Robinhood is a different type of brokerage because investors can manage their entire portfolio directly from their phones. The app doesn’t come with any fees for use, transfers, or for maintaining your account like other brokerages. Robinhood also offers Robinhood gold, but is Robinhood Gold worth it?
Robinhood is a free mobile trading app, but customers may opt to sign up for Robinhood Gold, the platform’s paid version that grants access to exclusive features. Both versions of Robinhood do not charge a fee when you open an account. So what is Robinhood Gold, and is it worth the extra cash? Here’s everything you need to know:
What Is Robinhood Gold?
Robinhood’s subscription is free for 30 days. During this trial period, users have access to all the features without the cost. It’s a great option for investors who want access to more advanced investing methods without the extra cost of commission fees.
Investors who make a large number of stock or ETF trades may find the app appealing since there are no commission fees. Robinhood Gold is accessible through the regular Robinhood mobile app, making it easy to access your portfolio anywhere, anytime.
For customers who do not have the funds to go through standard brokers, Robinhood Gold is a great online brokerage for advanced options without the large price. The flat monthly fee is more appealing than having to pay a fee on every trade, especially since these users tend to be making smaller trades.
Robinhood Gold Features
For $5 a month, users get access to the Robinhood Gold features that standard users do not have. Robinhood Gold offers:
- Professional Morningstar research reports on 1,000+ stocks
- Level II market data
- Larger instant deposit ($5k to $50k)
- Access to margins
- Note that the interest on these are paid separately
- Longer trading hours
Basic Robinhood users are bound by the Regular Trading Hours of 9:30 to 16:00 New York time (EST). Robinhood Gold members gain access to extended training hours, meaning they can maximize their investments in volatile stocks.
Are Morningstar Reports Helpful?
Morningstar is a leading investment research firm. While the company utilizes information available to the general public (such as SEC filings) for their reports, they compile it all for investors in a way that helps them better understand a company, without having to search for themselves.
While these reports are useful, they are not completely indicative of whether or not you should buy a stock. There are also other traders, such as Charles Schwab, who offer Morningstar reports completely free as well.
What is Level II Market Data?
Robinhood Gold’s Level II market is beneficial because it’s more detailed than Level I. The data goes beyond displaying the last price traded, and the current best ask, but also includes an in-depth amount of bids and offers for stocks. Level II data is mainly used to help investors identify short-term supply and demands.
In order for Gold users to get the most out of their Robinhood account, they need to know how to read the market data. Level II data shows customers what another broker has ordered in stocks. This “open orders” book essentially allows you to analyze what direction the stock will go. The key things to look at when reading the data are:
- The Market Maker
- Who placed the order
- The purchase price
- The number of shares purchased in the order.
Even if you don’t know how to read the data when you sign up for Robinhood Gold, learning as you go can greatly boost your trading skills.
What is Margin Trading?
When you invest on margin, it means that you are borrowing money from your broker in order to invest in stocks. This appeals to investors because you can leverage more money without selling off any assets. Margins can result in huge profits, but they are also incredibly risky for several reasons:
- You pay interest on what your borrow for the duration of the investment.
- The longer you hold the stock, the more interest you pay.
- You can lose not only the borrowed money but the value of the cash in your securities account.
- Robinhood can make a “margin call” if you begin to show great losses.
- Margin calls allow a broker to force a sale of securities and other assets.
- When you’re in a margin call, you are not entitled to a time extension. The brokerage also does not have to contact you before selling off securities.
Margin trading can increase your losses because the losses will be deducted from your portfolio value, not the amount you borrowed.
What Does Robinhood Gold Cost
Robinhood Gold costs $5 per month for access to all the premium features. While Robinhood does not charge trading fees and commission, there are other costs associated with using the app.
The platform includes the first $1,000 of margin, after that you will be charged 5% yearly interest. Your account will be charged at the end of each billing cycle based on your daily levels. There are also additional costs that may come from margin investments if your stocks lose value.
While Robinhood Gold is a margin account, you do not have to utilize the feature to sign up for premium. You do not have to trade on margin to make the most out of Robinhood Gold.
Robinhood Gold Pros
Robinhood is known as an app for beginner investors. Beyond this, what is so great about this online brokerage? And why should consumers use it? There are several pros to investing with Robinhood Gold:
- No account minimums to start investing
- However, users need at least a $2,000 portfolio value to qualify for margin investing
- Simple and streamlined interfaces make it user friendly
- Ability to see how a stock is performing in real-time
- Access to Level II data
Robinhood Gold provides users with more advanced tools than the free version of the app. Robinhood’s commitment to no fees allows those with a smaller income to still build wealth on the app. The price point of $5 per month, not including any money borrowed on margin, may make it an affordable subscription as well.
