TD Ameritrade vs. Robinhood [2023]: 8 Important Differences to Know (2024)

TD Ameritrade and Robinhood both offer online brokerage platforms to make investing easier for consumers. One is an established powerhouse with over 45 years of experience and more than $1 trillion in assets. The other is a fintech startup that is trying to make investing accessible to everyone.

In this article, we'll compare TD Ameritrade vs. Robinhood to highlight what they're good at and how they're different so you can determine which one may be right for you.

TD Ameritrade vs. Robinhood

Before we get into the details, let's look at an overview of TD Ameritrade vs. Robinhood. Knowing some basics will make it easier to choose how you’d like to go about investing money.

How does TD Ameritrade work?

As a traditional brokerage, TD Ameritrade offers investors the ability to trade various financial products over the phone, in-person, online, or through its mobile app. It offers a full array of investment options for accounts of all types, including taxable brokerage accounts, retirement accounts, and company plans.

TD Ameritrade offers real-time streaming quotes, which provide the most accurate and up-to-date values of stocks, bonds, and exchange-traded funds. Additionally, investors have access to a full suite of free tools to research investments. In addition to researching investments, these tools also provide educational topics ranging from beginner to advanced. These tools are available online, as a desktop application, and through TD Ameritrade’s mobile app.

Investors have access to a wide variety of investment options. TD Ameritrade investors can purchase common investments like stocks, bonds, CDs, annuities, ETFs, and mutual funds. Sophisticated investments like options, futures, margin accounts, managed portfolios, and forex are also available.

TD Ameritrade has no account minimum to get started and has a low-cost fee structure, including $0 commissions on online stock trades, ETF trades, and options trading. Read our TD Ameritrade review for even more details.

How does Robinhood work?

Robinhood is a fintech platform that works exclusively through its online portal and mobile app. As an online broker, it does not offer in-branch services, live support online, or telephone customer service like full-service brokerage firms. Robinhood is considered one of the best investment apps because it offers commission-free investing and the ability to purchase fractional shares.

Robinhood offers individual brokerage accounts as well as Robinhood Retirement accounts in the form of traditional or Roth IRAs. Robinhood Retirement offers an added benefit of a 1% match on qualified deposits, a feature not commonly found on other investment platforms.

Even though its account types are limited, it does offer a variety of trading options. Its investing options are focused on U.S.-based stocks, options, and ETFs, as well as American depositary receipts of select international stocks.

Additionally, Robinhood investors may purchase cryptocurrencies such as bitcoin and ether. They can also access margin trading with a Robinhood Gold account. Read our Robinhood review for more information.

Robinhood offers an education portal for investors to learn topics ranging from the basics to advanced strategies, from understanding an index fund to learning how to buy cryptocurrency. Customers may also subscribe to its Snacks newsletter, which distills the financial news into a quick read to start your day. For people on the go, Robinhood also publishes a daily podcast that breaks down three of the day's top stories in 15 minutes.

What both investment platforms excel at

Both TD Ameritrade and Robinhood make it simple for investors to get started with only a small amount of money. Each company's technology platforms give investors the tools they need to help them make informed investing decisions.

TD Ameritrade offers $0 commissions, no platform or data fees, and no trade minimums. Investors can purchase stocks, ETFs, mutual funds, and options online without paying a commission. Robinhood also provides commission-free investing to its clients. Customers can purchase stocks, ETFs, options, and cryptocurrency without paying a commission.

The web platforms and mobile apps for TD Ameritrade and Robinhood provide in-depth tools for customers to make investing decisions. TD Ameritrade's tools are more robust and are available as online, desktop, and mobile applications. One of its options, the thinkorswim platform, offers elite-level trading tools in a fully customizable format. However, Robinhood was built from the ground up as a fintech company, so it's not burdened by legacy systems that might be outdated.

