Review of Robinhood for Investors

Review of Robinhood for Investors
  • Opening Intro -

    Robinhood exploded onto the investing landscape in 2013, giving younger and more inexperienced stock traders the ability to easily buy stocks via a simple app and with free stock trades.

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This got more investors interested, and since then, Robinhood has expanded to offering exchange-traded funds, options, and crypto-currency.

Free trades seem to be the highlight of the company, but the app also offers other tips and tricks, like news and research reports, enough to satisfy even the more substantial trader.

Those Best Suited for Robinhood

Robinhood is perfect for investors beginning their foray into the stock trading world. When you are young, every dollar counts. The free stock trades really help those types of users.

More experienced traders will also want to take advantage of the options trading, and the more advanced and technology savvy will explore the crypto-currency offerings. However, the app does not offer many research options, and customer support might be difficult to find.

Strengths

The main strength of Robinhood is its low costs. The free trades on stocks, options, ETFs, and crypto-currency really appeal to any trader. With sites like TDAmeritrade or Fidelity offering around $5 in fees for the exact same stocks, Robinhood appears to be the better option.

The app is also very easy to use. You merely sign up with personal information, including your social security number and banking information, and you are all set to go.

A PIN helps you enter the app at any time, and immediately you will see your specific performance graph along with your portfolio. Stock purchases can be done in a matter of seconds.

Robinhood also offers free stock for referrals, which is a great way to begin your portfolio. The company advertises stocks like Facebook or Apple, but you usually end up with a stock worth only $5 like Groupon or FitBit.

Weaknesses

Since Robinhood is not a full-service broker, its supports may not be elaborate. It is very difficult to contact support throughout your experience.

The phone number of Robinhood is hard to find as well, and emailing support takes days to get a response. Not the best option for a young, inexperienced investor.

Robinhood also only specializes in the trading options mentioned above, like individual stocks, ETFs, and crypto-currency. It stops there and does not offer mutual funds, trust accounts, or IRAs.

Educational elements and research are almost non-existent with Robinhood. There are various news feeds, but that’s basically it.

The individual stocks offer a performance graph and a few key metric data numbers. Again, that’s just the price that you have to pay for free trades.

Safe to Use?

Robinhood is definitely safe. It is part of the Securities Investor Protection Corporation, guaranteeing your assets of $500,000 in stocks and options. The company is also legally compliant.

Robinhood has been vastly growing and has outnumbered E-Trade and other successful brokers in accounts. Robinhood also does not store bank passwords when you transfer money, and they are only used to verify access to the account.

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Conclusion

Robinhood is perfect for new investors, as well as more mature ones. The free trading is definitely a gift from heaven and outweighs the bad that comes with Robinhood, such as lack of research and support.

However, those who need more research and would like greater control of their portfolio, they may want to try other broker options like Charles Schwab or Fidelity.

The ~$4.95 fee for trades will definitely be useful for the information you receive.

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