Robinhood vs. Charles Schwab
Both Robinhood and Charles Schwab offer commission-free trading. So which one packs a better punch?
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If you’re ever made a trade on your phone, you’re probably familiar with Robinhood. The app launched in 2013, offering $0 commission fees for all stocks, ETFs, and options.
At the time, that was unheard of, but now it’s almost standard practice. As of 2019, most brokerages have followed suit and dropped their commission fees as well – or slashed them altogether.
Robinhood’s platform is quite simple-to-use, but is it too minimalistic…? Some say that it’s easier for investors to make mistakes because they may not know any better.
How do these two investing platforms stack up? Let’s take a look.
DIY stock trading
All investor types and levels
Pioneer of commission-free stock trading
Best online broker for stock trading
Minimum initial deposit
DIY stock trading
All investor types and levels
Pioneer of commission-free stock trading
Best online broker for stock trading
Investor Warning: All securities trading, whether in stocks, exchange-traded funds (“ETFs”), options, or other investment vehicles, is speculative in nature and involves substantial risk of loss. Robinhood Financial encourages its Customers to invest carefully and to use the information available at the websites of the SEC at http://www.sec.gov and FINRA at http://FINRA.org.
Charles Schwab, on the other hand, is the complete opposite when it comes to investment tools and platforms. There is no end to the amount of knowledge, screeners, analysis tools, and other resources available through the veteran brokerage.
As Charles Schwab looks to merge with TD Ameritrade, there may be no stopping this large brokerage from cornering the market even further – and stopping Robinhood in its tracks.
Charles Schwab has been around for roughly half a century, in that time becoming an online brokerage giant and symbol of trust for most amateur investors, particularly baby boomers. Robinhood, conversely, was built for millennials and offers a simple mobile app that may be easier to use.
Overview of Robinhood and Charles Schwab
- Easy-to-use mobile app that offers a minimal interface that beginner and advanced traders can appreciate
- Light on research and education tools, so you may have to look elsewhere for more information
- Offers $0 commissions on stocks, ETFs, options, and cryptocurrency trading
- Larger brokerage offers more platforms to help with research, analysis, complex trade orders, and strategy testing
- StreetSmart Edge is the downloadable platform for advanced traders
- $0 commission fees on stocks, ETFs, options, and NTF mutual funds, although you’ll pay $49.95 for non-NTF mutual funds
- Test all of your strategies on StreetSmart Edge and Idea Hub
- Contact 24/7 customer support at any time by phone, email, or chat
Fees and Commissions 💰
Robinhood keeps things simple. There are zero commission fees for stocks, cryptocurrency, ETF, and options trading.
Instead, the platform makes money by accepting payment for order flow. There are also no mutual funds, futures, or bonds available.
The platform caters to beginners, but experts are not so sure. While the zero-fee guarantee brings in all kinds of investors, beginners who do not have access to research tools on Robinhood may spend more by not knowing the best price or having access to more analysis tools.
Margin rates are capped at 5 percent, but you can also participate in margin trading if you sign up with Robinhood Gold for $5/month.
Charles Schwab is a larger, full-service brokerage. In October 2019, Schwab lowered its fees to $0 for stocks, ETFs, and options.
In addition to a $0 options base, you’ll pay $0.65 per contract fee. Other investments available include pink sheets, futures, bonds, mutual funds, and international trading.
Margin trading costs more with Charles Schwab than almost all other brokerages. You’ll pay over 9 percent margin if you have an account with a balance under $25,000. Margin rates go down as you grow your account, but it’s still quite expensive.
- ☑️ $0 commission fees for stocks, ETFs, options, and cryptocurrency trades
- ☑️ Marin rates capped at 5% but you’ll pay $5/month for Robinhood Gold access
- ☑️ No minimum account balance or inactivity fees
- ☑️ $0 commission fees for stocks, ETFs, options, and some mutual funds
- Thousands of NTF mutual funds, but $49.95 mutual fund trade fees for others
- ☑️ Broker-assisted trade fees cost $25
- ☑️ Investors pay $0.65 per contract for options
- ☑️ No minimum deposit or account balance is needed
🏆 Winner: Robinhood has $0 commission fees for stocks, ETFs, options, and cryptocurrencies, but Charles Schwab offers the same $0 commission fees for nearly the same. Schwab does not offer full cryptocurrency trading except for Bitcoin futures.
However, mutual funds, OTC stocks, futures, and IPOs are available.
Investment Selection 📃
Robinhood is meant to offer only the basics for investors. You won’t get any mutual funds or futures with a Robinhood account. However, you can use Robinhood for $0 commission trading on stocks, ETFs, options, and cryptocurrency.
