Robinhood, a leader in the investing industry, offers users the ability to trade stocks, ETFs, options, cryptocurrency, and more.
Recently, many negative headlines have been about people who “bet it all” on popular stocks and options. FINRA has issued a record fine of $70 million for “systemic supervisory failures.”
With zero-cost trades, a well-designed mobile app, and several well-known investors, Robinhood presents itself as the future financial system.
Does its commission-free trading platform make sense for customers and investors? Should you, as an investor, give it a go?
What I really think about Robinhood is that there are better free options for long-term investors.
This review will go over Robinhood to see if it really is the best Free Investing App out there.
If you’re like most of my readers, you came across Robinhood for one main reason:
You want to make more money than you currently make by leveraging your existing resources.
Maybe you’re even looking for a quick turnaround on some of your cash instead of waiting years or even decades for it to double.
Well, you’re in good company – who wouldn’t want all of that?
There’s one thing you need to watch out for though: legitimate scammers.
The idea of making 10X on your money in a day is obviously something that would entice the masses, and so it naturally attracts a lot of bad actors into the financial products space.
But for purposes of this review, let’s assume these people had the best of intentions.
Even with the most sophisticated systems out there, most experts barely manage to get it right 10% of the time…
Obviously, there’s an argument to be made that 1 winning bet can outshine 10 losing ones…
But if you mess up and miss a trade even one time, your month can turn sour pretty quickly.
Suffice it to say, there’s a whole lot of stress & uncertainty.
Now don’t get me wrong, it doesn’t mean you’re guaranteed to lose money. I’m just saying that you need to be aware of what you’re getting yourself into.
But what if you could build a different income stream, and start seeing profits within your first few days?
I’m talking about a system that doesn’t require:
- Obsessively checking your phone and charts
- The emotional turmoil of loss after loss, waiting for that win
- Glorified gambling
Something that you could make anywhere from $2,000 – $10,000 with consistently, month after month?
A stream of income that you can build as high (or low) as you feel like building it, without spending every waking hour watching for alerts and pouring over charts?
If that sounds interesting, you might want to think about becoming a Digital Landlord.
If you wanna see what Robinhood looks like on the inside, keep reading.
Robinhood Review: Quick Summary
- Stock, option, and cryptocurrency trading are all possible with this free investing app.
- Margin and after-hours trading are two examples of premium features.
- In my opinion, there isn’t much support, and the features and the Robinhood account aren’t complete.
- Product Name: Robinhood Investing App
- Stock and ETF Trades: Free Stocks, ETFs, Options
- Min Investment: $0
- Option Trades: Free
- Crypto Trades: Free
- Account Types: Taxable
- Promotions: Free Stock For Opening An Account
What Is Robinhood?
Robinhood is a mobile investment and banking app available for free download. The software start-up wants to change the way people make investments.
And it’s effective! It costs nothing to trade stocks, ETFs, and options through Robinhood. When it started, this was unheard of. Nearly all big stockbrokers no longer charge commissions or other costs.
In my opinion, most users are better served elsewhere. But if you’re interested in Robinhood, read on.
Robinhood’s main features include:
- Commission-free trading stocks, ETFs, options, and more…
- Forex trading with a fixed commission
- Investing infractions
In addition, Robinhood Gold offers low-cost margin trading.
Robinhood Cash Management – a debit card cash management bank account.
Trading mutual funds are not supported by Robinhood. On Robinhood’s platform, you also can’t buy bonds.
In this Robinhood review, I’ll dig deeper.
Robinhood Trading Platforms And Tools
Robinhood is intended for beginners who wish to understand the fundamentals of investing. However, once you start investing, Robinhood might not be sufficient because Robinhood’s trading capabilities and tools fall short of those offered by the top online stock brokers.
The trading tools offered by Robinhood are limited when compared to market leaders. For instance, charts are crucial and only have four technical indicators. Over 400 are at TD Ameritrade, and close to 300 are at TradeStation. For example, TD Ameritrade and Charles Schwab provide live broadcasts with in-house experts during the day.
Fractional shares: The simplicity of Robinhood is its greatest strength. For example, its recurring investment strategy tool allows you to invest a fixed dollar amount weekly. With Dividend Reinvestment enabled, Robinhood automatically reinvests dividends earned from the stock market or Stock ETFs Options, provided the symbols support fractional share trading.
Robinhood’s mobile app is my favorite for simplicity. Robinhood provides:
- Basic watch lists.
- Recent news.
- Basic stock quotes with charts & analyst ratings.
