If you’re like me, the idea of investing in stocks can be a little overwhelming. The thousands of available stocks to trade, the different jargon involved with the idea, and the tickers, oh the tickers. Many of these concepts can be quite daunting for a new investor, and may shy some away from the idea of trading stocks. Robinhood looks to change your opinion, and make stocks a bit more user friendly.
What is Robinhood?
Robinhood is an investing app that allows it’s users to trade stocks for free. That means no “per trade” fees. Robinhood also shines in the fact that it doesn’t have a minimum initial investment costs. This means that no matter if you have $10 or $10,000, you can use Robinhood. Now I should point out that investing with amounts as low as $10 probably won’t yield you very much profits but in realistic terms if you could save up a couple hundred bucks, you could be in business.
The app seems to target more of the younger market, like millennials, who are just getting started in stock trading and wish to dip their toes in without getting killed by fees. Their app is super sleek and simple, but also offers some good content for tracking and trading. It should be noted that there are selling fees, but these are not in the interest of the Robinhood, but mandated by the SEC and FINRA. The fees are as follows:
- SEC: $21.80 per $1,000,000 of principal (sells only) – this fee is rounded up to the nearest penny.
- FINRA Trading Activity Fee (TAF): $.000119 per share (sells only) – this fee is rounded up to the nearest penny and no greater than $5.95.
Pros and Cons
- No minimum investment amount
- No per-trade fees
- Simple, clean, user friendly design
- Great for beginner traders
- Has main order types such as market, limit, stop-loss, and stop-limit
- No dividend reinvestment plan (DRIP)
- No retirement accounts even though it’s pretty obvious that’s not what it was intended for
The Verdict on Robinhood
I think it’s pretty apparent at this point. I’m a fan of Robinhood. I’ve only been using Robinhood for a few months now but I really do love it. I didn’t have a few thousand lying around the house, so I started with an investment of $500. I’m realistic so I know I won’t become Warren Buffett off of an investment of $500, but it’s fun to learn and get into the scene of stock trading. Robinhood is a very clean, very easy to use app, and for a stock market beginner, it’s a must.
To download Robinhood click here.