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 the day-to-day of portfolio management.
Here is our full comparison of Fidelity vs Robinhood.
Robinhood Review 2021: Best Investing App?
Fidelity Investments Review 2021: Best Brokerage?
||Invest With Fidelity|
|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|
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.
As mentioned above, Robinhood lets users trade freely with no commissions. Although transactions are not simultaneous and buyers and sellers must wait a couple of days for the money to clear the accounts, free trading is a huge advantage. Every dollar you can save on commissions is a dollar you add to your portfolio.
Instantaneous transferring of funds is available with the purchase of Robinhood Gold for $5 per month. As a bonus, all Robinhood users get instant access to up to $1,000 when they make a bank transfer. This means you can begin investing before your deposit settles.
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.
Although limited, the research available on Robinhood is improving and has already made strides in the right direction. Users are able to access analyst ratings, lists of top movers, earnings calendars, and links to earnings calls free of charge.
Users that pay the $5 per month for Robinhood Gold have access to Morningstar Research Reports and NASDAQ Level II Market Data.
According to Robinhood’s Terms and Conditions... “There is an approximately 98% chance of the stock bonus having a value of $2.50-$10, an approximately 1% chance of the stock bonus having a value of $10-$50, and an approximately 1% chance of the stock bonus having a value of $50-$200, based on the price of shares at the time of purchase.”
Regardless of what stock you get, the free stock will be useful for new investors to get their feet wet without having to put any of their own money on the line.
Additionally, you can get more free stock every time you refer a friend to sign up for the platform.
|1 Free Stock (Up To $200)||Download|
|4 Free Stocks (Up To $3,700)||Download|
|3 Free Stocks (Up To $600)||Download|
|Free $10 Stock Slice||Download|
|Get $30 When You Deposit $1,000||Download|
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.
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.
For example, if you wanted to invest $250 per month into Apple stock, you could set up a recurring deposit on Robinhood that would pull $250 from your checking account on the 1st of the month and invest it all into Apple stock. 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. By purchasing little-by-little, you ensure that you're not just buying in at the top and instead average out your cost per share.
Robinhood allows you to trade a variety of popular cryptocurrencies 100% commission-free.
It is important to recognize that Robinhood Crypto is not apart 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. You are also unable to transfer your crypto out of your Robinhood account.
The Fidelity 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.
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.
Like Robinhood, Fidelity offers 100% commission-free trades or ETFs, stocks, and options.
This change came about in October 2019 and like fine wine has only gotten better with age. In addition, the company also waived transfer and account closure fees and even offers several index funds that have a zero-expense ratio.
This means users can trade freely without any worry about their return being eaten up by unexpected fees like in years past.
Fidelity offers index funds that have no investment management fees. These Fidelity funds have 0% expense ratios, saving investors ongoing management fees.
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.
Recently, Fidelity has rolled out a fractional share purchasing capability, known as Stocks by the Slice, which allows investors to own part of a stock that otherwise would be too expensive to purchase.
Users are able to enter either the dollar amount they are wanting to spend or the percentage of the share they are hoping to purchase. There are still no commissions or fees on any trades made with fractional shares.
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 and customer service offerings 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!