Robinhood Review 2024: User-Friendly Platform with Powerful Features

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What Is Robinhood?

Robinhood is a trading app designed to make investing and trading accessible to all through an easy-to-use platform. Robinhood doesn’t charge commissions on trades. This approach was part of the reason it became the fastest-growing brokerage soon after its launch in 2014. However, other brokerages soon caught up as they, too, offered no-commission trades.

Robinhood offers commission-free trades of stocks, options, ETFs, gold and crypto. However, the brokerage also has been in hot water due to platform outages at inopportune times–and hidden costs of how trades are executed. Overall, Robinhood continues to be a popular low-cost trading platform for beginners.

Robinhood Features

Robinhood makes trading simple for even the newest investor. Here is a quick overview of the app’s features.

Features and Accounts Overview

Robinhood’s interface is as simple as possible. While it’s ideal for beginners who may be overwhelmed by more advanced platforms, the app is still pretty functional for intermediate traders. Some of Robinhood’s features worth noting are:

Research Tools

The “meaty” tools hide behind a subscription wall. Only Robinhood Gold members who pay the $5 monthly subscription fee can access Nasdaq Level II Market and Morningstar.

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High Interest Rates on Cash Balances

Robinhood offers a cash sweep program that you can opt into–sweeping unused cash within your account to partner banks. You can earn 0.01% APY on cash balances in the cash sweep program (which is a very low rate)–but you can earn 5% APY on those balances if you’re a Robinhood Gold member. The 5% APY for Gold members is in line with some of the highest-paying high-yield savings accounts out there.

Fractional Shares

Robinhood allows for fractional share purchases, which allow you to buy into equity with less than the value of one full share. For example, you can buy $5 worth of Amazon or Bitcoin, even if one share is currently worth thousands of dollars.

Recurring Investments

Automate your investment plan by setting up a dollar-amount purchase of your choice. For example, you can plan to send $10 every month on the 15th from your checking account to buy shares of a particular stock. Robinhood will buy the shares for you based on the current value.

IRA Match

Robinhood offers an IRA account and will deposit matching funds of 1% of your total contributions or account rollovers from other institutions for the year (3% for Robinhood Gold members). The IRA match doesn’t count against your annual maximum IRA contributions–so you can deposit the full $7,000 for 2024 and get an extra $70 from Robinhood (or $210 with Robinhood Gold). If you rollover a $100,000 401k account as Robinhood Gold member–you get a $3,000 match from Robinhood.

The IRA match does come with some stipulations–namely that you’ll lose the matching funds if you withdraw or transfer money out of your IRA within five years–and your account balance drops below your contribution + match amount. Robinhood states “when withdrawing money from your IRA less than 5 years after making the transfer, we may charge an early IRA match removal fee equal to the IRA match amount earned if your remaining IRA balance is lower than your transfer amount that earned the IRA match plus the match amount.”

Robinhood Gold

More advanced traders may be willing to pay $5 per month to upgrade to Robinhood Gold. The main selling points are the research tools, which include Morningstar and Nasdaq Level II market data, and the ability to trade on margin at lower interest rates, which is basically trading on borrowed money. However, more advanced research tools are typically offered for free at competing brokerages.

Robinhood Gold also offers higher interest rates in its cash sweep program (5% APY vs. 1.5% APY) and you can get a higher IRA match (3% vs. 1%) for deposited funds. You can easily make up for the $5 monthly fee if you have a high cash balance or plan on depositing a large amount to a Robinhood IRA.

Fees

Robinhood doesn’t charge trading fees or commissions but there are other possible fees, which can be avoided if you are aware of them:

• Outgoing transfer fee: $100
• Outgoing wire transfer: $25
• Paper statement fee: $2
• Margin up to $50,000: 6.75% APR

You can view all of Robinhood’s fees on their detailed fee schedule.

Investment Options

Robinhood offers a decent investment selection. Here’s the full range of investment options available on Robinhood:

Stocks

Robinhood supports most U.S. exchange-listed stocks, with the ability to purchase fractional shares for as little as $1.

ETFs

Robinhood supports U.S. exchange-listed ETFs with fractional share investing available. These ETFs may include stocks, bonds, commodities, or other investments.

Crypto

Robinhood supports commission-free trading of 15 different cryptocurrencies, including; bitcoin, ethereum, chainlink, shiba inu, and dogecoin. You can also transfer crypto into a digital wallet and take full custody of your assets.

Options

Robinhood offers options contracts for U.S. exchange-listed stocks and ETFs–with no contract fees assessed. This makes Robinhood one of the cheapest places to trade options.

ADRs

While Robinhood doesn’t support most stocks listed only on foreign exchanges, it does support American Depository Receipts (ADRs) on over 650 globally-listed companies.

