Charles Schwab vs. Robinhood

Many investors who prefer online investing platforms choose Charles Schwab or Robinhood for two very different experiences. Charles Schwab offers a full-featured investment platform with widespread investment opportunities that offer the diversification and complexity that advanced investors expect. Using Schwab’s tools, you can trade almost any way you want, but first, you will have to learn how to navigate the data-rich world of a serious trader. Robinhood, on the other hand, offers an intuitive trading experience through an investment platform that prioritizes simplicity. However, in the process, it eliminates most of the tools and assets that serious traders rely on to navigate the market. When comparing Charles Schwab vs. Robinhood, there are other notable differences. Here is what you need to know about how the two stack up.

If you are deciding between Charles Schwab vs. Robinhood, a financial advisor can help you review your financial goals and risk tolerance to find the right platform for your needs.

Charles Schwab vs. Robinhood: Fees

There are usually four types of brokerage fees that trading platforms charge:

Trading fees. Trading fees are any fixed charge attached to the trades you make. This can come in the form of a flat fee or what is known as the spread. This is when your broker charges you the difference between the buying and the selling price of an asset, if any exists.
Management fees and trading commissions. Trading commissions are fees assessed by your broker that are either fee-based or commission-based. They may also charge additional management fees.
Inactivity fees. Inactivity fees are assessed by your broker for when you do not make trades for a specific period. This applies when you keep money in your brokerage account but do not trade securities.
Non-trading/other fees. These cover any additional trading fees not covered above. For example, a brokerage might charge you for making deposits or withdrawing from your brokerage account or if you sign up for additional financial services.

When it comes to investment fees, you will find in comparing Charles Schwab vs. Robinhood that the two are mostly identical in the services they provide. Neither service charges anything to trade stocks, exchange-traded funds (ETFs) and related exchange-traded products (ETPs). You also skip the typical service charges for inactivity, deposits, withdrawals or other common transactions.

The most significant difference between Charles Schwab vs. Robinhood is that Robinhood does not charge users to trade options. While Schwab offers commission-free trading for self-directed investments, it charges a $0.65 fee per options contract, plus a $25 service charge.

Robinhood’s main fee is the $5 monthly upgrade fee for Robinhood Gold. This service allows you to make margin trades with 4% interest rates and a 3% match on annual IRA contributions

In comparison, Schwab charges no fee for its thousands of mutual funds, enabling most retail investors to find affordable funds on Schwab’s no-fee list that meet their financial strategy. This can greatly help when choosing the right mutual funds for their portfolio.

Ultimately, both Robinhood and Schwab are completely or almost free trading platforms for most investors.

Charles Schwab vs. Robinhood: Account Types and Features

Schwab and Robinhood both provide platforms designed to capture entirely different markets.

Robinhood offers a feature-light experience aimed directly at new investors. Robinhood’s goal is to simplify investing and even bring a little bit of fun to the process. There are virtually zero barriers to entry, allowing you to start investing immediately.

While the firm has released a web-based version of its platform called Robinhood Legend, it is clearly built around its investment app. However, everything about Robinhood is designed to be extremely user-friendly, especially for beginners who value mobile trading.

However, the drawback is that Robinhood offers fewer services and features than most trading platforms. Users have access to several financial products, including these.

Stocks
ETFs (which hold equities and/or bonds)
Bonds
Mutual funds
American Depositary Receipts
Options contracts
Futures
Private banking
Robinhood Gold credit card
Cryptocurrencies (through its partner service, Robinhood Crypto)

However, Robinhood eliminates most of the investment information and data available through comparable investment platforms. Instead of using the industry’s typical technical indicators, side-by-side graphs and candlestick charts, Robinhood offers only basic trading data to its users.

An asset’s screen will offer information on the trade, such as price, analyst rating, trading volume and historical performance. Users can then buy or sell, with the ability to enter basic trading instructions like a market order, stop limit order, stop-loss order and trailing stop order.

Schwab, on the other hand, offers a full-featured trading platform powered by Ameritrade. Its thinkorswim platform allows users to trade nearly all popular assets.

When it comes to account variety, Schwab offers a much broader selection than Robinhood. In addition to standard taxable brokerage accounts, several other types of accounts are available.

Investors can access all essential trading data, with information that goes back for the lifetime of most assets. Schwab’s platform also offers sophisticated tools for analytics, from bespoke analysis provided by the firm itself to customizable charts that allow you to compare different assets or technical indicators side by side.

Traders who want still more sophistication can use Schwab’s second trading platform, StreetSmart. This is an investment platform that Schwab runs specifically for highly sophisticated and professional traders. It provides benefits such as quicker access to real-time information and greater customization for your data, although that adds greater complexity to the platform.

With the flexibility of Charles Schwab, investors can manage different financial goals, such as retirement, education savings and taxable investing, all under one roof. There is an undeniable convenience that Robinhood lacks.

Robinhood’s lineup is significantly more limited, making it a great platform for beginners. However, the limited selection leaves fewer options for those with more complex planning needs.

