Robinhood vs. E*TRADE: Which Is Right for You? | The Motley Fool (2024)

Both Robinhood and E*TRADE are low-fee brokers for investors who trade exclusively stocks and ETFs. Derivatives and crypto traders will find Robinhood's commission-free trading of special interest. Mutual fund investors will find E*TRADE's suite of more than 6,000 no-load, no-commission mutual funds appealing. In this round of Robinhood vs. E*TRADE, the victor depends on you as an investor.

Robinhood pioneered zero-commission trading, and has stuck to that model. Investors using Robinhood enjoy $0 commissions on all trades of stocks and ETFs. For that reason, Robinhood is consistently ranked as one of the best ETF brokers. Robinhood continues to push the envelope with $0 commissions on cryptocurrency and options trades. Combine that with no account maintenance fee, and you've got a very low cost broker.

Like many brokers, E*TRADE now offers zero-commission stock, mutual fund, and ETF trading. However, investors are charged up to $0.65 per option contract, about the industry average. (Investors who make 30 or more stock, ETF, or options trades per quarter are charged $0.50 per contract.) E*TRADE offers over 6,400 no-load, no-commission mutual funds.

Like most brokers, both Robinhood and E*TRADE help customers trade stocks and ETFs. However, if you seek alternative investment options, there is a distinct divide in the Robinhood vs. E*TRADE comparison. Robinhood's innovative DNA means that it has few, but often groundbreaking investment options. Robinhood offers fractional shares. With fractional shares, those with less to invest can own some of the biggest names in the market. Additionally, Robinhood offers cryptocurrencies, making it one of the few brokers to do so.

E*TRADE offers a broader range of investments to its clients. Beyond stocks and ETFs, investors can purchase over 6,500 mutual funds, including over 6,400 no-load funds. That is part of why E*TRADE is consistently among the best brokers for mutual funds. Additionally, E*TRADE customers can buy CDs and bonds, which may be an important part of a well-diversified portfolio. For traders with suitable risk tolerance, E*TRADE offers options and futures.

The suitability of Robinhood vs. E*TRADE depends in large part on the investments you want to hold. For crypto, options, and fractional share traders, Robinhood may be a good bet. For investors seeking mutual funds, CDs, bonds, and futures, E*TRADE may be the clear choice. Investors buying mostly stocks and ETFs may find both Robinhood and E*TRADE attractive.

For many investors, a taxable brokerage account may not be the most efficient place to invest in and store assets. These brokers differ a lot here. E*TRADE offers a very wide range of account types beyond the traditional taxable individual account. They include traditional and Roth IRAs, SEP and SIMPLE IRAs, beneficiary IRAs, and IRAs for minors. Additionally, customers can rollover a 401(k) onto the E*TRADE platform. E*TRADE is also considered one of the best robo-advisors, with a suite of managed portfolios. Customers seeking to keep all of their assets under one roof may find E*TRADE's checking, savings, and credit card accounts of special interest.

Robinhood offers users a taxable brokerage account, a traditional IRA, and a Roth IRA. Users can open a margin account, but only Robinhood Gold subscribers get the best rate.

Robinhood's streamlined approach has launched it into the spotlight. But E*TRADE has much more to offer investors seeking retirement, robo-advisor services, banking, or other accounts.

Investors evaluating Robinhood vs. E*TRADE will find key differences in mobile apps and trading platforms. For traders who value a sleek mobile app without bells and whistles, Robinhood may be a strong choice. E*TRADE offers a complex desktop suite best for active traders and options traders.

Robinhood was one of the pioneers of mobile trading, and still ranks as one of the best stock trading apps. A no-frills platform, Robinhood has made trading controversially easy. With little more than portfolio information and transaction tabs, the app is simple and visually appealing. Robinhood's desktop version is very similar to the mobile app.

E*TRADE offers a simple, easy-to-navigate mobile and desktop platform. With market data, commentary, research, and screeners, the basic platform is well suited to active traders. The Power E*TRADE platform sports a sleek dashboard and impressive tools for derivatives traders.

Comparing Robinhood vs. E*TRADE depends on the investing style and priorities of individual investors. Both brokers offer low fees and a user-friendly trading platform. However, each broker better suits a different style of customer.

Robinhood is an industry pioneer, offering a highly accessible mobile application and zero-commission trading. It has continued to push the boundaries of what a broker is and does by offering cryptocurrency as an investment option. Derivatives traders should note its uncommon $0 options contract fee. Investors who seek alternative investments and don't need the bells and whistles offered by many brokers should consider Robinhood.

E*TRADE is an established broker, as is evident in its wide range of investment and account offerings. Investors seeking more than a taxable brokerage account and basic IRAs may find value in E*TRADE's many retirement, robo-advisor, and banking accounts. Readers who invest in mutual funds, CDs, bonds, and futures will want to consider that these investments are available to E*TRADE customers. Add extensive market research and a powerful options dashboard, and E*TRADE may be the best broker for you.