E*TRADE from Morgan Stanley vs. Robinhood [2024]: Which Is the Right Choice for Your Money?

If you want to build wealth over time and meet other financial goals, one of the best ways to do so is through investing. There are a number of brokers that offer you the chance to easily buy and sell various assets, including stocks and ETFs (exchange-traded funds).

Two of the more popular online brokers are E*TRADE¹ <p>Restrictions apply. <a href="https://us.etrade.com/what-we-offer/how-it-works/promo?ch_id=A">Offer details on E*TRADE site</a>.</p> and Robinhood. If you’re trying to decide between E*TRADE versus Robinhood, here’s what you need to know.

E*TRADE vs. Robinhood

E*TRADE and Robinhood both make it easy to trade and learn how to invest money — without paying commissions on regular trades. However, they offer different types of accounts, and you’ll find that E*TRADE has more choices and a wider variety of assets than Robinhood. Yet, Robinhood offers cryptocurrencies, while E*TRADE does not.

Minimum investment	None for a basic brokerage account Investment minimums vary for a Personalized Investment Portfolio	None For margin accounts: $2,000 (or 100% of the security’s price, whichever is lower)
Account fees	None for a basic brokerage account 0.30% annual fee for Core Portfolio 0.65-0.90% annually* for a Blend Portfolio 0.95-1.25% annually* for a Dedicated Portfolio 0.35-0.75% annually* for a Fixed Income Portfolio	None for Robinhood Basic $5/month for Robinhood Gold
Asset classes	Stocks Bonds Exchange-traded funds Options Futures Mutual funds CDs	Stocks Exchange-traded funds Options Cryptocurrencies American Depositary Receipts (ADRs)
Account types available	Individual taxable account Joint taxable Custodial Coverdell education savings account (ESA) IRA (Traditional and Roth) Rollover IRA Solo 401(k) SEP IRA FDIC-insured checking and savings accounts	Individual taxable account FDIC-insured spending account IRA (Traditional and Roth)
Features	Custodial accounts for kids Margin trading Access to human financial advice Access to managed portfolios Mobile app	Access to crypto Margin trading Option to buy fractional shares (ETFs and stocks) Mobile app Robinhood Cash Card
Distributions	Cash distributions or dividend reinvestment	Cash distributions or dividend reinvestment
Taxes	No tax-loss harvesting	No tax-loss harvesting
Best for...	Investors interested in the perks a traditional brokerage offers, including managed portfolios	Investors who want to manage their own portfolio
	Visit E*TRADE	Visit Robinhood

*Note: Pricing varies based on total assets under management.

How does E*TRADE work?

E*TRADE, which was recently acquired by Morgan Stanley, was one of the first online stock brokers. In addition to being accessible online, E*TRADE also offers branches across the United States. E*TRADE offers two platforms: its traditional E*TRADE platform and Power E*TRADE. Both platforms are available as desktop platforms and via iOS and Android mobile apps. The company has no account minimums and no trading commissions. It also gives investors access to managed portfolios for a management fee.

In addition to its brokerage account and managed portfolios, E*TRADE also offers custodial accounts, giving you the option to invest on behalf of your children. You could also choose to save for college with a Coverdell ESA through E*TRADE, and choose from various tax-advantaged retirement accounts for individuals and businesses. Finally, E*TRADE offers FDIC-insured savings accounts and checking accounts.

There’s no minimum to open a basic account and begin trading with E*TRADE. Though it comes with an annual fee, its managed portfolios are a nice option for investors who prefer to be more hands-off with their investments.

Learn more in our E*TRADE review.

How does Robinhood work?

Robinhood’s stated mission is to democratize finance. The company was started by two former hedge fund traders who made it a point to offer commission-free trades and easy access to the markets. Robinhood makes ETF and stock trading relatively easy, as well as more complicated products, such as options contracts. Investors can choose online trading via a web platform or through the Robinhood trading app, which is available for iOS and Android.

While Robinhood doesn't offer custodial accounts, it offers brokerage accounts, crypto accounts, margin accounts, and retirement accounts. Robinhood Retirement gives you access to traditional and Roth IRAs with a 1% match on qualifying deposits, which is a unique feature not often found with other investment platforms.

You can upgrade your Robinhood access to Robinhood Gold. Users who upgrade get access to Morningstar research and margin at a higher level, as well as the ability to make larger deposits and gain quicker access to funds. Robinhood Gold costs $5/month. 

Robinhood recently added a cash card that is linked to an FDIC-insured spending account. The card allows you to automatically invest your change in stocks or cryptocurrencies. When you opt in for this feature, Robinhood will round up your transactions to the nearest dollar and invest the difference in assets of your choice.

Learn more in our Robinhood review.

What both investment platforms excel at

When considering E*TRADE vs. Robinhood, note that both make it fairly easy to trade. Both brokers have been pioneers in expanding stock market access to a larger swath of the population.

Each online brokerage also offers stocks, ETFs, and options for trading. Both offer commission-free stock and ETF trades. You can get a margin account with both brokers as well.

5 important differences between E*TRADE vs. Robinhood

While both E*TRADE and Robinhood make it easy to trade stocks and ETFs, there are some important differences between the two brokerages. Here’s what to consider as you decide between E*TRADE vs. Robinhood.

1. Cryptocurrency trading

E*TRADE doesn’t offer cryptocurrency trading, while the Robinhood app does. If you are interested in how to buy cryptocurrency and want to trade cryptocurrency, Robinhood is the only option between the two. The cryptocurrencies Robinhood offers include:

• Bitcoin
• Bitcoin Cash
• Bitcoin SV
• Litecoin
• Ethereum
• Ethereum Classic
• Dogecoin

Robinhood makes it easy to buy fractions of cryptocurrencies, as well as whole coins.

