The Robinhood Company has been on the rise recently, with their mobile app and zero-commission stock trading. But is this company as good as it seems? In this complete review, we’ll look at all the pros and cons of using Robinhood for your investments. Whether you’re just starting or a seasoned pro, this review will help you decide if Robinhood is the right fit.
Table of Contents
What is Robinhood?
Robinhood is a commission-free stock trading app that allows users to buy and sell stocks, ETFs, options, and cryptocurrencies without paying commissions or fees. It was founded in 2013 by Vlad Tenev and Baiju Bhatt, two Stanford graduates frustrated by the high commissions charged by traditional brokerages. Robinhood quickly gained popularity, especially among young investors, and now has over 10 million users.
Is Crypto insured on Robinhood?
No, currently, Robinhood does not insure cryptocurrency holdings. If you lose your phone or it’s stolen, your Robinhood account will be inaccessible, and your Crypto will be gone. So, after knowing the answer to your question, is Crypto insured on Robinhood? Best crypto insurance selection is essential for you to reduce your risk.
The Pros of Robinhood
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Zero commissions or fees
One of Robinhood’s most significant selling points is that it doesn’t charge any commissions or fees for trades. This is a massive benefit for active traders who make multiple trades per day, as traditional brokerages can charge up to $10 per trade. For example, if you make ten daily trades, you would save $100 with Robinhood.
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Easy to use
Robinhood is straightforward to use, even for first-time investors. The app has a sleek and user-friendly interface that makes placing trades quick and easy. The company also offers valuable research and articles to help you make informed investment decisions.
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No minimum deposit
Unlike most brokerages, Robinhood doesn’t have a minimum deposit requirement. This makes it an excellent choice for those who don’t have a lot of money to invest.
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Gold membership
Robinhood recently introduced a new membership program called Robinhood Gold. For a monthly fee, Robinhood Gold members get access to advanced features, such as after-hours trading and more extensive instant deposits. They also get a margin account with up to 2x leverage, which can be helpful for active traders.
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Cryptocurrency trading
Robinhood was one of the first brokerages to offer cryptocurrency trading. Currently, you can trade Bitcoin, Ethereum, Bitcoin Cash, and Litecoin on Robinhood.
The Cons of Robinhood
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Limited investment options
While Robinhood offers commission-free stock and cryptocurrency trading, it doesn’t provide much beyond that. You’ll need to look elsewhere if you’re looking for a brokerage with a wide range of investment options, such as mutual funds and bonds.
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No physical locations
Robinhood is an online-only brokerage, which means there are no physical locations where you can speak to a human being. If you’re someone who prefers face-to-face customer service, Robinhood is not the right choice for you.
Investment options
Robinhood users have access to stocks, ETFs, options and crypto trading. There are over 5,000 stocks and ETFs and seven types of cryptocurrencies on the platform.
You can get access to IPO shares through Robinhood, as well as to commission-free fractional shares. Before a stock is available to the general public, Robinhood lets you request the ability to purchase shares from investment banks at the IPO price. When purchasing fractional shares, you can get in on a pricey, big-name stock without having to buy an entire share.
Robinhood doesn’t currently offer bond or mutual fund investing, yet many of the ETFs it offers can provide similar features to a mutual fund or bond fund. Otherwise, you can set up a separate brokerage account with someone like Fidelity, Charles Schwab.
Features
Robinhood stands out mostly for offering investors free rein to completely build their own portfolio. For this reason, the platform is a good pick for active stock traders who have done their research and know a bit about how the market works. Newbie traders can get in on the action, but just be sure you’re comfortable with the risks of investing in individual stocks.
As an investor in a Robinhood brokerage account, you’ll also get access to the Robinhood Cash Management account. Though its not a bank account, it offers similar features to a checking or savings account, allowing users to earn interest on their cash and providing FDIC insurance to protect their funds.
Those looking to take their investing to another level can upgrade to Robinhood Gold for a $5 monthly fee. This subscription service provides more advanced investing tools like research reports and market data.
