Is Robinhood Gold Worth It?

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When you start investing in the stock market, it pays to keep things simple. The trick is to find a trading app that is easy to use and intuitive so you can start building your portfolio right away.

One such mobile app is Robinhood—a super popular platform for new investors.

Robinhood offers a free version along with a premium Gold membership plan. Keep reading to learn if Robinhood Gold is worth your time and money. 

Robinhood Review for 2022

Robinhood launched back in 2013 as a mobile app designed to make investing approachable and understandable for newcomers.

Today Robinhood remains one of the most popular investing apps for young investors. The company operates out of Menlo Park, California, and has raised $6.2 billion in funding. Right now, the company has about 15.9 million active traders.

One reason why Robinhood is so popular is because of its free stock promotion. When you sign up for Robinhood, the company gives you a free share of stock that’s worth up to $250. This is a very attractive draw—and a big reason why many people gravitate to Robinhood.

With all this in mind, here’s a breakdown of the basic services that you can access through Robinhood’s free and paid plans.

Commission-Free Trades

Robinhood provides commission-free investing for individual companies and exchange-traded funds (ETFs).

Altogether, you can invest in over 5,000 stocks on Robinhood. The company also provides access to over 650 global stocks through American Depository Receipts (ADRs).

What’s more, Robinhood also lets you buy and sell fractional shares or small pieces of individual shares. You can buy as little as 1/1,000,000 of a share at a time. This is a way to access high-growth funds that may be too expensive to buy outright.

Options

Options trading involves buying and selling stocks at specific dates and prices. Unlike other platforms, Robinhood company doesn’t charge any commissions or contract fees for options trading in margin accounts.

That said, here’s a disclaimer: Even though options trading is possible on Robinhood, my advice is to steer clear of it until you’re certain that you’re ready for it. Options trading is very risky and it’s generally better to put your buying power into companies that you believe in and think will be around for the long haul.

One thing to note is that you can’t automatically trade options on Robinhood; you need to first obtain approval. The company has a strict vetting system in place to weed out new investors who absolutely should not be trading options.

If you want to trade options and the company rejects your application, you can always appeal and file again. And, of course, you can always open an account somewhere else.

Crypto

Robinhood is one of the few online brokers that lets you buy and sell cryptocurrencies like Bitcoin, Ethereum, Dogecoin, and Litecoin on a stock trading platform. The company doesn’t charge any commissions when buying and selling coins, which is somewhat of a rarity.

In my opinion, it’s nice being able to see all of your crypto investments right alongside your regular investments in the Robinhood dashboard. This is a unique experience that makes it easy for investors who dip into both markets, and it sure beats having to log into yet another platform to track your investments.

Cash Management 

In addition to investing, it’s also possible to use Robinhood for cash management. The app lets you deposit paychecks, send checks, pay bills, and store funds. Robinhood also provides a debit card that works with over 75,000 ATMs and in almost any place that takes Mastercard.

As a bonus, Robinhood cash management lets you earn 0.30% APY. By keeping your money in a Robinhood cash account, you could benefit from a decent interest rate that is more than you’ll find at most leading banks.

Now that you have a better understanding of how Robinhood works, let’s take a closer look at Robinhood Gold.

Learn More:

What is Robinhood Gold?

Robinhood Gold is the paid version of the Robinhood app. With a Gold Robinhood account, you use the same app as the free version, with one important difference: you’ll have access to some additional tools and features for an advanced trading experience.

Here are some of the features you’ll get by opening a Robinhood Gold account:

Bigger Instant Deposits

Robinhood offers instant deposits of up to $1,000 for free users. In other words, you can immediately access your money after initiating a deposit. You won’t have to wait several business days to access your cash like you have to do with some other brokers. 

With Robinhood Gold, you can instantly access up to $50,000 after making a deposit—depending on your balance and account status. 