- Streaming Bloomberg TV.
- Simple trade entry.
Watch lists: Simplicity has its drawbacks. The watch list functionality is minimal, with only a few optional columns beyond the last price and percentage change. TD Ameritrade and TradeStation both offer over 300.
Free Stock Charts: There are six default date ranges and two chart types when pulling a stock quote. In addition, horizontal viewing in landscape mode is not supported. Using the free CNBC mobile or Yahoo Finance apps provides superior charting.
Price alerts: Users cannot set custom price alerts for individual stocks. Free stock price alerts are an industry-standard feature.
Commissions And Fees
Robinhood also provides cryptocurrency and ETF trading in addition to stock trading.
The Robinhood business model: Facebook (FB) is free. It generates revenue by gathering user data and selling ads to offset the lack of a subscription charge. Additionally, Robinhood also is a free service. Robinhood sells your order flow to wholesale market makers rather than ads. Therefore, Robinhood isn’t free. But in the world of $0 trades today, almost all brokers except Fidelity accept payment for order flow (PFOF).
Robinhood Gold: I found Robinhood Gold to be of poor value during my research. According to Morningstar, level II streaming quotes and margin trading are available for $5 monthly (which charges 5% annual interest). For the same $0 per stock trade, TD Ameritrade, E*TRADE, and Charles Schwab charge higher margin rates but offer better stock research, trading tools, and customer service.
Penny stocks: OTC stock trading is not supported by Robinhood. Robinhood supports only NASDAQ or NYSE penny stocks.
Few companies offer commission-free cryptocurrency trades like Robinhood. Currently, it only supports seven coins:
- Bitcoin (BTC)
- Bitcoin Cash (BCH)
- Bitcoin SV (BSV)
- Dogecoin (DOGE)
- Ethereum (ETH)
- Ethereum Classic (ETC)
- Litecoin (LTC)
This is one of the grounds why Robinhood hasn’t made our list of best crypto exchanges. It’s also worth noting that while Robinhood doesn’t charge a fee directly for crypto traders, the spread does.
Robinhood Gold is the company’s top-tier product. Gold can be obtained for as little as $5 per month.
Robinhood Gold provides you with:
- Margin Trading: This feature is marketed as “Gold Buying Power,” but it’s actually just a 2x margin on your account. However, unlike other margin accounts, you don’t pay interest on this account. The flat monthly fee determines the margin power you will pay.
- Before and after-hours Trading: You will have pre-market and after-hours trading access.
- More extensive Instant Deposits: You can get instant access to your money, even if you sell a security, and you don’t have to wait a few days for the settlement (they call this “Instant Reinvestment”)
- Level II Market Data and Research: In addition to Level II data, you’ll have access to Morningstar’s professional research.
Robinhood also announced in December 2020 that it would reduce its margin rate from 5% to 2.5% on any amount above $1,000 (the first $1,000 is included in your Gold monthly fee). That is one of the lowest rates available anywhere.
After a rocky start, Robinhood now offers a cash management account with an APY that rivals the top high-yield savings accounts.
The current APY is 0.30%. Like all variable rates, this may rise or fall.
This account is a no-brainer with no minimum balance requirements, monthly fees, and no overdraft fees.
The only drawback is that other ATM fees are not reimbursed. You’ll have to download their app to get around this. You’ll get a great cash management product if you meet these requirements.
Does Robinhood Have Mutual Funds?
Mutual funds, bonds, and futures trading are not supported at Robinhood, nor is cryptocurrency trading.
How They Make Money
I’m always skeptical of businesses that offer freebies. Of course, this is not a charity. Investors want to sell it publicly and earn millions of dollars. But to do that, they must be profitable. So how do they manage it?
They possess two. They first sell your data to third parties. Although it could cost individual investors money, this is a big source of income for them.
You can use services like margin trading if you have a Robinhood Gold Account subscription.
These are irrelevant to long-term investors. A $0.01 increase (potentially) per share shouldn’t affect a long-term buyer. But this could be costly if you’re a trader (like Robinhood’s platform).
Robinhood Bonus And Promotional Offers
Sign up for Robinhood and get a free share of stock. The share’s value is theoretically between $3 and $225, but Robinhood predicts it will be between $2.50 and $10.
They occasionally offer a better bonus. View current offers:
$15 New Student Sign-Up Bonus
Open a new account with a school email address and get a $15 bonus. Between September 15 and October 24, students who sign up with a .edu email and link a bank account will receive $15.
