Robinhood Review: Commission-Free Trades and Free Stock for All

Robinhood might be the right investing app for you if you’re a self-directed investor primarily investing in stocks, options, and exchange-traded funds.

All three asset classes are available in commission-free trades with Robinhood. Robinhood also offers cryptocurrency investment options if that’s something you enjoy doing.

On the platform, you can purchase and trade cryptocurrencies and do so commission-free. In contrast, cryptocurrency exchanges levy fees for holding a currency throughout a transaction and purchasing and selling it see more detail in Robinhood review.

RobinHood: Who is it?

When Robinhood was introduced in 2013, it was the first company to offer commission-free trades. It was and still is primarily intended for seasoned investors who don’t need the breadth of tools and customer service that significant, well-known brokerage firms provide.

The platform has a web version but is primarily intended to be a mobile app. It only provides a small selection of investments, primarily in exchange-traded funds, options, and equities with US origins. The most intriguing aspect is that one of the few investment services, Robinhood, lets you trade cryptocurrency.

More than 5 million people have downloaded the Robinhood app, which has received a user rating of 4.5 out of 5 stars on Google Play and the iTunes Store.

The company that owns the investment app, Robinhood Markets, LLC, is in Palo Alto, California, and has an A+ to F Better Business Bureau rating.

Robinhood’s Operation

For most accounts, including Robinhood Gold accounts (which charge a $5 monthly fee), the minimum initial investment is $0. There is a $2,000 minimum if you are trading on margin, but you may turn it off.

Taxable brokerage accounts are available; trusts, custodial, and retirement accounts are not.

Investment choices include more than 5,000 equities, most listed on US exchanges, exchange-traded funds (ETFs), options on US-listed stocks and ETFs, Bitcoin, Dogecoin, and Ethereum, as well as American Depository Receipts (ADRs) for more than 250 globally listed firms.

Among the exclusions are the following:

• International stocks
• A few over-the-counter stocks
• Favored stock
• Following stocks
• A mutual fund
• Trading of bonds and fixed-income
• Currency exchange

Geographic accessibility: The platform may be accessible to US military members stationed abroad in all 50 states and Puerto Rico.

Account custody, transaction settlement, and clearing are all handled by Clearing by Robinhood. Robinhood did utilize third-party clearing agent services up until recently. Nevertheless, they discovered that fees could be cut much further by setting up their clearing agent.

Trading hours: Extended trading is available two hours after the market closes until 6:00 p.m., all Eastern times. Pre-market trading starts at 9:00 a.m.

Mobile App: The Robinhood app is accessible on the App Store for all iOS (11.0 and newer) devices (including Apple Watch). Also accessible through Google Play for Android 6.0 Marshmallow and newer smartphones. The app might still function using the mobile app even though it isn’t explicitly supported on tablets running iOS or Android.

Customer support is solely available via email. Direct phone support is absent.

Robinhood: Is It Safe?

Checking that a new investing platform is trustworthy and won’t steal your money is crucial.

All Robinhood accounts are protected by SIPC insurance up to $500,000 in cash and securities, including up to $250,000 in cash, as the company is a broker subject to SEC regulation. Instead of losses caused by market conditions, the coverage is intended to guard against broker failure.

For added account protection, the app also employs two-factor authentication. An additional code that will be delivered to your mobile device through text message will be required when you sign into your account.

With Robinhood, your data is secure. Your password is never kept in plain text and is always hashed using the industry-standard BCrypt hashing method. Your Social Security number and other private information are encrypted before being kept. Smartphone and web applications use the Transport Layer Security (TLS) protocol to connect securely.

FINRA oversees Robinhood as a broker. Further information about them is available on the Broker Check website. Broker Check and Robinhood.

Trade Platform for Robinhood

While having less capability than other big brokerage platforms, Robinhood does provide the majority of the tools and services a regular investor will require. Placing market, limit, stop, stop limit, and trailing stop orders is included in this.

Again, trading happens in real time and is commission-free.

Also, the app notifies users before scheduled events like earnings reports, dividends, or splits.

There are fractional shares at Robinhood.

You can also trade fractional shares on Robinhood, down to 1/1,000,000th of a share. Nonetheless, a stock must be worth at least $1 per share and have a market capitalization of more than $25 million to qualify for fractional shares. You can create a diverse portfolio using fractional shares even if you don’t have a sizable account balance, which is one of their main benefits.

Options are one of Robinhood’s areas of expertise. You can use the platform to carry out complex trading techniques, including iron condors, straddles, and strangles.

Robinhood Food. “Daily dosage of finance” is what this is. A three-minute email with new perspectives on the financial news is delivered to you.

Robinhood Gold

The premium plan option, Robinhood Gold, provides more outstanding service. For instance, MorningStar offers detailed market research reports on 1,700 stocks, and Level II Market Data offers several bids and asks for each stock, enabling you to buy or sell at the best possible price.

Moreover, Robinhood Gold offers more enormous fast deposits. Depending on your account balance, you can use $5,000 to $50,000 when depositing. Also, you’ll have access to margin investing, which will let you increase the amount of leverage in your investing.