Not all brokers offer a bonus to new investors, but Robinhood will add one share of free stock to your brokerage account when you link your bank account and fulfill the conditions in your promotion. You’ll be able to keep the stock or sell it after two trading days.
Robinhood’s app is available to download for free in both the App Store (for iOS), where it has 4.2/5 stars (with a whopping nearly 4 million reviews), and on Google Play (for Android), where is has 3.8/5 stars at the time this article was written.
Fees
Robinhood has no minimums to open an account and users don’t need to reach a minimum to start investing, either.
Robinhood doesn’t charge commission fees to trade stocks, options or crypto.
What is Robinhood?
Robinhood is a new force in the broker industry, and has amassed a whopping 10 million users since its launch in 2013.
They’ve undeniably shaken things up with their free-trading of stocks, options and exchange-traded funds (ETF’s). But that’s not all, crypto-traders can trade without fees too, and for this reason, TD Ameritrade have grown a large crypto-trader customer base, too.
As Robinhood is not a full-service broker, it does lack in areas where some full-service competitors including Charles Schwab and Merrill Edge thrive. None-the-less, their entry to the market has proven to hit a key note with millennials, positioning them as a key player, and influencer in the industry.
Traders looking for a new broker will enjoy Robinhood for their low-cost trades, hassle free trades.
Robinhood Overview and Summary
Robinhood is defined by several key points, which we’ve rounded up to the top five:
- Robinhood launched in 2013 and has already influencing huge changes in the industry.
- Robinhood’s mobile-trading approach has been a hit with millennials as their app recently amassed 10 million users.
- Robinhood has $912M in venture capital funding and is a safe option for online trading.
- Robinhood caused a stir after it was announced that they receive 10 times more in order flow payments than other key competitors. However, their pricing still remains cost-effective.
- Robinhood’s basic offerings makes the platform a poor choice for traders looking for in-depth research, analytics or alerts.
Why Robinhood Over Others?
Robinhood makes investing and money management simple, which is one of many reasons it has drawn so many users. While Robinhood might not be the best option for the most advanced traders, it thrives at being the simplest and best for complete newbs to intermediate options traders.
Thinking about choosing Robinhood Company for your brokerage account? Let’s take a look at some of the features that current Robinhood Company traders love in this in-depth Robinhood review.
- Easy-to-use web platform: Robinhood’s biggest strength is an easy-to-use, convenient mobile platform. You can quickly access your tax documents and account statements through the app and you can create an account and begin funding it in as little as 10 minutes. Placing a trade is also equally simple. Brief explanations of every buy and sell order beside each option help you learn — it’s a great feature for beginners.
- No account minimum and fee free trading: FINRA requires a minimum balance of $2,000 in a brokerage account for Margin Trading which is an optional service that becomes available for Gold users. However, not all Gold users trade on margin and therefore don’t need to meet that requirement. Other than that, there’s a $0 minimum required balance for standard accounts. Combined with the broker’s new fractional share feature, Robinhood is a great option for new traders who only have a small amount of money to invest.
- Intuitive and responsive mobile app: Robinhood Company has one of the most well-designed mobile apps of any brokerage. The app mirrors the full functionality of the desktop platform and it also adds candlestick charting options not available online.
- Debit Card: Robinhood Company savings account works seamlessly with your brokerage account allowing you to close a position and spend your gains immediately. Robinhood Company also makes it incredibly to find and use your ACH and routing number.
- Dogecoin: With the popularity of meme stocks and cryptocurrencies in 2021, many users choose to open Robinhood accounts simply for access to Dogecoin. Find out more about Robinhood Crypto below.
Conclusion:
Robinhood is an excellent choice for active traders who want to save on commissions and fees. However, it’s not the best choice for those looking for a wide range of investment options or human customer service. Overall, Robinhood is a solid choice for those who want to trade stocks and cryptocurrencies without paying commissions.
