How to Buy ETFs on Robinhood

Yes, you can buy ETFs on Robinhood

Robinhood lets you buy and sell exchange-traded funds (ETFs) in the same way you buy individual stocks — through the app or web platform, with no commission fees. You can hold ETFs in a regular taxable account or in an IRA. The process takes the same few taps as buying a stock: search the ticker, enter the number of shares, and confirm the order.

The main limitation is that Robinhood does not offer fractional shares of ETFs the way it does for stocks. You must buy whole shares. If an ETF costs $400 per share and you have $500 to invest, you can buy one share and have $100 left over, but you cannot buy 1.25 shares.

Key Takeaways

• Robinhood offers thousands of ETFs with no commission and no account minimum, searchable by ticker symbol in the app.
• You can hold ETFs in a taxable account, a Roth IRA, or a traditional IRA through Robinhood.
• Robinhood does not allow fractional ETF shares, so you must have enough cash to buy at least one full share.
• Dividend distributions from ETFs land in your Robinhood cash account and can be reinvested or withdrawn.
• ETF trades settle in two business days, meaning your shares belong to you immediately but the cash clears after two days.

How to search for and buy an ETF on Robinhood

Open the Robinhood app or go to the web version and tap the search icon at the bottom. Type the ETF's ticker symbol — for example, VOO for the Vanguard S&P 500 ETF or VTI for the Vanguard Total Stock Market ETF. The search will show you the fund name, current price, and a chart of recent performance.

Tap the ETF name to open its detail page. You will see the fund's holdings, expense ratio (the annual fee as a percentage), dividend yield, and other data. Tap the "Buy" button, enter the number of whole shares you want, review the order, and confirm. The order executes immediately during market hours (9:30 a.m. to 4 p.m. Eastern time on weekdays) or enters a queue for the next market open if you place it after hours.

Your shares settle in two business days, meaning Robinhood transfers them to your account on the second day after the trade. You own them immediately, but if you try to sell them before settlement completes, you may trigger a good-faith violation if you do this repeatedly. Most casual investors do not hit this limit.

ETF account types available on Robinhood

You can hold ETFs in three types of accounts on Robinhood: a taxable brokerage account, a Roth IRA, or a traditional IRA. The taxable account has no contribution limits and no withdrawal restrictions — you can buy and sell whenever you want, but you owe capital gains tax on profits. The Roth IRA lets you contribute up to $7,000 per year (as of 2024, though this limit changes) and withdraw tax-free in retirement, but you cannot withdraw earnings before age 59½ without a penalty. The traditional IRA offers a tax deduction for contributions in the year you make them, but you owe income tax on withdrawals in retirement.

Robinhood does not charge account fees or require a minimum balance in any of these account types. The only cost is the ETF's own expense ratio, which Robinhood does not control.

Dividend payments and reinvestment

When an ETF pays a dividend, Robinhood deposits the cash into your account's cash balance. You then decide whether to reinvest it by buying more shares or to leave it as cash. Robinhood does not offer automatic dividend reinvestment (sometimes called DRIP) for ETFs, though it does for stocks.

If you want to reinvest dividends automatically, you have two options: manually buy more shares each time a dividend lands, or use a different brokerage that offers automatic reinvestment. For long-term investors, automatic reinvestment can compound returns over decades, so this is worth considering if you plan to hold the same ETF for many years.

Comparing Robinhood ETF trading to other brokerages

Most major brokerages — Fidelity, Schwab, Vanguard, and others — also offer commission-free ETF trading with no account minimum. The differences come down to features and account types. Fidelity and Schwab offer automatic dividend reinvestment for ETFs, while Robinhood does not. Vanguard offers fractional ETF shares, while Robinhood does not. All of them have thousands of ETFs available.

If you are already using Robinhood for stocks and want to add ETFs, there is no reason to leave — the core trading experience is the same. If you are choosing a brokerage specifically for ETF investing and plan to reinvest dividends or want to buy partial shares, Fidelity or Vanguard may be better fits.

Tax reporting for ETFs on Robinhood

At the end of each year, Robinhood sends you a Form 1099-B showing all your trades and a Form 1099-DIV showing dividend income. If you hold ETFs in a taxable account, you owe capital gains tax on any profit when you sell, and you owe income tax on dividends. If you hold ETFs in an IRA, you do not owe tax on dividends or gains while the money stays in the account — taxes come later, either in retirement (traditional IRA) or never (Roth IRA).

Robinhood's tax documents are usually available by mid-February. You can download them from the app or request them by mail. If you use tax software like TurboTax or a tax preparer, you can upload these forms directly.

Frequently Asked Questions

Can I buy fractional shares of ETFs on Robinhood?

No. Robinhood allows fractional shares for stocks but not for ETFs. You must have enough cash to buy at least one whole share. If an ETF costs $350 per share and you have $500, you can buy one share but not 1.43 shares.

What happens to my ETF dividends on Robinhood?

Dividends land in your cash account as cash. You can reinvest by buying more shares manually, or you can withdraw the cash. Robinhood does not automatically reinvest dividends for ETFs, so you must take action if you want to compound your returns.

Do I pay fees to buy or sell ETFs on Robinhood?

Robinhood charges no commission for ETF trades. The only ongoing cost is the ETF's expense ratio, which is a small annual percentage fee that all brokerages charge. This fee is built into the ETF's price and goes to the fund company, not to Robinhood.

Can I hold ETFs in a Roth IRA on Robinhood?

Yes. Robinhood offers Roth IRAs with the same ETF selection as its taxable accounts. You can contribute up to $7,000 per year (as of 2024) and withdraw tax-free in retirement. Robinhood does not charge account fees or require a minimum balance.

How long does it take to sell an ETF on Robinhood?

The sale executes immediately during market hours, and the cash settles in two business days. You can withdraw the cash or reinvest it once it settles. If you sell after market hours, the order queues for the next market open.