Investing > Vanguard vs. Robinhood

Vanguard vs. Robinhood

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When comparing Robinhood and Vanguard, you-the-investor will have to consider new school investment philosophies versus the old standby.

These two companies are polar opposites when it comes to investing methodologies, and neither one may be the right choice for a truly active investor. However, they both promise to help investors stack money for long-term investments, but their approaches to online trading are quite different.

Robinhood is also one of the best platforms for beginners (re: Millennials) who want to use their phones to monitor trades and take advantage of zero commission fees for stocks, options, ETFs, and cryptocurrencies. However, there are some drawbacks to this simple online brokerage – and that’s where Vanguard shines.

Here’s a quick review of the two investing platforms, side-by-side:

Fees
Commissions

$0

$0

Account minimum

$0

$0

Minimum initial deposit

$0

$0

General
Best for

Long-term, passive traders

DIY stock trading

Highlight

Vanguard Portfolio watch to assess your portfolio

Pioneer of commission-free stock trading

Promotion

None

Free stock

Rating
Fees

Commissions

$0

$0

Account minimum

$0

$0

Minimum initial deposit

$0

$0

General

Best for

Long-term, passive traders

DIY stock trading

Highlight

Vanguard Portfolio watch to assess your portfolio

Pioneer of commission-free stock trading

Promotion

None

Free stock

Investor Warning: All securities trading, whether in stocks, exchange-traded funds (“ETFs”), options, or other investment vehicles, is speculative in nature and involves substantial risk of loss. Robinhood Financial encourages its Customers to invest carefully and to use the information available at the websites of the SEC at http://www.sec.gov and FINRA at http://FINRA.org.

Overview of Vanguard and Robinhood

Vanguard

  • Best for retirement savers and long-term investors who do not require streaming quotes or real-time data.
  • Does not require a minimum account balance or deposit, but you will have to pay a $20 maintenance fee.
  • This brokerage has the most mutual funds with over 16,000 offerings, and many of those have no-transaction-fee pricing. However, other mutual funds will cost between $20 and $30.
  • Limited research tools such as stock screeners, retirement calculators, and some educational videos will help investors, but you will likely need to talk to a broker for more complex strategies.

Robinhood

  • With absolutely zero commissions on stocks, ETFs, options, and cryptocurrency trades, Robinhood allows investors to trade for free.
  • Mobile app and website are responsible and easy-to-use with basic ordering.
  • Customizable news feed.
  • Best for semi-active DIY investors who only want to work with one account and don’t want to pay any fees.

Trading Experience: Vanguard vs Robinhood

Robinhood is a free stock trading app that allows you to trade stocks, ETFs, options, and cryptocurrency, and you never pay commission fees.

Until October 2019, it was the only broker to offer commission-free trades. It’s best used for mobile and web trading as the platform is bare bones. You won’t find any options for mutual funds either.

With its simple platform, Robinhood shines for beginners. The mobile app and website are incredibly fluid, easy-to-use, and responsive.

You can make trades quickly for equities on Robinhood, and the app is designed for sending market orders in quickly. Options trading is pretty simplified as well, and you’ll receive some tips regarding strategies. You cannot access any streaming quotes or data within the mobile app or website.

On the other hand, Vanguard has reluctantly ventured into the online broker space with a minimal offering for investors. The brokerage mainly deals with retirement planning and mutual funds, and there are high costs to trade stocks and ETFs. There isn’t any real reason for active traders to use Vanguard since you won’t find any streaming quotes or complex charting tools.

You should use Vanguard if:

  •  You are looking for mutual funds and long-term trading technology suitable for retirement accounts
  •  You have a high account balance and want personalized broker assistance
  •  You don’t care about streaming quotes or real-time data

You should use Robinhood if:

  •  You want to set up some simple trades online or by your phone for stocks, ETFs, options, and cryptocurrency
  •  You don’t want to pay any trade fees
  •  You don’t mind that you can’t get streaming quotes or real-time data

Mobile Platform and New Technology

For basic stock trading, you get the bare bones with Robinhood and Vanguard. However, Robinhood’s app is a little bit more intuitive. You can set up watch lists, basic stock quotes with charts, see recent news, and follow key metrics.

You can also set price alerts that notify you when a stock meets your requirements. However, unless you hold shares in a particular stock, you cannot set these alerts, so it’s not completely easy to use.

Mobiles Phones with the Robinhood Trading App
Robinhood’s mobile app comes with generally intuitive user interface but lacks options for basic stock trading

You can access “collections,” which is a Robinhood-specific feature that organizes stocks by sector or categories. For example, you can cluster stocks by female CEOs or only companies in the tech sector.

You can also sort collections and compare stocks side-by-side on the website. You can also use the tab bar at the top to quickly access portfolio values, transaction history, and other tools.

On mobile, Vanguard offers:

  •  Basic portfolio analysis and simple orders
  •  Mobile check deposit

Robinhood offers a better interface on mobile, but its mobile offerings are limited to stocks, ETFs, options, and cryptocurrency.

  •  Basic ordering and some research tools available
  •  Set up watchlists and stock quotes
  •  Get alerts for stocks you trade in only
  •  Decent news feed that allows you to tap into several sources

Education, Research, News, and Stock Trends

Even though it has a simple interface and strips out streaming quotes, Robinhood does offer a great news feed with stories from Seeking Alpha, Associated Press, Marketwatch, Yahoo Finance, and many other stock news sources. You can click on any headline to get the full details. While there aren’t any screeners, you can access some charting tools, and it only includes five years of pricing data.

