What is the Robinhood app?

The Robinhood app is a trading and investment app aimed at beginner investors who want to try out the market. Here’s how it works.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image of person checking their shares portfolio on mobile phone and computer

Image source: Getty Images.

The Robinhood app is a trading and investing app aimed at beginner investors wanting to try out the market. Originally famous for being the first trading platform to charge no commissions on stocks and options, Robinhood is also very user-friendly and offers a streamlined trading experience.

Robinhood also has a website interface that you can use for trading and to access your account.

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

[top_pitch]

Who is the app for?

As of 2020, Robinhood had over 13 million users, making it one of the most popular investment tools in the market.

The Robinhood app is perfect for young people, newcomers to investing, and cost-conscious investors wanting to try their hand at investing without fees. According to the New York Times, Robinhood’s average customer is in their 30s and is likely to have never invested before or know much about the stock market.

Because the app doesn’t require a minimum investment, it’s also a good choice for people who prefer small investments. Robinhood users can trade fractional shares, investing just a few dollars if that’s all they can afford.

Costs

Robinhood’s claim to fame is that it was the first investment app to charge no commissions on trading. There are now other free trading apps available, but Robinhood remains an attractive option. There’s no balance requirement for Robinhood and users aren’t penalised for not doing any trades over a certain period of time.

For those who want more data, the app offers a Robinhood Gold option. For $5 per month, users get access to market data, instant transfers, trading on margin and other premium features. You can try Gold for free for a month to see if it’s the right choice for you.

Stock and ETF trading

As a Robinhood user, you can trade US stocks, exchange-traded funds (ETFs) and American depositary receipts (ADRs) for over 650 global companies.

You can also trade cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH) and Litecoin (LTC). While you can’t buy gold or silver directly through Robinhood, you can invest in gold stocks and securities. 

The app doesn’t support mutual funds, select over-the-counter equities, bonds, closed-end funds and limited partnerships.

[middle_pitch]

Benefits of using Robinhood

Traders who don’t want to pay fees or just want to dip their toes into the market can benefit from a simple app like Robinhood. Benefits of using the app include:

  • Easy trading with real-time market data and news to help you understand the market
  • Cutting-edge security to protect your personal information and investments at all times
  • No account minimum, so you can start investing no matter your budget
  • Great features for beginners who want control over their investments and have the time and energy to spend on it

Drawbacks

No app is perfect, and the Robinhood app has its limitations:

  • Without an advisor to help you make investment choices, it’s up to you to learn where and how to invest. You’ll have to research how to diversify your portfolio, when to buy and sell, and how to invest based on your goals. 
  • Limited securities for your portfolio. Because things like bonds and mutual funds aren’t supported, your portfolio won’t be as diversified as it would be if you invested through your bank or with the help of a financial advisor.
  • Limited customer support and only through email. This means no phone calls and no immediate responses to your questions or concerns.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

More on Personal Finance

Note paper with question mark on orange background
Personal Finance

Should you invest your ISA in a model portfolio?

Which model ISA portfolios offer both high performance and low fees? Hargreaves Lansdown, Interactive Investor and AJ Bell go under…

Read more »

Economic Uncertainty Ahead Sign With Stormy Background
Personal Finance

Is it time to exit emerging markets investments?

Investors may well be sitting on losses from emerging markets funds. Is it worth keeping the faith for a sustained…

Read more »

Personal Finance

Share trading? Three shares with turnaround potential

Share trading has been difficult in 2022, but which companies have turnaround potential? Jo Groves takes a closer look at…

Read more »

Man using credit card and smartphone for purchasing goods online.
Personal Finance

Revealed! Why Gen Z may be the savviest generation when it comes to credit cards

New research reveals that Gen Z may be the most astute when it comes to credit cards. But why? And…

Read more »

Environmental technology concept.
Personal Finance

The 10 best-performing sectors for ISA investors

The best-performing sectors over the past year invested in real assets such as infrastructure, but is this trend set to…

Read more »

Road sign warning of a risk ahead
Personal Finance

Recession risk ‘on the rise’: is it time for investors to worry?

A major global bank has suggested the risk of a recession in the UK is 'on the rise'. So, should…

Read more »

pensive bearded business man sitting on chair looking out of the window
Personal Finance

1 in 4 cutting back on investments amid cost of living crisis

New research shows one in four investors have cut back on their investing contributions to cope with the rising cost…

Read more »

Image of person checking their shares portfolio on mobile phone and computer
Personal Finance

The 10 most popular stocks among UK investors so far this year

As the new tax year kicks off, here's a look at some of the most popular stocks among UK investors…

Read more »