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When Robinhood launched in 2015, its claim to fame was commission-free investing, with free trades in stocks, ETFs, options, and cryptocurrencies. Now that most brokers have moved to commission-free trading, Robinhood has lost that edge. Still, its low costs, zero account minimums, and overall simplicity remain attractive to new investors. Robinhood has also leaned into new assets like cryptocurrencies and delivers low-interest margin rates to attract more trading-focused investors.
While not the oldest kid on the block, Vanguard has been around since 1975. Today, Vanguard has more than 50 million investors and over $9.3 trillion in global assets under management. The company offers an impressive lineup of low-cost mutual funds and exchange-traded funds (ETFs) aimed at buy-and-hold investors as well as reasonably priced professional advice.
While these two brokers don't share much in common—after all, they potentially target very different customers—we'll take a closer look to help you decide which might be a better fit for your investing needs.
Investing in cryptocurrencies, decentralized finance (DeFi), and other initial coin offerings (ICOs) is highly risky and speculative, and the markets can be extremely volatile. Consult with a qualified professional before making any financial decisions. This article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies nor can the accuracy or timeliness of the information be guaranteed.
Important
Vanguard also has a low-fee robo-advisor, Vanguard Digital Advisor, that we review separately.
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- Account Minimum: $0
- Fees: $0 commissions for stock, ETF, options, and cryptocurrency trading
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- Account Minimum: $0
- Fees: $0/stock and ETF trade, $0 plus $1 per contract for options
Usability
Robinhood makes it easy to open and fund a new account in a matter of minutes on its app or website. At Vanguard, you can open and fund an account online, but it takes a few days to get up and running. There's additional paperwork to fill out at either broker if you want to trade options or have access to margin. At Robinhood, you previously needed to upgrade to Robinhood Gold ($5 per month) if you wanted to enable margin access. Now margin is available to all, and Gold membership brings other perks like better interest on uninvested cash, level II market quotes, and $1,000 in interest-free margin.
Robinhood's website is sleek and easy to navigate, but this may be a function of its general simplicity. The mobile app and website are similar in look and feel, making it easy to switch between the two interfaces. Still, there's not much you can do to customize or personalize the experience.
Vanguard's website has been updated and is now more user-friendly and modern-looking. That said, there's still work to be done to make the website easier to navigate. You can't get very far on Vanguard's website unless you log into your account. The app is a good place to monitor positions, analyze your portfolio, catch up on the news, and place basic buy and sell orders.
Usability Verdict: Robinhood
Overall, we found Robinhood is a good starting place for new investors, especially if you have a small account and want to trade just a share or two at a time. Vanguard is a better option for buy-and-hold investors of all levels and for people who wish to access professional advice in combination with some of the lowest-cost funds in the business.
Trade Experience
Desktop Trade Experience
Robinhood offers a simple platform, but it has limited functionality compared to many brokers. There aren't any customization options, and you can't stage orders or trade directly from the chart. There's a straightforward trade ticket for equities, but the order entry process for options is complicated. Robinhood's charting has improved, but it is still a simpler platform built for simple strategies. Robinhood has put some years between itself and the meme stock craze of 2021 that led to outages and legal action, and it has been relatively stable since.
Vanguard offers a basic platform geared toward buy-and-hold investors. Vanguard revamped its trading experience and now flows real-time quotes on trading pages, although delayed quotes still exist on look-up pages and balances. The trading platform is adequate for buy-and-hold investors but it falls predictably short for traders and investors who want a responsive and customizable experience. Vanguard also gears most of its tools to fundamental analysis, so fans of technical analysis will find little to dig into here.
Desktop Trade Experience Verdict: Tie
Robinhood and Vanguard's platforms are so different that it's impossible to say which offers the better trading experience. New and tech-savvy investors will likely prefer Robinhood. Buy-and-hold and more experienced investors, on the other hand, will enjoy Vanguard's stability and reliability.
Mobile Trade Experience
On the mobile side, Robinhood's app is more versatile than Vanguard's app. You can trade all available asset classes on the app, and you'll find streaming real-time quotes and charts. Vanguard limits what you can trade on mobile, but quotes are real-time, and you can generally get things done.
On the App Store, Robinhood has more reviews, but Vanguard has a better rating. Robinhood has a 4.2-star rating from around 4 million reviews, while Vanguard has 4.7 stars from about 170,000 reviews. This is probably due to Robinhood trying to serve a wider range of customers than just buy-and-hold investors.
Mobile Trade Experience Verdict: Robinhood
Overall, we found that Robinhood's app offers more functionality and is more fun to use than Vanguard's. That's not a shock, as app-based investing is how Robinhood established itself—while Vanguard has been a bit of a laggard on user experience in general.
Range of Offerings
Robinhood supports a narrow range of asset classes. You can trade stocks (no shorts), ETFs, options, and cryptocurrencies, including Bitcoin (BTC), Bitcoin Cash (BCH), Bitcoin SV (BSV), Dogecoin (DOGE), Ethereum (ETH), Ethereum Classic (ETC), and Litecoin (LTC). Vanguard offers a decent range of assets, including stocks, ETFs, fixed income, options, and a long list of no-load/no-fee mutual funds. You also have access to Vanguard’s robo-advisory service. Neither broker provides access to futures, options on futures, or forex markets.
