The Robinhood investing app is undeniably one of the most talked about investment platforms.
Whether you are a beginner or veteran, it has something to offer for everyone.
Perhaps the most talked about feature is the zero commission per trade.
Unlike a lot of other options, it is not just a promise to woo customers.
There are no hidden charges or pre-condition.
You don’t even need a minimum balance to take advantage of the trading discount.
This is a specialized and discounted online brokerage platform developed specially for those not so confident to take on the market.
Somehow the mention of the name Robinhood stirs up images of one of the best known Samaritans of the modern world.
Well, don’t be alarmed now!
This app will not teach you how to steal from the markets.
But it surely does empower you with knowledge and understanding to make your mark in the market.
If you are new to the market, there is nothing to worry.
Robinhood will guide you through the nooks and crannies of the market and ensure profitability.
This is all about empowering average investors to make it big in the stock markets.
Whether you are looking at stocks, ETFs or what have you, Robinhood is there to serve all your needs.
But it is still a largely mobile based brokerage firm.
That is how they manage to keep a tab on the relative cost factor.
They do not have overhead expenses for managing expensive offices.
That leads to a huge saving, and that directly translates into lower expenses for customers who use the service.
But is the Robinhood investing app appropriate for you?
Here is a quick review.
Tracking the Robinhood Investing App Story
A quick search on the internet will tell you all about how Robinhood helps you trade for free.
The company does not charge any trading fee for stock trading, we all know about it.
This is essentially a venture-backed brokerage with an online presence.
Founded in 2013, they have raised more than $175 million so far.
It is as best described as a 0 commission trade no frills investing app.
The whole trading experience is streamlined to support the 0 commission promise.
The founders, Vlad Tenev & Baiju Bhatt focused primarily on a low-cost trading module.
But that has often raised concerns about efficiency and safety.
Like all other investing apps, Robinhood too is a SEC regulated option.
But the reality is starting an investment business from the scratch can be an expensive affair.
The reason why Robinhood manages is through a system of effective omission of many features.
It offers buying opportunity for listed securities like Apple and Amazon.
It also has a stop loss and limit order options, but in comparison to a full-service broker, there are many elements missing.
The core structure is intact, but it’s overall advanced order offerings are limited.
The idea is that these are expensive and used by limited investors.
A majority of their customers still comprise of those who undertake only basic trading.
It does not offer IRAs, DRIPS or other related banking services.
So in many ways, it is not a full-service brokerage.
Imagine it to a no-frill bank account.
You can open an account and withdraw money, but you do not have access to credit cards, debit cards or other amenities.
The same can be said about the Robinhood platform.
The main focus is providing a cheap and convenient trading experience to investors.
The Value for Money Perspective
The Robinhood investing app champions the cause of low priced value-based investment.
They keep the investing app as lean as possible.
That means that you get the maximum monetary advantage while you are investing in them.
It brings about a clearly well-structured margin based concept that is also easy on the pocket.
The final objective is offering the cheapest possible trading service to investors.
Though the range of options is narrow, you get a set of focused securities to invest in.
The app is mainly based on stock and ETF investment.
They do not charge commission on in-application trades.
Moreover, they have also tweaked the conventional margin framework.
This has helped users in clocking better profit and spending less for investments.
So users don’t have to pay any kind of annual interest rate.
This is, in fact, the most confusing element for new investors.
It is at time so overwhelming that it impacts their trading decisions too.
Instead, the Robinhood investing app has broken down the annual rate to monthly fees.
That too the monthly fees is a flat rate determined on the basis of the total equity in the account and money borrowed.
So this is one of the key factors that encourage small investors to take loans at times.
The loans are also offered in a tiered structure.
So the margins on the loans are much smaller than the conventional one.
As a result, their margin rates are amongst the most competitive ones in the market.
The ultimate objective is to keep the cost as minimum as possible.
This gives confidence to a lot small and new investors to take the plunge in the market.
They are filled with a sense of confidence in terms of approaching the market and locking gains.
Analyzing the Robinhood Fee Structure
The first aspect that deserves attention is, therefore, the Robinhood Fee Structure.
You have to give it to the company for keeping its promise of stock trading at 0 cost.
Traders also do not have to maintain a minimum account balance.
Instead, it is looking at a series of other conventional and not so conventional methods to realize revenue.
The Robinhood Gold is one such initiative to cover the cost.
It primarily is a high-end margin service.
The pricing depends on how much margin the customer is looking to garner.
At the lower end of the spectrum, investors have to shell out $6 every month.
This enables them to use as much as $1,000 margin.
This, therefore, gives them a far greater buying power than relying on sheer cash balance.
But the fees charged for the margin trading facilities is little different from how other brokers operate.
This is what makes this margin trade a profitable and revenue generating venture for them.
This online investing app also enables immediate fund transfer facilities.
Normally the funds are processed in three days in conventional Robinhood accounts.
But in case of Robinhood gold, you can take advantage of it almost immediately.
You can start using it almost as soon it is deposited.
But you must remember Robinhood operates in an eco-system that has Merrill Edge, Fidelity and Charles Schwab.
Not only are these more established names but they are also full-service brokers.
Therefore Robinhood may not be their first choice in any case.
The target audience for this investing app is predominantly beginners and those new to investing.
They are afraid to commit a lot of cash.
The gamut of trading options may also overwhelm them.
