Where Robinhood shines
Costs : Robinhood is a true discount rate broker — although its offerings may not be vitamin a robust as some other brokerages, Robinhood has some of the lowest costs in the industry. This includes options trades, which do n’t carry a narrow fee. streamlined interface : Robinhood is highly comfortable to use. So easily, in fact, some have argued that it ’ mho made complex trade strategies, such as options trade, besides accessible to inexperienced users. however, if your merely goal is to dabble in stocks, the trimmed-down interface is highly convenient.
complimentary cryptocurrency deal : Robinhood is distillery one of the few brokers that lets you trade cryptocurrencies for barren, so among stock brokerages, it ’ s a base out sport. however, if you compare Robinhood ’ s crypto offerings to pure-play crypto brokerages, that fall starts to fade. IPO access : Robinhood lets users take part in a company ’ s initial public offer, or IPO. This has typically been reserved for fiscal institutions.
Where Robinhood falls short
No retirement accounts : Robinhood only offers taxable brokerage house accounts. so, if you park your money hera long-run or are hoping to save for retirement, you ’ ll miss out on the tax benefits of retirement accounts like traditional or Roth IRAs. For most investors, investing through a taxable brokerage account should come only after they have started financing such a retirement account. No reciprocal funds or bonds : The miss of reciprocal funds and bonds may make it difficult to build a truly diversify portfolio. Limited customer confirm : Robinhood has made noticeable improvements to its customer serve in the past year, but it ’ s still not on equality with other brokerages. dependability : Robinhood has received criticism for ill-timed outages and trade restrictions amid market volatility, and has been charged by regulators for misleading customers, resulting in significant fines. We discuss these charges and other customer service issues in detail below.
Robinhood is best for:
- mobile users .
- Individual taxable accounts .
- margin accounts .
Robinhood at a glance
| Account minimum
|$ 0 for brokerage house explanation and for Robinhood Gold account .|
| stock trade costs
|$ 0 .|
| Options trades
|$ 0 .|
| score fees ( annual, transfer, close, inactiveness )
|No annual, inactivity or ACH transfer fees. $ 75 ACAT outgoing transportation fee. ( Robinhood Gold costs $ 5 a month. )|
| Tradable securities
|• Stocks. • ETFs. • Options. • Cryptocurrency. • american Depositary Receipts for over 650 ball-shaped companies. • Fractional shares .|
| Crypto handiness
|7 coins in 48 states .|
|Number of no-transaction-fee common funds||not rated .|
| trade platform
|Web platform is intentionally simpleton but meets basic investor needs .|
| Mobile app
|fluid deal platform includes customizable alerts, news feed, candlestick charts and ability to listen live to earnings calls .|
| research and data
|News available from WSJ Markets, Reuters, Barron ‘s, CNBC Business and Cheddar. Gold members have access to research from Morningstar, Nasdaq, Nasdaq Totalview grade II Market Data for an extra $ 5 per month .|
| Customer support options ( includes how easy it is to find key details on the web site )
|Email, social media, in-app request-to-call avail 24/7 .|
More details about Robinhood’s ratings
Account minimum: 5 out of 5 stars
Robinhood doesn ’ deoxythymidine monophosphate have an account minimum, which means investors can get started right away. Of course, in order to invest, you ’ ll need adequate to purchase the investment you have your center on.
Stock trading costs: 5 out of 5 stars
Robinhood provides 100 % commission-free banal, options, ETF and cryptocurrency trades, making it attractive to investors who trade frequently. still, these days many big-name brokers besides offer barren trades, so it makes sense to compare other features when picking a agent.
Options trades: 5 out of 5 stars
Robinhood ’ s commitment to low-cost trading is particularly apparent in its options trade offer — Robinhood is among the handful of brokers that don ’ deoxythymidine monophosphate charge a per-contract fee.
Account fees: 3 out of 5 stars
One of the biggest fees Robinhood charges is the $ 75 outgoing ACAT transfer tip — that monetary value is a bite on the high end, but it ‘s not an unusual fee among brokers. ( An ACAT transfer is when you want to transfer your investments to another broke ; there ‘s no fee for selling your investments and having the money transferred via ACH to your bank. )
Number of no-transaction-fee mutual funds: Not rated.
