Today investors have different arenas they can engage in or numerous brokerage and service providers they can employ. With many of them out there, taking a decision on which one to select can be totally strenuous.
With the pace of advancement in technology, investing has become less difficult, more affordable and more intuitive than it ever was before with research tools that endeavor to suit a portfolio or stock to your features and short or long term objectives.
In this article, I want to give a review of an application/service provider for you, and that application is Robinhood.
Robinhood doubles as both a member of FINRA and SIPC which has actual time quotes taking place on stock exchanges. They have an app on Apple as well as Android. The application is quite intuitive with a highly seamless use process. Their company was founded/discovered in Palo Alto, an abode of numerous technology-oriented companies.
The Robinhood app enables you to engage in stock trades for free. To access the service you need to install an app on your iPhone, Android smartphone, iPad, or Apple Watch.
How Does Robinhood Work?
The Robinhood app allows you to trade in stocks without having to pay a brokerage fee. To get a Robinhood account you’ll require an invite. You can get one by signing up on their site or through their App.
However, the wait list is really long. The most ideal approach to score an invite is just to go visit Twitter and search for individuals giving them away.
After you’ve gotten your invite, you can set-up an account. You’ll have to interface Robinhood to an account in which you’ll fund your investment account (brokerage account) with. You may at first put in $100 just to test it out.
When you make the main exchange it will take around three days for your cash to show up in the App prepared to trade. Trading on the App is as simple as liking somebody’s post on Facebook. You may have to start doing some research inside that App around a specific stock; however, I prescribe utilizing a blend of devices to discover who to put resources into.
Generally speaking, the procedure is made as straightforward as it could think of you as you now are a stock merchant, with all the ability to make and lose fortunes.
Pros of Robinhood
- Zero USD Commission: The indisputable reason why individuals have been employing this platform is simply because no cost is required at all to transact or trade with Robinhood. This is great indeed if you ask anyone! For the upcoming investors who do not have the huge cash flow to make big purchases this is very exciting. This simply translates thus –assuming you have $20 and want to purchase one share of a company; you can buy them without worrying about your expense ratio % when you make a trade or expense fee on the transaction. This is one important factor that we often consider with our brokerage but here it is 0% fee, a very big pro.
- No account minimum: Robinhood doesn’t have a minimum deposit, which means investors can begin transaction immediately. Indeed, to invest you’ll need sufficient deposit to purchase a minimum of one share of the stock or ETF you have your eye on.
- Streamlined/Intuitive interface: This could possibly be a downside as the service doesn’t offer all the rules of a typical online broker. However, for investors who understand what they want, the Robinhood platform is more than enough to quickly accomplish trades, and the app enables, limit orders, stop limit orders, stop orders, and market orders.
- Easy to use Process: If you’re a person who is addicted to using a smartphone or tablet — which Robinhood’s target user base evidently is — you’ll find the sign-up and account funding process fast and effortless. It all takes less than five minutes within the app, with just a few brief questions that collate your personal data, Social Security number, contact details, and means of funding your account. According to the company, approved customers are notified in not up to an hour, at which point bank transfers are initiated.
You’re allowed to link up to three banks and the company uses, saving users the trouble of reporting insignificant deposits to an account to verify information. Bank transfers are concluded in three working days and can be set up to happen automatically on a weekly, biweekly, monthly or quarterly basis. Robinhood Instant, a new feature, will make transfers of up to $1,000 instantly available for investing, and proceeds from the sale of stocks immediately available for reinvestment.
- Extra Cash to Pay for Things: What I mean by this, is with Robinhood you can earn extra cash that will pay for your cost of any transaction. Assuming you’re an investor that typically trades or transacts, for example, three times per month at $7.00 (round off figure) each trade. That amounts to $21 per month for trading fees of 12 months = $252 in a year that Robinhood could spare you. Now you have traded 61 times this year through your brokerage service at $6.45 each time. That is a cost to me of $393 (approximately) already! Given that I still have additional 2 months left, I seem to be on track to spending between $252 to $393 in fees. Imagine what this could have cost you or what typical monthly expenses you could cover with the extra cash? So, Robinhood pays for the cost you incur on anything on the program. Does that make sense? If you upgrade your iPhone for $200, using this App would pay for it. It’s exciting when you view transaction fees from a different perspective.
- Permits Investors to Diversify Without Purchasing ETF or Mutual Fund: This is an additional advantage accessible as a result of Pro #1. Consider how frequently you have wound up in the circumstance where you have restricted capital and need to buy different stocks that are exchanging at a markdown. For instance, in the event that you had $500 and all of a sudden saw a downturn in the market. You would have the capacity to buy each of the five stocks on your “Dependably Buy” list for $100 without incurring extreme exchanging expenses ($6.95 * 5 = $35.95 in the event that you exchanged through an alternate dealer). In the event that there were commissions, it is highly unlikely you would buy every one of the five stocks and would in all likelihood decide on one. The $0 commission would permit investors to spread their cash and enhance their portfolios through littler transactions/trades without being punished.
Cons of Robinhood
- Low Entry Barrier: One of the cons of Robinhood is the low barrier to entry to the stock market which allows even the fools who have no understanding of what they’re doing to join. The minimum age to download the app is 4 years plus, for Chrissakes – imagine how many 14-year-olds who will jump in and put all their parents’ savings into APPL. This is exactly the standpoint from which the media has portrayed stock trading.
- Limitation On Securities: There is a limitation on securities as this app is for stock and ETF investors only; you’re not permitted to trade options, bonds or mutual funds. This notwithstanding, it does allow investors access to beyond 5,000 securities, so it’s not as limited as other free trading platforms like Loya13. Again, Robinhood doesn’t have automatic dividend reinvestment program, which translates that dividends are credited to accounts as cash and not reinvested in the security that issued them.
- Absence of tools and resources: You’ll need to research your trade somewhere else. The application does exclude the backing that you’ll discover on other trade resources, for example, research reports or analysis software. It’s intended for executing free trades once you recognize what you need. Notwithstanding, you can make watch records, and the application offers ongoing information and alarms.
- Lack of Retirement Accounts: As consistent investors, one would love to have this element to convey all records to Robinhood. Basically, if you somehow happened to utilize this and needed a retirement account – you’ll need to have different businesses being utilized as Robinhood doesn’t have retirement accounts. So, this also is one of the shortcomings of Robinhood.
Robinhood is great for frequent stock or ETF traders and does what it promises. It allows users to trade a large amount of stocks and ETF’s for no commission. That’s great isn’t it!
The great thing though is it’s $0 account minimum so you can start off the back! Everyone loves Free, I know I do.
Robinhood is ran off your mobile device whether it’s Android or Apple, so you can be doing work anywhere. The sign-up and account funding process is quick and painless and is all done straight through your mobile device which is something I find amazing.
It took me about 5 minutes to get everything set up which is great on my watch. Didn’t waste too much time.
If you’re really not into this type of make money program, maybe I can interest you in a program I use to make money from anywhere I want.
I really hope this review on the Robinhood App has helped answer some questions you might of had, if I didn’t answer your question, please feel free to leave it below and I will get back to you.
Thank you for stopping by and taking your time to read my post.