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Robinhood is a trading and inv estment platform that enables users to trade stocks, ETFs, and even cryptocurrencies with zero commissions. The platform is best known for its easy to use mobile app. Plus, new users on the platform can also get a free stock when they sign up. You can also invest in fractional shares, enabling you to adjust your portfolio without having to buy entire large shares.
Pros
- Commission free trading – the platform charges $0 in commissions so you can buy any amount of a stock without having to worry about high fees.
- Invest in fractional shares – if you don’t want to purchase an expensive stock, you can just buy a fraction of one, starting from as little as $1.
- 3 different trading options to choose from – you can invest in stocks, exchange traded funds (ETFs), cryptocurrencies and even gold on the app.
- Get 0.3% APY on your uninvested cash – your cash earns interest even as you leave it in your account waiting for the right opportunity to invest it.
Cons
- Long delays for withdrawals – it may take up to 5 days for your withdrawal request to be processed and your funds to appear in your bank account.
- Minimum balance requirement – if you want to use margins on Robinhood Gold, you will need to maintain a minimum account value of at least $2000.
Jump to: Full Review
Compare to Other Investment Apps
Fundrise
Invest in real estate properties with a $10 minimum initial investment
Historical annual return varies from 8.8% to 12.4% (2019 – 9.47%)
Low annual fees: advisory – 0.15%; management fee – 0.85%
Public App
Manage your portfolio of stocks, ETFs, and crypto investments – all in one place
Over 5000 stocks and ETFs to choose from (dividend stocks available)
Follow other investors, see their portfolios, and exchange ideas
How Does Robinhood Work?
Robinhood is an online brokerage website that enables users to trade stocks, ETFs, options, cryptocurrencies, and other financial assets. The platform is well-known for offering commission-free trading services and a convenient mobile trading app. Robinhood is most popular among millennials and younger traders.
You can use the Robinhood platform to invest in different financial assets. The platform offers thousands of stocks and other assets that you can choose from to trade. The Robinhood platform also supports limit orders, stop orders, stop-limit orders, and market orders. You will also be able to set a time for when your order is valid.
Some of the most popular financial assets that you can buy on Robinhood include:
- Stocks
- ETFs
- Options
- Crypto
Moreover, you can also buy fractional shares on Robinhood. Fractional investing allows you to invest any amount into a stock. This method of investing is ideal for investing in expensive stocks that may cost thousands of dollars. You will not need to commit large sums to buy an entire share but can instead invest in a portion of a share.
Robinhood also enables users to increase their buying power with margin investing.
How Much Can You Earn With Robinhood?
Your earnings on Robinhood may vary depending on the stocks you buy. For example, if you invested $1000 into a share that increases in value by 10%, you can earn $100. Thus, do your due diligence and select stocks that you are confident in.
Apart from investment earnings, you can earn interest on the uninvested cash in your Robinhood account. Robinhood pays a 0.3% annual yield on your uninvested cash.
Robinhood Reviews: Is Robinhood Legit?
Robinhood is a legitimate platform that you can use to buy and sell various financial assets. The platform has received many positive reviews from its users, although there have been some users who have had negative experiences with the platform.
Most users were satisfied that the company offered a user-friendly mobile app that allowed them to buy and sell stocks. Many reviewers also praised the platform for its commission-free trading features and for allowing them to set up recurring investments.
However, some users complained that they could not contact customer support when they experienced issues with their accounts. Some reviewers reported problems with the platform’s after-hours trading feature.
Who Is Robinhood Best for?
Robinhood is best for investors who want to trade on the stock market and want to have control over the different assets in their portfolios. With Robinhood, you do not need to select from a range of pre-built investment portfolios. Instead, you will be able to choose the specific stocks that you want to invest in.
Robinhood is also ideal for anyone who intends to make frequent trades. The platform offers free trades for all users, meaning you can make trades as frequently as you want.
Robinhood Fees: How Much Does It Cost to Invest With Robinhood?
Robinhood is most well-known for its commission-free trading. The company does not charge users to open and maintain an account or transfer funds. However, there are some regulatory fees involved in buying and selling orders.
| Type of Fee | Fee Amount |
|---|---|
| Regulatory Transaction Fee | $22.90 per $1,000,000 of principal (sells only, no fees for customers with sales under $500) |
| Trading Activity Fee | $0.000130 per share (equity sells) and $0.00218 per contract (options sells), no greater than $6.49 |
| American Depositary Receipt (ADR) Fees | Typically between $0.01-$0.03 per share |
Note that you may only be charged these fees in certain circumstances. You can check the Robinhood website to see when you will need to pay each of the fees. You will also be able to see the relevant fees before you execute a trade order.
