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

When it comes to Cash App Investing vs. Robinhood, both are designed to be low-frills brokerage platforms.

And both are primarily targeted at younger investors who want to buy and sell stocks easily. Cash App added brokerage capabilities within the past few years to complement its other financial offerings, such as person-to-person money transfers and direct deposit.

On the other hand, Robinhood pioneered the no-fee brokerage platform model and is largely considered to be the reason most of the industry has adopted $0 commission stock trading.

We compare the pros and cons of each in the following review.

Cash App Investing is great for investors who use Cash App to send money. It's the same app for investing and money transfers. You can manage all your money in one place, super simple.

Robinhood is great for investors who want retirement accounts. Robinhood gives you 1% to 3% match on IRA deposits. It's a rare perk, perfect for the self-employed.

Investors should consider other brokers for investing beyond the basics. Robinhood and Cash App Investing cover the essentials. But neither offers a wide variety of account types, and you're limited to stocks and some cryptocurrencies (no bonds or mutual funds).

When it comes to fees, these two brokerage platforms are pretty close. Both have commission-free stock and ETF trading, just like most of the brokerage industry. Both have no account maintenance fees or minimum balance requirements. Plus, the fee to transfer stock out of an account is the same with both brokers. And neither offers mutual fund investing at this time, so there's no need to compare fees in this area.

There are two key differences worth noting:

• Robinhood is one of the only platforms where you can trade options commission free. Cash App Investing doesn't offer options at all.
• Robinhood offers commission-free cryptocurrency trades, while Cash App Investing only offers Bitcoin and charges a fee for every transaction.

These two platforms are on (almost) equal footing for investment options, but with a few big differences. As mentioned earlier, Robinhood offers commission-free options trading, while Cash App Investing doesn't facilitate options at all. And while both platforms offer cryptocurrency trading, Cash App Investing offers Bitcoin only while Robinhood offers several different cryptocurrencies through its platform.

LEARN MORE: Best Options Trading Platforms

The biggest takeaway is that both Cash App Investing and Robinhood are largely designed for investors who want to be able to buy and sell stocks in any dollar amount. (Both allow fractional share trading.) Robinhood is designed more for traders, with options and several other cryptocurrencies available, while Cash App Investing is designed to allow people to easily buy and sell stocks and Bitcoin.

Neither platform offers:

• Mutual funds
• Bonds
• Deposit products like CDs, futures, or forex trading

Both are rather low-frills in nature, so if any of those investment types are a key component of your strategy, you're probably better off looking elsewhere.

READ MORE: Best Stock Brokers

Both Cash App Investing and Robinhood are on similar footing when it comes to standard (taxable) brokerage accounts. For example, neither offers a robo-advisory service. There are also no custodial or college savings accounts offered by either platform, although Robinhood has said it would like to offer additional account types in the future.

One key differentiator is that Robinhood recently started allowing customers to open traditional and Roth IRAs to save for retirement. Other platforms offer several different types of retirement accounts beyond these, but Cash App Investing doesn't support retirement accounts on its platform at all.

READ MORE: Best IRA Accounts

Another major difference is that Robinhood allows investors to use margin (borrowed money) to make trades. Robinhood offers a premium membership service called Robinhood Gold, which costs $5 monthly. Robinhood Gold allows customers to access superior margin rates (8% as of January 2024, versus 12% for non-members), plus with Gold, the first $1,000 in margin used is interest free.

It's also worth noting that while neither technically offers a checking or savings account, both offer money management solutions. Cash App itself is designed to do pretty much everything a checking account can do, although it doesn't pay any interest. Robinhood's cash sweep feature allows users to earn interest on their uninvested cash and provides access at an extensive ATM network. So, if you're looking for more of an all-in-one financial solution -- as opposed to simply a place to invest -- neither of these platforms are a best-in-breed option. But Cash App Investing has a bit of an edge, as being a "checking alternative" is one of the platform's core competencies.

LEARN MORE: Best Robo-Advisors

If you're looking for a user-friendly way to buy and sell stocks, you'll find that both platforms excel in this department. Both are designed to be simple to use but also have limited functionality compared to full-service brokers. For example, you won't find any sophisticated trading tools, and educational resources are in short supply with both. Robinhood has a slight edge here: it offers beginner-friendly how-to-invest articles, and Robinhood Gold members get advanced market data and limited Morningstar research.

On the other hand, both have highly rated apps:

• Cash App is rated 4.8 out of 5 on the Apple App Store and 4.6 out of 5 on the Google Play store.
• Robinhood's ratings are 4.2 on the Apple App Store and 4.1 on the Google Play store.

READ MORE: Best Stock Brokers for Beginners

As you can see, both of these brokerage platforms excel in certain ways and can be quite appealing to investors who want a low-cost and user-friendly way to buy and sell stocks. There are a few major differences between the two, so the best choice for you depends on what features matter most to you.

In a nutshell:

• If you want an all-in-one solution for most of your financial life that also offers stock-trading capability, Cash App Investing could be right for you.
• If you want to trade options or cryptocurrencies beyond Bitcoin, or you want to keep fees to an absolute minimum, Robinhood could be worth a closer look.