Limited Free Research Components
You cant have it all when youre not paying anything for trades, and it really shows in the limited free research components being offered at Robinhood. This is not a killer for the right kind of investor savvy and experienced but may be a turnoff to newer investors who often need more direction from their broker. That said, Robinhood does funnel in lots of free educational content on investing and finance topics as well as its Snacks newsletter all of which can be helpful to newer investors starting their journey.
Of course, as part of its Gold program, the broker provides stock ratings from Morningstar, while offering a feed of news and analysis from popular websites for each stock. And the app does offer some basic charting functionality too. But its not nearly at the level of full-service brokers such as Charles Schwab or E-Trade. Both of these also offer solid free education for investors who want to power up their skills and knowledge.
Robinhood’s Unlikely To Solve This Big Issue But You Can Get Around It Yourself
Robinhood has legions of fans who swear by the popular trading platform. I can see why: it’s easy to use, cheap, and portable. But a lot of users — and I mean a lot — aren’t happy with the app-based brokerage.
Here’s the biggest problem with Robinhood…and how you can make sure it doesn’t happen to you.
Is Robinhood Safe To Use
So, we’ve told you about what Robinhood is and how it works but is Robinhood secure?
YESRobinhood is absolutely safe. Your funds on Robinhood are protected up to $500,000 for securities and $250,000 for cash claims because they are a member of the SIPC. Furthermore, Robinhood is a securities brokerage and as such, securities brokerages are regulated by the Securities and Exchange Commission . Also, I was one of the first 100,000 to open a brokerage account with Robinhood in 2014. I put in a few $100 dollars and made some trades just to test it out. I wanted to make sure that the stocks were priced correctly and that my orders were executed properly. And yes, my trades were made properly and they were commission free!
After a few months of successful trading, I sold everything and had Robinhood transfer my cash back to my checking account. They did so immediately. No problems. No questions asked. I even emailed them to check out their customer service and I got a reply within 4 hours.
I then transferred the money BACK INTO MY ROBINHOOD ACCOUNT and that is where I now save and invest on a monthly basis. Over the last few years, I have made literally 200+ trades and never had any problems with orders executing or with my fill prices. And yes, Robinhood is commission free!
In addition, the company has several other safety measures in place to protect your money and data. So, how is your MONEY protected?
You can sleep easy, knowing that your money is safe.
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How Do I Close My Robinhood Account
There are two ways to close your Robinhood account. First, you can sell all of your Robinhood assets and transfer the balance of your Robinhood account to your bank via ACH. Then follow these steps in the app to deactivate your account:
Second, you may transfer all of your assets in Robinhood to another brokerage. To do this, youll need to contact your other brokerage and have them initiate the transfer. Note that there is a $75 fee to transfer your assets out of Robinhood, whether as a partial or full transfer.
For further information, go to Help Center > My Account & Login > Transferring Stocks in and out of Robinhood > Transferring Stocks out of Your Robinhood Account.
Jonathan Lesser is a writer and editor covering cryptocurrency and personal finance. He has been published in Mens Health, Mens Journal, Vibe, Travel + Leisure Golf and other publications. View all articles by Jonathan here.
Who Should Use Robinhood
Robinhood is a self-directed investment platform that opened in 2012. Youre eligible to use Robinhood if you:
- Are at least 18 years old
- Have a valid Social Security number
- Have a legal U.S. residential address
- Are a U.S. citizen, permanent resident or have a valid U.S. Visa
Ive used Robinhood for years. Its my go-to investment platform, and I also have a cash management account with Robinhood.
However, as Ill explain in this Robinhood review, many people shouldnt use the platform.
Its great for introducing people to the concept of investing in the stock market and, hopefully, to get them thinking about long-term financial goals.
Robinhood lets you buy fractional shares and small quantities without jumping through many hoops. A low barrier to entry and an extremely streamlined user experience help inexperienced investors educate themselves.
Its also a good platform for long-term, buy-and-hold investors who want as little hassle as possible but are interested in checking their investments frequently. But they need to have the discipline to resist the temptation to sell.
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Extremely Limited Account Types
Robinhood is not a full-service brokerage, so dont expect the same level of account types that youd find at rivals. In fact, expect just one account type, the individual taxable account. So no IRAs, no joint accounts, no 529 savings accounts, etc. The broker says that it hopes to expand in this area, but doesnt seem to have done much so far. Thats a real knock for investors who would like to expand their relationship but must use another broker for their other account types.
You could pick almost any other broker and find more account types than youll find here.
Can I Trade Immediately After I Open My Robinhood Account
Robinhood says it notifies you in less than one hour if your application is approved, at which time you can initiate a bank transfer. Because Robinhood uses instant verification with several major banks, transfers of up to $1,000 are instantly available for investing. The same goes for proceeds of up to $1,000 from selling stocks. Deposits of more than $1,000 take about four or five days to process.
