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Robinhood was founded to help provide everyday people with easy access to the financial markets and pioneered the concept of zero-commission stock trading upon its 2015 launch. But there's a lot more to Robinhood than just free trading. In this Robinhood review, we'll take a closer look at this investment platform, fee structure, and the pros and cons investors should know about before deciding to use Robinhood for their brokerage needs.
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We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Rating image, 4.5 out of 5 stars.
4.5 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Bottom Line
With no fees, access to trade fractional shares and cryptocurrency, among many other investment types, Robinhood is a high-quality trading platform fit for beginning and seasoned investors alike.
Fees:
$0 for stocks, ETFs, options, and cryptocurrencies
Account Minimum:
$0
Special Offer
Get a free stock with a new account
Open Account
On Robinhood's Secure Website.
Full Robinhood review
This stock broker is a fit for: Investors seeking a mobile app to invest in stocks, ETFs, options, and crytpocurrencies. Investors needing an IRA account or to buy mutual funds will want to look elsewhere.
Pros
- $0 commissions
- High-quality mobile investment app
- Fractional shares investing
- Cryptocurrency investing
Cons
- No access to mutual funds and fixed income products
- No IRA accounts
Top perks
$0 stocks, crytpocurrencies, ETFs, and options commissions
Robinhood is best known for pioneering the idea of zero-commission stock trading. While most other top brokers have followed suit, Robinhood still has a favorable fee structure. For example, in addition to not charging flat commissions on options trades, Robinhood doesn't impose a per-contract charge either. That's something that many of the best options platforms still do.
Fractional shares
Traditionally, if a stock was trading for $500 per share, you needed to have at least $500 to invest in it. Robinhood lets investors buy fractional shares of thousands of stocks, even if they have only $1 to invest. This can be an incredibly valuable tool -- it not only lets you put 100% of your money to work, but also helps create a diversified portfolio without a ton of investment capital.
Cryptocurrency trading
If you're interested in cryptocurrencies, Robinhood could be a great choice for you, as cryptocurrency trading is integrated into the company's trading platform. Customers can buy and sell Bitcoin, Litecoin, and other cryptocurrencies any hour of the day.
Cash management
Robinhood also offers an appealing cash management account that allows clients to earn returns that fluctuate with prevailing interest rates (currently 0.30% APY) on their uninvested cash. What's more, the cash management account has no fees associated with it, including $0 ATM fees at more than 75,000 ATMs in its network.
Robinhood Gold
While Robinhood is known for being the "no fee" brokerage, it's important to mention that the company does have a premium product known as Robinhood Gold. This version of the platform costs $5 per month, but could be well worth it to active investors. Gold members get access to margin trading (including $1,000 of interest-free margin), instant access to larger deposits (standard accounts can have up to $1,000 instantly available), and access to Morningstar stock research reports.
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What could be improved
Access to mutual funds and fixed income investments
Robinhood's platform currently doesn't support mutual fund and fixed income investing, which is a rarity among major brokers. You can certainly invest in bonds through exchange-traded funds (ETFs) through Robinhood's platform, but you can't buy individual bonds.
Tools and research
Robinhood's platform was designed to be a simple, no-frills investment experience. However, if you want access to educational tools, stock research, or an advanced trading platform, you may want to look elsewhere.
IRA accounts
Robinhood only offers standard (taxable) brokerage accounts. You cannot invest through an IRA through Robinhood, nor can you open a custodial account, trust, or Coverdell, just to name a few.
Alternatives to consider
If you want a mobile investment app that offers IRAs: Webull's investment app receives high marks. Where it outshines Robinhood is that it's one of the few mobile-focused brokers that offers IRA accounts. Webull also matches Robinhood's feature set well, including to offer cryptocurrency trading, competitive margin rates, and $0 commissions for stocks, options, and ETFs.
If you're seeking a full-featured broker: TD Ameritrade offers some of the most comprehensive investing and banking experiences among big brokers, including a high-quality trading platform, $0 commissions for stocks and ETFs, mutual fund access, and IRAs. One downside, compared to Robinhood, is that TD Ameritrade doesn't offer cryptocurrency trading.
Commissions
Robinhood's claim to fame is its no-commission approach to trading, so this section shouldn't be too much of a surprise. The platform charges $0 for stock, exchange-traded fund (ETF), and option trades placed through its app or website.
| Stocks and ETFs | Stock options | Mutual funds |
|---|---|---|
| $0 | $0 (no per-contract charge) | Not offered |
The $0 options trading commission is a rarity in the industry. While most of the brokers who have dropped their standard stock trading commission have also dropped the base commission on options trades, a lot of them still charge a small per-contract commission. Robinhood allows traders to buy and sell as many options contracts as they want with no commissions at all.
