Usdfund.icu Review Is USD Fund Scam or Should I Invest

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker 2020!
    Good Choice for Beginners!
    Free Trading Education, Free Demo Account!
    Get a Sign-Up Bonus Now!

  • Binomo
    Binomo

    2nd in our ranking!

Stash Invest Review 2020 – Is It Even Worth It?

Every new investor faces two challenges:

  1. The barrier to entry is too high
  2. Not having the slightest idea of what to actually invest in

It’s no secret that investing jargon can sound like a foreign language. This can deter many people from ever taking the time to learn what they actually need to know. On top of that, many brokerages require investors to have minimum balances and automatic deposits that are just too much.

Fortunately, those days are long gone.

Technology has been huge for lowering investment barriers. There are now so many options that are both accessible and easy to understand by everyone.

One of these options is Stash Invest. You can get $5 for free when you sign up and make your first investment!

Stash is great because the app allows users – who perhaps don’t have a ton of money – to buy fractional shares of a stock. Want to buy Amazon but a single share costs $1,000?? With fractional shares, you can buy a percentage of a single share.

Stash isn’t the only one offering fractional shares – the functionality has become popular and companies like M1 Finance also offer it on their platforms. M1 Finance allows you to build a portfolio of stocks and ETFs for free – yes free. No fees.

Plus, many of the major brokers now offer commission-free investing, so keep that in mind as you make your decision of where to invest.

If that sounds appealing, then I recommend you check out these 5 apps that allow you to actually invest for free.

Bonus: Stash Banking is offering a $50 bonus if you deposit $300 within 30 days. Check it out here >>

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker 2020!
    Good Choice for Beginners!
    Free Trading Education, Free Demo Account!
    Get a Sign-Up Bonus Now!

  • Binomo
    Binomo

    2nd in our ranking!

Quick Summary

  • Automatic investing app with $0 minimum to get started
  • Makes investing “easy” by really simplifying the process
  • Fees as low as $1 per month

Stash Invest

Product Name

Min Investment

Annual Fees

Account Type

Traditional IRA, Roth IRA, Taxable

Promotions

Why Stash Invest?

Stash Invest is an app that launched in 2020 after the founders set out to answer the question: why don’t half of Americans invest?

They kept coming back to one answer. Most people found investing to be un-relatable, expensive and intimidating. (Can you relate?!) From those answers, Stash Invest was born.

The Stash Invest app allows investors to start investing for free. Not only that, but Stash makes choosing investments extremely simple.

They also have low fees at only $1 per month, for basic banking and personal investing.

Stash Invest Fees and Pricing

Stash Invest recently updated the pricing and tried to simplify their offerings.

They currently have 3 pricing options – all flat fee offerings (versus the previous structure of AUM).

Beginner: This plan is $1 per month, and offers a basic brokerage account and Stash Banking account. It also offers free financial guidance.

Growth: This plan is $3 per month, and allows retirement investing, along with a taxable brokerage account and banking options.

Stash+: This is their most robust option, and is for families who want to save and invest. At $9 per month, you get not only taxable and retirement investments, but you also get up to two custodial investment accounts for your children (note: these are not 529 plans).

These options compare to Acorns, but are slightly more expensive in some regards, although you do get banking at every price point.

How To Get Started In Five Simple Steps

If you want to get started with Stash Invest, the sign-up process is extremely simple. (After you sign up check the bottom of the post for ways to quickly grow that balance.)

# 1 – Click Here To Get Started

Click here to check out Stash Invest online and get started on your desktop.

Click here to get Stash for free on the App Store, you’ll be directed to the app store and you can download the app to your phone.

# 2 – Fill Out Your Profile

Next, you’ll fill out your basic information and answer a couple of questions.

These questions will help Stash guide you on making investment decisions. It’s important that you’re honest with these survey questions because they help determine your risk tolerance.

This should only take a couple of minutes.

# 3 – Choose An Investment

Based on the answers you provided, Stash Invest will show you investment options that line up with your risk tolerance (conservative, moderate, or aggressive.) You can click on the different investments to learn more about them. (Don’t worry they’re explained in layman’s terms!)