Robinhood Gold
Robinhood also has a paid monthly subscription plan known as Robinhood Gold that you can upgrade to if you are a more experienced trader. Robinhood Gold allows you to upgrade your account to a margin account so you can buy and sell stocks on credit.
The subscription plan also provides access to in-depth analysis and Morningstar research on more than 1,700 stocks. There is also access to pre-marketing and after-market trading hours.
The Gold plan starts from just $5 per month and comes with $1000 worth of free margin.
Robinhood Features: What Does Robinhood Offer?
IPO Access
Robinhood allows you to access initial public offerings (IPOs). IPOs allow you to invest in a company when it first becomes a publicly-listed company.
Options Trading
Crypto Trading
Some of the cryptocurrencies you can choose from include:
The lack of fees for investing in crypto on Robinhood makes it a popular alternative to many other trading platforms.
Automatic Investments
Robinhood also allows individuals to create automatic investments. This is ideal if you want to invest regularly over time and dollar-cost average your investments.
Some of the time frames you can set for your investments include:
- Every market day
- Weekly
- Bi-weekly
- Monthly
Cash Card
Robinhood’s Cash Card feature allows users to sign up for a debit card. When you use this debit card for your regular spending, you can earn weekly bonuses.
You can use the feature to earn a 10% to 100% bonus on your weekly round-ups. You will be able to earn up to $10 in bonuses each week. The platform then allows you to invest these bonuses in stocks and crypto of your choice.
There are no fees involved in using your Robinhood Cash Card, and you will also not need to maintain a minimum balance.
Mobile App
Robinhood also has a mobile app for iOS and Android smartphones. This app allows you to buy and sell stocks and other financial assets conveniently no matter where you are.
Research Offerings
Another feature of the platform is the research offerings that Robinhood provides its users for free. Some of the research offerings you can get include analyst ratings, earnings calendars, lists of top movers, and links to earnings calls.
Moreover, Robinhood also allows members to access data from reliable sources such as:
- Reuters
- Wall Street Journal Markets
- CNBC Business
- Barron’s
- Nasdaq
Robinhood Requirements
Here are some of the requirements if you want to create a Robinhood account:
- Be 18 years or older
- Have a valid Social Security Number (not a Taxpayer Identification Number)
- Have a legal U.S. residential address within the 50 states or Puerto Rico
- Be a U.S. citizen, U.S. permanent resident, or have a valid U.S. visa
Robinhood Payout Terms and Options?
You can sell the stocks in your Robinhood portfolio whenever you want. After selling the stocks, you can easily withdraw the funds from your account after the settlement period. The settlement period is usually two trading days after your trade date.
You can withdraw funds directly to the bank account you used to deposit funds into your Robinhood account. If you withdraw your funds to another bank account, you may need to provide additional information for verification.
Note that you can only make up to five withdrawals and up to $50,000 per business day from your Robinhood account.
Robinhood Risks: Is Robinhood Safe to Invest in?
Robinhood is one of the safest online brokerages that you can use to invest in the stock market and grow your wealth.
With Robinhood, your investments are insured by the Securities Investor Protection Corporation (SIPC). This insurance ensures that if Robinhood shuts down, you can recover up to $500,000, with up to $250,000 in cash. However, note that your cryptocurrency investments do not enjoy SIPC insurance.
Robinhood is also regulated by the SEC and is a member of FINRA.
How Does Robinhood Protect Your Money?
Robinhood maintains high-security standards for its investors and their accounts. The company will reimburse you for any losses you experience due to unauthorized activity on your account.
Thus, if you do not give your password to anyone and use two-factor authentication, you are not at risk of losing your investments.
What Are the Robinhood Pros & Cons?
Robinhood Pros
- Robinhood does not charge fees for any of its services, allowing you to trade for free.
- Apart from over a thousand stocks, you can also browse and trade over 16 different cryptocurrencies.
- You can access free research and other financial analysis to help you make better investment decisions.
- You can upgrade to a Robinhood Gold for just $5 per month to access additional trading features.
Robinhood Cons
- The platform has been known to experience significant downtime, with three such failures occurring in 2020.
- To have a margin account, you must maintain a minimum portfolio balance of $2000.
How Good is Robinhood Support and Knowledge Base?
Robinhood offers a comprehensive knowledge base on its website under the Learn tab. This knowledge base contains multiple articles about almost every investing topic. You can browse these articles to learn more about how to invest.
You can also browse the support page on Robinhood’s website to find answers to common issues encountered by users. If you still have questions, you can contact Robinhood support directly from your Robinhood account page.
Robinhood Review Verdict: Is Robinhood Worth It?
