Are you searching for an excellent broker to trade?
If so, you will come across numerous options. The problem is that choosing among those numerous brokers is not an easy task. If you end up picking the wrong broker, you can lose money in trades, find it difficult to make deposits and withdrawals, and so on.
Rather than experimenting, it is always a good idea to conduct some due diligence on the brokers.
Our Robinhood review today will help you with the same. We will go into every detail of Robinhood to help you understand if it is good enough or not.
Robinhood Full Review:
Robinhood offers you an app and web-based trading platform. It allows you to trade in multiple instruments like:
• And so on
It has become so famous because it allows you to trade without paying commissions or fees. It is the pioneer when it comes to free trading.
After the success of Robinhood, many other big-name brokers also started offering free trading solutions.
In the year 2021, Robinhood also introduced a recurring investment feature. That was a first for the industry as well. Soon enough, other brokers also followed suit.
Robinhood is famous as an app-based platform, but it offers a web-based platform as well. In a nutshell, you can buy sell using Robinhood through your smartphone or the computer as well.
Now that you know what Robinhood exactly is, let us look at more details about it.
• Account the minimum: $ 0
• Stock trading fee: $ 0
• Options trading fee: $ 0
• Trading platform: Web/app
• Mobile app availability: Yes
We will now look at some of Robinhood’s highlights to help you understand what it does right.
Highlights of Robinhood:
• $ 0 minimum
• Simple interface
• Recurring investment option available
• Ability to invest in fractional shares
• Cash management accounts available
With the basics of Robinhood covered, it is time to look at the features due to which it scores over other brokers.
Where Robinhood scores:
There are numerous positives of Robinhood. We will highlight them all below.
• Low fees:
The reason why Robinhood has been a huge success is because it offers 100% commission-free trading. Whether you are trading in stocks, options, cryptocurrencies, or ETFs, you can trade without paying any fee.
It also means that you can buy and sell smaller quantities as well.
If you look at other brokers’ charges, most of them charge for at least options contracts. However, Robinhood does not charge for those as well.
Low fees ensure that anyone can invest. Moreover, you can invest a small amount, as you do not have to pay any fees.
This feature alone has made it pretty famous.
Robinhood has made it clear that it will stick to this fee structure for the long-term. It aims to make investing accessible to everyone.
If you’re new to the world of investing and want a low-cost investing solution, Robinhood does not disappoint.
• Low minimum:
You might be wondering, all that is great, but what is the account minimum?
Once again, the account minimum is $ 0.
However, if you’re looking for a margin account, you should have a $ 2000 minimum portfolio. That, however, is the rule of the Financial Industry Regulatory Authority. It applies to all brokers.
If you’re operating a standard trading account, you need not deposit anything at all.
The $ 0 minimum and no fees ensure that you can do so without worrying, even if you want to invest $ 10.
The low fees and $ 0 minimum deposit makes Robinhood accessible to all.
• Ability to buy fractional shares:
You can also invest a small amount of money with Robinhood because it offers fractional shares.
It means that you can buy shares for as low as $ 1. Even if the share prices are in hundreds of dollars, you can buy a part of that share for $ 1.
With the help of fractional investing, it is easy for you to build a diversified portfolio. Without setting aside a lot of money, you can invest in stocks of Apple, Amazon, and so on.
One of the advantages of investing in fractional shares is that those trades are also executed in real-time. Due to the same, it becomes easier for you to own the shares without having to wait for days together.
The ability to buy fractional shares certainly makes it attractive for quite a few investors and traders.
• Easy to manage your portfolio:
The app has a portfolio section. Within the section, you can view your stocks, ETFs, and other instrument investments.
You will not have to worry about signing up with a 3rd party portfolio Management service or tool.
The Robinhood app itself can help you with the same.
Thus, if you’re planning a carefully curated portfolio, the Robinhood app can help you with that as well.
• Recurring investment options:
Another feature that Robinhood introduced recently is recurring investments.
The recurring investment means that you can set up an investment schedule. The app or the platform will invest on your behalf at that frequency. You can set up the schedule to be:
• And so on
You can decide the dollar amount as well.
On that day, Robinhood will automatically invest that amount on your behalf in the instruments you prefer.
When you look at this feature in conjunction with fractional share investing, you will realize why it is powerful.
For example, instead of setting aside $ 3200 for Amazon stock, you can program the Robinhood platform to buy 0.1 Amazon share for you every month. Doing so will require $ 320 rather than $ 3200.
Since it will be investing on your behalf, you need not monitor the price or the trading action on that day.
Robinhood also offers a dividend reinvestment program. Due to the same, whatever dividends you receive will be reinvested in the same stocks using fractional shares.
In a nutshell, these couple of features ensure that you can automate your investing journey with Robinhood.
These features certainly make it stand out.
