Author: Shan Hills
Robinhood has grown tremendously, providing customers with a free mobile platform for trading stocks and cryptocurrency. These features, including an easy-to-use user interface and low-cost margin loans, appeal to new and experienced investors.
However, the company’s rise has drawn further attention. In the past year, the company received criticism from users for its untimely outages and foreign trade restrictions.
This review will provide insight into Robinhood, its benefits, and drawbacks.Â
Who Should Use Robinhood?
With over 12 million users under 30, Robinhood is a suitable alternative for younger investors looking to learn the game. Robinhood’s app and website’s inherent simplicity make it easy for beginners to use.
If you’re an investor interested in experimenting with bitcoin investments, Robinhood could be a good place to start. This broker allows you to exchange Bitcoin, Ethereum, and many more cryptocurrencies.
Robinhood has also improved its platform, making it an attractive options trading platform. However, there are concerns about the quality of trade executions.
Also, if you prefer trading on your mobile device and want to trade at the lowest possible cost, Robinhood is a good choice.
Where Robinhood Stands out
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Costs
Even though its capabilities aren’t as extensive as those other brokerages, Robinhood has some of the most economical fees in the industry. While other brokerages offer low-cost stock and ETF trades, the uniqueness of Robinhood is its low-cost options trading. Users can also trade cryptocurrencies with no commissions.
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Streamlined Interface
Robinhood is simple to use. It has features that simplify even the most sophisticated trading tactics, such as options trading, and make them accessible to beginners. Nevertheless, it is an excellent choice if you intend to trade stocks.
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Quick Account Funding
Robinhood appeals to investors because of its simple funding method and low account minimums. If you’ve ever tried to fund a brokerage account, you’re familiar with the long wait before your funds arrive. That is why Robinhood funding stands out because it deposits funds into your account in no time.
Robinhood works with banks to provide fast verification, allowing you to bypass the hassles of traditional verification by reporting small deposits into your bank account. Because of the quick confirmation, users can immediately transfer up to $1,000 of any deposit into their account, with the remainder arriving a few days.
Where Robinhood could make improvements
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No Mutual Funds or Bonds
One of the most popular ways for individual investors to partake in the market is through mutual funds. When using Robinhood, however, investors do not have this option. Investors may find it difficult to diversify their portfolios due to a lack of mutual funds.
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Limited Account Types
Because Robinhood isn’t a full-service brokerage, you shouldn’t expect the same variety of account kinds as you would with other brokers. For the time being, Robinhood only provides taxable brokerage accounts. Therefore, users who wish to keep their money long-term or save for retirement may miss out on tax breaks on retirement accounts such as standard or Roth IRAs.
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Limited CustomerÂ
While Robinhood has significantly worked on its customer support, it is still not on the level of other competing brokerages. Previously, speaking with a representative over the phone about your account concerns was nearly impossible. However, the company now offers a 24-hour customer service system. Even though it is an improvement, in an age when brokerages like Fidelity and Schwab respond in seconds, Robinhood needs to do more.
The Bottom Line
With other competing brokerages offering low-cost trading on stocks and ETFs, Robinhood is no longer the standout it once was. On the other hand, its no-commission options trading may be a big differentiator. If you’re an investor searching for a simple platform, Robinhood could be your brokerage. However, if you want more than a basic taxed account, you should look at other possibilities.