What Is The Best Way To Contact Robinhood?
Another area in which Robinhood falls short. Under increasing pressure, Robinhood has finally announced 24/7 phone support – but you must still access it through the app.
Its “Support” page is nothing more than a collection of FAQs. And on its “Contact” page, there’s only one sentence: “Sign in so we can provide better and more personalized support.”
Is Brokerage Account Safe And Secure?
Security features include TLS protocol data protection, TouchID, FaceID, custom PIN code, and two-factor authentication for Robinhood account.
While still being hacked in October 2020. A hacker gained access to nearly 2,000 accounts, and at least one customer has already sued Robinhood.
SIPC protects all brokerage accounts up to $500,000. Cash accounts are insured for up to $1.25 million by Robinhood’s partner banks.
More About Robinhood Financial Regulation: Protected By Securities Investor Protection Corporation
Because Robinhood is a securities brokerage firm, it’s guided by the Securities and Exchange Commission (SEC), just like any other brokerage firm.
Furthermore, the app is voluntarily a Financial Industry Regulatory Authority member (FINRA).
FINRA is a self-regulatory organization in which many brokerages participate.
As you may recall, the Securities Investor Protection Corporation (SIPC) protects your money in Robinhood.
The SIPC provides up to $250,000 in cash claims and $500,000 in securities protection, so 99% of investors have NOTHING TO WORRY ABOUT.
Where Robin Hood Stands Out
- Costs: Robinhood is a genuine discount broker. While its offerings may not be as comprehensive as those of other brokerages, it has some of the lowest prices in the industry.
- Simple user interface: Robinhood is easy to use. Many people say that it has made sophisticated stock trading strategies like options trading too accessible to the general public because it’s so simple. On the other hand, the simplified interface comes in handy if you’re just looking to dabble in stocks.
- Free cryptocurrency trading: The fact that you can trade cryptocurrencies for free with Robinhood makes it a unique offering among stock brokerages. However, the luster begins to wear off when comparing Robinhood’s crypto offerings to pure-play crypto brokerages.
- IPO access: In 2021, Robinhood will launch a new offering allowing users to participate in a company’s initial public offering. Traditionally, this has been reserved for financial institutions.
Where Robinhood Falls Short
- Robinhood only provides taxable brokerage accounts: no retirement accounts are available. As a result, if you retain your money here for a long time or plan to save for retirement, you’ll miss out on the tax advantages of retirement accounts like traditional and Roth IRAs. Most investors should only invest through a taxable brokerage account after they have begun funding a retirement account.
- No mutual funds or bonds: The absence of mutual funds and bonds may make it challenging to construct a truly diversified portfolio.
- Limited customer support: While Robinhood’s customer service improved last year, it’s still not on par with other brokerages.
- Reliability: During market volatility, Robinhood has been chastised for untimely outages and trade restrictions and charged by regulators for misleading customers, resulting in significant fines.
The following are some of the most frequently asked questions about Robinhood:
Is there a catch with Robinhood?
While it is not technically a “catch,” one of the primary ways Robinhood generates revenue is through “payment for order flow,” which many believe is a conflict of interest.
How do I withdraw my funds from Robinhood?
Clients can withdraw up to $50,000 per day from their accounts. It’s worth noting, however, that Robinhood does not currently allow for the withdrawal of cryptocurrency purchased on its platform.
Does Robinhood support Dogecoin?
Yes, Robinhood customers can trade Dogecoin commission-free and at any time of day or night.
Is there a per-contract fee on options trades at Robinhood?
Because it doesn’t charge commissions, Robinhood is one of the few brokers that also doesn’t charge an option contract fee.
Is Robinhood currently offering any bonuses or incentives?
Yes, when you open a new account with Robinhood, you will receive one share of free stock. The share’s value could theoretically be anywhere between $3 and $225, but Robinhood estimates it will be between $2.50 and $10.
Final Thoughts: Robinhood Review
Suppose you’re looking to start investing in stocks and ETFs with a small amount of cash in a taxable account. In that case, Robinhood is a broker worth considering. Simply be aware that you cannot invest in mutual funds or establish an IRA. Additionally, don’t anticipate prompt and attentive customer service.
If you require something more robust, I strongly advise you to open an IRA or brokerage account with a well-known brokerage firm like TD Ameritrade or Fidelity. With every platform now commission-free, why not take advantage of full service at the same price?
Alternatives To Robinhood?
Yes, there are plenty of other business models to choose from if you want to pursue this making money online. Here are just a few:
Is Robinhood A Scam?
