Robinhood Review 2024: Pros and Cons Deep Dive

Robinhood Ratings at a Glance

Robinhood began as a bare-bones brokerage, offering commission-free trading on an intuitive app without many bells and whistles. While the simplistic features remain, Robinhood has expanded its offerings to include the following:

• Individual Retirement Accounts (IRAs) - Robinhood now offers both traditional and Roth IRAs, and subscribers to the Robinhood Gold premium service can get a 3% bonus match for each dollar they deposit (non-Gold members get a 1% match).

• Free Crypto and Options Trading - Stocks are free to trade at most online brokers, but options and cryptocurrencies usually incur fees. Robinhood users enjoy commission-free trading across all supported asset classes, including options and select cryptocurrencies.

• 24-Hour Markets - One of the newest features is 24-hour trading on not just cryptocurrency but certain popular large-cap stocks like NVIDIA, Amazon, JPMorgan Chase, and more.

• IPO Access - Having access to IPO is usually out of reach for a beginner trader, but Robinhood allows retail investors early access to new companies before they trade on public exchanges. However, offerings are limited, and the hottest new companies likely won’t have shares available.

• Robinhood Gold - The premium option for clients, which costs $5 per month and offers interest on uninvested cash, a 3% IRA match, a cash-back rewards credit card, research from outlets like Morningstar, and Level II market data.

Educational Content - If you aren’t an experienced trader, the learning center has enough content to get you started, but the offerings are basic tutorials and terminology

Robinhood’s only trading fees come from spreads and regulatory fees, which take fractions of a penny from each share or contract. Stocks, ETFs, options, and cryptocurrencies all trade entirely free from any commission charged by Robinhood. But the broker isn’t completely free, and there are some costs to consider.

Robinhood Gold is $5/month, which you’ll need to pay to access the best margin and IRA match rates. Additionally, instant transfers to bank or debit cards incur a 1.75% service charge, paper statements cost $2, and outgoing wire transfers cost $25. Margin rates are 12% for standard clients and 8% for Robinhood Gold clients. IRA holders will also face an early removal fee if they receive the 3% match through Robinhood Gold but cancel the service within 12 months.

Most clients use Robinhood to trade stocks and options, but these are far from the only assets available. Here are the securities you can trade on the platform:

Stocks - Robinhood supports stocks all on major exchanges, plus certain microcap stocks and international equities like ADRs.

Exchange-traded Funds (ETFs) - ETFs are baskets of stocks based on a theme like sector or market cap. Leveraged vehicles like ETNs and reverse ETFs can also be traded on Robinhood.

Options - While most online brokers now offer commission-free stocks and ETFs, options usually still carry a per-contract fee. But Robinhood clients only pay the option spread and no commission or fee is charged per contract.

Cryptocurrency - Robinhood's trading platform currently supports 15 cryptocurrencies, including Bitcoin, Ethereum, Dogecoin, and more.

Fractional Shares - Thanks to fractional shares, which are small slices of a single individual share, investors can get started with as little as $1. Stocks like Google and Chiptole with four-digit prices can now be added to small accounts via fractional shares.

Mutual funds, bonds, futures, forex, and most altcoins are not supported by Robinhood. Additionally, there are no advisory services available, so clients must self-direct their accounts.

If there’s one area where Robinhood lags behind the best online brokers, it's customer service. Most requests are directed to the FAQ and Support section, which contain plenty of articles and tutorials, but not much in terms of personalized support.

To contact someone via chat or phone, you’ll need to access your account and tap/click Contact via the Help section. If you have questions about a particular order, you can open it through a link and hit ‘Something Else’ when prompted. This will take you to a 24/7 chat feature or phone support, which is available Mon-Fri from 7 a.m. to 9 p.m. EST. The support process can be confusing and tedious, and questions often aren’t resolved satisfactorily.

Robinhood’s mobile app is one of the company’s biggest selling points. Available on both Google Pay and the Apple App Stores, it is intuitive, easy to learn, and full of instructions to help new traders navigate markets and learn the basics. 

The app's visual features are customizable based on the time of day (light/dark) or user preference. Fonts and numbers can be resized, and charts can be adjusted for lines or candlesticks, along with basic technical analysis tools. However, the charting tools leave a bit to be desired if you’re a day trader, as only a handful of indicators are available. If you only need moving averages and oscillators like MACD, these charts are sufficient, but competitors’ tools are far more robust.

