The Robinhood Investing Review is a legitimate investment for anyone to begin, and how great is the risk if any? I will explain in this article and let you make your decision.
Fair?
- Name Robinhood Markets Inc.
- Website: robinhood.com
- Price: Free
- Owners: Vladimir Tenev and Baiju Bhatt
- Overall Rank: 60 out of 100
Robinhood, Product Overview
Robinhood is an online broker that saw the light in 2013 but officially went public in Feb 2014. The developers behind the platform worked for financial institutions in New York up to that point and decided to crowdsource their personal projects. By the end of 2018, the company was worth $5.6bn.
What makes Robinhood different is the way it operates. More specifically, it doesn’t charge commission fees when investors make trades. Instead, the platform has other ways of generating money, and there are certain fees involved.
It should also be noted that the platform runs on a user-friendly app alongside a website, making it easy for newbie investors to gain access to publicly traded companies and exchange-traded funds listed on U.S. stock exchanges.
The Good And The Bad Of Robinhood Investing Review
Even though the Robinhood exchange platform is rapidly growing, it is far from being the perfect investment tool. Here is an objective look at what you’ll be getting.
Robinhood Investing Pros and Cons
The Pros:
- 1. The app is straightforward to use, even for individuals who have never invested in stocks before.
- 2. There are no commission fees on trades.
- 3. Easy access to public trading.
The Cons:
- 1. No client support whatsoever.
- 2. Hidden costs that accumulate as investment volume increases.
- 3. Controversial reputation.
- 4. Limited trading options.
Who is Robinhood Investing For?
The main target audience is definitely newbie investors that want to keep expenses low. Given that there are no commission fees that go to a broker, more money can invest. Ultimately, it is a platform that simplifies trading for everyday people. Whether it truly lives up to these standards can be put up for debate.
Robinhood Tools And Training
Compared to other online broker platforms, Robinhood leaves a lot to be desired in terms of tools and training. In fact, there is not much to work with to help you boost your trade decisions. So if you want additional advice, you will need to find the information somewhere else.
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Robinhood Support
At the time of this review, the Robinhood platform still didn’t have any support system for those who use it for trading. And this is somewhat strange for a broker struggling to launch financial services like those of a conventional bank.
Robinhood Price
Robinhood PriceIt doesn’t cost anything to use the app for trading. But once you start sending over funds, that is when costs start to factor in.
And it should be mentioned that a great deal of the profit the platform generates comes from payment for order flow. This is when market-makers influence the platform, specifically targeting investors trading on passion and using skill and knowledge like professionals. It should also be noted that the higher your trade volume gets, the more it will cost to trade through the app.
Final thoughts
In all honesty, it is strange to see this platform grow at such a rapid rate. Of course, the pitch of trading without commission fees is definitely alluring, and the app is straightforward to use. But is this enough to explain the giant leap the company took from a value of $1.3bn in 2017 to over $5bn at the end of 2018?
I can’t speak for anyone else, but this makes me question the platform’s integrity in general. I’m not saying investors are not making money, but the company dubbed itself a force that disrupts the markets. And when looking at the controversy associated with the platform, the creators weren’t kidding.
For example, Robinhood is trying to expand and add banking services, like checking accounts with very high-interest rates compared to conventional banks.
However, the twist is that the deposits are not secured, as the Federal Deposit Insurance Corporation does not ensure the account. In other words, higher interest means more risk.
Then there is the issue of how the company makes most of its money via payment for order flow. In basic terms, it means the platform exposes newbie investors to market-makers that want to minimize their own risk. This information was revealed late in 2018 through Bloomberg News, and the company admitted it is true.
Caution
And to add even more doubt to the mix, the costs that grow with your increasing investments. Unless you plan on sticking to a specific max and number of trades per month, you can expect to see a rise in costs. Just because you are not paying commission fees doesn’t mean you won’t be charged for all the other little things.
It’s not my place to tell you how or where you should invest your money. However, I would recommend using a lot of caution with this particular platform.
In fact, I believe the easy-to-use approach plays into exploiting new investors, which makes them feel confident and capable. Plus, considering the developers’ connections with financial institutions can also make you question their overall ethics.
VERDICT: LEGIT
Yes, the Robinhood online exchange is legit, and the trades are real. But if you are totally new to trading, it is wise to consider your other options – even those that involve paying commission fees. There is too much controversy with this particular platform to recommend it to anyone at this point.