So Robinhood offers them a straightforward and rather inexpensive trading option.
Championing Straightforward Investing
Robinhood may be a no frill investing app.
It charges 0 fees for trading and as a result has to make do with some facilities of a full-service broker.
But that does not mean that the users are left high and dry in terms of efficiency.
It is all about keeping your trade simple and effective.
That ensures that appeal and demand for this continue despite some obvious misses.
These features play an important role in keeping the broad demand cycle for Robinhood investing app intact.
So if you rely heavily on market data or want all your trading tools in one place, this is not for you.
This is not the ideal platform for those looking to day trade or data seekers.
Your research and backtesting facilities too are nearly absent in this.
There are some special cases in which day trading is allowed.
If you have about $25000 in your account, you can go ahead and day trade.
The list of features in this investing app is directed entirely to new users.
It is about how you can start trading without investing a whole lot of money and resources.
Research is one aspect that is severely lacking in this investing app.
Beginners also need a significant research at times to get started.
They have to understand the sectors they can start with.
But all of this information has to be sourced from other research apps or websites.
But this app has a unique built-in consumer protection system.
This enables new and inexperienced investors to avoid risky investments.
But this same protection system may be a bad idea for those who want to trade the volatility and price swing.
So the investment objective plays a crucial role in deciding for or against this app.
Mobile Trading App No Desktop Presence
The Robinhood investing app is a primarily mobile app.
They do not have any desktop presence.
The app works equally effectively on Android and iOS systems.
So whatever phone you may have, this app will run efficiently on it.
The mobile app has a simple and easy to use interface.
That means it is extremely intuitive and enhances the overall trading abilities.
It is convenient and user-friendly.
But if you want to catch up on any news based triggers or stock tips, you have to look for other avenues.
But then again the fact that it is simple to use means a great percentage of new users can access it easily.
They will not face any problem in learning to navigate through this.
The process of logging in, opening a new account and new trading is spelt out.
That means even if this is the first time that you are setting up an app, it should not pose any problem for you.
There are step by step instructions that simplify the complex trading processes.
All kind of help matter and customer convenience matters are just a click away.
That means if you get stuck mid-way, help is just a few clicks away.
You even have the option of transferring stocks from a separate brokerage account to Robinhood.
To maintain a regular flow of funds in your account, you can also link it to a recurring deposit.
You can log on to the app quite simply using your fingerprint after setting up the initial account.
Though this is a minor feature, it can often be a great advantage in enabling faster trades.
Speed is primary for executing effective and profitable trade at times.
This also ensures a higher degree of security for the users.
What’s not so great about Robinhood Investing App?
The simplicity of the Robinhood investing app is considered to be its biggest advantage.
This is what has made the investing app extremely approachable and opens up many opportunities.
But the same simplicity is often a hindrance for many looking to take advantage of zero trading fees.
The complete lack of any research tool is a limiting factor for advanced traders.
They normally trade stocks on the go as soon as there is news trigger.
If they used Robinhood investing app, they have to rely on other sources for getting the same news.
Compared to a host of investing apps that offer a one-stop destination for all services, this becomes a limiting factor.
Traders who use this investing app are therefore unable to capitalize on advanced strategies.
This app is still very basin in terms of its service offerings.
Though the Robinhood Gold seeks to offer some redressal on this issue, the question is this sufficient?
The premium segment that the Robinhood Gold is targeting has a host of full-service brokers with equally effective online and mobile apps.
The point is how wise it will be to compromise the comfort of all information in one go compared to cheap trading.
The incremental costs involved in using the Robinhood investing app also need to be considered.
It is never about just one factor affecting the cost.
The amount of expenses involved in opting for this and many other supporting apps has to be calculated.
You cannot look at the Robinhood investing app in isolation.
You have to look at the entire ecosystem in totality and that is where there are some serious pockets of concern.
Customer Support System
But one area that is not a major concern is undeniably the customer support system.
Users can get in touch with the company in multiple ways.
You can call them, email them or even tweet to them.
But remember none of them is a 24×7 service.
The customer services are only available during the market hours.
If you are ready to pay an additional fee, the Robinhood team also connects you with a broker for guided trading.
You can also seek assistance from Robinhood on the social media.
They have a Facebook and Google+ page that is updated regularly.
They also have a Linkedin presence.
That means all and all the Robinhood Investing App has a satisfactory customer support system.
It will enable the traders to seek help as and when they deem necessary.
That means if you are stuck in the middle of a trade, help is merely a click away.
That is often an extremely reassuring factor for many beginners.
The markets can be very overwhelming to a newcomer.
In that event, this type of assistance enhances the trading experience significantly.
Moreover, if you can spare some money, you can also take advantage of assisted trading.
That becomes a crucial factor in determining the exact level of satisfaction.
Of course, there is also the additional cost that you have to factor in.
So we can conclude that it is simple, uncomplicated with a user-friendly investment interface.
If you compare it with other peers, the 0 trading fee shines through as the most significant advantage of this Robinhood investing app.
But at the same time, it does not have any promotional features or advanced trading facilities.
If at all, those are all chargeable.
So the final cost factor comes to the same.
Som at best, this will be the ideal alternative for beginners who are starting to trade in the market.
If you are looking for the ideal alternative for straightforward and cost-effective trading app, you can choose the Robinhood investing app.