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Robinhood Review 2022: No Fee Investing in Stonks and Crypto

*This post may contain affiliate links, please see my disclosure

Robinhood’s name has been splashed all over the internet and various news outlets. While there’s no denying the colorful history of the brokerage, Robinhood remains the investing platform of choice for millions and millions of users. Investors use Robinhood to open taxable accounts for commission-free investing in stocks, stock options, ETFs, and even cryptocurrency.

Robinhood Review Summary

  • Robinhood is an investing brokerage that prioritizes the mobile experience
  • Robinhood allows investing in stocks, stock options, ETFs, and cryptocurrency
  • Robinhood Gold, an upgraded paid version of the platform, also allows for margin investing
  • Robinhood has no minimum account balances and promises $0 fees
  • Criticism of Robinhood surrounds the lack of transparency with trading statistics and limited customer service support

Robinhood Pros & Cons

Robinhood is probably the most well known (some might say infamous!) trading platform. While it certainly has a colorful history including some controversy, each year more and more investors sign up with Robinhood. Investors open taxable brokerage accounts with Robinhood in order to trade stocks, ETFs, stock options, and cryptocurrency. Margin investing is also available to select members through Robinhood Gold.

These are the pros & cons of the first commission-free trading platform:

Pros

  • Trade stocks and stock options
  • Can also trade ETFs and cryptocurrency
  • $0 fees per trade and $0 account minimum
  • Frequent promotions, such as one free trade
  • Fee-free crypto purchases
  • Fractional shares
  • Clean user interface

Cons

  • Robinhood fees are not transparent
  • Controversial history, including outages and fines
  • No mutual funds or bonds
  • Only offers taxable brokerages; no retirement accounts
  • Users report customer service is lacking

How Does Robinhood Work?

Robinhood works similarly to many other investing platforms. Investors–that’s you!–connect a bank account and then transfer money to their Robinhood account. From there, investors can choose to trade stocks, stock options, ETFs, and cryptocurrency. You can actively manage your trades, and you can also set up recurring investments using the Recurring Investments feature on the platform. All of these trades are commission free.

Investors who are interested in margin trading can do that by upgrading to a Robinhood Gold account for $5 a month.

How Do I Open a Robinhood Account?

Any investor who is interested in opening a Robinhood account can appreciate how straightforward the process is. It’s worth noting that to invest with Robinhood, there are four criteria you must meet:

  1. You have to be at least 18 years old
  2. You need a Social Security number
  3. You need a US address
  4. You need to be a US citizen or permanent resident (you can also have a US visa)

As long as you meet those requirements, you can get started investing since there are no minimum balance requirements.

Perhaps the easiest way to open a Robinhood account is using your smartphone. After all, Robinhood prioritizes its clients’ mobile experience.

The first step is to download the Robinhood app. Then, you input your personal information, including name, date of birth, and Social Security number. You also need to set up a way to fund the account.

Once you are approved, you can begin making transfers from your bank to the app. Robinhood estimates that approved customers can usually begin this process within an hour. When the funds hit your Robinhood account, you can start trading stocks, ETFs, cryptocurrency, or stock options. You can also set up recurring investments.

Robinhood Pricing

Robinhood proudly declares itself a pioneer in the commission-free trading world. But you’re probably wondering if this Robinhood pricing is too good to be true. Let’s explore the fees associated with using Robinhood, including the upgraded platform called Robinhood Gold.

Robinhood Fees

It’s true. There are zero trade fees with Robinhood.

So how does Robinhood swing those zero fees? They use what’s known as a payment for order flow. Essentially, they get a backend payment for directing trades to certain parties. This is one of Robinhood’s biggest revenue generators, and it has also been criticized by the Securities and Exchange Commission for a possible conflict of interest and lack of transparency.

While payment for order flow usually happens per share, Robinhood is actually paid per spread. That means that much of their revenue comes from options trading. Because this complicated investing strategy can be somewhat speculative, critics point out that this practice could be taking advantage of less skilled investors. However, Robinhood heard this criticism and now requires investors to apply to be considered for options trading.

Robinhood Gold

Investors who are interested in margin trading need to upgrade to Robinhood Gold. The upgraded membership unlocks four features for investors:

  1. Increased instant deposits
  2. Margin investing
  3. Morningstar research and reports
  4. Nasdaq market data on over 1,700 stocks

Your upgraded membership includes $1,000 of margin trading. Anything above that has an interest charge of 2.5%.

The Robinhood Gold upgrade costs $5 per month. Currently, you have the option of trying Robinhood Gold for free for thirty days.

Robinhood Features and Benefits

Robinhood is one of the most popular investing platforms in the world. To shed light on why millions of investors use Robinhood, we rounded up some of the standout features and benefits.

