Robinhood and Webull are two free apps that let you invest without paying commissions or fees. But, what are the pros and cons of each one? Is Webull better than Robinhood, or vice versa? How do free investing apps make money, and should you be concerned? And, most importantly, which one is best for you? Our Robinhood vs. Webull comparison will answer all these questions and more.
Most traditional brokers charge commissions or management fees in exchange for helping you invest. These costs are usually low, with single-digit commissions and management fees less than 1%. But, they can still add up fast!
Luckily, this no longer has to be the case. Now, dozens of apps let you invest with no fees or commissions, all using just your phone.
Two competitors, Robinhood and Webull, are among the most well-known of these companies. You can read more about each of them individually in our Robinhood review and our Webull review. But today, we’re focusing on how they stack up against another.
What Is Robinhood?
Robinhood is an online stock broker that prides itself on offering commission-free trading of stocks, ETF’s, cryptocurrencies, and stock options, all through an easy-to-use mobile app.
Robinhood’s lack of account minimums or trade-based fees combined with their accessible and user-friendly mobile app makes Robinhood a solid choice for the new, casual investor who wants to engage in some DIY experimentation in the stock market or invest in cryptocurrency.
The ability to purchase fractional shares also provides a cheap introduction to buying and selling stocks and removes many barriers to entry that often keep out prospective investors.
What Is Webull?
Webull is a free brokerage that lets you trade stocks, ETFs, and options via mobile or desktop. Geared towards more active investors, Webull focuses on providing the tools and resources necessary to research and pick individual stocks.
Think of Webull as one part online broker and one part financial analyzer. You can use it to trade assets use their tools to analyze different investments, keeping up with market trends.
With Webull, you can use more advanced trading strategies and build on the core concepts Robinhood made famous.
Robinhood Vs. Webull – A Broad Overview
|Fees||$0 / trade||$0 / trade|
|IRA & 401(k) Accounts||Traditional & Roth IRAs||None|
|Available Investment Types||• Stocks|
|Sign Up Now||Sign Up Now|
Robinhood Vs. Webull – Pros And Cons
Where Robinhood Bests Webull
Many of Robinhood’s advantages over Webull stem from its position as an introductory investment platform instead of a place to crunch data and day trade.
Robinhood has a simple-to-use dashboard that helps make investing seem more approachable to newcomers, rather than Webull’s sometimes overwhelming amount of data analytics.
Robinhood also allows users to trade cryptocurrency and fractional shares.
Fractional shares let you buy stock in a company with a high price per share without needing to purchase entire shares at a time. This lowers the amount of money you need to start investing and diversifies your portfolio using less money.
Where Webull Bests Robinhood
If Robinhood’s advantage is its friendliness to new investors, Webull’s is its laundry list of tools and information.
Webull’s watchlist lets you easily keep track of your favorite stocks in a single, customizable list. I found this tool useful to avoid continually having to search for stocks as I investigated them.
Webull also allows you to turn on notifications for specific stocks on your watchlist. Using the Alert function, you can ask Webull to send you an alert whenever a security meets a particular condition.
The condition can either be market value moving past a certain price or a value shift of a certain percentage. If you’re afraid of missing out on a big movement, Webull’s Alert feature can be a huge help.
Webull’s Markets tab gives high-level information about current market conditions. Metrics such as net inflow and the best performing industries can help inform that day’s trading strategy.
You can also use Webull to compare different stock indices against individual stocks to see how well you might be doing against the overall market. Or, you can compare different securities to measure their relative strengths.
When you search up a given security, Webull offers information on the company’s financials (earnings forecasts, income statements, balance sheets), some key indicators (ROE, ROA, Debt to Asset, BVPS), and important metrics (PE ratio, earnings per share).
In addition to this information, Webull has more tools (moving averages, trend indicators, etc.) than Robinhood. This is especially useful if you want to take advantage of Webull’s ability to make more advanced trades like short selling stocks and ETFs.
Robinhood Vs. Webull – How Do They Make Money?
Here at TFT, we think it’s vital for you to understand how companies, especially those that claim to offer free services, earn their money.
How Robinhood Earns Its Money
Robinhood earns its revenue in two main ways: paid premium accounts and a process known as payment for order flow.
Robinhood’s premium accounts are a simple enough business model. For an extra $5/month ($60/year), you’ll gain access to some additional research and market data, the ability to make larger instant deposits, and the ability to buy stocks on margin. While the extra information provided can certainly be useful in picking stocks, the main selling point of this service is the ability to buy on margin.
Simply put, buying “on margin” equates to borrowing money in order to buy more shares of a stock than you otherwise could (think of it like taking out a loan). If the stock performs well, you’re able to pay off the borrowed money plus interest and earn more than you otherwise might have. If the stock performs poorly, however, you can end up in a problematic situation as you’ll still owe borrowed money (this is why investing with margins can be a risky business).
Payment For Order Flow
The more insidious aspect of Robinhood’s business model is the payment for order flow. Whenever you’re buying a stock, you buy it from somewhere or someone else. A broker acts as a middleman, matching potential buyers with sellers and taking a small portion of the profits in exchange.
