What is an expense ratio?

An expense ratio is a fee charged on certain types of investments, typically mutual funds and exchange traded funds (ETFs). Mutual funds invest in a variety of stocks, bonds, and other securities. Investors can buy shares in the mutual fund to, in effect, diversify their investment across all of the securities that the mutual fund holds.

How do Robinhood ETFs work?

Stephanie Guild, a chartered financial analyst and Robinhood’s director of investment strategy, says that Robinhood allocates the portfolios between stock and bond ETFs in a way that fits customers’ retirement time horizons, while also minimizing expense ratios (the percentage fees charged by ETF managers).

What is Robinhood's margin interest rate?

Robinhood’s margin interest rate is based on a floating rate, and will vary depending on whether or not you are subscribed to Gold. The Standard floating interest rate (11.25%) is calculated as a combination of the Federal Funds Target Rate upper bound plus the Standard base rate, currently 6.5%.

Is a high expense ratio worth it?

Typically, any expense ratio higher than 1% is high and should be avoided, however it’s important to note that many investors choose to invest in funds with high expense ratios if it’s worth it for them in the long run. Over an investing career, a low expense ratio could easily save you tens of thousands of dollars, if not more.