Robinhood is one of the most widely used stock brokers in the US, with over 13 million active users. While there is plenty to like about this mobile-first brokerage, Robinhood does have some important shortcomings. So, if you’re just starting out with investing, it’s worth investigating whether Robinhood is right for you or whether you may be better served by an alternative brokerage.
In this guide, we’ll take a look at what makes Robinhood so popular and where it falls short. Then we’ll explore several alternatives to Robinhood that could be better for you.
What Is Robinhood?
Robinhood is a stock broker founded in 2013. At the time, Robinhood did several things that few other mainstream brokers were doing.
The platform only had a mobile app, with no desktop platform available. More important, Robinhood offered fully commission-free trading for every single user. That fee-free model made Robinhood particularly attractive to young traders and investors, and ultimately pushed the entire brokerage industry towards lowering or eliminating commissions.
Over the years, Robinhood has grown quite a bit. The brokerage introduced features like fractional shares – allowing users to invest as little as $1 in a company, no matter what the current share price is – which helped bring new investors on board. It also expanded its offerings for traders by introducing stock options trading and cryptocurrency trading. In addition, Robinhood now offers a web interface to compete with traditional stock brokers across multiple platforms.
Another significant change that Robinhood has made, and which has helped to turbocharge its popularity, is its introduction of some social network-like features. Robinhood allows any user to see the 100 most popular stocks on the platform, as well as displays popular companies across specific industries. It also operates a real-time news feed to help you stay on top of daily changes in the market.
The Problems With Robinhood
There’s a lot of good things to be said about Robinhood. Commission-free investing, fractional shares, and the wide variety of stocks to trade are all extremely important, regardless of whether you’re investing for the long term or getting into short-term trading.
However, the competitive advantages that Robinhood once had have eroded quite a bit. Many traditional brokers now offer commission-free investing and fractional shares, plus have an even wider range of stocks and other assets to invest in. It’s also hard to find a stock broker that doesn’t offer a mobile app today, even if not every brokerage app is as user-friendly as Robinhood’s.
On top of that, Robinhood has some significant flaws. For one, it offers almost no tools for analyzing the stocks you’re considering investing in. The platform has price charts, but they don’t offer the level of detail needed to pick out long-term price trends. You also won’t find much data about companies’ financials, which is a big deal if you want to invest in companies that are trading at a potentially discounted value.
Another problem with Robinhood is that it has almost no tools to help you build a portfolio. Within Robinhood’s platform, you have only the most basic view of how your investments are split across market sectors. The platform’s social features and news feed emphasize day-to-day price changes rather than long-term performance. In addition, you’re limited to investing in the stock market or cryptocurrencies, so it’s difficult to invest your money in safer assets like bonds.
If you’re investing for retirement, you’ll face another problem with Robinhood. The brokerage only offers standard investing accounts, not retirement-specific accounts like IRAs or 401(k)s. As a result, you can’t take advantage of important tax incentives for retirement investing with Robinhood.
The Best Alternatives To Robinhood
While Robinhood can still be a good choice for some investors, we think that some of the alternatives to Robinhood are better. Let’s take a closer look at some of the best Robinhood alternatives.
Webull started out as a direct competitor to Robinhood, with a mobile-first approach and fully commission-free trading. What’s great about Webull is that it offers a much more feature-rich platform than Robinhood. For example, you get access to customizable price charts with dozens of advanced technical indicators. Webull also has a stock screener, which makes it easy to find stocks that are worth investing in rather than just the stocks that are popular on any given day.
Another benefit to this broker is that you can open a paper trading account. This offers a chance to practice trading before you put your money on the line.
Still, Webull falls short when it comes to offering portfolio tools for long-term investors. In particular, there are few options for viewing your current investments and finding opportunities to diversify. But if your primary goal is to trade stocks, we think Webull is a more robust alternative to Robinhood.Click Here To Get Started (& Claim 2 Free Stocks)
M1 Finance is a simple and cost-effective platform for long-term investing. This brokerage offers more than 80 portfolios pre-built by experts, enabling you to start investing right away without having to worry about whether you’re diversified enough. If you want to customize these portfolios or build your own from scratch, M1 Finance has thousands of stocks and funds available. Better yet, the platform offers the tools you need to spot gaps in your portfolio diversification and fill them.
The other thing that’s nice about M1 Finance is that you can open accounts specifically for retirement investing. This broker offers traditional, Roth, and SEP IRAs, each of which come with a variety of tax benefits. You can easily set up recurring investments so that you put away a set amount for your retirement each month.Click Here To Get Started
E*TRADE And TD Ameritrade
E*TRADE and TD Ameritrade are two traditional full-service brokers that now offer commission-free stock investing, fractional shares, and advanced mobile apps. The selection of assets is massive, with thousands of stocks and funds from all over the world, plus safe options like bonds and CDs. You can get access to detailed analysis from in-house researchers, which is critical when you’re trying to evaluate companies. Both brokers also offer their own pre-built portfolios, making it easy for new investors to get started.Click Here To Get Started With E*TRADE
On top of that, they each offer a wide variety of investing accounts. You can set up an IRA or manage a 401(k) in addition to opening a standard investing account.
Perhaps the best thing about these established brokers is that you have access to reliable support. If you’re having problems with your account, you can get in touch with a dedicated support team five days a week and get help immediately. That’s a big difference from Robinhood support, which often points you to FAQ articles instead of connecting you with a real person.Click Here To Get Started With TD Ameritrade
Conclusion: Alternatives To Robinhood
Although Robinhood has become one of the most popular brokers in the US, it’s not necessarily the best broker for you. Alternatives like Webull, M1 Finance, E*TRADE, and TD Ameritrade offer a wider variety of trading tools, retirement investing accounts, and personalized support. If you’re looking to start investing, it’s worth taking a closer look at what these Robinhood alternatives can offer before you commit to a brokerage.