The great thing about Stash is that they make investing relatable. Instead of crazy names of ETFs and ticker symbols, you invest in “themes” that are based on your wants, beliefs, or likes. We’ll talk more about that below.

Right now, there are over 1,800 investment options (stocks and funds) available on the platform.

You can invest in these for as little as $0.01.

Link up the bank account you want to have money withdrawn from to make your investments.

It takes about 2-3 days for the money to transfer into Stash.

# 5 – Confirm Your Identity

Verify your identity, create a four digit pin number and you’re all done.

How To Actually Invest With Stash Invest

Stash does things differently than your traditional investing app or brokerage.

Instead of choosing a stock or ticker symbol to invest in, you choose from themed investments.

This is a really great way to make investing relatable, while at the same making investing affordable and easy.

For example, if you believe that Americans will spend more on healthcare simply because they are getting older, you could invest in “Doctor, Doctor”. This investment is based on an ETF that invests in U.S. healthcare companies.

Similarly, you could invest in “Companies”. For example, you could want to invest in a piece of Warren Buffett through his company, Berkshire Hathaway.

When you click on an investment you can see the underlying holdings – real companies that you invest in.

Purchasing an investment is really easy. You just click on the “Add To Portfolio” button and enter how much you want to invest.

Fractional Shares

Fractional Shares are now available on Stash – which is great if you’re getting started with just a little bit of money. Fractional shares of most investments are available on our platform starting at 1¢, and customers can buy a piece of any stock or fund trading at more than $1,000 per share starting with just 5¢.

DRIP (Dividend Reinvestment Program)

Dividends are a huge driver of long term growth and returns – and Stash now includes free dividend reinvestment. Customers can automatically reinvest dividends across STASH’s suite of investment products, including personal brokerage, Traditional & Roth IRA’s and custodial accounts.

What To Do Next

The goal of Stash (and any investment account) is to build your portfolio over time. Stash Invest makes it fun and easy by creating milestones and ways to encourage you to invest more.

Once you make your first investment, you’ll get the milestones based on thresholds:

Stash also tries to show you your potential – by both adding new investments and teaching you the value of investing often.

Over time, you can check in your home screen and see how your portfolio is doing overall.

You can also enable Diversify Me.

  • Diversify Me simplifies the portfolio building experience and guides customers towards a well-balanced, diversified foundation in their investment accounts. STASH’s diversification engine automatically constructs starter portfolios that are tailor-made for each customer. Then, customers can invest their desired amounts with just one tap.

Stash Retire

Stash has a feature called Stash Retire, which is a retirement account option for investors. Stash Retire offers both Traditional and Roth IRAs – and offers the same investment choices you’d find in Stash. You can contribute up to the IRA Contribution Limit in a Stash Retire account.

Stash Retire is part of the Growth Plan, and it is slightly more expensive at $3 per month.

You can still start investing for free, but that could be quickly eroded by fees if you don’t invest more and see investment gains.

Stash Banking

Stash also recently partnered with Green Dot Bank to launch a banking feature on its app¹. They offer a debit account with no overdraft or monthly maintenance fees², access to a large network of free ATMs nationwide³, ASAP Direct Deposit™ which enables customers to get their pay up to 2 days early⁴, as well as Stock Back™⁵ the only rewards program where customers earn stock every time⁶ they spend.

Every STASH customer also receives personal guidance across every aspect of their finances—from spending to saving and investing‚ with actionable advice to help them get the most out of their money.

Of course, the banking aspect connects seamlessly to Stash Invest, to allow you to manage all your money in one place.

Also, with banking, you can do the following:

  • Round-Ups to grow savings on auto-pilot. Every time customers spend, STASH will round-up the purchases to the nearest dollar. Each time the round-ups total hits $5, STASH will transfer the spare change to the customer’s personal investment account.
  • Cash Back gives customers the opportunity to earn up to 10% cash back on everyday purchases. Customers can opt-in and then connect up to three credit or debit cards and automatically earn cash back each time they spend at participating retailers nationwide. Based on customer location, the feature will surface cash back offerings nearby, allowing them to conveniently discover new retailers and great deals at places they already shop. Customers can invest the earnings in their favorite stocks or withdraw the money at no cost.

