Wondering whether Robinhood is worth using as an investor? Aside from their commission free trading and the option to earn a free share of stock just for signing up, Robinhood could be a great option!
What is the robinhood investing app? What sets it apart from other investing apps and brokers? And who is Robinhood best suited for when it comes to investing? Here's our detailed Robinhood review…
What Is The Robinhood Investing App?
Robinhood is a popular investing app aimed at making investing free, easy and requires relatively little money to start. They are often referred to as the “Pioneer of commission free trades.” Why? Because they were the first app that introduced investing with zero commission fees when placing an buy or sell order in the stock market.
Normally, you'd have to pay anywhere from $4.99 per trade to $9.99+ each time you bought or sold stocks! Soon after Robinhood's commission free trading campaign, most of the major discount brokers like Fidelity and TD Ameritrade followed close after offering commission free trading.
What Robinhood Offers
What about Robinhood makes them a great choice for investing in stocks and cryptocurrency? For starters, they give you a free share of stock just for opening a free account. That means you even have a chance of getting a share of Apple or Amazon!
Commission free trading
First and foremost, Robinhood lets you get started investing completely free, and with as little as $5. If you've avoided the stock market due to high fees or high minimum balances, you can have peace of mind that these are no longer a problem.
Fractional shares investing
Being able to invest as little as just $5 means that you can purchase shares of stock based on dollar amounts, not the number of shares. Most traditional investment brokers require that you buy stock shares in whole number amounts. That means if you want to buy Amazon, you'd need at least $2,100+ (as of the time of this writing) to buy just one share. With Robinhood, you can buy into Amazon with your $5 you found in the back pocket of your jeans after doing laundry!
Invest in cryptocurrency
We've all heard the hype over cryptocurrency, a decentralized digital currency that many believe will soon be the norm. Whether you're a believer or just a speculator wanting to thrown in some change in case that theory becomes reality, you can add multiple cryptocurrencies to your investing portfolio as well.
Margin trading & options contracts
Trading on margin means borrowing money to invest in stocks. The amount you can borrow depends on your account balance. It can either pose as an opportunity to double down on wildly successful companies, or serve as the vehicle that takes your account balance to zero. Regardless, those who wish to play the margin game can do so with Robinhood as well.
Options are contracts to buy or sell stocks at a predetermined price. You can purchase a “call” or a “put” contract that gives you the right to buy a stock at the predetermined price stated in the contract. This is another feature offered by Robinhood for those options investors out there.
Robinhood cash management account
Along with a basic investing account, Robinhood offers a cash management account with a basic debit card and higher than average interest rate when compared to local banks. The account is FDIC insured, allows for direct deposit and gives you access to over 75,000 ATM's for free.
Other notable reasons to invest with Robinhood
- Premium Services: get access to added research reports and margin trading with Robinhood Gold for $5 per month.
- Free Stocks: When you set up your account, Robinhood gives you a free share of stock.
- Simple Watchlists: You can select your favorite companies to keep an eye on and add them to your personal watchlist.
- Basic News Feed: News feed of trending stock reports and market movers.
What I didn't like about Robinhood:
Not a perfect investing app, but highly recommended in my opinion. With that said, Robinhood has a few things that could be better. Among them are:
Detailed research reports: The app is as simple as it gets. Be that good or bad, many out there may wish to have more detailed reports than just a basic line graph of their returns and a few news reports.
Robinhood Gold Premium Service: Robinhood Gold members pay an additional $5 per month and get access to added research from Morningstar. The problem is, the Morningstar reports are nothing more than a few paragraphs of research. Could be MUCH better.
Too simple?: Depending on the type of investor you are, this could be a good or bad thing. But it could be said that the Robinhood app is a bit too simple, it took me a minute to figure out how to understand the home screen.
It shows my total account returns, but not until after fiddling around did I figure out how to see the returns of each individual stock I owned within my account. It's not hard once you figure it out, but it was a bit confusing at first.
Who Is Robinhood For?
When all is said and done, I HIGHLY recommend Robinhood. Why? Because I love the ability to purchase fractional shares of stock without any commissions or fees!
It's a great option for any investor who wants to start building up their investment positions in their favorite companies but has little money to start. It also serves as a great option to make quick purchases when your favorite companies “go on sale” and dip in price.
Personally, I use it as a side account to my main brokerage account to make purchases when opportunities arise, and to build positions in expensive companies that I don't have immediate cash to invest in right away.
Not many apps are out there that offer all the user friendly and commission free features that Robinhood offers, but among the closest and highly rated options are: