TD Ameritrade vs. Robinhood: Which Online Broker Is Best for You?
TD Ameritrade and Robinhood are two brokerages offering similar services to their clients, but each offers unique features worth exploring.
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While Robinhood revolutionized the financial industry in 2013, TD Ameritrade is an established brokerage veteran with more than 40 years of experience. Both brokers offer zero-commission trades for stocks, ETFs, and options to individuals in the United States.
TD Ameritrade went through many mergers and acquisitions and is an industry leader with more than 11 million investors and $1 trillion in assets under management, whereas Robinhood has more than 13 million clients.
This review will compare these very different firms and dive deeper into their main features, investment options, account types, pricing, and positive and negative aspects. In the end, you will have an understanding of which online broker is best for you.
TD Ameritrade vs. Robinhood: Overview
TD Ameritrade and Robinhood are online brokers that offer asset trading on their platforms. That makes their services perfect for both self-directed and active investors.
In A Nutshell: TD Ameritrade provides investment and trading services for more than 11 million investors and has an asset under management (AUM) volume of $1 trillion. TD Ameritrade offers zero-commission trades, an impressive trading platform, and excellent research tools for active traders.
In A Nutshell: Robinhood allows you to make unlimited commission-free trades in stocks, ETFs, options and crypto. You can access professional research reports, trade on margin, and make bigger instant deposits with Robinhood Gold for $5 a month.
About TD Ameritrade
TD Ameritrade is a broker using technology to make investing faster and easier. Next to its various platforms, TD Ameritrade provides exceptional educational tools, resources, and various tradable securities. To read about TD Ameritrade’s services in detail, look at our full TD Ameritrade review.
See Also: 12 Best Online Brokers
Robinhood was the first self-directed platform to offer commission-free trading. It became one of the most popular free brokers because the platform allows users to trade cryptocurrencies and fractional shares. For more info, read our full Robinhood review.
TD Ameritrade vs. Robinhood: Main Features
Both brokers have the same audience and designed their features according to them. However, TD Ameritrade has a more robust offering than Robinhood because the former is a full-service broker.
|Investment Types||Stocks, ETFs, Options and Cryptocurrencies||Stocks, ETFs, Options, Mutual Funds, Forex, Futures, and Bonds|
|Account Types||Individual Taxable||Individual Taxable, Joint Taxable , Traditional IRA, Roth IRA, Rollover IRA, SEP IRA, SIMPLE IRA, Solo 401(k), Coverdell, Partnerships, Custodial and Trust|
|Platforms||Web-based, Mobile (iOS / Android) and Watch (watchOS)||Web-based, Mobile (iOS / Android), and WatchOS|
|Promotions||One Free Stock||None|
|Best For||DIY Investors||Beginner and Experienced Investors|
The first feature where TD Ameritrade scores is its vast range of available assets. Stocks, ETFs, options, 13,000+ mutual funds, futures, forex, fixed-income, and bonds are all part of the package. Margin trading is also possible but carries high fees.
Dividend investors love this broker because it has a Dividend Reinvestment Plan (DRIP) on offer. Through it, investors can automatically reinvest their dividends in more than 5,000 eligible stocks and ETFs.
TD Ameritrade’s biggest asset is probably is its impressive thinkorswim platform. The award-winning platform provides an excellent trading experience for investors. We will go into this more later on in this review.
The platform also has a virtual trading simulator called paper money that lets you trade with $100,000 of practice money. This desktop platform enables traders to improve their skills and very few brokers offer trading on a mock account.
In addition, TD Ameritrade provides outstanding educational and research offerings. The education offering includes videos, webinars, tutorials, live events, articles, courses with quizzes, and many more. The platform also provides many resources based on your skill level. The full suite of research resources includes screeners, charting, and technical indicators.
Ultimately, contacting customer service is possible 24/7 via phone, text, email, and chat, while technical support is available during the main trading hours. For in-person contact, TD Ameritrade has more than 175 branches nationwide. The firm is also available on social media.
Overview of Main Features
- Extensive investment options: The full-service broker provides an array of financial securities investors can invest in.
- Dividend Reinvestment Plan: Investors can automatically reinvest their paid dividends into more than 5,000 eligible stocks and ETFs.
- Trading platform: TD Ameritrade’s platform solution is one of the best in the industry. Charles Schwab will probably keep it operational after the merger is complete.
