Robinhood is literally turning the stock investing world upside down with their young fresh brokerage. After reading this Robinhood review, you will see how a revolutionary startup company built a customer base of over 3 million users within 3 years and matched E-Trade which had been in business since 1991!
I’ll go over what can be done on Robinhood, what features are available, costs associated with the app, and pros and cons for choosing it over other brokerages.
I’ll also show you firsthand what the interface looks like from a live account so you can get a better understanding of what it’s like to use Robinhood.
What is Robinhood?
Robinhood is an online brokerage founded in 2015 and designed with an easy to use interface to make stock trading easy and user-friendly via an app on your phone.
If you read my article on how to invest using Robinhood, you’ll already be familiar with how a brokerage operates and what makes Robinhood stand out from other brokerages.
If you haven’t read it, don’t worry, I’ll cover it in detail and give you a behind-the-scenes using my personal account below.
Robinhood was founded by Vladimir Tenev and Baiju Bhatt who didn’t agree with the complex nature of stock brokerages and how they had to charge fees for every trade made in order to make a profit and sometimes trading took over a week to initiate after creating an account.
Before, if you joined a brokerage, by the time you signed up, funded your account and initiated your first trade, a week or more could have transpired.
With Robinhood, you can buy shares of stock within minutes of downloading the app.
It really is that easy and the best part is it is Commission Free!
What Can Be Done With Robinhood?
Well obviously, you can buy and sell stock shares. That’s what put Robinhood on the map. They do offer more services however and they launch new features every year.
You can also trade ETFs which are exchange-traded funds. These are funds that track indexes, groups of similar assets or commodities. They are used to invest in specific industries rather than companies, entire indexes, and can be used to diversify portfolios.
Robinhood became a brokerage for Options in 2018. If you ever wanted to get started with Options trading, it’s now available on Robinhood.
Like most brokerages, there are different levels of options trading available to you based on your previous experience options trading and knowledge of trading.
Robinhood wants to be sure that you know what you’re doing before allowing you to access all options features. That’s what all major brokerages like E-Trade, Ameritrade, and Fidelity do. Most of the time there is an application process for trading options.
I do limited options trading on Robinhood but I use another platform for the majority of my options trading. Like stock trading though, their options trading comes with zero commissions as well!
Robinhood also introduced Crypto-currencies. The benefit of trading cryptocurrencies is that it is traded 24/7. It’s currently available in 32 states and plans to continue adding more states as it continues to grow.
Currently, members can trade the following cryptocurrencies:
- Bitcoin (BTC)
- Bitcoin Cash (BCH)
- Bitcoin SV (BSV)
- Dogecoin (DOGE)
- Ethereum (ETH)
- Ethereum Classic (ETC)
- Litecoin (LTC)
Rather than having your uninvested capital go to waste, Robinhood has introduced the ability to earn 1.80% APY on all uninvested cash residing in your brokerage account.
This money is also available to you by using their debit card so if you have extra money sitting in a low-interest savings account, Robinhood’s Cash Management system may be a good place to store your money.
Also, similarly to banks, it’s FDIC insured for your peace of mind.
Earn Free Stock by Referring People to Robinhood
Lastly, Robinhood introduced a rewards program that gives a random free stock valued between $2.50 and $200 to users that refer their friends and gifts a stock to the referral as well.
So, if you visit the link below, we’ll both get a FREE stock.
Take Me Inside Robinhood!
Above you see the main interface when you log in. The graph you see shows the overall performance of the account on the daily chart.
At the time of this post, it was after hours. If it were during the trading time of the NYSE, it would have a white background showing that the markets are open.
You can also sort the chart using the links below the graph for 1 Week, 1 Month, 3 Months, 1 Year, and the Lifetime of the account.
One negative to note is that there is not a lot of functionality with the graphs. You cannot select a specific range such as the 4th quarter (October 1st to December 31st). Also, you can not use graphing indicators such as MACD or other advanced chart features. I use Trading View for free charting.
That being said, free commissions more than makes up for the shortcomings in my opinion.
Buy Fractional Shares
This is something that separates Robinhood from a lot of the competition.
Certain companies are worth hundreds of dollars per share.
Robinhood will soon allow you to buy fractional shares so that you can invest in companies that would normally cost too much for the beginning investor.
Currently, they are accepting people on the waiting list for this feature but it is expected to be available soon.
Once this feature is live, you will be able to purchase fractions of stock shares in companies that cost hundreds of dollars by investing whatever you can.
This allows you to also balance your portfolio easier and diversify your account.
Everything I’ve mentioned so far is using the standard Robinhood account that you get when you first sign up.
This account is known as a Robinhood Instant account and it grants you free commission trading, instant access to deposited funds (without waiting days for the funds to settle) and extended hours trading at no cost.
If you upgrade to Robinhood Gold, you get access to a few extras for a monthly cost. One of the perks you get is Gold Buying Power which allows you to purchase shares without making a deposit.
In addition, you will have instant access to any deposits up to the amount allowed based on your tier. Here are the first tiers that you can sign up for:
- Tier I – $1000 extra buying power and instant access to deposits up to $2000. Cost $6/mo.
- Tier II – $1500 extra buying power and instant access to deposits up to $2500. Cost $9/mo.
- Tier III – $2000 extra buying power and instant access to deposits up to $3000. Cost $10/mo.
There are other tiers depending on the size of your account.
Robinhood Gold is by no means required to use this app. I have not upgraded to Robinhood Gold and don’t really intend to any time soon. For some serious investors, this is terrific. I’m perfectly happy with my Robinhood Instant account which is free of charge.
As a Recap, The Major Pros Are:
- There are no commissions
- Money can be used instantly when you transfer from your linked debit card (Up to $1000)
- Withdrawal is also easy
- It’s designed for easy use with a phone app.
- It’s secure with SSL certificates, BCrypt hashing algorithms, and is backed by the SPIC up to $500,000
The Cons In My Opinion Are:
- It doesn’t have advanced charting capability
- It doesn’t offer much in terms of researching stocks
- It’s only available in the United States currently and Crypto trading is still in only 32 states.
Overall, I think Robinhood is an incredible app to add to your investing arsenal.
If you have any questions or comments please add them below. I’d love your input. As always, if you know someone that can benefit from this review of Robinhood, please share this with them.
I hope you enjoyed this review. Now, let’s start trading!
Ease of Use9.5/10
- Zero commissions!
- Money can be invested within minutes of signing up.
- New features constantly being added.
- It doesn't take days to add money to your account.
- It is very secure.
- It doesn't have advanced charting capability.
- It's only available in the United States.
- It doesn't have the ability to conduct much research.
- Crypto trading is currently only in 32 states.
Eric Baglio has been investing for over ten years and learned a lot of valuable lessons along the way. He has helped numerous people start investing on their own and founded Let’s Start Investing to help anyone willing to learn how to build wealth. His favorite brokerage is Webull and his favorite stock advising service is Motley Fool Stock Advisor.