Of the many brokerage accounts on the market today, Robinhood and Fidelity are among the most popular. Both platforms offer seasoned and novice investors alike a truly impressive spread of investing tools, insights, and capabilities.
Robinhood, a relative newcomer when compared to brokerage legends such as Fidelity, has an impressive track record and appeals to a younger generation, eager to get their first experience in investing.
Fidelity is a well-established, well-respected institution that offers similar features as Robinhood, but is clearly a winner for investors with more experience and are more actively involved in day-to-day portfolio management.
Here is our full comparison of Fidelity vs Robinhood.
|Assets||Stocks, ETFs, Options, Crypto||Stocks, ETFs, Options, Mutual Funds, Bonds, Fixed Income|
|Sign Up Promotion||1 Free Stock||None|
|Customer Service||Limited||Chat, Email, Phone Support|
|Research Tools||Basic, Easy To Understand||Advanced, More Complicated|
|Best For||Complete Beginner||Experienced Trader/Investor|
|Get Up To 5 FREE Stocks||Download|
|1 Free Stock ($3-$225) For Opening Account||Download|
|2 Free Stocks ($3-$300) For Opening Account, 3 Free Stocks ($7-$3,000) When You Make 1st Deposit||Download|
|Free $30-$500 Bonus For Depositing/Transferring $1,000-$50,000+||Download|
|1 Free Stock Slice ($3-$300) When You Invest $1+||Download|
|Free $10 Bonus When You Invest $5+||Download|
Robinhood is a commission-free, investor-focused, financial services app where users can invest in individual stocks, exchange-traded funds (ETF), cryptocurrencies, and options. For several years, Robinhood was one of the only brokerage firms that offered commission-free stock trades, but recently that list has largely expanded as others follow suit.
Robinhood offers many features that appeal to young investors breaking into the world of finance. Among those top features are $0 account minimum, zero fees for stock, ETF, or option trades, Robinhood Gold, high-yield savings, research and data, promotional offerings, and fractional shares.
In years past, investors hoping to get into investing in the stock market would have been stalled by high account minimums.
Robinhood has done away with account minimums and has since sent shockwaves through the industry. As long as you have enough to purchase the desired stock, you are free to trade. There are exceptions such as a $2,000 minimum portfolio balance is required to open a margin account.
Users can access cash instantly, review professional research from Morningstar on 1,700 stocks, review level II market data, and utilize margin investing with Robinhood Gold.
Without Robinhood Gold, investors must wait 3 days from transferring funds from their bank account before they are able to purchase stocks or make trades of any kind, excluding the first $1,000.
With Robinhood Gold, users have access to $5k - $50k upon deposit, depending on the user’s account balance. This means that while you are waiting for your funds to successfully transfer, you can use money supplied by Robinhood to trade.
Robinhood offers users access to a high-yield savings account within the platform where they can hold the cash they aren't ready to invest and receive an above-average interest rate.
This is a huge advantage over traditional banking as interest rates for savings accounts have largely been stagnant for several years. Users that store their money with Robinhood also have access to 75,000+ ATMs where they can access cash through free withdrawals.
The move into offering a savings account demonstrates Robinhood's desire to move beyond a stock trading app and become a central hub for young people's personal finances.
Robinhood gives you the ability to purchase fractional shares of a company. With this feature, you can purchase shares of stocks and ETFs in $1 increments. This feature is particularly attractive for new investors who want to build a diversified portfolio, but lack the funds to buy entire shares of expensive stocks like Amazon.
When you initiate a transaction on Robinhood, you're able to choose whether you want to specify the dollar amount of the trade or the number of shares to buy.
Robinhood provides members with an extensive array of questions and answers in their help center, but that is not all. If you cannot find the answer you are looking for, then you can request an email or phone call. This can be done by navigating to the help section within settings in the app. From there, you can either choose to email or request a phone call. An email response to your question typically takes 1 business day while you can expect a phone call within 30 minutes.
When you receive dividends on Robinhood, you have two options for what to do with them. You can either receive them as cash that is added to your account balance or opt into the DRIP program and automatically invest them back into the stock that paid them out.
A DRIP or "dividend reinvestment plan" is a feature that allows you to put all of the dividends you receive back into the companies you own so that you don't end up sitting on extra cash and you can put the money back to work for you. This reduces the overall cash drag of your portfolio.
By participating in a DRIP, you're able to take advantage of compound interest and increase the growth rate of your portfolio over time.
