Robinhood has changed the way everyday Americans invest — but is it really as easy and rewarding as it looks?
Investing in stocks is quite different in the US than other countries. Most trading platforms in the US are now commission free.
It wasn’t always that way. In 2015 Robinhood launched its product with zero-commission trading. Since then most big brokers got rid of their fees — which used to be around $5-10 per stock/ETF trade.
I personally use Robinhood for a lot of trading, but over the years I’ve realized that single stock trading is too exhausting and I prefer focusing on a few indexes and ETFs.
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This year Robinhood has also introduced a feature that will automatically recommend investments for you called Robinhood Strategies.
Features I Use
I use Robinhood because it offers a high-yield savings account, stock trading and an IRA. On the IRA Robinhood even offers a 3% match for each dollar contributed for Gold subscribers, which I haven’t seen any other IRA offer. (This is separate from 401k matches employers often do.)
One thing I wish I had known sooner is that I can have an IRA, even if I already have a 401k through work!
I don’t use Robinhood’s crypto currency management features, as I just don’t care much about them..
Thoughts on Robinhood Gold (Subscription)
While a lot features of Robinhood are free, their $50/year Gold subscription offers Morningstar reports, a higher savings interest rate and additional market data.
Robinhood also introduced a credit card for Gold subscribers (referral link).
I find that this subscription pays for itself in my case even if I just use Robinhood as a savings account. And it usually is among the highest interest returning saving accounts when comparing Robinhood’s interest rate with other high yield savings accounts.
I personally don’t use margin investing – a method where Robinhood lends the Gold subscriber money – as I don’t like investing money that isn’t mine — it keeps my risk under control and helps me sleep at night. Leave a comment on what you do?
My Investing Approach
That’s a personal question and I can’t quite tell you what to do. My approach is to use individual stock trading with money that I won’t need in the near future and I don’t worry too much if the company I invest in performs poorly short term — I’ll check if I still believe in its future, long term prospects and most of the time just wait for it to bounce back. There’s a lot of periodic volatility, that I try to not let get to me.
I definitely don’t recommend doing individual stock trading if you get very nervous if there’s a downturn, those do happen!
What has worked well for me, is to invest in index funds or ETF’s like VTI (Vanguard Total Stock Market ETF) that invest across the broad US market and a few companies like Apple that I believe in. Ultimately, I try to not invest too much into one particular company, and using index funds/ETF’s is what seems to work for me.
Robinhood Strategies will assess a user’s risk tolerance and make custom recommendations based on a user’s personal preferences.
How Do I Start?
First of all, look at where you currently have your money. Consider if it’s too scattered among too many platforms or if you prefer it this way.
All brokers and banks have seasonal bonus offers for signing up, so be on the lookout for those on sites like Nerdwallet and make sure you understand the signup terms and conditions and that it’s a legit broker/bank.
If you like Robinhood, consider using my referral link to sign up, which should give us both a small bonus.
If you already use Robinhood but are curious about the gold subscription, consider using this link to upgrade to Robinhood Gold and join their credit card waitlist.
You can find more referral links of products that I use here.
Have you tried Robinhood or another investing platform? Share your experience in the comments — I’d love to hear what’s worked (or hasn’t) for you!
Also published on Medium.