Fidelity vs. Robinhood [2024]: Which Broker Meets Your Needs?

Choosing whether to invest with Fidelity or Robinhood depends on your financial goals and comfort level with investing. Fidelity is well-established and has been around for decades, which makes it a reliable name. It’s great for all levels of investors looking to build long-term wealth.

In contrast, Robinhood is newer and has developed solutions for folks with less experience investing and people interested in individual cryptocurrency trading. Asset types, asset classes, distributions, and taxes vary between the two companies.

Read on to learn how to choose the right investment company for you and maximize your investment dollar through Fidelity or Robinhood.

Fidelity vs. Robinhood

Fidelity has been around for decades, and offers funds and other portfolio products. For investors interested in long-term results, including tax-advantaged accounts, Fidelity can be a good choice in a trading app.

Robinhood is newer, but it also has an easy-to-use interface that makes it possible to learn how to trade options and other products that are harder to access at Fidelity. Here’s an overview of Fidelity versus Robinhood.

Overview: Fidelity vs Robinhood

Even though Robinhood is known for its user-centric design, including great mobile app functionality, Fidelity actually has a wider variety of investment options for all investment experience levels. Robinhood’s signup process is fast and easy, and the interface makes it easy to begin investing immediately, but Fidelity has a wider range of investment products and account types.

Both are among the best investment apps, so choosing between Fidelity and Robinhood depends on your unique needs.

About Fidelity Investments

Fidelity celebrated its 75th anniversary in 2021 and serves 40 million account holders. In addition to catering to individual investors, Fidelity also helps businesses manage their benefits plans.

Fidelity offers access to a variety of taxable and tax-advantaged accounts, including providing investors the ability to use IRAs, 529s, and HSAs to invest for the future. In addition to offering the ability to trade individual stocks and direct your own account, Fidelity also offers managed portfolios.

No matter your comfort level with portfolio management and stock trading, Fidelity offers access to various investment products. It’s even possible to get planning help and advice, as well as access to an extensive library of educational resources.

You can learn more when you read our Fidelity Investments review.

Pros

• A variety of $0 commission stocks and exchange-traded funds (ETFs)
• Access to tax-advantaged investment accounts
• Extensive library of free educational and research resources

Cons

• Some mutual funds have high minimum investment requirements
• Margin rates can be higher than Robinhood
• No individual crypto trading

About Robinhood

Founded in 2013, Robinhood has a self-declared mission to democratize investing and personal finances. Robinhood was one of the early brokerages to pioneer no-commission fee trading on all ETFs and stocks. Robinhood makes it easy to open an account and begin trading in a matter of minutes.

Robinhood offers two tiers: its free tier and its Robinhood Gold tier, which costs $5 per month. With the Gold tier, you get access to instant deposits in your account, as well as margin trading.

In addition to offering stocks, ETFs and options trading, Robinhood also offers access to a limited number of individual cryptocurrencies. Robinhood now allows you to transfer certain crypto assets in and out of your account using crypto wallets.

You can use Robinhood to open a brokerage account, a crypto account, or a margin account. Robinhood also began offering individual retirement accounts (IRAs). You can open a Robinhood Retirement account and even get a 1% match on qualified deposits you make.

However, Robinhood offers fewer investment and account choices than Fidelity and places a bigger emphasis on trading than on long-term portfolio building.

Learn more when you read our Robinhood review.

... or visit Robinhood.

Pros

• Easy-to-use mobile app
• Access to individual cryptocurrencies
• Low-cost margin trading for those who qualify

Cons

• Fewer asset choices
• Fewer tax-advantaged account options
• Market data isn’t widely available to those without Gold accounts

What both Fidelity and Robinhood excel at

Whether you’re investing with Fidelity or Robinhood, you won’t have to worry about trading commissions on stocks and ETFs. Additionally, neither brokerage requires a minimum balance to open an account. You can also start trading fractional shares with both Fidelity and Robinhood with as little as $1.

Even though both brokerages offer educational tools and resources, Fidelity has a more extensive library. Additionally, both offer research tools, but Fidelity’s are free for many account holders, whereas you might need to pay for a Gold account to access some analysis tools through Robinhood.

Overall, both make it possible for anyone, from new investors to experienced investors, to open an account and begin investing. Both also offer margin accounts with competitive rates, though Robinhood’s margin rate is lower than Fidelity’s.

