Robinhood Review

Robinhood is great for people who want to start trading stocks, exchange-traded funds (ETFs), and cryptocurrencies all in one place. It’s known for its simple and easy platform, which is especially good for new investors. It has a mobile app that’s easy to use and doesn’t charge any fees. Many people consider it one of the best online brokers. The owners first made software for hedge funds and then joined together to make a company that lets everyone invest. In this review, we’ll look at the facts to help you decide if Robinhood is right for you.

🏢 Headquarters	United States
📅 Year founded	2013
🗺️ Regulation	SEC, FINRA
💻 Trading platform:	Web platform and In-house application
💰 Account currency:	USD
📊 Accounts:	Robinhood Instant, Robinhood Gold, Robinhood Cash
💵 Withdrawal:	$0
🚀 Minimum deposit:	$0 (Standard accounts), $2,000 for Robinhood Gold account
⚖️ Leverage:	It depends on the type of asset
☪️ Islamic account (swap free)	No
🎮 Demo Account	No
💱 Spread:	No
🔧 Instruments:	Stocks, gold, options, money management, and cryptocurrency
📋 Orders execution:	Market execution
☎ Customer Support	24/7
📚 Education	Yes

What is Robinhood?

Robinhood Markets, Inc. is a zero-commission broker based in Menlo Park, California, that offers financial services. It has a mobile app that lets people buy and sell stocks, exchange-traded funds, and cryptocurrencies without paying commissions. The company is regulated by FINRA, the U.S. Securities and Exchange Commission, and is a member of the Securities Investor Protection Corporation.

Robinhood makes money in three main ways: from interest on customers’ cash, by selling order information to high-frequency traders, and through margin lending.

As of December 2023, Robinhood had 23.4 million accounts with funds and 10.9 million people who used the app every month. In April 2022, Robinhood introduced a cryptocurrency wallet to over 2 million users.

Pros and Cons

Pros	Cons
You can trade stocks without paying any fees.	Robinhood doesn’t offer trading in Forex.
Trade from your phone or tablet easily.	There are no options for earning passive income.
Signing up is quick and easy.	There are no options for earning passive income.
	Robinhood only serves clients in the US.
	They don’t offer online support.

Investment Options

Robinhood lets users trade stocks, ETFs, options, and cryptocurrencies. There are over 5,000 stocks and ETFs, and seven types of cryptocurrencies available on the platform. You can buy IPO shares and fractional shares on Robinhood. Before a stock becomes available to everyone, Robinhood allows you to ask investment banks to buy shares at the IPO price. 

With fractional shares, you can invest in expensive stocks without buying a whole share. Robinhood also offers IRAs, which are good for saving for retirement with tax benefits. One unique feature of Robinhood’s Retirement IRA is a 1% match on eligible contributions.

While Robinhood doesn’t offer bond or mutual fund investing, many of the ETFs it offers have similar features. If you want to invest in bonds or mutual funds, you can open a separate brokerage account with companies like Fidelity, Charles Schwab, or robo-advisor Betterment to diversify your portfolio.

Features

Robinhood is known for letting investors choose their own investments without charging fees. This makes it a good choice for people who like to actively trade stocks and understand how the market works. If you’re new to trading, you can join in, but make sure you’re comfortable with the risks of investing in individual stocks.

When you open a brokerage account with Robinhood, you also get access to their Cash Management account. It’s not a bank account, but it works like one, letting you earn interest on your cash and keeping your funds safe with FDIC insurance.

When you link your bank account to Robinhood and meet certain conditions, they’ll give you a free share of stock. You can keep it or sell it after two trading days.

Robinhood Fees and Costs

Robinhood doesn’t charge you fees for trading or to open or keep your account. When you transfer money into your account, there are no fees for that either.

Most funds have fees you pay to the company that manages them. These fees apply wherever you invest your money.

If you want to transfer all or part of your account to another brokerage firm, there’s a $100 fee. Other fees include charges for overnight mailing and some other services.

Robinhood Gold is a subscription that gives you extra services and products. These include access to margin trading. For a fee, which starts at $5 per month, you get:

• Access to research reports.
• An 8% annual interest rate on borrowed money.