Buying mutual funds and ETFs
Since Robinhood offers zero-commission stock trades, this also means that you can trade ETFs free of charge.
However, Robinhood doesn't currently offer mutual fund trading at all, which is a big negative differentiator from many of its competitors. While it may integrate mutual fund capabilities into its platform someday, for the time being, it's not possible to buy shares of your favorite mutual funds through Robinhood.
Fees you should know about
To be perfectly clear, Robinhood doesn't charge commissions for stock, ETF, and options trades placed through its online and mobile platforms. However, that doesn't mean that Robinhood is completely fee-free; there are some things you might still have to pay for. Here a few of the more common charges you might face:
- Returned check or ACH fee: $9
- Domestic/International wire transfers: $0/$0
- Domestic overnight check delivery: $20
- Paper statements: $5
- Paper trade confirmations: $2
Trading platform
For much of its history, Robinhood was a trading app -- period. There wasn't much of a functional web portal.
That's changed, as Robinhood has rolled out expanded capabilities through the web version of its platform. Both the web portal and mobile app versions are simple in design and are intended to be easy to learn and use.
Customers who value simplicity love Robinhood's trading platform. The company's app currently has ratings of 4.8 and 4.3 out of 5 on the App Store and Google Play Store, respectively.
Robinhood margin rates
If you pay $5 per month for the Robinhood Gold premium version of the platform, one of the perks you get is the ability to invest with margin (aka borrowed money).
Not only that, but the first $1,000 of margin balances are absolutely free, meaning you won't pay any interest on smaller margin trades. Plus, Robinhood charges a flat margin interest rate on the portion of your balance in excess of $1,000, and it's quite a competitive rate. Robinhood's margin rate is just 5%, which is lower than most competitors.
It's also worth mentioning that you'll need $2,000 in your account to use margin. This is a regulatory requirement that applies to all brokerages, not just to Robinhood.
Research offerings
The standard (free) Robinhood platform is light on features, and research is one of them. In fact, the only research offered on the Robinhood app is available only to its premium Robinhood Gold customers who have access to stock research reports from Morningstar. If you want access to stock research from several different firms, Robinhood likely isn't the best choice for you.
Customer support and service
This is another negative of Robinhood's "no frills" approach: Customer service is primarily handled through the help page on Robinhood's website, or through its automated chat system. You can email customer service, but it's tough to get a quick (and human) response to a question. In fact, Robinhood's human-driven customer support is done almost exclusively by email. There's not even a published phone number on Robinhood's website.
Robinhood is right for you if:
- You want a low-cost broker: Robinhood not only offers free web- and app-based stock trading, but it also offers free options and cryptocurrency trading.
- You like simplicity: Robinhood's trading platform was designed with simplicity in mind. It's not packed with features, but what it lacks in features, it makes up for in user-friendliness.
- You want to trade cryptocurrencies: Few brokerages allow investors to trade cryptocurrencies, but Robinhood allows clients to trade 17 different cryptocurrencies in the same trading app.
- You're a newer investor with limited capital: With the ability to buy fractional shares of stock with as little as $1, Robinhood is a good choice for investors who are just getting started.
- You want a savings and brokerage account in one: Robinhood essentially treats clients' uninvested cash as a high-yield savings account, with an APY that rivals even the best online savings banks.
- You don't want to invest in mutual funds or bonds: Robinhood may be a good option for those interested in stocks, ETFs, options, and even cryptocurrencies, but if you want to hold mutual funds or individual bonds in your brokerage account, you're out of luck.
- You just want a standard brokerage account: In addition to not offering mutual fund investing, Robinhood doesn't offer retirement accounts such as IRAs. You also cannot open a trust, partnership, Coverdell, 529, custodial, or any other type of brokerage account through Robinhood.
About the Author
Matt is a Certified Financial Planner® and investment advisor based in Columbia, South Carolina. He writes personal finance and investment advice for The Ascent and its parent company The Motley Fool, with more than 4,500 published articles and a 2017 SABEW Best in Business award. Matt writes a weekly investment column ("Ask a Fool") that is syndicated in USA Today, and his work has been regularly featured on CNBC, Fox Business, MSN Money, and many other major outlets. He’s a graduate of the University of South Carolina and Nova Southeastern University, and holds a graduate certificate in financial planning from Florida State University.
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