Robinhood does not offer any common funds.
Tradable securities: 1 out of 5 stars
The securities available to trade at Robinhood are limited. reciprocal funds and bonds aren ’ thyroxine supported, which can help build a diversify, long-run portfolio. Robinhood does, however, offer access to more than 650 alien companies via american Depository Receipts. Like some other brokers, including synergistic Brokers, Fidelity and Charles Schwab, Robinhood has introduced fractional shares. That means you can pay arsenic little as $ 1 for a part of a share, even if that parcel ‘s full price is in the hundreds of dollars. This have makes it much easier to build a diversify portfolio — you ‘re able to buy many more companies, even if you do n’t have a set of money to invest.
Crypto availability: 5 out of 5 stars
Unlike many traditional brokerages, Robinhood users can buy certain cryptocurrencies right in their stock trade account. What ‘s more, it ‘s completely free. Pure-play crypto brokerages broadly charge relatively high fees for a alike service. And Robinhood ’ s recurring stock investments feature extends to its crypto offer adenine well. There is, however, a catch : presently, for many customers, your lone choice is to buy cryptocurrencies with USD, and sell them for USD. You wo n’t be able to send the coins you buy, nor receive coins from another wallet. Robinhood is in the procedure of changing this : It recently rolled out crypto wallet features for more than two million customers, and in May 2022, announced plans to build a raw noncustodial wallet that will allow customers to access the decentralized web. The wallet will be available by the end of 2022, with beta testing for waitlisted customers planned this summer. The list of available cryptocurrencies is much smaller than you ‘ll find at a true crypto brokerage house. That — and the miss of comprehensive wallet offerings — gave Robinhood ‘s crypto offering a relatively low overall score in our analysis of the best crypto exchanges and platforms, which includes pure-play crypto brokerages like Coinbase and Gemini. But compared to other banal brokers, Robinhood ‘s crypto propose stands out.
Trading platform: 3 out of 5 stars
If you ’ re accustomed to using a smartphone — and Robinhood ‘s target drug user base obviously is — you ’ ll find the sign-up and history fund process immediate and painless. It all happens within the app in a count of minutes, with just a few quick questions that gather your personal information, contact details, Social Security number and means of funding your account. The company says approved customers are notified in less than an hour, at which point they can initiate bank transfers. Robinhood uses blink of an eye verification with many major banks, sparing users the fuss of reporting micro-deposits to an history to verify information. This means bank transfers of up to $ 1,000 are available immediately for investing. Deposits larger than $ 1,000 will take four to five occupation days to process. We should note, however, that Robinhood has been the submit of complaints suggesting that signing up may be besides comfortable. so while it ’ second true you can start investing with Robinhood in no time, users should be certain they understand the risks of investing before diving in.
Mobile app: 4 out of 5 stars
The app ’ sulfur streamlined interface could be a negative, as the serve doesn ’ t put up all the bells and whistles of a typical on-line malcolm stock agent. But for investors who know what they want, the Robinhood platform is more than adequate to promptly place trades. It supports market orders, limit orders, catch limit orders and end orders.
Research and data: 3 out of 5 stars
Though Robinhood ‘s research offerings still pale in comparison to other brokers, the company has made strides to increase the tools and research available for customers, offering analyst ratings, lists of top movers, earnings calendars and links to earnings calls. Candlestick charts are available on mobile, and the military service resurfaces information from other Robinhood customers to create its own universe of data. For exemplar, investors can view the 100 most democratic stocks on the platform and sort them by assorted criteria. They ’ ll besides have access to a few reputable news sources, including Wall Street Journal Markets, Reuters, Barron ’ second and CNBC Business.
Customer support options: 3.5 out of 5 stars
last class, Robinhood rolled out a modern customer subscribe feature that lets users request a customer support example call them rear 24/7 for anything they need — a first gear for Robinhood, which has lagged behind more mainstream brokers when it comes to phone support. The in-app sport tells users they can expect a call back within 30 minutes of requesting it.
