Best Robinhood Alternatives

Robinhood Markets, Inc. [NASDAQ:HOOD] is an American financial services (Fintech) company that operates as a discount online broker.

The Menlo Park, California-headquartered company offers an extensive range of commission-free investment products and services, including stocks, exchange-traded funds (ETFs), cryptocurrency, options, and American depositary receipts (ADRs) via a mobile app.

Robinhood’s commission-free trading model and slick and easy-to-use interface has made it hugely popular with retail and first-time investors. It was established by Vladimir Tenev and Baiju Bhatt in 2013 and went public in 2021.

How Robinhood Makes Money?

Robinhood is the pioneer of the commission-free trading model. If commissions don’t exist, though, how does HOOD make money?

The company generates revenue through premium membership fees, cash management fees, user transactions, interest from uninvested cash, and other smaller revenue streams.

Transaction-based revenues

When investors place orders for equities, ETFs, cryptocurrencies, and options, Robinhood routes the order through market makers. This process is known as payment for order flow (PFOF), and the brokerages that use PFOF get rebates from market makers.

The commission, though very small for each transaction, is a major source of revenue for Robinhood owing to the large number of orders it handles.

Most recently, Robinhood’s revenue from users’ transactions hovered around $363 million, accounting for over 73% of the company’s total revenue. 

Revenue from cryptocurrency transactions

This has been Robinhood’s fastest-growing source of transaction-based revenues.

The prime driver of this growth was Crypto Gifts, a platform offered by Robinhood that allows account holders to send crypto to family and friends.

The company is planning for the international expansion of its crypto platforms, along with the launch of a host of other crypto-related services.

Revenue from memberships fees for Robinhood Gold

Robinhood receives subscriber fees from Robinhood Gold, which is a paid subscription service offering premium features, including investing tools that provide professional research reports, instant access to larger deposits, Nasdaq Level II market data, and margin trading for approved users. T

he company charges a monthly fee of $5 for Robinhood Gold.

Income from Margin Trading

When investors use margin for trading, they’re borrowing from Robinhood Securities, and the company earns income from margin loans to users.

At last watch, a 2.5% interest rate was levied on a sum of more than $1,000, borrowed for margin trading.

Income from Cash

If customers have uninvested cash, that money can generate interest for Robinhood if it is deposited into bank accounts.

Miscellaneous sources of revenue

Robinhood also makes money from a variety of miscellaneous sources. For example, if the user wishes to transfer the account to a different brokerage firm, Robinhood charges a $75 transfer fee.

Robinhood also makes money from the fee levied on the usage of its debit card.  It charges $20 for overnight check deliveries.

Pros Of Robinhood

The most attractive feature of Robinhood is that it lets users trade stocks, options, cryptocurrency, and ETFs for free.

It has a transparent fee structure with zero or low non-trading fees. Trading fees are imposed – and Robinhood has no control over these – and relate to the fees (e.g. regulatory) charged on commissions, conversion and spreads to name a few.

Non-trading fees are not directly linked to trading, such as withdrawal or inactivity fees. 

Trading Fees for Robinhood

Stock fees and ETF fees: Robinhood lets you trade US stocks, and ETFs, without charging any commission but may charge you regulatory fees and other fees outside its own remit.

A Robinhood Gold account is required for trading stocks on margin. Trading on margin means you borrow money from your broker to buy stocks. You in turn will have to pay interest to your broker on the money you have borrowed. 

Robinhood has a low margin rate compared to most of its competitors. For Gold membership, you are charged a monthly fee of $5, and as far as charges for margin trading is concerned, there is no fee for margin below $1,000, but anything in excess of $1,000 you are charged an additional 2.5% annual charge on the amount that is in excess of $1,000.

Options fees and Crypto fees

As in the case with ETFs and stocks, Robinhood offers commission-free trading in options and cryptocurrency as well.

Non-trading fees

Robinhood has low non-trading fees.

There is no withdrawal, account opening, deposit or inactivity fees. However, $75 is charged for transferring the account to some other broker.

There is no fee for ACH withdrawals, but a domestic wire transfer costs $25, and an international wire transfer $50.

