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Updated on Friday, January 22, 2021
Robinhood is a brokerage account and stock trading app designed for both beginners and more experienced traders. It provides a way to quickly and easily make stock, exchange-traded fund (ETF), option and cryptocurrency trades, without commissions. In addition, Robinhood offers a premium trading product for a monthly fee, and you can also use its cash management account. This Robinhood review takes a look at what you can expect when you use the app to help you determine if it’s right for your needs.
|Minimum deposit||$0 for a brokerage account, $2,000 for Gold account (required for margin)|
|Sign-up bonus||None currently offered|
- What Robinhood offers and who it’s for
- Robinhood fees and costs
- Robinhood investing tools and research
- Robinhood user experience
- Robinhood investor education
- Robinhood security
- Robinhood alternatives to consider
What Robinhood offers and who it’s for
Robinhood is an online brokerage and trading app that only offers taxable investment accounts for trading stocks, ETFs and options. In addition, you can access cryptocurrency trading and cash management through Robinhood. The app is known for its ease of trading, and its simple interface that takes the guesswork out of trading.
However, Robinhood doesn’t offer any tax-advantaged retirement accounts at this time, and you won’t have access to mutual funds either. Instead, if you want access to fund investing, you’ll need to stick with ETFs. The cash management account can provide you with a debit card and allows you to earn 0.30% APY on uninvested cash in your brokerage account (note there is currently a waitlist for the cash management account). By paying a small fee, you can access a margin account, as well as more research and market data.
Robinhood is notable for its no-commission trades and the way it allows anyone to start trading, including with more complex instruments such as options. That said, while beginners can benefit from the intuitive interface, they may find Robinhood’s lack of education and customer service to be a challenge. As for more seasoned investors, high-frequency options and currency traders looking to reduce costs may be drawn to Robinhood.
- No account minimum: There is no account minimum for a basic brokerage account with Robinhood, although there is an account minimum of $2,000 if you get a Gold account, due to the requirements for margin access.
- Easy-to-use interface: Robinhood’s user interface is streamlined and intuitive, and even trades using more complex instruments, including options, can be easy to execute.
- Cryptocurrency trading: Users have access to popular cryptocurrencies, including Bitcoin, Ethereum, Litecoin and Dogecoin, through Robinhood.
- Earn interest on unused brokerage funds: If you aren’t using the cash in your brokerage account, you can earn 0.30% APY on it. You can also access your funds with a debit card.
- Limited customer service: While there is a searchable FAQ section, customer service is rather limited. Instead, it’s mostly focused on email and social media.
- No tax-advantaged accounts: Robinhood offers no way to open a tax-advantaged account, like an IRA, and invest in a way that allows your money to grow in a more tax-efficient manner.
- Limited education and research tools: Robinhood doesn’t offer a lot of investment education with its free version. You can sign up for Robinhood Gold and get access to market data and investment research, but that comes with a fee.
Robinhood fees and costs
|Options trading fees||None|
|Stock trading fees||None|
|Cryptocurrency trading fees||None|
|Account fees (annual, transfer, inactivity)||
|Robinhood Gold fees||
Robinhood offers commission-free stock and ETF trading — something that other brokerages, including Fidelity and Schwab, also provide. In addition to stocks and ETFs, Robinhood also offers commission-free options trading and cryptocurrency trading, which is harder to find. It’s important to note, however, that commission-free trading doesn’t mean you won’t be dealing with expense ratios on ETFs or other costs you might encounter with different investments.
It’s worth noting that Robinhood offers options trading with no contract fees, as well as no commissions. This is a relatively rare occurrence — typically, even if you don’t pay a commission, you might still have to pay a per-contract fee.
With Robinhood Gold, your fee is based on the margin to which you have access. If you have a $1,000 margin, you pay a flat $5 per month. For accounts with margin above $1,000, the fee is 5% annually. It’s also important to note that interest will be charged on margin, based on how much you borrow.
Robinhood investing tools and research
With Robinhood, you can invest in fractional shares of companies for as little as $1. This allows you to access companies with high stock prices without having to pay for a full share.
Market data and professional research
If you sign up for Robinhood Gold, you can get access to multiple bids for certain stocks, as well as to research and insights from Morningstar. In addition, Robinhood offers real-time market data on a variety of cryptocurrencies, even those you can’t trade through the platform.