- Paper Trading: The broker lets new traders learn on its trading simulator paper money so they can learn and transfer to the real platforms later on.
- Excellent education and research: Investors benefit from an outstanding research and education section at TD Ameritrade. These resources are suitable for all skill levels.
- Great customer support: The broker has an array of touchpoints for its customers, including social media, branch offices, and traditional contact channels.
Robinhood was the first broker to offer zero-commission trades for US-listed stocks, exchange-traded funds (ETFs), American Depositary Receipts (ADRs), options, and cryptocurrencies. Small-budget investors benefit further from trading fractional shares of their favorite high-priced assets.
All these trades can take place during standard and extended market hours. The instant deposit feature allows investors to use their money immediately after the funds have been cleared.
Investors can use the dividend reinvestment plan by automatically reinvesting dividends back into the issuing security. In contrast to TD Ameritrade, the DRIP is stock-based.
Investors who upgrade to Robinhood Gold ($5 per month) get access to premium features like Morningstar’s research, Level II market data, margin, and larger instant transfers.
With $2,000, you can also open a margin account and borrow money from Robinhood to increase your buying power. Robinhood charges a flat fee of 2.5% annually on the borrowed cash, but the first $1,000 is included in Robinhood Gold and margin-free.
Robinhood’s self-directed trading platforms primarily target beginner investors. The user-friendly interface is easy to navigate and intuitive. For that reason, it doesn’t support advanced features like TD Ameritrade’s platforms.
Ultimately, users can open a cash management account that generates above-average annual percentage yields of 0.3%. The idle money is moved at a partner bank and FDIC-insured up to $1.25 million.
Overview of Main Features
- Zero-commission trades: Robinhood users enjoy zero-commission trades for all assets, including US-listed stocks, ETFs, ADRs, options, and crypto.
- Fractional shares: Small-budget investors can trade fractional shares and don’t have to wait until they can fund whole shares.
- Instant deposits: Investors can use their deposits right away.
- Dividend reinvestment plan: Like TD Ameritrade, Robinhood offers a DRIP to dividend investors. This means investors can reach their goals faster due to reinvested dividends.
- Robinhood Gold accounts: This account provides detailed research from Morningstar and larger instant deposits. Combining Robinhood Gold and cash management, investors can use margin for daily spending.
- Level II market data: Level II data shows the volume of buy and sell orders in real-time. The respective bid/ask prices come directly from the Nasdaq stock exchange.
- Margin trading: The first $1,000 in margin doesn’t face any interest charge (for Gold accounts only), while additional borrowing comes at a competitive 2.5% flat annual interest rate.
See Also: 7 Best Micro-Investing Apps
TD Ameritrade vs. Robinhood: Investment Options
TD Ameritrade and Robinhood are free investing platforms and perfect for self-directed investors and traders. The two brokerage firms let investors trade stocks, ETFs, and options commission-free. While Robinhood also offers to trade cryptocurrencies for free, TD Ameritrade provides a broad selection of financial assets at competitive industry prices.
The broker joined Robinhood and cut its fees on stocks, ETFs, 4,200 mutual funds, and options to zero. The diverse selection of assets also includes futures/commodities, forex, IPOs, bonds, OTCBB, penny stocks, and multiple thousands of mutual funds that carry fees.
Trading cryptocurrency is also possible but limited to spot and futures contracts which is different than what Robinhood offers. Besides, fractional shares are not supported.
Robinhood offers fewer asset classes. Their offering includes stocks, ETFs, options, and cryptocurrencies, for which they don’t charge any trading fees. Additional instruments like the ones offered at TD Ameritrade aren’t supported.
Unlike TD Ameritrade, Robinhood makes free trading of fractional shares possible, enabling users to invest in their favorite securities without saving for a whole share.
TD Ameritrade vs. Robinhood: Account Types
With TD Ameritrade, investors can open a range of different account types that suit their needs, while Robinhood only offers taxable accounts.
As a full-service broker, TD Ameritrade has numerous account types to choose from, including retirement, custodial, and specialty accounts:
- Individual taxable brokerage account
- Joint Tenants Account with Rights of survivorship
- Individual retirement accounts (traditional IRA, Roth IRA, rollover IRA, SEP-IRA, SIMPLE IRA, solo 401(k))
- 529 plan
- Custodial accounts
- Specialty accounts for businesses
As of right now, Robinhood only provides individual taxable accounts to its investors. Retirement, joint, and custodial accounts aren’t available.
