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Written by Matthew Cerminaro on February 14, 2021
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Robinhood vs Charles Schwab 2021: Best Brokerage?

Whether you are a new investor trying to get into the game of investing or a seasoned trader, picking the right broker is the first step to any investment plan. It is crucial to get off on the right foot, and this article will break down a few of the largest players in the online brokerage space.

In this review, we will be going over the important features, fees, pros, and cons of Robinhood and Charles Schwab, two of the most well-regarded and popular online brokers.

Robinhood vs Charles Schwab: The Basics

Robinhood is commonly referred to as a pioneer in the free trading space. This platform caught fire shortly after launching by offering commission-free trades on stocks and ETFs. It has since expanded into the world of options and even cryptocurrency. Although it does not allow for retirement investing, there are still several great features that users love. Second only to commission-free trades, Robinhood's focus on a seamless and simple user experience is what makes it stand out from the crowd.

Charles Schwab is a tried and tested platform that has been around since the 1970s and takes a different approach than Robinhood. Charles Schwab wants to be an all-encompassing platform where users can dabble in several types of investment vehicles. Schwab focuses on retirement accounts while offering commission-free trades as well. If you are looking for a more immersive and detailed experience, Charles Schwab is your go-to platform.

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Robinhood Review 2021: Best Investing App?

  • Trading Fees
  • Ease Of Use
  • Account Types
  • Research/Data
  • Securities Offered
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Charles Schawb Review

Charles Schwab Review 2021: Best Brokerage?

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  • Robo-advisor
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Robinhood vs Charles Schwab: Summary

  • Both Robinhood and Schwab offer high-quality services at competitive prices 
  • Robinhood focuses more on trading in the stock market and providing low commission choices across stocks, ETFs, and options
  • Schwab offers a more diverse array of accounts for you to choose from (Robinhood only offers a taxable or margin account)
  • Schwab has a longer track record than Robinhood which is a newer trading app
  • Robinhood’s mobile application won a recent Google Play Award
  • Robinhood is offering a stock referral program where you get a free stock for signing up and more stocks for inviting friends
  • Schwab offers a tactical trading platform for technical charting and trend analysis
  • Robinhood is focused on attracting new investors while Charles Schwab appeals to more advanced traders
  • Robinhood allows investors to purchase Bitcoin and other cryptos
  • Neither have trading commissions (for stocks or ETFs) or account minimums
FeatureRobinhoodCharles Schwab
Minimum Balance$0$0
Trading Commissions$0$0
AssetsStocks, ETFs, Options, CryptoStocks, ETFs, Mutual Funds, Options, Futures, Bonds
Mutual FundsNoOver 3,500 No Transaction Fee Funds
Fractional SharesYesYes
Dividend ReinvestmentYesYes
Robo-AdvisorNoYes ($5,000 Minimum)
Physical BranchesNoYes
Best ForEveryday InvestorsHigh Net Worth Investors

What Is Robinhood?

Robinhood is an online broker based out of Menlo Park, California. It offers a large array of investment services and products. The company pioneered commission-free trading and their rapid success forced industry titans like Charles Schwab to follow suit and drop their commissions.

The app was designed with Millennials and Gen Z in mind as evidenced by the minimalist design and gamification of investing.

Robinhood Features 

Robinhood offers stocks, ETFs, cryptocurrency, and options as part of its competitive services. And better yet, Robinhood will offer these securities at no extra cost to you! You may wonder how this is possible. It's all through the impressive online brokerage features.

Robinhood does make money, but it is in less conventional ways than what most brokerages do.

Since launching in March of 2015, the app has paved the way for dozens of investing apps to follow suit and offer specific features to investors for low-to-no cost.

Zero-Commission Trading

Today it can be easy to forget that we used to have to pay commissions every time we wanted to buy or sell a stock. These days are largely behind us thanks to Robinhood.

You enjoy the luxury of keeping costs low while trading the 1000’s of different securities that Robinhood offers. Not to mention you can enjoy trading on an award-winning mobile application.

Robinhood Free Training

We put together a free 30 minute video training that walks you through the entire process, step by step. This training will help you get up and running in no time at all.

GET THE GUIDE

Robinhood App

Robinhood’s app is offered on both the IOS App store and the Google Play store.

It is 100% free to download and, speaking especially from personal experience, is very beginner-friendly. It took much of the complexity out of investing when I began using the app in 2018 and still provides the seamless beginner-friendly experience that won it the Google Play Award recently for best use of material design.