One benefit of simplicity is that since the platform was meant for mobile trading, the app doesn’t have much of a learning curve. Even market novices should be able to deposit funds, search for certain stocks, and execute their trades without too much hand-holding.

You get what you pay for when it comes to Robinhood. No advisors are on staff, customer service can be patchy, and the platform lacks certain securities like bonds or mutual funds. But if you want a free and simple user experience, Robinhood is still the cream of the crop.

The app is designed with user-friendliness in mind. It’s easy to read, navigate, and locate what you’re looking for. The sleek design enables fast processes like sign-up, deposits/withdrawals, and trade execution. The simplicity and gamification of the app almost make it too easy to buy and sell stocks, which can have negative effects on trading behavior and investor psychology. The platform also loses points due to its confusing customer service setup.

You won’t find comprehensive portfolio management or advisor-assisted services on Robinhood. All accounts are self-directed, and the platform is designed for beginners. But that doesn’t mean perks are lacking at Robinhood online brokerage. Here are some features users can enjoy: 

Stock Lending - Clients who opt into the stock lending program will receive monthly payments for shares borrowed by other investors. Shares on loan can still be sold at any time, although you must have $5,000 in your account to be eligible, and only full shares can be lent out.

Spending Accounts - Robinhood’s new cash management program allows clients to open a spending account with a debit card, direct deposit services, and FDIC insurance. Spending account clients can also round up purchases for additional investment deposits and send money between friends and family. 

Premium Services - Robinhood Gold has some of the best available rates on uninvested cash. Clients can earn 5.25% on their free cash, plus a 3% IRA match, instant deposit access (up to $50,000), discounted margin rates, and more. Gold is only $5/month and can be canceled at any time.

Cash and Margin Accounts - Multiple brokerage accounts, such as retirement, cash, and margin accounts, are available. The default account for Robinhood clients is the margin account, which allows for borrowing money but is also subject to Pattern Day Trader (PDT) rules. Cash accounts cannot use margin trading and aren’t subject to PDT restrictions. 

Simple and Intuitive - If you find the markets complex and frustrating, Robinhood might be ideal for your goals. The app is easy to use, and a diverse portfolio can be constructed in a matter of minutes. If you’re just getting started on your investment journey, Robinhood is a great place to learn how to invest in crypto and stocks while figuring out your goals and risk tolerance.

Robinhood is a Securities and Exchange Commission (SEC) registered investment broker with SIPC membership, and the cash card is issued by Sutton Bank. Cash sweep vehicles have FDIC protections, and Robinhood has additional insurance beyond SIPC protection for investment funds. Investments all carry risk, but Robinhood is a safe place to buy and sell securities.

Users also have security protocol features to protect their data. Robinhood utilizes two-factor authentication and Face ID security to prevent unauthorized access, and clients can set up a trading password that must be entered before any orders are executed. The platform uses the BCrypt hashing algorithm to store passwords and Transport Layer Security (TLS) for server data security.

Back in 2015, Robinhood was a one-of-a-kind brokerage platform with an innovative strategy. But now that commission-free trading is the industry standard, the company has evolved to offer more enticing services, like an IRA match, a stock lending program, and 24/5 trading on highly liquid stocks. However, Robinhood remains behind the pack on advisory services and forces novice investors to navigate portfolio management on their own. Additionally, the platform lacks certain technical indicators that experienced day and swing traders would want in their toolbox. Robinhood is still a fine brokerage for new traders, but over time you may outgrow its basic offerings.

Robinhood vs Competitors

Robinhood was the first true commission-free broker and still has a few benefits over competitors like Webull and Coinbase. Unlike Webull, the cryptocurrency offerings are more robust and don’t require a separate app for trading. And unlike Coinbase, you won’t need a premium account to trade crypto commission-free. However, Robinhood and Webull both offer commission-free options trading.

No mobile app is more intuitive than Robinhood’s, and the learning curve compared to other apps like Webull, Fidelity, or Charles Schwab is minuscule. However, if you’re looking for a robo-advisor, personalized portfolios, or a detailed financial plan, you won’t find it at Robinhood and should seek out a legacy brokerage firm.

Frequently Asked Questions