What is Robinhood? Everything you need to know about this investment app

What Robinhood app is How Work
What Robinhood app is How Work

Whether you’re a hobbyist stock trader , professional investor, or just on the lookout for financial contingency, you’ve most likely heard of Robinhood, a stock buying and selling platform that is popular with novice investors or people with portfolios. of larger stocks.

What is Robinhood?

Robinhood is a platform created by two Stanford graduates whose mission is to open access to investment platforms by “democratizing banking.” Robinhood allows you to buy and sell stocks, invest in cryptocurrencies, make electronic money transfers, and more.

How does Robinhood work?

To use Robinhood, you must download the app (available on Android and iOS) and create an account. Before starting to make transactions, you must enter the information requested by the platform -name, email, telephone, date of birth and social security number-; this type of data is common in stock market operations on platforms such as Robinhood.

Once the account is ready and approved, you have to enter an amount of money to start making operations. The registration process in general is similar to other electronic investment platforms and it may take a few days between the account registration being created and approved.

Within the application you can see data on different actions: prices, news and analyst information. With this information you can outline an investment strategy to buy either shares or fractions of shares (as small as 1 / 1,000,000 of a share), allowing you to invest in more expensive stocks without necessarily having a large budget. Furthermore, it is possible to make purchases based on an amount of money and not on a specific number of shares.

Are commissions charged at Robinhood?

Robinhood allows you to carry out transactions without commissions just like other similar platforms, but that does not mean that you will never pay anything when carrying out an operation; It is very possible that some mandatory payments will have to be made, according to current regulations.

How does Robinhood make money?

Robinhood makes money through repayments, margin interest, stock loans, uninvested cash, and cash management. Here is a short summary of each of these sources of income:

  • Refunds – Some companies make it easier for buy or sell orders to be processed more quickly, making securities more “liquid.” These companies – usually banks or other financial institutions – may offer rebates to exchanges, and Robinhood then earns income from these operations.
  • Margin interest: Margins are the money that a financial broker lends to make new investments. Robinhood makes money from the interest charged to people who borrow these types of loans; likewise, Robinhood itself can also make loans and then earn money from those transactions.
  • Uninvested Cash – Robinhood can deposit unused cash into interest-bearing accounts and earn money as a result.
  • Cash Management – Products like the Robinhood debit card and other money management can also generate income for the platform.

Is Robinhood Safe?

In any investment platform you run the risk of having serious financial losses when making a risky transaction. Being a formal company, Robinhood is regulated by the United States National Securities Market Commission (SEC), a body created precisely to regulate the financial sector. This is not to say that Robinhood cannot fall into some kind of questionable practice, but being regulated, any activity outside the law will be investigated. In fact, Robinhood has already been under the microscope on a few occasions; in particular, for blocking operations on certain actions, such as what recently happened with GameStop.

Is Robinhood protected by the Federal Deposit Insurance Corporation?

Robinhood as such is not a bank. But in their cash management services, the funds are deposited in different banks. According to the official Robinhood website, “deposits made under the cash management service are eligible to be insured for a total maximum of $ 1.25 million dollars (up to $ 250,000 dollars per bank, including deposits that the same owner already has in said Bank). Robinhood is part of the Securities Investor Protection Corporation (SIPC), which protects its members for up to $ 500,000.”

Is Robinhood legit?

Yes, Robinhood is a completely legitimate investment platform.

Is Robinhood Gold worth it?

This will depend on the activities they carry out. Robinhood Gold is a $ 5 per month subscription that gives you access to options like high-level instant transfers and much more in-depth market information. Robinhood Gold can become a valuable alternative for those who have the ability to invest or transfer large sums of money and need extra data for such investments.