5 important differences between Fidelity vs. Robinhood

When considering Fidelity versus Robinhood, it’s important to consider your needs, as well as what each offers to meet those needs. There are some differences between Fidelity and Robinhood you should take into account when deciding which is best for you.

1. Tax-advantaged investment accounts

Fidelity and Robinhood both offer tax-advantaged investment accounts, but only Fidelity also offers access to tax-advantaged investing through health savings accounts (HSA) and 529 accounts.

2. Asset selection

Although both Fidelity and Robinhood provide access to stocks, ETFs and options, Fidelity has a wider selection of asset classes. Fidelity has a variety of mutual funds, bonds, and other assets to choose from. You can even invest in annuities through Fidelity.

Robinhood doesn’t offer the same array of available asset classes. If you want more fixed-income assets such as certificates of deposit and bonds, Fidelity can offer you that access. However, Robinhood does have better access to crypto.

3. Cryptocurrencies

If you’re interested in how to buy cryptocurrency, Robinhood can be a better choice than Fidelity. Fidelity only lets you access crypto exposure through ETFs that include companies focused on the metaverse and blockchain technology. You can use your employer-sponsored 401(k) to add bitcoin to your portfolio, but that’s a different process than opening your own account through Fidelity.

Robinhood lets you buy and sell bitcoin, litecoin, ethereum, and other cryptocurrencies on an individual basis. Additionally, through Robinhood’s wallets, you can move cryptocurrencies in and out of your Robinhood account.

4. Fees

Even though both Fidelity and Robinhood offer commission-free trading, there are other fees to be aware of. For example, when trading options, Robinhood doesn’t charge a per-contract fee. Fidelity, on the other hand, doesn’t charge a trading commission, but it does charge a per-contract fee.

However, Fidelity has some funds that don’t come with expense ratios, whereas you still have to consider expense ratios for ETFs on Robinhood, even without the trading fee.

Depending on the type of account you get with Fidelity, you might pay a percentage of the assets in your portfolio as a management fee. With Robinhood, a flat $5 is the fee for Robinhood Gold, which offers access to margin and some other features.

5. Account bonus

Robinhood offers free stock when you open an account. Fidelity doesn’t provide a bonus offer for investors.

Which should you choose between Fidelity and Robinhood?

When deciding between Fidelity versus Robinhood, it’s important to consider your portfolio strategy and goals. You should also compare different brokerages to see which offer the tools you need. Some of the things to consider when deciding on a brokerage include:

• Available accounts: If you’re looking for a 529 or HSA account, Robinhood likely won’t work for you, whereas Fidelity offers these. Consider your goals and needs for the investments, and then look at the account types to see what’s likely to provide your best choices.
• Available asset classes: Think about the types of investments you want. Both Fidelity and Robinhood offer stocks, ETFs, and options. However, if you want access to mutual funds and bonds, you need to turn to Fidelity. On the other hand, if you want access to individual cryptocurrencies, it might make more sense to use Robinhood.
• Fees: How much you pay in fees can make a difference in your real returns over time. Both Fidelity and Robinhood offer commission-free trading, so you don’t have to worry about commissions when you make your stock or ETF trades. However, Fidelity has a higher margin rate and charges per-contract fees for options. If you expect to trade a lot of options, using Robinhood can make sense as it reduces your overall costs.
• Other features: Don’t forget about the features you’re interested in. Fidelity has a more extensive library of research and analytical tools. Robinhood’s mobile interface and mobile app is easier to use than Fidelity’s. Additionally, Fidelity offers managed portfolios, similar to what you see with the best robo-advisors. If that’s important to you, and you don’t want to direct your portfolio on your own, it can make sense to look for a broker that does the heavy lifting of asset allocation.

Figure out which features matter more to you as you weigh your choices. In the end, it’s about what’s likely to work for you and feel comfortable for your level of investment experience.

FAQs

Bottom line

Both Robinhood and Fidelity offer you the opportunity to invest and do so without worrying about commissions. They are among the best brokerage accounts and can give you a way to meet your financial goals. When deciding between Robinhood versus Fidelity, take into account your desired asset choices and account types. You can use both trading platforms for different purposes and to meet different goals.

FinanceBuzz is not an investment advisor. This content is for informational purposes only, you should not construe any such information as legal, tax, investment, financial, or other advice.

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