Robinhood review: everything you need to know

Fernando Figueiredo

Robinhood, one of the most popular investing apps in the US, has been going since 2013¹, and today has around 13 million users.

This article will take you through everything you need to know about Robinhood: what it is, who it’s for, how it works, and whether it might be right for you. It will also give you information about Wise and how it can help you send, receive and pay in different currencies.

Robinhood review: what is Robinhood?

Robinhood is an app that lets you invest money in stocks, funds, options, and other financial products. Founded in 2013¹, it has the aim to democratize the world of finance – to put power into the hands of the people, rather than those who are already well off.

It lets people trade without charging commission and also in very small quantities – opening investment up to those who don’t have a lot of cash to play with.

Primarily aimed at the younger, millennial audience, Robinhood’s median customer was 31 years old in 2020. Many similar businesses have set up in recent years, but Robinhood remains one of the most famous names when it comes to mobile trading.

But is it still the best one to use? While that’ll depend on exactly what you’re looking for, in this article we’ll explain how Robinhood works and how you can make the most of it.

How does Robinhood work?

You’ll find out the basics of how to sign up and get started with Robinhood later on, but here’s the general principle.

Through the Robinhood app or site, you can invest in financial markets like the stock market using your own money. You can buy stock in fractions of shares, meaning that it’s possible even if you don’t want to invest very much.

Your investment will come to be worth more or less over time, depending on the movement of the market. So it’s possible to make either a profit or a loss, depending on both skill and some luck.

That’s actually just how investing works in general. What makes Robinhood particularly interesting is how easy it makes the process – with the potential to invest only very little money, the ease of trading on your phone, and the lack of fees, Robinhood is specifically designed as a gateway into the world of finance for those who maybe don’t know where to start.

Robinhood fees

Does Robinhood have fees? The basics of trading are famously free on Robinhood – that’s one of its core features. But there are indeed some fees for some of the things Robinhood offers.

It charges $0 commission on stocks, options and ETFs, and there are no fees for opening or closing your account. There’s a $5 monthly fee for the premium service Gold, though - but not for the standard service. Apart from that, there a number of other trading fees² ³.

Regulatory transaction fee
This is a fee that the Financial Industry Regulatory Authority (FINRA) need to pay to the Securities and Exchange Commission (SEC). The cost is passed onto Robinhood, and therefore the company puts it on its customers:

  • $5.10 per $1,000,000 dollars of principal (sells only) as a regulatory trading fee.

Trading activity fee:
FINRA will also ask you for another fee that’s meant to cover supervision and regulation costs:

  • $0.000119 per share (equity sells)
  • And $0.002 per contract (options sells)

This fee can be no greater than $5.95 per order execution, though.

American Depositary Receipt Fees:
ADRs are certificates (issued by U.S. banks) representing foreign stocks that can be traded on the US stock exchange. In short, they’re an easy way to own foreign stocks. Therefore, depending on the cost the issuing bank charges, you might have to pay:

  • $0.01-$0.03 per share

How does Robinhood make money?

Given the lack of fees, you might well be wondering how Robinhood makes any money for itself. According to Robinhood, it makes money from a variety of sources, including the Robinhood Gold fees just mentioned.

Robinhood also receives rebates from the market makers that execute its customers’ orders, and the same thing happens with the trading venues which handle crypto. Other sources of income include lending, interest earned, and cash management⁴.

If that all sounds like too much information, you could just think of it as being a little bit like a bank – essentially, it makes money through dealing with your money.

Robinhood trading – what can you trade?

As you’ll soon realize when investigating the world of financial trading, there’s a huge range of different things you can deal in – the stock market is just the beginning. We’ll take Robinhood’s offerings one by one.

Robinhood stocks and funds

The simplest option is using Robinhood to trade in stocks and funds⁶.

Stocks are the units of ownership that make up a company. Say a company has 500 shares of stock outstanding – if you own five of those shares, you actually own 1% (5/500) of the company.

The key question, though, is how much stock is worth – its value fluctuates over time. If the value of the company goes up, the value of your stock could increase too, meaning you can make a profit by selling at a higher price.

You can use Robinhood to buy and sell stocks in individual companies, but one alternative is trading in exchange-traded funds (ETFs). These are collections of stocks: they track the performance of various companies, rather than one company in particular.

The S&P 500 is an example of an ETF – in that case, it’s a collection of the US’s 500 largest publicly traded companies. Other ETFs might track a particular part of the market, like technology or oil and gas.

One advantage of ETF trading is that your risk is diversified more than if you trade in individual stocks – you’re investing in a range of different companies simultaneously, so if one fails, the negative effect is smaller.

Robinhood options

You can also trade in options with Robinhood, and there are no fees for that either⁶.

Options are a more complex sort of financial instrument. Buying an option means gaining the right – not the obligation – to buy stock at a set price at a certain time in the future.

By that future date, of course, the value of stock may have either risen or fallen. If the value has risen, then by making the buy at the pre-agreed price, you’re essentially making a profit. (You can also do the opposite, and bet on the value falling.)

