TD Ameritrade vs. Robinhood

It can be intimidating to choose a brokerage when you first start your investing journey. However, it's important to carefully consider the pros and cons of various brokers to find the one that's best for you. In this TD Ameritrade vs. Robinhood face-off, we'll get to the heart of the features that may sway you one way or another.

TD Ameritrade vs. Robinhood: Types of accounts

Investors who are on the fence about opening an account at TD Ameritrade vs. Robinhood may find the types of available accounts alone is reason enough to pick TD Ameritrade.

Currently, Robinhood offers only taxable brokerage accounts. So if you want to get the tax benefits of a traditional IRA, Roth IRA, SEP IRA, health savings account (HSA), 529 College Savings Plan, and so on, Robinhood isn't the place for you. This is perhaps the biggest trade-off with Robinhood, which otherwise has a compelling value proposition for many investors.

TD Ameritrade offers taxable brokerage accounts, but it also offers just about every tax-advantaged account you can think of. If you're looking to open anything other than a taxable brokerage account, then TD Ameritrade gets an easy win over Robinhood.

TD Ameritrade vs. Robinhood: Trading costs and commissions

While TD Ameritrade has joined the zero-commission stock trade revolution, Robinhood has a clear-cut advantage for anyone who wants to buy and sell options. Plus, Robinhood is the only one of the two where you can buy fractional shares of stock (for now).

That said, TD Ameritrade bridges some of the pricing gap with more than 1,800 mutual funds you can buy or sell for free out of about 11,500 total. Robinhood doesn't offer mutual funds at all. 

It's also worth noting that Robinhood is one of the few major brokers to allow clients to directly invest in cryptocurrencies like bitcoin. 

Commission-free funds and ETF trades

Just because a brokerage charges trade commissions doesn't mean that all trades come with a commission. Robinhood offers trades for free, but TD Ameritrade also offers thousands of funds and ETFs you can trade without paying a transaction fee or commission.

TD Ameritrade vs. Robinhood fund types side by side

Of course, transaction fees and commissions are only one price you pay to actually buy a fund or ETF. Over time, a fund's management fee (also known as the expense ratio), which typically ranges from 0.05% to 1% of the amount invested each year, can easily add up to more than the cost of buying or selling a certain fund or ETF.

TD Ameritrade vs. Robinhood: Account minimums

Lower investment minimums are among the biggest advantages of the best online brokers. TD Ameritrade and Robinhood are market leaders here, as neither has a required minimum. That's to say, you can open an account and deposit just $1 if you want to.

That said, Robinhood's fractional shares give it the edge. For practical purposes, the minimum amount of money to start investing through TD Ameritrade is the cost of one share of whatever stock or ETF you want to buy, or the minimum investment amount for a mutual fund. On the other hand, with a Robinhood account, you can literally buy $1 worth of stock. 

TD Ameritrade vs. Robinhood: Trading platform

The user experience with TD Ameritrade vs. Robinhood is very different, which is down to their different business models.

Robinhood's platform

We'll start with Robinhood, which doesn't offer a fully-featured trading platform. Robinhood's mobile app and web browser platform are designed to be simple. Load up your account and you'll see a straightforward chart for any stock and ETF, a summary of key metrics, a breakdown of analyst ratings, and a list of headlines about the stock or fund.

Robinhood's clutter-free design makes it really easy to navigate and use, but its simplicity is also a byproduct of its limited number features. You won't find full analyst reports or any financial data that goes beyond a stock's earnings per share in recent accounting periods. To sum it up, Robinhood offers everything you'd need, just not everything you might want.

One recent addition to Robinhood is its "Robinhood Gold" account, which offers investors access to Morningstar research reports, the ability to trade with margin (including up to $1,000 in margin interest free, an industry rarity), and a few other features. However, it costs $5 per month.

TD Ameritrade's platform

TD Ameritrade is almost on the opposite end of the spectrum. It offers far more features in its mobile apps and browser platforms than Robinhood. In addition, TD Ameritrade's desktop trading platform, thinkorswim, is a perennial favorite among active traders, investors, and professional reviewers alike.

From complex charting tools to live video feeds, Level II quotes, and economic data from the Federal Reserve, you can find just about anything you'd need from within the thinkorswim platform. Best of all, it's completely customizable, so you can move windows around as you see fit. That way the details that are most important to you are always front and center.

And unlike many other trading platforms, thinkorswim is available to all TD Ameritrade customers -- no matter how much you keep in your account, or how much you trade. Put simply, if there is one thing that separates TD Ameritrade from the pack, it's that it has one of the most powerful trading platforms out there and doesn't charge you anything to use it.

TD Ameritrade vs. Robinhood: International stocks and ADRs

TD Ameritrade and Robinhood don't offer access to foreign markets. TD Ameritrade clients can purchase American Depositary Receipts (ADRs), which trade on U.S. stock exchanges.

Robinhood introduced ADRs on its platform in 2018, and you can't access all of them. It offers "over 250" ADRs, which it says includes companies like "Tencent, Nintendo, and Adidas." It seems to be moving country by country to add the largest ADRs. In a blog post, it said that it will "expand the global list with stocks from France, including most frequently searched companies Ubisoft Entertainment, LVMH, and Michelin."

If being able to trade ADRs is important to you, TD Ameritrade is likely the better pick, since not every ADR is available on Robinhood. As for trading directly on international markets, Fidelity and Charles Schwab may be worth studying more closely, as both offer online access to foreign markets that Robinhood and TD Ameritrade do not. (However, Schwab has recently acquired TD Ameritrade, so this feature will likely be available eventually.)

TD Ameritrade vs. Robinhood: Research quality and tools

TD Ameritrade has a wide range of third-party and proprietary research tools, such as Morningstar, S&P Capital IQ, and Thomson Reuters research. In addition, clients can access proprietary research and tools to screen stocks and funds by fundamental performance. It even tracks social-media sites like Twitter for investor sentiment.

Robinhood does not currently offer third-party or proprietary research to its clients unless they pay $5 per month for Robinhood Gold. Robinhood Gold comes with Morningstar research access. Its research suite consists primarily of news feeds from free publications and average sell-side research estimates. As it's a no-frills brokerage, saving on commissions does come with some trade-offs in the research department.

TD Ameritrade vs. Robinhood: How to decide

There are a few "make-or-break" features that make it easy to decide between TD Ameritrade vs. Robinhood. First, if you want to open any account other than a taxable account (IRAs, health savings accounts, college savings plans, etc.) then TD Ameritrade is the best way to go. Robinhood doesn't offer those types of accounts.

Secondly, TD Ameritrade is the only broker to offer a full list of American depositary receipts and mutual funds. Robinhood offers only select ADRs and doesn't offer any mutual funds. TD Ameritrade is the only one of the two to offer a fully-featured desktop trading platform, too.

Of course, Robinhood has its place for investors who prioritize the cost of making a trade over everything else. It may not give much in the way of research or supplemental features, but it does feature no-commission trading of both stocks and options.

When comparing TD Ameritrade vs. Robinhood, your decision will ultimately come down to the type of investing you want to do. New investors who want to start small and place trades for a handful of shares (or even a fraction of a share) at a time might be better off with Robinhood. More experienced investors should take a closer look at TD Ameritrade.