More Pros of Robinhood

Slick and easy-to-use interface: Robinhood’s mobile app is extremely easy to use, so much so that even inexperienced investors can trade with ease. 

The mobile app is not state-of-the-art or highly sophisticated; it has some basic features which nevertheless let investors trade without much friction.

Also, you can purchase fractional shares for as low as $1.

Free cryptocurrency trading

This is an important feature offered by Robinhood – very few stock brokerages let investors trade cryptocurrencies for free.

IPO Access

Last year Robinhood unveiled a feature that allows investors to take part in the Initial Public Offering (IPO) of organizations set to trade on public markets.

Other important features

Another important feature offered by Robinhood is the dividend reinvestment program (DRIP), which if enabled in the app, reinvests dividend income derived from equities and ETFs.

It also has a recurring investment tool, which enables you to automatically invest a fixed dollar amount at periodic intervals.

Robinhood’s cash management features generate .30% APY. Additionally, no fee is charged at the company’s network of over 75,000 ATMs

Cons of Robinhood

No retirement accounts: Only taxable brokerage accounts are supported by Robinhood. This makes it less suitable for long-term investment as investors are not offered tax benefits associated with retirement accounts like traditional and Roth IRAs.

No mutual funds or bonds

Robinhood does not let investors buy mutual funds, bonds or any other fixed-income investment products, which makes it difficult to build a fully diversified portfolio. Also, investors cannot dabble in forex, commodities or futures. 

Inadequate customer support

Robinhood has made improvements in its customer support in recent times, but it still falls short when compared to its peers and competitors.

Limited research facilities

Robinhood does not boast of deep research or educational resources for its customers.

Investors interested in something more than basic stock quotes have to subscribe to Robinhood Gold which comes with a $5 monthly fee. Even then, Robinhood falls short of expectations when compared to its competitors.

Reliability

In recent times, Robinhood has come under fire for vulnerabilities, including outages during periods of high volatility, technical issues, security breaches, trade restrictions and revealing customer information, and has been fined by regulators. 

How to Open an Account at Robinhood?

Account opening at Robinhood is fairly simple. The entire process is digital and can be achieved in a short period. On the negative side, only US citizens can open an account and IRA accounts are not offered.

However, the company is planning to expand its presence to Europe and other continents. The company has already been granted a brokerage license in the UK from the Financial Conduct Authority (FCA). 

Minimum deposit requirement at Robinhood

There is no minimum deposit requirement for the Robinhood Instant account.

However, the minimum deposit amount for Robinhood Gold account is $2,000.

Account Types

Robinhood Instant account is what you get for signing up with Robinhood. You can upgrade it to a Cash Account, or opt for Robinhood Gold in which case you will be charged $5 per month.

Assess your needs properly before subscribing for Gold because some additional features offered with Gold subscription is available free of cost at some other US brokers.

Robinhood Instant and Robinhood Gold accounts permit only three-day trades per week. Anything exceeding that limit will lead to blockage of the account for 90 days unless you have a balance of at least $25,000.

Another important feature offered by Robinhood is that of margin trading. You can borrow money from the broker for trading purposes, but you have to pay interest on the borrowed money. 

How To Open Your Account 

The entire process of opening the account is user-friendly and fully digitalized.   You can submit your application within 10 minutes, and the entire application is verified within a day.

In order to open an account, you need to:

1. be of a legal adult
2. have a valid social security number
3. possess a US residential address
4. be a US citizen, a US permanent resident or have a valid US visa

To complete the process, you have to do the following:

1. Provide your personal information such as social security number, date of birth and address
2. Answer a few questions that gauge your trading experience
3. Authenticate your identity with your driver’s license/identity card/passport. 

Deposits & Withdrawals

Robinhood charges nothing for deposits.

In the case of the instant deposit option, the money is immediately credited. You can immediately deposit up to $1,000. This amount goes up to $50,000 in the case of the Robinhood Gold account.

Anything above the set limit will be transferred in 4 to 5 business days. For example, if you transfer $2,000 to your Instant account, $1,000 is immediately credited, while the remaining $1,000 will be deposited after 4 to 5 business days.

