Robinhood review [2024]: My Experience Using This Commission-Free Trading App

What is Robinhood?

Robinhood is a fintech company that has a stated mission of democratizing investing. Founded in 2013 by two Stanford roommates Vladimir Tenev and Baiju Bhatt, Robinhood launched its mobile app in 2015, giving everyday investors the ability to trade stocks and exchange-traded funds (ETFs) without paying commissions. Over time, this commission-free offering expanded to options and cryptos.

This commission-free model helped Robinhood’s user base grow to over 23 million and put pressure on major brokerages like Charles Schwab and TD Ameritrade to eliminate trading fees to stay competitive.

Here's a quick snapshot of what Robinhood offers:

Available assets	Stocks ETFs Options Cryptocurrencies
Account types	Taxable brokerage account Roth IRA Traditional IRA cash management account
Fees	$0 commission fees for stock, ETF, and crypto trades $0 commission and $0 per-contract fees for options $5/month for Robinhood Gold
Platform availability	iOS through the App Store Android through Google Play Desktop through its website
Minimum deposit	$05

Who is Robinhood best for?

Robinhood is a fantastic choice for beginner investors who want an affordable, easy-to-use platform to start actively investing. When I first started investing, I was intimidated by all the complex jargon and high fees. But Robinhood's app made the process feel more like an engaging activity than a chore.

I love how I can invest in my favorite companies with just a few taps, without worrying about commissions eating into my returns. And if I only have a few bucks to spare, I can still get a piece of the action with Robinhood's fractional shares⁶ feature.

However, Robinhood might not be the best fit for more experienced traders. While the app is constantly adding new features, it still lags behind some other brokers, like Charles Schwab, in terms of advanced charting, research, and analytical tools. And if you're looking to invest in a wider variety of assets like mutual funds or bonds, you'll have to look elsewhere.

My trading experience with Robinhood

Setting up my account

Getting started with Robinhood is a breeze. I downloaded the Robinhood app and created an account in about 5 minutes. All I needed was my contact info, Social Security number, and bank account details.

Next, I transferred some money into my Robinhood account from my bank. The funds usually take one to two business days to process, but I was able to invest up to $1,000 instantly while I waited.

Placing my first trade

Once my money hit my account, I was ready to start investing. I could browse stocks, ETFs, options, and cryptos right in the app. Robinhood's interface is super clean and intuitive, with helpful bite-sized explanations of key investing concepts.

To make a trade, I just tapped on the asset I wanted, entered the dollar amount or number of shares to buy, reviewed the details, and submitted my order.

Commission fees? No, thank you

While $0 commission fees are the industry standard nowadays, they only became so thanks, in part, to Robinhood. Before Robinhood came along, I was paying $4.95 per trade at another major brokerage, which really added up.

To put that in perspective, let's say I had $500 to invest each month, spread across 5 different stocks at $100 each. With my old broker, I would have paid $24.75 in trading fees, leaving only $475.25 to actually invest. That's nearly 5% of my money lost to fees right off the bat.

With Robinhood, I can invest that full $500 every month at no trading or commission costs. Over time, those savings can make a huge difference. According to Robinhood, its investors have saved over $2 billion in fees since 2015. That's more money staying in our pockets.

Beyond stocks: Exploring options and crypto

Robinhood isn't just for stock market investing. The app also lets you trade options and cryptocurrencies commission-free.

Options trading can be a powerful way to speculate on future price movements, but it comes with higher risks. Robinhood makes it easy to buy and sell options with just a few taps. The platform even has a helpful options strategy builder to walk you through potential trades.

If I’m looking to diversify into digital assets, Robinhood Crypto has me covered. I can buy, sell, and hold popular coins like bitcoin, ethereum, and dogecoin right alongside my stocks and options. Crypto trading is available 24/7, so I never have to miss out on a market move. However, I always keep in mind that the crypto market is highly volatile and risky.

What more does Robinhood offer?

While I've had a great experience with Robinhood's core investing features, there are a few notable offerings that I haven't had the chance to fully explore yet. Here's a quick rundown of some of the platform's additional perks and services.