Bonus: Stash Banking is offering a $50 bonus if you deposit $300 within 30 days. Check it out here >>

The Cons of Stash Invest

The biggest drawback of Stash is the cost. $1 per month may not seem like a lot, but on a small portfolio, the percentage is very high. $1 per month is $12 per year. On a $100 investment that is 12% in investing fees. That’s incredibly hard to earn back, and those fees keep coming. That can really kill your portfolio’s earning potential.

When you look at $3 per month (or even $9 per month), you need to invest a large amount to make the fees competitive to other platforms.

Let’s look at an example to break it down. If you’re interested in Technology Stocks, you might consider investing in Stash’s Internet Titan’s ETF. This ETF is actually ticker symbol FDN, which is First Trust Dow Jones Internet Index Fund. This ETF has an expense ratio of 0.54% – which is pretty high for a domestic ETF.

If you want to invest in a similar ETF at Fidelity, you’d probably go with FTEC, which is Fidelity MSCI Information Technology Index ETF. It invests in the same companies, and it has an expense ratio of just 0.08%. It’s also commission-free to invest in. The Stash ETF alone is 6.75x more expensive to own than the fund at Fidelity. Plus, you have that $1/mo fee on top of it!

So, if you have a $1,000 investment in this fund, it would cost you (per year):

  • At Stash: $12 (the $1/mo fee) + $5.40 (the fund’s expense ratio) = $17.40
  • At Fidelity: $0.80 (the fund’s expense ratio) = $0.80

In percentage terms, your investment would end up costing about 1.74% per year in fees.

At Fidelity, it’s just the 0.08%. So, when you add in the monthly fees, it ends up being 21.75x more expensive to invest at Stash than Fidelity!! All those extra fees are doing is hurting your return over time.

I spoke to Stash about this to see if they had any comment. The person I spoke to justifies the high percentage in fees by looking at what the customer gets in return of spending only $1 a month.

For example, unlike Fidelity, Stash has a beautiful and easy-to-navigate app built specifically with the user in mind (millennials). When a customer signs up to Stash, they are not just there to invest. they are there to learn.

Fidelity doesn’t exactly talk the user through their investment decisions the way Stash does, using layman’s terms the user can understand. Moreover, many people never end up investing solely because there are too many options on platforms like Fidelity!

It turns out millennials may be willing to pay $1 a month, even if by percentage terms that’s a lot, to learn how to invest, get recommendations on what to invest in, and most importantly, form the investing habit.

Alternatives To Stash

But if you’re like me, and don’t like high fees no matter how convenient and pretty the app may be, then I recommend opening an IRA or brokerage account at a mainstream brokerage like TD Ameritrade or Fidelity. What most people don’t realize is that you can open an IRA with no minimum, you can get access to hundreds of commission free ETFs, and you have a great app to use. You essentially can build your entire diversified portfolio for free, on an app.

So, instead of paying high fees and investing in their custom ETFs, you simply get a regular “mainstream” account, can invest in the same ETFs, and experience no fees.

If you’re looking for something that allows you to buy small amounts, check out ​M1 Finance.

Final Thoughts

With Stash, it’s free to get started. This is perfect for anyone getting started. Plus, it’s so easy to understand!

A bunch of $5 investments can add up to something big.

If you want to get started investing but haven’t made the plunge, consider Stash, but also consider other options. For every investing style, there is likely a better and cheaper solution.

Investment advisory services offered by Stash Investments LLC, an SEC registered investment adviser. This material has been distributed for informational and educational purposes only, and is not intended as investment, legal, accounting, or tax advice. Nothing in this article should be construed as Legal or Tax Advice. For additional questions regarding Taxes, please consult a Tax Professional. Investing involves risk.

*Clients may incur ancillary fees charged by Stash and/or it’s custodian that are not included in the monthly Wrap-Fee.