For investors that believe in a strategy of dollar-cost-averaging, this feature will likely be appealing. Robinhood allows users to set up recurring deposits where a set amount is pulled into your Robinhood account and invested on a consistent basis.
This feature has the potential to significantly automate the investing process for passive investors practicing dollar-cost-averaging. Dollar-cost-averaging is an investing strategy recommended by Warren Buffet whereby an investor invests a consistent amount on a consistent basis rather than making lump-sum investments.
Robinhood allows you to trade a variety of popular cryptocurrencies 100% commission-free.
It is important to recognize that Robinhood Crypto is not a part of Robinhood Financial LLC, but Robinhood Crypto LLC, and as such is held in a different account that is not regulated by FINRA or insured by the FDIC. Read more about Robinhood crypto with our full review.
The Fidelity Investments platform has long been known for its strength in helping its customers save for retirement in tax-advantaged accounts like IRAs or 401Ks, but it is also a dominant force in the brokerage world. This is also due to the history of price improvement Fidelity has continued to provide investors with.
Fidelity offers a wide range of products that appeal to all types of investors. Its main features include the following; commission-free stock, ETF, and options trades, money market accounts, professional research, mutual funds, fractional shares, and educational support.
Fidelity offers index funds that have no investment management fees. These Fidelity funds have 0% expense ratios, saving investors ongoing management fees. This is a very unique feature that sets Fidelity apart from many of the other stock trading brokerages.
Without prompting from users, Fidelity places non-invested cash into its Fidelity Government Money Market Fund (SPAXX), which had a 0.61% interest rate as of Oct. 21, 2020.
This is a great way for customers to earn interest while they explore different stocks to purchase. If users are uncomfortable with the non-protected funds, they can opt to place the money in an FDIC-backed account instead.
For investors looking to save for retirement, Fidelity has offerings for you. From traditional IRAs, to Roth IRAs, to SEP IRAs, you've got significant options when it comes to preparing for the future.
It's important to keep in mind that when investors take advantage of these types of accounts, Uncle Sam is going to reward you with some tax benefits. For example, if you invest in a Roth IRA and hold it until retirement, you can potentially end up paying no taxes on your investment gains.
This can equate to a savings of hundreds of thousands of dollars throughout the course of a person's life!
Fidelity’s research options are plentiful and extensive.
For stocks, Fidelity consults 20 different third-party providers to make sure its users have all the information they need before investing.
For ETFs, Fidelity offers research from 6 third-party providers.
In addition, Fidelity shows an aggregated score called the Equity Summary Score so users can see the relevant information in one glance. These research functions are of great value to investors that want to know every detail about the strength of the stock they are purchasing.
Many poor decisions can be avoided in the world of investing with additional research.
Mutual funds are available through Fidelity brokerage services and are in large quantities on the platform. Investors with Fidelity have access to 3,500 no-transaction-fee mutual funds and more than 700 mutual and index funds with expense ratios of 0.50% or less.
This gives Fidelity a leg-up on Robinhood as investors here can prepare for retirement with access to these funds, which are widely unavailable on other platforms.
The Fidelity platform is determined to provide its investors with the utmost quality in customer care. Along with in-person guidance and investor seminars, Fidelity also offers online learning centers and webinars. Customer care can be reached by phone, direct message through Fidelity’s platform, or online chat.
In summary, both Robinhood and Fidelity are great options for seasoned investors and beginners alike. Both offer commission-free trading and a variety of useful features. At the end of the day, it comes down to personal preference.
Although Robinhood’s research platforms are not as enhanced as other brokerages, users are still able to access enough critical information to feel comfortable transacting.
Robinhood offers a clean app layout, without the confusing and often exhausting data dumps that other brokerages push on consumers.
Robinhood sets itself apart by focusing on simplicity and design. This contrasts with Fidelity, which has often been criticized for clunky and often confusing web layouts.
What Fidelity lacks in sleekness, it makes up for in information and reputation. Fidelity is the go-to source for in-depth analyses and professional insights that investors often need before making large transactions.
In considering which option is best for you, it is important to consider what you value in an investing platform. For ease of use or access to cryptocurrency, Robinhood will be your best bet. If you are a more active trader, planning for retirement with mutual or index funds, or need more hands-on assistance and learning, then Fidelity will be a great fit.
In the end, both platforms have very little risk associated because of their emphasis on free trading. What's important is that you get started with investing sooner rather than later. Try both out and find out what investing style works best for you!