Robinhood Review for 2021

Investing

You’re likely familiar with the story of Robinhood, the outlaw who stole money from the rich and gave it to the poor. Well, you’ll find a similar principle behind the investing app, Robinhood.

Robinhood

The founders of Robinhood aren’t stealing anything, but they do believe that the current financial system doesn’t benefit every American. For that reason, they make it easy for non-traditional investors to get started.

When you sign up for Robinhood, you get access to commission-free trading and a cash management account. Keep reading to learn more about the pros and cons of signing up for Robinhood, as well as who the app is best for.

What is Robinhood?

Robinhood is an investing app that offers no-fee stock trades and a cash management account. Originally founded in 2013, Robinhood has grown quite a bit in the years since. It now has over 22 million customers and has shaken up the financial landscape.

When you sign up for Robinhood, you can trade stocks, options, exchange-traded funds (ETFs), and even cryptocurrency with zero commission fees. In 2021, no-fee trading is pretty commonplace, but it was a novelty eight years ago when Robinhood launched the app.

You can trade stocks using either the web or mobile versions. Robinhood seems to resonate the most with millennial investors who resonate with the company’s mission.

How does Robinhood work?

When you sign up for a Robinhood account, you’ll get your first stock for free, even if you don’t deposit any funds. Signing up for an account is easy — all you have to do is enter your name, email address, and create a password.

From there, you’ll be prompted to enter more personal information, like your address and Social Security Number. Robinhood is required by federal law to request this information.

After you’ve set up your account, you’ll outline your investing experience thus far. And to go forward, you will need to fund your account at this point. However, there’s no minimum deposit required to fund the account, so you can always start small and invest more later.

You can connect your bank account to the Robinhood app to make funding your account easier. And there are no fees for transferring money in and out of your account.

Get started with Robinhood on Robinhood’s secure website

Robinhood Features

Here are some of the features that set Robinhood apart from other investing apps:

  • Zero commissions: One of the biggest benefits of using Robinhood is the lack of commissions. In many ways, Robinhood set the stage for other investing platforms to follow suit.
  • Cryptocurrency trading: Robinhood is one of the few investing apps to offer cryptocurrency trading. You have the option to trade Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH), Bitcoin SV (BSV), Ethereum Classic (ETC), Litecoin (LTC), and Dogecoin (DOGE).
  • Mobile app: One of the best things about using Robinhood is its straightforward mobile app. Once you log in, you can see how each asset is performing and can easily buy and sell assets.
  • Account notifications: You can also sign up for notifications about how your account is performing. You can set your alert preferences in the app’s settings.
  • Daily market updates: Once you become involved in the stock trading, you may want to learn more about how the stock market is performing day-to-day. Robinhood’s news feed will keep you up-to-date on what’s happening in the news and changes in the market.

Pros and Cons of Using Robinhood

When it comes to investing, Robinhood is a solid choice, but there are pros and cons to using the app. Let’s look at the most significant advantages and disadvantages you need to know about.

Pros

  • No account minimum: One of the things that makes Robinhood so accessible is that there are no account minimums. Even if you only have $50 to get started, that’s enough to begin trading with Robinhood. And since the app offers instant verification with your bank, you can transfer the funds almost immediately.
  • Free trading: Again, Robinhood offers commission-free trades on stocks, ETFs, options, and cryptocurrency. You can trade all of them for free on Robinhood, which will save you a ton of money on trading fees.
  • Cash management account: Robinhood also offers a cash management account that pays 0.30% APY on uninvested cash and doesn’t come with any hidden fees. You can use the account to pay bills, send checks, and withdraw funds. And you’ll get a debit card issued by Sutton Bank that gives you access to over 75,000 ATMs nationwide.
  • Fractional shares: Robinhood allows investors to buy fractional shares of thousands of stocks. You’ll also get access to a recurring investment tool that lets you automatically invest a fixed dollar amount periodically. For example, you can invest as little as $1 per week in fractional shares.

Cons

  • Limited account types: Robinhood only supports one type of brokerage account, called the individual taxable account. So you won’t have the option to open a trust, partnership, Coverdell, custodial, college savings, retirement accounts, or any other type of brokerage account through Robinhood.
  • Limited trading tools: The research and trading tools available on Robinhood’s website are minimal compared to most online brokers.
  • Minimal customer support: Robinhood does offer customer support through its chatbot and frequently asked questions page. But if you have a more complex question, you may have to do some digging to find an email address or phone number to contact.
Get started with Robinhood on Robinhood’s secure website

Who is Robinhood best for?

Robinhood is an excellent option for new investors since there are no commitments to getting started. You can sign up, try out the Robinhood platform, and learn more about investing as you go. And the company makes it easy to research the market and learn more with its daily news feed.

If you’re interested in margin trading, you might be a good fit to sign up for Robinhood Gold. The service costs $5 per month and gives you access to between $5,000-$50,000, depending on how much you deposit.

However, Robinhood isn’t a great option for individuals that are trying to save money for retirement. The app doesn’t offer any retirement savings options. You’ll also need to look elsewhere if you’re looking to invest in bonds and mutual funds.

Bottom Line

Robinhood is a solid option for new investors that are looking for an easy way to begin trading. You can set up your account within minutes and won’t pay any commissions on your trades. You have nothing to lose by signing up and will even receive your free stock.

Plus, Robinhood makes it easy to track your account’s performance and monitor market news. However, if you’re a more experienced investor, you may want to look into a full-service brokerage with a bit more options.

Get started with Robinhood on Robinhood’s secure website
Jamie Johnson
Meet the author

Jamie Johnson is a freelance writer who has been featured in publications like InvestorPlace and GOBankingRates. She writes about various personal finance topics including student loans, credit cards, investing, building credit, and more.