Founded in 2013, Robinhood is a relative newcomer to the online brokerage industry. Its claim to fame is commission-free investing, with free trades in stocks, ETFs, options, and cryptocurrencies. Of course, with a growing list of brokers now moving to commission-free trading, the company may have lost that edge. Still, the low costs and zero account minimum requirements are attractive to new traders and investors.

  • Account Minimum: $0
  • Fees: $0/stock and ETF trade, $0 plus $1 per contract for options
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While not the oldest of the industry giants, Vanguard has been around since 1975. Today, it has more than 30 million investors and $6.2 trillion in global assets under management. The company offers an impressive lineup of low-cost mutual funds and exchange-traded funds (ETFs) aimed at buy-and-hold investors, as well as reasonably priced professional advice.

In our 2020 Best Online Brokers reviews, Robinhood earned higher scores than Vanguard in our Best Stock Trading Apps, Best for Options, and Best for Day Trading categories. Meanwhile, Vanguard beat Robinhood in the Best Overall, Best for Beginners, Best for International Trading, Best for IRA Accounts, and Best for ETFs rankings.

Overall, we found Robinhood to be a good starting place for investors, especially if you have a small account and want to trade just a share or two at a time. Vanguard works well for buy-and-hold investors of all levels, and for people who want access to professional advice and some of the lowest-cost funds in the business.

Usability

Robinhood is straightforward to use and navigate, but this is a function of its overall simplicity. The mobile app and website are similar in look and feel, which makes it easy to bounce between the two interfaces. Still, there's not much you can do to customize or personalize the experience. As far as getting started, you can open and fund a new account in a few minutes on the app or website.

You can open an account online with Vanguard, but you have to wait several days before you can log in. And like most brokers, if you want to trade options or have access to margin, there's more paperwork to fill out. The website is a bit dated compared to many large brokers, though the company says it's working on an update for 2020. You can trade stocks, ETFs, funds, and some fixed income products online, but you have to call a broker to place orders for other asset classes.

On the mobile side, Robinhood's app is more versatile than Vanguard's. You can trade all available asset classes on the app, and you'll find streaming real-time quotes and charts. Vanguard limits what you can trade on mobile, and quotes are delayed 20 minutes. 

Trade Experience

Desktop Experience

Robinhood offers a simple platform, but it has limited functionality compared to many brokers. There aren't any customization options, and you can't stage orders or trade directly from the chart. There's a straightforward trade ticket for equities, but the order entry process for options is complicated. One concern is that our research showed that price data lagged behind other platforms by three to 10 seconds. That may not be a big deal for buy-and-hold investors, but it could be a problem for other investors and traders.

Vanguard offers a basic platform geared toward buy-and-hold investors. You need to jump through a few hoops to place a trade. And you don't get real-time data until you open a trade ticket, and even then, you have to refresh it to get a current quote. Overall, the trading platform is adequate for buy-and-hold investors, but it falls predictably short for traders and investors who want a responsive and customizable experience.

Mobile Experience

Robinhood's mobile app is user-friendly. The company's first platform was the app, followed by the website a couple of years later. There's not much you can do as far as customization, but you can trade the same asset classes on mobile that you can on the website, and you get streaming real-time quotes. 

Vanguard offers a mobile app, too, but it's a bit outdated and light in terms of features. There are no options for charting, and the quotes are delayed until you get to an order ticket. Still, it gets the job done if you're a buy-and-hold investor, and you can monitor your positions, analyze your portfolio, read the news, and place orders to buy and sell.  

Range of Offerings

Robinhood supports a narrow range of asset classes. You can trade stocks (no shorts), ETFs, options, and cryptocurrencies.  Its crypto offerings include Bitcoin (BTC), Bitcoin Cash (BCH), Bitcoin SV (BSV), Dogecoin (DOGE), Ethereum (ETH), Ethereum Classic (ETC), and Litecoin (LTC). And data is available for ten other coins.

Vanguard offers a decent range of assets, including stocks, ETFs, fixed income, options, OTCBB, and a number of no-load/no-fee mutual funds. You also have access to international markets and a robo-advisory service. Neither broker provides access to futures, options on futures, or Forex markets.

Order Types

Robinhood supports a limited number of order types. You can place market, limit, stop limit, trailing stop, and trailing stop limit orders on the website and mobile platforms. It doesn't support conditional orders on either platform. The default cost basis is first-in-first-out (FIFO), but you can request to change that.

Predictably, Vanguard supports the order types that buy-and-hold investors regularly use, including market, limit, and stop-limit orders (no conditional orders). You can select a specific tax lot before placing an order, including partial shares within a lot. Neither broker allows you to stage orders for later.