Robinhood Withdrawal Fees & Options

Robinhood offers free ACH withdrawals. However, this is not the case with wire transfers, as you have to shell out $25 for domestic transfer, and $50 for international wire withdrawals.

The withdrawal limit per day is $50,000, and it takes 3 business days for the withdrawal to be processed.  In case you have an uninvested amount, the withdrawal can be made in 5 business days.

Stock transfer

Robinhood allows stock transfers. Incoming stocks entail no charges, while outgoing transfers cost $75 for every transaction.

Cash Management

Robinhood offers a cash management service, which lets you earn an annual interest of 0.30%. on your uninvested cash.  

Robinhood Alternatives

Here we assess different online brokers worldwide that offer a robust and easy-to-use online trading platform with zero or low commission charges for trading.

The information provided will aid you in making an informed decision and help you choose an online broker you think can efficiently take care of your investing needs.

eToro

eToro, founded in Israel in 2006, is a social trading network, and contract for difference (CFD) brokerage, which allows you to buy stocks, ETFs, cryptocurrencies, and/or follow successful traders on the platform, known as social trading.

It was one of the few online trading companies to offer the facility of trading in digital currency when it facilitated the trade of Bitcoin in 2014 through its CFD trading platform.

An introduction to Social Trading

In 2010, eToro launched an innovative social trading feature called CopyTrader™, which is a form of investing that allows the regular investor to copy the trading behavior of other investors, who in turn charge a commission in the form of profit-sharing, a monthly-fee, or other fee types.

This is a great feature, especially for investors who are new to the world of investment, as it lets them copy the ideas of more successful investors.  Zulutrade, Darwinex and Naga are some of the other trading platforms that offer this feature.

Trading Experience

Traders can buy and sell CFDs on dozens of digital currencies and tokens. eToroX is the firm’s professional-grade cryptocurrency exchange that comes equipped with advanced features and a comprehensive product suite for professional investors.

To sum it up, eToro is an established, safe and hassle-free trading platform that offers a powerful crypto trading experience.

Investors interested in taking positions can opt to buy and sell crypto CFDs, whereas those looking to buy and sell actual cryptocurrencies can trade on eToroX.  

Also, it is a well-regulated secure platform that offers a host of innovative products. The US and UK clients can earn $ 50 as referral balance.

The downsides of eToro include complex fee structure, withdrawal and inactivity fees, and overnight fees on CFD positions. Also, investors need to have a minimum of $25 to purchase cryptocurrencies, whereas the minimum trading amount is even higher for eToroX.    

SoFi

SoFi, short for “social finance”, is ideal for beginner investors who have just stepped into the world of investing.

A SoFi Invest account has no minimum amount requirement for account opening, which means you can start trading even if you do not have a large sum to invest.

It is an intuitive and easy-to-use app, which allows investors to open an active or automated investing account, and dabble in cryptocurrencies.

Pros of SoFi Invest

No minimum amount is needed to start investing. You can have $0 in your account and need just $1 to start investing.

There are no commissions for active trading (buy stocks and funds as per your own choice) and automated investing (pre-built portfolios with risk levels clearly defined), and a very low fee for investment funds like ETFs.

It lets investors invest in fractional shares, and offers access to Certified Financial Planners (CFPs) at no additional cost.

Investors are charged a minimal 1.25% for trading in cryptocurrencies like Bitcoin and Ethereum. Additionally, investors are offered $10 in Bitcoin for their first crypto trade.

SoFi also features IPO investing.

Cons

No tax-loss harvesting, which is a technique to sell a stock or a mutual fund at a loss for tax benefits.

SoFi has a limited track record. SoFi’s automated trading platform came into existence in 2017.

There is no option for stop-loss orders and it’s only available only to US citizens.

To sum it up, SoFi Invest is a trading platform with basic features, which makes it ideal for beginner investors who initially may not have a large amount to invest.

SoFi offers both automated investing accounts and IRAs, in contrast to Robinhood which only offers active trading accounts.