Robinhood Cash Management

Another feature offered by Robinhood is Cash Management – which lets you use a Robinhood brokerage account for everyday financial transactions. You get a debit card with it, alongside an ACH number and routing number, and your money will earn interest giving 0.30% APY⁶.

Robinhood Gold

Gold is the name of Robinhood’s premium product. For $5 a month you can gain access to research reports and data to better inform your trading decisions, and you can also invest on margin.

Investing on margin means borrowing money from Robinhood, and you pay 2.5% yearly interest on your margin above $1,000⁷. Your portfolio value has to be at least $2,000, minus crypto, before you can use margin with Robinhood Gold⁸.

What doesn’t Robinhood offer?

While there are various products available for traders in Robinhood, it doesn’t offer investment in mutual funds, futures, or bonds. Unlike some similar platforms, it doesn’t offer retirement accounts, and if you want personalized financial advice, it may not be the platform for you.

How to use Robinhood

Robinhood is designed to be easy to use, even – especially, in fact – for people new to trading. But serious money could be at stake, so setting up a Robinhood account and taking your first steps is still a process to take seriously. Here’s what you have to do.

  1. Download the Robinhood app, and sign up – you have to submit an application⁹.
  2. Wait for an email – it will approve you to use Robinhood, or else ask you for more info like ID documentation⁹.
  3. Once you’re approved, you can start trading up to $1000 instantly, thanks to Robinhood Instant. You technically borrow the money from them while the funds from your bank account process¹⁰.
  4. Once your bank account is linked to your Robinhood account, you can both deposit money into your Robinhood account, and withdraw money from Robinhood into your bank account. To do the latter, you’ll need to wait two trading days after a trade, and it could take another five days for the money to reach you¹¹.

How easy is it to use Robinhood?

Robinhood’s usability is one of its selling points – it’s designed to be easy to use via either its app or its website.

Of course, trading itself isn’t easy – it’s risky to make a lot of money this way, whichever platform you use. So as well as thinking about ease of use, make sure that you understand what you’re using Robinhood for.

Is Robinhood safe?

If you’re wondering if Robinhood is legit, the answer is yes - Robinhood is a legit business. It’s signed up to SIPC, which means that its securities customers – that’s you, potentially – are protected up to $500,000¹². That doesn’t include cryptocurrency, though.

It also has a range of security measures to ensure your account is well protected, and it recommends you use two-factor authentication¹².

So, overall, it’s a safe platform to use. However, that doesn’t mean that investing your money on Robinhood is risk-free. In fact, investing is inherently unsafe in that there’s always a real chance you could lose money.

That’s just the name of the game – and before you start investing, you need to be sure you’re comfortable with that risk.

Robinhood app reviews

At the time of writing, the Robinhood app has a 3.0 star average review on Google Play, and a 4.1 star average in Apple’s App Store.

That’s out of more than 386,000 reviews on Google Play¹³ and 3.5 million in the App Store.14

Conclusion: is Robinhood good?

Should you use Robinhood? Inevitably, the answer is that it depends. Its mission is to democratize the world of financial trading, and through streamlining the process it’s made it easy to do with just a few taps of your phone.

Whether Robinhood is right for you, though, will depend on exactly what you’re after. It blazed a trail a few years ago, but these days there are a huge number of investment apps available to choose between. Each of them offers something different, whether you’re looking to try out day trading, save for the long term, or widen your knowledge of the world of finance through learning.

Robinhood has its pros and cons in each of these categories, so make sure you know what you want before you take the plunge and start trading.

Need to manage your money in different currencies? Meet Wise.

In case you manage you money with different currencies, you might want to know about Wise. Why? You can top up you Robinhood account or withdraw from it, and Wise will let you send, receive and convert your money between currencies in seconds and without the mark-up costs on the exchange rates. Here's the highlights:

  • Send and receive payments from overseas in multiple currencies and no hidden mark-ups or Swift fees
  • Get everything you need to bank in another country. With zero hassle, you can get an IBAN, Sort Code, Routing Number, and others
  • Pay for your purchases in different currencies with the mid-market rate

Create a free Wise account and start saving


  1. Forbes The Inside Story Of Robinhood’s Billionaire Founders, Option Kid Cowboys And The Wall Street Sharks That Feed On Them
  2. Robinhood Support Are There Fees?
  3. Robinhood FinancialFees schedule
  4. Robinhood Support How Robinhood Makes Money
  5. Robinhood Our Products
  6. Robinhood Cash Management
  7. Robinhood Support Robinhood Gold: Overview
  8. Robinhood Support Robinhood Gold: Upgrading to Gold
  9. Robinhood Support Open My Account
  10. Robinhood Support Robinhood Accounts
  11. Robinhood Support Withdraw money from Robinhood
    Robinhood Support How You’re Protected
  12. Robinhood Support How you’re protected
  13. Google Play Robinhood
  14. App Store Robinhood

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We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.

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