Alright, time for the $1,000,000 question: is Robinhood a scam?
No, not technically. You can 100% make money with it, but it’s not NEARLY as simple as they want you to think it is.
You need to understand that you are taking a very big risk with financial products.
So while it’s entirely possible that you hit the big leagues and retire to a vineyard… the path to get there is so stressful, it might just shave a decade off your life… IF you even get there.
A friend of mine actually writes advertisements for one of the largest financial program advertisers in the world… so believe me when I say that most of the “awesome” numbers they use in their ads & landing pages are borderline false.
What they conveniently leave out are the dozens of losing bets and trades that came before the big win you’re reading about.
Now, most people don’t have the emotional bandwidth to stick out 3 months of back-to-back losses before (hopefully) getting a big win.
I’d rather use that 3 months of work (in my spare time) building Digital Rental Properties, and then collect a handful of nice little $500-$2,000 checks every single month afterward (AKA passive income).
And the cool part is that you can do it in a lot less time than 3-months (I personally did it in my first 2 weeks of being a Digital Landlord).
You can do it from anywhere in the world, so it’s a genuine “laptop-lifestyle” business.
All you need is a laptop and an internet connection.
Some of my friends are Digital Landlords that run their 6-figure businesses from:
- Camping trips at national parks
- Beachfront in Hawaii
- On the road in a camper van (with a pet pig!)
They focus on living an enjoyable life first, and focus on income second. All thanks to this program.
They can take weeks or months off, and money keeps rolling in.
Living happily is the top priority.
If the thought of living perpetually at your dream vacation spot interests you, being a Digital Landlord might be for you!
What Is My #1 Recommendation For Making Money Online In 2022?
I’ve personally tried all of the major online business models:
- I’ve traded crypto & purchased a bunch of fancy “insider stock tip” newsletters
- I’ve sold fidget spinners through Amazon FBA
- I’ve drop-shipped a toilet bowl putting green on Shopify
- I’ve sold women’s health supplements via Clickbank affiliate marketing
And I made money with all of them, so trust me when I say: there is no “perfect” business model.
That being said, my #1 recommendation for making real money online is, hands-down: being a Digital Landlord.
Whether you’re a complete newbie, or you’ve been around the block before but have never had that “big win” to propel you forward, becoming a Digital Landlord is for you.
1)Time: If you’ve got a spare hour or two each day, you can do this. If you want to drop everything and go all in, you can do this. More time obviously means faster results, but even putting in a few hours per day is enough to see real success.
And because of that flexibility, you don’t need to trade your time for money. Once the income starts, it’s recurring.
That means you can take a month off, travel the country, pursue a passion project, chill on the beach, or charter a boat across the world.
But you can only do that once you’ve created an income stream that doesn’t require YOU to be there all day, every day.
2) You Own & Control EVERYTHING: When it comes to the markets, nothing is in your control. You have zero influence over market-shifting macroeconomic trends.
The number of people that have ACTUALLY beat the market consistently can be counted on one hand.
Why pour your soul into a business that you realistically have zero control over?
When you’re a Digital Landlord, you literally own all of the assets, which means you have ultimate control.
3) It’s Effectively Copy-Paste: Here’s my favorite part: once you have your first Digital Rental Property up, you can literally copy-paste another version of it and find another willing “renter” in a few days. DOUBLING your income doesn’t get much easier than that…
If you wanted to double your income in the markets, you would need to make twice as many winning trades, or double your profit on each trade. And I can guarantee you that’s a lot harder than a few clicks & a phone call.
4) Make Money Helping Real People: When you make money in the markets, you’re not really helping anyone but yourself. There is a loser on the other end of that trade.
But when you’re a Digital Landlord, you’re helping solve REAL problems that people are ASKING for help with:
Small local businesses around the world need one thing: customers. Without them, their business would fall apart. If you can provide those customers, they’re going to be really happy – and they’re going to pay you for it.
You’re helping a struggling mother or father put food on the table for their families, put their kids through college, or simply live life a little bit more comfortably.
Having this type of impact on the world is what will help you sleep soundly at night.
So, the rest is up to you. You could keep looking at other programs like Robinhood, which might make you money if you luck out.
You could keep researching and researching for the next few months (or few years), never making a concrete decision.
OR, you can look deep inside, think about those dreams, hopes, & desires, and make the decision to ACTUALLY make it happen, just like it has for thousands of other students before you.
Making a fortune while actually helping real people that need it.
If this sounds like you, click here to see how it all works.