I’ll admit it off the bat: I don’t know a whole hell of a lot about investing. Despite the technical analysis seminars I’d tag along with my father to, my past experience with apps like Acorns, and even keeping a decent eye on the stock market in general, I’d never directly purchased a stock of my own until just a few weeks ago. This came about as, after years of reading about it, I finally decided to download and sign up for Robinhood.
If you’re not familiar, Robinhood is an app that allows users to buy and sell stocks without any fees or commissions. As the app has grown, they’ve also added some new features — most recently introducing the ability to buy cryptocurrencies (more on that later). With my recent realization that I had some extra funds I should be doing more with, it was high time I gave Robinhood a try and am here to share my first impressions.
Signing Up for Robinhood and Funding Your Account
While most of the finance apps I review involve a bit of a sign-up process, joining Robinhood was by far the most extensive experience I’ve had so far. Of course this is completely understandable as the app must adhere to various regulations and needs to ensure that shareholders are properly documented. Because of this, it took me a few days from my first attempt at signing up until I was ready to trade.
To be fair, part of the problem with my sign-up process and the delay I experienced may have been my fault. For example, while the app allows you to upload a photo of your government-issued I.D. easily, the photo I took was apparently not readable. There was also a problem with my Social Security number not matching, which probably means I typed it wrong and didn’t catch my error until it was too late. In any case, I was able to send a photo of my SS card in order to move forward with the approval process.
Another issue I encountered during the application process was that I had forgotten to unfreeze my credit file. Like many people, I elected to freeze my credit reports after the Equifax hack and had completely forgotten that Robinhood would need to access my information. This must be something the app runs into fairly often as the team at Robinhood made it really easy to proceed. Once I put a temporary lift on my credit account, all I had to do was respond to their e-mail to let them know. In both cases (the unfreezing request and the social security card issue), the folks at Robinhood were very quick to respond and push my application through. So while it took a few extra steps along the way, within a few days I was ready to fund my account.
Speaking of funding your account, I found this part of the process to be much easier. For select banks, connecting your account is as simple as logging into your bank’s online service as you would from their app or website. Alternatively you can manually enter your account and routing numbers in order to link them to Robinhood. I ended trying both options as my Wells Fargo was available to link while my Discover Bank account had to be added manually.
One great thing about Robinhood is that, once you initiate a transfer from your bank, it allows you to access your funds right away. You also have to option to set up recurring transfers so that you’re automatically adding to your investment funds. While I haven’t tried out that automation just yet, I’ve definitely been impressed with the speed in which money is transferred, allowing me to snag a good price on a stock instead of waiting around for funds to clear.
Finally, I should also mention that Robinhood has a unique referral program that incentivizes users to share with their friends. When you invite people to join Robinhood using your special link, you’ll both earn a free stock when their application is approved. The type of stock you earn is random but 1 in 150 people can earn a premium stock, including Apple, Facebook, or Berkshire Hathaway (sidenote: while they don’t say as much, it’s probably safe to assume they mean $BRK-B and not $BRK-A as the latter trades for around $290,000 a share…). Meanwhile 1 in 80 people will receive either GE, Ford, or Kinder Morgan, with the everyone else receiving some other stock. In other words, feel free to use my link. 😉
Buying Stocks on Robinhood
When it comes to buying stocks on Robinhood’s platform, I’m really not sure it could be any easier — even for a newbie like me. All you need to do is enter how many shares you’d like to purchase, review the order, and submit. Moreover, if you don’t have the funds available to make the trade, it will prompt you to make a transfer for the difference.
As a long-time Disney fan, I knew what stock I wanted to buy before I even downloaded Robinhood. At the same time, I didn’t necessarily just want to pay the going rate to own a small piece of the Mouse House. That’s why I decided to give Robinhood’s limit order option a try.
Simply put, placing a limit order allows you state what price you’re willing to buy a stock at and have the app execute your order should it become available. You can elect to have these orders expire the next day or keep them open indefinitely. In my case I entered a limit order for a couple dollars below the current market price, set it to expire only when canceled, and was surprised to find I had become a Disney shareholder the next day. Incidentally I set a second order to buy if $DIS fell below $100 a share and so I now own two shares of the Walt Disney Company.
Seeing as Disney recently held their annual shareholder’s meeting, I was curious whether those who purchased stocks via Robinhood were eligible to vote on business matters of the companies they owned. As it turns out, you can. According to their website, Robinhood utilizes ProxyVote, which will alert eligible shareholders to upcoming meetings and votes (my purchase of Disney came too close to the meeting to qualify).
Back to stock orders, Robinhood also offers the ability to set Stop Loss and Stop Limit order, allowing users to set buy prices above the current trading price. Likewise you can also set similar triggers to have the app sell your stock positions when the price reaches certain lows or highs. I won’t pretend to understand all the intricacy and exceptions to these tools but they’ve worked pretty well for me (note: I haven’t actually sold any stock yet so I haven’t tried those options).
With the cryptocurrency market exploding (and retracting, and exploding, and retracting, etc. etc. etc.) in recent months, Robinhood has now introduced support for buying and selling maor cryptocurrencies such as Bitcoin and Ethereum. Just recently Robinhood added support for trading Litecoin, Bitcoin Cash, and Dogecoin. This feature is currently in beta and current users can apply to join the waiting list. As someone who’s had a passing interest in crypto but not enough to dive in further, I was delighted to gain access to Robinhood Crypto a few months back.
Although it sports some fun 80s Tron-esque backgrounds, Robinhood’s crypto trading platform is very similar to their stock trading platform. Just like with stocks, you can either buy coins at market price or set limit orders (the same goes for selling). You can also monitor your position and see how much your crypto is currently worth. As of this writing, the $4 I bought in Bitcoin is now worth $3.70 and I have a limit order to buy $5 worth of Ethereum if the price falls to $400 or less — high roller, I know.
One thing to note about Robinhood Crypto is that, at this time, they don’t allow you to remove your coins from the platform — although that is apparently something they’re working on. This isn’t to say that you can’t cash out your funds, it just means that you’ll need to sell your coin and withdraw in U.S. Dollars. In other words those on team #HODL that want complete control over their crypto might not be too impressed with Robinhood’s offering at the stage, but it seems just about right for dabblers like myself.
Final Thoughts on Robinhood
For the longest time, I’ve known I should start investing but wasn’t sure where to start. On that note, Robinhood has proven to be an extremely easy way to start buying stocks without having to pay commissions or fees. Furthermore, as I do start to learn the ropes and am ready to take my portfolio to the next level, it’s nice to know that Robinhood continues to increase their offerings. Beyond their expansion into crypto, Robinhood is also in the process of rolling out an options trading platform as well.
Compared to other beginner-friendly investing apps like Acorns, I think I actually prefer Robinhood as it allows me to buy specific stocks instead of a bundle of investments. At the same time it’s important to note that this means it’s on you to diversify your own investments — not to mention that Robinhood only allows you to buy full shares of stock whereas Acorns might invest your change in partial shares and other investments. In any case I’m excited to have purchased my first stocks (and first cryptocurrencies) via Robinhood and look forward to learning more about the world of investing.