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Avoid Foreign Currency Conversion Fees With Wise And Save Up To 4x
Robinhood only allows customers to hold a balance in US dollars. That means that if you spend with your Robinhood debit card when youre abroad, or when you shop with an online merchant overseas, you may pay a foreign conversion fee to Mastercard.
Instead, why not get a Wise account to hold 54 currencies and spend easily with your linked debit card. Its free to spend any currency you hold – which means no more foreign transaction fees to worry about. Instead, just top up your account in the currency of your choice, and convert to any currency you need with the mid-market rate, plus a small and transparent fee. That can mean it can be 4x cheaperto use Wise compared to your regular bank card.
How Good Is Robinhood Support
Its hard to give Robinhood Support a solid grade based on definitive data. Many people on Reddit report relatively quick responses by email to their questions that resolved their problems. It should also be noted that their help guide is relatively solid and could resolve many common questions, especially for beginners.
Robinhood is a free service offering a large audience their first taste of investing. By leveraging technology to make this happen, they understandably have fewer actual people working for them compared to a large and established brokerage firm. Also keep in mind that they likely receive a huge volume of basic questions that have more to do with the user not understanding the basics of how markets work that may overwhelm their ability to provide personalized service that we expect from other brokerages.
However, it is quite clear that by now offering the long awaited phone support on a 24/7 basis, Robinhood recognizes that there are other competitors out there trying to market themselves as more serious investing tools. As a publicly traded company, we and many others called upon Robinhood to do better and it seems this is a step toward recognizing their power and weight among younger investors and traders.
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How To File A Claim In Plaid Settlement
To claim a cash payment as part of Plaids $58 million settlement, you need to fill out a claim form. You can do so online or by mail.
Online: Fill out and submit the form at www.PlaidSettlement.com.
After printing out a copy of the claim form, mail to:
- Plaid, Inc. Privacy Litigationc/o Settlement Administrator1650 Arch StreetSuite 2210Philadelphia, PA 19103
The deadline to file a claim is April 28, 2022. Payout amount depends on the number of valid claims filed.
For more information, call 855-645-1115.
Robinhood Is Fined $70 Million Over Misleading Customers And System Outages
The fine was the largest ever imposed by the Financial Industry Regulatory Authority, which is known as FINRA.
Robinhood Financial, the online stock-trading app, was fined $70 million by the securities industrys self-regulator on Wednesday for a series of failures that the agency said hurt Robinhoods customers.
The announcement came ahead of Robinhood filing an investment prospectus to go public, which is likely to land later this week, a person with knowledge of the matter said. The companys initial public offering is expected to be one of the highest profile of the year.
The fine, the largest ever imposed by the Financial Industry Regulatory Authority, which is known as FINRA, was the latest legal punishment for Robinhood. The eight-year-old start-up has upended the online brokerage business by introducing fee-free trading and gained prominence this year as the venue of choice for much of the stock-trading mania that boosted shares in companies like GameStop and AMC Entertainment.
The Silicon Valley company has repeatedly been accused of operational and regulatory lapses by regulators and lawmakers that, critics said, left customers exposed to sometimes ruinous losses. Robinhood has already paid tens of millions of dollars in fines, including $65 million to the Securities and Exchange Commission, for misleading customers about its business.
Im not going to say that Robinhood did everything perfect, he said.
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Are There Other Risks Associated With Trading On Robinhood
For most investors, the potential risks involved with using Robinhood aren’t associated with the regulatory framework covering their accounts. For instance, Robinhood is a very sleek and minimal application, and investor tools are rudimentary compared with those of other major brokerages like TD Ameritrade Holding Corporation and E*Trade Financial Corporation . This can lead to hasty and uninformed decision-making, especially for novice investors.
In addition, the Robinhood app makes it difficult to manage a diversified portfolio. Most reviewers suggest that tracking more than three or four positions isn’t practical with Robinhood, which leads to overweighing your portfolio with one or two equitiesnever a good practice. The Robinhood platform currently permits only stock and ETF tradesbonds and mutual funds are excluded. Again, this risks tilting your portfolio toward a single asset class.
As a matter of convenience, Robinhood doesn’t integrate with other financial management tools like Mint or Quicken, so there’s no convenient way to track your holdings as a part of your overall financial picture outside the Robinhood app. In addition, there is no IRA account option, excluding investors from the tax savings and long-term benefits of retirement savings plans.
How Does Plaid Work
For example, you can use Plaid to connect to your Chase bank or credit card account. When you need to pass your bank credentials to another finance app, youll be prompted with a Plaid window.
Youll enter your Chase username and password and submit the form. That information stays only with Plaid, which will contact Chase and verify your login information. If you have set up two-factor authentication , you will enter that information as well. Plaid also has the option to use its own 2FA if your bank doesnt support that extra layer of security.