Stock Trading

Robinhood became a darling of the stock trading world when it burst onto the scene in 2013. That’s because it was the first platform to offer 100% commission-free stock trades. Since then, many other brokerages and investing platforms have made the move to fee-free trades as well. Still, investors who want to trade stocks, as well as ETFs, cryptocurrency, and options and are looking to streamline their finances, may appreciate that Robinhood offers all of the above.

ETFs

ETFs, or exchange traded funds, are one of the most popular types of investment. There’s a reason for that! Actually, there are several. ETFs allow you to invest in a group of companies all at once. This array of investments is great for diversifying your portfolio. Additionally, ETFs are generally very low fee, meaning you get to keep more of your money.

Since ETFs are so powerful and so popular, Robinhood makes it easy for investors to invest in them. You can use Robinhood to invest in ETFs that follow the stock market indexes, such as the S&P 500. Or you can invest in ETFs that focus on a particular sector, such as tech, fashion, or energy. In fact, virtually all ETFs that are listed on US exchanges are available on Robinhood.

Buying Crypto

Investors who are looking into buying crypto don’t need to look any further than Robinhood Crypto. Robinhood offers fractional amounts of crypto, so there’s no need to buy full coins. Trades can be made in US dollars or cryptocurrencies.

To trade crypto, you can use your Cash, Instant, or Gold account. With the exception of scheduled maintenance, Robinhood Crypto allows trades seven days a week around the clock.

Robinhood Crypto also features a watchlist tool that allows you to keep a closer eye on any currencies you’re interested in following.

There are a few things to note about Robinhood Crypto:

  1. Robinhood Crypto and Robinhood Financial are separate accounts.
  2. Cryptocurrencies in your Robinhood Crypto account are not projected by FDIC or SIPC.

Whether you’re a long-time crypto investor or just getting started, Robinhood also offers a robust education section on their site to help people better understand crypto, blockchain, and other related topics.

Options Trading

Trading stock options means that you are betting on the price changes of a stock. Allowing investors to make these trades is partly how Robinhood made a name for itself. In fact, it was the first platform to allow commission-free options.

To trade options on Robinhood, you have to complete an application process. Then, as you become a more veteran options trader, you can unlock more advanced options trading features. Robinhood also features an Options Knowledge Center to make sure you’re aware of options strategies in general and how to trade options using the Robinhood app.

Margin Trading

Robinhood gives you the ability to margin trade using their margin investing feature. With this feature, you are borrowing against your investments. Depending on the values of the securities in your account (excluding any cryptocurrency), you can access more money to make more purchases. This feature is advantageous for people who want to invest more without waiting to have more cash on hand.

Margin investing with Robinhood is not available to all Robinhood users. Instead, you access this feature through Robinhood Gold. Once you upgrade your account to Gold, you then apply to see if you qualify for margin trading.

The first $1,000 of margin investing is included. Anything above that will incur a 2.5% interest charge.

Fractional Shares

Fractional shares allow investors to purchase a portion of a share. This means that people who might not be able to buy a full share of a particular stock can still own a slice of the company. It also means that you don’t have to let cash sit idle in your account. Instead, Robinhood allows you to invest with as little as $1. You can invest in over 5,000 ETFs or stocks, like Tesla and Apple.

Robinhood Recurring Investments

Many aspects of Robinhood cater to active investing. However, investors may also want to explore the Robinhood recurring investments options for stocks and ETFs. That means you create a predetermined schedule and Robinhood gets to work, investing in what you say on the dates you specify. These recurring investments support investors’ long-term portfolio growth. They’re so popular that Robinhood just recently added the option to create recurring cryptocurrency investments as well.

Robinhood Cash

One unique feature of Robinhood’s brokerage account is called Robinhood Cash Management. While Robinhood Cash Management is similar to a checking or savings account, it isn’t quite the same. Like their brokerage account, there are no minimum requirements to use the Cash Management feature. Current interest rates are 0.30%. Additionally, they work with a partner bank to offer FDIC protection on your money and an optional debit card.

Robinhood Reward Stock

Robinhood has a referral program that rewards existing and new clients with stock as a reward. When you refer a friend and they set up their bank account, Robinhood will send a reward stock to both of your accounts. The reward value ranges from $3 to $225, with the majority being valued at $10 or less.

Robinhood will notify you that you need to claim your reward. You can also check your messages in your account by clicking Robinhood Rewards. It’s important to keep track of these rewards because you only have 60 days to claim them. You also want to note that there is a $500 yearly limit in reward stocks.

Robinhood FAQ

Investing can come with questions, especially if you’re just getting started. That’s why we collected the most frequently asked questions about Robinhood and compiled our comprehensive FAQ list below.

Is Robinhood Safe?

Robinhood received criticism and even regulatory fines in the past for outages and misleading customers. Still, Robinhood is overseen by three regulatory bodies: SEC, FINRA, and SIPC. SEC makes sure that federal securities laws aren’t violated. FINRA oversees transactions and makes sure that brokerages are truthful. SIPC can restore investor funds from brokerage firms that fail.

