Charles Schwab vs. Robinhood: Which Broker Is Right for You? | The Motley Fool (2024)

Both Charles Schwab and Robinhood are brokerage firms that have a lot to offer to their customers. But there are important differences between the two.

Charles Schwab is a more traditional brokerage firm that offers multiple account types and a solid mix of traditional asset classes to invest in. Robinhood offers fewer account types, caters to beginner investors, and allows crypto trading.

This Charles Schwab vs. Robinhood comparison can provide more insight so you can pick which brokerage firm is best for you.

Charles Schwab is great for investors who trade mutual funds. It offers over 4,000 of them commission free. In the investing universe, that's rarer than diamonds.

Robinhood is great for investors who like it sleek and simple. The modern app is fun and lets you make fast, affordable trades. For stock or crypto, Robinhood has you covered.

Investors should consider other brokers for trading currencies. Neither Charles Schwab nor Robinhood lets you trade non-crypto currencies, and other trading platforms offer you more crypto options than Robinhood.

When you're choosing between Charles Schwab vs. Robinhood, the good news is you won't have to pay for buying stocks with either brokerage firm online. Neither charges online commission for getting your money into the stock market by investing in stocks or ETFs.

Trading options may cost you a little more with Schwab, though. With Charles Schwab, there's a $0.65 per contract fee. Robinhood doesn't impose this fee -- although per contract fees are very common among brokerage firms -- which is why Robinhood is among the best options trading platforms.

Both Schwab and Robinhood allow you to trade stocks, ETFs, and options, but there are some important differences between Charles Schwab vs. Robinhood when it comes to available investment options.

Charles Schwab provides access to a wider range of traditional asset classes, including more than 18,000 mutual funds as well as bonds, CDs, and futures. Unlike Schwab, Robinhood doesn’t offer mutual funds or access to fixed-income securities, like bonds. However, Schwab doesn't allow cryptocurrency trading, while Robinhood does.

And while Charles Schwab and Robinhood both allow you to trade fractional shares, Schwab's minimum investment for its "Schwab Slices" is $5, while Robinhood allows you to spend as little as $1 to buy fractional shares. This lower investing requirement helps make Robinhood one of the best online brokers for beginners since you can get started with very little money.

If you're looking for the best brokers for IRAs, Charles Schwab may be an option for you. Schwab provides a variety of different individual retirement accounts, including traditional IRAs, Roth IRAs, Simple IRAs, and SEP IRAs.

In December 2022, Robinhood launched its first tax-advantaged retirement savings accounts. Robinhood now offers traditional IRAs and Roth IRAs, and offers a 1% match up to the annual IRA contribution limits (3% match for Robinhood Gold members).

Robinhood also won't make any list of the best robo-advisors, as it doesn't provide any robo-advising services. Schwab does, though. Through Schwab Intelligent Portfolios, robo-advisors build a diversified portfolio based on your goals and automatically rebalance your portfolio over time. There's no advisory fee for Schwab Intelligent Portfolios, but there is a $5,000 minimum investment required.

And while both brokerage firms offer margin accounts, you must be a Robinhood Gold member and pay a monthly fee (on top of margin interest) to gain access to margin investing. However, Robinhood does offer the first $1,000 of margin to Gold members without charging interest.

Both Charles Schwab and Robinhood offer full-featured mobile apps that are well received by customers. Robinhood's investing app received a 4.2-star out of 5-star rating on the App Store for iOS and 4.1 stars out of 5 stars on the Google Play store. Schwab's investment app received a 4.8-star rating on the App Store and a 2.4-star rating on the Google Play store.

Schwab offers many more options with regard to its trading platforms than Robinhood does. You can choose to use StreetSmart Edge, an advanced platform with streaming data and sophisticated charting tools. (Note: Charles Schwab is retiring StreetSmart Edge in 2024 in favor of building out thinkorswim, an alternative and popular charting platform.) Or you can engage in stock trading on web or mobile apps.

Robinhood also offers trading on the web and mobile devices, but its trading platforms are undoubtedly geared more toward beginners. Its simple design has no learning curve, but may not offer all the features advanced traders are looking for.

Charles Schwab is a long-standing established brokerage firm that provides a traditional investing experience. You'll have a choice of trading platforms and access to in-person advice if needed. Schwab also provides you with the option to invest in most traditional asset classes, including stocks, mutual funds, CDs, and bonds.

Robinhood is a newer and more modern alternative with a fun and simple trading platform and a focus on mobile trading. Its different investment options highlight this approach, as you can trade cryptocurrencies and take advantage of more affordable fractional share trading, but can't buy traditional fixed-income investments.

When deciding between Charles Schwab vs. Robinhood for your brokerage account, take these differences into account to see which feels like the better fit for you based on the type of investor you are.