If you notice how much fees & trading commissions impact your overall portfolio returns, then you’re not alone. One of the easiest ways to boost your portfolio return is to decrease the amount of fees you pay. It’s simple yet most investors don’t give it much thought.
For example, let’s say you trade with Fidelity (I have a Fidelity SEP IRA) and you buy 1 share of Apple stock at $190. Fidelity charges a $4.95 trading commissions so you end up paying $194.95 to execute the trade. You’re already down 3% on this position from the beginning. This is the worst part about paying commissions. You need to gain a couple percentage points just to break even.
What if there was a way to buy stocks without entering the position at a loss? Enter Robinhood, the world’s largest commission free broker with over 6 million users and counting.
In this review, I’m going to cover everything you need to know about Robinhood and show you how to open your account for free.
What is Robinhood?
Robinhood is a revolutionary commission-free stock, ETF and cryptocurrency trading app for investors who want to save money on trading fees and grow a substantial equity portfolio over time.
The company was founded in 2013 by Vladimir Tenev and Baiju Bhatt who were upset at the current broker options available to the average investor.
The app is used mostly by millennial investors who are new to investing and want to grow their portfolio over time. However, I think all investors can benefit from zero cost stock trades because that extra money saved on fees can be reinvested in your portfolio and will boost your overall return,
I’ve been using Robinhood app for over 1 month and will cover everything in-depth in this Robinhood App review. You can also follow my journey to a $100k Robinhood portfolio by checking out my Youtube videos and hitting the subscribe button
Robinhood Benefits: Why Should You Use It?
The biggest benefit in my opinion is the commission free stock, ETF, REIT and cryptocurrency trades. Most full service brokerages charge a trading commission because they offer 24/7 customer support, have big offices and thousands of staff salaries to pay.
Robinhood doesn’t have any 24/7 customer support or brick and mortar brokerage branches. The company is mostly based online, which allows them to keep overhead costs down and offer zero fee trades to their customers.
Opening a Robinhood Account
Robinhood app is a wonderful free stock trading app but it’s only available to US citizens, US permanent residents or aliens with a valid US visa.
To apply for a Robinhood account, you will need the following:
- Over 18 years of age
- Have a valid Social security number
- Have a legal US address
The signup process is simple and easy but before you sign up, use this link to get a free share of stock as a gift. If you use this link, we both get a free share of stock.
Fill out the application and link your bank account to make your first deposit into your Robinhood account.
Navigating the Mobile App & Website
Once you submit your application, you’ll be taken to the main mobile app dashboard. You can view your account balance, watchlist, holdings and notifications on the main page.
On the second page, you can search for stocks by ticker symbol or classification. Robinhood organizes thousands of stocks into categories based on price, industry and popularity.
The trading experience is very smooth. You can enter a trade to buy or sell a stock or trade options if you have options trading enabled. Enter the number of shares and choose your order type from: Market, Limit, Stop Loss or Stop limit. Market trades get executed immediately while limit trades are more safe if the stock is experiencing extreme volatility. Robinhood requires you to have at least a 5% premium on limit trades so you may have to deposit more money if you don’t have the extra 5%.
Once you enter your trade, you simply swipe up to place the trade. Robinhood does a good job of trying to enter your trade at the lowest price and I’ve luckily bought several stocks at their 52 week low dips thanks to Robinhood.
Range of Offerings
Robinhood only offers stocks, several ETFs, REITs, cryptocurrencies and options trading. You cannot open an IRA, short stocks, buy mutual funds or bonds using the app. They lack a lot of full service brokerage features in order to offer free stock trades to their customers.
Mobile App Design & Usability
The mobile app is well designed and easy to use. I enjoy browsing through dozens of stocks each day and I find it simple to research new stocks I never heard of using the Browse tool.
In the Browse section, you can review the “Top Movers”, popular collections of stocks, or even read headlines from major news sources like MarketWatch, CNBC, and Yahoo! Finance.
What is Robinhood Gold?
Robinhood Gold is the premium upgrade for select users who want access to increased benefits like:
- In-depth Morningstar Research Reports
- Bigger Instant Deposits
- Access to Margin Investing
There are different pricing tiers depending on your account size and desired instant deposit limit:
Do Robinhood offer fractional shares?
No. You cannot purchase fractional shares using Robinhood app. M1Finance and StashInvest are good alternatives for buying fractional shares.
Is Robinhood a brokerage?
Robinhood Financial is an SEC-registered broker-dealer.