Webull

Webull is a mobile-first brokerage platform with a slick interface that helps beginner investors get started in stock trading, cryptocurrencies and options trading with ease. 

The app charges no fee for stock trading, options trading, and offers a host of advanced features and tools, such as individual retirement accounts (IRAs), Level II market data from NASD and more.

Pros of Webull

• An excellent mobile app with an easy-to-use platform for a great mobile experience.
• Zero minimum deposit or platform fees.
• Offers direct access to 11 different cryptocurrencies for trading
• No fee for trading in stocks, ETFs, option trades, and American depository receipts (ADRs)
• No annual or inactivity fee

Cons

• Compared to some of its peers, there is a dearth of educational resources
• $75 charge for transferring assets to another brokerage firm.
• Customer support is not rated as highly as competitors
• No option for mutual funds, bonds, futures or foreign exchange (forex) trading

In both platform design and marketing focus, Webull seems to be competing directly with Robinhood. It has a great user interface combined with advanced features and tools, which makes it a perfect platform for intermediate level traders with some experience. 

TD Ameritrade

TD Ameritrade, acquired by Charles Schwab, but still operating as a separate entity, serves the needs of both beginner and experienced traders.

An easy-to-use mobile app, quality trading platforms, zero commissions for stock and ETFs, a large number of mutual funds choices (over 500), and top-quality educational programming makes TD Ameritrade one of the most venerated brokerage firms in the market.  

Pros of TD Ameritrade

With its breadth and depth of educational programming, TD Ameritrade offers a nonpareil experience for beginners to learn about trading in the stock market. 

• An extensive range of high-quality free research for investors from reputable sources like the Federal Reserve Economic Database and Morningstar.
• Excellent customer support available 24×7 via live chat, email, social media, phone as well as an in-person meetings.
• A range of high-quality trading platforms, including the highly-rated thinkorswim platform, and large investment options ranging from mutual funds to forex trading.
• User-friendly interface that offers seamless learning and trading experience.

Cons of TD Ameritrade

One major drawback of TD Ameritrade is that it does not offer the option of fractional shares trading, which allows traders with limited investment amounts to purchase high-priced stocks.

• TD Ameritrade’s margin rates are higher than some of its competitors
• No direct access to cryptocurrencies, though crypto-based products are available through TD Ameritrade.
• In short, TD Ameritrade provides a personalized learning experience for beginners, offers a wide range of investment choices, and scores high on important parameters such as customer care, pricing, security, and reliability.

TradeStation

TradeStation is a top-quality trading platform for day traders and experienced investors.

TradeStation’s desktop trading platform is simply state-of-the-art, making it a top choice for serious investors looking for a professional-level trading experience.

It offers real-time scanning of market indicators and comes equipped with a host of advanced tools. On top of that, it is highly customizable allowing investors to download apps to create their own investment strategies.

Pros of TradeStation

• Incredibly sophisticated trading platform for experienced investors
• An extensive range of high-quality educational materials and research
• Over three decades of experience
• Zero commission for stock, ETF, and options trades.
• Offers accessibility to foreign markets, penny stocks and IPOs

Cons

• Not suitable for beginners
• $2,000 initial investment for free trades on desktop application
• $50 annual inactivity fee
• Customer service falls short of expectations
• Commission charged for mutual fund and bond trading
• Receives payment for order flow (commission for routing trades to market makers)
• No provision for fractional shares

To sum it up, TradeStation is a top choice for serious investors who want accuracy, fast-trade execution and the ability to customize tools as per their own requirements. It offers comprehensive research and an impressive list of investments.

tastyworks

A tech-focused platform, tastyworks is designed keeping primarily active options traders in mind, although it does have stock trading functionality as well. In this tastyworks review, we’ll explore the features, pros, and cons to help you decide if it might be the right stock broker for you.

tastyworks, an online brokerage platform developed by tastytrade, is specifically geared towards active options traders.

It offers education, support, research tools, and technology to option traders, futures traders and experienced stock investors.