Robinhood Gold and Gold Credit Card

Robinhood Gold is a premium subscription service that unlocks a suite of advanced features for $5 a month. Some of the key benefits include:

• 5.00%⁷ annual percentage yield (APY) on uninvested cash compared to 0.01% (as of 7/02/24) APY for the free Robinhood account
• Bigger instant deposits (up to $50,000)⁵
• Professional research from Morningstar
• Level II market data from Nasdaq
• Lower borrowing rates for margin investing
• Access to Robinhood Gold Credit Card

In my opinion, the $5 monthly fee for Robinhood Gold is worth it, especially if you keep a significant amount of uninvested cash in your account. The 5.00% APY on idle cash is much higher than what most traditional savings accounts offer, and there's no limit on how much interest you can earn.

The bigger instant deposits and access to professional research and advanced market data could also be valuable for more active traders. However, if you're a more passive investor or don't plan to use margin, the extra features might not justify the monthly cost.

But the real standout perk is the Robinhood Gold Card. This sleek metal credit card offers a flat 3% cash back on all categories and 5% cash back on travel booked through the Robinhood travel portal and it has a $0 annual fee, no foreign transaction fees, and exclusive benefits like trip interruption protection and auto rental collision damage waiver. The catch? It's still on a waitlist, and you have to be a Robinhood Gold member to apply.

Personally, I'm excited about the prospect of the Gold Card. A flat 3% cashback rate is very competitive, especially for a card with a $0 annual fee. The fact that it's made of metal is a nice touch too.

Robinhood Retirement

In January 2023, Robinhood launched a retirement account that aims to help its users save for the long term. Robinhood Retirement supports Roth and traditional individual retirement accounts (IRAs) with no account minimums or commission fees.

These accounts stand out from Roth and traditional IRAs with other brokerages in that Robinhood will match 1% of your annual contributions – or 3% if you're a Gold member. That's free money for your future. Keep in mind that Robinhood requires you to keep your IRA with them for at least five years to avoid forfeiting the match.

Let's say you maxed out your 2024 IRA contribution of $7,000. With Robinhood's IRA match, you could potentially boost your savings even further. Here's how the numbers stack up:

Contribution source	Amount
Your contribution	$7,000
Robinhood 1% match	$70
Robinhood Gold 3% match	$210

Over time, that match can make a significant difference in your retirement account balance, especially when you factor in the power of compound growth. For example, let's assume you contribute $7,000 each year for 30 years, earn a modest 5% annual return, and receive the 3% Robinhood Gold match. Here's how your savings could grow:

Scenario	After 30 years
Your contributions only	$517,713
With Robinhood Gold 3% match	$580,868

In this hypothetical scenario, Robinhood's 3% IRA match could add an extra $63,155 to your retirement savings over 30 years. Of course, these projections are based on assumptions and shouldn't be considered a guarantee of future results.

IPO Access

Robinhood's IPO Access feature lets all Robinhood users buy shares of select companies at their initial public offering (IPO) price before they start trading on public exchanges. This can be a unique opportunity to get in early on a stock that you believe has strong growth potential.

However, IPO investing also comes with significant risks. Many IPOs are priced at a premium due to high demand and limited supply of shares. There's no guarantee that a stock will continue to rise after it starts trading publicly. In fact, some high-profile IPOs have seen their stock prices plummet shortly after debut.

Moreover, IPO Access is only available for a limited selection of companies that Robinhood chooses to offer. And even if a company you're interested in is available, there's no guarantee that you'll be allocated shares.

Nonetheless, I think IPO Access is an interesting feature that gives everyday investors a chance to participate in a process that's traditionally been reserved for large institutional investors and high-net-worth individuals. Just be sure to do your due diligence and understand the risks before jumping in.

Margin trading

Another investment option on Robinhood is margin investing, which allows all Robinhood users to borrow money from Robinhood to buy and invest in stocks. This feature gives you access to more purchase power and increases your cash flexibility. For example, if you see an investment opportunity, you could invest in it right away without waiting for a deposit from your bank account.

When you open a Robinhood account, you get access to margin investing by default. But you can deactivate margin investing in your account settings.