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Hi Bishop,
Thank you for this Robin Hood Investing review. This the first time l heard about this trading platform and l do agree with you about the integrity of the company. Furthermore, the cons outweigh the pros especially no support is rendered whatsoever make me feel unsafe to trade with this company. Can you recommend some of the reliable trading company?
Best Regards
Hey Sui, I did my due diligence and investigate this company and talk to a lot of my friends here in New York who invested in this company and I came up with this review.
I have invested in this company and have nothing bad to say about this company so far. My money is growing on a daily basis, and I have never had a reason to contact support thus far or try to make a withdraw.
It is difficult for me to recommend a reliable trading company cause I only deal with a few brokers that I put my trust in. I suggest you do the same. Thank you for your comment and all the best with your investment.
I am always leery of any platform that allows the everyday Joe to get involved with stock trading.Here’s a little story, during the big stock explosion before the crash, I worked with a guy who work at P.&G. For 20 years. He retired with three million dollars in stock. When he retired he decided he wanted to turn the three million dollars into 10. He took all of the stock he had put it in the NASDAQ. So we wound up having to get a job making $6.00 an hour because he lost everything.You really need to be very careful when investing in the stock market.The stock market is a tough business.Having an app that allows people to ” trade the stock market” to me is very scary. I know some people have made lot of money. I know more people who lost a lot of money!I really don’t think the stock market is a good “toy” within app on your phone.Just my opinion.Are you a member of wealthy affiliate?How has it work for you so far?
It is a scary investment, and I too know people who lost money in investing in the stock market. Although I made a small investment, I am not going to buy more stocks. I will just leave the small investment I made and see how it goes.
Yes, Wealthy Affiliate has thought me a lot about the online world, and the platform is working for me and lots of others. Thank you for the comment.
Hi Bishop,
I did not heard about Robin Hood Investing or stuff before reading your nice and clear review.. After reading your review, I came to realize that, it is not my place,and it does not worth my money, time and hard work. It is good to know about Robin Hood Investing before dealing with it.
Thank you so much for such a nice review.
Radeet
Although I presented an honest review, I have invested in this company and it is working for me thus far. I did not put too much into it, but sometimes it is always good to take a risk. If this company decide to work on their pitfalls, then my decision would have been a good one. Only time will tell, Radeet. Take care.
hello
thanks for your review on robin hood investing app;I have a full time experience with the app some months ago and i appreciate the fact that there is no commision attached but i dont get to know how they make their profits with the app.
Thanks for listing out the pros and cons, this would help new investors to decided easily.
There are fees involved with the platform that is one way they make their money, plus their trading is limited.
I wanted my audience to see the pros and cons so that they can make a sensible decision if the system is worth the investment. Glad that you get some value from my review.
Very interesting article. To be fair I was reading a bit about Robinhood investing platform before and to be fair opinions were very mixed. Thank you for your detailed and transparent review, after all it seems to be legit business. Yet, looking on site opinions and hidden cost I do believe that there are much better opportunities to earn money online and this site is not worth investing time in it.
I wrote this article about two years now and it so happen that Robinhood Investing is doing great. I have earned this month more money put together for the past two years. Would that happen to you? I cannot day, but what you should do is to give it a second look. If you need some information on what angle you should take, please let me know, I would be happy to assist you.
Hi there. Thanks foe taking time to share your honest review on Robin hood. The only this I like about it is that currently, it’s one of the few brokers that gives investors the opportunity to trade cryptocurrency. They offers both web and mobile trading, but the platforms are purposely bare bones, and some investors may find the range of tradable securities and account options lacking.
You have a point there, but keep in mind that people started to make good money with this company. As of now, they are in the heat with the wealthiest, the small and average person is trading and buying up a lot of their stocks causing it to rise. So please take another look and do some more investigating.
I would be cautious when dealing with company. I have no problem with the fees, as the point of being in business is to make money although they could be more transparent about. I have concerns about fact that their banking services are not federally insured and that’s a big red flag in my book. Also, any company that grows that big that quickly might be artifically inflating their numbers. If they’re not, it might be difficult to sustain the stability of the company. I’m gonna pass.
Thank you for chiming in, Cynthia. When I had written this blog back in February of 2019, Robinhood Investing had just gotten started and little attention was placed on them. But since then, they have come a long way and average people are making money trading than before. So please look into them again, you may benefit as well.