Fidelity vs Robinhood: Which One Is The Best To Choose?

Fidelity vs Robinhood: Which One Is The Best To Choose?

Robinhood and Fidelity Investments are two popular online trading platforms.

Robinhood is known for 100% commission-free trading but lacks the number of services offered. In contrast, Fidelity is a full-service brokerage firm offering a wide range of services, therefore considered by many investors. Here is a look at Fidelity vs Robinhood Investments.

Fidelity vs Robinhood Investments Features of Robinhood

Source: cnbcfm.com ● Robinhood is a trading company focusing on its simple, streamlined trading app that appeals to the youth and novice investors eager to experience their first investment in the stock market. It offers basic trading data only.

● The company’s priority is its trading app over its web interface. It keeps the trading interface as uncluttered as possible. It has replaced the candlestick charts and documents of technical analysis with a single line graph chart that gains an advantage over any standard trading platform. ● The platform is limited to a few complex trades like stop-loss orders.

Tradable financial assets are also limited, like stocks, ETFs, ADRs, options, and no bond or mutual funds. Its affiliated company Robinhood Crypto allows trading of a variety of popular cryptocurrencies for 100% commission-free. ● The Robinhood facilitates the purchase of fractional shares of a company.

It helps new entrants to build a diversified portfolio even if they lack the funds to buy large stocks. ● With Robinhood, you can opt for receiving the dividend in your account or reinvest under the DRIP program. With the Dividend Reinvestment Plan (DRIP), your dividend income will be reinvested into the stock automatically. So let your money back work for you. ● The company provides high-yield savings accounts that offer higher interest rates over traditional banking savings accounts. Users can use debit cards to make free withdrawals at 75k+ ATMs. ● With Robinhood Gold margin investing, you can access cash instantly between $5k – $50k upon deposit, based on your account balance.

Otherwise, without Robinhood Gold, you have to wait for three days for funds to make any trade. ● For customer service, it offers relatively little – just FAQs and an email ID.

Features of Fidelity Investments

Source: barrons.com ● On the other hand, Fidelity can meet the requirements of any investor through its app and website. You can trade either on your own or seek help from an advisor. It offers trading facilities for stocks, fractional shares, options contracts, mutual funds, and OTCBB / Pink Sheets. It offers international trading facilities also. ● You can trade most of the assets across its platform except futures contracts and cryptocurrencies. However, it is planning to launch bitcoin exchange-traded funds. It offers retirement account services also. ● Fidelity provides substantial trading data and technical indicators that help traders to make investing decisions. It includes lifetime data for stocks.

Using the lifetime data sets, one can compare various financial assets’ lifetime performance before investing.

● Fidelity education content from a large selection of research providers includes videos and education about stocks, ETFs, Options, Mutual Funds, fixed income instruments, retirement accounts. ● It offers the facilities of checking accounts, savings accounts, debit & credit cards. ● Fidelity provides several options for customer services, including a calling facility, live chat, email, and even the Fidelity branch visit.

Fee Structure Robinhood ● Robinhood does not charge for most of its basic services like no transaction fees, commissions, inactivity fees, etc. It was one of the pioneers following the zero-trading fee model. ● $0 account minimum, no fee for stocks, ETFs, option trades, Robinhood Gold, no-cost research & data offerings are some of the attractive features of Robinhood for new investors. ● There is no account minimum except margin account that requires a $2,000 minimum portfolio balance. Thus, if you do not trade on margin, your trades are free. Its margin trading service is relatively economical at $5 monthly, and the interest rate starts at 5%.

Fidelity Investments ● Fidelity fee structure differs as its service list is huge. ● It also does not charge trading fees on the defined list of assets. However, there is a fee of $0.65 per contract to trade options. It costs $1 per bond and $50 for most mutual funds. The margin rate starts at 8.325%. ● There is no inactivity charge, annual fee, transfer fee, and closing fees. ● There is a $5 charge to make a trade on call. ● For broker-assisted trades, it charges $33.

Thus, most of the overlapped services at both trading platforms are free. The only significant difference is Fidelity’s charges for options trading and margin trading that are not available with Robinhood.

Trading Platform

Source: medium.com

Robinhood ● Robinhood operates a single trading platform instead of multiple trading platforms for different levels of investor sophistication. ● Robinhood’s trading app users can quickly search securities by name, market, or category. In addition, it groups assets by tags. You can scroll and quickly see similar products in these tagged groups. ● Trading screens are candid to find any information quickly. ● Easy-to-understand tables and charts are impressive. ● You can find price histories through simple line charts instead of candlestick graphs. ● Users can place trades quickly using clearly marked buttons.

