Robinhood Review 2024: Zero-Commission Investing App

review-rating
Robinhood is a great stepping stone if you’re a beginning investor looking to get comfortable with investment strategies.
8.5/10
Cost
8.5/10
Features
8.5/10
Ease of use
9/10
Services
8/10
If you’re a Millennial, then you’ve probably heard of Robinhood. A few years ago, receiving a text message with a friend's invite to join Robinhood was a commonplace experience. But is it worth the hype? To figure that out, it’s important to look at all of the features this investing app offers.

What is Robinhood?

Robinhood is a mobile trading app created by two Stanford graduates with a history of working in finance. After witnessing the Wall Street firm experience, these classmates decided that it was time for every American to have easy access to the financial market. They built Robinhood to make investing friendly, approachable, and understandable whether you’re a beginner or an expert.
The Robinhood app provides a free trading platform that you can use on Apple iOS or Android.

How does Robinhood work?

When you visit the Robinhood website, you’ll see several different places to sign up. Clicking on either button will take you to the same sign-up page.
Robinhood Review 2024: Zero-Commission Investing App
The first thing you’ll see on the sign-up page is a button to claim your free stock. According to Robinhood, you don’t need any money in your account to receive this free stock. All you need to do is link your bank account during sign-up.
Now, the sign-up process truly begins. You'll set up your basic account information after you click to claim your free stock. Under the continue button, there’s a link to sign in to your account to complete your application. If you take a break during the sign-up process, it’s good to know that you can come back and log in instead of starting your application over from the beginning.
Robinhood Review 2024: Zero-Commission Investing App
Then you’ll be asked for your contact information. You must complete all of this information to continue the sign-up process.
Robinhood will next ask for your Social Security number, birth date, and citizenship. Like its competitors, Robinhood is required by law and industry regulations to collect this information before you can have an account.
The next part of the sign-up process is to gather the information to help Robinhood give you the best investment advice and products. To start, Robinhood asks about your level of experience with investing.
Robinhood Review 2024: Zero-Commission Investing App
Then, Robinhood asks about your employment status.
Robinhood will then ask you for your employment information if you're employed. This is also the information they must gather when anyone signs up for an account because they need to know whether they’re associated with any financial institutions.
Robinhood Review 2024: Zero-Commission Investing App
Robinhood needs to know the answer to this next question to prevent insider trading.
Robinhood Review 2024: Zero-Commission Investing App
You’ll also need to disclose whether you or a family member work for another brokerage.
That’s the end of the initial application process. After you submit your application, it will be reviewed, and your identity will be verified using the information you provided during the sign-up process.
In the meantime, you can move on and set up funding for your Robinhood account. You can wait and fund your account later if you’d like, but you won’t get your free stock until you’ve set up your funding.
If you decide to fund your account now, you’ll see this pop-up notifying you of Robinhood’s process to link your bank account.
Robinhood Review 2024: Zero-Commission Investing App
You can then search for and select your bank.
Robinhood Review 2024: Zero-Commission Investing App
When you’ve found your bank, you can click on it to sign in to your bank account.
If you decide to wait and fund your account later, you’ll see this message when logged into the Robinhood website. Remember, you can’t receive your free stock or start investing until you’ve funded your Robinhood account.

How much does Robinhood cost?

Robinhood doesn’t charge any fees to open or maintain your account. By signing up for a new account, you’ll automatically start with an account that will give you access to up to $1,000 of instant deposits and extended-hours trading. Having instant access to your funds with this account means that if you sell a stock, you can use the funds immediately rather than waiting a couple of days. Still, Robinhood says the deposit can take up to five days.
You can also upgrade to Robinhood Gold, which costs $5 monthly. (You can try it out with a free 30-day trial.) This level gives you everything that entry-level has and premium features.
With Robinhood Gold, your instant deposits start at $5,000 and increase based on your portfolio value.
  • If your portfolio value is over $10,000, you get $10,000 in instant deposits.
  • If your portfolio value is over $25,000, you get $25,000 in instant deposits.
  • If your portfolio value is over $50,000, you get $50,000 in instant deposits.
Another benefit of Robinhood Gold is that it gives you access to margin investing. If you invest on margin, you’re borrowing money from Robinhood to purchase stocks. With access to margin investing, you can invest more money and take greater risks.
Robinhood Gold also gives you access to more detailed reporting and research. You’ll receive access to Level II Market Data, which shows the full depth of orders on the Nasdaq stock market. You’ll also receive premium, in-depth stock research reports from an independent investment research company called Morningstar.
You need to be aware of some fees associated with Robinhood. When you invest, fees are charged to Robinhood and any other online broker selling orders. Robinhood passes these fees on to customers. Robinhood charges:

