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Investment platforms and apps are a dime a dozen. A cursory search of any app store reveals hundreds of choices.
Robinhood is one of the most popular investing apps and you may be wondering: Is Robinhood good for investing? It’s an important question to ask because every app has its benefits and features.
We’ve got your back as you decide whether Robinhood is right for you. It’s a beginner-friendly investment app that’s popular and free to download. In this review, we’ll run through the basic information about Robinhood, including its features, how it works, and whether it’s the best platform for beginners and casual investors.
Is Robinhood worth it? Keep reading to find out.
What is Robinhood and How Does It Work?
Before we reveal if Robinhood is good for investing, let’s talk about what it is and how it works. Robinhood Markets, Inc. is a financial services company that was founded back in April of 2013 by Vladimir Tenev and Baiju Bhatt. Their goal was to create a mobile trading app that was free and easy to use. The app itself went live in early 2015.
One of the most important features of Robinhood is that it offers instant deposits and commission-free trading, something that changed the investment industry. Its mobile-first design and accessibility set off a wave of fin tech innovation that has made investing easy for investors at every level to invest without normal trading costs.
From the beginning, Robinhood users have been able to buy and sell stocks and exchange traded funds (ETFs). In 2018, the company added a few select cryptocurrencies to its list of available assets. Since that time, they have expanded the number of digital assets available. As of December 2024, 40 cryptocurrencies are available including Bitcoin, Ethereum, Litecoin, Solana, and USDC.
In addition to the free Robinhood platform, the company also offers a premium subscription service called Robinhood Gold. The price is affordable at just $5 a month or $50 for an annual subscription, although there have been some recent indications that the price may increase to $75 per year. Some of the perks of Gold membership include higher APYs on uninvested deposits and higher IRA matching than with the basic membership.
Here are some of the key features of Robinhood.
Commission-free trading
Option trading
User-friendly, intuitive interface
Trade stocks, ETFs, and cryptocurrencies
IRA with 1% matching (3% for Robinhood Gold)
APY of 4.25% on uninvested cash with Robinhood Gold
24/5 stock trading
Free stock when you refer friends to Robinhood
Instant deposits
Educational resources
Robinhood’s interface is one of the app’s best features, outside of Robinhood Gold. What Robinhood doesn’t offer are mutual funds or bonds, the lack of which can make portfolio diversification a challenge.
Keep in mind that while Robinhood is commission-free, there are some fees involved with trading. Deposits in your Robinhood spending account are insured by the financial industry regulatory authority, FDIC, up to $250,000.
Pro Tip:
Sign up with Robinhood today! You can refer friends to earn up to $1500 per year in FREE STOCK!
Is Robinhood Good for Stocks and Beginner Investors?
Is a Robinhood brokerage account a good way to invest for beginners? We believe that it is, so let’s review what we like about it.
It all starts with the user interface, which is very easy to understand and navigate. There are some investment tools that we could point to that have cluttered home pages and a huge learning curve. That’s not the case with Robinhood. Setting up an account takes just a few minutes and you can start trading immediately. In other words, there’s a very low barrier to entry.
On a related note, Robinhood provides a free education center on the app where you can find slideshows to teach you about Bitcoin or investing myths, and articles from reliable investment sites such as Barron’s and MarketWatch.
Another thing that makes a Robinhood IRA a good choice for beginners is that there are no account minimums. You don’t need a large amount to invest. Likewise, you don’t need to buy a full share of a stock or ETF to invest in a company, because Robinhood allows users to buy fractional shares, without worrying about Robinhood Financial’s fee schedule.
The process of investing is simple and intuitive. That’s useful for beginner or casual investors, but may not be ideal for advanced or high-volume investors. Here are a few potential downsides for investors who’ve been around the block.
Lack of advanced trading features: for example, there’s no day trading and no commodity trading
Limited investment options: as mentioned above, you can’t buy mutual funds or bonds on Robinhood
Limited research tools: while there are some articles and other educational materials, Robinhood isn’t the right place to conduct in-depth research on potential investments
Our takeaway is that Robinhood is a terrific app for people who are interested in self-directed trading with uninvested cash and investing and don’t need much in the way of advanced tools. It’s probably not the best choice for experienced or high-volume investors looking for an all-in-one tool that allows them to research and invest in a wide array of assets.
Pro Tip:
Sign up with Robinhood today! You can refer friends to earn up to $1500 per year in FREE STOCK!
Robinhood Plans and Performance
Robinhood has been popular from its start. Before it even launched in 2014, there were more than 314,000 people on the waitlist. As of 2022, Robinhood had 10.8 million active users.
