Robinhood Review: Operate In The Market Without Commission

June 8, 2020
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Robinhood is an investment platform that was founded in 2013 with a modern business model that allows it to operate in the market without commission in the exchange of financial instruments. In this Robinhood review, we’ll introduce you to a comprehensive overview of the services and how this platform operates. You will see that Robinhood’s main service is to be a trading platform. Also, you will see that it is possible to have a Cash management account. We will show you the free content that Robinhood offers and you will also see how you could earn up to 500 USD free using Robinhood.

#1 What Is Robinhood

Robinhood is a financial services company that has a modern investment platform that offers the possibility of investing in stocks, options, exchange-traded funds and cryptocurrencies without commissions. Robinhood was founded in 2013 and its goal is to position itself in the young adult and even adolescent market segment

#2 Looking For Services In This Robinhood Review

Robinhood has a friendly platform and an excellent app for smartphones that will allow you to fully exploit the features that the company offers you. You will see in this Robinhood Review that the services offered by the company can be basically grouped into 3 types:

  • Investments
  • Cash management account
  • Free content

Below we will present an entire section for each of these excellent services so you have a clear idea of what Robinhood has to offer.

#3 Robinhood Review: Investments

This is the main service of the platform. The investment service will allow you to trade hundreds of financial instruments such as stocks, options, exchange-traded funds and cryptocurrencies without commissions.

3.1 What Can Be Negotiated

Robinhood Financial currently supports the following assets:

  • U.S. Exchange-Listed Stocks and ETFs.
  • Options Contracts for U.S. Exchange-Listed Stocks and ETFs.
  • Cryptocurrencies: Bitcoin (BTC), Bitcoin Cash (BCH), Bitcoin SV (BSV) or Ethereum (ETH) and more.
  • American depositary receipt (ADR) for over 250 Globally-Listed Companies.

Robinhood Financial currently doesn’t support the following assets:

  • Foreign-Domiciled stocks.
  • Select OTC Equities.
  • Preferred Stocks.
  • Tracking Stocks.
  • Mutual Funds.
  • Bonds and Fixed-Income Trading.
  • Foreign Exchanges.

3.2 Robinhood Review: Account Types

Robinhood offers different types of accounts that will allow you to invest and even borrow so that you can fully exploit all the investment opportunities that come your way.

a) Robinhood Instant

This type of account is the one that every new investor will be able to open when they register on the platform for the first time. With this account, you can invest in hundreds of different types of financial instruments such as stocks, options, exchange-traded funds and cryptocurrencies without paying commissions.

b) Robinhood Gold

The Robinhood Gold account is a premium service that will not only allow you to operate with the same characteristics as the Robinhood Instant account, but you will also be able to access a set of highly interesting services for just 5 USD per month. In this Robinhood review, we’ll show you right away what they are:

b.1) Relevant Information

You will have access to research on hundreds of Nasdaq Level II companies and quotes. Please note that Level II data is unique in that it shows more than the usual bid and ask price quotes but also shows the total depth of all orders in the market, including quantities.

You can try Robinhood Gold for free for the first 30 days. After your free trial ends, you will be charged 5 USD every 30 days at the beginning of your billing cycle. This type of information is really valuable for making the best investment decisions and is not easily accessible in the world of finance.

b.2) Instant Deposit Limits Are Based On Your Balance

The deposit limits will be equal to your investment balance in your account, for example:

  • 50,000 USD instant deposit limit if your wallet value exceeds 50,000 USD
  • 25,000 USD if the value of your portfolio is greater than 25,000 USD
  • 10,000 USD if the value of your portfolio is greater than 10,000 USD

3.3 Margin Account

With a margin account, you can borrow money within the investment platform with the intention of trading financial instruments. This will allow you to take advantage of great investment opportunities in specific instruments that would allow you to generate profits.

Is There A Requirement To Use A Margin Account?

Federal regulations require that you have 2,000 USD in your Robinhood brokerage account and an adequate investment profile to use the margin. Eligibility is determined by asking a few questions about your investment experience, objectives, and risk sensitivity. You can enable margin while in Robinhood Gold.

How Is Margin Interest Calculated?

The first 1,000 USD of margin is included with your 5 USD monthly fee. If you decide to borrow more, you will pay a 5% annual interest on any margin used above 1,000 USD. It is possible that the 5% interest rate will change in the future and will depend on the economic environment.

