Is robinhood trading app legit

Given that the app is a securities brokerage firm, Robinhood is regulated by the SEC. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Additionally, the app reportedly makes money off of marginal interest and margin lending. By Jason Notte. Bull Market Fantasy with Jim Cramer. The Bottom Line So, should you go ahead with the investment app or steer clear?

The Platform

Company founders Vladimir Tenev and Baiju Bhatt, Stanford physics graduates, believed that Robinhood would motivate a new generation of would-be investors. Robinhood, the mobile-only online brokerage, was launched in December with a waitlist of more thanThe company’s mission was to make the financial markets more accessible, primarily by offering commission-free trades, no account minimums, and an easy-to-use mobile app. Robinhood launched a premium trading platform, Robinhood Gold, offering extended-hours trading, margin accounts, and larger instant deposits in exchange for a flat monthly fee based on Gold Buying Power tiers. There’s no doubt that Robinhood has won a loyal following, and the company is backed by major players such as Google Ventures, Index Ventures, and Andreessen Horowitz. But is it safe? Here’s what you should know.

This Free Event Reveals : How I transformed myself from an employee to being my own boss and how you can too, even with no experience! Thursday — Jan 2nd — pm est. Here are my thoughts. You should have no hesitations when it comes to investing your money with Robinhood from a reliability standpoint. Some brokers try to nickel and dime you with extra charges, but when it comes to Robinhood they are straight forward and upfront about the fees they charge. You can view their complete fee schedule here.

Company founders Vladimir Tenev and Baiju Bhatt, Stanford physics graduates, believed that Robinhood would motivate a new generation of would-be investors. Robinhood, the mobile-only online brokerage, was launched in December with a waitlist of more thanThe company’s mission was to make the financial markets more accessible, primarily by offering commission-free trades, no account minimums, and an easy-to-use mobile app.

Robinhood launched a premium trading platform, Robinhood Gold, offering extended-hours trading, margin accounts, and larger instant deposits in exchange for a flat monthly fee based on Gold Buying Power tiers.

There’s no doubt that Robinhood has won a loyal following, and the company is backed by major players such as Google Ventures, Index Ventures, and Andreessen Horowitz. But is it safe? Here’s what you should know. Robinhood, like all brokerage firms that handle securities, is regulated by the Securities and Exchange Commission SEC. The SEC’s primary compliance mechanism is prosecuting civil cases against companies and individuals that commit fraud, disseminate false information, or engage in insider trading.

However, the SEC does not offer protections for the individual investor—it does not insure against loss or otherwise protect your investment from actions your brokerage firm may.

Brokerages that are FINRA members submit to the organization’s rules and regulations, which cover testing and licensure of agents and brokers and a transparent disclosure framework that protects investors. Investment accounts with Robinhood are covered by the Securities Investor Protection Corporation SIPCwhich is a nonprofit membership corporation that protects money invested in a brokerage that files for bankruptcy or encounters other is robinhood trading app legit difficulties.

For most investors, the potential risks involved with using Robinhood aren’t associated with the regulatory framework covering their accounts. This can lead to hasty and uninformed decision making, especially for novice investors. In addition, the Robinhood app makes it difficult to manage a diversified portfolio. Most reviewers suggest that tracking more than three or four positions isn’t practical with Robinhood, which leads to overweighing your portfolio with one or two equities —never a good practice.

It is also worth noting that there is no dividend reinvestment program in place, although the company indicates that this may be offered in the future. The Robinhood platform currently permits only stock and ETF trades—bonds and mutual funds are excluded. Again, this risks tilting your portfolio toward a single asset class. As a matter of convenience, Robinhood doesn’t integrate with other financial management tools like Mint or Quicken, so there’s no convenient way to track your holdings as a part of your overall financial picture outside the Robinhood app.

In addition, there is no IRA account option, excluding investors from the tax savings and long-term benefits of retirement savings plans. For a certain class of investor, Robinhood may be the right tool at the right time. However, for long-term investors, IRA accounts with a mainstream broker may be a better alternative.

In many cases, you can open a no-minimum account and get commission-free trades on many if not most ETFs while still having access to all the data, charts, tools, and educational resources you need to make informed decisions. Stock Brokers. Automated Investing. Your Money. Personal Finance. Your Practice. Popular Courses. Login Newsletters. Brokers Stock Brokers.

Key Takeaways Mobile-only brokerage Robinhood is easy to use and charges no commissions, but investors worry about the brokerages access to IRAs and financial advisors. Some also believe it is too easy to use and causes investors to make hasty decisions.

Robinhood Gold is an upgraded service that gives investors access to a margin account, but the increase in usable capital can be just as much a risk as a benefit, causing some investors to overleverage an unbalanced portfolio. Many investors consider other brokerages a better offer. Even though they charge commissions on trades, access to funds and retirement accounts make them a desirable choice.

Compare Investment Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation.

Related Articles. Brokers Robinhood vs. TD Ameritrade Stock Brokers The Is robinhood trading app legit U. Brokers Fidelity Investments vs. Robinhood Partner Links. Related Terms Mobile Trading Mobile trading refers to the use of wireless technology in securities trading.

Mobile trading allows investors to use their smartphones to trade. An Inside Look at Brokerage Accounts A brokerage account is an arrangement that allows an investor to deposit funds and place investment orders with a licensed brokerage firm. Self-Regulatory Organization — SRO A self-regulatory organization SRO is a non-governmental organization which may create and enforce industry regulations and standards by.

Broker A broker is an individual or firm that charges a fee or commission for executing buy and sell orders submitted by an investor. What You Need to Know About Dealers A dealer is a person or firm who buys and sells securities for their own account, whether through a broker or .

Can You Make Money with the Robinhood App? Our Honest Review!

The Company

The app has largely marketed itself to millennials as the new, young investment tool for beginners. Credit Cards. Related Articles. Robinhood began exclusively on Apple products but has since rolled out Android versions, as. To Falcone, that decision is largely based on the kind of experience, knowledge and goals you. Employee Benefits. Retirement Daily. Estate Planning. An Inside Look at Brokerage Accounts A brokerage account is an arrangement that allows an investor to deposit funds and place investment orders with a licensed brokerage firm. Partner Links. Cramer’s Articles.