Robinhood Review: Is Robinhood Legit & Safe (2024) 

Here’s a full Robinhood review that will help you if you are considering investing in it.

Robinhood is a well-known investment platform that allows users to trade stocks, options, ETFs, and cryptocurrencies free of charge. It also offers a 1% match on Individual Retirement Accounts (IRAs) and has a $0 account minimum. However, it doesn’t provide mutual funds and bonds.

One of the main advantages of using Robinhood is its user-friendly interface, which makes it easy for beginners to navigate the app. Another benefit is that it allows commission-free trades so that users can buy and sell stocks without additional fees or commissions.

However, it’s important to note that Robinhood has faced serious complaints and lawsuits over the years, which potential users should take into consideration.

Check out the article if you’d like to learn more about Robinhood and its advantages and disadvantages.

Robinhood Review at A Glance

Pros & Cons

Pros

• No account minimum.
• Streamlined interface.
• Cryptocurrency trading.
• IRA with 1% match.
• The high-interest rate on uninvested cash.

Cons

• No mutual funds or individual bonds.
• Limited customer support.

Customer Rating About Robinhood

What Makes Robinhood Apart From Others

IRA with 1% Match

In January 2023, Robinhood made IRAs available to all its customers, offering some unique features that are not commonly found in regular retirement accounts.

These features include a 1% match on contributions, which is typically only offered by employer retirement plans, instant deposits of up to $1,000, and suggestions on which ETFs to invest in.

It’s important to note that if you withdraw money within five years, Robinhood might take back the extra money they gave you.

However, with no fees and no minimum requirement to start, Robinhood’s IRA is an excellent choice for those who want to save for retirement, particularly with the added bonus of the 1% match on eligible contributions up to IRA limits.

Trading Fee

Robinhood is a discount broker known for its low costs, even if it doesn’t have as many features as other brokers. It offers some of the cheapest prices in the industry, including options trading without charging extra for each contract.

So, even though it might not have everything, Robinhood’s focus on keeping costs down can be appealing for investors looking to save money on trading fees.

$0 Cryptocurrency Trading

Robinhood is a brokerage firm that allows its users to purchase specific cryptocurrencies directly in their regular brokerage account without any fees. In contrast, traditional crypto brokerages usually charge high fees for this service.

With Robinhood, you can start trading with just $1, but there are some limitations to keep in mind. Unfortunately, not all U.S. states can access this service, and crypto-crypto trading pairs and staking aren’t available.

Additionally, Robinhood’s cryptocurrency selection is smaller than that of dedicated crypto platforms, and it’s only available in taxable brokerage accounts, not IRAs. Despite these limitations, Robinhood’s crypto offering is still highly rated among traditional brokers.

24/5 Market Feature

Starting in late May 2023, Robinhood introduced its 24-Hour Market feature, allowing users to place limited orders anytime from 8:00 p.m. Sunday to 8:00 p.m. Friday. This gives customers more flexibility in managing their trades beyond regular trading hours.

Robinhood Spending Account

Robinhood offers a spending account that comes with a debit card and FDIC insurance of up to $250,000. Users can send or receive money, set up direct deposit, and schedule recurring investments.

What sets Robinhood apart is its unique features, such as the ability to get direct deposit paychecks up to 2 days early and the option to round up debit card transactions to invest spare change in stocks or funds.

This round-up feature is similar to strategies used by popular robo-advisors Acorns and Stash, making it easy for users to invest while making everyday purchases.

Enhanced Features with Robinhood Gold

For a fixed monthly fee of $5, Robinhood Gold allows investors to earn higher rates on uninvested cash and lower rates on margin loans compared to the free account tier. However, it’s important to note that margin trading involves borrowing money from the broker, which can lead to losses exceeding your initial investment.

Gold members also receive a 5% interest rate on uninvested cash deposited into an affiliated bank account, along with increased deposit insurance of up to $1.5 million through partner banks, exceeding typical FDIC limits.

Robinhood IPO Access

With Robinhood, regular users can participate in a company’s initial public offering (IPO), a privilege usually reserved for financial institutions. However, this feature isn’t available in IRAs.

IPOs allow investors to buy shares in a company when it goes public for the first time, potentially offering exciting investment opportunities. While this feature discussed in the Robinhood review offers accessibility, it’s important to note that it’s not available for retirement accounts.

Quick and Easy Sign-Up Process with Robinhood

Signing up and funding your account with Robinhood is quick and straightforward, all done within the app in just a few minutes. After answering some basic questions and providing personal information, your account can be approved in less than an hour.

Instant verification with major banks allows for immediate transfers up to $1,000, while larger deposits take four to five business days. However, some complaints suggest signing up may be too effortless, so in this Robinhood review we suggest users should understand investing risks beforehand.