Robinhood is one of the most popular online brokerage platforms that both beginner and experienced investors can use to trade financial assets. The platform offers a wide range of financial assets, allowing users to trade over a thousand stocks, options, and cryptocurrencies.
Moreover, Robinhood is also well-known for its commission-free trading features. There are no fees involved with creating or maintaining an account on Robinhood. There is also no minimum account balance and you can access market data and financial analysis for free.
Experienced investors on Robinhood can also upgrade to the Robinhood Gold subscription plan starting from $5 per month. This plan allows you to access more advanced investing features.
How to Sign Up With Robinhood
Step 1: Create an Account
Before you can start trading on Robinhood, you will need to start by creating an account. You can do so by visiting the Robinhood website and clicking on the Sign-Up button. Note that you must be from the United States to create a Robinhood account. You will also need to provide some personal information about yourself.
When creating an account, ensure that your name as it appears on your government-issued ID.
Step 2: Deposit Funds
After creating a Robinhood account, you will need to link a bank account so that you can deposit funds into your account.
You can make up to five deposits and transfer up to $50,000 into your Robinhood account each business day.
Step 3: Browse and Invest
Once you deposit funds into your Robinhood account, you can browse the different financial assets available for you to trade on the platform.
When you find a stock, option, or cryptocurrency you are interested in, you can initiate a buy order from your account.
Sites Like Robinhood
| Comparison | Robinhood | Acorns | Fundrise | Public |
|---|---|---|---|---|
| Service Fees | $0 commission | From $3 per month | 1% | No fees |
| Min. Investment | $1 | $5 | $10 | $1 |
| Best For | General stock trading | Spare change | Real estate | Stocks and ETFs |
Robinhood vs. Acorns
Acorns Summary
- Low account fees from just $3 per month
- Get $5 in your account for referrals
- Low minimum starting investment amount
- High average return on investments of 7.5%
Acorns is one of the best platforms beginner investors can use to invest in the stock market. The platform specializes in helping users invest their loose change through its Round-Up investing feature.
Users can connect their spending cards to their Acorns accounts. Whenever you buy something using a linked card, Acorns will round it up to the nearest dollar. It then helps you save the loose change and invest it in a portfolio of your choice.
Since you will not need to choose the specific stocks to invest in, Acorns may be better for you than Robinhood if you want convenience when investing. However, Acorns charges a monthly subscription fee starting from $3.
Robinhood vs. Fundrise
Fundrise Summary
- Low minimum starting investment of $10
- High historical returns of 8.8% to 12.4%
- 1% of management fees
- Diverse portfolios of up to 16 investments
Fundrise is a crowdfunded investment platform that specializes in real estate investments. The platform pools the funds from its investors to invest in different properties. By investing in property on Fundrise, you can diversify your investments and reduce your risk.
Moreover, Fundrise also charges a reasonable asset management fee of just 1% per year for its portfolios. Thus, if you want to invest in real estate, Fundrise may be a good alternative platform to Robinhood.
Robinhood vs. Public
Public App Summary
- Invest in stocks, ETFs, and crypto
- $0 commission fees for any stock trades
- Over 100 articles to learn about investing
- Low 1-2% commission for crypto trades
Like Robinhood, Public is an online brokerage platform that allows investors of all skill levels to trade stocks, ETFs, and other assets. Both platforms do not have minimum account balances or charge any fees for creating an account and investing.
Thus, Public is a good alternative platform to Robinhood that you can use to invest in stocks and ETFs.
Other Sites Like Robinhood
Robinhood FAQ
What Is Robinhood?
The company has been around since 2013, and its headquarters are in California. Robinhood’s mission is to democratize finance, allowing anyone to invest in financial assets that were traditionally only available to professional institutions.
Is Robinhood really free?
Robinhood is a trading platform that offers a free service. There are no fees to open or maintain your account or transfer funds.
However, note that there may be some regulatory fees involved when you conduct certain transactions.
Is Robinhood good for beginners?
With no account minimums and free trading, Robinhood is one of the best brokerage platforms for beginners. There are also no minimum account balances that you will need to maintain.
Moreover, the platform also allows users to invest in fractional shares. This feature makes it ideal for beginners who may not be willing to commit large amounts of money to purchase expensive stocks.
Is it good to invest in Robinhood?
Robinhood mainly operates as a brokerage service that enables you to buy and sell stocks. Thus, your earnings may vary depending on the stocks that you invest in.
Can you actually make money with Robinhood?
You can make money with Robinhood if you invest in the right stocks. However, it is also possible to lose money on your investments.
Thus, you need to do your due diligence when researching and choosing stocks to invest in so you can maximize returns while limiting risk.
Do I own my stocks on Robinhood?
When you purchase a stock on Robinhood, you own the stock.
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