Robinhood Review 2024 (2024)

• Who Should Choose Robinhood?
• How Does Robinhood Work?
• How To Use Robinhood
• How To Trade Options on Robinhood
• How To Withdraw Money From Robinhood
• Robinhood Fees
• Robinhood Platform and Technology
• Robinhood Range of Offerings
• Robinhood Research and Education
• Robinhood Customer Service and Security
• How Robinhood Stacks Up
• About Robinhood
• Is Robinhood Safe?
• Frequently Asked Questions (FAQs)

Robinhood offers new investors a platform designed to lower market barriers, courtesy of its barebones interface and low fees.

But here’s the problem with Robinhood. It makes trading so easy that it practically turns it into a game. This tends to drive active trading, or buying and selling stocks rapidly to turn a quick profit.

Due to the amount of risk and the vast potential of loss involved with active trading, most experts recommend that almost all investors opt for passive investing or buying and holding low-cost index funds to grow wealth.

Robinhood also lacks many of the educational resources offered by the best online brokers for beginners.

Robinhood is an online broker that, since its early days, has focused on making it easy for investors with little or no experience to start investing, and to do so with very little money.

• What is its mission? Like Sherwood Forest’s legendary champion of sharing wealth, this brokerage aims to “provide everyone with access to the financial markets, not just the wealthy.”
• How does Robinhood pursue its mission? By offering an inexpensive, easy-to-use platform, Robinhood makes securities trading often seem like a game.
• What is Robinhood’s appeal? Robinhood offers investors what many have described as a game-like interface that can make trading fun and easy. The crux of Robinhood’s appeal is its easy-to-navigate trading app. Desktop access is also simple.
• When did Robinhood introduce its zero commission trades? In 2013, Robinhood shook up the brokerage industry by offering a zero commission trading app.
• How fast has Robinhood grown? Within a year of coming online in 2013, Robinhood had about half a million users—measured by funded accounts, and the company had roughly one million in 2016. User ranks jumped to six million by 2018, then doubled to 12.5 million by 2020. In 2023, user ranks hit 23 million.

You can trade a variety of assets, including stocks, exchange-traded funds, options, cryptocurrency and American Depository Receipts, on Robinhood. ADRs are bank-issued certificates representing shares in a foreign company. They trade on U.S. stock exchanges even if the foreign stock itself does not. With Robinhood, you can even trade fractional shares of stocks and ETFs.

However, you cannot trade stocks listed on foreign exchanges, preferred stocks, over the counter stocks, mutual funds, closed end funds, foreign currencies or bonds on Robinhood. Nor can you short stocks.

To use Robinhood, you must have a valid social security number, a legal U.S. residential address and be a citizen or permanent resident of the U.S. or hold a U.S. visa. You must also meet the minimum age requirement.

Basic services are commission free. Some additional services are available by paying for a premium subscription called Robinhood Gold.

Options used to be an exotic type of security that only seasoned professionals traded or knew how to trade. Technology has made it easier, and Robinhood is among the platforms that offer access.

Like other platforms, Robinhood restricts options trading access to knowledgeable investors who meet certain standards, which indicate they understand the risks they are undertaking and can afford to play in this potentially costly arena.

Once you’ve got an options account set up and funded, it only takes four steps to make a trade:

1. Search for the security—stock or ETF—that you want to trade.
2. Select the security.
3. Choose “Trade” on the detail page for the security.
4. Tap the “‘Trade Options” button.

If you have more than one type of account with Robinhood—such as a taxable brokerage account and an IRA, as well as an options trading account—you’ll want to choose your options account before placing the trade.

Robinhood users can also swipe on existing or pending orders to buy, open, sell or close the order. Swiping right will buy or open the order. Swiping left will sell or close the order.

After selling stock or options in your Robinhood brokerage or retirement account, the transaction usually needs to settle before you can withdraw the proceeds and move them to your bank account.

The settlement period for equities is the trade date plus two trading days. That’s sometimes called a regular-way settlement. On the third day, you’ll be allowed to withdraw those proceeds.

For options trades, the settlement period is the trade date plus one trading day.

Robinhood was the first major brokerage platform to eliminate commissions on stock and options trading, helping to revolutionize the industry. Today, commission-free trading of stocks and ETFs has become the standard industrywide.

To access a lower interest margin account, customers must pay at least $6.99 monthly—or $75 annually—for Robinhood Gold. Without Robinhood Gold, users with a Robinhood margin account will pay 12.00% interest. With Robinhood Gold, that rate can be reduced to 8.00%.

