It can be difficult to determine what exactly is a good rate of return on your investments due to additional factors like tax rates, commission fees, account management fees, and so on. Even if you’ve been involved in managing your own investments with a human advisor or a robo-advisor for a while, investing is nevertheless a complicated venture.
Anyone with other hobbies and a day job knows that. If you’re looking for a simplified, low-cost solution to the confusion swirling around the stock market and best investment strategies, then Robinhood Financial, the investing app, has something for you.
Robinhood Review
What Makes Robinhood Unique?
Robinhood’s number one selling point is that it offers online investors free access to stock and ETF trading. This is almost unheard of. Even “low-fee” online investment platforms still cost investors considerable rates of commission on each trade. E*Trade and Scottrade charge $6.95 per trade, and Fidelity and Schwab charge $4.95 per trade.
These low-fee online trading platforms also have considerably higher account minimums ranging from $500 (E*Trade) to $2,500 (Fidelity and Scottrade). Robinhood, on the other hand, charges $0 per trade and has a $0 account minimum requirement. This makes it easier to invest even if you have little money upfront.
Robinhood’s no-fee trading undercut old-school brokerages. TD Ameritrade routinely charges $6.95 per equity trade and Schwab charges $4.95.
Robinhood is able to make money through its Robinhood Gold program and collecting nominal interest on account balances. If you’re looking for a truly no-cost way to get started in the stock market, then Robinhood is a great place to start.
Robinhood Security
While Robinhood’s efficient business model prioritizes the affordability factor for folks who want to try investing in the stock market, they certainly don’t cut corners when it comes to their members’ security. Robinhood is an SEC registered broker dealer. It’s also a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC). What this means for you is that your securities are protected up to $500,000.
Additionally, Robinhood has high-tech online security measures in place, including SSL and 128-bit encryption. This ensures the privacy of your information, including your Social Security number, which is required to participate in Robinhood trading. The Robinhood app allows you to use either touch ID or a special pin code to access your account. But, the company never stores your banking log-in credentials, they’re simply used to verify your ownership of the checking account.
Robinhood for Web
Robinhood for Web is a new program that will roll out in 2018. You can join the waitlist in the meantime to get early access when it releases. Robinhood for Web will include new, in-depth market research and useful tools to help beginning and experienced investors alike improve their portfolios’ performance.
These tools include Collections, which are different stocks organized by market sectors, comparison tools, company earnings reports, and much more! Robinhood for Web is functional on most updated Internet browsers for both Macs and PCs.
Robinhood Gold
Thankfully, Robinhood promises consumers that free trades are “never going away”. But, investors who want more advanced tools and options can choose to upgrade to the Robinhood Gold program. It costs just $6 per month. The Robinhood Gold program gives you access to a variety of benefits, including loans for buying more stocks (Gold Buying Power option), early access to trading, and instant deposits. You can add up to $1,000 to your account instantly instead of waiting for the three-day window to pass.
All in all, the Robinhood Gold program is an excellent, low-cost way to reap greater rewards from your investments. It can also improve the efficiency of your trading options with instant access to cash and even access to loans to take advantage of lucrative trading opportunities as they arise.
Robinhood Adds Savings and Checking Accounts
Robinhood is offering no fees checking account, and it’s giving users a 1.80% annual interest rate in both savings and checking accounts—that’s above the national average. Robinhood Checking & Savings has no minimums, no monthly fees, no overdraft fees, and no foreign fees. Fee free, for real.
Invest, spend, and earn 1.80% APY*—all through your brokerage account. Your uninvested cash is moved to banks in our program that pay you 1.80% APY. Like all variable rates, this could go up or down over time.
It’s insured by the SIPC, not the FDIC. That’s a free $240 every year for the average American family with $8,000 in the bank. The Securities Investor Protection Corp. covers brokerage accounts. Robinhood’s retail banking will put the likes of Bank of America, Citi, and Wells Fargo under pressure, especially given Robinhood’s almost unheard-of interest rates on savings and checking accounts.
Robinhood customers will also have access to 75,000 ATMs and around-the-clock customer service. Search for the nearest ATM in the app, or drop into your local 7-11, Target, Walgreens, or Costco. You can also use your Robinhood debit card anywhere Mastercard® is accepted around the world.
Customers can also mail checks, make mobile deposits, and withdraw cash from the account like they would any other. Sometime next year, the company plans to launch bill pay.
Likewise, the Robinhood announcement is more than just checking and savings. It’s a step toward becoming a true bank. Robinhood has not yet gone through the process of obtaining a bank charter, but its CEO says that it could in the future.
Invest, manage your money, deposit checks, get 24/7 customer support, and more—all on the Robinhood app Full Disclosure: We earn a commission if you click this link and make a purchase, at no additional cost to you. .
Should You Invest with Robinhood?
Even if you’re not ready to dive into the Robinhood Gold program, the basic Robinhood app and Robinhood for Web options offer everyday investors minimally risky opportunities to get involved in the stock market. There is never a guarantee of success in the stock market. But, Robinhood reduces the risk for its investors by allowing you to get your feet wet with no minimum account balance requirements and transparent trading practices.
Time will tell if Robinhood for Web lives up to the hype in 2018. But, if it’s anything like their current mobile trading platform, Robinhood for Web will be a rising star in a fintech industry.
