Which Broker is for you: Robinhood or Fidelity?
While both Fidelity and Robinhood are respectable brokers, as someone who’s used both it’s very clear which broker is better for certain types of people.
To not bury the lead: Robinhood is best suited for people who want to save on fees, and only care to go long stocks and sell covered calls against them. Fidelity is better for people who want to trade multiple assets at once, such as foreign-currencies as well as stocks, or more advanced option strategies.
With that being said, if you are looking for a long-term buy and hold brokerage I’d recommend M1 Finance over Robinhood, and if you are interested in Options trading I’d recommend an option-oriented broker like Tastyworks. Likewise, if you want to trade Foreign currencies I’d recommend a full-fledged FX broker like Forex.com.
The only case I’d recommend Robinhood is if you’re an active trader wanting to skimp on fees or if you want to sell covered calls against huge stock positions and pay zero commission for it. In the same respects I’d only recommend fidelity if you want to have all your investment accounts under one roof, however that’ll mean paying needless fees and having some restrictions (like potentially not being able to sell naked options for many years).
Which Platform has Lower Fees?
This is hands down Robinhood, as Fidelity charges fees that average around $4-5 per trade, however if you trade options this can be significantly higher.
Meanwhile Robinhood has no trading fees period, regardless of if you’re trading options, individual stocks, or an ETF. The only fees you’ll pay is if you decide to use branded ETF’s, such as iShares or Vanguard ETF’s, as they subtract a fee from you automatically every year for managing the ETF/fund.
This is the main reason I prefer Robinhood to Fidelity. But there are a few other reasons.
The brokerage I now use instead of Robinhood not only has the same no-commission element, but it also allows you to mirror most ETF’s and not even pay the management fee that the ETF’s charge. The only downside is you can’t trade options or futures in it, but I do that in my tastyworks account, so that’s not an issue for me.
Which Platform has more Flexibility?
Without a doubt Fidelity takes this category; they have WAY more investment options and services than Robinhood does. While platforms specifically designed for the type of investing, such as Forex.com for forex trading, are better for their respective asset classes they all fall short in terms of all asset classes.
Think of it like this: With Robinhood you get 8/10 for trading and simple investment types, but a 1/10 when it comes to Options, or a 0/10 when it comes to Futures which Robinhood doesn’t allow at all. With Fidelity you get everything at about a 6-7/10, which means while they charge fees and get dinged for simple investment types, they have a far better options platform than Robinhood, but at the same time lag behind Options-focused platforms like Tastyworks.
I prefer to separate my trading accounts and investment accounts so the flexibility doesn’t apply to me, which is why I am not a fan of Fidelity. You may not want a few different accounts to do different things, but then again you may not trade/invest for a living, in which case you’ll probably be fine with a simple long-term investment platform like M1 Finance and nothing else.
Is There Any Reason to use Fidelity over Robinhood?
As we covered above in the flexibility portion of this comparison Fidelity wins out hands down for providing a larger range of products and services, only being rivaled by TdAmeritrade, which also aims to be an “all-in-one” type of broker.
If that’s what you want then they’d be fine platforms for you; just keep in mind you’ll be paying fees and sacrificing a few features compared to platforms that focus more on one type of investing that all of them.
Which Brokerage do I use?
While I tried out Fidelity for awhile and used Robinhood for well over a year as my primarily investing platform, I’ve moved on from both of them. This is because in my opinion there are better brokers than them that are lower commission or commission-free.
For Long-term Value-Investing I stick to M1 Finance, for foreign currency hedging I use futures on tastyworks as well as forex.com, and for options trading I use Tastyworks. I use M1 Finance for all my Retirement (IRA) accounts as well.
If you aren’t treating trading as a career I’d recommend just going with an M1 Finance account, as if you do not know what you’re doing trading will absolutely destroy your networth, especially options, and if you know what you’re doing and make a small miscalculation you could lose months of contributions. By all means, if you want to do Forex trading or Options trading I’d highly recommend the above-mentioned brokers that I use, but do not get greedy or impatient. Stay on long time horizons and be patient, layer in, and have a trading plan. That’s how you make it doing that.
Even then though — even if you trade, I’d recommend having a long-term account with M1 Finance or similar, as it really takes the weight off your shoulders and keeps your risk in-check in my opinion.