Your interest is calculated daily on the margin used at the end of the day. The daily interest rate is 5% divided by 360. For example, if you use a margin of 3,000 USD, then the daily amount you will have to pay in interest is 0.28 USD. Next, we show you the calculation:

  • 3,000 USD margin used
  • 1,000 USD included with your monthly fee, leaving 2,000 USD subject to interest
  • (2,000 * 5%) / 360 = 0.28 USD per day.

While you are using the margin account you will accrue interest every day and will be deducted from your account every 30 days at the end of your billing cycle.

#4 Robinhood Review: Cash Management Account

Robinhood offers a Cash Management account that currently pays 0.30% per year for the money in your Robinhood account that you are not investing in the platform. You can also request an international debit card if you want to spend the money that you do not invest. It is important that you consider the following points:

  • Please note that the 0.30% interest is effective March 16, 2020, and may change at any time.
  • Access to the cash management account is currently limited, it will be necessary to register on a waiting list to obtain the service.
  • To access the cash management account or the waiting list, it is necessary to have an approved brokerage account. That is, being approved as an investor in the platform.
Cash Management Account

Robinhood Debit Card

Robinhood will allow you to apply for an international debit card that will be accepted almost anywhere in the world where Mastercard is accepted. You can make purchases in stores or online. You can also use your Robinhood debit card to get cash at any ATM in the network.

  • In order to request the debit card, you must have an investment account at Robinhood.
  • The cash available to use with the Robinhood card is any cash in your brokerage account that you can withdraw or spend.
  • For those with Robinhood Gold and margin enabled, the available cash will include the margin. In a few words, you can transform your debit card into a credit card thanks to the margin account associated with the investment account. You can spend more than you have!
  • You can use your Robinhood debit card 24 hours a day, 7 days a week, as long as you have enough cash available in your brokerage account to cover purchases.

Please note that the platform will also allow you to request a virtual debit card, but you can only use it online and through Apple Pay, Google Pay and Samsung Pay.

Debit Card

#5 Robinhood Review: Free Content

Robinhood also offers very interesting free content. You can find brief market reports on Robinhood Snacks as well as opinion pieces on the blog.

5.1 Blog

We think that the blog is a very useful content space for beginning investors, although any type of investor can take advantage of the content because the reading is very varied. The style of each article is to give answers to specific questions. In fact, all the titles of the articles are questions. Here we add a couple of articles to which you can click if you are interested in reading:

5.2 Robinhood Snacks

Robinhood defines this service as digestible financial news. After subscribing completely free you will receive a small financial newsletter that could be relevant on each investment day.

Robinhood Snacks

#6 This Robinhood Review Also Tells You How To Register

In this section of this Robinhood Review, we will show you the requirements you need to meet and the steps you must take to open an account.

Requirements

To apply for a Robinhood account, you’ll need to meet the following requirements:

  • You only need to be at list 18 years old.
  • Have a valid Social Security Number.
  • Have a legal U.S. residential address within the 50 states or Puerto Rico.
  • Be a U.S. citizen, U.S. permanent resident, or have a valid U.S. visa.

How To Open An Account

What you need to do to open an account

  1. Submit an application in your Robinhood app.
  2. You’ll receive an email within one trading day either confirming your application’s been approved or asking for a little bit more information.
  3. Verify your identity

It is very likely that you will have to verify your identity with some documents. Don’t worry, you will receive instructions on what type of instrument and how to securely upload the information to the platform. Some of the documents that you could request are:

  • Drivers License
  • State I.D
  • Passport Photo Page
  • Bank Statement
  • Social Security Card.

Take into account that all these documents must be uploaded to the mobile app.

#7 Account Security

Robinhood’s security team uses a series of high-level measures to protect your account. For example:

  • Your account password is encrypted using a specialized algorithm.
  • Confidential details, such as your social security number, are encrypted before being stored.
  • Two-factor authentication will allow you to verify your account with something you know (your password) and something you have (your phone).
  • When you log in from a new device, the system will ask you to verify your login by typing in a code that reaches you via text message or email.

#8 Get Up To 500 USD Free In Stocks Through Referrals

The good thing about the new platforms that are in full growth is that they make very good promotions for their members. Robinhood gives you the opportunity to earn up to 500 USD free in stock per year. Yes, Free. Not bad at all, right? At this moment you must be thinking: How? Do not worry. Below in this Robinhood Review, we will show you everything you must do so that you can access this option.

