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Written by Matthew Cerminaro on October 26, 2021
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Robinhood vs Vanguard 2022: Best Investing Platform?

If you're looking to get involved in the financial markets, there is no time like the present. 

Step one is to get up to speed on what brokerage platforms are out there when you're ready to dip your toes into the water and start investing. 

There are several options available, each with its own strengths and weaknesses. In this article, I will review two of the most popular options, Robinhood and Vanguard

Vanguard vs Robinhood: The Basics

Robinhood is the original commission-free stock trading app. Users can buy and sell stocks, ETFs, options, and crypto through a simple beginner-friendly interface. Newer investors will likely find it very easy to get up to speed on Robinhood.

Vanguard is a brokerage with decades of experience serving clients. They go above and beyond what Robinhood offers when it comes to account types and educational resources. However, their interface is not nearly as user friendly.

Both online brokers are leading competitors in the field. Let's take a close look at the pros, cons, fees, and important features of both platforms. 

Product Features Overall Price Buy Now
Robinhood review

Robinhood Review 2022: Best Investing App?

  • Trading Fees
  • Ease Of Use
  • Account Types
  • Research/Data
  • Securities Offered
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Vanguard Brokerage Review 2022: Best Investing Platform?

  • Fees
  • Low Commissions
  • Account Types
  • Asset Selection
  • Active Trading
  • Retirement Investing
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Robinhood vs Vanguard: Summary   

  • Both Robinhood and Vanguard offer attractive zero-commission trading on stocks and ETFs 
  • Robinhood and Vanguard both offer zero-commission options trading on the platforms
  • Robinhood has an award-winning mobile application that recently earned the Google Play Award  
  • You can choose from several types of accounts with Vanguard
  • Robinhood is limited to a taxable account and margin account, no retirement
  • The Vanguard platform has been around for far longer than Robinhood and currently has $7.1 trillion assets under management 
  • Vanguard offers more access to market research and more ways to learn more about the markets than Robinhood 
  • Both offer customer support, however, Robinhood has the edge with 24/7 customer support
  • Vanguard has more fees associated with its accounts than Robinhood does 
  • Vanguard does not have a signup incentive
  • Robinhood offers new users a free stock when they sign up for a brokerage account
FeatureRobinhoodVanguard
Minimum Investment$0$0
Sign Up Bonus1 Free StockNone
Trading CommissionsNoneNone ($25 for trades over the phone)
Options FeesNone$1 Per Contract
Fractional SharesYesNo
DataBasicAdvanced
AssetsStocks, ETFs, Options, CryptoStocks, Bonds, CDs, ETFs, Options, Mutual Funds
Retirement AccountsNoYes
Customer Support24/7Limited hours
Best ForTraders Looking For Free Stock, Beginner-Friendly PlatformThose Looking For Mutual Funds/Full Blown Brokerage

What Is Robinhood?

Robinhood is a very popular online brokerage service that is headquartered in Menlo Park, California. The company is highly regarded for its easy-to-use mobile application. The app offers commission-free trading so you won't have to worry about paying anything at all for your trades. 

Robinhood Features

Robinhood's forward-thinking feature set is what sets this investment app apart from many of the slow-moving brokerages of the past.

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Fractional Shares

For investors that are just getting started, the high share price of companies like Amazon might make investing feel out of reach. With the ability to buy fractional shares, Robinhood allows investors to invest in stocks on its platform with as little as $1.

For example, if you wanted to invest in Amazon stock, which is currently trading over $3,000, you can do so on Robinhood in $1 increments instead of needing to round up enough cash to buy a full share.

Dividend Reinvestment

Long-term investors know the power of compound interest and are always eager to take advantage of the exponential growth that it has to offer. One great way to leverage compound interest in your portfolio is by reinvesting your dividends.

Robinhood investors will have two choices when it comes to dividend distribution. They can either receive them as additional cash in their Robinhood account balance or automatically reinvest the dividends into fractional shares of the company.

When you chose to take advantage of the DRIP or "dividend reinvestment program" you are essentially increasing the growth rate of your portfolio while decreasing the cash drag. Win-win!

Robinhood Investments

On the Robinhood platform, you'll have access to various asset classes that you can take advantage of in order to create an investment portfolio that matches your needs and investment strategy.