Since margin investing enables you to use borrowed money that isn't yours, losses can be quite costly. If a stock you buy on margin loses value, the losses can be amplified due to the increased purchase power of margin. Since you would still owe Robinhood the money you borrowed, it's possible for a margin account to inflate your losses. That's why margin trading can be a highly risky form of trading that requires advanced investment experience.

Personally, I've chosen not to use margin on Robinhood. While the potential to amplify gains is tempting, I'm not comfortable with the added risk. I prefer to invest only with money that I actually have so that I'm not on the hook if a trade goes south.

Is Robinhood safe?

Safety is a top concern for any investor, especially when it comes to a relatively new fintech platform like Robinhood. So, is your money safe with Robinhood? Let's break it down.

SIPC protection

First off, Robinhood is a member of the Securities Investor Protection Corporation (SIPC). This means that your Robinhood brokerage account is protected up to $500,000, including $250,000 for cash claims, in the event that Robinhood fails financially.

However, it's important to note that SIPC insurance doesn’t protect against market losses. If your investments decline in value due to normal market fluctuations or poor stock picks, you won't be reimbursed.

Account security

When it comes to securing your account, Robinhood uses industry-standard encryption and two-factor authentication. You can log in using facial recognition, fingerprint scanning (on mobile), or a custom PIN code. Robinhood also offers the ability to disable and enable your account if you suspect any unauthorized activity.

However, Robinhood has faced some criticism over its account security in the past. In 2020, the company reported a data breach that exposed the email addresses and full names of about 5 million customers. Robinhood has since upped its security measures, but it's a good reminder to always use strong, unique passwords and enable two-factor authentication when possible.

Customer support

When things go wrong or you have a question, being able to get help quickly is crucial.

In the past, Robinhood's customer support has been a point of criticism, but the company has recently made significant improvements. Robinhood now provides 24/7 live chat and phone support for all users. You can easily access these support options right in the app.

In my experience, Robinhood's chat support has been responsive and helpful, with quick connection times and satisfactory answers. The 24/7 availability is also a big plus for investors who may need assistance outside of regular business hours.

Alternative investment platforms

While Robinhood is a solid choice for many investors, it has a limited number of asset types available. That’s why you may prefer alternatives like SoFi Invest® or Stash for their wider range of investment options or automated investing features.

SoFi Invest® vs. Robinhood

SoFi Invest® is a solid alternative to Robinhood, and it's actually the platform I use for most of my own investing. Like Robinhood, SoFi offers commission-free trading of stocks and ETFs with no account minimums.

One of the main reasons I chose SoFi Invest® is its wider range of investment options. In addition to stocks and ETFs⁸, SoFi offers access to mutual funds, IPOs⁹, and more. It also gives me free access to financial advisors¹⁰ and automated investing through its robo-advisor service.

I also like that SoFi Invest® integrates seamlessly with SoFi's other financial products, like SoFi Checking and Savings¹¹ accounts and SoFi Relay¹² budgeting and money management tool. Having all my finances in one place makes it easier to manage my money and get a holistic view of my financial situation.

Visit SoFi Invest® or learn more in our SoFi Invest® review.

Stash vs. Robinhood

Stash is another investing app that aims to make investing accessible to beginners. Like Robinhood, Stash offers fractional shares and has no account minimums.

What sets Stash apart is its emphasis on education and guidance. The app has a feature that analyzes your spending patterns and automatically invests spare change into your portfolio. It also categorizes investments based on your risk tolerance and values, such as "Clean & Green" for environmentally-friendly companies.

However, Stash does charge a monthly fee of $3 or $9, depending on your plan, which could be a downside for investors with small account balances.

I briefly tried Stash and found the app to be very user-friendly, with helpful tips and explanations throughout the investment process. I particularly liked the "Stock-Back" feature, which rewards you with fractional shares when you spend with the Stash debit card.

Visit Stash or learn more in our Stash review.

FAQ

Robinhood review: bottom line

Overall, Robinhood is an excellent choice for new investors looking to dip their toes in the stock market without drowning in fees. The app's commission-free trades, user-friendly design, and unique perks like IRA matching make it a compelling option for beginners.

However, Robinhood's limited investment selection and basic research tools may leave more experienced traders wanting more. Ultimately, Robinhood is a solid starting point, but as your investing skills grow, you may find yourself seeking out more robust platforms.