2021 Robinhood App Review 2021 Robinhood App Review: Is It the Best Free Stock Trading App?

2021 Robinhood App Review

I’ll admit it off the bat: until the last few years, I didn’t know a whole hell of a lot about investing. Despite the technical analysis seminars I’d tag along to with my father, my past experience with apps like Acorns, and even keeping a decent eye on the stock market in general, I’d never directly purchased a stock of my own. But that finally changed a few years ago when, after a long while of reading about it, I finally decided to download and sign up for Robinhood. Now, after several years of using the app, I’ve really become a fan overall — despite some high-profile missteps and controversies.

If you’re not familiar, Robinhood is an app that allows users to buy and sell stocks without any fees or commissions. As the app has grown, they’ve also added some new features, including the ability to buy cryptocurrencies, trade options, and hold funds in a Cash Management account. If you’ve come to the realization that you should be doing more with your extra cash, let’s take a look at how Robinhood can help you start investing your money.

Robinhood App Review
Robinhood logo
Robinhood: Still an Easy Way to Get Started with Investing
4
Monthly fee
Free ($5 a month for Robinhood Gold)
Investments supports
Stocks, ETFs, options, cryptocurrencies
Other features
Robinhood Retirement, Robinhood Cash Card, and more
Setting aside past controversies and scandals, there’s no doubt that Robinhood changed the brokerage industry for the better and remains one of the most accessible options for new traders. Plus, the app now also offers a wider variety of features, including retirement accounts for long-term investing. All in all, Robinhood is an easy-to-navigate and use investment tool. However, some downsides include their “payment for order flow” model and the inability to invest in some other assets such as bonds.
Pros
  • No account minimum
  • Commission-free trading
  • Offers dividend reinvestment (DRIP)
Cons
  • Uses “payment for order flow”
  • Doesn’t offer bonds trading
  • Past controversies continue to surround the brand

Signing Up for Robinhood and Funding Your Account

While most of the finance apps I review involve a bit of a sign-up process, joining Robinhood was the most intensive experience I’ve had so far. Of course, this is completely understandable as the app must adhere to various regulations and needs to ensure that shareholders are properly documented. Because of this, it took me a few days from my first attempt at signing up until I was ready to trade.

To be fair, part of the problem with my sign-up process and the delay I experienced may have been my fault. For example, while the app allows you to upload a photo of your government-issued I.D. easily, the photo I took was apparently not readable. There was also a problem with my Social Security number not matching, which probably means I typed it wrong and didn’t catch my error until it was too late. In any case, I was eventually able to send a photo of my SS card in order to move forward with the approval process.

Another issue I encountered during the application process was that I had forgotten to unfreeze my credit file. Like many people, I elected to freeze my credit reports after the Equifax hack a while back and had completely forgotten that Robinhood would need to access my information. This must be something the app runs into fairly often as the team at Robinhood made it really easy to proceed. Once I put a temporary lift on my credit account, all I had to do was respond to their email to let them know. In both cases (the unfreezing request and the social security card issue), the folks at Robinhood were very quick to respond and push my application through. So while it took a few extra steps along the way, within a few days I was ready to fund my account.

Speaking of funding your account, I found this part of the process to be much easier. For select banks, connecting your account is as simple as logging into your bank’s online service (via the popular Plaid service) as you would from their app or website. Alternatively you can manually enter your account and routing numbers in order to link them to Robinhood. I ended up trying both options as my Wells Fargo was available to link, while my Discover Bank account had to be added manually.

One nice thing about Robinhood is that, once you initiate a transfer from your bank, it allows you to access your funds right away (up to $1,000, that is). You also have the option to set up recurring transfers so that you’re automatically adding to your investment funds. While I haven’t tried out that automation just yet, I’ve definitely been impressed with the speed at which money is transferred, allowing me to snag a good price on a stock instead of waiting around for funds to clear.

Finally, I should also mention that Robinhood has a unique referral program that incentivizes users to share with their friends. When you invite people to join Robinhood using your special link, you’ll both earn a free stock when their application is approved. The type of stock you earn is random, with 98% of people receiving a stock valued between $2.50 and $10 — although some may receive stocks worth up to $250. If you are opening an account, feel free to use my link.

Get a Free Share of Stock

Not a Robinhood user? If you haven’t signed up yet just click the button to create an account and get a free share of stock just for opening an account with this Dyer News link.

Free Stock

Buying Stocks on Robinhood

When it comes to buying stocks on Robinhood’s platform, I’m really not sure it could be any easier — even for a newbie like me. All you need to do is enter how many shares you’d like to purchase, review the order, and submit. Moreover, if you don’t have the funds available to make the trade, it will prompt you to make a transfer for the difference.

