Robinhood Review 2023 (2024)

Robinhood offers new investors a platform designed to lower market barriers, courtesy of its bare-bones interface and low fees.

But here’s the problem with Robinhood. It makes trading so easy that it practically turns it into a game. This tends to drive active trading, or buying and selling stocks rapidly to turn a quick profit.

Due to the amount of risk and the vast potential of loss involved with active trading, most experts recommend that almost all investors opt for passive investing or buying and holding low-cost index funds to grow wealth.

Robinhood also lacks many of the educational resources offered by the best online brokers for beginners.

Major controversies have attended Robinhood’s approach in the past

In June 2020, a 20-year-old college student named Alexander E. Kearns took his own life after seeing an unexpected negative balance of more than $730,000 on his Robinhood app. It is thought that the negative balance was associated with a complicated options trading strategy deployed by Kearns.

In 2021, Robinhood was a central player in the Gamestop saga, and CEO Vladimir Tenev was called to testify before Congress about how Robinhood may have exacerbated the situation.

In November 2021, the company disclosed that hackers had accessed the names and email addresses of millions of Robinhood customers, calling into question the company’s security procedures.

Robinhood has been fined more than $130 million by the Securities and Exchange Commission (SEC) and FINRA, a brokerage governing body, for misleading and harmful customer practices.

These facts, combined with very modest customer service and educational resources, make us not recommend Robinhood for beginner investors—although investors of all experience levels may also find the platform lacking.

Intermediate and advanced investors won’t find the tools and resources they want for more sophisticated trading strategies. Would-be cryptocurrency investors may wish to avoid Robinhood due to its limited number of supported cryptos.

Robinhood was the first major brokerage platform to eliminate commissions on stock and options trading, helping to revolutionize the industry. Today, commission-free trading of stocks and exchange-traded funds (ETFs) has become the standard.

To access a lower interest margin account, customers must pay at least $5 monthly for Robinhood Gold. Without Robinhood Gold, users with a Robinhood margin account will pay 12.00% interest. With Robinhood Gold, that rate is reduced to 8.00%.

Robinhood Gold also includes $1,000 in margin credit and research materials. In addition, Robinhood Gold provides customers with the ability to make larger deposits.

For any margin above $1,000, there is a 8.00% annual interest rate with Robinhood Gold, calculated daily and charged to the customer’s account at the end of each monthly billing cycle.

Robinhood receives payment for order flow, directing orders to third-party market makers in exchange for a fee. These third parties may or may not be able to provide faster trades or better prices. But because Robinhood gets paid whether or not they improve order speed and price for its clients, some industry experts are critical of this practice.

The Robinhood trading platform is minimalistic and intuitively designed, making it very easy to buy and sell stocks, ETFs and cryptocurrencies. The platform does suffer from limited order types and relatively few other bells and whistles.

Watch List and Cards

Most brokerages offer multiple methods for tracking market activity. Unfortunately, Robinhood offers no alerts, artificial intelligence (AI) assistants, portfolio builders, trading simulators, heat mapping, and screeners—tools that are commonly offered by competing brokerage platforms.

Robinhood does offer a simple watch list function that allows you to track the assets you’re most interested in right from the main screen of the Robinhood mobile app.

News

Robinhood users can access news stories and videos about specific stocks and the market from sources like The Wall Street Journal, Reuters, Barron’s, CNN Business, Cheddar and Reuters. If you navigate to a specific stock on the app or web client, you can find recent news stories about the stock from the same sources.

The app also uses push notifications to alert users to breaking news and top stories that may affect the market.

Charting

Robinhood has always offered candlestick, line, and volume charting for all securities tradable on the mobile app and online, as well as indicators for volume, various moving averages and relative strength index.

In addition, in August, Robinhood launched an advanced charts feature. This feature allows Robinhood customers to analyze and research company trends and stock prices better.

Robinhood is not a comprehensive brokerage, which means its range of offerings is somewhat limited.