Pros of tastyworks

• Extensive range of educational materials
• Sophisticated tools and technology for option traders
• No minimum balance requirement
• Excellent customer support service
• A multitude of customizable features available on the web, mobile, and desktop platforms 

Cons

• Not suitable for beginners
• No facility for mutual fund trading
• Absence of features such as market news, trading ideas, and screeners
• Primarily built for options trading, which means exposure to other assets class is very limited
• Less competitive margin rate structure

To sum it up, tastyworks is designed to serve derivatives traders rather than general investors. If you are an options trader, tastyworks is an excellent choice for you with its advanced tools, quality research, extensive educational content and competitive pricing.

Best Stocks to Trade on Robinhood

Robinhood Markets, Inc. [NASDAQ:HOOD] has been one of the biggest disruptors in the brokerage industry with more than 22 million funded accounts and over $100 billion in assets.

The firm still enjoys widespread popularity with young investors, despite rising competition and accusations of intentional trade restrictions Some of the top Robinhood stocks to buy right now are mentioned as follows: 

Microsoft

The market owing to the uncertainty bred by the ongoing Russia-Ukraine conflict is in a state of turmoil. Buying stocks of top-quality organizations during periods of volatility can be a good strategy for investors, as it gives them an opportunity to add shares of quality companies with strong growth prospects at a lower price.

Microsoft Corporation [NASDAQ:MSFT] together with Facebook, Amazon, Apple, and Alphabet, is considered one of the Big Five technology companies or “FAAMG”.

MSFT is currently down from its all-time high, which means now could be a golden opportunity to add this software giant to your portfolio. The company has been expanding virtually unhindered, as evident by its recent multibillion-dollar acquisition of Activision to strengthen its position in the video gaming industry.

Microsoft is also experiencing strong growth in its cloud computing segment through its Azure offering. Cloud revenue jumped to $22.1 billion in Q2, an increase of 32% in comparison to the same period last year.

The bottom line here is that MSFT is a strong stock with multiple tailwinds, including stellar earnings, rapidly expanding Cloud SaaS capabilities, a visionary CEO, acquisition of ATVI, and an attractive valuation to top it all. These factors make it a top tech stock, especially during current market weakness.

Nvidia Corporation

Nvidia Corporation [NASDAQ:NVDA], pronounced ‘Invidia’, is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit (GPU). 

The share price of the semiconductor firm has taken a slight beating recently, despite the company delivering stellar Q4’22 results with both Gaming and the Data Center business performing above expectations.

Total revenues for the quarter came in at $7.64 billion, a highly impressive surge of 53%, compared to the same period a year earlier.

Nvidia’s GeForce RTX 30-Series GPUs continue to rule the roost with avid gamers, and the company is further expected to benefit from the launch of new RTX products.

The company’s Data Centre business surpassed the gaming business for the first time thanks to heightened demand for high-performance computing and artificial intelligence solutions.

Management had announced in September that it would purchase U.K.-based Arm Holdings from Japanese investment firm Softbank in a transaction valued at $40 billion. The deal has failed to go through, which means NVDA has an abundance of cash to indulge in share buybacks. 

It is expected that NVDA will grow at a faster than expected rate this year, driven by new product launches and demand for AI solutions, which makes it a top stock for investors on Robinhood.

Qualcomm

Most semiconductor stocks have performed below expectations so far in the current year, but that does not mean investors should shy away from top-quality semiconductor firms like Qualcomm [NASDAQ:QCOM].

The company is a major designer of semiconductor components and a leader in 5G technologies.

The company receives licensing revenues on almost all 3G, 4G, and 5G handsets, which means it has a continuous source of revenue. The growth of 5G and the popularity of smartphones means the company is in a great position to capitalize on multiple secular growth tailwinds.

The semiconductor powerhouse reported sales of $10.7 billion in the first quarter of fiscal 2022, an upswing of over 30 per cent in comparison to the same period a year ago. The semiconductor firm has also done better than its peers during the recent battering the technology stocks have received.

Strong earnings growth, great free cash flow, attractive valuation, a 1.62% dividend yield, increasing focus on the automotive chip supplier industry, diminishing reliance on Apple [AAPL], and solid strength in licensing space makes Qualcomm a hugely attractive long-term buy.

