Keep reading to see if Robinhood is a service that could benefit you.
WHAT IS ROBINHOOD?
Robinhood started as an exclusive to iOS and Android apps. Today it's also a web-based app offering commission-free stock and ETF trades. It's the trading platform for the new investor who doesn't need all of the bells and whistles that brokerages like Fidelity and Charles Schwab offer. Originally, Robinhood was invented to help millennial's get started investing without giving up a majority of their earnings to commissions. The simple sign-up process and no minimum balance requirement makes it easy for beginning investors to get started. WHAT TYPE OF INVESTMENTS DO THEY OFFER?
Unlike your standard brokerage, Robinhood only offers taxable accounts. In other words, you won't find retirement account or college savings options. You also won't find any banking options. It's strictly a platform for the following types of investments:
Options (new this year)
Cryptocurrencies (Bitcoin and Ethereum)
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HOW DOES ROBINHOOD MAKE MONEY?
Robinhood also earns interest on your cash balances. In other words, any money you have sitting in your account, but not invested, earns Robinhood interest. They pool the cash balances of each investor together to earn higher levels of interest.
REASONS WE LIKE ROBINHOOD
You don't have to pay any commission fees to trade stocks. This probably goes without saying. Free stock trades are a huge benefit. Just to compare, Fidelity charges $4.95 per stock trade - that's $5 off your earnings right off the bat. If you buy one share of a $25 stock, that's a 20% loss right away.
You don't need a minimum investment to get started. The fact that you can invest with just a few dollars is great. Robinhood doesn't set a $1,000 minimum or even a $5 minimum. Obviously, in order to invest, you'll need enough money to buy one share or one ETF, but that puts you in charge of how much you invest, giving you more options.
Advanced traders have the benefit of the Robinhood Gold account. If you are an active trader and want the benefit of trading on margin, the Gold account may be a good fit. Not only can you buy and sell stock on credit, but you get access to extended trading hours. You can trade 30 minutes before the market opens and 2 hours after it closes.
The app is user-friendly. Investing is confusing enough, so the last thing you need is a complicated smartphone or web app. You can sign up for an account in just a few minutes and have your account up and running in an hour. Making trades is easy, as the app offers a simple interface that even the novice can use.
You can execute a variety of stock trading orders. Even though you are new to investing, you can try your hand at a variety of stock trading orders, including limit, stop limit, and stop orders.
They are a member of SIPC, the Securities Investor Protection Corporation. This means your account is protected up to $500,000. While SIPC protects against the loss of cash and securities (such as stocks and bonds) in the case that Robinhood fails, it does not protect against investment losses from the market.
You can view the average price paid. Robinhood shows the average price per share that Robinhood Investors paid. This allows you to compare it to the current price and determine if it's a good investment. This is great for beginners who don't know what's a "good buy" and what is not.
You can get real-time updates on stocks in your watch list. While there isn't any level of robust research to be found, you can get real-time updates on any stocks you put in your personal watch list, which can help streamline your decision-making process.
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If nothing else, it's a great way to get your feet wet and learn how the stock market works without breaking the bank in fees. As always, you should invest with caution, conducting as much research as possible before choosing your investments. If low cost is your priority then you can’t beat Robinhood free trading service. Nonetheless, while the broker offers just enough for users to trade comfortably, it is perhaps best suited to beginners looking for a simple, user-friendly design.