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Robinhood: Overall Rating
| Feature | Insider rating (out of 5) |
| Fees | 5.00 |
| Investment selection | 4.25 |
| Access | 4.30 |
| Ethics | 2.50 |
| Customer service | 5.00 |
| Overall score | 4.21 |
Is Robinhood Right for You?
Robinhood is an online investing platform offering commission-free trading on several US-listed investment types, with high-yield cash management offerings, margin trading, and access to initial public offering (IPO) investments.
The brokerage also offers cryptocurrencies, so it could be a solid choice for those who want to trade assets like bitcoin and ethereum without commissions. Plus, Robinhood recently launched a cash card that lets you earn up to 8% back at places you shop, with the option to earn bonuses spanning from 10% to 100%.
It also offers IRAs with a 1% match, but the overall brokerage isn't a good choice for those who want access to investment options like joint accounts and education savings accounts.
Robinhood was established in 2013 and is headquartered in Menlo Park, California. The brokerage provides mobile access for both iOS and Android devices.
Robinhood vs. Fidelity
Robinhood Investing and Fidelity Investments both offer commission-free trading on multiple investment types. But you'll have a wider range of investment options at Fidelity than you will with Robinhood.
Both companies offer stocks, ETFs, and options, but, unlike Robinhood, Fidelity offers automated investing and advisor-managed portfolios for hands-off investors. The brokerage also has a more extensive account and investment selection.
However, Robinhood is the better choice for all-around commission-free trading and crypto trading.
Robinhood vs. SoFi
Robinhood Investing and SoFi Invest have similar investment offerings. But Robinhood is the cheaper option when it comes to trading fees. Though SoFi also offers DIY trading, it's a better choice for those in search of IRAs and automated investing.
If you like the sound of active trading, though, and don't mind doing a bit of your own research on your investments, Robinhood's low fees and commission-free securities could be a good fit for you.
Ways to Invest with Robinhood
Stocks and funds
Robinhood is best for active traders interested in placing commission-free trades in stocks, options, ETFs, and cryptocurrencies. The brokerage has no minimum account size requirements for most of its investments, but you'll have to make minimum opening deposits for its fractional shares and margin trading offerings (you'll also need at least $25,000 for pattern day trading).
Robinhood also offers fractional shares. This means that you can purchase portions of stock in companies without paying the full share price. You'll only need $1 to get started. And its advanced charts — which were launched on August 17, 2022 — give all users access to more in-depth analysis of different investments.
Plus, Robinhood's web platform and mobile offerings are straightforward and easy to navigate. And you'll get one share of free stock when you open an account. You'll also get a free stock whenever you make successful referrals, and as of August 11, 2022, users get a 1.5% APY on uninvested cash in their brokerage accounts.
Options
Robinhood's commission-free option trading comes with a notable perk: no per-contract fees. Many brokers charge under $1 per options contract, and some platforms use tiered pricing structures that charge lower fees for more active traders and higher fees for less active traders.
But with Robinhood, you'll incur no such fees. It's worth pointing out, though, that options investing carries more risk than stock and ETFs. Robinhood offers options risk disclosures on its website.
And while Robinhood formerly required its users to have a margin account for options trading, you can now trade options with its regular cash accounts.
Cryptocurrency
This platform's commission-free rule applies to cryptocurrencies as well. The Robinhood Crypto account option lets you trade an array of digital currencies such as bitcoin, dogecoin, and ethereum. In total, Robinhood offers 17 cryptocurrencies. This is a limited selection compared to exchanges (e.g., Kraken and Coinbase) that offer 100+ assets, but the brokerage's selection could still be useful as long as it supports the asset you'd like to exchange.
You can use any funds you've deposited into your brokerage account to purchase cryptocurrencies through Robinhood Crypto. Robinhood also rolled out crypto wallets early 2022.
Prior to its wallet launch, users couldn't transfer crypto from or to external wallet addresses. But now, you can send any crypto assets to the wallet of your choosing. In addition, Robinhood is building a web3, non-custodial crypto wallet and DeFi platform.
The app will let users exchange crypto without network fees, store NFTs and access NFT marketplaces, utilize DeFi protocols, and connect to DeFi apps.
Robinhood Gold
Robinhood Gold allows you to trade on margin and access Morningstar professional research reports and NASDAQ market data. The account carries a 4.90%, and you can make instant deposits of up to $50,000. However, you'll need at least $2,000 to get started, so it may not be best for traders looking to avoid hefty account minimum requirements.
With margin trading, you're essentially borrowing money from a brokerage to invest in securities or other financial assets you can't afford. Your investments serve as collateral for the margin loan, and you'll have to pay back your borrowed funds.
Gold members can also earn 4.90% interest on uninvested cash in their brokerage accounts. Non-Gold members can earn 1.50% as long as they're enrolled in a cash sweep.
IPOs
Robinhood also recently introduced IPO access. Unlike other popular brokerages that require a minimum household asset size (Fidelity requires $100,000 or $500,000, depending on which company is sponsoring the IPO) for investors who want to take advantage of the IPO offer price, Robinhood says it has no minimum balance or special status requirements.
This investment offering is best for traders who want to buy a company's IPO shares before they're listed on an exchange for the public. A big downside, though, is that you aren't guaranteed to receive IPO shares when you request them. This is because Robinhood gets a limited amount of shares of each IPO.
IRAs
Robinhood has also launched IRAs for those looking to build wealth through a retirement account. Though previously not available to all of its users (users could only sign up for the waitlist as Robinhood slowly rolled out access), it's now available to everyone.
Its accounts — traditional IRAs and Roth IRAs — allow for trading without commissions, recommended portfolios, and an extra 1% match on every dollar that goes toward your IRA. You can currently only sell stocks and ETFs in the IRA, but Robinhood will also soon launch options trading for eligible users.
Robinhood: Is it Trustworthy?
Robinhood has an F rating with the Better Business Bureau. The bureau also says the brokerage has a pattern of complaints that show multiple users were unable to withdraw funds from their investing accounts.
In 2021, Robinhood also faced intense scrutiny after it halted trading on several stocks — namely GameStop (GME) and AMC Entertainment (AMC) — whose share prices skyrocketed due to the efforts of members of a Reddit forum called r/WallStreetBets. The investment app eventually reopened trading on many of the stocks it had temporarily restricted, but its restrictions led to user retaliation and major lawsuits.
BBB data also shows that in 2021 the Financial Industry Regulatory Authority (FINRA) alleged that — at certain times dating back to 2016 — Robinhood provided false and misleading information on important issues, approved customers for options trading when they didn't meet the company's eligibility criteria, and failed to properly supervise its technology. Robinhood neither admitted nor denied the charges, and FINRA fined the platform $57 million and ordered $12.6 million in restitution.
Further back, in 2020, following the suicide of a young user who'd amassed significant financial loss from an options transaction, Robinhood announced that it was expanding its educational content on options trading. The company also hired an options education specialist and pledged to improve its user interface.
The brokerage has closed more than 600 complaints in the last 12 months, and it currently has more than 100 unresolved complaints, according to BBB data.
Robinhood — Frequently Asked Questions (FAQ)
Robinhood's simple user interface, lack of trading commissions, and digital library are a few of the traits that make it a solid option for beginners. It isn't a great choice for beginners who want to utilize automated portfolio management or the help of financial advisors, but it best suits newer DIY traders.
Yes. Robinhood is a member of the Securities Investor Protection Corporation, so it offers insurance of up to $500,000 for securities and coverage for up to $250,000 for cash. The platform is also a registered broker-dealer.
One thing to consider before signing up is that Robinhood is strictly for self-directed traders. It doesn't offer any automated investing options, so it isn't a great choice for hands-off investors. In addition, Robinhood doesn't offer joint accounts, retirement accounts, or education savings accounts.
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