E*TRADE, Robinhood and Fidelity offer three different approaches to building an investment portfolio. E*TRADE is notable for being one of the first online brokerages, while Robinhood has led the wave of online brokers to offer free stock trades. Fidelity, meanwhile, is one of the most trusted names in investing with a history dating back to 1946. Comparing E*TRADE vs. Robinhood vs. Fidelity can help you to decide which brokerage to use.
For more help managing your money and planning your financial future, consider finding a financial advisor.
Overview of E*TRADE vs. Robinhood vs. Fidelity
Created by physicist and inventor Bill Porter, E*TRADE got its start in the 1980s and served as an early stage platform for online trading. That platform continued to be developed and fine-tuned, leading the company to launch its initial public offering (IPO) in 1996. Today, E*TRADE is part of Morgan Stanley, and it continues to serve millions of investors with convenient online trading.
Robinhood was founded in 2013 with a goal of making investing more affordable and accessible to a wider range of people. The brokerage’s original trading platform revolved around commission-free stock and exchange-traded funds (ETFs), with IPO and cryptocurrency trading added later. In 2022, Robinhood a feature that allows investors to lend out their stocks to earn extra income.
Fidelity is a full-service discount brokerage firm, founded in 1946, that provides a wide range of financial products and services to its customers. Investors can choose from stocks, ETFs, mutual funds, cryptocurrency, bonds and fixed-income products. In addition to investment accounts, Fidelity also offers IRAs, 529 college savings accounts, cash management accounts, annuities and long-term care insurance.
E*TRADE vs. Robinhood vs. Fidelity: Fees
The past few years have seen more brokerages move toward a commission-free trading model. E*TRADE, Robinhood and Fidelity are no exceptions. Here are some highlights of what each platform charges.
The firm charges $0.65 per contract to trade options contracts, and $1 per bond to trade. However, for investors who make at least 30 trades per quarter, E*TRADE reduces its options contract price to $0.50 per contract. E*TRADE charges nothing to trade a series of pre-defined mutual funds on a fee-free list and $20 to trade all others. The firm also offers extensive fee-free lists, meaning that you will likely be able to find a $0 mutual fund to meet your investment strategy. It also costs $1.50 to enter a futures contract. Margin rates start at 8.95%. Broker-assisted trades cost $25 per trade.
Robinhood does not charge fees or commissions to trade, and there are no inactivity fees, no fees for moving money in or out of your account and very few non-trading fees. Instead, Robinhood makes money by pocketing the small difference between the buying and selling price of an asset. This generates very little money, typically only pennies or less per share traded, but over millions of transactions those pennies add up. Robinhood Gold also offers margin trading to subscribers who pay a $5 monthly fee, which allows margin trading at 7.5% interest rate and – as of April 2023 – 4.4% APY on idle cash.
Fidelity lets customers trade stocks, ETFs and bonds free of charge, and there are several thousand no-fee mutual funds. Fidelity charges $49.95 to trade funds that aren’t on its no-fee list. Options trading costs $0.65 per contract. Margin rates are as low as 8.75%. There is a zero expense ratio for four Fidelity funds. The Depository Foreign Trust Company foreign settlement fee is $50 per trade. The firm charges $0 for new bond issues and $1 for secondary bond issues.
E*TRADE vs. Robinhood vs. Fidelity: Services & Features
As mentioned, Fidelity offers multiple ways to invest and manage money, including 529 college savings accounts, Health Savings Accounts, custodial accounts and cash management accounts. You can choose from DIY investing or robo-advisory services if you prefer a more hands-off approach. So, it could be a one-stop shop for investors who want to work toward multiple goals without having to toggle between different brokerages.
E*TRADE offers brokerage accounts, IRAs, IRAs for minors, small business retirement accounts and bank accounts through Morgan Stanley. Core portfolios and managed portfolios are also an option if you want to automate your investment strategy without having to open a separate account at a robo-advisor.
Robinhood’s business model is built around brokerage accounts but in early 2022, the company announced it would begin adding support for IRAs and pensions. If you’d like to open a brokerage account with Robinhood, you only need $1 to get started. There’s no minimum to open accounts with Fidelity or E*TRADE but there may be minimum requirements for specific investments through each platform.
If you need help with your Fidelity account, you can call support or connect with a representative over live chat. Access to human advisors is available with Fidelity managed portfolios. Both E*TRADE and Robinhood provide customer support by phone.
E*TRADE vs. Robinhood vs. Fidelity: Online & Mobile
E*TRADE, Fidelity and Robinhood allow you to invest online or through a mobile app. In terms of the website experience, E*TRADE offers good navigation and it’s easy to find information about different investment accounts and products. The account opening process is also simple and straightforward.
Fidelity’s website contains a wealth of information, and you can easily manage multiple accounts in one place. You can also view your 401(k) plans that are managed by Fidelity through the website.
Robinhood’s website, meanwhile, is a bit more streamlined as the platform offers fewer account options. That can be a good thing, however, for a beginning investor who doesn’t want to be overwhelmed by information.
So how do they compare app-wise? Fidelity’s mobile app has the highest rating of the three in the Google Play Store, with 4.2 stars. E*TRADE’s app has a 4-star rating while Robinhood has a 3.9 rating. Reviews of the Robinhood app suggest that investors find it easy to use overall, but they bemoan the lack of certain features and functions found with over investing apps.
In the Apple Store, the ranking order is the same. Fidelity has a 4.8-star rating, while E*TRADE has a 4.6 rating. Robinhood fares slightly better here, with a 4.2 rating.
Who Should Use E*TRADE, Robinhood and Fidelity?
Robinhood may be particularly suitable for beginning investors or investors who are solely interested in trading stocks and cryptocurrency. Its no-fee approach is attractive for anyone who might be trying to build wealth on a budget and wants to avoid costly commissions that other brokerages might charge.
E*TRADE could be a good fit for beginning and more experienced investors who are still interested in fee-free trading but want a wider range of investment options. The E*TRADE platform has a good reputation for meeting the needs of investors and being able to set up automated portfolios may interest those who are considering a robo-advisor.
Fidelity might appeal to investors who are working toward multiple financial goals and want to do it in one place. You can invest for retirement in an IRA, trade stocks commission free in a Fidelity-brokerage account, get insurance and start a college account for your kids all under one roof.
If you’re debating whether to use E*TRADE vs. Robinhood vs. Fidelity, looking at their similarities and differences is a good place to start. Each platform has established itself as a leader in the investing space and they all make it easier to access commission-free trading. Considering your investment goals and needs can help you to decide which brokerage to choose for your investing journey.
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