Stash vs Robinhood 2021: Which Investment Platform Should You Choose?
For most millennial investors, starting their investment journey through an online investment platform/mobile app seems to be the natural way to go. And just like mobile apps/online platforms in every other category, there are a lot of options in the investment field as well. Two of the most popular platforms of that kind are Stash and Robinhood. Stash vs Robinhood seems to be a raging debate in the modern investment world. If you are an investor who is thinking about choosing between Stash and Robinhood, you’ve come to the right place. In this post, we will take a quick look at the differences and similarities between Stash and Robinhood and help you make the decision to choose between the two. Let’s get started.
Stash vs Robinhood: Important Things To Know
What is Stash
Stash is a three-tiered personal finance app that combines banking and investing and helps investors reach their financial goals. Stash charges a monthly base rate from its users and lets them create a budget, build a portfolio, create a retirement corpus and become more adept at handling their money.
What is Robinhood?
Robinhood is a commission-free trading app that is broadly divided into two sections: Robinhood Financial and Robinhood Crypto. Robinhood Financial helps users conduct stock trading (along with ETFs and options). Robinhood Crypto, as the name suggests gives investors the option to trade in cryptocurrency. Robinhood doesn’t have any base charge for users.
Stash vs. Robinhood: Services & Features
Both Robinhood and Stash offer taxable accounts and allow users to invest in cryptocurrencies and ETFs. Both these platforms come with iOS and Android devices. There are some features that are unique to each platform though. Let’s find out.
Stash sets itself apart with its SRI (socially responsible investing) portfolios. Users can focus their investments on different themes based on their values. Stash also comes with more than 100 investment options that are paired with a banking capability that holds the money of the investors when it’s not invested.
The company primarily works through fractional shares, which allows for its low initial costs. This involves the app’s buying a full share and splitting it up into smaller shares. In case the ownership of a $100 share is split, you will be able to claim ownership of it for any price.
Robinhood users can enjoy commission free investment in stocks, ETFs and other investment tools. Robinhood also comes with cryptocurrency and options trading. The website features a robust set of articles and other content that can help to make you more knowledgeable about its services, specific investment types, investing strategies and more. Robinhood does not have financial advisors available to assist investors in its free version but does give Gold customers access to Morningstar research.
Stash vs. Robinhood: Online & Mobile Experience
Stash’s app comes with a lot of educational materials and investment information. It also has a nice banking option. Users can also buy fractional shares of stocks on the app. It also has a very strong budgeting platform on top of the buying and selling platform.
Robinhood’s mobile trading platform comes with a lot of customization features. Users can customize their alerts, look at charts of their investments and even listen to live earnings calls. Users can also trade in cryptocurrencies with the app.
Stash vs. Robinhood: Fees
Stash comes with three tiers. The Stash Beginner program costs $1 a month. Stash Beginner comes with features such as banking with the Stock-Back card, investing, budgeting and personalized advice. The Stash Growth plan costs $3 per month and includes everything that Stash Beginner does, plus a Roth or traditional IRA capability. Stash+ is the third tier plan and investors need to pay $9 per month to avail its services. Stash+ has all of Stash Growth’s features while also providing custodial investment accounts for kids and an exclusive monthly report on market insights.
Robinhood has no trading fees or commissions. There are no inactivity fees, fees for moving money in or out of your account and in general, a very tiny amount of non-trading fees. Now, if you are wondering how Robinhood makes money, this is how it does it, it pockets the small difference between the buying and selling price of an asset. This generates very little money per transaction, typically only pennies or less per share traded, but over millions of transactions those pennies add up.
Robinhood’s approach hasn’t been free of controversy. The Securities and Exchange Commission (SEC) has scrutinised it on a few occasions. In December 2020 it said that one of “Robinhood’s selling points to customers [between 2015 and late 2018] was that trading was ‘commission free,’ but due in large part to its unusually high payment for order flow rates, Robinhood customers’ orders were executed at prices that were inferior to other brokers’ prices.” Robinhood agreed, without admitting or denying the SEC findings, to pay a $65 million civil penalty while agreeing to a cease-and-desist order.
Stash vs Robinhood: Who should use it?
Stash is quite good for first-time investors, providing a lot of help and guidance. For beginner investors struggling to find a place to start, Stash provides information on how to select suitable investments, manage your portfolio and offers insight on good trading tactics.
Stash is also great for people looking for a more hands on investing experience. Unlike most robo advisors which tend to have a hands off experience, Stash allows users to make direct trading and investing decisions.
Stash is also great for people interested in Socially Responsible Investing (SRI) as it gives investing options that make it appealing to people who want to invest based on their values like environmental concerns.
While Robinhood doesn’t necessarily require you to have ample investment experience prior to joining, it’s helpful if you have the ability to be an independent investor. While it does feature some educational material on the website, it does not have advisory representatives to help you make your investment choices. So, Robinhood is definitely more suitable for people looking to trade stocks without any fees and commission. The friction free platform is also great for active traders, helping them buy and sell at will.
Robinhood’s mobile and internet centric platform requires a good amount of technological proficiency. There are no physical branches of Robinhood but the app and website are available throughout all 50 states and Washington, D.C., Puerto Rico and the U.S. Virgin Islands.
Stash vs Robinhood: Conclusion
As you might have noticed that both Stash and Robinhood are good platforms for people looking to invest. Robinhood’s fee-free structure is ideal for active traders and investors who are looking for commission free trading. Stash on the other hand is better for people who want to learn more about investing while they are at it. The Stash vs Robinhood battle ends up being a dead heat since both of them are user-friendly and come with low barriers to entry for everyone who is looking to start investing in stocks and other investment tools.