Charles Schwab Vs. Robinhood: Which Is Better For You?

Charles Schwab and Robinhood are two of the most well-liked on-line brokerages, letting purchasers purchase and promote inventory, choices, exchange-traded funds and extra. Tens of millions of individuals belief these names to assist them entry the market, monitor investments and analysis shares, amongst different issues.

Charles Schwab has a long-deserved status as an investor-friendly dealer that helps smaller buyers, utilizing a spread of analysis and instruments. It often ranks extremely in Bankrate’s critiques of the trade’s finest.

However Robinhood has taken the funding neighborhood by storm within the final decade, shortly rising into the title that many consider after they consider cellular buying and selling. It’s been a boon for a lot of buyers because of its help for fractional shares and low buying and selling prices, particularly for choices.

So which is healthier for you? That comes right down to the dealer’s options but additionally what you actually need from one. Right here’s how they stack up on an important options.

Schwab vs. Robinhood: Prices

In a number of areas on the price entrance, it’s a lifeless warmth, however Schwab edges out its rival general.

Each Schwab and Robinhood supply buying and selling in shares and ETFs with no fee, however so does each different main on-line dealer. Robinhood stands out for its no-cost choices buying and selling, a rarity within the sector and one thing that an choices dealer could discover particularly worthwhile. Schwab can’t match it, and as an alternative gives the trade normal fee of 65 cents per contract.

That mentioned, Schwab gives one thing that Robinhood doesn’t — some 4,000 mutual funds with out a transaction charge. That’s a strong providing, as Robinhood doesn’t supply mutual funds in any respect.

And in terms of different charges, Schwab notches forward once more. It expenses a $50 full transfer-out charge if you happen to’re shifting securities and $0 for a partial transfer, in comparison with Robinhood’s $100 for a full or partial switch.

Edge: Schwab

Schwab vs. Robinhood: Account minimal

With neither account having a minimal stability requirement, it’s simple for any investor to get began with both dealer. No account minimal is a characteristic of the most effective brokers for rookies.

Edge: Even

Schwab vs. Robinhood: Tradable securities

Right here’s a spot the place Charles Schwab outdistances Robinhood as a result of breadth of its choices, although Robinhood gives one thing Schwab doesn’t.

At Schwab, you’ll be able to commerce various completely different securities, together with shares, bonds, choices, ETFs, mutual funds, futures and foreign exchange. It’s a wide array that gives buyers a ton of entry to the most well-liked funding varieties, sufficient that just about all buyers are going to be happy.

Robinhood nonetheless gives a strong core of accessible investments — shares, ETFs and choices — however not different well-liked varieties comparable to mutual funds. The differentiating issue is that it gives buying and selling in cryptocurrency alongside its different securities, one thing that almost all conventional brokers don’t.

So in order for you a wider number of securities, Schwab makes the higher decide, whereas in order for you the core with the addition of crypto, then Robinhood is your winner.

Edge: Schwab, for its wider number of conventional securities

Schwab vs. Robinhood: Account varieties

By way of account varieties, there’s nonetheless a ways between Schwab and Robinhood, although Robinhood has narrowed the hole lately.

Schwab gives all the elemental varieties — particular person and joint taxable accounts, IRAs (conventional, Roth and rollover), custodial accounts, enterprise accounts and belief accounts, amongst different much less typical varieties. If you happen to’re searching for a managed portfolio, Schwab gives that by way of its Schwab Clever Portfolios robo-advisor service at no further charge. It’s fairly a spread.

In distinction, Robinhood gives particular person and joint taxable accounts in addition to IRAs (conventional, Roth and rollover). It additionally simply rolled out its personal managed portfolio service as properly: Robinhood Methods. The dealer truly has a neat bonus characteristic for its IRAs, providing you with a 1 % bonus of no matter cash you carry to the desk, together with for rollovers. If you happen to’re a member of Robinhood Gold, you’ll get a 3 % bonus.

If you wish to do extra along with your dealer than what Robinhood gives, you’ll have to go elsewhere.

Edge: Schwab

Schwab vs. Robinhood: Fractional shares

Relating to fractional shares, Robinhood clearly outclasses Schwab.

Robinhood is a superb decide if you happen to’re aspiring to spend money on fractional shares. You cannot solely place orders for fractional shares, however you can even reinvest any dividends in partial shares, too. That mixture is just not one thing you see at many brokerages, solely the most effective for fractional shares. At Robinhood, you should buy partial shares for as little as $1, and the vary of accessible inventory is big — all however the smallest shares and people buying and selling for lower than $1 — to maintain the riff-raff out.

You should buy fractional shares as a part of Schwab’s Inventory Slices program, however its vary of supported shares is narrower — simply the five hundred or so names within the S&P 500 index. You’ll want to speculate not less than $5 for every buy, and you should buy as much as 30 shares at a single time, making it a reasonably easy-to-use interface if you wish to purchase lots of shares directly (in distinction to Constancy’s interface.) Nonetheless, you’ll have the ability to reinvest your dividends for different shares that pay them.

So Schwab’s fractional share program is decently broad, however not practically as broad as Robinhood’s.

Edge: Robinhood

Schwab vs. Robinhood: Buyer help

Schwab’s customer support is one in all its strongest fits, and it truly is that good.

Schwab often receives excessive marks for its useful and pleasant buyer help. You will get to a human in below a minute with out getting misplaced within the phone maze. Schwab has 24/7 help throughout cellphone, chat and e-mail, plus you’ll be able to nonetheless go to one in all 400+ branches. In our expertise, it’s been pretty much as good as you can moderately anticipate buyer help to be.

Robinhood has not too long ago upgraded its help, shifting from what was basically a self-help web page, e-mail help and a deeply buried cellphone quantity. Now you’ll get these plus 24/7 callback help on your concern. Simply go away details about your concern and Robinhood will get again to you inside 24 hours. It now additionally gives 24-hour chat help, too. It’s worlds higher than it had been, absolutely, however Schwab tops this recreation. In fact, as an app, Robinhood doesn’t supply a department community in case you have that urgent query.

Edge: Schwab

Who’s Charles Schwab finest for?

• Schwab works as an amazing all-around dealer for buyers who’re searching for analysis,  training and robust buyer help.
• Schwab’s buying and selling platform, the well-regarded thinkorswim, could show significantly worthwhile to merchants or those that merely desire it.
• Traders who wish to broaden their accounts in future years, maybe with IRAs, 529 plans or perhaps a robo-advisor account, have strong choices right here.

Who’s Robinhood finest for?

• Robinhood will work properly for many who just like the mobile-first expertise and like the benefit of a fast swipe to commerce and analysis shares.
• If fractional shares are what you’re searching for, Robinhood gives among the many finest packages round.
• Free choices buying and selling continues to be unusual, and if you happen to’re doing vital buying and selling, then you definitely could possibly save vital cash at Robinhood. 

Backside line

On condition that it’s an upstart with pockets not practically as deep as its rival’s, Robinhood does a surprisingly good job in a handful of classes, in comparison with the well-funded and deeply skilled Charles Schwab. However Schwab finally ends up being too polished in too many classes, and it takes an investor-friendly strategy to a lot of what it does. Nonetheless, these searching for a selected characteristic comparable to free choices buying and selling could discover Robinhood a extra apt selection.