Here’s a breakdown of what you can access instantly:

  • $50,000 if your portfolio value is more than $50,000
  • $25,000 if your portfolio is more than $25,000
  • $10,000 if your portfolio is more than $10,000
  • $5,000 if your portfolio is less than $10,000

In my opinion, this is a double-edged sword. On one hand, it’s great being able to instantly access your money. This makes it easier to act quickly on opportunities and make timely investments. It’s convenient, and you won’t have to wait for your money to clear before making a transaction.

On the other hand, you need to have some discipline when investing or you could make some rash decisions.

To illustrate, you might see a high-growth stock that’s skyrocketing in value and want to immediately dump $10,000 into the company. But rushing into an investment with that much capital is extremely risky. The stock could suddenly plummet due to market volatility, tanking your investment and causing you to miss out on a chance to buy the same security at a lower value.

When it boils down to it, most beginner investors don’t need immediate access to $50,000. But if you have the discipline and want faster access to more capital, Robinhood Gold can provide it. To learn more, check your instant deposit limit at any time in the account overview section of the Robinhood app.

Maintaining Access to Instant Deposits

It is important to keep your account in good standing if you want to maintain access to instant deposits. Robinhood may revoke access under certain circumstances—e.g., if your transfers don’t settle or if your account is flagged for any reason.

Should that happen, you may receive access to instant deposits again if your transfers successfully settle.

Optional Access to Margin Investing 

Margin investing is a strategy where you borrow money from a broker to execute trades.

When you trade on margin, you deposit cash that serves as collateral. Once that’s done, the broker issues you a loan and you pay interest on the money that you borrow.

Margin trading allows you to quickly execute a trade without immediately pulling money from your bank, giving you extra flexibility.

Signing up for Robinhood Gold won’t automatically give you access to margin trading. You’ll still have to apply for the ability to trade on margin.

Another disclaimer: If you aren’t careful, you could accidentally lose a lot more than you initially invest with a margin trading account. In other words, it could wreck your financial situation.

Professional Research from Morningstar 

One of the top reasons investors upgrade to Robinhood Gold is because they want deeper insights when making trades.

Robinhood partners with Morningstar, giving Gold members unlimited access to stock research reports.

Morningstar provides insights on roughly 1,700 stocks and regularly updates them to reflect recent company changes and events. Morningstar reports provide professional analysis on items like fair market value, leadership, risk, economic moat, and business strategy. 

Level II Market Data from Nasdaq

In addition to Morningstar reports, Robinhood also provides Level II market data through a partnership with Nasdaq.

Robinhood members receive access to Nasdaq TotalView, which is a powerful data feed for serious traders.

Level II data ultimately gives you more information to influence your investment decisions and analysis. You can use this data to predict short-term and long-term prices.

The combination of Level II market data and Morningstar reports can help you make stronger investing decisions. It may require a bit of a learning curve, but it’s worth it if you’re serious about growing your portfolio and minimizing risk.

Signing Up and Getting Started

Robinhood’s success can surely be attributed to the fact that its platform is intuitive and easy to navigate. Here’s a breakdown of how to start using it.

1. Download the Robinhood App 

The first thing you’ll need to do is download the Robinhood app and create an account. Robinhood is available in the Play Store for Android and the App Store for Apple, so no matter what device you use, you should be good to go.

During the sign-up process, Robinhood will ask you for some basic personal information. The process should only take a few minutes, so don’t worry about jumping through countless hoops.

2. Select Robinhood Gold 

As you begin going through the registration process, you’ll have to determine whether you want Robinhood’s free plan or the Gold option.

If you can’t make up your mind, don’t sweat it. You can easily upgrade or downgrade your account in the settings tab of the app.

I recommend trying the free version to see how you like the app. If you fall in love, you might want to consider upgrading to Gold. Once you start trading on Robinhood, you might find out that you want deeper access to analytics or potentially even margin trading.

The last step is to link your bank account to Robinhood so you can start making trades. 

Robinhood works with most leading banks—including Chase, Bank of America, Ally, Wells Fargo, Citibank, and HSBC, to name a few examples.