Deposit and Withdrawal

Deposit

When you deposit or withdraw money with Robinhood, it’s free and simple. Robinhood offers a cash management service, which is very convenient. You can only use bank transfer to deposit money, and deposits that exceed your ‘instant’ limit may take several business days to process. If you have a personal bank account in a currency other than USD, you’ll be charged a conversion fee.

To avoid paying high conversion fees, you can open a multi-currency bank account with a digital bank. These banks offer accounts in different currencies with good exchange rates, as well as cheap or free international transfers. Opening an account is quick and easy; it only takes a few minutes on your phone.

Bank transfers can take several business days, and you can only deposit money from accounts that are in your name.

If you choose the instant deposit option, your money arrives immediately; otherwise, it may take 4 to 5 business days. However, there are limits to instant deposits: with a Robinhood Instant account, you can deposit up to $1,000 instantly, while with a Robinhood Gold account, the limit is $50,000. Any transfers exceeding this limit will be credited after 4 to 5 business days. For example, if you transfer $1,500 to your Instant account, $1,000 will be credited immediately, and the remaining $500 will be credited after 4 to 5 business days.

Withdrawal

Robinhood doesn’t charge a fee for ACH withdrawals, but wire transfers are costly: domestic wire transfers cost $25, and international wire withdrawals cost $50.

Withdrawals usually take 3 business days. There’s a withdrawal limit of $50,000 per day, and if you deposit money but don’t use it for trading, you can only withdraw it after 5 business days.

Account Types

Robinhood offers one type of account, which is an individual brokerage account. Robinhood doesn’t have joint, custodial, or trust accounts. This might be a problem for couples or parents who want a custodial account. The company says it will offer more account types later. In the individual brokerage account category, there are two options:

Basic Account: This account includes margin, instant deposits up to $1,000, and extended-hours trading. You can make electronic deposits.

Robinhood Gold: This costs $5 per month and gives you 5% interest on cash. It offers Morningstar research reports, larger instant deposits, Level II market data, and a discount on margin.

Research and Education

Robinhood aims to make investing accessible to everyone, but it doesn’t provide much educational support for new investors. They don’t offer tools to help users research stocks, except for Morningstar research, which is available only to Robinhood Gold members. These members pay $6.99 per month or $75 a year, though the first 30 days are free.

The Morningstar reports cover about 1,700 stocks and are regularly updated, especially when companies release earnings reports or experience significant events. 

However, Robinhood does have basic articles in its Learn section on its website. Also, they offer the Robinhood Snacks newsletter and podcast, which provide easy-to-understand investment news for beginners.

Customer Support

Robinhood has improved its customer service reputation. Before, it was hard to talk to someone about your account. Now, they have a 24/7 system that calls you back with a human response. This might be more efficient in the end, even if it takes longer to get your answer. They’ve also opened a 24/7 chat to help you get answers.

You still have the options that were there before, like the broker’s help page, for many easily answered questions. But if your question goes beyond the FAQ’s scope, you might struggle to find a solution without contacting customer service.

In a time when Fidelity or Schwab can quickly answer your questions over the phone or chat with a helpful and friendly response, Robinhood is still behind but improving.

Conclusion

In conclusion, if you want inexpensive and straightforward trading of US stocks and ETFs while you’re on the move, Robinhood is a great choice. You don’t even need a laptop; Robinhood’s mobile app offers one of the best user experiences we’ve come across. It has low fees across the board: withdrawals and stock trading are free, and so is options trading, which gives it an advantage over most US brokers. Just pay attention to the details: the prices at which trades are executed aren’t the best in the market, which means there’s a hidden cost for you when you trade.

FAQs

Is Robinhood still safe?

Yes, Robinhood is safe. It’s a member of the Securities Investor Protection Corp. (SIPC), regulated by the SEC, and provides extra financial protection for customers up to certain amounts for cash and securities.

What are the downsides of Robinhood?

Robinhood only offers stocks, ETFs, options, and cryptocurrency trading. It doesn’t support mutual funds or fixed-income products, and you can’t trade commodities, forex, or futures.

Why can’t I withdraw my money from Robinhood?

If you sell your free stock before 30 days, you can’t access those funds. After 30 days, there are no restrictions. Check your history for the stock’s value.

Can you make money with Robinhood?

Yes, you can make money in two ways: buy and sell stocks or other assets at a higher price than you bought them for (capital gains), or earn dividends on stocks you own.

Robinhood Licenses

 

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