The investing world is quickly changing before our eyes. Newer investment apps, such as Robinhood, are launching innovative features to lure in new investors. Traditional brokerage behemoths, such as Fidelity, slowly adopt some of these strategies into their own offerings.
If you’re just starting to invest and want to open a brokerage account, you may struggle to choose between these two different options. They each have benefits and drawbacks. Use the following information to help you decide on a clear winner for your situation.
In a nutshell:
Fidelity is a powerhouse brokerage firm that caters to longer-term investors that need more options.
Robinhood is a fresh take on shorter-term investing for beginners that allows cryptocurrency trading.
Both firms have pros and cons, but which is best? Here are the highlights of Fidelity and Robinhood so you can pick the best solution for your situation.
Fidelity vs. Robinhood summary
Fidelity and Robinhood are both legitimate places to invest, but they target entirely different audiences. Robinhood competes for the younger investing crowd and offers a relatively basic suite of options. Fidelity’s massive size appeals to traditional investors looking for more nuanced choices.
Each firm has its pros and cons for different types of investors. Here’s a quick summary of what you may need to know to get started.
Sign-up fee $0 $0
Commission $0 on US Stock, ETF, and option trades $0
Trade fee $0 on stocks, ETFs, and certain mutual funds, $0.65 per contract on options, $1 per bond or CD in secondary trading $0
Margin rates 8.325% (1.250% above base rate) on up to $25,000. As low as 4.00% (3.075% below base rate) for $1,000,000 plus. $5/mo. Up to $1,000, 5% thereafter
Tradable assets Stocks, mutual funds, ETFs, options, bonds, CDs, precious metals, and international investments Stocks, options, ETFs, cryptocurrency
Platforms iOS, Android, Desktop iOS, Android, Desktop
In-app analytics Fidelity’s stock research center Morningstar (Robinhood Gold required for $5/mo.)
Open Account Open Account
Fidelity is a powerhouse traditional brokerage firm that was founded in 1946. While the business started in the pre-internet era, Fidelity has done a decent job keeping up with the offerings that many newer apps provide. Unfortunately, it takes a while for Fidelity to embrace the features newer apps are offering.
Still, they currently provide commission-free trades, zero expense ratio index funds, powerful tools, research, low fees, no minimum initial investment, fractional share trading, a wide variety of account types, and so much more. Investment options include stocks, options, ETFs, mutual funds, bonds, CDs, IPOs, precious metals, international investments, and more.
Their platform and website aren’t necessarily as easy to use as some of the newer user experience-focused apps, but their products and services available are difficult to beat.
Robinhood came on the scene with a bang in 2013 when they offered zero commission trading and no minimum balance requirements. At the time, these were enormous barriers for new investors at most other brokerages.
The company uses apps and desktop trading options with slick user experiences that might make it easy to learn how to trade. They offer stock, ETFs, options, and cryptocurrency investment options.
Unfortunately, Robinhood isn’t as developed as a massive brokerage firm that has been around for decades. Their product offerings and advanced options aren’t as well built out yet.Advertiser Disclosure – This advertisement contains information and materials provided by Robinhood Financial LLC and its affiliates (“Robinhood”) and MoneyUnder30, a third party not affiliated with Robinhood. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Securities offered through Robinhood Financial LLC and Robinhood Securities LLC, which are members of FINRA and SIPC. MoneyUnder30 is not a member of FINRA or SIPC.”
Fidelity vs. Robinhood investment performance
You can’t compare investment performance directly between Fidelity and Robinhood because you can choose different investments with each option. Both offer low fees, which allow you to keep more of your investments’ returns for yourself. Fidelity does charge $0.65 per contract on options, though.
Both Fidelity and Robinhood offer margin trading, but Robinhood’s pricing makes it more useful for smaller traders. Even so, margin trading is risky, and most new investors should stay away from it.
Ultimately, your performance will depend on which investment you choose. Fidelity has many more options to pick from than Robinhood provides.
Fidelity investment options
Fidelity easily wins the investment options battle over Robinhood, but you would expect it to since it has been around for decades longer.
In particular, Fidelity offers the following:
- Mutual funds (Over 10,000 to choose from).
- Certificates of Deposit (CDs).
- Precious metals.
- International stocks, ETFs, and mutual funds.
Fidelity offers fractional share trading for more than 7,000 US stocks and ETFs, as well as a vast suite of technology and research solutions. They even have advanced trading tools such as Active Trader Pro Platforms. They don’t offer direct cryptocurrency trading, though.
