay for gas and the $.55 would be swept into your Acorns savings account.

Saving $.55 may not sound like much, but it can really add up fast because Acorns is rounding up every transaction you make. If you completed 40 purchase transactions in a month, that $.55 would be $22 in a month and $264 in a year.

Acorns Invest Account Options

Now that you have an Acorns account, you need to decide how you want Acorns to manage all that spare change that is piling up in your account.

Acorns offers three primary account options:

Invest Account

The Invest account is the most basic Acorns account available. The invest account includes the following:

  • Automatically invest your rounded up change into a diversified portfolio of exchange traded funds.
  • The exchange traded funds are managed by investment companies like Vanguard and Black Rock.
  • You choose the portfolio based on your risk tolerance.
  • You can choose portfolios with 5 main risk tolerances: conservative, moderately conservative, moderate, moderately aggressive, and aggressive.
  • After you set your risk tolerance, your portfolio is managed for you on autopilot.
  • The Invest Account is just $1 per month.

Invest Later Account

The Invest Later Account includes all the features of the Invest Account, but adds the ability to setup an IRA account with recurring contributions.

The same investment portfolios are available with the Invest Later account, but you have access to an IRA account. This additional option costs $2 per month.

Invest Later Spend Account

The Invest Later Spend accounts includes the standard invest features along with an FDIC insured checking account with a debit card.

The account includes no overdraft or minimum balance fees, unlimited free or fee-reimbursed ATMs throughout the country, and free bank-to-bank transfers.

By using this account option, you have the benefit of combining an investment account along with a checking account through a single platform.

The Invest Later Spend Account costs just $3 per month.

Acorns Found Money

The Found Money program is an innovative feature that is included with all Acorns investment accounts.

Currently Acorns has partnerships with over 350 different merchants. Anytime you shop at those merchants with an Acorns linked credit or debt card, those merchants will give you a bonus that will be invested directly into your Acorns account.

Typically the bonus is in the form of a percentage of your purchase price. A typical bonus might range from 2% to 5%, but can be even higher during limited time promotions.

Any bonus you receive will be credited into your account within 60 to 120 days. Some of the partner merchants include Amazon, Apple, Hulu, Walmart, Macy’s, and many more.

You can also an Acorns browser extension to earn bonuses while shopping online at Found Money partners. This is a really convenient way to give your savings a boost without requiring any extra effort on your part.

Should you use Acorns?

Acorns offers a really nice set of features with a very low price point. The rounding up concept that Acorns uses is a really smart way to help people save a little extra money each month without thinking about.

Acorns is a great option for new investors that want a little extra help saving money and learning how to invest in the market.

Robinhood App

Robinhood is a commission-free app based investing platform. Robinhood lets you trade stocks, exchange traded funds, and cryptocurrency with no commission fees.

Robinhood is similar to Acorns in terms of the investment account options. However, Robinhood requires more investor knowledge because you have to make your own investment decisions.

Acorns, on the other hand, is better suited for beginner investors because the Acorns platform provides you with diversified portfolios of exchanged traded funds, so you don’t need to choose individual investments.

Robinhood Account Options

New investors can open a Robinhood investment account for free. All trades are commission free.

  • Open a free Robinhood account and receive a free stock share. The free stock share is available to new users and can have a value ranging from $3 to $150.

Gold Account

For more experienced investors, you might want to consider a Robinhood Gold account. The Gold account includes the following:

  • Access to professional research from Morningstar.
  • Ability to deposit larger instant deposits into your account ($5,000 to $50,000).
  • Access to level II market data which allows you access to bid and ask spreads.
  • Ability to invest on margin.

The Gold account offers a number of nice features, but is really only appropriate for more sophisticated investors.

What is the Digit App?

Need help building a nest egg? That’s where Digit shines.

Digit is available as an app on the Apple and Android platforms. The service is designed for people who could use a boost in their savings, but don’t have the time or ability to do the budgeting work on their own.

If you find you lack the motivation to set aside money, find yourself leaving it in your account for too long, and end up spending the extra, Digit could help you.

How Does Digit Work?