You can receive a free easy-to-read “3-minute newsletter,” offering bite-sized information about the market and current conditions before you start trading for the day.
Robinhood user experience
When you read almost any Robinhood review, you are likely to see that the brokerage is known for its intuitive and easy-to-use interface. It’s generally easy to use Robinhood to place orders and engage in trading. The mobile app offers access to your account in your pocket and includes a news feed, as well as candlestick charts to help you figure out which trades to make. On top of that, you can use the app to set your own news alerts and even listen to earnings calls.
However, there have been some criticisms that Robinhood makes it too easy to trade, especially when it comes to options — this means inexperienced traders might take on more risk than they should. Another criticism of Robinhood has been the frequent app outages that can make it difficult for traders to access the platform in some cases.
And while Robinhood has a well-organized FAQ section on its website, the customer support is somewhat limited, so beginning investors with questions, as well as those who might need a little more hand-holding, might find it difficult to get the help they need. However, more experienced and confident traders are likely to enjoy the user experience.
Robinhood investor education
Robinhood’s investor education has improved over the years, but it’s not as robust in comparison to some of the more established brokerages. Robinhood does offer its Snacks newsletter, plus you can also find a variety of articles on the website that talk about investing basics, including on topics such as diversification, choosing stocks and volatility.
For those who pay for the Robinhood Gold account, it’s possible to get access to other more advanced investor education tools. You can view market data, as well as get access to investor reports and research from Morningstar.
- SIPC insurance for brokerage accounts
- FDIC insurance for cash management
- Two-factor authentication
- Encrypted data storage
Robinhood is SIPC-insured for members, up to $500,0000, including $250,000 in cash. In addition to SIPC insurance for brokerage accounts, Robinhood also has FDIC insurance for its cash management account. As a result, you know you’re getting industry-standard protection, regardless of where your money is held.
It’s important to note that cryptocurrencies aren’t protected by SIPC or FDIC insurance, so if you’re trading cryptos, the amounts you hold won’t be protected by the insurance.
Robinhood does take steps to keep your information secure, including encrypting the data it stores, such as your Social Security number, as well as using third parties to access bank account information. Finally, you can choose to enable two-factor authentication for your Robinhood app, as well as use TouchID and FaceID to access your account via mobile app.
Robinhood alternatives to consider
Robinhood offers a lot of good features, particularly when it comes to frequent trading and options trading. Additionally, the low cost can be a selling point. However, Robinhood isn’t a full-service brokerage and some of its offerings are limited. If you aren’t satisfied with those limitations or simply want to see what other brokerages are out there before making your choice, here are some alternatives to consider.
|Average Cost Per Trade||Minimum Deposit||Best for...|
Robinhood vs. Webull brokerage account
Robinhood and Webull brokerage account are very similar in a lot of ways: Both are designed for ease and have user interfaces that make executing trades simple. However, Webull brokerage account has a more extensive suite of research tools available for free. Robinhood offers some research and data when you sign up for Gold, but, in general, Webull brokerage account offers more in this area.
On the other hand, Robinhood offers lower margin rates for lower amounts. When you sign up for the $5 per month Robinhood Gold, you can get access to your first $1,000 of margin without worrying about interest. Webull brokerage account does offer more access to margin, although its rates aren’t as competitive for smaller amounts.
Because of the tools offered by Webull brokerage account, it could be suited to advanced traders and active day traders more than Robinhood. Robinhood, meanwhile, may be better suited for beginner traders than Webull brokerage account (with some downsides, including allowing them to take on too much risk without necessarily understanding it).
Robinhood vs. E*TRADE
E*TRADE also offers no-commission trades, along with a wider selection of account types and investment choices than Robinhood. E*TRADE is a full-service brokerage, so you get access to tax-advantaged accounts, as well as a full suite of investment choices, including bonds and mutual funds, which Robinhood doesn’t offer.
On the other hand, E*TRADE’s platform isn’t quite as accessible and easy to learn as Robinhood’s (or Webull brokerage account’s, for that matter). Robinhood is a little easier to use for the beginner, and it has the added benefit of taking things up a notch, with access to commission-free trading for options and cryptocurrencies. It’s also easier to access margin trading with the Robinhood platform than with the E*TRADE platform.
All information included in this profile is accurate as of 1/22/2021. For more information, please consult Robinhood’s website.
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