Is Robinhood a legit investing app?
Robinhood (HOOD) is a popular financial services company with 10.3 million monthly active users (MAU) as of November 2023. 1 It's considered a safe option for investors' securities and cash for various reasons: Robinhood is a member of the Securities Investor Protection Corp.
Our Verdict. Robinhood has become one of the most popular brokerages in the U.S., thanks largely to its easy-to-use trading app that can make investing appear very simple. For some investors, this makes it a good choice—but there are reasons to be wary of any platform that treats markets almost like a game.
No mutual funds or bonds: The lack of mutual funds and bonds may make it difficult to build a truly diversified portfolio. Customers can only access bonds via bond ETFs. Limited customer support: Robinhood has made noticeable improvements to its customer service, but it's still not on par with other brokerages.
Your securities and cash are protected by SIPC
Robinhood Financial LLC and Robinhood Securities, LLC are both members of SIPC, which protects securities for customers of its members up to $500,000 (including $250,000 for claims for cash).
There are two main ways to make money on Robinhood: Buy and sell stocks or other assets at a higher price than you bought them for. This is known as capital gains. Earn dividends on stocks you own.
At Robinhood, we aim to cut all the fees we can. This means that for Cash Management, we don't charge: Maintenance fees: We don't charge fees to open, close, or maintain an individual investing account.
- Best Overall: Fidelity.
- Best for Low Costs: Fidelity.
- Best for Beginners: Charles Schwab.
- Best for Advanced Traders: Interactive Brokers.
- Best for ETFs: Fidelity.
- Best for Options Trading: tastytrade.
- Best for International Trading: Interactive Brokers.
For instance, Robinhood is a very sleek and minimal application, and investor tools are rudimentary compared with those of other major brokerages like Charles Schwab and E*Trade. This can lead to hasty and uninformed decision-making, especially for novice investors.
Standard bank transfer: No fee for withdrawals. External debit card account: Withdrawals have up to a 1.75% fee based on the amount being transferred out. You'll see the calculated fee when you initiate the withdrawal, so you'll know the amount up front.
- Go into your Cash tab.
- Tap Transfer.
- Tap Transfer to Your Bank.
- Select the external bank account you want to move funds to.
- Input the amount you want to transfer to your bank.
Can I trust Robinhood with my bank account?
Yes, it's fairly safe to enter your bank account login info in the Robinhood app. Many people are alarmed that Robinhood asks for your bank login info when you attempt to link a bank account, and they wonder if it's safe to give Robinhood this information. The information, however, is not being requested by Robinhood.
If you're interested in investing in Robinhood, or in any other individual stock, consider keeping the amount to a small portion of your overall portfolio, financial advisors suggest 5% to 10%. It's also a good rule of thumb to invest only an amount you won't need for the foreseeable future, say five years.
Robinhood requests personal information, including financial and tax identification information, in order to comply with U.S. government laws and FINRA rules. We'll request personal information from both new customers and long-standing customers.
If you sell any stock using Robinhood, you must report this and pay taxes on the gains. Sometimes Robinhood gives away free stocks for referring a friend or creating an account. If the value of the stock exceeds $600, you'll need to report this to the IRS.
Some of the best stocks to buy on Robinhood for beginners include Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and The Walt Disney Company (NYSE:DIS). A closer look at the business of these firms demonstrates their competitive edge.
The best Robinhood alternatives are Webull, TradeStation and Coinbase. Robinhood faced scrutiny from its users in early 2021 relating to the GameStop fiasco (that started on Benzinga Live). This sent many looking for an alternative.
We charge a $100 fee for a partial or full ACATS out of Robinhood. Currently, fractional security shares with RHF and crypto held with RHC aren't transferable to other brokerages.
For US customers, we're generally not required to withhold taxes on proceeds, such as from sales, interest, and dividends. If you don't certify your tax status, you may be subject to backup withholding.
Fidelity offers several advanced trading features that are absent from Robinhood's platform. You can trade OTC penny stocks and engage in short selling. Robinhood does not offer OTC penny stock trading or short selling.
- Ally Invest.
- E-Trade Financial.
- Firstrade.
- Firstrade.
- Webull.
- Merrill Edge.
- SoFi Active Investing.
- Robinhood.
Which trading is best for beginners?
Overview: Swing trading is an excellent starting point for beginners. It strikes a balance between the fast-paced day trading and long-term investing.
- Webull.
- J.P. Morgan Self-Directed Investing.
- Robinhood.
- SoFi Active Investing.
- E*TRADE.
- Ally Invest.
- Firstrade.
- Public.
The Massachusetts Security Division claims the company violated state laws and exposed investors to "unnecessary trading risk." Broker-dealers are supposed to act "in their clients' best interest." The trading platform provides incentives for frequent use and churning of accounts allowing those with limited or no ...
When Robinhood could not clear its sales, it suspended the sale of GME and other heavily shorted securities and cryptocurrencies, alongside other trading platforms. Robinhood's traders allege that the platform participated in market manipulation.
So who is John Freund? For someone that's Warren Buffett's broker, he's got a pretty low online presence -- spare video interviews on being: Buffett's broker. (When asked how he managed to become the broker to the legendary Buffett, Freund answers humbly: "By luck.")
