Robinhood: The Perfect Stock Broker for Small Accounts

Searching for the right broker often leaves investors confused and disheartened. To save time, they routinely settle for options that don’t best suit their needs. To demystify the process, let’s take a look at Robinhood, a broker whose long list of benefits is quite impressive.

Robinhood was one of the first brokerages to offer trades with no commission charges, and it still maintains that standard to this day for stocks and ETFs. The brokerage also doesn’t have a minimum balance for cash accounts, while margin accounts are still subject to the $2,000 minimum balance that regulators require. Another feather in Robinhood’s cap is the fact that they offer free options trades, which is definitely a differentiator compared to other major brokerages. Robinhood also doesn’t charge annual fees, inactivity fees, or fees for transfers that are done by ACH. These low costs are a major benefit for holders of small accounts, who have traditionally had their investment gains significantly reduced by fees in the recent past.

When it comes to the availability of securities to trade, Robinhood is very competitive in the marketplace, as they offer stocks, ETFs, options, cryptocurrencies, and American Depository Receipts for at least 200 international corporations. A major benefit of signing up with Robinhood is the ability to select options trades based on risk tolerance, which allows those who aren’t familiar with options to still take advantage of this investment product. Robinhood also provides added value over other stock brokers by offering fractional shares, which allows investors to purchase less than one share of a company’s stock. For many this may not sound significant, but for those with smaller accounts it opens their investment opportunities significantly to include high priced stocks such as Google, Amazon, and Berkshire Hathaway.

Robinhood also takes out the confusion for the novice investor through a simple and easy to understand web platform and mobile application. On top of all of the aforementioned benefits, Robinhood offers a high-yield cash management account that offers a high annual interest rate. For the retail investor that doesn’t have a lot of trading experience or money in the bank, Robinhood should be at the top of their list of possible brokers.