In contrast, Charles Schwab aims to be the most diverse online brokerage on the market. With the recent news of a merger with TD Ameritrade, Schwab will have almost all investment types available for customers, although that still might not include a full cryptocurrency platform.
With Schwab, you can currently trade the following:
- ☑️ Stocks
- ☑️ ETFs
- ☑️ Options
- ☑️ Mutual funds
- ☑️ Bonds
- ☑️ Broker-assisted trades
- ☑️ Futures
- ☑️ Bitcoin futures
In addition, Charles Schwab offers a more diverse platform for market orders. You can set upmarket, limit, stop, and trailing stop orders with Robinhood, but contingent, multi-contingent, OCO, OTO, and OTOCO types are available with Schwab.
- ☑️ Simple trading platform offering stocks, ETFs, options, and cryptocurrency trades
- ☑️ Trade in Bitcoin, Bitcoin Cash, Dogecoin, Litecoin, Ethereum, and Ethereum Classic
- ☑️ No mutual funds, futures, or broker-assisted trades
- ☑️ Large trading platform with diversified investment types, including stocks, pink sheets, options, complex options, futures, forex, mutual funds, bonds, and all commission-free ETFs
- ☑️ Margin rates are considerably higher with Schwab
- ☑️ All order types available including OCO, OTO, and OTOCO
🏆 Winner: Charles Schwab wins this category, but Robinhood is made to be more simple. However, global trading and mutual funds make Schwab one of the best.
Online Advisors and Educational Offerings 👨🏫
During our research, Robinhood’s education resources fell short in comparison to nearly every other brokerage that we reviewed.
Their education materials are mostly about how to use the app, and little else. There aren’t enough research materials on the site or app to help beginner investors who may not know the latest methodologies or stock tips.
On the other hand, Charles Schwab has more learning materials than just about all other brokerage firms. Their education center is mainly dedicated to security research and investment methodologies, tailored to beginners. Multiple screeners can help you research or find new stocks based on new criteria.
Stock profiles are also provided on Schwab. These pages provide financial statements, peer comparisons, news articles, earnings histories, option chains, and dividend information. You can also look at analyst reports from seven different sources.
If you are a fund investor, you can use Morningstar reports for each mutual fund. ETF traders are able to use an ETF screener and ETC Select List, which shows Schwab’s top picks.
- ☑️ No real research tools available in the web-based or mobile app platform
- ☑️ No stock screeners, customizable charts, or streaming quotes
- ☑️ Morningstar report access and level II quotes available with a Robinhood Gold account ($5/month)
- ☑️ Basic charting, watchlists, and alerts are available
- ☑️ Extensive research available with sources like Credit Suisse, MarketEdge, Reuters, Morningstar, and CFRA
- ☑️ StreetSmart Edge and Idea Hub allows you to find new options trading ideas
- ☑️ Real-time data streaming, retirement planning, and financial goal-setting tools
- ☑️ Extensive education available including articles, videos, webinars, and more
🏆 Winner: Charles Schwab knocks it out of the park with all kinds of educational materials, resources, screeners, testing, and real-time data.
Trade Experience and Security 🤝
Robinhood offers the basics for trading tools and research. You won’t get much more than what’s on the mobile app. While it’s easy-to-use, Robinhood is also minimalistic and attracts customers based on its $0 commission fees.
However, it could lead investors to make poor decisions since the platform lacks streaming data and customizable charts. You can’t perform any research within the app beyond news feeds and watchlists.
In addition, Robinhood makes money from selling your order flow, which is the right to fill your order, to other wholesale marketer movers.
💡 Explanation: The issue with this is that Robinhood uses a per-dollar order route rather than per-share, which could result in lower-quality trade executions.
In contrast, Charles Schwab uses a wheel-based router that can surpass multiple issues such as exchange outages and even review execution quality in real-time. You can make trades on the web, desktop, or mobile platform, and it’s insanely accurate.
There are several platforms available to trade on with Schwab, including StreetSmart Edge, which is a desktop platform.
It’s an interface built for advanced brokers, featuring real-time streaming quotes and data, as well as news and customizable charts. There are almost too many platforms to pick from including TradeSource and StreetSmart Central.
However, the All-in-One-Trade ticket is an asset to Schwab and makes it easy for investors to get the rights at the right time. It lets you build an order using any asset class you wish. Quotes are updated in real-time so you always know that you are getting the best rate.
Robinhood and Charles Schwab are considered to be safe since they are both regulated by finest financial authorities like the Securities and Exchange Commission (SEC), and the Financial Industry Regulatory Authority (FINRA).