For example, a broker might buy stock from a seller at $100.00 per share and then sell that same stock to the buyer for $100.05 per share, collecting 5 cents per share in profits (often called the “spread”). While this isn’t an uncommon industry practice, Robinhood’s spread is reportedly much higher than many of its competitors.
This means Robinhood matches you with sellers who are charging more than the market price for the same good. Put differently, the price you’re paying for individual shares purchased through Robinhood is likely a bit higher than what you would pay with another broker.
When choosing between a broker that earns its money through commission vs. payment for order flow, if you only plan to purchase a small number of shares, it’s generally still cheaper to pay a couple of extra cents per share than it would be with a $4.95 commission fee on the total purchase. So long as you don’t plan on buying hundreds of shares at a time, Robinhood’s business model isn’t too bad.
How Webull Earns Its Money
Webull states very clearly on their site that they earn money via the following methods:
- Paid data subscriptions
- Interest on cash balances
- Fees to invest on margin
- Payment for order flow
We’ve already mentioned fees to invest on margin and payment for order flow. Now, let’s discuss Webull’s paid data subscriptions and the earned interest on cash balances.
Webull’s paid data subscriptions provide access to several sources. Costs range from $2.99 per month for Nasdaq Basic or Taiwan Stock Exchange Level 1 to $59.99 for Hong Kong Stock Exchange Level 2.
These subscriptions can be useful to traders who utilize time and sales data to plan entry and exit points. If this is you, you should also consider subscribing to a source on an annual basis rather than a monthly one, since you’ll receive a discount on the total cost.
Webull earns money through interest on their users’ cash balances. Operating similarly to a bank, Webull lends out securities and cash held in checking accounts to other institutions and charges those companies interest.
Robinhood Vs. Webull – Available Investments
Both companies allow you to trade stocks, ETFs, and options, but only Robinhood currently lets you trade cryptocurrencies or fractional shares.
As far as cryptocurrencies go, Robinhood currently lets you invest in the following ones: Bitcoin, Omise, Lisk, Dash, Monero, Zcash, NEO, Steller, Ethereum, Qtum, Ripple, Dogecoin, and Litecoin, all without fees.
This can be a very helpful feature if buying and trading cryptocurrency is your preferred investment method. There aren’t many other options on the market that provide free cryptocurrency trading.
While neither allows you to invest in mutual funds is unfortunate, the ability to freely trade options makes up for this in our minds.
Robinhood Vs. Webull – Account Options
Note that this does not apply to margin accounts, which both companies offer. Margin accounts are required by federal law to have at least $2,000.
For margin accounts with less than $500,000, Robinhood will charge a lower margin rate (fee) than Webull. Robinhood charges a flat 5% fee. Webull starts at 7% for accounts with less than $25,000 and scales downwards as you get a larger balance.
Webull also offers Traditional and Roth IRAs, making it easier to store your money for long-term retirement savings. Also, IRAs can help you pay less in taxes—feel free to read more in our “What is an IRA?” breakdown.
Are Robinhood and Webull Safe?
Webull not only provides SIPC insurance, but they also have backing from Apex Clearing.
Apex Clearing insures up to $150 million in combined cash and securities. The limits for individual investors’ insurance are $900k in cash per customer and $37.5 million in securities per customer.
All of this means your funds are extraordinarily safe with Webull, given the extra insurance provided by Apex Clearing.
While a security breach is always possible with any company, Robinhood and Webull encrypt your personal data and do not store it locally or sell it to other third parties. This means connecting either app to your account involves minimal risk.
Should You Use Robinhood Or Webull?
Ultimately, both Robinhood and Webull provide useful services completely free of charge. They’re both solid choices if you want to start investing, but which one is best will depend on what you’re looking for from an online broker.
Who Robinhood Is Best For
Though it may lack the same available information or investment options that other brokerage services offer, Robinhood’s commitment to commission-free trades, no minimum deposits, and fractional shares, all of which are put into one user-friendly app, makes them a good choice for someone looking for a low-commitment introduction to investing in the stock market.
As a low-cost, introductory tool to get started in the stock market, Robinhood is a solid option, albeit one that the more serious or long-term investors may find themselves outgrowing in favor of more feature-rich alternatives.
Who Webull Is Best For
That said, the ability to invest with an IRA provides useful ways to avoid paying excessive capital gains taxes on any short term gains. Investors should take advantage of these accounts with the peace of mind that they’ll be protected through both the SIPC and Apex Clearing.
Ultimately, Webull offers a robust variety of tools for the experienced investor. With commission-free trading of stocks, ETFs, and options, investors will find a cheap and easy-to-pick-up alternative to traditional brokerages.
Lucas is a personal finance expert, an undergraduate student at Harvard University and the founder of the Personal Finance and Consulting Group at Harvard College (an officially recognized student organization). He has spent much of his life working to increase financial literacy in his surrounding communities through independent financial research and curricula design, and he is currently studying economics with a secondary in music.