When it comes to selecting an online broker, there are several factors to consider, including trading fees, the types of investment products available to you and what kind of support you’ll be getting. In this article, you’ll find a comparison between two top online brokers, Robinhood vs TD Ameritrade, to help you understand the critical differences between the two.
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Robinhood is an investing app that allows you to invest in stocks via your phone or desktop. With more than 5,000 stocks available on Robinhood Financial and its “zero commission trading”, this app is a popular choice for both beginner and experienced investors. No fees are charged for opening an account, buying stock or fund transfers.
Using Robinhood, you can invest in ETFs and most U.S. equities listed on American exchanges, as well as options, crypto, and around 250 global stocks. It’s not possible to invest in mutual funds, most foreign exchanges or preferred stocks – this may be offputting for those who would prefer a more diverse portfolio.
Beginner investors should note that there’s no personalized advice on hand with Robinhood and no recommended portfolio to get the ball rolling. There is, however, a wealth of educational articles on the Robinhood website that many existing users find helpful.
What real users are saying about Robinhood
The Robinhood app scores (4.6 / 5) on Google Play (from more than 65K ratings) and a very respectable (4.8 / 5) in the App Store (from 451K ratings). On the whole, the reviews are positive, although the customer service element of Robinhood lets the overall score down. Quite a few reviewers have complained about a lack of response when they’ve contacted the support team with an issue.
Several reviewers claim that Robinhood is an excellent app for DIY investors and that the process of finding, tracking, and trading stocks is made easy through Robinhood’s user-friendly interface. The free trading aspect of Robinhood is well received, as you’d imagine!
TD Ameritrade is an online broker suitable for all levels of investors. With three powerful trading platforms, TD Ameritrade has won several accolades including Best Online Broker for 2018, according to Kiplinger and Number 1 for Long-term Investing (6 years in a row) according to Barron’s. Additionally, TD Ameritrade has received a (5 / 5) rating overall in the Stockbrokers.com 2018 Online Review.
There is no account minimum involved to open an account, but there is a flat-rate commission of $6.95 per online equity trade. This fee may concern some investors. However, TD Ameritrade offers a wide range of investment products, excellent research tools, and educational resources along with comprehensive customer support, all of which goes a long way in justifying the cost.
Through the platform, you can invest in stocks, commission-free ETFs, options, mutual funds, futures, Forex, annuities, bonds, and CDs. TD Ameritrade also offers recommended portfolios, automated investing and portfolio management for those who would prefer some guidance.
As a sign-up incentive, TD Ameritrade offers commission-free trading for 60 days when you deposit $3,000 or more, plus cash if you deposit more than $25,000.
What real users are saying about TD Ameritrade
One reviewer highly praised the number of tools available to help her understand when to buy or sell a stock, while another (using the iOS app) said that if they could give the app a 10-star rating, they would! This particular reviewer used several different brokers and said TD Ameritrade has one of the most user-friendly websites to navigate using an iPhone.
Some of the main critical reviews about the TD Ameritrade app reflect technical glitches and the fact that the mobile app isn’t as good as the desktop application. One user said that they didn’t like having to pay $6.95 everytime they traded.
Below you’ll find a summary of the main differences between the two brokers to help you decide which one may better suit your needs:
- Fees – Robinhood offers a fee-free approach to investing, whereas TD Ameritrade charges a flat-rate of $6.95 per online equity trade. Investors looking to cut costs may find Robinhood more appealing.
- Greater choice of investments – Robinhood’s investment products are limited compared with TD Ameritrade. More experienced investors may prefer the wider range of investments on offer with the latter.
- Virtual trading – this is a tool offered by TD Ameritrade (called paperMoney), where you can try out investing strategies before doing it for real. Robinhood doesn’t provide this feature.
- Cash management – TD Ameritrade offers a checking account with a debit card, free check writing, and free ATM withdrawals, whereas Robinhood doesn’t.
- Face to face support – You can get support in person at a TD Ameritrade branch, as well as over the phone and via email (24/7). With Robinhood, help is only available online.
Overall, TD Ameritrade seems to offer much more for the serious investor, compared with Robinhood, when you consider its extensive range of investment products, robust trading platforms, and the many research tools and educational resources available. However, the TD Ameritrade mobile app may benefit from some improvements.
On the other hand, if you’re looking for a no-frills, no-fees broker, Robinhood may be the ideal investing app for you. Moreover, as Robinhood was initially built for mobile, the app itself is pretty slick and should make for a positive user experience.
*We hope you find this information useful. Please note that it shouldn’t be taken as professional financial or investment advice.