My Experience Using the Robinhood Stock App
Since the time I have been enrolled in college and worked various part-time jobs to make ends meet, I've had leftover funds that have been sitting in a savings account once other expenses are taken care of. I do have an IRA and invest in ETFs, and while I've tried to maintain decent savings in order to pay off unexpected bills, the interest that is paid by the bank on said savings account is close to non-existent. Hence, I've developed an interest over the past several months in investing in individual stocks, and potentially earning dividends, however currently slight.
This interest has led me to invest in individual stocks through Robinhood, specifically the app that you can acquire on any smartphone device. I researched other investment firms as well in the beginning of my journey in opening an individual account, but the commissions, charge fees, and minimum account balances that were required were slightly discouraging and would eat into the money that I was investing into stocks. For a college student such as myself, even though I'm not in financial straits, utilizing financial assets in a prudent manner is a must, and Robinhood was an excellent way of achieving my minor investment goals.
So the following paragraph explains the mechanics that make Robinhood such an attractive investing intermediary. You can buy and sell individual stocks without having to pay commissions. Additionally, there are no minimum account balances required or fees charged for maintaining an account. The Robinhood app that I have on my smartphone contains simple and easy-to-understand features such as graphs, charts, etc. that track the performances of stocks that you bought and display the historical performance of said companies and corporations in which you hold stock in. I also purchase and sell stocks using said app, requiring just the touch of a finger on the buy or sell button on the screen.
Your individual account can be linked to a savings or checking account, which allows for a seamless transfer of funds. It typically takes 3-5 days for the funds to actually be transferred out of your banking account to your Robinhood account, however, said transferred funds usually show up instantly in your account as margin. For example, if you have authorized a transfer of $200 from your checking account to your Robinhood account, that money will appear as having been deposited, so it is then available for buying stock as long you maintain that $200 dollars in your banking account until it has been confirmed as being transferred.
So how does Robinhood itself make money if it doesn't charge any fees? It does this by using any uninvested funds in your account and making investments off of it, similar to how a bank uses customer deposits to make investments and loans. This translates into the "free" use of Robinhood for the individuals utilizing it.
Now, while I have been extremely satisfied with using Robinhood and the app in buying and selling stocks, it is not without its limitations. The app can be slow in loading and displaying data, particularly if you have stocks invested in a large number of firms. Furthermore, the app itself lacks some of the features found in more established investment brokerages, and day trades are limited to three-day trades in a five trading day window, (unless you have more than $25,000 in your Robinhood account). In consequence, Robinhood is more suited for a "stay and hold" investor due to these limitations. It's not to say that more fluid trading options are impossible, but that those types of investors would potentially be better served by other brokerages.
In all, I would rate my experiences with Robinhood as being very positive. The fact that I can invest at my own leisure and pace without the need for a broker or the need to pay fees is enticing and makes for an easy and hassle-free investment experience. For the novice investor like myself who is just looking to invest in single stocks in a company you like or for the chance to earn some dividends off said stock, Robinhood is a good choice for exploring these options and simple investing, and I would recommend it to any new investor.