Regulatory transaction fee

Regulatory transactional fees are passed down from the Financial Industry Regulatory Authority (FINRA) to its members, including Robinhood. Robinhood then passes this fee down to you. The fee is intended to cover costs incurred by the government for supervising and regulating the securities markets and is ultimately paid to the Securities and Exchange Commission (SEC.)
According to Robinhood, the SEC fee is $22.90 per $1 million of principal (sells only) and is rounded to the nearest penny. The fee isn't passed to customers with a notional value of $500 or less.

Trading activity fee

FINRA also charges a fee to recover the costs of supervising and regulating brokerage firms, called the trading activity fee.
For equity sales, the stock trading activity fee is $0.000130 per share. For options sales, the fee is $0.00218 per share. If you only purchase 50 shares or less, you will not be charged a trading activity fee, essentially receiving free trades.

American depositary receipt (ADR) fees

You'll need to know this fee if you’re interested in foreign stocks. These are certificates that represent foreign stocks traded on American exchanges. Banks issue the certificates, which may come with custodial fees that usually range from $0.01-$0.03 per share.

Robinhood features

Cash management

Robinhood offers the option to upgrade to Cash Management, a feature that lets you use Robinhood to spend and earn interest on your swept cash. Swept cash is uninvested cash in your brokerage account. If you upgrade to Cash Management, this money will be moved to where it can begin earning interest at 0.30%. You’ll also be able to use this to fund your brokerage account.
By upgrading to Cash Management, you’ll receive a digital and physical debit card that you can use for routine spending, such as paying bills and buying groceries. The card receives fee-free ATM withdrawals at 90,000 ATMs. It also has FDIC insurance of up to $250,000. However, Robinhood is no longer accepting new cash management customers. 

Referrals program

Robinhood’s referrals program is a popular incentive for current and new users. Once you have signed up for a Robinhood account, you can invite friends to join Robinhood. If the person you invite signs up, gets approved, and links their bank account, you’ll each receive a free stock. You must claim the free stock bonus within 60 days through your Robinhood platform.
Robinhood claims you can receive up to $1,500 in free stocks annually. The shares of free stock that Robinhood gives you are chosen randomly and may be worth anywhere between $5 and $200.

Cryptocurrency trading

Robinhood Crypto offers commission-free cryptocurrency investing to customers in most states. The available cryptocurrencies include:
Robinhood Crypto supports real-time cryptocurrency market data, including Bitcoin Gold, Dash, Ripple, and more.
Check here to see if Robinhood Crypto is available in your state. If it’s unavailable in your state currently, you should receive an in-app notification and an email when Crypto is available.

Options investing

Robinhood offers options for trades with either the entry-level or Gold account. There are no monthly fees for options investing or a commission fee to buy or sell options.

Who is Robinhood best for?

New investors

If you have no idea what you’re doing but know that you probably should be investing, Robinhood may be a good option. The sign-up process is relatively simple, and you can start small without raising fees or making a financial commitment to the platform. Robinhood doesn’t have an account minimum to sign up, so you can use the platform even if you only have a few bucks to play around with.

Experienced traders that want to trade on margin

Robinhood’s margin trading is available with the Gold account, which only costs $5 monthly. This is a good option for experienced traders only because margin trading is much riskier overall than the type suitable for beginners. Since you’re trading borrowed money with margin trading, you could lose more money than you had to invest. This can open up a whole world of issues and hurt your finances.

Who shouldn’t use Robinhood?

Investors who are interested in bonds

Most of the competitors I’ve looked into have the option to invest in bonds or mutual funds. Unfortunately, Robinhood does not offer this type of investment. Of course, you could always set up another account elsewhere for these investments. But if you’re interested in bonds and mutual funds, it may be better to find a platform that can offer all of the investments that you plan to use.

