Robinhood is an investing app that boasts free stock trades, low account minimums, and an easy to use interface. I’ve been interested in getting in to dividend growth investing and individual stocks and have been using Robinhood for a couple weeks now to dip my toe in the water.
Before we start, here are some helpful links to things that may not be covered in this article, but are important to know before creating an account.
Remember that this is a review of a taxable investment account, which means any activity with Robinhood will affect your tax situation. Please make sure you understand the implications of taxable investing on your finances.
Signing up for a Robinhood account only takes a few minutes through the app or online (I signed up online). After submitting the standard personal information you can sync a bank account you want to make transfers from. However instead of submitting routing and account numbers you simply provide your online banking login information, which might make some folks uncomfortable. I decided to go with an opening deposit of $100.
A few minutes later I received an email that my funds were immediately available and I was ready to go.
Note: While you can sign up for an account online, any activity after the initial investment has to be done through the app, so keep that in mind.
The main screen is simple and well designed with options and account info in a slide out menu to the left. From this screen you can also set up automatic deposits, however I wish there was an option for every 2 weeks as my paydays don’t fall on the same dates.
Making a purchase is simple – either select a stock from the list below or perform a search. After a little reading (thanks to Jason Fieber!) I settled on CVS. You get a graph of recent performance intervals, with the color changing from green to red (or vice versa) based on how the stock has done. I submitted my order (note: remember this is a regular brokerage account so you can’t purchase fractions of shares. I was able to buy 1 share of CVS with my $100 opening deposit and was left with $13.69 in “buying power”, aka available cash.)
Once you have some stocks in your account, your home screen will display a graph with your overall account performance. Scroll a little lower and you can see how your individual stocks have done.
The home screen also comes with a “watchlist” where you can pin stocks you want to keep an eye on. I decided to remove all the pre-loaded ones and pinned a selection of “Dogs of the Dow” stocks.
While I’m pretty limited with only $100 to invest I did find the process of looking at stocks and actually buying something a little bit addictive. The combination of it being incredibly simple and cost effective makes you want to use it more. A major barrier to investing in individual stocks is the commission or fee – if a trade is going to cost you a few dollars you want to make sure you have enough money to invest to make it worth your while. Robinhood makes it easy to get started right away and build up your account over time.
There’s a lot to consider if you’re interested in getting into individual stocks – tax implications, how much risk you’re willing to take, your financial goals and health – and Robinhood doesn’t make all of that go away. But no service could. For most people, automatic transfers into index funds are going to be their best option. I personally have one fund in both my IRA and 401k, and they’re both stock market index funds. I like that that part of my financial life is boring.
But I’m also really interested in learning more about things like dividend growth investing or just the stock market in general. And Robinhood makes it possible for me to experiment in those areas without finding $3000 or transferring over my IRA. There aren’t commissions to worry about, I don’t need to plan out a $1000 deposit to make the fees worthwhile, and as a tool Robinhood is well designed and really easy to use. I think it’s a great option for beginners who want to dip their toe into regular stock investing. More advanced users can pay $10 a month for Robinhood Gold which has options like after hours trading and instant investing. I think the basic app (which I’ll remind you is free) is perfect for most people.
And for all I love about Robinhood’s simplicity, there’s still things that you need to do outside of the app – besides performance charts and links to recent company news, most research on stocks is probably best done on the internet. Which I like (and others who are looking for a more robust trading app may not like), because it establishes the app as a tool that does one thing really really well.
There’s also the concept of managing a complex financial account on a smartphone. I wrote a few weeks ago about how fintech is changing our lives and a big part of that is mobile money management. I’m a little old school in that I prefer using a big bulky desktop computer at an actual wooden desk for most things. As I mentioned in the beginning, Robinhood doesn’t have a web interface beyond the sign up process and even though I use a lot of financial apps they all have some sort of web interface, which somehow makes me feel like they’re more “real”. I know there’s 100 actual dollars (well, actual invested dollars) in my Robinhood account, but it feels separated from the rest of my finances and more like an experiment at this point than an actual part of my financial picture.
Perhaps as the account grows the money in it will start to feel more real. Or maybe it’s just a little weird for those of us who still do a majority of their computing on, well, a computer.
You can sign up for a Robinhood account here, and this blog will get a little bit of money!
Note: This post contains some affiliate links. I only post links to products or services I personally use or have tried and think will be helpful to someone. Thank you for reading!
Readers, what is your experience with Robinhood? Are there similar apps in your opinion that are better?