Which Broker is for you: Robinhood or Vanguard?
While both Vanguard and Robinhood are respectable brokers, as someone who’s used both it’s very clear which broker is better for certain types of people.
Essentially Robinhood is better for everyday investment accounts (taxable, non-retirement) while Vanguard is better for Retirement accounts like 401ks and IRA’s, although there are better IRA/401k brokers I’ll cover in this article.
While I believe both of these brokerages have their advantages and disadvantages towards one another, I believe there’s a better broker than either of them, as it combines all the great features of Vanguard (like retirement accounts, DRIP investing, etc) with Robinhood’s No-commission trading. The broker I’d recommend people to use instead of these two is called M1 Finance.
Which Platform has Lower Fees?
This is hands down Robinhood, as Vanguard not only has trading fees ranging from $2 or so per trade up to $20 per trade, but also forces you to use their ETF’s, which means you’ll be stuck paying a management fee on top of the trading fees Vanguard makes you pay them.
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.
This is the main reason I prefer Robinhood to Vanguard. 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.
Which Platform has more Flexibility?
This is also hands down Robinhood, as Vanguard restricts you to using only their funds and restricts your ability to invest in certain investment products (ETF’s & Stocks).
Robinhood on the other hand has no restrictions to what you can or can’t trade, except for options that expire within a day or two and naked short options, neither of which you even have access to on Vanguard.
Is There Any Reason to use Vanguard over Robinhood?
If you want to have special accounts like a 529 college savings plan, a 401k plan, annuities, or even basic IRA or Roth IRA, then Robinhood wouldn’t be a good choice for you. Vanguard offers all those account types though, so they’re an option if that’s what you’re looking for.
If you want the best of both worlds, that brokerage I switched to from Robinhood named M1 Finance has Roth IRA’s, Traditional IRA’s, and most of what Vanguard offers. They just don’t have Annuities, but those are garbage that only has downsides compared to other investment vehicles.
If you want to sign up for Robinhood you can do so by clicking here. If you sign up using that link you’ll get a free stock that’s generally worth about $5-10, however it may be more or less as it’s somewhat random/luck-based.
If you want to sign up for M1 Finance you can do so by clicking here. Often they’ll have a few sign-up bonuses, if you’re interested in them and have enough money to make them worthwhile check out this page where we go over all of the current ones.
Vanguard however doesn’t offer a bonus for signing up, and I’ve never seen one, but if you want to signup for them I’ll leave a quick link to Vanguard here for you to do so.