Robinhood Investment App: An Investing Game Changer

Robinhood Investment App: A Brief History

The Robinhood investment app, which officially launched in March 2015, has been a game changer in the online discount brokerage world. Since its launch, the Robinhood app has allowed users to invest commission-free in individual companies or ETFs (bundles of investments), without account or trade minimums. This helped level the playing field for investors and forced competitors like FidelityTD AmeritradeSchwab, and E*Trade to all gradually lower their trading fees, and recently eliminate them.

In 2016 Robinhood rolled out Gold for $5/month. Robinhood Gold gives investors access to professional research reports from Morningstar, bigger instant deposits, level II data (real time bids and asks), and the ability to trade on margin (extra buying power via leverage). Then in 2017 Robinhood rolled out free options trading and in 2018 it rolled out free crypto currency trading (e.g. Bitcoin, Ethereum, Dogecoin, etc.).

Robinhood Investing

Robinhood Investment App: New Products & Features

Robinhood is currently rolling out 3 new products/features which make it an even more compelling option:

  1. Cash Management – Allows you to earn 1.80%* APY (yield as of 1/31/2020) on your uninvested cash and includes a Robinhood debit card that can be used anywhere Mastercard® is accepted, including 75,000+ free ATMs. There are no account minimums, no transfer fees, and no foreign transaction fees. Also, your cash is eligible for FDIC insurance up to a total of $1.25 million.
  2. Fractional Shares – Allows you to buy partial (fraction) shares of stocks or ETFs. This gives smaller investors the ability to invest in Amazon, Google, or Berkshire Hathaway, even if a full share price is out of reach. It also gives investors more flexibility, allowing them to better diversify their portfolio, and reduce risk. Fractional shares also help with dollar-cost averaging by allowing investors to scale into positions and reinvest dividends.
  3. Dividend Reinvestment (DRIP) – Allows you to reinvest your dividends, which helps with dollar-cost averaging and the accumulation of more shares over time. Dividend reinvestment functionality will be supported in early 2020 after the full rollout of fractional shares.

Recommendation

I have been using the Robinhood investment app since it’s launch for my taxable stock trading and dividend investing portfolio. I really like its clean and user-friendly interface, strong security, fast money movement, solid trade execution, and low cost. With the rollout of cash management, fractional shares, and dividend reinvestment, I like it even better and will move more of my portfolio over to Robinhood. I’m hoping that the next enhancements to come are advanced charting and better portfolio and performance summaries.

Robinhood Investor

If you’re interested in Robinhood, you can get a free share of stock if you sign up with my link! You don’t need any money in your account to get your free stock. You have a 1 in 150 chance of getting Facebook (FB), Microsoft (MSFT), or JPMorgan Chase (JPM) and a 1 in 40 chance of getting GE (GE), Ford (F), or Energy Transfer (ETP).

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