On top of these two regulators, Charles Schwab is also managed by the Commodity Futures Trading Commission (CFTC), abroad by the Hong Kong Securities and Futures Commission (SFC), and the Monetary Authority of Singapore (MAS).
With both of these brokers all customers are covered by the US investor protection scheme, called the Securities Investor Protection Corporation (SIPC) which protects clients against the loss of cash and securities in case the broker goes bust. The limit of SIPC protection is $500,000, which includes a $250,000 limit for cash.
Both websites use the latest encryption protocols and secure logins. If you log in with another device, you’ll be prompted with a security challenge.
- ☑️ Robinhood was designed to be a lightweight stock trading mobile app, so it doesn’t have the best research and analysis tools to make better trades
- ☑️ Easily input basic trades in the app or on the website
- ☑️ Trade execution quality is poor compared to other brokers
- ☑️ Fast trade execution and high quality trades
- ☑️ Multiple platforms including StreetSmart Edge, which is an advanced desktop platform
- ☑️ All market order types available
🏆 Winner: As both brokers are very well regulated it’s clear that Charles Schwab is definitely the best when it comes to trading experience and technology.
Mobile and New Trade Tech 📱
Robinhood was a pioneer in the mobile trading apps market, but many of the larger brokerages have developed their own great apps. Most of the popular ones have a robust app that allows you to make simple trades, monitor your portfolio, and access research tools. However, Robinhood has not changed much since its initial launch in 2013.
Although they have launched Robinhood Crypto to help with digital currency trading, their app remains mostly the same and doesn’t provide more than watchlists and customizable news feeds. If you want a more robust trading app, then you have to look at apps from other great stock brokers like Charles Schwab.
You can make any trade customization or watchlist on the cloud, and it will appear in your mobile as well. You can access streaming videos, quotes, and real-time data in the app, and all the education resources are available as well.
The StreetSmart mobile app offers more complex trading tools and even more analysis for options. It’s one of the best apps for mobile trading if you want better charts and more data.
- ☑️ The easy-to-use mobile app offers a minimalist approach to investing
- ☑️ Free app with $0 commissions and a few tools, such as synced watchlists and news feeds
- ☑️ No real research and analysis tools
- ☑️ No options analysis or strategy testing, only basic charting provided in-app
- ☑️ Everything is accessible through Schwab’s mobile apps
- ☑️ Use StreetSmart mobile app for more complex orders and options analysis
- ☑️ All education articles and videos can be found on the app
Robinhood vs. Charles Schwab Conclusion 🏁
Charles Schwab comes out on top for investing. Their new switch to a zero-commission platform means that Robinhood is not the most competitive mobile trading brokerage either. Schwab offers a plethora of tools, whether you want to trade on web, desktop, or mobile.
The low-cost investing, extensive research and vast investment selection make Charles Schwab the best platform for any investor.
🕵️♂️ Are you still having trouble finding the right broker? This guide provides a quick set of information’s on how to choose a broker.
Robinhood vs. Charles Schwab: FAQs
Which is Better for Retirement: Robinhood or Schwab?
A predominant part of Charles Schwab’s audience base is retirees who want to save more and diversify their portfolios with the best tools. Charles Schwab offers portfolio analysis, reports, news, and research to help long-term investors. In addition, you can invest in over 3,500 no-transaction-fee mutual funds.
You can monitor your portfolio with your phone using the Charles Schwab mobile app. It’s easy to research new mutual funds and find the best one. There are over 600 funds on Schwab that have expense ratios of 0.50 percent or less.
Does Charles Schwab Offer 24/7 Customer Support?
You can make a phone call to Charles Schwab at any time of day or night with 24/7 customer support. You can also access live chat and email support, and there are more than 300 local branches.
Who is Charles Schwab Best Suited For?
Charles Schwab is a great broker for all types and levels, either beginner or experienced investors can enjoy the variety of options the platform offers.
As a beginner, you'll get insights and easy-to-use tools to help you navigate and learn. While on the other hand experienced investors can enjoy and maneuver the advanced trading system. All in all, quality is assured for every type of investor.
Can you Actually Make Money with Robinhood?
You can – Robinhood’s commission-free stock, crypto, and ETF trading features significantly reduce costs, while the user-friendly and streamlined platform makes it very easy to use.
Robinhood has experienced a meteoric rise over the past couple of years, as witnessed by its 13M+ user base. Provided that you first educate and inform yourself, you can make money with Robinhood – in that regard, it isn’t any more or less risky than other platforms.
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