Overall Ranking: 3.5 stars out of 5
Ease Of Use: 4.9 stars out of 5
Costs: 5.0 stars out of 5
Educational Resources & Customer Support: 3.0 stars out of 5
Research & Analysis Tools 2.2 stars out of 5
Range Of Product Offerings: 2.4 stars out of 5
Summary: Robinhood started off as a ground-breaking free stock trading app. It has since morphed into a slightly better free stock trading app and website.
Recommended For: Although this is a very good teaching tool, we can’t recommend it, even for a novice investor as an actual trading platform. If you start here, you’ll outgrow it very quickly and have to transfer your account to a more robust platform.
Even if you’re not an investor yet, you’ve probably at least heard of Robinhood. The app-based trading platform made a huge splash when it was first introduced in 2014. At the time, it was a revolutionary app that took a revolutionary approach to trading, offering absolutely free trades on a wide range of investment products.
In the years since the app was introduced, the bloom has come at least part of the way off of the rose, as many of the more established brokers began following suit and also offering free trades. This has left Robinhood in a somewhat tenuous position. It’s still a great app for investors and it’s one of the simplest ways to get started with investing, but as you’ll see in the review that follows, that comes with a steep price.
Free is a good thing. There’s no doubt about that, but free trades, pared with the extreme simplicity Robinhood offers comes at the cost of having almost nothing in the way of help, support or analytics.
That’s actually fine for most novice investors who don’t yet have a robust trading strategy developed, but as you gain more experience, you’re almost certain to become increasingly frustrated by the limitations of the system.
Is it a good fit for you? In the sections that follow, we’ll take a closer look at what Robinhood has to offer and where it falls short. That way, you’ll have all the information 5you need to make an informed decision.
Ease Of Use (4.9 stars out of 5)
Although Robinhood began life as an app-based platform (on both Android and iOS), the company did eventually establish a website too. Like the app, it’s extremely simple and easy to use.
Account setup is dead simple and you’ll have the basics of the app (or the web-based variant) in a matter of minutes.
Part of the simplicity stems from the fact that there’s not a lot you can do on the platform. You can buy and sell, but forget about placing advanced or conditional orders. They simply don’t exist.
Given that the platform was designed specifically with novice investors in mind, that’s not the end of the world, but again, as you gain more investing experience, you’re going to start getting frustrated that there aren’t more options available.
The other thing worth mentioning is that as easy as the app is to use, it’s harder than it should be to actually place a buy order (this is the reason that we Robinhood didn’t earn a perfect five-star rating in this section).
The relative difficulty with placing an order comes down to a cumbersome navigation setup where orders are concerned. It’s not horrible, but it is mildly frustrating, given how simple the rest of the app is. In any case, once you successfully place your first order, you’ll have it pretty well mastered.
Costs (5.0 stars out of 5)
It’s hard to beat free, and that’s what Robinhood offers. Free trades, and the ability to buy and sell in small lots, including buying cryptocurrency in fractional amounts. There are a few miscellaneous fees but these are all clearly spelled out. For instance:
- You’ll pay $5 a month if you want to upgrade to the Robinhood Gold account type, which offers a $1000 margin. Interest on the margin is 5% which is quite low compared to Robinhood’s peers.
- There’s an account transfer fee of $75, which is on the high side of average, but not awful.
- Wires are $25 (domestic) or $50 for international. Note that this is both to send and receive, which is unusual. Normally, there is no fee for receipt of a wire.
- There’s a $35 fee for sending a domestic check overnight
- And you’ll pay $10 to place an order with a broker, but like making a buy order, contacting a broker is actually harder than it should be because the app/website doesn’t make it readily apparent how you’d go about doing that.
Educational Resources & Customer Support (3.0 stars out of 5)
Whether you’re using the app or the website, you’ll find a button labelled “Learn.” The educational resources the company has available are at the other end of that link. Sadly, there aren’t many and most of them are concerned with the app itself. There’s very little in the way of educational resources aimed at making you a better investor.
Customer service is strictly middle of the road. It can be somewhat difficult to get an actual person on the phone, but once you do, they’re generally helpful. The FAQ is fairly robust though, and should answer the most common questions you may have, at least.
Research & Analysis Tools (2.2 stars out of 5)
This is another limitation of the platform. Although there are some research tools available, they’re not very numerous yet, although that is slowly changing. At present, you can get a one-day snapshot of your portfolio and see your portfolio’s total value and unrealized gains or losses, but that’s about it.
There are no screeners or calculators on offer, and although charting is now present, compared to just about every other broker in the business, the charting function is rudimentary. It’s good enough for novice investors but it’s something else you’re likely to outgrow in short order.
If there’s a silver lining to be found, it lies in the fact that you can, at least, export your account data to some third-party app and perform whatever sort of analysis you want. The trouble is, you’ll have to.
Final note: There is a live news feed, and you can get news from the Wall Street Journal, Reuters, Barron’s, and a few video feed sites, including CNN Business.
Range Of Product Offerings (2.4 stars out of 5)
Robinhood keeps things pretty simple. At present, you have access to:
- Stocks (long only)
- Cryptocurrencies (about a dozen, all told)
- Fractional share trading in ~7000 stocks and ETFs
- Options (recently added)
It’s a short list, but again, it’s important to remember that this platform was designed for absolute beginning investors. With that in mind, the range of products on offer is fine, but all too easy to grow out of (like the platform as a whole).
Pros And Cons
As a learning tool, Robinhood is awesome. If you know nothing about investing and you don’t have a lot of time to learn, this is a pretty good way to get your feet wet and learn the basics.
Unfortunately, the company’s relentless pursuit of simplicity is both its greatest strength and its greatest weakness.
You’ll love that it’s free. And you’ll love that it’s delightfully easy to use.
In the same breath, the moment you get a little bit of experience under your belt, you’ll start running into its limitations and they will become increasingly frustrating.
We actually like the Robinhood app and wish we could give it a recommendation but in all honesty, we can’t. It’s a good teaching tool for a novice investor but it’s not really a very good platform to invest on.
There’s just not enough meat on the bones of the app to make it a good option. It’s one selling point is that it offers free trading but these days, so do a lot of other brokers, and they offer a lot more in the way of educational and analytic resources.
It’s not bad, and it definitely has its uses, it’s simply that it no longer has a monopoly on free trades, and that’s really its only selling point.