Robinhood investment options
Robinhood allows you to invest in stocks, ETFs, options, and cryptocurrency. While their investment options aren’t as flashy as Fidelity’s long list, they offer the main investment types most investors want to invest in.
Like Fidelity, Robinhood supports fractional share purchases. This helps you purchase shares of expensive companies you may not be able to afford if you had to buy a whole share. Robinhood stands out from Fidelity with their no-commission cryptocurrency trading as Fidelity does not offer this at all.
Fidelity vs. Robinhood investment performance summary
Fidelity offers a wider variety of investment options. That said, their traditional corporate style can be harder to navigate than Robinhood’s slick, user experience-focused app.
Ultimately, you have to choose which is more important to you as an investor. Experienced investors can get more value from Fidelity’s options and tools while someone just looking to trade stocks may find Robinhood easier to get started with.
Fidelity vs. Robinhood pros
- Massive variety of investment options – It’s hard to beat Fidelity’s exhaustive list of stocks, mutual funds, ETFs, options, bonds, CDs, precious metals, and international investment options.
- You can invest using several account types – In addition to a traditional taxable investment account, you can open IRAs, self-employed retirement accounts, and even a 401(k) if you run a small business.
- Provides several tools, research, and experience – Fidelity offers plenty of research and investing tools you can access as an account holder with the company.
- Provides essential investment options – While Fidelity’s investment list is long, Robinhood offers popular investment options, including stocks and ETFs.
- You can trade cryptocurrency – Fidelity doesn’t allow investing in cryptocurrency so Robinhood wins in this category.
- Easy to get started and use – Robinhood is designed to get beginners set up to start trading quickly without a ton of potentially unnecessary options.
Fidelity vs. Robinhood cons
- A traditional corporately run company that doesn’t move as fast – As a massive company, Fidelity takes longer to offer trendy new products such as cryptocurrency trading.
- The number of options can be overwhelming – It’s easy to get analysis paralysis with so many more account types and investments to choose from.
- Fees still exist in many places – While Fidelity doesn’t charge commissions and has low costs in many areas, their company still charges fees in other areas so be sure to look at the full fee schedule.
- Not as wide of a selection of investments – Robinhood is only a few years old so they haven’t built out the exhaustive list of investment options.
- You can only invest in a taxable investment account – The company doesn’t have an option for IRA or trust accounts so you’ll have to settle for a taxable investment account.
- Investment research is lacking – The app doesn’t focus on offering research or stock trading tools so you’ll have to use other solutions if these are important to you.
Why choose Fidelity?
Giant brokerage firm with experience
Fidelity is one of the largest brokerage firms with 31.3 million brokerage accounts and $8.3 trillion in customer assets as of June 30, 2020. They’ve used the experience they developed as they grew their firm to continue building a fantastic platform for their customers.
A large variety of investment options and account types
While you can’t trade cryptocurrency, Fidelity has a wider variety of investment options than Robinhood offers. Fidelity also shines by offering several account types, including traditional brokerage accounts, cash management accounts, various kinds of IRAs, self-employed retirement plans, and even 401(k)s for small businesses.
No minimums and zero-cost index funds
Fidelity has no minimums to open an account and offers several investment options that don’t require minimum initial investments. They allow fractional share trading for many stocks and ETFs to enable anyone to start their investing journey. They even offer some zero expense ratio index mutual funds.
Why choose Robinhood?
Want to get started trading stocks quickly
Robinhood’s user experience is designed to get your account up and running fast so you can start making trades quickly. If you don’t need the breadth of investment options Fidelity provides and are happy with Robinhood’s offerings, Robinhood’s app may be a better fit.
Want to trade cryptocurrency
You can’t trade cryptocurrency with Fidelity. If you want to invest in this option, Robinhood is the better fit for you. Robinhood doesn’t charge commissions on cryptocurrency trades, either.
Easy to understand interface without overwhelming options to choose from
Fidelity’s colossal size has its downsides. Robinhood focuses on offering what is most important to new traders so they can concentrate on trading instead of deciding how to get started.
When you’re ready to open your brokerage account, deciding between Fidelity and Robinhood probably won’t be difficult.
For people that love the latest technology and want to trade individual stocks or ETFs on a short-term basis, Robinhood’s interface will likely appeal to them more. Investors that want a well-established company that can help them invest for the long-term will probably gravitate toward Fidelity.
Either way, both offer solid investment options and no commissions on trades so it’s hard to make a bad decision.