So investors can feel confident that there is some oversight taking place. It is worth noting that Robinhood Crypto is not currently regulated by these agencies.

In addition to these outside agencies, there is a Robinhood security team. Their dedicated security team works to protect your account and information. Sensitive information is encrypted and the platform also requires two-factor identification.

How Much Do I Need To Invest With Robinhood?

You can start investing with Robinhood right away. That’s because there is no minimum required to invest with Robinhood.

While some platforms require investors purchase a full share–which can sometimes be a sizable cost–Robinhood does not. Instead, Robinhood offers fractional shares. That means there is no need to wait to invest.

Does Robinhood Have a Roth IRA?

No, there is no Robinhood Roth IRA option. Currently, Robinhood only offers taxable brokerage accounts. They do not offer retirement options, like Roth IRAs and traditional IRAs.

Does Robinhood Pay Dividends?

Robinhood does pay dividends and they are credited back to your account. The dividends are processed automatically. Robinhood also features something called Dividend Reinvestment. You can turn on this option and that will automatically reinvest into stocks or ETFs.

Who is Robinhood Best For?

Robinhood is best for several groups of investors:

  • Beginners
  • Mobile users
  • Crypto traders
  • Options traders

Beginners

Beginners often find themselves sidelined by account minimums. With Robinhood, there are no minimum requirements. That means that beginning investors can get started right away. Plus, Robinhood offers fractional shares for stock and ETF trading and fractional crypto amounts. That means you don’t have to run a big cash balance in your account before you start trading.

Mobile users

Robinhood has a sleek, easy-to-use mobile interface. As a result, it attracts a lot of younger users who prefer to manage their money from their smartphones.

Crypto traders

Robinhood Crypto has attracted legions of crypto traders and for good reason. Currently, investors can trade seven different cryptocurrencies on the app, and there is an ongoing push to add more. Because Robinhood doesn’t charge commissions, crypto traders may prefer this platform to other crypto exchanges, like Coinbase. Crypto traders who are also interested in trading stocks, ETFs, and options might also enjoy having one platform house both their crypto and traditional brokerage accounts.

Options traders

Options traders flock to Robinhood. If you trade options and are also interested in stocks, ETFs, and crypto, Robinhood is your one-stop shop.

Robinhood Alternatives

There are over 31 million Robinhood users as of 2021. However, Robinhood can’t seem to shake the less-than-favorable media coverage in past Robinhood reviews. Fear not. Robinhood is going to greater lengths to increase transparency and comply with all regulations. However, you do have plenty of other brokerage options that are worth exploring as well.

Some of our favorite Robinhood alternatives include:

Wealthfront

Are you looking for investing advice without the price tag that comes with actively managed funds or human advisors? Wealthfront is a roboadvisor that shines with thorough and unique insight.

One of our favorite Wealthfront tools is the Time Off to Travel feature. This tool allows you to determine if you can push pause on your work and explore the world (or your own backyard!) without disrupting your future financial goals.

Check out our full Wealthfront review for more details.

Personal Capital

Personal Capital is a much-loved personal finance platform in the FIRE community. There’s a good chance you’ve seen someone share a Personal Capital graphic in a net worth post. But did you know that Personal Capital also gives investors access to a roboadvisor or a human advisor based on account balance size?

Their fees are a bit higher than other investing platforms, though. But even if the fees are too steep for you, you can still set up a free Personal Capital account to use all of their finance tools.

Check out our full Personal Capital review for more details.

Acorns

Unlike Robinhood, Acorns focuses on more passive investing. Acorns gives you two ways to invest: recurring deposits or microinvesting.

Recurring deposits is what most investors are familiar with. You set up a specific amount that you want invested on a specific day, oftentimes coinciding with payday.

There’s a second option as well. You can do what’s known as microinvesting by investing pocket change–quite literally. Acorns works with your linked credit or debit card and rounds up each transaction, sending the spare change to your investment account. Acorns is a powerful tool for people who are looking to build their confidence as beginning investors or who prefer to let fintech do the heavy lifting.

Check out our full Acorns review for more details.

Jacob Wade

Jacob Wade

Jacob Wade has been a nationally-recognized personal finance expert for the past decade. He has written professionally for The Balance, The Spruce, LendingTree, Investing Answers, and other widely-followed sites. 
He’s also been a featured expert on CBS News, MSN Money, Forbes, Nasdaq, Yahoo! Finance, Go Banking Rates, and AOL Finance.

In 2018, Jacob quit his job and his family decided to sell everything (including their home) to take off on an adventure. They traveled the country in an RV for nearly 3 years, visiting over 38 states, 20+ national parks and eventually settling in the sunshine state!

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