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Robinhood is a popular choice for beginner investors due to its ease of use and lack of fees. In order to start investing with Robinhood, you must first create an account and log in.

Our Take

Robinhood started out as an innovative disruptor in the brokerage industry and its brand has since grown to be very popular with tech-savvy investors and new traders, thanks to a no-fee model and sleek, easy-to-use trading experience.

Originally, the company’s biggest differentiator was fee-free trading; however, many competitors have since lowered their fees in response. Users can easily trade stocks, ETFs, and cryptocurrencies on the platform, but it lacks more sophisticated financial tools, asset categories, and research capabilities that advanced traders look for in a broker. Though there has been a clear focus on improving access to a growing library of educational content and enhancing basic charting capabilities, there is still much work to do before the platform reaches the standards now set across an increasingly competitive landscape. We’ll explore Robinhood in more detail so you can determine if the platform makes sense for you.

New and Notable

On January 12, 2023, Robinhood announced that Robinhood Retirement, which launched via waitlist in December, is now available to all eligible customers.1

Introduction

Robinhood was founded in 2014 by two former Stanford roommates, Vlad Tenev and Baiju Bhatt.2 Launched with a desire to expand access to the market by reducing barriers to entry, the platform quickly found a home with young, tech-friendly traders thanks to a simple design and intuitive trading experience. It’s clear that Robinhood’s brand has struck a chord, with more than 14 million active users and $64 billion in assets managed as of June 30, 2022.3

No-fee and no-minimum trading makes it easy for beginners to get started with investing, and the ability to trade fractional shares gives users access to a greater range of assets than they might otherwise be able to afford. The platform provides a simple menu of assets such as stocks, ETFs, and direct cryptocurrency trading, further streamlining the app and trading experience. Options trading is offered as well, although some limitations in order types and concerns about the quality of trade executions may deter more serious investors. Previously, Robinhood only offered individual accounts, but on January 12, 2023, the company announced that Robinhood Retirement, which launched via waitlist in December, had become available to all eligible customers.1

Robinhood’s limitations are a recurring challenge for advanced traders and are significant enough to drive sophisticated investors to seek alternative broker options that better align with their trading approach. For example, Robinhood offers no fixed income, mutual fund, foreign exchange, or futures trading, thereby making a multi-asset trading position more difficult to set up. This lack of assets combined with an overall lack of tools, calculators, and advanced charting features makes it very difficult to execute more complex trading strategies.

Educational content, while improving, still isn’t up to par with many of Robinhood’s competitors’ offerings. An intentional focus on enhancing this area is apparent, though. Robinhood continues to expand its Learn section with more material and has enhanced the onboarding questionnaire to help users understand investing basics while setting risk parameters that match their tolerance.

Robinhood’s platform is receiving focus in other areas as well. Cash management enhancements such as providing a higher interest rate on uninvested cash as well as a cash card product aim to round out the platform and draw in more clients. Still, questions linger about Robinhood’s reliability and motivations due to significant platform outages, fallout from restrictions placed on certain meme stocks like GameStop in January 2021, and misleading customers about sources of revenue related to order routing.

Pros & Cons

Pros

• Very simple, intuitive trading experience

• No trading fees or commissions

• Fractional share trading and direct cryptocurrency access

• Solid cash management features and recurring investment functionality