Anyone looking for a retirement account

Unfortunately, Robinhood also does not offer retirement savings accounts. While Robinhood says it may add other accounts in the future, it’s probably best to look elsewhere if you want to do more goal-based investing for retirement.

Robinhood vs. competitors

App
Pricing
Starting minimum balance
Robinhood
$0 - $5/month
$0
Betterment
0.25% annual fee for Digital Investing/1% annual fee for Crypto Investing
$0
Ellevest
$12/month
$0
Stash
$3 - $9/month
$5

Betterment

Betterment is a robo advisor that offers several plans with somewhat more robust offerings when compared to Robinhood. You can choose from a digital or premium plan based on your interests and needs. Like Robinhood, you can use Betterment with a $0 minimum balance. However, you must pay an annual fee based on your account balance.
Betterment also offers advice calls with financial experts to help create and refine your investing strategy. These calls come at an extra charge starting at $299. You can sign up for several accounts with Betterment. In addition to its investment products, Betterment offers a checking account, high-yield cash account, and retirement accounts.

Ellevest

Ellevest was created with women in mind. As such, the Ellevest investment algorithm factors in gender pay gaps, career breaks, and a woman’s longer average lifespan. Like Robinhood and Betterment, this platform is a good option if you’re new to investing and don’t require a minimum account balance.
In addition to serving women, Ellevest emphasizes using your investments to create a positive social impact with its Impact Portfolios. While Ellevest does have a small monthly fee to become a member, it offers banking accounts, retirement accounts, coaching access, and more for you to choose from.

Stash

Stash was also created by former Wall Street investors who believe "everyone should have access to tools, guidance, and confidence to grow personal wealth and live a better life."
From $3 to $9 per month, beginners can receive an investment account, life insurance, and a bank account with a Stock-Back debit card with additional tiers providing retirement accounts, double stock rewards, and a monthly market insights report.

Pros and cons

Pros
  • Robinhood offers the ability to dabble in the world of investing without making any serious commitments. You can sign up for Robinhood with no monthly fees and no minimum account balances. This is what makes the platform so approachable for new investors.
  • Robinhood offers the ability to invest in cryptocurrencies in most states. Cryptocurrencies are newer to the world of investing and have proven to be quite popular in recent years. If investing in cryptocurrencies appeals to you, then it’s good to know that you can choose this investment type with Robinhood.
Cons
  • Robinhood doesn’t have nearly as many investment products as some of its competitors. While the sign-up process is simple and the platform is relatively approachable, you may want more soon after signing up. The fact that Robinhood doesn’t offer the goal-based strategy of some of its competitors can be a deterrent.
  • Some may find Robinhood’s customer support to be lacking. When you visit the website’s support page, you’ll notice that there’s no phone number to be found. Instead, Robinhood offers a long list of frequently asked questions and a link to email Robinhood’s support team for further assistance.

FAQs

What investments can I make on Robinhood?
Robinhood offers a variety of assets, including stocks and options. There are over 5,000 stocks that you can invest in with Robinhood, which includes most U.S. equities and exchange-traded funds (ETFs). Robinhood also offers options trading and access to global stocks through American Depositary Receipts (ADRs).
What are fractional shares?
Fractional shares are just that, a fraction of equity stock. Robinhood offers these shares for as little as $1 so it helps you create a more diversified portfolio.
Can you trade penny stocks on Robinhood?
Robinhood only offers United States exchange-listed stocks found on NASDAQ and NYSE, which is not common for penny stocks. These are companies that trade less than $5 a share. However, some can be found on Robinhood.

The bottom line

Almost anyone can appreciate the simple and straightforward process that Robinhood offers. It’s a great stepping stone for a beginning investor looking to get comfortable with investment strategies. You can even make higher-risk investing choices as you become more experienced.
Some of Robinhood’s features can also appeal to many beginners. Millennial investors can especially appreciate the friendly and approachable nature of the platform. The fact that you can earn free stocks by inviting your friends is also a major plus if you’re in this age group since most of your friends are probably in a similar position and may be interested in learning more about investing.
Overall, Robinhood can be a good option if you’re looking to dip your toe into the water of investing. While it doesn’t offer the array of products that some of its competitors do, it does offer enough for you to get started as an investor with a minimum commitment.

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