Stocks 

Robinhood offers over 5,000 stocks for you to choose from. From large-cap names such as Amazon, Google, and Apple, to the smallest biotech names, Robinhood can cover all types of companies you may be looking for. 

The company also offers numerous penny stocks for those with higher risk tolerance. Keep in mind these penny stocks do not trade via over-the-counter transactions. All stocks traded on Robinhood are available via U.S. exchanges.

ETFs 

Robinhood offers ETFs as well. An ETF is a pooled investment, bundling multiple securities together to align with a certain index, sector, or specific field of interest.

Options 

Robinhood offers options trading on its platform. Options give investors the right but not the obligation to buy or sell a security at a certain price. They are important investment tools to hedge risk in the market. These are valuable but complex investment instruments. 

Options amplify gains as well as losses. They should only be used after an investor possesses a solid understanding of the risks involved.

Crypto

For those looking to get into the world of cryptocurrencies, you can trade a limited number of digital currencies on the app.

It's important to note that any crypto bought on Robinhood and held within Robinhood must remain on Robinhood and cannot be transferred to any other accounts or wallets. However, if you use Robinhood's new crypto wallets, then transferring coins in and out of the platform is as simple as typing in the address. These investments are also not covered by the FDIC or SIPC.

robinhood website image

Cash Management 

Robinhood Cash Management is a program that automatically lets you earn competitive interest rates on uninvested money in your account. 

This option ensures that your uninvested cash is working for you while you wait for your next investment opportunity.

YieldAs Of
0.30% APY10/26/2021

Stock Referral Program 

Robinhood’s versatility and affordability seem almost too good to be true, but its stock referral program only makes it better.

First of all, when you sign up, you will get a completely free stock.

Then, invite friends to earn more free stocks!

The free stock is valued at anywhere from $3 to $225. There's a 98% chance of the stock will be valued between $2.50 and $10.00. And you can hold onto the free stocks for the long run, or turn around and instantly sell. It is all your choice!

Keep in mind that you are able to earn up to $500 in free stocks during a calendar year, so invite everyone you know!

Customer Support 

Robinhood provides members with a highly detailed customer service help center with hundreds and hundreds of questions and answers. If members are unable to find the answer they are looking for, they can also email or request a phone call.

Both emailing and requesting a phone call are managed within the app under "Help" inside of settings. Members can expect an answer to their email within 1 business day or a phone call within 30 minutes.

While this may not be as convenient as a simple phone number that you can call, it is more efficient for Robinhood as many questions can be answered in the help center.

Robinhood Fees 

Robinhood Gold

One main way that Robinhood makes money is through the fees that are collected through the Robinhood Gold account. This account, which allows increased access to after-hours trading and research, charges members a fee of $5 per month.  

robinhood gold

Margin Expenses 

Fees can also be associated with Robinhood’s marginal interest charged to gold members who want to access lines of credit from the online broker. These fees are billed at the end of every month and deducted directly from the account's cash balance. 

Robinhood Pros 

  • Zero commissions on Stock, ETF, crypto, and options trading 
  • No account minimum policy on all brokerage accounts 
  • Cash management program gives high-interest accrual on uninvested money 
  • Stock referral program hands out free stock when signing up 
  • Beginner-friendly mobile app makes it easy for newcomers to make transactions 
  • No fee for deposits and withdrawals in and out of  your accounts 
  • Robinhood Gold allows access to margin trading  
  • 24/7 customer support via phone or email

Robinhood Cons 

  • Limited account types make it hard to solve everyone's personal savings needs 
  • Research and margin trading can only be accessed through Robinhood Gold 
  • No automated/digital advisor, so you will have to make your own investment decisions 
  • There is no ability to short a stock 
  • Robinhood does not offer a tactical charting platform  

What Is Vanguard?

Vanguard is another investment advisor with exceptional online brokerage services. The advisor is based out of Malvern, Pennsylvania, and currently has $7.1 trillion in assets under management. The company specializes in mutual funds and ETFs that are key to its popularity.

Vanguard was the pioneer of low fee investing for the people.

