Robinhood Review: Lower Costs and Simplified Investing In One
Commencing its journey as an avant-garde challenger within the brokerage industry, Robinhood has since burgeoned into a brand much admired by those conversant with technology and novice traders. This popularity surge can largely be attributed to a no-fee model and a sleek, user-friendly trading interface.
At inception, Robinhood's principal edge was its commission-free trading, a feature that has since provoked many rivals into repricing their services. On this platform, one can effortlessly trade stocks, ETFs, options, and cryptocurrencies. Nevertheless, it does lack the more intricate financial tools, asset classes, and research competencies that seasoned traders covet in a broker.
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Despite an evident emphasis on enriching access to an expanding repository of educational content and elevating rudimentary charting capabilities, there remains a substantial amount of progress to be made before the platform attains the benchmarks now established across an increasingly contested field. We shall delve deeper into Robinhood, enabling us to assess if the platform holds merit for our use.
This brokerage firm is suitable for: Investors desiring a mobile application to invest in stocks, ETFs, options, fractional shares, and, via Robinhood Crypto (a related but distinct entity), cryptocurrencies, or to establish an IRA. Those requiring the purchase of mutual funds may need to explore other options.
Advantages
- Zero transaction fees
- High-grade mobile investment application
- Fractional shares investment
- Cryptocurrency investment through Robinhood Crypto
- Drawbacks
- Consumer views concerning trading limitations
- Absence of mutual fund and fixed income product access
- Zero commission fees
Robinhood's claim to fame primarily rests on initiating the concept of zero-commission stock trading. Even though most other leading brokers have since adopted this model, Robinhood continues to maintain a competitive fee structure. For instance, it does not levy flat commissions on options trades or charge per contract, a practice still prevalent among many top options platforms.
Fractional shares
In conventional terms, if a share was trading at $500, one needed to have a minimum of $500 to invest. Robinhood permits investors to purchase fractional shares of thousands of stocks, even if they have only $1 to invest. This can serve as an extraordinarily useful tool - not only does it allow 100% of your funds to be utilized, but it also aids in building a diversified portfolio without substantial investment capital.
Cryptocurrency investing via Robinhood Crypto
For those intrigued by cryptocurrencies, Robinhood could be an ideal selection as it facilitates cryptocurrency trading through its Robinhood Crypto service. Clients can buy and sell Bitcoin, Ethereum, Litecoin, and other cryptocurrencies at any hour. Once identity verification and two-factor authentication are activated on the Robinhood account, cryptocurrency assets can be withdrawn and deposited, with a restriction of $5,000 or 10 total transfers within a 24-hour span.
Cryptocurrency limit orders
While some cryptocurrency platforms permit only immediate trades, Robinhood Crypto allows the utilization of a limit order to set the price at which to buy or sell.
Cash management
Robinhood also proffers an enticing cash management account that allows clients to earn returns that vary with current interest rates (presently 1.50% APY) on their uninvested cash. Furthermore, the cash management account is free of any associated fees, including $0 ATM charges at over 75,000 ATMs within its network.
Robinhood Gold
Although Robinhood is renowned as a "no fee" brokerage, the company does possess a premium product known as Robinhood Gold. This platform variant costs $5 per month but could potentially be highly valuable to active investors. Gold members receive the following benefits:
- 4.65% interest on uninvested cash. Standard accounts earn 1.50% on cash.
- Immediate access to larger deposits. While standard accounts can deposit and instantly access up to $1,000, Gold accounts can deposit $50,000 instantly.
- Margin investing at 7.75% versus 11.75% through a standard account.
- Level II market data from Nasdaq.
- Access to Morningstar stock research reports.
- IRA Investing
Robinhood has now introduced IRA investing for its account holders, and it doesn't stop there. Robinhood matches 1% of every dollar on all IRA contributions. The 1% match will be accessible around the same time as the deposit, as per Robinhood, and the match doesn't contribute towards your annual contribution limits.