Within its individual accounts, Robinhood lets investors choose from three account options that have different features:
- Robinhood Instant: Investors start with this taxable margin account and get access to instant deposits and extended-hours trading.
- Robinhood Gold: This is Robinhood’s instant premium account, which grants access to advanced research, Level II market data, a higher margin balance, and larger instant deposits.
- Robinhood Cash: This basic account allows users to trade all of the firm’s products during regular and extended market hours. However, downgrading to this account doesn’t give access to margin trades or instant deposits.
TD Ameritrade vs. Robinhood: Sign up Bonus and Promotions
Usually, brokers offer signup and referral incentives. Of the two brokers, only Robinhood currently offers signup and referral bonuses to its users.
As stated above, TD Ameritrade isn’t running any signup or referral promotions at this moment.
See Also: 12 Best Investment Apps: For Beginners & Pros
Robinhood has two promotions for its users: its referral program and the first-time signup reward.
When signing up for Robinhood, the broker guarantees to credit a free surprise stock into the user’s account. Investors have a 1 in 80 chance of getting stock from Apple, GE, or Microsoft, but 98% of awarded stocks have a value of between $2.50 and $10.
Under the referral program, users can receive up to $500 in reward stocks each year. To get these reward stocks, they must invite friends to open a Robinhood account. For every three friends that complete the registration, users receive a fourth stock.
TD Ameritrade vs. Robinhood: Fees & Pricing
Although using both broker’s platforms and trading stocks, ETFs, and options is free, TD Ameritrade, as well as Robinhood, have services that come at a cost.
The two brokers don’t require minimum account balances to open an account and don’t charge annual, maintenance, or inactivity fees. However, if you want to trade options or on margin with TD Ameritrade, the broker requires a $2,000 minimum deposit.
Trading stocks, ETFs, and more than 4,200 mutual funds at TD Ameritrade is entirely free. Options trading also doesn’t come with a commission but carries a per-contract fee of $0.65, which is the industry average.
All other classes come at a cost. Penny stocks are $6.95 per transaction, mutual funds outside the no-fee list are $49.99, futures and options on futures cost $2.25 per contract, and broker-assisted fees are $25.
The fee for a full transfer of accounts is $75, while partial transfers come at no cost. Domestic and international wire transfers are both charged $25.
Robinhood’s fee structure is straightforward. The platform is free and the broker doesn’t charge any commissions for trading assets on it, unlike TD Ameritrade.
Still, Robinhood Gold does come with a $5 monthly fee, which in turn gives you your first $1,000 in margin free of charge. This is a plus because the firm charges a competitive 2.5% yearly interest rate on margin trades.
Robinhood also charges fees for outgoing account transfers ($75), domestic wire transfers ($25), and international wire transfers ($50).
See Also: Robinhood vs. Acorns: Which Investing App is Best?
TD Ameritrade vs. Robinhood: What We Like (Pros)
Both brokers effectively cater to the needs of their audiences. TD Ameritrade operates as a full-service broker and Robinhood sticks to what it does best.
See the list below to find out what we like best about both brokers:
- Commission-free stock and ETF trading
- A broad range of financial assets to invest in
- Multiple account types to choose from
- Availability of a dividend reinvestment plan (DRIP)
- Impressive trading platforms
- Excellent market research and educational tools
- No account minimums (unless trading options or on margin)
- Great customer service and support
- Zero-commission trades for stocks, ETFs, and options
- Direct trading of cryptocurrencies
- The availability of a dividend reinvestment program
- Robinhood has margin rates below the industry average
- Free extended-hours trading on the platform
- Investors receive one free stock upon registration
- Robinhood Gold gives access to advanced and beneficial features
- Fractional shares are supported
TD Ameritrade vs. Robinhood: What We Don’t Like (Cons)
Although TD Ameritrade and Robinhood have excellent offerings for active investors and traders, there are some negative aspects we want you to know about:
- High fees of $75 for transferring your account
- Holding a mutual fund for less than 180 days triggers a $49.99 fee
- High margin rates compared to other brokers
- Fractional shares and direct trading of cryptocurrencies is not supported
- Advanced tools on the website and platform may overwhelm beginner investors
- A limited number of account types and no retirement or custodial accounts
- Only US-listed assets are available for investors
- The broker doesn’t offer mutual funds, forex, futures, fixed income, or bonds
- Robinhood lacks an automated portfolio management feature
- Unstable platform in situations of extreme market volatility
- Trades are routed to third-party market makers to generate revenue via Payment for Order Flow (PFOF); while it’s true that you pay no commissions at Robinhood, its PFOF practices are obscure and potentially a conflict of interest
- Trading cryptocurrencies is limited to the app
See Also: 12 Best IRA Accounts
TD Ameritrade vs. Robinhood: Security
Both brokers are highly-regulated US-based financial firms. Their products and your investments are well-insured. Both companies have SIPC protection for investor’s accounts that provides coverage up to $500,000 (including $250,000 in cash claims).