Users can automatically reinvest their dividends with Robinhood by toggling on the feature on investments that offer it.

Despite the limited range of tradable assets, Robinhood does stand out for its cryptocurrency offerings. While its range of available coins is more limited than the best crypto exchanges,

Spending Account

Robinhood’s spending account is the company’s cash management account service, which works similarly to an online checking account. You do not need a Robinhood brokerage account in order to open a spending account.

Users get a Robinhood Cash Card, which is issued by Sutton Bank. The spending account allows users to opt into round-ups and bonuses, which can be used for groceries, bills, checks and more.

Cash Sweep

The Robinhood cash sweep program allows customers to move their uninvested brokerage cash into deposits, with six banks currently participating in Robinhood’s program.

The Robinhood Brokerage Cash Sweep program offers an annual percentage yield (APY) for non-Gold members of 1.50% APY (5.00% APY for Gold customers). Deposits are FDIC-insured up to $2.25 million.

Cryptocurrency

Robinhood allows users to invest in cryptocurrencies. The following coins are available:

• Avalanche (AVAX)
• Bitcoin (BTC)
• Bitcoin Cash (BCH)
• Bitcoin SV (BSV)
• Cardano (ADA)
• Chainlink (LINK)
• Compound (COMP)
• Dogecoin (DOGE)
• Ethereum (ETH)
• Ethereum Classic (ETC)
• Litecoin (LTC)
• Polygon (MATIC)
• Shiba Inu (SHIB)
• Solana (SOL)
• Stellar Lumens (XLM)
• Uniswap (UNI)
• USD Coin (USDC)

Users should note that not all coins are available in every state.

While Robinhood is limited to the trading of a few cryptocurrencies, the platform does offer crypto storage. In September 2022, Robinhood launched a beta version of its self-custody Web3 Wallet to 10,000 customers who joined a waitlist in May.

The standalone app allows users to trade and swap crypto with no fees. Features of the wallet include the ability to fund the wallet with USDC as the primary fiat currency, earn crypto rewards on third-party platforms and connect to decentralized apps (dApps) to earn yield on crypto.

Robinhood’s commitment to the democratization of investing does not seem to extend to the educational component of building new investors.

The brokerage offers no stock screeners or research tools, and only provides Morningstar research to Robinhood Gold members, who must pay $5 per month for their subscription—the subscription fee is waived for the first 30 days.

These Morningstar reports cover about 1,700 stocks and is updated regularly, like when a company issues an earnings report or experiences a major event.

Robinhood does cover most of the basics in articles in its website’s Learn section. In addition, its Robinhood Snacks newsletter and podcast are easy entries for investment news that won’t overwhelm newbies.

Robinhood’s customer support features text chat and phone support, although the latter is hard to reach.

There is no displayed customer service phone number. Customers must be signed into their account to request a callback from Robinhood. While there’s a fairly robust FAQ support page that may be able to help answer your questions, the lack of easy direct customer support could cause heartburn for worried investors.

That said, Robinhood does offer reasons for confidence in its security. Your account password is hashed using the industry-standard BCrypt hashing algorithm, and it’s never stored in plaintext. Additionally, the mobile app offers secure access using Touch ID, Face ID or a PIN code, and two-factor authentication.

As for your invested funds, Robinhood is a member of SIPC, which protects up to $500,000 (including $250,000 of cash) of securities of its members’ clients. If you’re dipping your toe into crypto investing, remember that SIPC does not protect cryptocurrency investments through Robinhood Crypto.

Robinhood was founded by Vladimir Tenev and Baiju Bhatt in 2013 and is currently headquartered in Menlo Park, Calif. The company went public in late July 2021, with share prices set at $38 for the initial public offering (IPO). Robinhood made its name on $0 trading fees, and its example helped spur a number of other large brokers, such as E*TRADE, TD Ameritrade and Charles Schwab, to eliminate their own trading fees.

Though the startup has been quite popular and successful, it has also faced a number of controversies that have somewhat tarnished its reputation.