$0 Account Minimum

If you are a small investor, Robinhood’s $0 account minimum may stand out as an attractive feature of its online brokerage account.

Big or small, Robinhood is welcoming of all users. However, why start at zero when you can use a friend’s referral code to receive a free stock upon opening a brokerage account.

robinhood interface

Robinhood Stock Referral Program

When signing up for a Robinhood account with our link, you will receive a free stock when your account gets approved.

These stocks are chosen from Robinhood’s extensive inventory of securities that it holds. According to Robinhood’s website, stocks are valued anywhere between $2.50 and $200.

Robinhood also notes that there is a 98% chance that you will receive a stock that is worth between $2.50 and $10.00. Therefore, while the odds are low that you will hit the jackpot on a $200 stock, the chances of you receiving a $5 stock are high: not a bad start to your new brokerage account.

You'll also get a unique link when you sign up that you can give to your friends so that both of you will get a free stock when they sign up.

Other Free Stock Market Promotions

BrokeragePromotionLink
Robinhood Logo1 Free Stock (Up To $225)Download
Webull Logo2 Free Stocks (Up To $1,850)Download
Firstrade trading platform2 Free Stocks (Up To $400)Download
M1 Finance Robo AdvisorGet $30 When You Deposit $1,000Download
Acorns LogoFree $10 BonusDownload
SoFi Robo Advisor1 Free Stock Up To $1,000Download

Fractional Shares

Robinhood’s fractional shares initiative allows you to buy fragments of a company’s stock if you cannot afford it or only want to allocate a smaller percentage of money toward it.

For example, let's take a company like Amazon. It is currently trading at $3,138 per share. However, with Robinhood, you can buy shares of Amazon in $1 increments. This is great for beginner investors looking to build a diversified portfolio on a budget.

Dividend Reinvestment Plan

If you're a long-term investor looking to take advantage of compound interest, a dividend reinvestment plan or DRIP can allow you to do just that.

With a DRIP, you can set up your dividends to be automatically used to buy more shares of the underlying company. For example, if Apple pays you a $5 dividend, Robinhood will automatically use it to buy $5 worth of Apple Stock if you enable the DRIP.

This is an effective strategy to make sure you're not sitting on too much cash and the majority of your portfolio is put to work for you.

Recurring Investments

For investors that follow the advice of Warren Buffet and practice dollar-cost-averaging, the ability to set up recurring investments will likely make your life easier.

Robinhood now allows investors to set up their Robinhood account to automatically purchase shares for you on a schedule that you choose. So if you wanted to buy $100 worth of Amazon every week, you could set up your Robinhood to automatically pull $100 from your checking account and invest it in Amazon every Monday.

Long-term investors will likely find this feature useful for automating more of their investments.

robinhood website image

Cash Management

Robinhood Cash Management provides a great solution to earning interest on uninvested cash in your brokerage account. This is something to take note of if you are a patient investor and often have a lot of cash lying around in your brokerage account as you wait for the right opportunities to test the waters.

YieldAs Of
0.30% APY08/31/2021

The account also provides a debit card you can use to spend money directly from your Robinhood account if you'd prefer to keep all of your finances in the same place.

Robinhood Gold

Robinhood Gold is a monthly paid service starting at $5 per month that gives you access to features that are not offered in the normal Robinhood brokerage account.

Margin trading, investment research, and extended trading hours are some of the most notable features supplied to Robinhood Gold members. However, these features do not come free and a monthly fee will be billed to you for investing in this account.

Check out the “Robinhood Fees” section for more information regarding fees on Gold accounts.

Customer Support

If there was one aspect of Robinhood that lacks, it would be its customer support.

With a track record of unresponsiveness and limited access to actual representatives, Robinhood’s customer support can be easily deemed as difficult to deal with. With this being said, the company still has an extensive FAQ page on its website that should do a good job of answering the most basic questions you may have.

Robinhood Fees

While many of Robinhood's features can be accessed free of charge, Robinhood still needs to make money. It does this in part by adding fees on certain features that it provides.

Robinhood Gold

If you are a Robinhood Gold member, you will be charged a monthly fee of $5 for accessing its exclusive resources and tools. However, if you aren't planning on investing with margin, paying $5 may be unnecessary. If you are looking for these features, the $5 may be well worth it for you. There are no fees on margin as well.

robinhood gold

Margin Fees

For Margin associated with the Robinhood Gold account, the first $1,000 that you use is included in the $5 monthly fee.

