Robinhood rose to prominence in 2021 when it was used by Redditors to fight Wall Street. The event quickly became one of the most discussed topics all over the world. For Robinhood, an investment app with a large following became one of the best-well-known platforms in a matter of days.
The platform was named after the mythical figure of Robin Hood. Just like the name suggests, the platform allowed the little guy to take on the system. By offering an easy way to participate in the market, Robinhood opened the doors of investment to millions of people around the world
Investing with Robinhood provides no commission fees and a platform that can be installed/used in minutes. These benefits, in addition to a big offering of investing options, made the platform one of the best trading platforms out there. If you are reading this article, you might be wondering if investing with Robinhood is a good option for you. Well… Let us tell you all about it.
What is Robinhood?
Robinhood is an investment application platform that offers cryptocurrency, stock, and options trading. With no commission fees, the app has popularized among young people and new investors. The app was created with the idea of “democratizing” investment, which it has achieved with more than 10 million accounts having been created.
The platform is perfect for new investors due to its simplicity and flexibility. It allows its users not only to trade really small quantities but also fractional shares and cryptocurrencies. This, in addition to the lack of commission fees, ensures that everyone can dip their fingers in the world of investing.
You can use Robinhood by installing the mobile app or visiting the online platform. You also will have access to customer support via email and social media, ensuring you get help if needed.
If you are an experienced trader looking for more powerful trading features and analysis tools, Robinhood might not be the right fit. However, if you are looking for an easy-to-use and streamlined investing experience with a decent portfolio… You are in the right place.
The Controversy Behind Robinhood
While Robinhood might be the most popular investment app at this time, this has come with controversy. Vlad Tenev, Co-founder & CEO of Robinhood, has been known to joke about feeling like the most hated person in America. The reason? Both Wall Street veterans and retail investors are unhappy with how the App dealt with the GameStop craze.
If you missed the news on the craze, let us summarize it: An army of retail traders from Reddit took on Wall Street. By organizing themselves, they were able to cause massive losses for Wall Street investors who expected to earn money if GameStop Stock’s value dropped. It didn’t.
The result of the unprecedented event was the platform’s decision to freeze transactions involving the stock. The move was seen as not harsh enough by Wall Street and as treason by retail investors.
You might be asking yourself: “Why am I reading about the history of Robinhood?”. Well, when it comes to investing, we have always highlighted the importance of doing research on your platform of choice. Robinhood is an American company that must comply with the law and as such, risks of actions destined to protect the platform can be taken at any time.
While Robinhood’s actions were not seen as positive by any party, the platform’s popularity continued to grow. Now, Robinhood is preparing to sell its own stock after being valued at $40 billion, a testament to the app’s growth and trust of its user base.
Furthermore, Robinhood said it will reserve up to 35% of its shares for its own customers to buy. This is an unprecedented move that makes this the best time to consider investing with Robinhood.
7 Reasons Why You Should Be Investing With Robinhood
We already mentioned some of the reasons that have made Robinhood so popular among investors. However, there is more to the platform and app. Let’s look at some of the reasons why you should be investing with Robinhood!
1. No Commission Fees
Yes, we know we already mentioned this. However, we need to highlight it as it is what originally set Robinhood apart. While many companies have since offered a similar approach, Robinhood was the first. This is a reflection of the company’s aim to democratize investments.
While no commission fees might seem like a small benefit to some, they really add up if you trade frequently. That’s not even considering options trading!
Here at TurboWallet we always talk about how saving and investing every dollar benefits your financial life. Well, having to pay $1 to invest $10 would not be a great deal, right? investing with Robinhood means you don’t have to worry about this as the platform is not behind your money.
2. No Account Minimum
Just like the previous reason, this one is a must for anyone looking to start right away. Robinhood doesn’t have a minimum account balance, which means you only need the balance needed to trade.
This also means that you can try the platform by investing a small amount of money. If you find out that Robinhood is not the right fit… Just withdraw your money and move on. You will also take advantage of the bonus you get for registering on the platform!
3. Get Free Stock for Opening an Account
Once you register on the Robinhood platform, the company will add 1 share of stock to your account. For free! After 2 days, you will be able to keep or trade the stock as you wish. This is a great way to start your investment journey. Just don’t forget to link your bank account to get the gift and start investing with Robinhood!
The stock you receive will be chosen at random from an inventory of settled shares. While this means it is basically a lottery, there is a 98% chance that the stock bonus will be valued between $2.5 to $10. However, it is possible for the stock you receive to be valued as high as $225.
One of the great things about this gift is that as any stock, it has the potential to increase in value in the future! Did we mention it will be stock from one of the most popular stocks available on the platform?
4. Initial Public Offering Access
While this might be a temporary benefit, it reflects well on the platform and represents a great opportunity. As we said before, Robinhood will be having its Initial Public Offering soon. The team behind the platform has decided to allow its customers to participate in it.
This means that not only big Wall Street and corporate investors can take advantage of the IPO but you too. The conditions of the IPO access ensure that all customers get a fair shot to participate. That means no minimum account balance, special status requirement, or other conditions need to be met.
5. Fractional Shares
New investors are usually disappointed to find that the share they wanted to invest in, is too expensive for them. For example: would you as an investor put in $600 in a Tesla share? We know we wouldn’t when we started.
As such, Robinhood offers what is known as a fractional share. This means you can invest any amount, receiving the equivalent parts of a whole share. If you invest $10 for a share worth $1000, you would receive 0.01 shares.
This allows you to build a balanced portfolio to reduce risk, as well as trade-in real-time with no need to raise or gather funds. Investing with Robinhood is all about ease, which means this benefit is great when combined with features like recurring investments.
6. The Right Products to Start
Robinhood is not meant to be a platform for corporate or professional traders. This means that the company not only focuses on simplicity but also on developing products that beginners can use.
As such, while it might lack features that veterans might look for, it offers a wide range of products. This includes cash management, stock & funds, options, Robinhood golds, and crypto.
The stock & funds, crypto, and options products allow you to invest in such assets. Cash management will provide you with a way to generate passive gains on any uninvested cash in your account. Finally, Robinhood gold will give you access to research reports, margin trading, and allow you to perform bigger deposits to your account.
7. Recurring Investments
One of the best things you can do when investing is to be consistent. We talked about this in our article on how to start investing and building and build wealth https://turbowallet.com/investing/start-investing-and-build-wealth/. We also mentioned when referring to Dollar Cost Averaging https://turbowallet.com/crypto/crypto-investing-tools/. There is no excuse not to be consistent when investing with Robinhood!
Being consistent when trading is not hard but we all can get busy or forget from time to time. This makes Robinhood’s Recurring investment feature a perfect tool for anyone to use. You set up how much you want to invest, how often, and what share… Then just let Robinhood take care of the rest.
Not only will this ensure you keep track of your investment plans but also provide you with added flexibility. You can modify it at any time and even decide to manually invest more if needed.