Robinhood Review 2021. Features, Why You Should Invest, and How it Works

Robinhood as a form of investment is not for everyone. It’s an online stock trading platform that allows you to buy and sell stocks, ETFs, options, cryptocurrencies, and more with just $3 per trade. 

Robinhood has been growing in popularity among millennials because it offers them the ability to invest without having any experience or knowledge. The app also uses artificial intelligence so users can make informed decisions when they are buying and selling their investments. This means there will be less room for human error, which leads to losses due to a lack of understanding. However, this comes at a cost since Robinhood does charge its customers fees every time they want to execute trades on the platform. 

Fees start from 0.05% up to 1%. While these may seem like small amounts, if used strategically, they could add up quickly. For example, let's say your account balance was $1,000, and you executed ten transactions worth $100 each. That would mean you'd pay $10 in the transaction fee. If you were using Robinhood exclusively, you’d have to shell out over $50 before making one single purchase! On top of that, Robinhood doesn't offer free mobile apps, unlike other platforms such as Coinbase, where you don't need to download anything.

Features of Robinhood 

The following features set Robinhood apart from traditional brokerage firms:

No minimum deposit required - You do not need to put down any money upfront to open an account. All you need is a valid email address and phone number.

Free commission- There is no hidden fee associated with executing trades through Robinhood. Commissions are only charged once you exceed certain limits.

Lowest fees - Robinhood charges meager fees compared to most brokerages. They even go as far as offering zero percent interest rates on balances above $5,000.

No minimum withdrawal amount - Withdrawing funds from Robinhood is accessible. Users simply log in to their accounts and select "Withdraw" under the "Account Settings.” Funds will appear instantly in your bank account.

Free market data - Robinhood provides real-time updates regarding the performance of different markets around the world. The market information includes historical prices, news events, economic reports, and much more.

Easy access to multiple exchanges - Robinhood supports many popular cryptocurrency exchange services, including Binance, Bitfinex, Kraken, Poloniex, Gemini, GDAX, etc.

Mobile application - Robinhood offers iOS and Android applications that allow investors to place orders while away from home computers.

Multiple languages supported - Robinhood currently supports English, Spanish, French, German, Italian, Portuguese, Dutch, Russian, Japanese, Korean, Chinese, Arabic.

Who Should Invest In Robinhood?

If you're looking for a simple yet effective way to get started investing, Robinhood might be right for you. Unlike some brokers who require extensive training to become familiarized with how the system works, Robinhood requires little effort to learn. Once you've signed up, you can begin placing trades immediately. To help newbies understand what they should expect from Robinhood, here are three things you must know:

You won't lose money by signing up - Robinhood guarantees that you will never lose money by opening an account. Their goal is to provide a safe environment for people to practice investing.

It's easy to withdraw funds - When you first sign up, you'll receive a debit card linked to your Robinhood account. Simply log in to your account whenever you wish to transfer funds between your checking and savings accounts.

There are no long-term contracts - No matter how long you stay with Robinhood, you won't ever be obligated to commit to a contract.

How Does Robinhood Work?

To better explain how Robinhood operates, we'll take a look at two scenarios involving hypothetical clients named John Doe and Jane Smith. Both John and Jane decide to try out Robinhood after hearing good reviews about the service. Let's see how they proceed throughout their journey together.

John Doe opens their Robinhood account and begins depositing cash into their portfolio. He decides to invest all of it in Bitcoin. After several months have passed, he notices that BTC has increased significantly in value. This makes him feel confident enough to start trading other cryptocurrencies like Ethereum, Ripple, and Litecoin. His investments grow steadily over time until one day when he receives a notification informing him that he needs to deposit additional capital or risk losing his entire investment. At this point, John realizes that he doesn't want to continue using Robinhood because he feels like he isn't getting any return on his initial investment.

Jane Smith also signs up for Robinhood, but she chooses not to open her brokerage account. Instead, she invests $1,000 in stocks through Robinhood. She then buys shares of Apple Inc and Amazon.com Inc. Over the next few weeks, she sees that these companies' stock prices increase dramatically. As more days pass, she becomes increasingly interested in learning how to trade herself. One day, she finds out that there are many ways to make profits off of stocks. She starts researching different strategies before deciding which ones work best for her. Eventually, she comes across a website called StockTwits, where she learns about technical analysis. Her interest grows even further when she discovers that specific indicators can predict future price movements.

In addition to reading articles online, she attends seminars hosted by professional traders. By following the advice provided by experts, she manages to turn around her losses and eventually turns them into gains. The same thing happens again and again. Before too long, she earns so much profit that she wants to quit her job and focus solely on trading full-time.

What Are Some Of The Advantages And Disadvantages Of Using Robinhood?

Robinhood offers users several advantages including:

 No minimum balance requirement - You don't need to keep an amount of money deposited to use Robinhood. All you need is a bank account from which you can access deposits and withdrawals.

Low fees - There are no transaction costs associated with making trades. Fees only apply if you choose to sell securities short. If you're looking to buy something, however, you will pay nothing.

Easy to understand interface - It takes less than five minutes to set up your first account. Once you've done that, you won't find yourself struggling to figure things out.

Mobile app - users can check real-time market data while sitting anywhere. They can also place orders directly from their mobile device without having to go back home.

Disadvantage 1: No free checking accounts - While Robinhood offers some free services, most people who sign up for its platform do so just to get started. For example, they may be able to withdraw funds from their savings account at no cost. However, once they begin investing, they'll need to cover the service's monthly fee.

Disadvantage 2: Limited customer support options - Although Robinhood provides 24-hour phone support, it's limited to US residents. International customers must rely on email instead.

Frequently Asked Questions

Q: How Does Robinhood Work? 

A: When you create an account, you deposit cash or transfer existing balances from other financial institutions like banks and credit unions. Then, you can start buying and selling stocks using this new account.

Q: What Is A Brokerage Account? 

A: This type of account allows investors to purchase and sell securities such as stocks and bonds. Most brokers charge commissions for each trade. These charges vary depending on whether you're purchasing or selling.

Q: Can I Use My Savings To Invest With Robinhood? 

A: Yes! You can invest any amount of money you have saved up. Just remember that you'll incur additional fees whenever you want to liquidate those holdings.

Q: Do I Need An Investment License Or Certification?

A: Not necessarily. But, if you plan to become a broker, you should take advantage of the education offered by FINRA.

Bottom Line

 If you're interested in learning how to make investments but aren’t sure where to start, then Robinhood might be right for you. Its low commission rates and easy-to-use features make it one of the best platforms available today.