Range of Offerings Verdict: Vanguard
At first glance, it looks like Robinhood should take the range of offerings based on crypto, but Vanguard actually has a much wider offering through its excellent selection of funds that cover global assets. Many investors won't notice the difference between the two if they stick to S&P 500 stocks, but it becomes apparent if you are looking for broader exposure.
Compare Range of Offerings
| Vanguard | Robinhood | |
|---|---|---|
| Short Sales | Yes | No |
| Number of No-Load Mutual Funds | 191 Vanguard funds, 9,951 third-party funds | None |
| Assets Available to Trade on Website | Stocks, mutual funds, ETFs, bonds, CDs, options; OTC trading generally restricted (except for certain global ADRs) | Stocks, ETFs, options, OTC, cryptocurrencies (asset only) |
| Max Number of Options Legs | 1 | 4 |
| Robo Advisory | Yes | No |
| Number of International Exchanges | None | None |
| Fractional Share Trading | Yes | Yes |
| Fractional Dividend Reinvestments | Yes | Yes |
Order Types
Robinhood and Vanguard offer the same basic order types, including market, limit, and stop limit orders. Only Vanguard allows you to short a stock, but Robinhood is the only one offering a trailing stop. Neither broker supports any conditional orders such as one-cancels-the-other (OCO) or order-triggers-other (OTO).
Order Types Verdict: Robinhood
Robinhood takes order types for its trailing stop, but neither of these brokers offer the full suite of orders that more advanced traders prefer.
Trading Technology
As with other categories, Vanguard and Robinhood differ quite a bit in terms of trading technology, and neither is exactly an industry leader. Robinhood did not share its trade execution speeds. However, the company reports an average net price improvement of $2.77 per 100 shares, with 95.62% of orders at National Best Bid and Offer (NBBO) or better. Robinhood collects payment for order flow (PFOF), while Vanguard does not. Robinhood reported $0.0049 per share in PFOF in the period examined.
Robinhood's percentage of revenue from PFOF has dropped over time. The Form S-1 Registration Statement filed with the SEC on July 1, 2021, indicates payment for order flow represented 81% of Robinhood's total revenue in the first quarter of 2021, compared to 75% for the year 2020. More recent filings have this down under 50%, with more revenue coming in from interest.
Vanguard does not use smart order routing technology, and customers can't route their own orders. Still, the broker reports an average net price improvement of $1.70 per 100 shares. We did not find any details about Vanguard's execution speed, which is not surprising considering the broker's target customer is playing the long game (and unlikely to be concerned about nanoseconds). Although Vanguard's approach to routing is basic compared to many other brokers, it scores points for not accepting payment for order flow.
Trading Technology Verdict: Robinhood
Again, neither broker is a standout when it comes to trading technology, but we give Robinhood the edge here for more price improvement per order, even though it collects PFOF.
Costs
Robinhood's trading fees are straightforward: You can trade stocks, ETFs, options, and cryptocurrencies for free. The margin rates at Robinhood are much lower than Vanguard, starting at 6.75% up to $50,000 and tiering down to 5.70% at $50 million. Vanguard's margin rates start at 13.75% up to $19,999 and only go to 11.75% at $499,999.
Meanwhile, Vanguard charges $0 commissions for online equity, options (there's a $1 per contract fee), and ETF trades for U.S.-based customers. Broker-assisted trades cost $0 or $25, depending on your account balance.
Costs Verdict: Robinhood
Overall, it's challenging to pick a winner for costs since the brokers don't offer the same trading products. Still, Robinhood has the edge if you're trading the usual suspects—equities and options—since it doesn't charge a per-contract fee for options trades.
Compare Costs
| Vanguard | Robinhood | |
|---|---|---|
| Option for No Base Commission for Trading Penny Stocks | Yes | Yes |
| Option for No Base Commission For Stocks and ETFs | Yes | Yes |
| Number of No-Load Mutual Funds Without Transaction Fees | 191 | N/A |
| Recurring Investment Fees | Yes | No |
| Base Commission for Options | No | No |
| Cost Per Stock Trade | $0 | $0 |
| Cost Per Options Contract | $1 | $0 |
| Cost Per Futures Contract | N/A | N/A |
| Broker-Assisted Trade Fee | $25 | N/A |
| Volume-Based Options Discounts (Upon Meeting a Threshold) | No | N/A |
| Options Price Cap (Upon Meeting a Threshold) | Yes | N/A |
| Inactivity Fees | No | No |
| Account Closure Fees | Yes | No |
Account and Research Amenities
Predictably, Robinhood's research offerings are limited—but have improved. The stock screener has 20 filters, and some of the ETFs can be pulled into the same filters. You won't find any investing-related tools or calculators, but the charting has improved in terms of indicators and some basic visualizations. News is available from several outlets, and you can access Morningstar research if you're a Robinhood Gold client (a $5 per month subscription).
