Robin Hood is a free-trading app that allows investors to trade stocks, exchange traded funds, and cryptocurrencies without the need to pay any commission. This app is a solid option for most of users, and currently, it is one of the few brokers that offer the investors an opportunity to trade in cryptocurrency. Moreover, it offers both mobile and web trading to its users. Therefore, it is best suited for the new investors who want to invest small quantities since its simplicity makes both the app and the web easy to use. On the other hand, when an investor is cost-conscious, the zero changing commission will always appeal to them by offering various services at the lowest price possible.
Commissions: One of the advantages of the Robinhood is the trading cost, which tends to be very low. Robin hood’s commitment to providing 100% commission-free stock, options, ETF, and cryptocurrency trades is admirable by a number of users, and the savings for investors who trade frequently is significant. Additionally, the cryptocurrency trades can also be placed in small quantities favoring small investors.
Ease of use: It is very simple and easy to use. When investors want to use their phone, it is very easy to sign up, and within a matter of minutes, one can access the services. Robinhood uses instant verification with most of the banks; thus, sparing uses the hassle of reporting to an account for verification. Bank transfers of up to $1,000 are available instantly for investing, while those above takes four to five business days to process. Additionally, it is possible for the users to automatic deposits in their favorable schedule.
High-yield savings: Robinhood offers a cash management account that comes with a free ATM and debit card from more than 75,000 ATMs. This allows its users to attain high yield savings.
Less research and resources: There is little research and resources available. Therefore, a new investor who is dedicated to improving their trading skills will outgrow the resources provided. It will eventually limit their growth, creating the need to search for more apps in the market.
Limited securities: Robinhood has limited securities; thus, the mutual funds and bonds aren’t supported. In this, it lacks an automatic dividend reinvestment program for the users. This means that; the dividends are credited to accounts as cash instead of being reinvested as securities. Although the company hopes to offer more features in the future, there are other apps available that attracts the Robinhood users. On the other hand, you can have much if you are not paying.
One account option: Robinhood limits its user from having multiple accounts. For investing, it only supports one account, which is an individual’s taxable account, which means it is not a full-service brokerage. This is difficult since, for most investors, investing through a taxable brokerage account comes only after they have invested 10% to 15% of their income for retirement in a tax-advantaged account like a 401(k) and such.
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