Robinhood Review: Why We Think It (Still) Lives Up to the Hype | The Motley Fool (2024)

Robinhood is an affordable discount broker at its core. It's easy to pick up and get started, even if you're totally new to investing. A few features set it apart from your vanilla trading app.

For one thing, its premium membership gives a ton of perks that are actually useful (like deposit match). Its commissions are also highly competitive. And let's not forget about its margin rates, which are some of the lowest we've found!

Robinhood lets you invest in the basics through standard accounts. You can purchase fractional shares of stocks and ETFs for as little as $1 on the platform.

Investments

• Cryptocurrencies
• ETFs
• Fractional shares
• Stocks

Brokerage accounts

• IRA
• Roth IRA
• Traditional brokerage

Robinhood also gives you access to a debit card linked to your spending account.

Margin rates

Robinhood gives you hyper-competitive margin rates. The more you borrow, the lower your rate gets. Robinhood Gold members borrow the first $1,000 of margin at a 0% interest rate.

Robinhood gives excellent educational resources to beginners. On Robinhood Learn, users can find many how-to articles and investing term definitions. There's even lots of content on advanced topics, like options trading.

However, if you're looking for in-depth stock research, you can do better than Robinhood. Robinhood tailors its research and educational content to beginners. Only Robinhood Gold members get access to Morningstar research reports, and only on select stocks.

Customers who value simplicity love Robinhood's trading platform. Robinhood features both a desktop web portal and a mobile app. Impressively, both are simple in design and easy to use.

Desktop

The desktop interface is great for reading news articles and reviewing Morningstar research. It can also be nice to scroll through your stocks on a big screen, so you can see the ratio of green (good) to red (bad) on a given day.

Be aware that two-factor authentication (2FA) may slow down your desktop login. Although 2FA is great for security, it makes it a little more of a hassle to use Robinhood on desktop. The app is more convenient for most things.

During Robinhood's "Gold Standard" event, CEO Vlad Tenev said that the Robinhood app would change its layout a lot. This is expected to roll out in 2024.

App

Using the Robinhood app is quick and easy. Upon opening the app, you can see your account balance and investments. You can monitor any account in one tap. Tabs along the bottom include "Investing," "Crypto," "IRA," "Spending," and "Profile."

Robinhood has gotten in trouble for "gamifying" its app before. However, it seems to have dialed down these elements.

The Robinhood widget lets you see how your stocks are trending without opening the app. I recommend it, since you might be tempted to frequently open your account otherwise.

Customer service reviews are mixed. Robinhood rates decently on the App Store (4.2) and Google Play (4.1). User complaints mostly address the layout, which some find confusing. On Trustpilot, Robinhood scores a 1.2. This is pretty typical for big financial services, though it could be much better. It scores slightly worse than Webull (1.4) and much worse than SoFi (4.6), two of its biggest competitors. Complaints address poor customer service and difficulty reaching out.

You can contact Robinhood customer service one of two ways:

• Phone Monday - Friday between 7 a.m. and 9 p.m. ET.
• 24/7 online chat

You request a phone call in advance through the app. Or, you can send a chat and wait for a representative to get back to you. This could take a while depending on wait times.

Robinhood takes standard measures to secure your accounts. Your investments are insured by SIPC insurance for up to $500,000 (including $250,000 for cash). If you opt into Robinhood's brokerage sweeps program, your cash moves to partner banks. There, it's FDIC insured up to $2.5 million.

Robinhood scrambles passwords, encrypts personal information, and requires 2FA upon login. These are all standard and important security measures that keep your money safe.

Robinhood was founded in April 2013 by Vladimir Tenev and Baiju Bhatt. They aimed to democratize investing.

Robinhood's popular trading app launched in March 2015, and was one of the first firms to offer stock trading without commissions. More than 800,000 people were on the waitlist for the app when it launched.

In 2018, Robinhood made its appeal wider by adding cryptocurrencies like Bitcoin through Robinhood Crypto. This move made Robinhood one of the first to offer an easy way to buy virtual coins without fees.

In 2021, Robinhood went public in one of the year's most anticipated IPOs. It now trades under the ticker HOOD. As of 2023, more than 10 million people use Robinhood as their primary brokerage.

Robinhood has been the subject of controversy numerous times. While these issues are important for Robinhood to navigate and important for investors, we do believe Robinhood is a solid broker to consider, which is reflected in our overall rating.

Here are some of the serious issues that have arisen:

• In December 2020, the Securities and Exchange Commission charged Robinhood with misleading consumers in statements made between 2015 and 2018 and executing trades at inferior prices.
• In December 2020, the Commonwealth of Massachusetts accused the brokerage of gamifying trading, and steering inexperienced traders towards high-risk investments.
• On Jan. 8, 2021, Robinhood froze trading of GameStop and several other stocks that were the subject of intense trading interest, angering many of its customers.
• On June 30, 2021, Robinhood was fined $57 million and ordered to pay around $12.6 million to consumers who had experienced losses due to system outages during a period of market volatility in March 2020.

To be fair, Robinhood has done an excellent job of learning from these incidents. For example, it has done a good job of building its educational library and adding features for long-term investors, such as the availability of IRA investing.