The service is free during the first 30 days; after that, a $5 monthly fee is required. Your monthly fee includes the first $1,000 in the margin. But, you will be charged 7.25% annual interest if you use more than $1,000 in the margin (the rate is variable and can change at any time). Although Robinhood Gold offers a margin, you are not forced to use it to keep your account active.

Robinhood Cash Management

You can receive interest on at least a portion of your investment through Robinhood Cash Management. The account comes with a personalized debit card provided by Sutton Bank and pays an annual percentage yield (APY) of 4.15% (APY is variable and subject to change at any time). With the ATM card, you’ll have access to over 75,000 fee-free ATMs nationwide. You can also use Apple Pay, Google Pay, or Samsung Pay with this account.

The availability of Robinhood Cash Management may be limited across investors and will require permission.

The FDIC covers Robinhood Cash Management accounts up to $250,000 per depositor. There are no transfer fees, account minimums, or foreign transaction costs.

After enrolling in a cash sweep, those not members of Robinhood Gold can continue to earn up to 1.5% interest on their uninvested brokerage funds.

Crypto Robinhood

If any aspect distinguishes Robinhood from its rivals, it is this. Cryptocurrencies are available for purchase and sale around-the-clock, every day of the week, and fully commission-free.

Purchasing and selling Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and Dogecoin through a cryptocurrency exchange will be unnecessary because these digital currencies are already available.

Be warned that cryptocurrencies carry a higher level of risk than traditional asset classes because SIPC or FDIC does not protect them.

Costs & Prices for Robinhood

As stated throughout this study, no costs are associated with trading stocks, options, ETFs, or cryptocurrencies on Robinhood. Also, there aren’t any expenses that occasionally apply to standard brokerage accounts, such as monthly service fees or other costs.

But how can Robinhood generate revenue if there are no fees? Most of the company’s income comes from monthly fees collected through the Robinhood Gold program and from interest fees on margin accounts with more than $1,000 in the margin.

Robinhood has a significant advantage over many free services because you won’t be exposed to advertising for partner companies. It is a typical free service provider revenue-generating method, and Robinhood does not use it.

Promotions Right Now: Get Free Stock

With Robinhood’s affiliate and refer-a-friend programs, you can get free shares.

With Your Free Account, Get Free Stocks

Both you and the friend who you recommend can receive a free stock. Your and your friend’s accounts will be credited with the free stock after the friend’s application is approved.

• A surprise stock is added to your account when you sign up, so there is a 100% possibility that you will receive one for free.
• Money not required: To receive your free stock, you don’t need any money in your account. You receive a free stock with a value between $5 and $200 when you sign up for Robinhood.
• Up to $200 is possible: In the businesses AAPL, AMZN, BRK.B, CVX, DE, DIS, F, GOOGL, HON, JNJ, JPM, KO, LLY, MCD, MSFT, NVDA, PG, TSLA, WMT, XOM, you can earn up to $200 in stock.

You can receive free shares worth up to $1500 annually through numerous recommendations.

Opening a Robinhood Account: Steps

You need to fulfill the following prerequisites to open an account with Robinhood:

1. Be at least 18 years old.
2. A taxpayer identification number is unacceptable; you must have a legitimate Social Security number.
3. Own a legitimate US residential address in one of the 50 US states or Puerto Rico; however, there may be some exceptions for US military service members stationed abroad.
4. Possess a valid US visa, be an American citizen, or be a permanent resident.

Four screens of information must be filled out to create an account. The first requests your name, email address, password development, and other essential information.

Robinhood software

Your phone number and complete address must then be entered. Additionally, you must state whether Robinhood, a stock exchange member firm or FINRA employs you or a member of your immediate family. You must also state whether you or a member of your immediate family is a director, 10% shareholder, senior officer, or employee of another publicly traded company.

You must confirm your identity and specify your account’s funding method on the following screens. The process of opening an account is simple.

Benefits and Disadvantages of Robinhood

Pros:

• Stocks, options, and ETFs have no commission fees.
• One of the few brokerage platforms that allow trading in cryptocurrency is Robinhood.
• There is no prerequisite for a minimal down payment.
• Pre-market and after-hours trading is available on the platform.
• You can create a diversified portfolio using fractional shares, even with a bit of account balance.
• In addition to other investment activities, Robinhood is launching its Cash Management program, allowing clients to earn high interest on a fixed-income account.

Cons:

• Since most large brokerage firms no longer charge charges on stocks, options, and ETFs, the commission-free feature of the Robinhood service is less appealing than it once was.
• Robinhood only offers a few products, including bonds and mutual funds.
• There is no IRA option offered.
• Very little customer assistance is provided (email only, during regular business hours).

Is Robinhood a Good Place to Invest?

There are two different sorts of investors whom Robinhood suits exceptionally well. The first category comprises sophisticated investors who only want commission-free trading on stocks, options, and ETFs.

The second group consists of people who want to invest in cryptocurrencies. Now, only Robinhood among investment brokerage companies offers cryptocurrency. Also, you can buy and sell them commission-free in addition to the fact that they offer them. If not, you must trade them on specific cryptocurrency exchanges that impose fees on both trading and custody.

Robinhood is worth another look if you’re seeking commission-free transactions, free stock, and the option to purchase fractional shares (without commissions).