Want to start investing, but don’t have a clue where to start? There’s only one brokerage I’m always recommending to beginners: Robinhood.
You’ve probably heard of Robinhood — it’s a mobile-friendly investing app that’s especially popular among younger investors. With its user-friendly tools, it’s a great way to ease into your investing journey.
Here’s what I like about Robinhood, what could be better, and how to use it the right way.
Why Robinhood is great for beginners
User-friendly interface
Robinhood makes it super easy to open an account and start trading in minutes. Buying and selling takes just a few taps, and the app will guide you through your first transactions.
The interface is sorted into simple tabs like “Investing” and “Retirement.” The app also has a ton of educational content, including articles with titles like “Why invest?” and “What’s an ETF?”
Years ago, I bought and sold my first stocks on Robinhood. I loved how easy it was to open my account, fund it, and make my first trades. I recommend it to anyone who’s looking to learn the ropes of the stock market.
Extremely low cost and fractional shares
With no commission fees on stocks, exchange-traded funds (ETFs), or stock and ETF options, Robinhood is one of the most affordable brokerages out there.
It costs nothing to transfer money into or out of your account, except there’s a 1.75% fee (max $150) for instant withdrawals and a $25 fee for outgoing wire transfers.
There are no fees to use the basic version of the platform. Robinhood’s premium subscription, Robinhood Gold, costs just $5 a month or $50 a year. Members get perks like a 3% IRA match, 4.00% APY on uninvested cash (at time of writing), access to the Robinhood Gold Card, and more.
Robinhood also offers fractional share investing, which lets you invest as little as $1 in most stocks. That means you can easily invest in almost any company on the market, no matter how high its share price.
Put simply, if you’re looking for an inexpensive way to start investing, Robinhood is hard to beat.
Ready to begin your investing journey? Check out our full Robinhood review to open an account in minutes.
Reasons to look elsewhere
Past controversies
While its interface is clean and intuitive, Robinhood has faced criticism in the past for making it too easy to make trades.
Some felt that the Robinhood platform “gamified” investing and encouraged users to trade too frequently or recklessly. The company tweaked its platform in response, like removing the digital confetti users saw when they made their first transactions.
Also, in June 2021, Robinhood paid roughly $70 million to the Financial Industry Regulatory Authority (FINRA) for “systemwide outages and misleading communication and trading practices.”
Earlier that year, Robinhood had limited users’ ability to trade certain “meme” stocks like GameStop and AMC, angering both users and lawmakers. The $70 million settlement was the largest in FINRA history.
It’s worth keeping these things in mind when starting out with Robinhood. A long-term, buy-and-hold approach is usually a better way to grow your money.
No mutual funds or bonds
Robinhood offers access to stocks, ETFs, cryptocurrency, and more, but not bonds or mutual funds.
Mutual funds are prepackaged groupings of stocks that let you invest in a bunch of different companies at once. ETFs are similar, only they usually track an index (like the S&P 500) instead of being actively managed.
Both can be great, hands-off ways to grow your money. But if you want access to mutual funds specifically — or bonds — you’ll have to look elsewhere.
How to use Robinhood the right way
Robinhood offers an intuitive, beginner-friendly way to start investing. I also love it for its lack of fees and access to all sorts of investment options (minus mutual funds and bonds).
The best way to use it is also the best way to invest in general: Focus on long-term growth. Build a diversified portfolio — then stay patient and avoid unnecessary short-term moves.
If you do, Robinhood can be the perfect tool to grow your money steadily over time.
Check out our list of the best stock brokers for beginners for more great options.
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