Robinhood Investing App Review

Nick
Carroll
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W

ith an app rating of 4.8 out of 5 stars with over 937,000 consumer ratings, Robinhood is ranked #11 on Apple's app store and received the Editor's Choice Award.

​This article may contain affiliate links. Affiliate links are a form of receiving a commission should you purchase anything from the links selected. The commissions earned help to keep this website running. Please read the Disclaimer page for more information. The author is a client of Robinhood Financial, but has no direct business relationship with the company.  Upon any viewers signing up for an individual account with Robinhood Financial, new account holders will receive one FREE stock and the stock value could get up to $206.20. All investments, stocks, ETFs, and options have risk and is recommended to discuss your financial situation with a licensed and certified financial planner prior to investing.

Robinhood is an online brokerage platform offering commission-free investing.  In this article, you'll discover an in-depth review of why Robinhood is popular, how to get started and sign up, explore the hidden fees and charges, and if Robinhood is the right investing online resource for you.

Robinhood Financial has taken the stage of the financial trading platform forcing brokers to lower their fees and even slash trading commissions altogether to compete.

Why Is Robinhood Popular


During a time when brokers were charging highly lavish fees and commissions to its clients, Robinhood Financial jumped out among the crowd by offering commission-free trading.  Traders can buy and sell stocks, ETFs, and options on the mobile app with $0 commission trades.  Do you think that got the competitors' attention?

According to Fortune, "The number of user accounts on the Robinhood trading app has blown past E*Trade, hitting 4 million."

 

Its valuation has rocketed past $5.6 billion since its launch and is recognized as one of the most valuable private fintech startups in the U.S. 

 


How to Get Started & Signed Up on Robinhood

 

Go to the Robinhood website to signup, or you can receive a Free Stock when you select this link.  You'll get a free stock like Facebook, Ford, or Sprint, for example.

Once you have signed up, Robinhood will request a deposit from your financial institution.  In order to start buying a stock, you must have money in your account.  Unlike many brokers, Robinhood does not require a minimum balance to get started or to maintain.  

However, you must deposit enough money in your account to cover the purchase price of the stock you desire to buy.   For the deposit to clear your account, it may take a few days for the funds to transfer.  Once your funds have been transferred, your stock buying journey begins.

It is important to note that not all stocks are equal.  Investing involves risk, and past performance of securities does not guarantee future performance or results.

Use the tools available on Robinhood to accurately research stocks before you buy them.  Another resource I recommend for research is FINVIZ.

In late 2019, Robinhood announced Fractional Shares Investing.  By allowing clients to purchase fractional shares, they can affordably own costly stocks.  

For instance, if you desire to have Apple in your stock trading portfolio, but can not afford a full share trading over $300, Robinhood gives you the ability to buy a piece of it depending on how much you want to invest.  

Buying fractional shares allow clients to build a diversified portfolio at a much more affordable cost.  This opens the door to purchase numerous companies while gaining exposure to more markets, sectors, and countries.

Data Source: Robinhood Financial

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​Does Robinhood Have Hidden Fees or Charge Fees

 

No.  Traders with a self-directed individual cash or margin account, pay no commission on trading; however, there may be regulatory trading fees depending on the amount of your brokerage/trading account.  For instance, if you have over $1 million of principal, regulatory fees are $20.70 per $1 million.  

Other fees to be considered are returned checks/ACH and wire payments.  If a financial institution returns payment, the client will be charged $9.  Also, to keep accounts at minimal costs, Robinhood recommends electronic statements.  Should a client desire to receive paper statements, the charge is $5.

If you are a margin trader, meaning borrowing money until your bank deposit adequately funds your brokerage account, Robinhood will allow you to trade before you money reaches the account, if approved for its Gold account.  

A Robinhood Gold account charges $5 for $1,000 of margin.  Any amount over $1,000 may be charged a 5% interest rate as of October 8, 2019.  Margin trading account rates may increase depending on the size of the account.  See below or visit Robinhood's Fee Schedule.

Data Source: Robinhood Financial - Fee Schedule

How Does Robinhood Make Money

Robinhood makes its money by earning revenue on interest.  When clients have funds in their accounts that have not purchased stocks, it sits in a cash account. Robinhood uses the money in cash accounts to earn interest.

Another manner in how Robinhood makes money is by charging $5 a month for its Robinhood Gold account.  Not everyone needs a Gold account, but some savvy investors prefer this method.

 

Data Source: Robinhood Financial

Data Source: Robinhood Financial

Why Choose Robinhood to Buy & Sell Stocks

I've been trading stocks since 2001, and I have paid my fair share of commissions and fees over time.  When buying and selling stocks, the asset must appreciate significantly than the commissions to buy and sell plus inflation.  

Before switching to Robinhood, I was paying $8.95 to buy a stock and an additional $8.95 to sell it.  That sums up to $17.90, and if I owned five shares at $10 each, my stocks had to appreciate to $13.58 per share to break even, or 35.8%.  With Robinhood's no trading commission, I can easily pocket that 35.8% gain.  

Now that I have been using Robinhood since its launch in 2013, I can confidently claim it is my go-to trading platform.  While it isn't a perfect platform for stock research, many advanced traders will dismiss it, but it wasn't designed for well-trained traders.  

Robinhood was designed to break down barriers allowing everyone from minimal investment experience and little money to the wealthy to buy and sell stocks affordably.  It has revolutionized the trading fintech environment.

Open your account today!

Subscribe to their daily news feed and Podcast, Robinhood Snacks.

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Data Source: Robinhood Financial

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