As a long-time Disney fan, I knew what stock I wanted to buy before I even downloaded Robinhood. At the same time, I didn’t necessarily just want to pay the going rate to own a small piece of the Mouse House. That’s why I decided to give Robinhood’s limit order option a try.

Simply put, placing a limit order allows you to state what price you’re willing to buy a stock at and have the app execute your order should it become available. You can elect to have these orders expire the next day or keep them open indefinitely. In my case I entered a limit order for a couple of dollars below the current market price, set it to expire only when canceled, and was surprised to find I had become a Disney shareholder the next day. Incidentally I set a second order to buy if $DIS fell below $100 a share and so I now own two shares of the Walt Disney Company.

Robinhood also offers the ability to set Stop Loss and Stop Limit orders, allowing users to set buy prices above the current trading price. Likewise you can also set similar triggers to have the app sell your stock positions when the price reaches certain lows or highs. I won’t pretend to understand all the intricacy and exceptions to these tools but they’ve worked pretty well for me (note: I haven’t actually sold any stock yet so I haven’t tried those options).

Fractional shares

Like several digital brokerage accounts, Robinhood now allows users to purchase pieces of stocks or WTFs instead of needing to buy a full share. To do this, you’ll just need to enter the amount you want to buy in U.S. dollars (as opposed to putting the number of shares). While this is a great option for more expensive stocks or for users who want even greater diversification, there are a couple of small drawbacks. First, fractional shares aren’t available for all stocks — although most major companies are available. Additionally, at the time, you can only do market orders for fractional shares. So, if you prefer a limit buy option, you’ll need to stick to full shares.

Voting rights for your stocks

After buying stocks through Robinhood, you’ll be afforded the same treatment as any other shareholder. This not only means you receive dividend payments but also entitles you to vote in various matters. According to their website, Robinhood utilizes both ProxyVote and Mediant in addition to their own system to allow customers to cast their ballots. Interestingly, while previous ballots sent to me had been via ProxyVote, a later Walt Disney Company proxy utilized Mediant’s ProxyPush.com. Personally, I have to say I preferred the experience of the latter a tad more but both platforms are easy to use and navigate.

Other Robinhood Features — Robinhood Crypto, Options, and More

Robinhood Crypto

A few years ago Robinhood first introduced support for buying and selling major cryptocurrencies such as Bitcoin and Ethereum. Since then Robinhood has also added support for trading Litecoin, Bitcoin Cash, Bitcoin SV, Ethereum Classic, and Dogecoin. As someone who’s had a passing interest in crypto but not enough to dive in further, I was delighted to gain access to Robinhood Crypto soon after the beta began.

Although it sports some fun 80s Tron-esque backgrounds, Robinhood’s crypto trading platform is very similar to their stock trading platform. Just like with stocks, you can either buy coins at market price or set limit orders (the same goes for selling). You can also monitor your position and see how much your crypto is currently worth. As of this writing, the $4 I bought in Bitcoin is now worth more than $22 thanks to recent record highs for the asset. Meanwhile I also had a limit order to buy $5 worth of Ethereum if the price fell to $400 or less at one time. That investment seemed to be a loser for a while but has similarly shot up in recent months, turning my Abraham Lincoln into an Andrew Jackson — or soon to be Harriet Tubman.

One thing to note about Robinhood Crypto is that, at this time, they don’t allow you to transfer your coins from the platform. That is apparently something they’re working on… but they’ve also been saying that for years, so I wouldn’t hold my breath. This isn’t to say that you can’t cash out your funds; it just means that you’ll need to sell your coin and withdraw in U.S. Dollars. In other words those on team #HODL that want complete control over their crypto might not be too impressed with Robinhood’s offering at the stage, but it seems perfect for dabblers like myself.

Robinhood Options Trading

Not long after the unveiling of Robinhood Crypto, the app also introduced support for options trading. This includes the ability to buy and sell puts and calls. To access these features, simply tap “Trade” when viewing any stock and the “Trade Options” button will appear above “Sell” and “Buy.”

To the app’s credit, Robinhood’s options trading platform does a commendable job at explaining the concept of options for beginners. For example, it will first ask you if you want to bet that a stock is going up or down. Selecting the former will display various calls you can buy while selecting the latter will show puts. From there it will also offer a few special options for purchase, noting both term length and risk level for each listing. Meanwhile, more experienced traders can access a far more expansive list of puts and calls by selecting an expiration date at the top and toggling between puts and calls as well as selecting whether they want to buy or sell.