Robinhood Gold Cons
Just as with any investment, there are associated risks. While Robinhood Gold does offer some great features, there are downsides to it:
- Margin trading is riskier for investors
- Investors can potentially lose more money than they originally invested and get themselves into massive debt.
- Robinhood lacks sources for investors to conduct research.
- It does not have built-in reports, software analysis, or educational resources beyond Level II data and Morningstar reports (both of which may not always be enough to rely on).
- There is no feature for automated broker transfers.
- Investors have to utilize the Automated Customer Account Transfer Service (ACATS) for transfers from another platform.
Every investor’s goal is to make money, but these cons will affect every customer differently based on their personal goals. If you have the cash to spare and want to take more risks, margin trading may be a good option for you.
How About Webull?
Webull is another online brokerage that is appealing to customers, especially young investors. Like Robinhood, Webull features commission-free trades and has a variety of the same features, as well as additional features.
Investors who open a Webull account will also receive two free stocks. Webull markets itself to both desktop and mobile users and has a more sophisticated design, whereas Robinhood is largely focused on being a mobile trading platform with a simple interface for beginners.
So how do the two platforms compare when it comes to stock trading? Let’s see:
Similarities Between Webull and Robinhood:
Both Webull and Robinhood are committed to commission-free trades. They both also offer investors the ability to trade in U.S. stocks, ETFs, and ATRs. At this point in time, neither Webull nor Robinhood allows users to trade in mutual funds or bonds.
Both platforms also do not require account minimums to start investing and do not charge inactivity fees, or deposit/ withdrawal fees for transfers from a bank account. Robinhood Gold and Webull also offer margin trading.
Differences Between Webull and Robinhood:
While Robinhood and Webull both offer margin investing, they differ on the costs associated with their services. When investors utilize Robinhood Gold, they pay $5 a month on top of any interest accrued with margins over $1,000. Robinhood previously had an interest rate of 5% but has since lowered it to a flat rate of 2.5%. On Webull, interest rates start at 6.99% and increase from there.
Where Robinhood lacks in investment resources, Webull makes up the difference. The online brokerage offers information about different investments and markets, initial public offerings (IPOs), and ETFs.
At this point in time, Robinhood does offer a wider variety of cryptocurrency investment options, but Webull’s selection is growing every day. Webull also supports the short sale of stocks at the time of writing, whereas Robinhood does not.
Webull is also known as a more sophisticated investment platform than Robinhood Gold. Robinhood boasts a simple interface designed to make it easy for beginner investors, but they have come under fire for one of their mobile app features. This feature includes on each stock a “you may also like” section which is seen by critics as encouraging reckless investing behaviors for inexperienced investors.
Webull displays more pertinent information when investing and resembles a software professional traders use. Webull also has a unique feature called paper trading that allows you to simulate trades without actually committing any money. This is a feature that both the free version of Robinhood and Robinhood Gold lacks.
How Can I Upgrade to Robinhood Gold?
Upgrading to Robinhood Gold is easy from both the mobile app and the website. If you are using the app, you can upgrade by:
- Navigating to the account icon in the bottom right of the screen
- Tap Settings
- Tap ‘Get Robinhood Gold’
If you are on the website, the steps are very similar:
- Tap the account menu at the top right of the screen
- Click ‘Get Robinhood Gold’
So, Is Robinhood Gold Worth It?
Whether or not Robinhood Gold is worth the money depends on who you are as an investor and what your goals are. Things you should consider are:
- Will you actually read the Morningstar reports?
- Are you planning on using margins?
- Will larger deposits allow you to maximize your investment goals? Or get in on deals sooner?
- Do you understand Level II market data and know how to utilize it? Are you willing to learn?
If you answered yes to all or some of these questions, it may be worth your while to sign up. Even if you didn’t, every Robinhood user gets a 30-day free trial, meaning you have nothing to lose by giving it a try! However, keep in mind that if you are using margin or the larger instant deposit feature when your trial expires, you won’t be able to downgrade back to the free version.
Is Robinhood Gold Worth It? Final Thoughts
In 2021, Robinhood Gold appears to be a viable premium option, but there are still plenty of other trading platforms out there. Every investor should research their options and consider their goals. This is especially true if you plan on getting into margin investments as they are extremely risky.
Robinhood has come under scrutiny in the past for breaches and potentially unethical tactics. But this is why it is important that you as a consumer do your research before choosing a brokerage. The features that Robinhood Gold offers versus their free version may make it enticing for anyone who uses the platform.
No matter what knowledge of the market you have, your financial status, your investment objectives, or what your portfolio value is, investing always comes with some risks. If Robinhood Gold aligns with the way you wish to invest and what you look for in a trading platform, it may be worth it for you.