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As a college student about to graduate and head into the full-time working world, I thought that it was time to begin to take a look at my financial options. One of the steps that I’ve taken is to familiarize myself with investments — and the Robinhood website and app is where I decided to start.
Robinhood is a digital investment platform that offers users access to commission-free trading in more than 5,000 stocks, exchange-traded funds (ETFs), and option contracts. The product is free to use and has no minimum balance restriction.
Ease of Use Score:3
To get started, all you need to do is download the app or visit the website. Signing up for Robinhood was incredibly easy, even for a first-time investor — though it may be slightly intimidating to those who do not wish to provide their Social Security number to an online app or website.
If you’re nervous about giving away your Social Security number, you can be reasonably assured by the fact that Robinhood encrypts this information prior to storing it and secures communication across servers by using a Transport Layer Security (TLS) protocol with updated configurations and ciphers, which means that your information is coded with a specific algorithm that prevents others from understanding what is being sent. The TLS protocol specifically encrypts your information before sending it across servers and is continually updated to ensure that your information is protected.
When you first set up your account, you will be faced with a series of questions about your current employment, investing experience, income levels, whether you (or your family) work for a brokerage, and more. I’m told back in the day this was known as a “risk assessment profile,” and took the better part of an hour to fill out — not to mention all the paper it used.
Don’t worry about making a mistake in this section. Once it’s finished, you can always head into the settings to make any adjustments, as necessary — which was helpful for me, since it meant I could review how comfortable I felt with my investments after receiving my free stock offering (AquaBounty, in my case).
On both the Robinhood website and app, users have access to a chart describing how their overall investments are doing, as well as access to news, a list of popular stocks and their performance on the day, and cryptocurrency trading information. There is also an option on the homepage (of the desktop and app versions) that allow users to filter their personalized stock lists so they know they are viewing relevant up-to-date information only.
On the desktop version of Robinhood, news, stock information, and self-curated lists can all be found on your desktop home screen without too much navigation. The layout of the app, on the other hand, requires you to click through several tabs for most features.
Robinhood also offers access to cash management services, which allow you to pay bills, invest money, earn interest, activate direct deposit, and more. Another segment of the app offers investing news and any updates out of Washington, D.C., (or the world) that might impact your financial decision-making.
There is also an option to try recurring investments in one’s chosen stocks, which can be made on a daily, weekly, bimonthly, or monthly basis. This type of schedule can help you maintain your investments without having to worry about remembering to buy shares every time you get your paycheck.
Investing a fixed dollar amount into a market-based investment allows you to take advantage of volatility in a strategy called dollar-cost averaging (DCA). When you invest a fixed dollar amount into an investment at regular intervals, your investment purchases fewer shares when the price is relatively high and a greater number of shares when the price is relatively low. The result across a period of time is that your actual average purchase cost is lower than the average share prices for the same time.
Another benefit Robinhood offers is a feature that allows for dividend reinvestment for long-term investors.
Bang for Your Buck Score:4
Not only is Robinhood free, but it even offers first-time users a free stock when they sign up. These are free full shares that can be traded or sold after a period of two days. Though Robinhood states that there is a chance of receiving a share of an Apple or Microsoft stock, this is extremely rare. For 98 percent of users, the value of each share will range from $3 to $10. Another 1 percent of users will receive a share worth between $10 and $50, while 1 percent receive a share with a value ranging between $50 and $225.
Be aware, though, that you must link your bank account to Robinhood in order to receive the promotion, which is not explicitly mentioned in the advertisement itself. You can also earn a free stock by referring friends or even followers on social media platforms, such as Twitter.
The major financial institutions that Robinhood accepts include Chase, Bank of America, Wells Fargo, Capital One, Navy Federal Credit Union, USAA, Citi, BB&T, SunTrust, Chime, Citizens Bank, TD Bank, Ally Bank, Fidelity, Huntington Bank, and Charles Schwab. If your bank is not listed, the process will be slightly more difficult, as you’ll need to sign up with your routing and account number (normally found on the bottom of a check from your financial institution checking account or by searching for your bank through its database).
Given that Robinhood allows access to numerous features — including up-to-the-minute investment updates and recurring investment options — it is certainly worth checking out. Both the app and website also give users the ability to purchase cryptocurrency with choices including Bitcoin, Dogecoin, Litecoin, and more.
Robinhood charges zero startup or monthly fees. Though you may be required to pay a fee if you choose to buy an ETF, this fee is charged specifically by that ETF, rather than by Robinhood itself.
Customer Service Score:1
There is no live chat to communicate with Robinhood, so in order to contact Robinhood’s customer service representatives, you will need to use this form. There will be several questions about the nature of your inquiry before you are brought to the form, so be sure to be careful to select the right options. Most options will lead you to an FAQ page, but you can always scroll down and choose “Contact Us” in order to reach an actual representative through an online form. You will receive a response through a live text-based online chat with Robinhood.
Robinhood estimates that users will receive a response within one to three business days. If you fail to respond to the company’s response within 24 hours, Robinhood will automatically close your request. In my case, the company’s response came three days after I sent my initial request for information. For many investors, this could be too long to wait.
In recent months, Robinhood has seen a general and prolonged downfall in its reputation among consumers. After the recent and unprecedented surge of GameStop, AMC Entertainment, Koss, NOKIA, Express, and other hotly pursued assets, Robinhood elected to put holds on these specific stocks.
This led some users to complain about hypocrisy and unfair treatment by the company. Though previously hailed as a friend to retail traders, Robinhood has now come to be seen as an ally to hedge funds and other large-scale investors.
Notably, Robinhood’s decision to halt trading on these stocks allegedly led to the death of investor Alex Kearns, who reportedly took his own life because he believed that he was $700,000 in debt after the initial GameStop plummet.
Kearns reportedly attempted to contact Robinhood multiple times, only to receive automated responses. Kearns’ family has filed suit against Robinhood over the incident, claiming that a lack of protections by the service led to Kearns’ untimely death.
This case could have a considerable effect on Robinhood’s reputation, depending on what the courts decide. CentSai contacted Robinhood regarding these allegations and the company did not comment.
The app itself holds no rating from the Better Business Bureau (BBB) and is not currently accredited by the BBB, but possesses a 1.18/5 user rating and has been recorded as having had over 1,200 complaints over the course of the past year. In Google Play, the app has a slightly higher average rating of 2.8/5 out of 383,088 reviews. In the App Store, Robinhood appears to be viewed much more favorably, boasting a 4.1/5 with more than 3 million ratings.
The Bottom Line
Every platform has its strengths and weaknesses, but despite its reputation, Robinhood is one of the stronger options I’ve come across. If you’re interested in the sort of day-trading that involves investing in some of the more popular retail investor choices, like GameStop or AMC Entertainment, it may not necessarily be for you.
As someone who isn’t interested in day-trading or capitalizing on the recent stock surges, Robinhood’s choice holds were not a deal breaker for me.
I’m also not someone who typically needs to contact apps or websites without leaving myself at least a week before responses are necessary. But, though the drawbacks are not too troublesome for me, that won’t be the case for everyone, so be sure that you know what you’re getting into with this service.
If you’re interested in recurring investments in carefully researched choices, Robinhood can be a great resource that lets you invest without needing to worry about monthly fees or subscriptions.
Past performance is not a predictor of future results. Individual investment results may vary. All investing involves risk of loss.