Fidelity Investments ● Fidelity also operates a single trading platform that can be accessed through its website and mobile app. ● As a full-service brokerage, besides its more standard options, Fidelity has successfully handled various technical information, data, and sophisticated trading products alongside and made it an easy-to-use platform with a broad list of functions. ● Traders can find the securities and the related information altogether at the trading screen. ● Its app layout carries a learning curve for a new investor who can quickly read about its basic functions like checking your portfolio and how to buy/sell. However, traders may find the app navigation a little bit troubling while searching for the stock price as there are various tabs and options to explore.

Who Should Use It Robinhood ● Robinhood is geared toward new entrants and inexperienced individuals. If you are an experienced investor, you may find its services deficient in fulfilling your needs, like little information and data, limited assets to trade, which binds experienced investors. ● It is imperative to be careful while using Robinhood’s platform as it does not provide enough research support and customer support to users but allows trading risky securities like options. ● Robinhood is a better choice for: ● Mobile Users ● Newcomers ● Margin account users ● Cryptocurrencies

Fidelity Investments ● Fidelity is an ingeniously designed trading platform for both seasoned investors and new investors. ● New entrants can learn from the education it provides at its trading platform, and experienced traders can utilize the information to make trading decisions. ● Fidelity Investments is better for: ● Retirement investors. ● An active trader looking for intensive research reports. ● New traders want to trade at low fees. ● An experienced trader wants commission-free trading in stocks, ETF, and options trading.

Is Fidelity Better Than Robinhood

Source: ytimg.com You can check these pros and cons for more clarity on Robinhood vs. Fidelity Investments.

Robinhood Pros ● 100% commission-free trading on selected securities. ● You can trade cryptocurrency; however, you will not be able to transfer your crypto out of your Robinhood account. ● Ease to use and understand simple, user-friendly interface ● Portfolio diversification smaller account balances through fractional shares. ● Dividend reinvestment plan for compounding power ● High yield savings account for more earnings.

Robinhood Cons ● Robinhood provides relatively little information, which may not be enough to make trading decisions. A user can find the current stock price, its trading volume, and price history for the last five years only. ● Limited research reports & technical data ● It offers brokerage accounts only and no facility for retirement accounts. ● You can not reach them over the phone. Only an email address is available for customer services.

Fidelity Investments Pros ● ● ● ● ● ●

Commission-free trades on more assets comparatively.

Besides mutual funds, access Zero Expense Ratio index funds also.

Premium Research reports and information Excellent customer support Retirement accounts for tax advantages Access fractional shares

Fidelity Investments Cons ● Complexity due to a wide range of products may be an obstacle for Fidelity’s new users. ● Newcomers may have to spend a little extra time to understand the candlestick charts.

● No crypto trading ● Novice investors may find the platform’s automatic candlestick charts feature confusing.

Comparison At a Glance: Fidelity vs Robinhood Feature

Robinhood

Fidelity Investments

Account Minimum

$0

$0

Trading Fees

$0

$0

Tradable Securities

Stocks, ETFs, Stocks, ETFs, Options, Mutual Options, Crypto Funds, Bonds, Fixed Income

Fractional Facility

Shares Yes

Branch Visit

Yes

No

Yes

Zero Expense Ratio No Index Funds

Yes

Customer Support

24/7 Live Chat, Email, Call, In-person visit option at 200 local branches.

Service Limited to email

Retirement Accounts No Facility

Yes

Research Accommodation/Data

Extensive

Limited

Technical Information

Basic

Advanced

App’s Learning Curve

Not Available

Available

Suitable for

New Entries Inexperienced Investors

and Every Type of Investor

To Sum Up Now you have Robinhood vs. Fidelity highlights and comparisons of both trading platforms. You can find the right fit based on your trading requirements.

Overall, Fidelity Investments is a better option in terms of commissions & fees, securities offered, research reports and tools, education, and information. If you find Robinhood limited in terms of the facilities provided, go ahead with Fidelity Investments, where novices can find a learning curve to evolve trading skills and experience can discover advanced research tools to make wise, informed choices. Fidelity is the winner of NerdWallet’s 2021 Best-Of Awards in the category of Best Broker for Beginning Investors and the Best App for Investing.

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