1 Debit Account Services provided by Green Dot Bank, Member FDIC. Investment products and services are not offered by Green Dot Bank, are NOT FDIC Insured, Not Bank Guaranteed and May Lose Value. Account opening for the debit account is subject to Green Dot Bank’s approval.

2 Other fees apply to the debit account. Please see Deposit Account Agreement for details

3 Other fees may apply. Fee-free ATM access applies to in-network ATMs only. For our-of-network ATMs and bank tellers a $2.50 fee will apply, plus any additional fee that the Atm owner or bank may charge.

4 Early access to your direct deposit depends on deposit verification and when Green Dot Bank gets notice from your employer, and may vary from pay period to pay period.

5 Opt-in is required. In order to earn stock in the program, the Stash debit card must be used to make a qualifying purchase. Stock-Back Rewards that are issued to a participating customer’s personal brokerage account via the Stash Stock-Back Program, are not FDIC Insured, Not Bank Guaranteed and May Lose Value. Stash Stock-Back™ is not sponsored or endorsed by Green Dot Bank, Green Dot Corporation, Visa U.S.A., or any of their respective affiliates, and none of the foregoing has any responsibility to fulfill any stock rewards earned through this program.

6. What doesn’t count: Cash withdrawals, money orders, prepaid cards, and P2P payment. See full terms and conditions.

10 Best Investment Apps of 2020

At NerdWallet, we strive to help you make financial decisions with confidence. To do this, many or all of the products featured here are from our partners. However, this doesn’t influence our evaluations. Our opinions are our own.

You can do just about anything on your phone — including invest, thanks to a variety of investment and stock trading apps.

All of the brokers on our list of best brokers for stock trading have high-quality apps. But if mobile trading is most important to you, these 10 investing apps are NerdWallet’s picks for the best of 2020. (Need more info to get started? Read our primer on how to buy stocks.)

on TD Ameritrade’s website

TD Ameritrade

cash credit with qualifying deposit

on TD Ameritrade’s website

cash credit with qualifying deposit

Commission-free stock, ETF and options trades.

High-quality trading platforms.

No account minimum.

Good customer support.

Large investment selection.

Costly broker-assisted trades.

on Robinhood’s website

Robinhood

no promotion available at this time

on Robinhood’s website

no promotion available at this time

No account minimum.

No retirement accounts.

No mutual funds or bonds.

Limited customer support.

on Stash Invest’s website

Stash Invest

cash credit to invest with qualifying deposit

on Stash Invest’s website

cash credit to invest with qualifying deposit

Educational content and support.

Values-based investment offerings.

No investment management.

High ETF expense ratios.

on Acorns’s website

Acorns

no promotion at this time

on Acorns’s website

no promotion at this time

Automatically invests spare change.

Cash back at select retailers.

Educational content available.

Small investment portfolio.

High fee on small account balances.

Want to compare more options? Here are our other top picks:

Summary of Best Investment Apps of 2020

on E*TRADE’s website

cash credit with a qualifying deposit or transfer

on E*TRADE’s website

on TD Ameritrade’s website

cash credit with qualifying deposit

on TD Ameritrade’s website

on Robinhood’s website

no promotion available at this time

on Robinhood’s website

on Stash Invest’s website

cash credit to invest with qualifying deposit

on Stash Invest’s website

on Acorns’s website

no promotion at this time

on Acorns’s website

SoFi Active Investing

on SoFi Invest’s website

career counseling plus loan discounts with qualifying deposit

on SoFi Invest’s website

cash credit with qualifying deposit

in cash bonus with qualifying deposit.

No promotion at this time

No promotion available at this time

Brokerage app FAQs

How much money do I need to get started?

Shockingly little. Thanks to micro-investing apps like Acorns and Stash, you can kick-start an investment portfolio with small amounts of money — just your spare change, in fact. Acorns, for example, sweeps a linked credit or debit card account, rounds up purchases to the nearest dollar and invests the change. Stash offers a similar opt-in feature that rounds up purchases to deposit money in a user’s account.