Remember that this money still needs to be paid back, however. After that, the daily interest rate on margin is calculated as 5% divided by 365 charged monthly. So, the longer you take to pay back margin, the more interest you will pay on it.

Robinhood Pros

  • Easy to use mobile platform and a simple investment process for stocks, ETFs, options, and crypto
  • High interest on all uninvested cash through Robinhood Cash Management Program
  • No account minimums on individual brokerage accounts
  • Fractional shares allow smaller accounts the opportunity to invest in higher-priced securities
  • Dividend reinvestment keeps the majority of your account invested and working for you
  • No fee on account withdrawals and deposits in and out of brokerage account
  • FAQ page is extensive and covers most basic questions that you will have

Robinhood Cons 

  • No ability to sell a stock short (bet against a company)
  • Some people have said customer support is hard to reach and unresponsive
  • No tactical charting program for technical analysis
  • Poor execution prices potentially hinder total returns
  • Not a robo-advisor, so you have full autonomy over your investments. (This may be good or bad depending on how experienced you are as an investor)
  • Margin, investment research, and after-hours trading capabilities can only be accessed through Robinhood Gold

What Is Charles Schwab? 

Charles Schwab investing platform

Charles Schwab is an online broker based out of San Francisco, California, and boasts more than 29.6 million accounts. That is more than double Robinhood's 13 million. Often referred to as 'Schwab', this titan of industry has been around since 1971 and offers a variety of investment products, services, and features to help investors reach their goal of financial security.

This brokerage offers several account types ranging from individual brokerage to educational and custodial accounts for children. As far as investable assets go, they pretty much have everything that an investor could want: stocks, bonds, annuities, money market funds, and futures to name a few.

With Schwab, there is little that can't be done in the game called investing. 

Schwab Features 

Schwab hit the scene in the early '70s to invent help individuals take ownership of their financial futures. To help them accomplish this, Schwab has invested in several tools and features that investors love and are easy to use. Let's dive deeper into a few of them.

Schwab Brokerage Account

Often, younger investors care most about the different features available with brokerage accounts. With Schwab, users can feel satisfied knowing they can trade to their heart's content with no commissions, account fees, or maintenance fees for all stocks and ETFs.

This offering is on par with several other brokerage companies like Robinhood above. However, with Schwab, investors have a large swath of investment and research tools to help them make the right decisions. Something that is severely lacking on Robinhood.

High-Quality Research

In 2019, Schwab earned the top award for self-directed investing from J.D. Power. A huge accomplishment and a nod to the free research and analysis available on the platform. With the research platform that is powered by Schwab, investors have access to 3rd party data from companies like Morningstar and Credit Suisse and can also perform their own analysis. Some popular self-directed tools include Schwab equity ratings, select lists of mutual funds and ETFs predicted to outperform their peers, and other technical analyses like StreetSmart Edge.

StreetSmart Edge is Schwab’s downloadable technical charting platform. Schwab’s StreetSmart Edge platform lets you mark up charts, analyze trends, and gain an upper hand when deciding to make trades.

This research comes standard by giving your business to Schwab and is something that makes them stand out in a very crowded field.

Retirement Accounts

In the highly competitive brokerage landscape, few stand out as leaders in the arena of retirement planning. Schwab offers several options including a Roth IRA, Traditional IRA, Rollover IRA, and Inherited IRA. These accounts and several others help investors plan for and crush it once they retire.

Similar to Schwab's brokerage account, these features come free for all users. This, of course, does not include the fees that might be imposed by the SEC and other account fees which are fairly standard in the industry. Users who choose to invest for retirement with Charles Schwab will also have access to investing in mutual funds, CDs, and bonds. This is a standout offering compared to brokerages like Robinhood which don't offer retirement accounts and only allow the trading of stocks, ETFs, options, and crypto.

High Yield Investor Savings® Account

For investors who want to put money away but need more liquidity, Schwab offers a high yield savings account. Though at a lower rate than Robinhood’s Cash Management Program, Schwab offers a 0.05% yield on clients’ savings. Which is right in line with the national average. If having cash on hand but still earning interest is your goal, then Robinhood can win here.

YieldAs Of
0.05% APY02/22/2021

Schwab Intelligent Portfolios

If you are new to investing and think that a Robo advisor may suit your needs best, Schwab has you covered. Through its full-service Robo advisor, Schwab will build, monitor, automatically rebalance, and diversify your portfolio across multiple asset classes.