2. Retirement account

E*TRADE offers a variety of retirement account choices. You can roll over a 401(k) from your work or open a separate traditional or Roth IRA. On top of that, E*TRADE offers custodial IRAs for children, so if you want to give your child a headstart on saving for retirement, you have the option to do so. When you reach retirement age at 59 ½, E*TRADE could also help you by converting your IRA into an accessible account, complete with bill pay and checking.

Not only that, but E*TRADE offers tax-advantaged business retirement accounts. If you have a small business, you might choose to open a solo 401(k) or a SEP IRA. It’s even possible to set up a profit-sharing plan through E*TRADE.

On the other hand, Robinhood only offers two types of IRAs (Roth and Traditional) for retirement savings. With a Robinhood Retirement account, you can build your own portfolio, use a recommended portfolio, or have a mix of both. You can earn a 1% match on qualified deposits, which is a unique plus. Robinhood IRAs allow you to invest in stocks and ETFs with no account fees. However, these accounts don't offer crypto trading access.

3. Custodial accounts

Robinhood doesn’t offer accounts for minors at this time. However, E*TRADE does allow you to open an investment account on behalf of your kids. This includes a tax-advantaged retirement account as well as a taxable investment account.

While it’s not a custodial account, you can also choose to open a Coverdell ESA with E*TRADE to help save for your child’s college education.

4. Managed portfolios

E*TRADE offers something Robinhood doesn’t: managed portfolios. If you don’t want to engage in trading on your own, E*TRADE offers different managed portfolio options, with minimum investments starting at $500. However, some of their managed portfolios have a minimum of $250,000.

Robinhood doesn’t offer managed portfolios or help from a robo-advisor. If you use Robinhood, you’re in charge of your own portfolio and do not have the option to have someone else manage your investments.

5. Traditional asset classes

While Robinhood offers access to cryptocurrencies, it has more limited access to traditional asset classes. You can trade stocks, ETFs, and options with Robinhood, but you don’t have access to mutual funds, bonds, CDs, or futures like you do with E*TRADE. If you’re looking for a wider range of investment choices, E*TRADE may be more likely to provide what you need.

Do understand that if you want access to some products, like CDs, you could add exposure to them in your portfolio through the use of ETFs. Investing in ETFs could allow you to gain exposure to those asset classes through Robinhood, even if you don’t invest in them directly as you could with E*TRADE.

However, Robinhood does offer you the ability to trade options without worrying about a contract fee. When you trade options with E*TRADE, you end up paying a per-contract trading fee, even though you don’t have to pay a commission.

Which investment platform should you choose?

Whether you choose E*TRADE vs. Robinhood, or any of the best brokerage accounts available, depends on your investment strategy and portfolio goals. As you’re researching brokers, it’s a good idea to ask the following questions:

• What accounts are available? Are you looking for a tax-advantaged retirement account, or do you just want an account to do some trading? Are you hoping to set something up for your kids, or just invest for yourself? Think about your goals and what types of accounts are likely to work best for you.
• What assets can you invest in? Figure out what assets you want to include in your portfolio to help you reach your goals. Depending on the situation, you might want to be able to diversify your portfolio with various assets, beyond just adding exposure through ETFs. If this is the case, look for a broker that allows you to do that.
• How much are the fees? Pay attention to costs. Fees can eat into your real returns. Look for commission fees, as well as per-contract transaction fees if you decide to trade options. Additionally, when it comes to managed portfolios, you want to look at the management fees.
• How easy is it to complete transactions? Don’t forget to factor in how easy it is to complete transactions based on what you want to do. Find out if there’s an automatic investment plan you can sign up for to easily add money and invest each month, or pay attention to how easy it is to use the platform to place orders. Look for a platform that meets your needs.

For the most part, a Robinhood account could be an ideal option for someone who wants to trade fairly frequently. If you’re interested in easy access to trading and you want to place frequent trades, Robinhood is easy to use, and there are no fees to worry about as long as you aren’t using margin. Additionally, you get access to Robinhood Retirement accounts, and you can also use your crypto account to trade cryptocurrency.

On the other hand, E*TRADE might work well for someone who wants access to more traditional brokerage services, including managed portfolios. While E*TRADE could work for someone who trades frequently, especially equities and ETFs, it’s better suited for those who are looking to make long-term investment options. Because E*TRADE offers both retirement and custodial accounts, it could be a good choice for investors looking for tax-advantaged accounts and to help their kids start building wealth.

FAQ

Bottom line

When choosing a broker, it’s important to consider your own personal finance goals and your portfolio strategy. Robinhood is well-suited for active mobile trading, although you could use a buy-and-hold strategy with Robinhood. However, E*TRADE is likely a better fit for those looking for long-term investing goals. You don’t have to worry about trading commissions on stocks, ETFs, and options with either of these trading platforms.

It’s also possible to use both brokers, depending on your goals. You might consider using E*TRADE for your custodial account to help your kids learn how to invest money, while using Robinhood for more of your “play” investment money to trade cryptocurrencies and options.

Carefully think through your strategy and figure out which of these brokers is likely to help you reach your goals. If you are interested in learning more, check out our picks for the best investment apps.

*Disclosure: The author has positions in cryptocurrencies mentioned in this piece: Bitcoin, litecoin, and ethereum.