Robinhood Gold Pricing & Fees

At the time of writing, Robinhood is currently offering a free trial for the first 30 days.

When the trial period ends, the company charges $5 at the beginning of each billing cycle unless you opt to cancel your subscription before the next billing date.

If you would rather skip the fees and put that money into investing, you should look into an alternative platform such as Charles Schwab, Fidelity, or TD Ameritrade that doesn’t charge membership fees.

Also, if you decide to place a margin call and use more than $1,000 of margin, you have to pay an interest rate of 2.5% on the excess funds in a settled margin amount. The company calculates margin interest daily and charges customers at the end of each billing cycle.

Is Robinhood Gold Worth It?

As with most financial products, this depends on a few factors.

Robinhood Gold is useful if you’re already highly immersed in the Robinhood platform and want to take your trading game to new heights. You could potentially benefit from Level II market data and professional research from Morningstar.

That said, unless you’re a high roller, you probably won’t be moving large volumes of money in and out of Robinhood regularly. Further, you might not be in a position to try margin investing, which is a strategy that’s better for experienced investors. So, while those two features are nice additions, they won’t impact the average investor all that much.

With that in mind, competitors like Schwab and Fidelity offer comprehensive research and analytics and real-time updates—for free. Schwab also provides access to Morningstar data, as well as reports from Credit Suisse and other firms.

In light of this, the best play seems to be to use Robinhood’s free services to get a feel for the market and then transfer your portfolio over to another brokerage account when you’re ready to access advanced research tools. 

Frequently Asked Questions (FAQs)

Can You Day Trade with Robinhood Gold?

It depends. Day trading is the process of buying and selling the same stock, or opening and closing an options contract, within a single trading day.

Pattern day trading occurs when you execute four or more trades within five trading days. If you do this, you will be a pattern day trader and will need at least $25,000 portfolio value in your free or Gold account at the close of the previous day to continue.

If you day trade as a pattern day trader and end the previous day below the $25,000 equity requirement, the company will issue a day trade violation and prevent you from trading on Robinhood for 90 days.

Is Robinhood Gold Free?

No. Robinhood charges a monthly fee of $5 for its Gold plan. However, there is a current promotion where you can access Robinhood Gold for free for 30 days. You might want to give it a whirl to see whether you like it.

Do I Need Robinhood Gold to Trade Options?

You don’t need a Gold membership to trade options through Robinhood. However, you do have to request approval for options trading.

Like all brokers, Robinhood has to vet traders to make sure they are in a position to trade options. This is because trading options is very risky and you can lose a lot of money if you aren’t careful.

Do Customers Receive Protection on Robinhood?

At Robinhood, your securities and cash receive protection through the Securities Investor Protection Corporation (SIPC). However, Robinhood crypto investments do not contain any protection from the SIPC.

Keep in mind that cryptocurrency is highly volatile, and the market is largely unregulated. It’s a much different trading experience than you’ll find in the stock market. 

Does Robinhood Offer Mutual Funds?

Unfortunately, you can’t buy mutual funds on Robinhood at the moment. But make sure to check back, as the company could potentially expand its offerings in the future.

The Bottom Line

There are a lot of things I like about Robinhood for new investors.

For example, the stockbroker doesn’t charge any trading fees. And after stock trading hours are over, you can keep the party going with cryptocurrency trading, without having to change apps. Further, there are no account minimums on the investing platform, either.

As for the Gold plan, my advice is to do some research and see if it’s something that would directly benefit you. Robinhood Gold provides access to more insights and analytics, which could potentially help you make better investing decisions. However, Robinhood isn’t the only platform offering advanced insights—and you may be able able to get them for free elsewhere.

Whatever you end up deciding, take your time and don’t make any rash decisions. The calm, cool, and collected investor has a much better chance of achieving financial independence.

Here’s to making the best decisions on your journey to long-term financial freedom.

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