TD Ameritrade had a few missteps in the early 2000s but hasn’t had any significant security breaches lately. Their security is in line with industry standards and includes biometric recognition and protection against account losses from unauthorized activity.
Robinhood is regulated by the Securities and Exchange Commission (SEC) and a member of the Financial Industry Regulatory Authority (FINRA).
In addition, the broker’s financial products are issued by FDIC member banks and covered up to $1.25 million. This number is five times more than the industry standard.
TD Ameritrade vs. Robinhood: Platform and App
Both brokers offer user-friendly web-based platforms and well-designed mobile apps that active traders will find useful. However, TD Ameritrade’s offering is bigger and more advanced compared to the basic Robinhood platform.
TD Ameritrade offers four different platforms that cater to every investor’s needs and deliver an excellent trading experience. The offering includes a web-based and a desktop version and two corresponding mobile apps.
The thinkorswim platform is a top recommendation for serious day traders. You can customize the platform to your preference and have full control over the settings. You also get access to professional features such as extensive charting, screening tools, and backtesting on the platform.
Users also aren’t limited to using one version for specific trades because all platforms support trading the available asset classes.
See Also: How to Invest in Bonds: Diversify Your Portfolio
Robinhood’s trading platforms are trimmed down to suit beginner investors. The website and app are easy to navigate without TD Ameritrade’s complexity. You can execute basic tasks and trades, but you can’t customize the limited platform to your liking.
Users have access to charting tools and indicators, newsfeeds, analyst reports, and basic fundamental data on stocks.
Who Is TD Ameritrade For?
TD Ameritrade is a top choice for all types of investors. The broker offers excellent educational tools and resources, impressive platforms, and great customer support. The thinkorswim platform is suitable for advanced traders who actively get involved in their investments.
The full-service broker is also great for cost-conscious investors who want to diversify through the available commission-free assets as well as retirement investors due to the number of IRA accounts.
In A Nutshell
- Account Minimum: $0
- Fees: Zero-commission stock, ETF and per-leg options trading (+$0.65 per contract)
- Promotion: None at this time
Who Is Robinhood For?
In contrast to TD Ameritrade, Robinhood does not offer that same well-rounded service portfolio. However, new investors will find the broker an excellent choice to get started because Robinhood keeps things simple and offers inexpensive services.
If you are interested in trading options for free, buying fractional shares, or actively trading cryptocurrencies, then Robinhood is the better choice because TDA doesn’t offer any of these options.
In A Nutshell
- Account Minimum: $0
- Fees: Zero-commission stock, ETF and per-leg options trading
- Promotion: 1 free stock
TD Ameritrade, as well as Robinhood, offer inexpensive services and distinct features that make it easy for investors to get started and use the tools provided by the respective broker.
As a versatile full-service broker, TD Ameritrade is positioned well to cater to all investor types and their needs. The broker stands out through its range of investable asset classes, cutting-edge trading platforms, excellent education section, research options, and customer support. While the offering might overwhelm beginner investors, it makes trading easier.
Although Robinhood can’t keep up with TD Ameritrade’s comprehensive offering, the broker shines when it comes to trading ETFs, options, fractional shares, and cryptocurrencies free of charge. The platform is popular among investors who primarily use the app and don’t need much research before investing.
Ultimately, retirement investors, advanced traders, and those looking to open multiple accounts with one firm will prefer TD Ameritrade, while new traders with small amounts will opt for Robinhood.
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Carsten is a Freelance Copywriter with a personal interest in money management and investing. Besides taking care of his investments, he loves traveling, reading books, and working out (calisthenics & yoga).
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