Once you have used Plaid to authenticate your bank information, the connection is in place and can be used to transfer the financial information that you authorize. This could be information like transaction history, balance, or other information. Installment payment platform Sezzle is one finance company that recently announced that it is using Plaid for financial authorization. Through the partnership, Sezzle customers will be able to connect their financial accounts via Plaid. This will allow them to pay more efficiently using Automated Clearing House instead of a credit or debit card.
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The Risks You Should Know About Robinhood
Investing with Robinhood is just as safe as investing with Etrade, TD Ameritrade, Schwab or any other US bank.
The question is, do you know how to invest your money? Because if you make bad investments, you will lose your money.
So, what can you do to stay safe?
You need to arm yourself with knowledge.
Otherwise, Robinhood has the infrastructure and regulations in place to keep your money safe.
Oh, and Robinhood will keep your data safe, too.
The risks on Robinhood lie more in user error than in the app itself. Just because they don’t charge commissions doesn’t mean you will make money. You STILL need to pick quality stocks and build a strong portfolio. If you need stock advice, please read our Motley Fool Reviewsince their stocks picks have been the best over the last 4 years and new subscribers can sign up for just $99 a year.
As the customer, you must always perform your own research on the brokerage, tools, and investments.
Like any other service, Robinhood provides you the platform, but your results depend on YOU.
After that, you are good to go with Robinhood.
The company is safe, receives high safety ratings, and is safe for investing.
And when it comes to your money, just be sure that Robinhood is right for you.
Ask yourself the following questions:
- What are your objectives?
- How much money can you afford to invest?
- Do you have an emergency fund?
- Do you have debt that must be paid-off?
- Is your retirement plan on track?
If you answered YES to all of these
Free Trades Are Great
Robinhood’s greatest innovation was free stock trades, which gave the platform a clear advantage over more traditional brokerages, which often charged several dollars for a trade. Though a number of brokerages now offer free trades, the feature is still mostly closely associated with Robinhood, and it continues to draw new investors to the app.
However, no-fee commissions shouldn’t be a reason to trade constantly. The best way to make money in the stock market is by holding high-quality stocks for a long period of time. There’s a tax advantage in this, as long-term capital gains rates, which require holding an investment for more than a year, are generally lower than short-term rates, which are taxed like ordinary income.
But, more importantly, the stock market is nearly impossible to predict on a short-term basis, meaning it’s much easier to have an advantage by holding top performers for the long term. While it may seem appealing to book a quick 20% gain on a stock that has just jumped, or even take profits after a surge like the one Tesla just experienced, true life-changing gains are made by holding top stocks for decades.
A number of popular names have turned $1,000 into $100,000 or much more over the years, including Netflix, Amazon, and Starbucks. There’s no way to know when stocks like these will break out, and selling them has almost always been a mistake.
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How To Contact Robinhood Support
Like many tech startups, Robinhood was initially not big on phone contact and did not encourage questions by phone as a first option. However, now that the company is publicly traded, theyve significantly ramped up their phone supporter and just announced 24/7 phone support in October 2021.
The below GIF from Robinhoods blog shows the process in real time what it looks like on your phone when you request support:
While you cannot technically call up Robinhood, the system they have in place makes it a much more convenient way to seek phone support than any of their previous offerings. Once you go through the process on the app, it makes it pretty simple to get a call back.
To start, click the the three lines in the top right corner of the page that comes up when you click the icon that looks like a person in the bottom right corner of any page on the Robinhood app. It will then pop up with a menu that has Help as the bottom option. After that, click contact us. If you click I have a different question, you can then be led to a menu of recent stock, options and crypto purchases or a menu of other topics. You click on those purchases, or the menu of topics to choose from. It will then give the option to be contacted by phone or e-mail. After that, you are then put in line to receive a phone call from Robinhood, which they say is a 650 area code telephone number that will call you.
I Wish You Had More Crypto And Coins In General
I would like to invest in some other securities that robinhood doesnt have. I feel you guys are losing clients to this matter. Also, there are some stocks you guys dont allow on the site but are on others. Finally, I wish you guys would make trading extended from 4am-8pm. Again some other brokerages allow that. I feel that these 3 main reasons are holding you guys back alittle when you could have 100 million users instead of where we stand today. Im with you 100%. Two wks ago I was alittle weary and Alot of fellow traders im friends with all started discussing leaving robinhood for other brokerages like webull and ameritrade etc etc again some prob left your brokerage over the squeeze ordeal. I had an issue with it also. I know you guys float money but this should have been thought of before you became a bank pretty much per say. We lost thousands and tens of thousands of dollars off of the retrained that were put on us. Even with crypto. That was alittle outside of character. I understand why but it screwed us when if we were on or with another brokerage per say that wouldnt have happened and Id have another 7-12k or more in my acct. right now. Just giving you the word on the street lol anyway you guys have made your site very easy to use and its all at your fingertips all in all. Thanks and hope this helps. Mike
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