• High yield cash management account:
Searching for a cash management account?
If so, Robinhood offers you that as well. The yield is 0.3%.
Not only that, your Robinhood account provides you with a debit card as well. Using their debit card, you can withdraw your cash from over 75,000 different ATMs.
Also, it offers you $ 1.25 million FDIC insurance.
It means that when you’re using the cash management account the Robinhood, your money is entirely safe.
• Simple interface:
Robinhood offers you a simple web-based and app-based interface.
Even if you have not used any trading account before, signing up and funding the account will not be a problem.
You can do so within a few minutes. Also, the information which Robinhood requires is pretty minimal.
You have to submit your personal information, Social Security number, funding method, and contact details.
Usually, the account will be approved the same day. Once that happens, you can easily deposit money.
As for the funding verification, most major banks do that almost instantaneously. Therefore, you can invest $ 1000 instantly.
At the start, depositing greater than $ 1000 requires 4 to 5 days for the process to be completed.
After this period, you can deposit as much money as you want.
The simple interface and the signup process certainly makes it convenient for traders as well as investors.
• Stock collections available:
The mobile, as well as the web platform, has a feature which is known as collections.
Collections are nothing but a set of stocks having similar parameters.
For example, a collection can have stocks of companies with female CEOs.
A collection can be a basket of stocks in the entertainment industry.
You can buy this collection with a single click. You can easily set future orders for these collections as well.
If you want to invest in companies based on a set of parameters, these collections can undoubtedly come to your rescue. You will not have to filter the stocks manually due to the same.
The availability of collections can certainly make things easier for you when you’re using Robinhood.
• Margin trading available:
Despite Robinhood having a 0 minimum dollar balance, it offers a Robinhood Gold plan as well. Robinhood Gold plan will cost you $ 5 monthly.
Using Robinhood gold, you can avail margin funding. Margin funding might increase the risk, but it also increases the reward. This feature is not for the average trader but the intermediate and advanced one. Such features make Robinhood suitable for every type of trader.
Also, the cost of just $ 5 per month makes Robinhood gold one of the most affordable margin accounts across various brokers. It has fueled the popularity of Robinhood among advanced traders.
• Customized alerts available:
In the financial markets, quite a few things are happening simultaneously. It is not that easy to stay on top of things.
Robinhood app allows you to set up customized notifications. It ensures that you receive notifications whenever the stocks or ETFs you’re interested in hit certain levels.
After that, you have to decide whether you want to invest in those stocks, ETFs, or not.
You can set up as many customized notifications as you want.
These notifications will alert you on your smartphone.
You won’t miss any opportunity due to these customized alerts.
The customized alerts certainly work to your advantage with Robinhood.
• Various tools and research reports available:
Slowly but steadily, Robinhood is also adding more tools and research reports to its offerings. As a result, it is easy for any investor/trader to analyze stocks and research more about them. As a trader, you won’t have to access any other platform for doing the same.
These days charts and various indicators are also available for you to plot them on the charts of ETFs and stocks.
With increasing tools and research reports available, it is fast turning into a holistic platform.
When you look at all these features, it is easy to understand why Robinhood has become so popular.
There are, however, a few other things which you have to keep in mind. We will highlight these below.
Where Robinhood can improve:
• Limited investment options available:
One of the main negative points about Robinhood is that it does not allow you to invest in mutual funds and bonds. If you want to create a diversified portfolio, you need these instruments. Currently, if you’re using Robinhood, you will have to use another broker to invest in these instruments.
• No 401(k) or IRA accounts:
If you want to invest in tax-saving accounts like 401(k) or IRA accounts, Robinhood does not offer you that.
The accounts which Robinhood is offering currently are taxed accounts.
While many investors trade using such accounts but if you need the tax-free alternative, you are out of luck.
• Slow customer support:
Robinhood only offers you email support and social media support. Reaching out to them on both these channels is not going to be an easy task.
Even though they have an elaborate FAQ section but it does not help much.
When you look at other brokers, they do provide phone support. However, Robinhood does not offer phone support.
As you can see, there are a handful of negatives regarding Robinhood.
Before you make your decision regarding Robinhood, do take a look at the pros and cons below.
• Simple signup process
• Ever growing set of investment instruments
• Various tools available
• No minimums
• No fees
• Easy to understand interface
• Slow support
Should you choose Robinhood?
When you’re looking for a broker that offers a simplistic platform and does not require you to deposit a minimum amount, Robinhood certainly meets that requirement. If you’re starting in the world of investing, Robinhood is undoubtedly a good option for you. With their ever-expanding set of tools and research reports, the broker is suitable for intermediate and expert traders as well.
Unless you’re looking for a professional trading platform, Robinhood is undoubtedly a good choice. It is better than many other brokers available out there.