[Update 3/2/20] Today, Robinhood suffered a massive outage Robinhood experienced a ‘system-wide outage’ as markets rebounded in heavy volume Monday
This is causing the MoneyVikings rethink usage of the platform for short term trades. If I had bought a call option in Robinhood for 300$ in SPY today, I would not have been able to sell it for a profit. What’s worse, many investors may have been stuck in money losing trades. Be careful putting large amounts of money into this new player.
Robinhood is an application platform to buy and sell stocks, exchange traded funds, and index funds, etc. The big draw here is no cost trading and ease of use on your smartphone. I personally have found it helpful in purchasing a few shares at a time of quality dividend producing stocks.
Zero costs/fees to trade stocks, ETF’s, options etc.
Easy to use and fun online platform, perfect for mobile
Great way to slowly build positions in desired companies, saving hundreds in fees
Again, the service is truly free, no hidden fees
3% checking and savings accounts (proposed future offering?)
We have been using the Robinhood platform for a while now, and I think it is a game changer for investing platforms. It has allowed me an opportunity to build a substantial mostly dividend portfolio by easily purchasing a few shares at a time. I think it’s the Amazon of stock investing in the way it has reduced costs and increased convenience.
Its one of those things that after you have used it for a while, you think, wow, it should have been this easy and free all along!
I believe Robinhood is another step in “democratizing” markets and a great example of technological disruption that has removed a high fee middle man. Why were we paying someone to be the middle man between us and buying a company stock. Many years ago I would avoid this by buying some stock directly from the company, but Robinhood makes this all easy.
Robinhood lacks many of the research tools available through other brokerages, but I see it steadily improving. Plus, it is easy nowadays to do research through sites like Seeking Alpha, Yahoo Finance, CNBC Business, etc. Not a major drawback in my mind.
Can’t think of other cons except maybe the fact that it is new. Newer platforms need to prove themselves and stand the test of time, but with millions joining all the time, it appears the business model might work for them. I wouldn’t mind if they had an IPO!
Sometimes ease of use could be dangerous. People are connected to their phones in my opinion too much. I wonder with this Robinhood platform it could become too easy to make hasty decisions and take action too quickly. The market goes up and down every day, so it will take a lot of discipline to not be tempted to swipe that button too often, sell too early, buy too quickly, etc. This is where the psychological aspects of money management will come into play. Discipline and a long term view will be needed, etc. Otherwise this quickly becomes less about investing and more about gambling.
No account minimum, but you will need enough to buy your first share.
No fees, this is the biggie and could save a person thousands of dollars over the years.
Ease of use, ability to make trades anywhere and anytime.
GOING GOLD, MAYBE NOT FOR YOU
Robinhood Gold is their premium service that offers investors access to extended-hours trading and the ability to trade on margin, which involves borrowed money. The opt-in service requires a minimum balance of $2,000, the regulatory requirement for a margin account. This also carries a flat monthly fee based on the “buying power.” New investors should be aware that margin trading is risky. You’re trading on dollars borrowed from the broker.
If you sign up using the link below then we both get a random free stock:
There is talk of a Robinhood IPO at some point in the future. It is going to be amazing to watch as future investment tools are developed.
This is not investing advice and the post may contain affiliate links.
My Dividend Portfolio that returns $1,000/year