8 important differences between TD Ameritrade and Robinhood

Although TD Ameritrade and Robinhood have some similarities, there are important differences to consider when comparing these trading apps:

1. Years in business: When comparing TD Ameritrade vs. Robinhood, you're comparing an established veteran vs. a startup. TD Ameritrade has been in business for more than 45 years, while Robinhood was founded in 2013.
2. Size of Assets Under Management (AUM): TD Ameritrade has $1 trillion of AUM and was recently acquired by Charles Schwab. Robinhood does not release its financials, but industry sources estimate it manages $80 billion of customer money.
3. Account types: TD Ameritrade is a full-service brokerage and offers numerous account types to meet its customers' needs. With Robinhood, you can currently only open an individual brokerage account or a retirement account.
4. Variety of investment options: Customers can invest in a wide variety of products with TD Ameritrade, including stocks, options, ETFs, mutual funds, and forex. Robinhood has fewer products to choose from, but they can satisfy the needs of beginner investors. Options include stock trading, ETF trading, options trading, cryptocurrency, and gold.
5. Fractional shares: Only Robinhood allows customers to purchase fractional shares of stocks. These shares enable people to purchase a fractional interest in a stock even if they don't have enough to buy a whole share. With TD Ameritrade, investors must purchase whole shares of stock unless you are participating in a dividend reinvestment program (DRIP).
6. Research tools: TD Ameritrade offers a robust selection of tools for online, desktop, and mobile devices at no extra charge. These tools include real-time streaming quotes, live help via in-app chat, and access to Federal Reserve data. Robinhood's research reports and tools focus on a more limited set of five indicators to enable customers to make investing decisions. Robinhood Gold offers more in-depth research reports by Morningstar, an independent investment research company, however.
7. Stability of its trading platform: Robinhood has a checkered past when it comes to outages. For example, its service was down at least twice in March 2020 while the stock market was collapsing due to coronavirus fears.This meant any investors who were interested in selling were unable to do so before their portfolios declined. Robinhood was ordered to pay almost $70 million by FINRA due to these outages as well as misleading consumers. Robinhood didn't admit to or deny any wrongdoing. In contrast, TD Ameritrade has received accolades from several industry leaders, such as Investor’s Business Daily and Stockbrokers.com, for its customer service, platform and tools, and investor education.
8. Customer service: With TD Ameritrade, customers can speak to a live person over the phone, via chat in the app, or in a physical branch. This access can provide a quick resolution to issues that arise. Robinhood does not have live customer service, and you can only speak with its support team via a website contact form and in-app messaging.

Which investment platform should you choose?

When it comes to investing money, choosing between TD Ameritrade and Robinhood should be based on your needs. Consider the type of account that you need, what investments you want to purchase, and how much money you have. Both investing platforms offer no-commission trading and robust digital trading interfaces. However, several differences may help you decide which account is right for you.

TD Ameritrade has a broader appeal because of its full-service business model. Its accounts could be a smarter choice for these types of customers:

• Investors who need multiple account types (e.g., individual brokerage, IRA, and 529) can open all these accounts with one company.
• Customers who are unsure how to invest on their own and need questions answered by live customer service (phone, in-person, and chat).
• People who are looking for specific investments, such as mutual funds, forex, and futures trading.
• Those who want the backing of a large financial institution.

Robinhood's unique value proposition is that investors can purchase fractional shares of stocks. This means you could buy into companies like Apple, Tesla, and others with as little as $1. Investors that could be a good fit for Robinhood include:

• Beginners who cannot meet minimum investment amounts at other companies.
• Investors that want to use a dollar-cost averaging strategy to invest a set amount each month into fractional shares of one or more stocks.
• Index-fund investors who want to learn how to buy individual stocks with small amounts of money.

FAQs

Bottom line

TD Ameritrade and Robinhood are two of the best brokerage accountsbecause they each offer robust technology without all the trading fees. But each company provides unique features that make it more suitable for a specific style of investor. TD Ameritrade is a full-service brokerage with live customer service, various account types, and a wider range of investment options. Robinhood is a fintech startup that enables investors to start investing in fractional shares with as little as $1.

When comparing Robinhood vs. TD Ameritrade, don't just think about pricing. Think about what's most important to you as an investor. Are you interested in working up to day trading, or are you a long-term investor? Do you have specific account types you need to open, or are you just looking to get into the stock exchange?

As you build your investment portfolio and your investing knowledge, you could migrate from one to the other or open accounts at both to take advantage of the feature that suits your needs.

FinanceBuzz is not an investment advisor. This content is for informational purposes only, you should not construe any such information as legal, tax, investment, financial, or other advice.