Airbnb

One of the worst sufferers of pandemic restrictions was the Travel & Leisure industry, with the sector losing nearly $500 billion in the US alone in 2020.

Things started to improve though in 2021 with the widespread availability of vaccines. The sun finally started to shine on industries and Airbnb was a big winner.

Airbnb Inc, [NASDAQ:ABNB] is poised to profit from the travel industry recovering from the pandemic. The company is in a rebounding mode as the global reopening picks up steam and the company’s revenue and bookings show healthy growth. In fact, the company’s Q4 2021 revenue came in at $1.5 billion, a solid jump of 78% year-over-year.

Airbnb finds itself in a strong position to benefit from the lifting of travel restrictions, a fact demonstrated by its latest quarterly results. It is a lucrative long-term growth prospect for investors looking for sectors that are going to be the prime beneficiary of fading lockdowns and social distancing.

Is Robinhood Legit or a Scam?

It is very important to be sure about the legitimacy of a financial provider like Robinhood because you are trusting it with your investments and savings.

As far as Robinhood is concerned, it is of course legit as it is regulated by venerable financial authorities, such as the Securities and Exchange Commission (SEC) and the Financial Industry Regulation Authority (FINRA).

Robinhood Financial LLC is a member of FINRA and falls under the US investor protection scheme, the SIPC, which covers up to $500,000, including a $250,000 limit for cash. However, Robinhood Crypto LLC is not protected by the SIPC.

Another major assurance for investors trading on Robinhood’s platform is that it is listed on Nasdaq, and as such has to release financial statements on its website at regular intervals in a transparent manner.

Is Robinhood Only for US Citizens?

Robinhood only accepts US citizens. What it means is that if you are not an American citizen, you cannot invest through Robinhood.

The app-based broker, which offers commission-free trading for US stock, options and crypto trading, specifically requires an investor to have a valid Social Security Number (SSN) in order to open an account.

Remember that merely furnishing Taxpayer Identification Numbers will not suffice. So, an investor, in order to open an account, must have a legal address of proof within the 50 U.S. States or Puerto Rico.

Non-US citizens can open an account only if they possess a valid U.S. visa. However, the zero-fee discount broker is in the process of making its services available to residents of Europe and other continents.

Conclusion

Robinhood offers a lot of features and benefits, and this has been precisely the reason for its overwhelming popularity, especially amongst beginner investors.

Its most defining characteristic is its highly appealing fee structure, as it is a discount broker in the real sense of the world charging no commission on the trading of stocks, ETFs or cryptos.

Moreover, there are no withdrawal or inactivity fees, and the overall fee structure is transparent.

The online trading platform is sleek, intuitive, and easy-to-use and the account opening process is easy, quick and fully digitalized, plus there is no minimum deposit amount requirement.

The mobile app also has a good search function, which in turn makes it easier for investors with limited trading experience to buy and sell stocks, ETFs and cryptos. It also offers cash management services and has recently introduced a recurring investment feature.

Robinhood, in all honesty, suffers from a few drawbacks as well. It is only available for US residents, though it is working towards expanding its reach in Europe and other continents.

The firm does not offer facilities of mutual funds, forex, or futures trading. Customer support falls short of expectations, as you can only reach them through e-mail, and the wait for answers can be frustrating.

Also, Robinhood’s education materials are in the need of improvement, as there are no trading tutorials or educational videos. A credit/debit card facility is not available, and wire transfers are expensive. Also, investors need to subscribe to Robinhood Gold, which costs $5 per month, for margin trading, and access in-depth research reports and data.

Final verdict

Robinhood has built a strong brand, and despite rising competition continues to remain highly popular with young investors, despite its fair share of fines and criticisms. If you’re new to investing and have a limited amount for trading, Robinhood is a great place to begin. The mobile-first broker offers a well-designed easy-to-use app for new investors.

The recent controversies and criticism of Robinhood may have dented its reputation amongst its target base, but it still remains a good place to start with its commission-free trading, and its regulation by financial authorities, such as the Securities and Exchange Commission (SEC) and the Financial Industry Regulation Authority (FINRA).

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.