Other Robinhood details you should know
Robinhood besides offers a cash management report that presently pays 1.00 %. The account comes with a debit card and detached ATM withdrawals from more than 75,000 ATMs, and offers up to $ 1.25 million of FDIC insurance thanks to Robinhood ‘s agreements with respective banks.
Robinhood Gold offers investors the ability to trade on margin. The opt-in service carries a two-dimensional monthly fee of $ 5. New investors should be mindful that allowance trade is hazardous. You ’ re trade on money borrowed from the broke, which means you can lose more than you invest. ( here ‘s more on how gross profit trade works. )
Reliability and trustworthiness
Robinhood has been the subject of serious complaints and lawsuits over the years, which potential users shouldn ’ thymine neglect :
- On November 8, 2021, Robinhood announced a datum security incidental that revealed personal information for a parcel of account holders, including e-mail addresses, entire names and, in limited cases, dates of births and energy codes. The company said it does n’t believe bank history, debit circuit board or Social Security information was affected, and no customers experienced a fiscal loss .
- On June 30, 2021, FINRA announced it fined Robinhood $ 57 million and ordered it to pay approximately $ 12.6 million to thousands of customers who suffered “ meaning damage ” at the hands of the brokerage house. FINRA said millions of customers had received faithlessly or mislead information from Robinhood, and millions were affected by system outages during the March 2020 market volatility. What ’ s more, FINRA found that algorithmic bots had approved thousands of customers for options trade, even if those users weren ’ t eligible or had red flags in their history that would have prevented them from taking part in the advance deal strategy. The $ 70 million sum marked the largest fiscal penalty ever levied by FINRA .
- In January 2021, the app came under fire for its decision to restrict trade during the extreme grocery store volatility surrounding GameStop and other heavy short-circuit stocks. And while the marketplace conditions led early brokerages to take precautions, Robinhood ’ mho restrictions were more expansive .
- In December 2020, Robinhood was charged by the Securities and Exchange Commission for misleading customers. The SEC found that “ Robinhood customers ’ orders were executed at prices that were inferior to early brokers ’ prices, ” and that in aggregate, those deficient prices deprived customers of $ 34.1 million, even after accounting for savings from Robinhood ’ s commission-free deal put up. Robinhood agreed to pay $ 65 million to settle the charges .
- besides in December 2020, the Commonwealth of Massachusetts accused Robinhood of aggressively attracting inexperienced investors to its platform and using gamification techniques to manipulate customers. The complaint besides states that many Robinhood users were given access to advanced — and hazardous — options trade products, evening when they identified as having no or limited investment experience. In August 2020, Robinhood announced plans to hire hundreds of new customer support representatives .
- Throughout the surge of new investors during 2020 and into 2021, Robinhood — along with other brokers — have outages and early technical issues that disrupted avail. Both the outages and the January 2021 restrictions led to class-action lawsuits .
» Learn more about alternatives to Robinhood
Is Robinhood right for you?
If a streamline trading platform and mobile experience or the ability to trade cryptocurrency are crucial to you, Robinhood is a solid choice. But immediately that enough of on-line brokers have joined Robinhood in eliminating commissions, casual investors can afford to shop for the broker that suits them best. Interested in other brokers that work well for new investors ? See NerdWallet ’ s rankings of the best brokers for beginners.
How do we review brokers?
NerdWallet ’ s comprehensive examination recapitulation process evaluates and ranks the largest U.S. brokers by assets under management, along with emerging industry players. Our drive is to provide an mugwump assessment of providers to help arm you with information to make fathom, inform judgements on which ones will best meet your needs. We adhere to strict guidelines for column integrity. We collect data directly from providers through detailed questionnaires, and conduct first-hand test and observation through provider demonstrations. The questionnaire answers, combined with demonstrations, interviews of personnel at the providers and our specialists ’ hands-on inquiry, fuel our proprietorship appraisal serve that scores each provider ’ randomness performance across more than 20 factors. The final end product produces star ratings from poor ( one star ) to excellent ( five stars ). Ratings are rounded to the nearest half-star. For more details about the categories considered when rate brokers and our process, read our full moon methodology .