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Investing With the Robinhood App
If you’re at all like me, you know that investing can be really confusing. Most of us were never taught about it in school or by our parents and honestly, how are you even supposed to know what to invest in?
After having investments in the Robinhood app since 2018, I officially put together all of my data, looked back on recent events, and compiled all you need to know about if you should invest with the Robinhood app. This article will discuss investing with Robinhood and what the future may look like for this mobile investing company.
History of Robinhood Investing
So let me tell you a quick story. Years back in graduate school I had a huge group of guys in a class who were getting each other to sign up for free stocks on Robinhood. Out of 40 students, I was the only female interested in getting a free stock, and I wanted to learn more about investing in brokerage accounts. I’ll explain what those are later.
Luckily I ended up with a Gamestop stock, and if you know anything about Reddit right now, Gamestop is quite a big deal.
With this stock, I made over $200 without doing anything. But this really sparked my interest in investing in mobile brokerage accounts and I am here to show you the pros, cons, and help give you some insight on why, or why not, to invest with Robinhood.
I recognize that many of you don’t really understand investing in general. And that’s okay! The term “investing” is extremely broad, but essentially means that you are putting money aside into something in hopes for a greater return in the end. It’s a risk without a guarantee, but most people find that the risk is worth the potential reward.
What Are Brokerage Accounts?
What is a brokerage account and how does Robinhood fit in with this?
A brokerage account is an investment account with a brokerage firm. A brokerage firm is essentially a company that allows you to buy things called securities, which include stocks, bonds, mutual funds, and ETFs or exchange traded funds.
These types of accounts are taxable, so it is important that you know you will be subject to capital gains taxes.
Is Robinhood a Brokerage Account?
Robinhood is an online-only brokerage. It was created in 2014 and quickly became the most popular way for young and less-experienced investors to participate in the stock market.
It grew to be a fun, simplified, and easy way for anyone to get started with investing, and by offering a free stock for signing up, what isn’t there to like?
Robinhood Pros
Well, let’s dive into the Pros before we go into why the Robinhood app may not be the best option for you.
First, Robinhood offers a free stock to sign up. In fact, use this link to get yours! (But you may want to read this full article until the end to get a better deal).
They pioneered this “free stock thing” and now you can get free cash or free stocks with many mobile brokerage accounts.
Robinhood is also very beginner-friendly and they offer lots of educational content and helpful advice for newbie investors. Plus, it is inviting for women to invest in to, with their gender-neutral colors and aesthetic.
But the biggest pros are that Robinhood is commission-free and they allow micro investing, or fractional investing.
Robinhood Cons
Let’s backtrack for a second. Remember how I told you about the Gamestop stock?
One big problem that drove many customers away this year was that Robinhood restricted trading, making it so people could not buy and trade certain stocks like $GME and $AMC.
On June 30 an article wrote that Robinhood is going to have to pay 70 million after causing widespread harm to customers.
Yikes, so what happened? Apparently, Robinhood had misled customers on how much they had in their accounts.
What is now considered “Robbinghood”, most people who are interested in buying individual stocks are transferring their investments to other accounts as we speak.
So if you’re interested in buying some simple stocks, then Robinhood may be fine. But if you want to engage in trendy trading, stay away.
Alternatives to Robinhood
And for those of you who stuck around, I have a quick bonus tip.
I have reduced my investments in Robinhood over this past year and transferred many of my investments into either Fidelity or Webull. Both are great options for completely different reasons but I don’t have time to go into that right now.
However, the reason I brought this up is because you can get up to 10 free stocks if you sign up for a free account with Webull with the link here. And yes, I did say 10! Check it out here!
Instead of the measly $3 stocks you get as free signup bonuses from Robinhood, I have found that Webull averages $8-12 per free stock. Totally worth getting your stocks and learning about the stock market for free!
Summary
In this article you learned pros and cons of the mobile investing app Robinhood.
This app is great for new beginners to investing but is not a fan-favorite of people who are interested in day trading or being involved with investing in popular meme stocks such as $AMC.
To learn more about investing, check out these informative articles to grow in your knowledge of investing!