Beyond the micro-investing apps, the amount of money you’ll need to begin investing after you open your account depends on the assets you intend to buy. Individual stock shares range from as little as a few dollars to hundreds or even thousands of dollars per share. Mutual funds often have minimums of $1,000 or more, but exchange-traded funds (ETFs) are essentially mutual funds that trade like a stock, and they can often be purchased for less than many mutual funds. Don’t forget, too, that some brokers charge trading fees every time you buy or sell an investment. The good news there is that many brokers now offer free trades.

Many of NerdWallet’s picks for best apps have account minimums of $5 or less, so you can open an account right away and over the internet. Here’s more on what a brokerage account is and how to open one.

Which investment app is best for stock traders?

In the summary table above we’ve categorized our best investing apps based in part on price (trading costs and account fees), mobile platform features and account minimums.

What is the best investment app for beginners?

For new investors just learning the ropes, Acorns and Stash are worthy contenders for your first investing dollars. One reason is that their services focus on ETFs instead of just individual stocks, although Stash also offers about 150 stocks.

While the idea of buying individual stocks might be exciting, building a portfolio of stocks requires a fair amount of research and discipline. ETFs offer instant diversification in that they contain shares of multiple companies (dozens, even) like a mutual fund, but trade like individual stocks. (Check out this full explainer on ETFs.)

Although all the other brokers allow investing in ETFs through their apps, Acorns takes a different approach by steering investors towards pre-built portfolios that contain multiple ETFs, diversifying your investment dollars across a collection of stocks and bonds. Portfolios are based on your tolerance for risk — based on your age, goals and time horizon — and automatically rebalanced when the stock market fluctuates. Acorns uses a handful of ETF portfolios that range from aggressive to conservative. Stash doesn’t offer pre-built portfolios but helps investors choose specific ETFs based on themes (e.g., “Clean and Green” is an ETF that holds environmentally responsible companies).

If buying individual shares of companies is something you’d like to do, see our guide on How to Buy Stocks.

What assets can I trade on these apps?

The mobile trading experience varies by broker — and so do the range of available assets. Among the picks for best apps, Acorns offers only ETFs, while TD Ameritrade’s offerings include individual stocks, mutual funds, ETFs, bonds, options and currency (or forex).

Is my money insured?

Just as FDIC insurance insures bank accounts, SIPC insurance insures the money you have in your brokerage account (or robo-advisor account) up to $500,000. $250,000 of that total can be applied to protect cash that you haven’t yet invested. All of NerdWallet’s picks for best apps are members of the SIPC.

However, it’s important to note that investments you make in your account can potentially fall in value or even decrease to zero, and investment losses are not covered by any type of insurance. (Here’s more on SIPC insurance and what it does and doesn’t protect.)

Robinhood Review

Robinhood’s fees no longer set it apart

Investopedia is committed to rigorous editorial standards to provide our readers with the best advice and recommendations. We may receive compensation when you click on links to products we reviewed. Learn more about our methodology and review process.

  • Account Minimum: $0
  • Fees: $0

Robinhood’s claim to fame is that they do not charge commissions for stock, options, or cryptocurrency trading. Due to industry-wide changes, however, they’re no longer the only free game in town. The firm’s target customer base is young people new to investing, who are drawn to the app by advertising that leans heavily on words such as “free” and “democratization.” By and large, this tactic has succeeded, drawing in 10 million customers. But what happens to them when they outgrow Robinhood’s meager research capabilities or get frustrated by outages during market surges?

Important

During the sharp market decline, heightened volatility, and trading activity surges that took place in late February and early March 2020, Robinhood experienced extensive outages that affected its users’ ability to access the platform at all, leading to a number of lawsuits. However, Robinhood’s customer agreement, a multi-page document most customers electronically sign without reading, is intended to legally absolve the firm of any responsibility for these outages.

We’ll look at Robinhood and how it stacks up to more established rivals now that its edge in price has all but evaporated.