IPOs

Robinhood allows investors to access new IPO investments–meaning you can buy shares in a company as it is listed on a public exchange. You can request IPO allocation–but it is random and you may not get access to IPO shares when they become available.

Who Is Robinhood Best For?

Robinhood is best for the new investor who wants to learn more about trading without a big financial commitment. New accounts even get one stock for free when they first sign up. You may outgrow the platform as you become more comfortable with trading — or find workarounds to make it work for you, such as having separate research and technical analysis sources.

Low Initial Investment

You can get started with $1 if you desire. Robinhood doesn’t have opening balance requirements. Fractional shares are allowed, making a $1 investment entirely possible, even if you’re buying a stock selling for $500 per share.

Trading Types

You can trade stocks, ETFs, options, gold, crypto and ADRs, all from a single platform. Robinhood’s mission to make trading accessible to all does well on that promise.

Simple Interface

The uncluttered, no-frills mobile app and online platform are designed to take the confusion out of trading. It’s easy to find what you need. Tap on a stock name and you’ll find stats, charts, your position and what type of “collection” the stock falls into, such as Top Movers or Most Popular.

When it’s time to trade, you can place limit and stop limit orders, market orders and stop orders. Are you not sure what that means? You’ll have access to educational resources and Robinhood Snacks, which deliver a “daily dose” of investing news to the app or your email inbox.

Security

Robinhood is a member of the Securities Investor Protection Corporation, so your securities, including $250,000 in cash, are insured in the event Robinhood goes under. Password encryption and two-step authentication protect your identity and your data.

Where Robinhood Falls Short

There are some points on which Robinhood could use some improvement.

Transparency and Reliability

In light of the lawsuits and accusations from account holders over the last couple of years, Robinhood has some work to do regarding its policies. It is still unclear whether halting trading of certain stocks, leaving investors stuck with shares or missing out on opportunities, was a one-off situation or could happen again. Here are a few controversies Robinhood has been a part of in the past few years:

• The SEC charged Robinhood in December 2020 with misleading customers. According to the charge, Robinhood touts commission-free trading but orders are executed at prices inferior to other brokers. The SEC claims Robinhood is making money off their customers through higher payments from order flows.
• The state of Massachusetts is seeking to revoke its broker-dealer license, accusing Robinhood of “encouraging inexperienced investors to place risky trades without limits.”
• Roughly 90 lawsuits were filed against the company in February 2021 after Robinhood made an unprecedented move to halt or restrict the trading of certain securities that came to be known as “meme stocks.”

No Mutual Funds

Robinhood doesn’t offer mutual funds, the backbone of a diversified portfolio. However, you can trade ETFs, which are similar.

Margin Trading

Although margin trading is available, you will need to pay a $5 subscription fee to access the best rates. And the rates still don’t beat top brokers like Interactive Brokers–even with a Robinhood Gold subscription.

Robinhood vs. Competitors

Here’s how Robinhood measures up to other similar investment platforms.

Robinhood vs. Webull

Robinhood and Webull run similar no-commission platforms, although Webull’s supports more advanced traders with robust research tools and charting. Robinhood allows fractional trading, which offers a lower entry point for new investors with a $1 minimum investment. Webull’s minimum for fractional share purchases is $5. However, Webull’s margin trading does not require a paid subscription as Robinhood’s requires.

Robinhood vs. Merrill Edge

Both platforms provide low minimum, commission-free trading but they have trade-offs. Merrill Edge allows traders to buy and sell mutual funds but doesn’t support crypto. Robinhood offers crypto but has no mutual funds. When it comes to reputation, Merrill Edge is backed by Merrill Lynch and Bank of America.

Robinhood vs. Charles Schwab

Like Robinhood, Charles Schwab also provides commission-free trading. However, Charles Schwab recently acquired TD Ameritrade and has over $7 trillion in managed assets. Schwab does allow mutual fund trades but does not support crypto spot trades.

Robinhood’s rates are more favorable. Schwab’s effective margin interest rates are as high as 13.575% compared to Robinhood’s 6.75%.

Who Should Use Robinhood? And Who Shouldn’t?

Robinhood is a good start for newbies interested in seeing how trading stocks or the hot crypto market works. You can start with as little as you like and get one free share for signing up.

However, you may decide over time that you need better research and charting tools, or that you want to have your portfolio managed for you. You’ll have to look elsewhere unless Robinhood adds more functionality and expands its products, which is entirely possible.

Jacob Wade, Daria Uhlig, John Csiszar and Cynthia Measom contributed to the reporting for this article.

Editorial Note: This content is not provided by Robinhood. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by Robinhood.

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