Robinhood Review – Are Commission Free Trades Worth It?

What Is Robinhood?

Robinhood is an app-based investing platform (it also has banking options) that is commission-free. It is a tech-based start-up that has been focused on changing the investment game. 

And, honestly, it's been working. Robinhood made a name for itself by offering $0 commissions on stock, ETF, and options trading. When it first was launched, this was unheard of. However, today, almost every major stock broker offer $0 commissions and no fees.

So, how do they compare today? Honestly, there are becoming more of a novelty for young traders than a true investment platform for the long term - and most users will likely be better served elsewhere.

But if you're interested in Robinhood, here's what you need to know.

Robinhood offers the following main options:

• Commission-free investing for stocks, ETFs, and options
• Commission-free limited cryptocurrency trading
• Fractional Share Investing
• They offer a premium subscription called Robinhood Gold that offers low-priced margin trading
• Robinhood Cash Management - which is a cash management account with a debit card

Let's dive in more in this Robinhood review.

Setting Up The Robinhood App

Robinhood does everything through it's smartphone app. Even if you sign up on their website at Robinhood.com, you still have to download their app.

Once I signed up on the website, I received an email with a link to download the Robinhood app. I followed the link and got started.

 Once I downloaded the Robinhood App for my iPhone, I opened it up. After you login with your information, it asks you to create a Watchlist.

I didn't really understand what was even happening at this point - I seriously just entered my login information and it started populating a Watchlist. I wish it didn't do that (and you don't have a choice to skip it that I saw).

The next screen asks if you want Smart Notifications for the app. I opted out of this because I hate notifications on my iPhone. I'm sure others will find this feature useful though:

The next screen asks you to fund your account. Out of every app I have ever used, this has been the most intuitive part of the process. I find linking bank accounts can be a challenge, even on a desktop computer, but Robinhood made this easy.

Once your account is funded, you'll receive a confirmation email and an alert on the iPhone app. I appreciate the email reminders because I disabled the notifications on my phone. Here's what your account screen looks like:

However, before I could do anything else, Robinhood once again asked me to setup a bunch of investment objectives. I didn't really understand the purpose of these, as they don't seem to have any software or help to customize a portfolio or trade.

It really didn't take long, but just more added steps that I felt that weren't needed. It was all pretty standard stuff, but seemed like a robo-advisor:

How To Use The Robinhood App

Now that you have your account funded, you can start using the Robinhood App to look up and trade stocks.

They have some very elegant ways to look up stock information. Here's what I started with, looking up Abbott Labs (ABT). Once you look up the stock symbol, it gives you a quote, basic chart, and other basic information about the stock.

This is all trading information - they don't have any fundamental information about the company:

Before you can make a trade, Robinhood does have this cool feature that lets you look at "Popular Stocks" based on what others are doing on their app.

While I don't like to base my investment decision on what others are doing, a little voyeurism is always fun:

When I went to make my first trade, I thought I'd keep it simple and just invest in SPY. So, I typed in the symbol for SPY and got a quote.

I then clicked the big Buy button on the screen and it brought me to the order screen. It's very intuitive and easy to use to place an order. You simply type in the shares you want to buy and the price. If you don't want a market order, you can tap the "Market" and switch it to a limit order.

After that, you review your order. Then, you just swipe up to submit. Personally, I hate having to swipe to access features on a phone. Just let me push a button.

Robinhood Gold

Robinhood Gold is their premium product. You can get access to gold starting at $5 per month.

Robinhood Gold gives you:

• Margin Trading: They call this feature "Gold Buying Power", but honestly it's just 2x margin on your account. However, unlike other margin accounts, you don't pay interest. Your margin power is based on the flat monthly fee you'll pay
• Pre & After Hours Trading: You can get access to pre market and after hours trading
• Bigger Instant Deposits: You can get instant access to your money, including when you sell a security, you don't have to wait the few days for the settlement(they call this "Instant Reinvestment")
• Level II Market Data and Pro Research: You can get access to more information and research than on the standard level.

Here's where it gets tricky. The pricing for all of this is pretty high in my opinion. Of course, this is always subject to change (and please let us know in the comments if it does change):

Robinhood vs. Vanguard

Vanguard is the leader in mutual funds and low-cost investing. They changed the game in lowing mutual fund expense ratios and management fees - saving investors billions. As a result, they have a cult-like following of low cost index fund investors.

Read our full Vanguard review here for more.

Robinhood vs. M1 Finance

M1 Finance is another tech-based investment firm that is another revolutionary force for long-term investors. M1 Finance is commission-free investing - but has a unique feature that allows investors to build their portfolio allocation, automatically rebalance it, and contribute new money directly into the right places.

Read our full M1 Finance review for more.

Robinhood vs. Webull

Webull is a direct competitor to Robinhood in the app-based investing game. Webull is almost like the more "adult" version of Robinhood, offering a lot more of the robust features in terms of trading and analytics that are missing from Robinhood.

Read our full Webull review here.

Robinhood vs. Public

Public is another direct competitor Robinhood with their own investment app. We view Public as the happier, friendlier app-based investing tool. Public seeks to combine the best aspects of free trading, fractional share investing, and more - with a unique community feel.

Read our full Public review here.

Have you used Robinhood? Did you like the experience? Are you going to replace your brokerage with it?