Key Takeaways

  • Robinhood’s low fees and zero balance requirement to open an account are attractive for new investors.
  • Customers must pay at least $5 per month for Robinhood Gold in order to trade on margin, view market depth data, and access research, such as Morningstar reports on high-volume stocks. Robinhood customers can try the Gold service out for 30 days for free.
  • Robinhood does not publish their trading statistics the way all other brokers do, so it’s hard to compare their payment for order flow statistics to anyone else. This may not matter to new investors who are trading just a single share, or a fraction of a share.

Who Robinhood Is For

Robinhood is best suited for newcomers to investing who want to trade small quantities and require little in terms of research beyond seeing what others are trading. Robinhood’s overall simplicity makes the app and website very easy to use, and charging zero commissions appeals to extremely cost-conscious investors who trade small quantities. That said, the offerings are very light on research and analysis, and there are serious questions about the quality of the trade executions.

Trading costs are very low and cryptocurrency trades can be placed in small quantities

Very simple and easy to use

Customers have instant access to deposited cash

Trades appear to be routed to generate payment for order flow, not best price

Quotes do not stream, and are a bit delayed

There is very little research or resources available

Pros Explained

  • Robinhood allows cryptocurrency trades to be placed in very small quantities. Most other cryptocurrency-friendly platforms require certain minimums in order to trade.
  • Robinhood’s mobile app and the website are extremely easy to use.
  • Robinhood is very efficient at getting your cash into the market. All customers have instant access to deposits and immediate access to funds after closing positions, and your buying power is increased as soon as you initiate a deposit into your account.

Cons Explained

  • There is no commission charged by Robinhood for trades, but the spread we saw for our cryptocurrency transactions was considerably wider than those we saw on other platforms.
  • Though prices update on the Robinhood app and the website, they lag other real-time data providers by several seconds.
  • New investors who are dedicated to improving their trading skills will outgrow the resources provided by Robinhood, especially options traders.

Usability

Robinhood is very easy to navigate and use, but this is related to its overall simplicity. Robinhood’s initial offering was a mobile app, followed by a website launch in Nov. 2020. As a result, Robinhood’s app and the website are similar in look and feel, which makes it easy to invest through either interface. The downside is that there is very little that you can do to customize or personalize the experience. Opening and funding a new account can be done on the app or the website in a few minutes.

The opening screen when you log in is a line chart that shows your portfolio value, but it lacks descriptions on either the X- or Y-axis. You can hover your mouse over the chart, or tap a spot if you’re on your mobile device, to see the time of day for each data point.

An order ticket pops open whenever you are looking at a particular stock, option, or crypto coin. All the asset classes available for your account can be traded on the mobile app as well as the website, and watchlists are identical across platforms. Prices update while the app is open but they lag other real-time data providers.

The mobile apps and website suffered serious outages during market surges of late February and early March 2020. The founders said in a blog post that their systems could not handle the stress of the “unprecedented load” and pledged to beef up their systems. 

Trade Experience

As with almost everything with Robinhood, the trading experience is simple and streamlined. Robinhood deals with a subsection of equities rather than the entirety of the market, but on every quote screen for the stocks and ETFs you can trade on Robinhood, there is a straightforward trade ticket. All the asset classes available for your account can be traded on the mobile app as well as the website, and watchlists are identical across the platforms.

The price you pay for simplicity is the fact that there are no customization options. If you want to enter a limit order, you’ll have to override the market order default in the trade ticket. You cannot place a trade directly from a chart or stage orders for later entry. Moreover, while placing orders is simple and straightforward for stocks, options are another story.

Placing options trades is clunky, complicated, and counterintuitive. Although Robinhood allows options trading, the platform seems geared entirely towards making market orders for assets rather than actually attempting to strategically use options to profit. This perception is reinforced by the fact that pricing refreshes every few seconds, but the actual pricing data lagged behind two other platforms we opened simultaneously by 3–10 seconds. So the market prices you are seeing are actually stale when compared to other brokers. This will not faze anyone looking to buy and hold a stock, but this data lag kills any idea of using Robinhood as a trading platform.

