Public vs. Robinhood: Which Broker Is Right for You? | The Motley Fool (2024)

FAQs

Should I use Robinhood or public? ›

Public stands apart due to the community aspect of its trading platform. If you want to invest socially, or trade bonds, or invest in collectibles, Public may be a better fit. If you'd like to trade crypto cheaply or open IRAs, Robinhood may be the right choice for you. Both are discount brokers.

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Like all brokers, Robinhood helps users buy and sell stocks and ETFs. Unlike most brokers, Robinhood also offers fractional shares. Fractional shares allow small investors to buy big names. Instead of buying a whole share of stock valued at, say, $3,000, an investor can buy a fraction worth $5.

Having said that, it is a viable option to execute your trades – any platform is good to get started. The danger however, is when trading apps like Robinhood make it too easy to just buy and sell stocks without first having done the research. And that's where the danger lies — clicking to buy or sell is easy.

Cons Explained

Limited research: Research tools and information at Robinhood don't measure up to competitor standards, making it difficult for traders to get the most out of the platform. There are no stock or ETF screeners available at all, and other research tools are rudimentary at best.

The Motley Fool advises holding onto winning stocks, as they often continue to outperform in the long run. "Double down buy alerts" from The Motley Fool signal strong confidence in a stock, urging investors to increase their holdings.

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While Fidelity offers clients access to more than 10,000 mutual funds, including many proprietary funds, Robinhood doesn't allow mutual fund trading at all. Fidelity also offers the opportunity to buy CDs and bonds, and Robinhood doesn't.

Does it matter which brokerage you use? ›

Different brokerage firms have different strengths, and your investing priorities will help you determine which strengths are better for you. Some brokers, for instance, are better for people who want to trade now but don't have much money to start with, while others cater to investors with a higher net worth.

Trading options may cost you a little more with Schwab, though. With Charles Schwab, there's a $0.65 per contract fee. Robinhood doesn't impose this fee -- although per contract fees are very common among brokerage firms -- which is why Robinhood is among the best options trading platforms.

Vanguard may not be as flashy as Robinhood, but buy-and-hold investors will value the broker's simplicity and reliability. Vanguard is also a better fit for investors who want access to more asset classes, including some of the best (and lowest cost) funds in the business.

18 Webull doesn't provide third party research but does provide more advanced and customizable charting than Robinhood. For technical and day traders seeking advanced and customizable charting, Webull is best. For everyone else, either platform is adequate for basic research.

E*TRADE is a better option for more active traders, while Robinhood is a satisfying option for new and passive investors.

Yes, some people have gotten rich from Robinhood. For example, one Robinhood user turned $250,000 into $400 million by investing in Tesla stock. However, it's important to note that these are the exception, not the rule. The vast majority of Robinhood users do not make money, and many lose money.

All Robinhood customers are beneficial shareholders because the shares they own are held by Robinhood Securities as the “street name” (as the Robinhood Securities' name, rather than the names of the individual legal owners).

Robinhood Gold is worth considering if you regularly use margin, keep lots of uninvested cash in your account, or invest heavily in your IRA. Special Offer. Get a 3% match on IRA contributions each year with Robinhood Gold (subscription fee applies), or 1% without.