Robinhood Margin Account

You can borrow up to $1,000 in a Robinhood margin account for your monthly subscription fee. If you borrow more than that, you’ll be charged 8% annual interest on the amount borrowed.

This interest is calculated daily based on the cash balance in your brokerage account at the end of each trading day. Robinhood review indicate that if you borrow money for investing using margin, you’ll have to pay interest on the borrowed amount, especially if you borrow more than $1,000.

Where Robinhood Needs Improvements

Absence of Mutual Funds & Bonds

Robinhood’s absence of mutual funds and bonds limits the options for creating a diverse investment portfolio. Bonds are only available through bond ETFs, which may not offer the same level of diversification as individual bonds.

Investors may need to explore other platforms to get a fully diversified investment strategy discussed in this Robinhood review.

Limited Customer Support

Although Robinhood has made some improvements to its customer service, it still needs to improve compared to other brokerages. Users may find that customer support could be better when dealing with issues or inquiries.

Robinhood Reliability 

Robinhood has been criticized for facing service interruptions and imposing trade restrictions during market ups and downs. Moreover, regulators have fined the company for misleading customers, which led to imposing substantial penalties.

These issues, along with other customer service concerns, are discussed to provide a clearer understanding of the challenges Robinhood faces, and they are now discussed in this Robinhood review.

Is Robinhood Legit and Safe?

According to Robinhood review, it is safe for investors. It’s regulated by the SEC and a member of the Securities Investor Protection Corp. (SIPC), offering extra financial protection for customers’ cash and securities. This means your investments are protected up to certain amounts in case of any issues or losses.

In addition to these securities, Robinhood has been involved in various legal disputes and complaints listed below:

• Robinhood was fined $7.5 million by Massachusetts regulators for using gamification tactics to encourage risky trades.
• A data breach in 2021 exposed some users’ personal information, but financial losses were avoided.
• FINRA fined Robinhood $57 million for misleading customers and system outages during market volatility in 2020.
• The app faced criticism for restricting trading during the GameStop frenzy in January 2021.
• In 2020, the SEC charged Robinhood for misleading customers about trade prices, resulting in a $65 million settlement.
• Massachusetts accused Robinhood of attracting inexperienced investors and offering risky trading options.
• Service disruptions in 2020 and 2021 led to class-action lawsuits.

All About Robinhood

Robinhood is a platform where you can trade stocks, ETFs, and cryptocurrencies using a user-friendly mobile app. It’s known for not charging any fees for basic services.

However, it might be more suitable for experienced traders who are comfortable managing their investments without relying on customer service or additional resources.

Is Robinhood Right For You?

Robinhood could be a good option if you’re looking for an easy-to-use platform for trading stocks, ETFs, and cryptocurrency.

It offers features like an IRA with a contribution match and commission-free trading. However, with many brokers now offering similar benefits, it’s worth exploring your options to find the one that best fits your needs.

Check out Signupbonus recommendations for the best brokers for beginners if you want more choices.

How It Compares

Fidelity and TD Ameritrade

• Competitive trading commissions.
• Wide range of investment options.
• Sign Up Bonus: Varies; check website.

E*TRADE

• Lower fees for certain transactions
• Offers comprehensive services
• Sign Up Bonus: Varies, check website
• Referral Bonus: Varies; check the website.

Robinhood

• Simple and mobile-first approach
• Sign Up Bonus: 1 Free Stock after linking your bank account (stock value range $5.00-$200)
• Referral Bonus: 1 Free Stock for each referred friend

Interactive Brokers

• Advanced trading features.
• User-friendly platforms offer accessibility.
• Sign Up Bonus: Varies; check the website.
• Referral Bonus: Varies; check the website.

Tastytrade

• Offering options trading expertise and educational resources, it is unique in its alternatives.
• Sign Up Bonus: $5,000
• Referral Bonus: $250

Moomoo

• Offers competitive advantages such as $0 trading commissions.
• Diverse investment options.
• User-friendly platforms.
• Sign Up Bonus: 10 Free Stocks.
• Referral Bonus: 15+ Free Stocks

Webull

• Commission-free trading
• Advanced charting tools
• User-friendly mobile app
• Sign Up Bonus: Get up to 75 free fractional shares (valued up to $3,000) when you open a fund account with Webull.

Charles Schwab

• Competitive $0 trading commissions
• Wide range of investment options
• Comprehensive services, including robo-advisor and financial advisor options. Check more in the Charles Schwab review.
• Sign Up Bonus: $101 starter kit.
• Referral Bonus: $1,000

Conclusion

Robinhood review offers a user-friendly platform with $0 trading commissions, making it attractive for those seeking simplicity and mobile accessibility. However, its features may be limited compared to other brokers, and there have been concerns regarding its customer service and reliability during market volatility. Therefore, while it may be suitable for certain investors, it’s essential to consider your investment needs and preferences before choosing Robinhood as your brokerage platform.

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