Range of Offerings

Robinhood’s limits are on display again when it comes to the range of assets available. Robinhood allows you to trade cryptocurrencies in the same account that you use for equities and options, which is unique, but it’s missing quite a few asset classes, such as fixed income. Investors using Robinhood can invest in the following:

  • Stocks: Long only. No short selling. No OTCBB (penny stocks).
  • Simple and multi-leg options.
  • Cryptocurrency: Bitcoin (BTC), Bitcoin Cash (BCH), Bitcoin SV (BSV), Dogecoin (DOGE), Ethereum (ETH), Ethereum Classic (ETC), Litecoin (LTC). Data is additionally available for ten other coins.
  • No mutual funds, fixed income, futures, or futures options.
  • Fractional share investing has been announced but not currently available to all customers.

Order Types

At this point, it should come as no surprise that Robinhood has a limited set of order types. You can enter market or limit orders for all available assets. You cannot enter conditional orders. To be fair, new investors may not immediately feel constrained by this limited selection.

Trading Technology

Robinhood does not publish its trading statistics the way all other brokers do, so it’s hard to compare its payment for order flow statistics to anyone else. The industry standard is to report payment for order flow on a per-share basis. Robinhood reports on a per-dollar basis instead, claiming that it more accurately represents the arrangements it has made with market makers. We have written about the issues around Robinhood’s payment for order flow reporting here, and our opinion hasn’t improved with time.

The way a broker routes your order determines whether you are likely to receive the best possible price at the time your trade is placed. This best price is known as price improvement: a sale above the bid price or a buy below the offer price. Robinhood does not disclose its price improvement statistics, which leads us to make negative assumptions about its order routing practices. The target customer is trading in very small quantities, so price improvement may not be a huge consideration. However, other brokers who also charge $0 for equity trades are offering their customers impressive price improvement, so Robinhood needs to get serious about execution quality in order to stay competitive.

Costs

Robinhood’s trading fees are easy to describe: free. There are some other fees unrelated to trading that are listed below.

  • All equity trades (stocks and ETFs) are commission-free.
  • Options trade for $0—no per-leg fee and no per-contract fee.
  • Trading on margin requires a Robinhood Gold subscription at $5 per month, which includes $1,000 of margin. Margin usage over $1,000 is charged 5% interest, which is relatively low.
  • Account transfer fee is $75.
  • Exercise and assignment fee is $0.
  • Wire fees to send or receive: $25 for domestic wires, $50 for international. It is unusual to be charged to receive a wire.
  • Check fees: $35 to send a domestic check overnight.
  • Live broker fee is $10 per transaction, though it’s not obvious how to contact a broker.

How This Broker Makes Money From You and for You

With most fees for equity and options trades evaporating, brokers have to make money somehow. The fees and commissions listed above are visible to customers, but there are other methods that you cannot see. Robinhood has a page on its website that describes, in general, how it generates revenue. 

  • Interest on cash: Like most brokers, Robinhood generates interest income from the difference between what you are paid on your idle cash and what they can earn on customer cash balances. Robinhood clients, once they make it off the waitlist and design their own Mastercard debit card, can earn modest interest on their uninvested cash, which is swept to its network of FDIC-insured banks. On several pages of the website, the cash feature is labeled “Coming Soon.” 
  • Payment for order flow: Quite a few brokers generate income by accepting payment from market makers for directing their customer’s equity and options orders to those trading venues. This is called payment for order flow (PFOF). We discussed Robinhood’s lack of transparency around PFOF above, but it is worth repeating that this appears to be a major revenue stream for the broker.
  • Stock loan programs: Stock loan programs generate revenue for brokers when the stock held in your account is loaned to another trader or hedge fund, usually for the purposes of selling that stock short. Robinhood retains all the income it generates from loaning out customer stock and does not share it with the client.
  • Margin interest: Robinhood’s margin interest rates are lower than average, though using margin requires paying $5/month for their Gold program whether you are using margin or not.
  • Portfolio Margining: Portfolio margining, which can lower the amount of margin you may need, is not offered by Robinhood.

Account Amenities

  • Robinhood does not offer portfolio margining.
  • Robinhood does not have a stock loan program.
  • Robinhood clients can earn interest on their uninvested cash, which is swept to its network of FDIC-insured banks.
  • Cash sweeps are automatic once a client is enrolled in the program.
  • Clients cannot enroll in dividend reinvestment programs.