How To Earn Free Stocks

Simply! Invite a friend to join Robinhood and you will receive a free share. Keep in mind that the stock they will give you will be random. That is, you will not be able to choose it and it could be in a price range between 2.50 USD and 200 USD. The more friends you invite, the more shares you will earn. Keep in mind that you can only win up to a maximum of 500 USD in shares for free.

Claim Your Free Stock

It is important to remember that you must claim the reward actions within 60 days.

How To Invite Friends

You can refer your friends to Robinhood directly from your mobile app:

  • Tap the account (person) icon in the bottom right corner.
  • Invite friends, get a free stock card.
  • Tap Invite Contacts.
  • Tap Invite next.

Terms And Conditions Of The Free Stock Bonus

The Robinhood Free Stock Bonus is valid for all guests who effectively become customers. Also:

  • Please note that this does not apply to a current or past Robinhood customer.
  • Bonuses will be credited only if the referred Robinhood account is approved. and the bonus is claimed within 60 days through the Robinhood platform.
  • The free stocks cannot be sold until 2 business days.

#9 Deposits

There are instant deposits that will allow you to immediately use up to 1,000 USD. However, the settlement time for any deposit over 1,000 USD will be up to five business days. That is, any amount greater than 1,000 USD takes time to appear in the account. Additionally, you may transfer up to 50,000 USD per business day to your Robinhood account.

#10 Although Robinhood Is Commission-Free, Some Things Have Costs

It is important to note that the Commission-free is related to the transactions of financial instruments. However, there are some typical costs in this sector. For example:

  • Returned Check, ACH, Wire & Recall/Stop Payments: 9 USD
  • Domestic Wire Transfer: 25 USD
  • International Wire Transfer: 50 USD
  • Per $1,000,000 of principal (sells only): 22.10 USD
  • Paper Statements: 5 USD
  • Paper Confirms: 2 USD

#11 Registration

It is important that you take into account that in order to join this service you must download the app on your cell phone. Then, you must fill all the fields with your information to open the trading accounts

After you register in the app, you can log in to the web platform with your email and password

Robinhood: Registration

#12 Robinhood Review: Pros And Cons

It is time for us to group what we think can be exploited from this Robinhood Review and also what could be better:

Pros

  • Commission-free.
  • Market news notifications.
  • No minimum deposit is required to open an account.
  • It has a blog with free content.
  • There is a great diversity of financial instruments.
  • It is possible to earn interest thanks to the cash management account.
  • Having an international debit card sounds great.
  • It is possible to borrow money with the margin account.

Cons

  • Stock quotes can be seen only with basic charts.
  • Does not have powerful technical analysis tools. If you decide to invest with Robinhood, it is necessary that you have other programs that allow you to optimize your analysis.
  • There are no calculation tools to analyze investments.
  • They can only be invested with individual capital. It is not possible to invest in retirement accounts or company accounts.
  • There is no test account with fake money to check the movement of quotes on the platform.
  • There are no seminars or videos on market analysis. This aspect is very useful and common in investment platforms.

Take into consideration that you should complement your investment ideas with the recommendations of a qualified advisor. Indeed, we suggest our post “Capitalist Exploits: A Measured Approach To Achieving Asymmetric Returns”. In it, we cover the type of content and services, how it works and in which markets they recommend you invest in.

Robinhood Review in A Nutshell

Throughout this Robinhood review, we have talked a lot about the features of this new platform that offers the possibility of trading financial instruments without commissions. In addition, Robinhood offers a margin account that will allow you to invest amounts greater than the capital you have.

We think the blog is interesting. Although the blog does not offer content for expert investors, it does offer interesting topics that can be exploited by leading investors. We find it very interesting that Robinhood offers a Cash Management account that currently pays 0.30% per year for the money in your Robinhood account that you are not investing in the platform.t. It also seems relevant to us that you can request an international debit card and that you can also use the loan from the margin account.

You should be aware that Robinhood is a relatively new platform and is still in expansion and consolidation. So there is still room for some things to be improved. For example, the platform could offer more powerful analytics tools, the ability to open retirement accounts, and even offer financial reporting.

Robinhood offers you several financial services that are very relevant. If you want to trade without commissions, earn interest for the money you have in your account while you wait for the best market opportunities to invest it or you need an international debit card, we think that the best option is Robinhood

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