Robinhood VS Loyal3

In this blogpost, I will attempt to evaluate two popular trading platforms for beginners – Robinhood and Loyal3.

Both of them have:

• No commissions
• No account minimums
• No annual or inactivity fee

These factors make them stand out from other discount/online brokers. However, a downside is that they do not offer as many securities as these other brokers. In addition, they do not offer any research tools or resources (you can overcome this by using platforms such as Yahoo Finance and Morningstar to research and track your portfolio)

While Robinhood and Loyal3 seem to be offering a similar service/value, they do have their differences, and you might want to consider these differences before you decide on which one to go with:

Robinhood:

• App only
• The only fee that they charge is the ACAT outgoing fee if you decide to change broker (and bring your portfolio over). What is ACAT or Automated Customer Account Transfer Service? It is basically a service that allows investors to transfer their accounts from one brokerage firm to another
• Currently only offers stocks and ETFs
• Account set-up is fairly easy
• Order execution can be done anytime of the day (unlike Loyal3) although some people have complained that it takes a while after the market has opened for the app to update.
• Instead of batch order that Loyal3 does, some people have remarked that Robinhood engages in a price markup, essentially, a bid/ask spread where it might charge you more than real-time market price for an order (probably to offset lost earnings from zero commission)

Loyal3:

• Accessible on website and App
• 100% no fee platform, it does not charge a ACAT transfer out fee that Robinhood charges
• Offers stocks and access to IPOs, however, the stock options are limited (70ish available stocks) and mostly either big companies or new companies that finished their IPO with Loyal3. Here is a list of company stocks on Loyal3: loyal3.com/stocks
• An attractive feature is that Loyal3 allows you to buy fractional shares (minimum $10). What that means is if you only have $400 and you want to buy Company X (priced at $800/share), you can absolutely do so unlike most brokers that require you to buy a minimum of 1 share. In this scenario, you receive 0.5 share of Company X
• Creating an account and buying stocks can be as quick as under 3 minutes. They do not even require an upload of your photo-ID that Robinhood requests
• Loyal3 operates using a batch order system and executes orders once per day (orders need to be received before 2 pm ET or it will be executed the next day), which means the price that you buy or sell may differ from the price at the time you placed your order, it may work for you or against you depending on market fluctuations