Vanguard Services Offered 

As the largest provider of mutual funds and the second-largest provider of ETFs in the world, Vanguard is a great option for people who want to get involved in these securities. Vanguard offers several types of accounts on its platform as well. 

Vanguard Features

The features and asset classes offered by Vanguard are fairly standard for large, well-established online. However, when compared to new and digitally native brands like Robinhood, Vanguard's offerings are much more robust.

Bonds 

Unlike Robinhood, Vanguard offers fixed income options through its brokerage account. You can choose from US treasuries, corporate bonds, municipal bonds, and others.

Purchasing bonds direct from the Vanguard brokerage comes with no commissions or fees. However, if you'd like to purchase a bond on the secondary market, a charge of $1 per $1,000 face amount ($250 maximum) will be applied.

Mutual Funds 

Mutual Funds are a strong suit of Vanguard as it offers thousands of funds for you to choose from. Through a mutual fund, you can invest in hundreds and sometimes thousands of individual stocks and bonds at the same time.

Diversification is key to any successful investment portfolio and can often be achieved through mutual funds. 

Vanguard ETF list

Digital Advisor

Vanguard Digital Advisor is a robo-advising account that automatically allocates your funds based on your money goals and aspirations. This advisor helps you reinvest dividends, reallocate investments, and make choices in line with your goals. 

Retirement and Educational Planning

Planning for retirement can seem far in the future for many of us, but it is essential to plan for your later years early in life. That is why Vanguard feels so strongly about its diverse account types to help you better understand what you will need for a financially sound retirement.

Vanguard offers both traditional and Roth IRA accounts, 529 college saving plans, Vanguard 403(b) services, and annuity capabilities. These investments are focused on the long term but can offer significant benefits now for the investor such as tax savings and peace of mind. 

Customer Service

Vanguard Client Services can be reached from 8 am to 8 pm EST on Monday - Friday. The number to reach client services is 800-662-2739. The ability to speak with a live representative and have a personal experience is a key factor to Vanguard's popularity! 

Vanguard Fees 

Over-The-Phone Trading 

Trades made over the phone will often cost you $25 to execute. If you are someone who has a smaller account and is making smaller trades, I would advise the online option. If you are more intrigued by an actual representative executing your trades, over-the-phone trading may be a great option for you! 

Follow this link to see the full schedule for Vanguard fees.

Fee On Brokerage Account 

Vanguard will apply a $20 annual fixed fee to all accounts below $10,000. If you are above the $10,000 threshold, this fee will not apply to you. You can also eliminate this fee by enrolling in electronic statement delivery.

Vanguard Pros 

  • Largest provider of mutual funds and the second-largest provider of ETFs 
  • Over $7 trillion in assets under management adds to this brokerage's long-standing track record 
  • Digital advising service makes it easy to automate portfolios   
  • Zero brokerage commissions on online trades for ETFs and stocks 
  • Exposure to fixed income (bonds) and other types of securities that Robinhood does not offer 
  • Wide array of accounts offered for investment, savings, and retirement 

Vanguard Cons 

  • Various accounts carry some annual fees  
  • High fees for mutual fund transactions 
  • Lacking the ability to buy fractional shares
  • $25 for phone execution of non-Vanguard ETF and stock trades
  • No online tactical charting platform offered, similar to Robinhood 
  • More complex platform to navigate for beginner investors

Robinhood vs Vanguard: Final Thoughts

To recap, both Robinhood and Vanguard offer top-notch services for all your investment goals. Robinhood specializes in stock trading and charges no commissions on any of the securities it offers. Vanguard has a focus on mutual funds and ETFs, which are vital to most investment portfolios. 

In the end, it all comes down to your personal needs. While these online brokers are different and unique from one another in their fees, features, pros, and cons, they each have a very similar mission: lower the bar for entry to all investors and to level the playing field. 

If you are looking for a sleek and easy-to-use mobile app, Robinhood is probably your best bet. They have the most beginner-friendly platform in the market. Additionally, they have a feature set tailored to beginners including fractional shares and dividend reinvestment.

If you are looking to invest passively, especially long term for retirement, that is exactly what Vanguard is designed for.

In our opinion, both of these services are accomplishing just what they set out to do. It is now up to you to evaluate which one fits your goals best and then take your pick. Happy investing!

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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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