Research Amenities

Robinhood’s research offerings are, you guessed it, limited. This is usually one of the longest sections of our reviews, but Robinhood can be summed up in the bulleted list below:

  • There are no screeners for stocks, ETFs, or options.
  • There are no investing-related tools or calculators.
  • The trading idea generators are limited to stock groupings by sector. Once you click on a group, you can add a filter such as price range or market cap.
  • News is available from The Wall Street Journal, Reuters, and Barron’s in addition to videos from CNN Business, Cheddar, and Reuters.
  • Third-party research from Morningstar can be accessed by Robinhood Gold clients ($5/month subscription).
  • The charting is extremely rudimentary and cannot be customized.

Portfolio Analysis

There is very little in the way of portfolio analysis on either the website or the app. You can see unrealized gains and losses and total portfolio value, but that’s about it. The start screen shows a one-day graph of your portfolio value; you can click or tap a different time period at the bottom of the graph and mouse over it to see specific dates and values. There is no asset allocation analysis, internal rate of return, or way to estimate the tax impact of a planned trade. There is no trading journal.

To perform any kind of portfolio analysis, you’ll have to import your transactions into another program or website.

Education

Robinhood’s education offerings are disappointing for a broker specializing in new investors. There’s a “Learn” page that has a list of articles, displayed in chronological order from most recent to oldest, but it is not organized by topic. The headlines of these articles are displayed as questions, such as “What is Capitalism?” or “What is Inventory?”   There are no videos or webinars available, but the daily Robinhood Snacks three-minute podcast gives some market information.

Customer Service

  • All customer service is done via the app or the website.
  • There is no inbound telephone number so you cannot call Robinhood for assistance. If you work your way through an extensive menu designed to narrow down your support issue, you can enter your own phone number for a callback.
  • You can place a trade through a live broker for $10, but they are not there to offer help otherwise.

Security

Robinhood’s technical security is up to standards, but it is missing a key piece of insurance.

  • Mobile app users can log in with biometric (face or fingerprint) recognition or a custom pin.
  • Robinhood encourages users to enable two-factor authentication.
  • New logins from unrecognized devices also need to be verified with a six digit code that is sent via text message or email in case two-factor authentication is not enabled.
  • Robinhood carries no excess Securities Investor Protection Corporation (SIPC) insurance.
  • Through calendar 2020, there were no significant data breaches reported by the Identity Theft Research Center. 

Our Verdict

If you’re brand new to investing and have a small balance to start with, Robinhood could be the place to help you get used to the idea of trading. The extremely simple app and website are not at all intimidating and provide a smooth on-ramp to the investing experience, especially for those exploring stocks and ETFs. While it’s true that you pay no commissions at Robinhood, its order routing practices are opaque and potentially troubling. Robinhood also has a habit of announcing new products and services every few months, but getting them into production and available to all clients takes a long, long time.

If you’re a trader or an active investor who uses charts, screeners, and analyst research, you’re better off signing up for a broker that has those amenities. Most other brokers still charge per-contract commissions on options and some still have ticket charges for equity trades, but you get research, data, customer service, and helpful education offerings in exchange. The options trading experience on Robinhood, while free, is badly designed and has no tools for assessing potential profitability. Even if you are a new investor only interested in buying and holding stocks, there are many zero-fee brokers to choose from now. They may not all have the flashy marketing that backs up Robinhood, but they have a lot more meat to their platform and much more transparent business models.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker 2020!
    Good Choice for Beginners!
    Free Trading Education, Free Demo Account!
    Get a Sign-Up Bonus Now!

  • Binomo
    Binomo

    2nd in our ranking!

Like this post? Please share to your friends:
How To Start Binary Options Trading 2020
Leave a Reply

;-) :| :x :twisted: :smile: :shock: :sad: :roll: :razz: :oops: :o :mrgreen: :lol: :idea: :grin: :evil: :cry: :cool: :arrow: :???: :?: :!:

Broker Commissions Promotion Account Minimum Learn More