Schwab graph

Signing up is fairly simple and will ensure that you get the best plan for your situation. Simply follow the steps below:

  1. Complete a short questionnaire to establish your goals, risk tolerance, and timeline
  2. Allow experts to choose a diversified portfolio of ETFs for you
  3. Let the robo-advising do the rest of the work as your portfolio automatically rebalances

Robo-Advisors Free Training

We put together a free 30 minute video training that walks you through the entire process, step by step. This training will help you get up and running in no time at all.

GET THE GUIDE

Customer Support

Schwab has a fantastic track record of providing top-quality customer support. Offering support 24/7, Schwab is acting on its “client first” policy by keeping live representatives on call if you have any pressing questions regarding all parts of your Schwab experience.

Schwab also employs thousands of financial advisors so if you decide that your financial situation has risen to the level of needing additional support, you'll be able to get connected with a local financial advisor and make a plan. If you feel your situation is a little more in-depth and could use an in-person visit, Schwab has over 300 physical locations where you can visit to discuss your finances.

Schwab Fees 

Though this platform is free of commissions and account minimums. There are a few fees that could sully the current view most of us have about Schwab.

Option Fees

There is a $0.65 price per contract for options trades, which makes Schwab more expensive in this category than Robinhood. This does not, however, mean that Robinhood is the better choice for options trading. It's up to you to decide which is a better fit because cheaper doesn't always mean better!

Mutual Fund Fees

Schwab charges up to $49.95 on mutual funds. Since Robinhood doesn't offer mutual funds, it is hard to draw a comparison between the two online brokers. However, other online brokers may offer cheaper rates if this number is steep for you.

Schwab Intelligent Portfolios Account Minimums

Schwab requires between a $5,000 minimum for the most basic Robo-advisor, and a $25,000 minimum for their premium Robo-advisor. However, for the premium Robo-advisor, Schwab charges a one-time planning fee of $300 and you will pay a $30 per month advisory fee after that.

Schwab timeline

Schwab Pros 

  • No commission on stocks and ETFs offered through an individual brokerage account
  • Wide range of accounts to meet most of your investment needs
  • 24/7 client service offered and live representatives
  • Diverse array of retirement accounts offered
  • Long track record of consistent, positive results
  • Robo-advisor to automatically invest, rebalance, and achieve optimal diversification
  • Technical trading platform offered for charting and trend analysis
  • Ability to short stocks  
  • In-house research capabilities

Schwab Cons 

  • High mutual fund commission expenses  
  • $0.65 contract fee on all option trades
  • High account minimums on Schwab Intelligent Portfolios
  • Commission charged on over the phone trades on stocks and ETFs

Robinhood vs Charles Schwab: Final Thoughts

Both Robinhood and Charles Schwab offer high-quality services at competitive prices. The real question comes down to what you are looking for in an online broker.

If you are looking to trade options and cryptos more than stocks and ETFs, Robinhood may be a better choice. It has commission-free options capabilities compared to Schwab’s contract-based fee system. Schwab has many retirement accounts and valuable robo-advising. This could make it your best bet if you want to save for the future and have an automated portfolio.

Schwab's physical branch locations could also be a plus for some investors who would appreciate the ability to walk in and talk to a financial professional about their investments. Robinhood is 100% online which allows them to pay a higher APY on uninvested cash, but they are not able to provide the personalized service that Charles Schwab can.

Most importantly, it is about where you see yourself fitting in. Both online brokers offer many different bells and whistles, but each has their own specialties. Take a close look at both areas of expertise and make a smart decision about what suits you. Then, take action!

I hope this article brought you up to speed on the key differences between these popular brokerages! If you have any questions regarding Robinhood or Charles Schwab please feel free to leave a comment on this post.

BrokeragePromotionLink
Robinhood Logo1 Free Stock (Up To $225)Download
Webull Logo2 Free Stocks (Up To $1,850)Download
Firstrade trading platform2 Free Stocks (Up To $400)Download
M1 Finance Robo AdvisorGet $30 When You Deposit $1,000Download
Acorns LogoFree $10 BonusDownload
SoFi Robo Advisor1 Free Stock Up To $1,000Download

Robinhood vs Charles Schwab
Article written by Matthew Cerminaro
Matt is currently attending Union College pursuing a Bachelor of Arts in Economics. He participates in the student investment fund and is a member of the Union College football team. Matt runs his own personal finance Instagram page and market-related blog where he writes about economics and general wealth accumulation tips.

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