Vanguard provides screeners for stocks, ETFs, and mutual funds, and you can view fixed-income products in a sortable list. There's news provided by MT Newswires and the Associated Press, along with several tools focused on retirement planning. Charting is limited, and there's no technical analysis, but again, that's not surprising for a broker that focuses on buy-and-hold investing and retirement planning.
Account and Research Amenities Verdict: Vanguard
Vanguard comes out ahead in this category due to a wider variety of tools and resources in addition to a more generous cash sweep without requiring a subscription.
Compare Account and Research Amenities
| Vanguard | Robinhood | |
|---|---|---|
| Portfolio Margin Available | No | Yes |
| Ability to Choose and Offer Shares Held Long to a Loan Program | Investors can loan shares, but cannot choose the stocks to loan | Investors can loan shares, but cannot choose the stocks to loan |
| Interest Earned on Uninvested Cash | Varies (currently over 5%) | 1.00% APY (5% for Gold members) |
| Uninvested Cash Automatically Swept Into a Money Market Fund | Yes | Yes |
| Screeners Offered | Stocks, preferred stocks, ETFs, mutual funds, fixed income (ETF and mutual fund screeners contain filters for ESG strategies) | Stocks |
| Ability to Build Custom Screen | Yes | Yes |
| Ability to Screen Based on Technical Indicators | No | Yes |
| Ability to Save Custom Screens | Yes | Yes |
| Access to Proprietary Research | Yes, at no additional cost | No |
| Access to Third-Party Research | Yes, at no additional cost | Yes, for an additional cost |
| Ability to Turn Screen Results Into a Watchlist | No | No |
| Trading Idea Generator Offered | No | No |
| Daily Market Research Reports Offered | Yes | Yes |
Portfolio Analysis
Robinhood's portfolio analysis tools are somewhat limited, but you can view your unrealized gains and losses, total portfolio value, buying power, margin information, dividend history, and tax reports.
Vanguard provides access to real-time buying power and margin information, internal rate of return, and unrealized and realized gains. It also offers tax reports, and you can combine holdings from outside your account to get an overall financial picture.
Portfolio Analysis Verdict: Vanguard
Overall, Vanguard has the edge over Robinhood in the portfolio analysis department.
Education
Robinhood's educational articles are easy to understand, but don't expect any deep dives. It can be hard to find what you're looking for because the content is posted in chronological order and not organized by topic. There aren't any videos or webinars, but the daily Robinhood Snacks newsletter and 15-minute podcast offer useful and lively information.
The focus of Vanguard's educational content is to help you set and reach your financial goals. Much of the content is in the form of articles. Still, you'll also find commentary and research papers, videos, and webcasts on investment products, retirement, industry news, financial planning, and the economy.
Education Verdict: Tie
Overall, we found Robinhood's content to be more engaging, while Vanguard's was more informative.
Customer Service
Robinhood handles its customer service through the app and website. You can't call for help but live chat is available 24/7. Vanguard offers phone support from 8 a.m. to 8 p.m. ET, Monday through Friday. Live chat isn't supported, but you can send a secure message via the website. As your balance grows with Vanguard, so do your options to access more customized support via financial advisors.
Customer Service Verdict: Vanguard
Robinhood users still tend to be younger, so the lack of phone support may be less of an issue. That said, we give Vanguard the edge here for the traditional phone approach.
Security
Vanguard's security is up to industry standards. You can log into the app with biometric (face or fingerprint) recognition, and you're protected against account losses due to unauthorized or fraudulent activity. Vanguard holdings are protected by the Securities Investor Protection Corporation. Limits are $500,000 for securities and $250,000 for cash.
Robinhood's technical security is up to standards. Your cash and securities are protected by standard SIPC insurance up to $500,000 (including $250,000 for cash). Vanguard has had no significant data breaches. In November 2021, Robinhood had a breach of non-sensitive records. It's also worth noting that Robinhood faced class-action lawsuits over trading halts and platform crashes that reportedly led to financial losses for millions of Robinhood users.
Security Verdict: Vanguard
While your money is protected at either broker and security is up to industry standards, we give Vanguard the nod here for having a bit less controversy in the recent past.
The Bottom Line
With a straightforward app and website, Robinhood doesn't offer many bells and whistles. If you're brand-new to investing and trading a small balance or are self-employed and want to start a retirement account, Robinhood could be a good place to gain experience before you switch to a more versatile broker. If you have concerns about Robinhood's outages and trade restrictions, there are other zero-fee brokers out there that may offer a more predictable and reliable trading experience.
Vanguard may not be as flashy as Robinhood, but buy-and-hold investors will value the broker's simplicity and reliability. Vanguard is also a better fit for investors who want access to more asset classes, including some of the best (and lowest cost) funds in the business. We think young investors looking to enter the market may actually be better served by Vanguard based on long-term results. That really goes for buy-and-hold investors of any age. Vanguard certainly isn't for everyone, especially traders and active investors, but it knows its niche and serves it well.
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