Robinhood also does not offer too many educational courses or webinars. Most of the content is about using the website and mobile app rather than studying strategies and trade methodologies. There are no live events, and there doesn’t seem to be any current videos available.

Vanguard is equally stripped down when it comes to education, but you’ll find more resources than Robinhood for retirement planning and long-term investing. There are stock screeners and an ETF screener, but the options tool is limited to studying options chains only. With basic charting online, you cannot set up technical studies or customization options.

However, Vanguard does have more retirement calculators and planning tools that allow you to set actionable goals. You can set up investments for each goal, and there are way more personalized account advisor tools with Vanguard as well.

Screenshot of Vanguard Ratirement Income Calculator
Retirement Income Calculator provides precise info on the income amount that customers can expect once they retire.

Vanguard offers more tools for research than Robinhood, which requires that you do most of your research and trade testing outside of their app.

Vanguard offers:

  •  More stock screeners and ETF screeners, as well as retirement planning tools and calculators
  •  Videos and some educational content, though it may be a bit outdated
  •  Webinars that focus around long-term investing and retirement

Robinhood offers:

  •  Very limited education and research with no screeners and basic charting abilities
  •  Most educational content is about how to use the app and website
  •  No live events or video content
  •  Streaming news feed hooks into most major stock news outlets and sources

Retirement and Mutual Funds

Vanguard clearly wins in this category. Robinhood does not offer mutual funds or any retirement planning tools.

Security

Vanguard makes more of an effort to protect its users on the website with security challenges and authentication factors. Insurance covers fraudulent use of your account up to $500,000.

Robinhood has minimal security and will prompt a security question if you try to log in from an unrecognized device. In addition, they use Google Authentication on their mobile app.

Customer Support

You will not find any phone or online chat customer support with Robinhood. The company exclusively handles all requests through email, answering within 24 to 48 hours from Monday through Friday trading hours only. There are also no help articles online, and the company does not include a phone number on its contact page.

Vanguard offers personalized support for higher-level accounts, but most customers will access customer service during normal business hours, Monday through Friday.

Screenshot of Vanguard Customer Service Page
While there is no online help or live chat option, Vanguard does offer broker assistance and account management. 

Which Costs More: Vanguard or Robinhood

Vanguard definitely costs more. Robinhood is known as the best discount brokerage because it does not charge any commissions on stocks, options, ETFs, and cryptocurrency trades.

You can essentially set up an account with $0 and start using Robinhood’s trading tools for free. This bare-bones approach may work for DIY investors who like to work within certain sectors and do not need all of the research tools to make a trade.

Vanguard is still charging $7 per trade for stocks, ETFs, and options. In addition, you’ll pay $1 per options contract. While some of these costs go down depending on the account balance and account type, you will likely still pay more in fees since Vanguard also charges a $20 maintenance fee.

Robinhood does have some requirements if you plan to day trade. You will need to keep at least $25,000 in your account, or else your account will be restricted to 3-day only trades every rolling five business days. However, Robinhood is probably not the best choice for a day trading app.

For margin trading and higher trading tools, such as Morningstar reports, you can pay $5 per month for Robinhood Gold. This gives traders access to level II streaming quotes, margin trading, and reporting.

However, these tools are not nearly as good as free tools offered by TD Ameritrade and Charles Schwab.

Verdict

Robinhood has some advantages for the DIY investor who is semi-active and knows how to research their own stocks. However, beginner investors with little experience could lose a lot of money playing the market with Robinhood’s stripped-down approach. For cryptocurrency investors, it could be the only brokerage that allows you to use your account for stock trades and digital currency trading.

Paying for Robinhood’s Gold plan is not advisable as many of the tools are offered free with an account at larger online brokers like TD Ameritrade, Fidelity, and Charles Schwab.

Overall, Vanguard does seem to be the winner for online trading, retirement, and research tools. You have access to way more tools and asset classes with Vanguard as well. If you want to retire using mutual funds, then you’ll have to use Vanguard over Robinhood anyway.

FAQs About Vanguard and Robinhood

Is Robinhood Completely Free in Comparison to Vanguard?

In short, yes, Robinhood offers a completely free platform for trading certain assets such as stocks, ETFs, options, and cryptocurrency. Robinhood was the first to stop charging commissions on all trades. However, you may have to sign up for Robinhood Gold, which costs $5 per month.

Is Vanguard or Robinhood Better for Retirement Accounts?

Vanguard is definitely the better choice when it comes to setting up IRAs, Roth IRAs, 401ks, and other long-term investment accounts. However, Robinhood does not offer any type of mutual funds, and you only trade out of one brokerage account.

Does Vanguard Offer Cryptocurrency Trading? What Cryptocurrency Can You Trade with Robinhood?

Vanguard does not offer any type of cryptocurrency, but it does allow forex trading. You can buy and sell Bitcoin with Robinhood, as well as Ethereum, Bitcoin Cash, Litecoin, Dogecoin, Ethereum Classic, and Bitcoin SV.

Was Robinhood Charged with a Fine by FINRA?

In recent news, Robinhood did get hit with a $1.25 million fine by FINRA. The company was charged with best execution violations and other supervisory failures that took place earlier between October 2016 to November 2017.

Comparison Corner

Find out how Robinhood and Vanguard stack up against other competition.

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