Trading Technology

Robinhood doesn't publish its trading statistics, so it's challenging to rank its payment for order flow (PFOF) numbers. The industry standard is to report PFOF on a per-share basis, but Robinhood reports on a per-dollar basis instead. It doesn't disclose its price improvement statistics either. Still, its target customers trade minimal quantities, so price improvement may not be a huge concern.

Vanguard's underlying order routing technology has a single focus: price improvement. The company reports price improvement on stock orders of $0.85 per share. Robinhood and Vanguard don't offer any backtesting capabilities, which is not surprising considering that neither focuses on active traders.

Costs

Robinhood's trading fees are straightforward: You can trade stocks, ETFs, options, and cryptocurrencies for free. Vanguard charges $0 commissions for online equity, options (there's a $1 per contract fee), OTCBB, and ETF trades for U.S.-based customers. Broker-assisted trades cost between $0 and $25, depending on your account balance. There's also a sliding fee of $0 to $50 for broker-assisted mutual fund trades that fall outside the no-transaction-fee family.

Robinhood and Vanguard both generate interest income from the difference between what you're paid on your idle cash and what they earn on customer balances. With Vanguard, you can move your cash into a money market fund to get a higher interest rate. Neither broker shares with clients the revenue generated through stock loan programs.

Research Amenities

Predictably, Robinhood's research offerings are limited. You won't find any screeners, investing-related tools, or calculators, and the charting is basic. Still, news is available from several outlets, and you can access Morningstar research if you're a Robinhood Gold client ($5/month subscription). 

Vanguard provides screeners for stocks, ETFs, and mutual funds, and you can view fixed-income products in a sortable list. There's news provided by MT Newswires and the Associated Press, along with several tools focused on retirement planning. Charting is limited, and there's no technical analysis, but again, that's not surprising for a broker that focuses on buy-and-hold investing (and retirement planning).

Portfolio Analysis

Robinhood's portfolio analysis tools are somewhat limited, but you view your unrealized gains and losses, total portfolio value, buying power, margin information, dividend history, and tax reports. 

Vanguard provides access to real-time buying power and margin information, internal rate of return, and unrealized and realized gains. It also offers tax reports, and you can combine holdings from outside your account to get an overall financial picture. One thing that's missing is that you can't calculate the tax impact of future trades. Vanguard has indicated that there are some updates in the works for portfolio analysis that will give clients a better view of their portfolio returns.

Education

Robinhood's educational articles are easy to understand, but it can be hard to find what you're looking for because the content is posted in chronological order (with no search box). There aren't any videos or webinars, but the daily Robinhood Snacks newsletter and 15-minute podcast offers some useful information. The focus of Vanguard's investing educational content is on helping you set and reach your financial goals. Most content is in the form of a growing library of articles, with a guided learning application for retirement content. 

Customer Service

Robinhood handles its customer service through the app and website. You can't call for help since there's no inbound phone number. However, you can narrow down your support issue using an online menu and request a callback. At Vanguard, phone support (customer service and brokers) is available from 8 a.m. to 10 p.m. (Eastern) Monday through Friday. There's no live chat, but you can send a secure message from the website. On Twitter, Vanguard typically responds to queries within an hour or so.

Security

Vanguard's security is up to industry standards. You can log into the app with biometric (face or fingerprint) recognition, and you're protected against account losses due to unauthorized or fraudulent activity.  Vanguard carries excess Securities Investor Protection Corporation (SIPC) insurance (provided by London insurers) that provides each client with $49.5 million for securities and a cash limit of $1.9 million per customer. There's an aggregate limit of $250 million for all clients. Robinhood's technical security is up to standards, but it's lacking the excess SIPC insurance. However, your cash and securities are protected by standard SIPC insurance, up to $500,000 (including $250,000 for cash claims). 

Through June 2020, neither brokerage had any significant data breaches reported by the Identity Theft Research Center.

Our Verdict

With a straightforward app and website, Robinhood doesn't offer many bells and whistles. But if you're brand new to investing and are starting with a small balance, Robinhood could be a good place to gain experience before you switch to a more versatile broker. Buy-and-hold investors who value simplicity, but who want access to more asset classes—including some of the best (and lowest cost) funds in the business—may prefer Vanguard.

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Methodology

Investopedia is dedicated to providing investors with unbiased, comprehensive reviews and ratings of online brokers. Our reviews are the result of six months of evaluating all aspects of an online broker’s platform, including the user experience, the quality of trade executions, the products available on their platforms, costs and fees, security, the mobile experience and customer service. We established a rating scale based on our criteria, collecting over 3,000 data points that we weighed into our star scoring system.

In addition, every broker we surveyed was required to fill out a 320-point survey about all aspects of their platform that we used in our testing. Many of the online brokers we evaluated provided us with in-person demonstrations of their platforms at our offices.

Our team of industry experts, led by Theresa W. Carey, conducted our reviews and developed this best-in-industry methodology for ranking online investing platforms for users at all levels. Click here to read our full methodology.