Robinhood
4 comparisons available
About Robinhood
Robinhood Markets is an American financial services company founded in 2013 by Vlad Tenev and Baiju Bhatt, based in Menlo Park, California. Robinhood pioneered commission-free stock trading in the US, forcing established brokers like Charles Schwab, TD Ameritrade, and Fidelity to eliminate commissions in 2019. The platform has over 23 million funded accounts and $150 billion+ in assets under custody. Robinhood's primary product is its mobile-first brokerage app offering commission-free trading of US stocks, ETFs, options, and cryptocurrencies. Robinhood Gold ($5/month) provides access to margin trading, Morningstar research, and higher interest on uninvested cash (currently 4.5% APY). The platform came under intense scrutiny during the January 2021 GameStop short squeeze when it temporarily restricted buying of meme stocks, which became a congressional hearing topic. Robinhood generates revenue primarily through payment for order flow (PFOF), net interest (on margin loans and cash sweeps), and Gold subscriptions. In 2024, Robinhood expanded into banking products, retirement accounts (IRA with 1% match), and credit cards.
Frequently Asked Questions
Is Robinhood safe?
Robinhood is regulated by FINRA and the SEC, and customer securities accounts are protected by SIPC up to $500,000 (including $250,000 for cash). Cash in brokerage accounts is swept to program banks and is FDIC-insured up to $2.5 million. The platform itself is legitimate, though critics point to its payment for order flow model and simplified interface that may encourage overtrading.
Robinhood vs Fidelity: which is better?
Fidelity is generally better for serious investors: no payment for order flow (better trade execution), superior research tools, mutual funds, and full banking services. Robinhood is better for beginners who want a simple mobile app and commission-free crypto trading in the same account. Fidelity also offers a 2% cash management card vs Robinhood's 3% (Gold required).
How does Robinhood make money if trades are free?
Robinhood makes money primarily through payment for order flow (PFOF) — market makers pay Robinhood for routing customer orders to them. It also earns interest on cash balances and margin loans, Robinhood Gold subscription fees ($5/month), and interchange fees from its debit card. PFOF is controversial as it creates a potential conflict of interest, though Robinhood argues it still provides competitive execution prices.
Top Alternatives to Robinhood
Fidelity
No PFOF, better research tools, full banking services
Charles Schwab
Full-service broker, owns TD Ameritrade, thinkorswim
Webull
Commission-free with more advanced charting tools
E*TRADE
Morgan Stanley-owned, strong options platform
Public
Social investing features, no PFOF model
Coinbase
Better for crypto-focused investing