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.
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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.
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.
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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
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.
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