Robinhood index funds (S&P 500, Dow Jones, NASDAQ) investing. Can you buy index funds on Robinhood?

Index Funds on Robinhood

Since its inception, Robinhood, the financial services firm out of Menlo Park, California, has made a name for itself offering an easy-to-use, commission-free experience for trading individual securities. What you don’t hear about often is the company’s offering of index funds.

One reason for this is that Robinhood doesn’t offer users the ability to trade index mutual funds. Or mutual funds at all for that matter. However, the company does offer a user-friendly experience for trading Exchange Traded Funds (ETFs).

Index ETFs on Robinhood

Introduced in the early 1990s, ETFs track a sector, commodity, or asset. Index ETFs, specifically, track or replicate an entire index, such as the S&P 500 or the Dow Jones Industrial Average.

Index mutual funds act in a similar manner. But the main difference between the two is that index ETFs can be traded throughout the day, like individual securities, while index mutual funds are only traded at the close of each trading day.

Investing in Index Funds on Robinhood

Robinhood offers users several ways to find and trade index ETFs. The first starts with selecting the browse option (magnifying glass) on the bottom of the home screen. This brings a user to the platform’s main search engine. Here, by typing in the name or ticker symbol of an index ETF, information about that fund will appear.

Robinhood Index Funds

If a user is new to index ETFs, or doesn’t know the name of a particular fund, they can pull up the search engine (magnifying glass), and find index ETFs as a category in the Popular List section.

Another option to search for index ETFs on Robinhood is through the profile page listed at the bottom of the home screen (silhouette icon). Selecting the profile page will take a user to a screen which breaks down their portfolio into Stocks, ETFs, Options, or Crypto. These categories appear regardless of whether or not a user holds any securities in them.

For users with no knowledge of index ETFs, or who have never traded them before, this is a good place to start. When a user chooses the ETF icon on this page a list of funds is produced based on asset class (Index, Bond, Commodities, Real Estate, etc.) Selecting a particular ETF asset class allows a user to view all the ETFs offered in that asset class.

Robinhood Buying Index Funds

In all of these search instances, once a user pulls up a particular index ETF, the option to trade appears on the bottom right of the screen. Most Index ETFs on Robinhood can be bought, sold, or traded as an Option. Though, there are some instances on the platform where index ETFs are only available to be bought or sold.

Open Robinhood Account

Open Robinhood Account

Better Broker For Index Funds

These methods to trade Index ETFs on Robinhood offer users an instantaneous way to diversify their portfolio. This can also be done through index mutual funds. Just not on Robinhood. They are, however, available on TD Ameritrade.

Founded as Ameritrade in the early 1970s, and acting as a subsidiary of the Charles Schwab Corporation, TD Ameritrade helped popularize online trading during the 1990s.

Like Robinhood, TD Ameritrade offers commission-free trading. In order to purchase index mutual funds a user has to navigate through several screens, and often find selections in small print on the margins of a page.

For example, purchasing an index mutual fund requires a user to select ‘Trade’ and then ‘Mutual Funds’ at the top of the home screen. This delivers the user to a screen where the main option is to input the exact ticker symbol of the fund they are looking for.

TD Ameritrade Vanguard 500 Index Fund (VFINX)

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Open TD Ameritrade Account

If a user doesn’t know the name of the index mutual fund there is a symbol look up option. But there is no specific option to look up index funds on this screen. Only by selecting ‘Mutual Fund Screener’ on the right of the page will a user be able to scan a full list of available index mutual funds.

While the layout is lacking, one benefit to the TD Ameritrade platform is its research and educational features. Atop the home screen, TD Ameritrade lists “Research & Ideas’ as well as “Education.” In the former, a user can navigate to the Mutual Fund section and produce a list of index funds. Not only will this show all available index funds but it allows the user to compare each fund with information such as performance, ratings, risk, fees and management, as well as providing a fund’s prospectus.

Regarding education, TD Ameritrade provides a slew of options, including the ability to learn via articles, courses, videos and events. A user can determine their education level (Beginner, Intermediate, Advanced) and progress at a pace comfortable for them.

Unlike Robinhood, where the completion of a trade only asks the user two questions (trade and number of shares), the process of trading index mutual funds on TD Ameritrade is more in depth. One reason is the ability to short sell index mutual funds. Short selling any security is not available on Robinhood.

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Open TD Ameritrade Account

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