In 2023, Robinhood generated $1.86 billion in revenue and had $89 billion in assets under management as of the second quarter. It is worth noting that the company experienced an annual net loss of $540 million that year.
Robinhood offers several plans. These include:
Robinhood’s basic service
Robinhood Gold
Robinhood Legend
We’ve already talked about the first two. Robinhood Legend is a free, desktop trading platform for advanced investors. It provides more in-depth research and analysis, advanced charting, reduced trading fees, and much more. The platform itself is free to use.
Is Robinhood Worth It for You?
Now it’s time to answer the burning question: Is Robinhood worth it for you? You may be wondering how it compares to other platforms.
Robinhood is free to use unless you subscribe to Robinhood Gold
Robinhood never charges commissions, but some other platforms do
Robinhood has a user-friendly interface, while some other investment platforms don’t make it as easy for new investors to get started. Examples include Webull, which has an interface that’s clearly designed for more sophisticated investors.
In terms of investment experience, here’s how we’d break down the suitability of Robinhood.
Long-term investors, particularly those who don’t have an employer-sponsored and matched retirement account, may prefer Robinhood because it’s easy to open an IRA and take advantage of matching.
Day traders may prefer other platforms since Robinhood’s basic program doesn’t include advanced trading tools. However, using Robinhood Legend may be an option.
New and casual investors are likely to find Robinhood’s accessibility to be a benefit and may prefer it to other platforms.
Robinhood is a good option for investors who don’t want to engage in complicated trades, including day trading. While it is possible to engage in option or future trading, Robinhood doesn’t have the best tools and research options for these complex trades.
Expert Tips for Getting Started on Robinhood
If you want to give Robinhood a try, here are some expert tips to help you make the most of the platform.
Start with a small amount and build from there. One of the best things about Robinhood is that you don’t need a lot of money to get started, so we suggest being cautious at first and giving yourself time to get used to the process before increasing the amount you invest.
Take advantage of fractional shares. Robinhood allows all users to buy fractional shares, and that means you can invest in companies you like and care about even if you don’t have enough money to buy one or more full shares.
Use Robinhood’s educational section (under “Learn” on the menu) to get familiar with investment concepts, asset classes, and specific companies to invest in. We recommend staying open to new ideas and taking the education aspect of investing seriously if you want to maximize your returns.
Diversify your portfolio to minimize your risks. A diversified portfolio should include stocks and ETFs in different industries and sectors, bonds, mutual funds, and even cryptocurrency. (Keep in mind that Robinhood doesn’t currently allow users to invest in bonds or mutual funds, so you’ll need to go elsewhere for those.)
Don’t invest more in cryptocurrency than you can afford to lose. It’s important to remember that crypto is far more volatile than other asset classes.
Create custom price alerts to be notified when one of the investments in your portfolio experiences a drop or increase in price.
If you don’t already have a retirement plan, set up an IRA on Robinhood to take advantage of 1% matching for the basic platform and 3% for Robinhood Gold.
These pro tips can help you make the most of Robinhood’s features while you learn about investing and build your portfolio.
Pro Tip:
Sign up with Robinhood today! You can refer friends to earn up to $1500 per year in FREE STOCK!
Conclusion
Robinhood changed the fin tech industry when the app launched in 2015 and it continues to be popular. Using the basic app, it’s easy to create and fund an account, initiate trades, and learn about investing. You can also get matching funds for your IRA, and Robinhood never charges commission for trades.
Our take is that Robinhood is ideal for beginning and casual investors who want a quick and intuitive way to start investing and build a portfolio. It’s not the best choice for advanced investors who are trading at high volumes or want to make more complex trades.
FAQ
Yes, we think it’s worthwhile for both beginners and casual investors. Robinhood’s intuitive interface and streamlined user experience make it easy for users to fund their accounts, buy investments, and track their portfolios.
Yes, you can make money on Robinhood in a variety of ways. You can earn returns on your investments, get matching funds for your IRA, and even earn interest on your deposits. You may also qualify for free stocks when you refer your friends.
Robinhood touts the fact that it offers commission-free trading. However, it doesn’t offer fee-free trading. Some of the fees that may be charged include regulatory fees, OCC fees, and service fees. You should always review the fees before finalizing any investment. Most of these fees are only a few cents and some are waived for purchases of fewer than 50 shares.
Yes. Robinhood deposits, including investment accounts and IRAs, are protected by SIPA up to $500,000. Robinhood spending accounts are insured by the FDIC, and Robinhood has purchased additional insurance for losses to protect users. Robinhood accounts are password-protected and two-factor authentication (fingerprint scan and codes) is enabled. The app and website are encrypted and protected, as well.
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