Gold subscribers get a 3% match on eligible contributions to a Robinhood IRA account. Eligibility requirements include keeping eligible contributions in the IRA for at least five years and remaining a Gold member for at least one year after receiving the first 3% match.

Robinhood Gold also includes $1,000 in margin credit and research materials. In addition, Robinhood Gold provides customers with the ability to make larger deposits.

For any margin above $1,000, there is an 8.00% annual interest rate with Robinhood Gold, calculated daily and charged to the customer’s account at the end of each monthly billing cycle.

Fees apply to some other Robinhood services as well. Their costs are the same with or without a Gold subscription.

More Robinhood Fees

For a Robinhood debit card, there is no fee for opening or maintaining an account, or for inactivity or replacing a card. However, out-of-network ATM providers may charge use fees.

The Robinhood trading platform is minimalistic and intuitively designed, making it very easy to buy and sell stocks, ETFs and cryptocurrencies. The platform does suffer from limited order types and relatively few other bells and whistles.

Robinhood is not a comprehensive brokerage, which means its range of offerings is somewhat limited.

Users can automatically reinvest their dividends with Robinhood by toggling on the feature on investments that offer it.

Despite the limited range of tradable assets, Robinhood does stand out for its cryptocurrency offerings, although its range of available coins is more limited than the best crypto exchanges.

Robinhood’s commitment to the democratization of investing does not seem to extend to the educational component of building new investors.

The brokerage offers no stock screeners or research tools, and it only provides Morningstar research to Robinhood Gold members, who must pay $6.99 per month—or $75 a year—for their subscription. The subscription fee is waived for the first 30 days.

These Morningstar reports cover about 1,700 stocks and are updated regularly, like when a company issues an earnings report or experiences a major event.

Robinhood does cover most of the basics in articles in its website’s Learn section. In addition, its Robinhood Snacks newsletter and podcast are easy entries for investment news that won’t overwhelm newbies.

Robinhood’s customer support features text chat and phone support, although the latter is hard to reach.

There is no displayed customer service phone number. Customers must be signed into their account to request a callback from Robinhood. While there’s a fairly robust FAQ support page that may be able to help answer your questions, the lack of easy direct customer support could cause heartburn for worried investors.

That said, Robinhood does offer reasons for confidence in its security. Your account password is hashed using the industry-standard BCrypt hashing algorithm, and it’s never stored in plaintext. Additionally, the mobile app offers secure access using Touch ID, Face ID or a PIN code, and two-factor authentication.

As for your invested funds, Robinhood is a member of the Securities Investor Protection Corp, or SIPC, which protects up to $500,000—including $250,000 of cash—of securities of its members’ clients. If you’re dipping your toe into crypto investing, remember that SIPC does not protect cryptocurrency investments through Robinhood Crypto.

Robinhood was founded by Vladimir Tenev and Baiju Bhatt in 2013 and is currently headquartered in Menlo Park, Calif. The company went public in late July 2021, with share prices set at $38 for the initial public offering. Robinhood made its name on $0 trading fees, and its example helped spur a number of other large brokers, such as E*TRADE and Charles Schwab, to eliminate their own trading fees.

Though the startup has been quite popular and successful, it has also faced a number of controversies that have somewhat tarnished its reputation.

Robinhood’s Growing Pains

Robinhood has been fined more than $130 million by the SEC and FINRA for misleading and harmful customer practices.

In November 2021, the company disclosed that hackers had accessed the names and email addresses of millions of Robinhood customers, calling into question the company’s security procedures.

In 2021, Robinhood was a central player in the Gamestop saga, and CEO Vladimir Tenev was called to testify before Congress about how Robinhood may have exacerbated the situation.

In June 2020, a 20-year-old college student named Alexander E. Kearns took his own life after seeing an unexpected negative balance of more than $730,000 on his Robinhood app. It is thought that the negative balance was associated with a complicated options trading strategy deployed by Kearns.

Customer assets at Robinhood are protected three ways. First, by insurance from SIPC. Second, through an added layer of private insurance to make up for shortfalls in SIPC coverage. Both of these options, however, only cover the failure of Robinhood itself. They do not protect investors from market losses.

Your third form of protection stems from the SEC. The SEC regulates Robinhood and other broker-dealers. This layer of protection is in the form of rules and regulations that bar Robinhood from doing things that could put your assets in peril. But, again, there is little that the SEC can do to safeguard investors from market declines.

Some critics do say that Robinhood makes investing too easy. This might encourage investors to spend money without doing sufficient research, which in itself can be risky.

Further, Robinhood does not offer many popular securities, including mutual funds, bonds, stocks that trade on foreign exchanges and preferred stocks, which makes it hard to diversify your portfolio.