Note that both Charles Schwab and Robinhood were implicated in the 2021 short-squeeze mania when the two platforms announced restrictions on trading certain stocks like Gamestop, AMC and Nokia. The platforms made it more difficult or even impossible for users to buy new shares, driving down stock prices and ultimately helping hedge funds that had considerable short-term interests in many of these stocks.

However, the restrictions was later reversed, and certain stocks returned to the platforms for trading, creating a market surge for investors.

Charles Schwab vs. Robinhood: Online & Mobile Experience

The Schwab investment platform is much more complicated than Robinhood. Understanding Schwab’s platform requires a basic knowledge of investing. You need to know not just how the market works but also the concepts and mechanics of trading.

In contrast, Robinhood restricts data to a line chart showing the user’s price history. This graph tells you the price of any given asset on any particular day.

Schwab uses candlestick charts instead. These are the market standard for reading asset prices over time and provide significantly more information than a line graph. However, they are more complex and intimidating unless you know how to read them.

Despite its complexity, Schwab is a well-designed trading platform offering online brokerage accounts that investors will find mostly easy to use. Information is well laid out; you can find your investment portfolio, research assets and even compare prices with just a few clicks.

The only real drawback to Schwab’s design is what it calls the All-In-One Trading Ticket. As users make trading decisions, Schwab’s platform collects them on a separate screen, creating the Trading Ticket. Users can have up to eight simultaneous stock or ETF orders. After you enter your trades, you must confirm all your trades at once.

Users may be divided on this feature, as some find it an unnecessary extra step while others appreciate the big-picture overview of their activity.

Robinhood, on the other hand, has much less complexity. Assets are easy to find with a convenient tool that organizes assets by category, nudging users to similarly situated products in the same way that Netflix might suggest additional streaming options. Although information is limited, it is easy to read the price and trading details for each asset, and equally easy to execute trading decisions.

Charles Schwab vs. Robinhood: Account Minimums

Robinhood requires a $1 minimum deposit to open an account. Schwab, on the other hand, requires nothing at all. This makes both platforms easily accessible to new investors just getting started.

However, Schwab’s broader account selection may appeal to investors who want to start off simple but later expand into other account types as their financial needs evolve.

Charles Schwab vs. Robinhood: Who Should Use It?

Schwab is the better trading platform for many investors with its well-designed, full-service platform. It is one of several full-service trading platforms that will do well with just about anyone in the marketplace. Alongside other brand names like E*TRADE, Fidelity and Ameritrade, this platform is a good choice whether you are a highly active investor or one who just touches up their mutual funds once or twice a year.

While this reviewer finds Schwab’s All-In-One Trading Ticket both unnecessary and disruptive, other investors might find it a valuable tool for their own trading. Otherwise, Schwab offers a consistently strong trading experience. Experienced investors will find all the information they need on this platform, from its customizable charts to high-quality news and analysis. Meanwhile, newer investors can benefit from the thinkorswim paperMoney feature that allows paper trading so they can practice trading without any of the usual risk.

Novice investors will absolutely face a learning curve when learning how to invest funds using this service. Someone new to the market should use caution and take the time for thorough research before making any decisions so you can avoid hasty and emotional investing.

It is important to understand the investing process before committing any money. While that does not mean you need to decipher particularly advanced strategies, taking the time to learn a candlestick chart can help ensure you understand exactly what you are getting into.

The Robinhood trading platform is not just designed to make trading easy. Robinhood gamifies trading by working to eliminate virtually all friction in the investment process.

Robinhood even includes a list of other recommended stocks or options you can purchase at the bottom of each asset’s screen. It’s similar to Amazon’s algorithm that prompts you to spend just a few dollars more.

Robinhood’s platform encourages high-volume trading in some of the riskiest assets on the market, such as stocks and options contracts. However, the problem is that it targets novice investors who are the least qualified to invest this way.

Experienced investors may have the savvy to use this kind of quick-trading system well, but they would quickly bump up against the limited information and limited asset classes that Robinhood provides. Novice investors, on the other hand, may not know enough to miss the depth of information that Robinhood lacks on its trading platform. However, these are also exactly the investors who should not approach investing lightly, nor should they exclusively invest in the high-risk assets Robinhood predominantly limits them to.

Regardless of your experience level, proper portfolio diversification can spread your risk across multiple investments so no one investment wipes you out if there is a market downturn.

Bottom Line

When comparing Charles Schwab vs. Robinhood, it is clear that the two target significantly different audiences. Schwab is a full-service investment platform that offers access to just about all mainstream assets with access to advanced data. It is a much better option for experienced investors, although new investors may appreciate the simplicity of Robinhood’s trading platform. Be sure to carefully compare the two to determine which one will best meet your investment needs.

A financial advisor can help you find the best brokerage based on your investment goals and risk tolerance.

Tips for Investing

Don’t make a choice just yet. Now that you’ve read our overview of these two options, dive into the details: In our review of Robinhood’s platform we go into the nitty-gritty of what this service has to offer, and we do the same while reviewing Schwab.
Which platform you invest with matters, but so does what you invest in. In other words, a financial plan is essential. And that’s where a financial advisor can be immensely helpful.
Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.