Despite all of this, I have yet to trade any for myself. Still, I do definitely appreciate the option (see what I did there?) should I choose to enter that world in the future. On that note, Robinhood has put a few more restrictions in place, making it so only more experienced users can make more advanced options trades. I won’t pretend to know whether these restrictions are effective but hopefully they prevent users from making risky mistakes.

Robinhood’s Cash Management 

After months of anticipation, Robinhood recently began rolling out its Cash Management accounts to those that had joined the waitlist. Currently offering 0.30% APY (accurate as of February 10th, 2021), a sleek-looking debit card, and access to more than 75,000 fee-free ATMs, this account acts as a great place to stash your cash while waiting to put it into the market. Alternatively, dividend investors can access their earnings with greater speed and fewer steps.

Although the Cash Management account was originally to be called “Checking & Savings” it doesn’t have all of the features that a normal bank account would. While funds are swept into partner banks (making them FDIC insured) and direct deposit is available, there’s currently no option for depositing paper checks. Still, as an extension of your Robinhood brokerage account, it’s a worthwhile product — especially since it’s free.

By the way for more on the Robinhood Cash Management account, you can read my full review.

DRIP

Speaking of dividends, another recently introduced feature is dividend reinvestment — or DRIP. Just as it sounds, this option allows users to automatically reinvest dividend payments they earn from their stock holdings. Customers can even toggle DRIP on for select stocks while leaving it off for others. On that note, in order for dividend reinvestment to be available, the stock in question needs to also be available for fractional shares trading.

Robinhood Controversies

Before we get to my final thoughts on Robinhood, we need to discuss some of the controversies the company has found itself in. In general, the platform has been accused of “gamifying” stock trading and making it too easy for users to get themselves into financial trouble. Tragically, this point was made all too clear when a 20-year-old user took his own life after mistakenly believing he owed hundreds of thousands of dollars (in reality, it seems that the displayed amount was only the result of an options trade that hadn’t been fully settled). 

Even more recently, Robinhood was criticized by users and lawmakers alike when it decided to temporarily halt the ability for users to buy shares of companies such as GameStop and AMC at a time when these stocks were involved in what’s called a short squeeze. 

On top of that, the platform has experienced several instances of unplanned downtime, which also may have impacted customers’ ability to trade during volatile market days. It should also be noted that the company reached a settlement with the SEC after the agency accused Robinhood of misleading customers about how it makes money and even costing users money by not seeking the best terms when executing trades — although the company says that these practices “do not reflect Robinhood today.”

Ultimately, while these controversies and missteps may not affect all current users, they do raise questions about Robinhood’s decision making and viability. As a result, some users may wonder if they can really trust the app with their money. Personally, as a long-term investor, these issues haven’t impacted me and, thus, I don’t feel a need to move my money. Nevertheless, these concerning incidents do require me to qualify my recommendation with the fact that I can only speak from my personal experience. 

Final Thoughts on Robinhood

For the longest time, I’ve known I should start investing but wasn’t sure where to start. On that note, Robinhood has proven to be an extremely easy way to start buying stocks without having to pay commissions or fees. Furthermore, as I do start to learn the ropes and am ready to take my portfolio to the next level, it’s nice to know that Robinhood continues to expand its offerings. Plus, with the addition of fractional shares, the app will also appeal to those who want to invest but can’t afford to spend hundreds of dollars.

Compared to other beginner-friendly investing apps like Acorns, I think I actually prefer Robinhood as it allows me to buy specific stocks instead of a bundle of investments. At the same time it’s important to note that this means it’s on you to diversify your own investments — although that’s where purchasing ETFs on Robinhood may come in handy. 

With all of that said, given Robinhood’s mistakes and controversies, it’s understandable that some would-be investors might prefer to try other options. For them, I’d recommend checking out SoFi Invest among many other platforms that have taken Robinhood’s core concept and made it their own. 

In any case, I’m excited to have purchased my first stocks via Robinhood and continue to look forward to learning more about the world of investing. If you are too then use this link to sign up and get started by getting a free share of stock today!

Author

Kyle Burbank

Head Writer ~ Fioney
Kyle is the head writer for Fioney. He is a personal finance nerd, constantly looking for new apps and services to test and incorporate into his own financial game plan. In addition to his role at Fioney, he's written for other publications including Born2Invest, Lifehack, and Laughing Place, as well as his own site Money@30. He also creates personal finance and travel-related videos for Money@30's YouTube channel, which has garnered more than 2 million views. Currently, Kyle resides in Springfield, Missouri with his wife of 10 years. Together, they enjoy traveling (including visiting Disney Parks around the world), dining, and playing with their dog Rigby.

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