For years there was a race against all discount brokers and investment banks to the bottom in terms of charging their clients commissions on trades. It used to be that a single stock trades cost at least $9.99 per trade! Slowly, institutions kept lowering their trade commission to attract more business. Then, Robinhood came along and did the unthinkable, offering an in-app trading platform that charged zero trade commissions!
In short, Robinhood is a pioneer of commission-free trades and has nearly forced every other investment bank to follow in their footsteps of zero trade commissions, else the competition would lose a lot of business to the new modern investment app.
What is Robinhood? What makes them different from any other investment account today? And are they worth using to invest in the stock market?
In this detailed Robinhood review, we’ll answer these questions and more to help you get a firsthand insight of the real value Robinhood has to offer.
Overview of The Robinhood Investing App
Robinhood is a modern investment app that lets consumers invest in the stock market and other related investments for zero commissions. Furthermore, Robinhood allows investors to purchase fractional shares rather than requiring whole share amounts to be purchased. This allows anyone to trade with as little as $1 in any company they want, regardless of the share price.
They provide an elementary brokerage account that simplifies the investing process and analysis of individual investments. They offer both free accounts and premium accounts (called Gold memberships) that provide additional investment research tools if needed, as well as access to purchase options contracts, trade on margin, and even invest in cryptocurrency.
Fees & Minimum Balances
While some brokers have followed in the footsteps of Robinhood offering zero-commission trades, many will have hidden fees elsewhere or back-end fees on the sale of your investments.
When it comes to trading options contracts or trading with a margin account, there are low options contract fees and low-interest rates on margin accounts with a $5 monthly fee to use a margin account.
Robinhood has no required minimum balance to open an account and no dollar amount requirements on how much you can trade into each stock. This means you can purchase $1 worth of Amazon (which costs thousands of dollars for a whole share).
Available Account Types
Robinhood offers multiple types of accounts on their investing platform, including:
- Individual brokerage accounts
- Margin accounts
- Cash management accounts
The individual brokerage account is the most basic account, allowing investors the ability to invest in stocks, funds, crypto, and options trading. The margin accounts enable investors to upgrade their individual accounts to trade on margin. The cash management account is your most basic account that comes with a debit card and pays a variable interest rate.
With any Robinhood account, you can invest in the following types of securities:
- Exchange-Traded Funds (ETFs)
- Options contracts
You can trade almost any publicly listed company, nearly any ETF available, and the most established and popular cryptocurrencies.
The cryptocurrencies available on Robinhood as of this writing are:
- Bitcoin (BTC)
- Ethereum (ETH)
- Bitcoin Cash (BCH)
- Litecoin (LTC)
- Dogecoin (DOGE)
- Ethereum Classic (ETC)
- Bitcoin SV (BSV)
Robinhood may add more cryptocurrency options as the company grows. Furthermore, they have another ten cryptocurrencies available to add to your watchlist. Should they add more cryptocurrency to trade with, it only seems logical that one of the coins on the watchlist options may be the next addition to the platform.
Want to start investing? Check out our article 10 Legits Ways to Get Free Stocks. See the table below for more free stock offers.
|Robinhood||Commission-free trades of stocks, ETFs, and options||Get a free stock when you sign up||Robinhood review|
|M1 Finance||Free automated investing||Get a $20 bonus when you create an account||M1 Finance review|
|Webull||Commission-free trades of stocks, ETFs, and options||Get a free stock when you deposit $100||Webull review|
|Stash||Buy fractional shares, earn stock instead of cashback with the Stash credit card||Get a $5 bonus when you invest at least $5||Stash review|
|Acorns||Invest your spare change||Get $5 when you create an account||Acorns review|
|Nvstr||Social aspect allows you to benefit from collaborative wisdom||Get up to $1,000 in cash to invest when you sign up||Nvstr review|
Why Invest with Robinhood?
What makes Robinhood different from any other investing app available? Why not use a traditional discount broker that’s been around for years, such as Fidelity or TD Ameritrade? Some of the popular features offered on Robinhood attract people due to the ease of use, the zero-cost approach, and the availability of the most popular investment options in one place.
Commission Free Trades
As previously mentioned, Robinhood is considered a “pioneer” of the commission-free trade. Once they launched, all other brokers had no option but to follow in their footsteps. Naturally, this is the main attraction for new investors looking to save money on building a successful stock portfolio.
Zero commissions to buy new stocks, and zero commissions to sell your current positions.
Invest in Cryptocurrency
Sure, some brokerages have followed the zero-commission trading trend, but very few investment brokerages allow you to invest in both stocks and cryptocurrency in the same portfolio.
If you think investing in the stock market sounds complicated, investing in options is even worse. However, Robinhood has made it very simple for anyone to invest in options contracts while also showing individuals how options work, your potential loss, and potential gain.
You could even say that Robinhood’s options trading feature is a great place to start for new options investors because it’s quite visual and informative while remaining very simple and easy to use.