Digit uses algorithms to learn how you spend your money. After understanding your spending habits, Digit will automatically save a small amount of money from your monthly budget each day.

Setting up your Digit Account

  • Set up your Digit account and link a bank account to Digit.
  • A checking account number or routing number are not required.
  • Digit will monitor your spending using advanced algorithms.
  • After understanding your spending habits, Digit will automatically move money from your linked checking account to a FDIC insured Digit account based on your savings goals.
  • You don’t need to keep a minimum balance in your Digit account.
  • You can withdrawal the money you saved in the Digit account at any time.

Creating Savings Goals

The amount of money that Digit transfers is based on savings goals that you establish in your Digit account.

Digit will establish a transfer amount designed to help you meet your savings goal. Digit’s algorithms learn when and how much is safe to transfer based on your spending habits.

  • Digit’s algorithms are designed to only transfer money that you can safely set aside for saving.
  • In the event that your linked checking account is overdrawn by Digit’s automatic saving, Digit will reimburse the fees for up to two overdrafts.

To create a savings goal, just open the Digit app and create a savings goal.

  • There is no limit to the number of savings goals you can create.
  • You can also create debt reduction goals which let you make automatic payments from your Digit account to your credit card.

You’ll set your savings goal by letting Digit know what you’re saving for, whether it’s a vacation, debt retirement, emergency fund, or a new wardrobe.

Next, you decide when you’d like to meet your money goal.

Digit can even funnel money to multiple goals at once by taking the savings and applying it to several categories.

You don’t have to do the work or stress over how much you can afford to save – Digit does the work for you automatically.

Is Digit Safe to use?

With financial apps, the first thing that comes to mind is safety. Digit employs the following safety measures:

  • All personal information is anonymized, encrypted, and securely stored.
  • Funds held by Digit are FDIC insured up to $250,000.

Using the Digit Service

Digit is free for the first 30 days so you can try it risk-free. After the 30 day trial period, it only costs $5 a month to use Digit. You can cancel the subscription at any time.

Savings Bonus

Digit offers a unique savings bonus. The concept is intended to reward you for meeting your savings goals.

  • Save with Digit for three consecutive months.
  • Receive a 1% annualized savings bonus deposited into your Digit account.

Availability

Digit currently works with over 2,500 banks and credit unions within the US. Digit is not currently working with any banks outside of the US.

What are the Benefits of Using Digit?

Digit provides an easy to use platform for saving money. The service is ideal for busy professionals or people that don’t want to spend their time creating and tracking a budget each month.

Digit helps you save money by using algorithms that understand your spending habits in real time. After understanding your habits, Digit saves an ideal amount of money into an FDIC insured savings account based on your personalized savings goals.

This is an easy way to put your savings goals on auto pilot.

Which App is Best For You?

The easiest way to compare the apps is by thinking about the problem you are trying to solve. Are you looking for ways to save more efficiently or do you need access to a good investment platform?

Best Option for Savers

If you need to save more money, Acorns or Digit are your best options. The real question is which method of saving do you prefer?

Acorns will round up your purchases to the nearest dollar. That extra charge will be automatically moved into your investment account. While the savings from an individual transaction amounts to just pocket change, the savings can add up very fast.

Digit takes a slightly different approach. Digit analyzes your spending and automatically takes a small amount from your checking account and deposits it into a savings account.

The other difference is how your savings is managed. Digit manages your savings with an FDIC insured account. Acorns manages your savings in a diversified investment portfolio.

The Digit account will only provide a small interest rate on your savings, but the funds will not lose value. Acorns can potentially provide a larger return, but your funds will fluctuate in value depending on market conditions.

Best Option for Investors

For those people looking for an investment platform, you will be comparing Robinhood vs Acorns.

Robinhood is a solid investment account. You have the ability to trade stock, exchange traded funds, and cryptocurrency with no trading fees. However you have to make your own investment decisions.

Acorns offers investment accounts with diversified investment portfolios. All you need to do is choose an investment portfolio based on your risk tolerance.

Robinhood is a better option for more experienced investors while Acorns is a better option for beginner investors.

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