Hello again, readers! In case you didn’t know, I consider myself a multi-niche blog. I like to cover different topics, and today I would like to talk about my experience using Robinhood, the commission-free trading app. You may be considering investing through Robinhood and wondering if it’s really free or not. Well, according to Robinhood’s About section,
“Robinhood is a stock brokerage that allows customers to buy and sell U.S. listed stocks and ETFs with $0 commission.
We believe that everyone should have access to the financial markets and are on a mission to inspire a new generation of investors.”
At first, I found it hard to believe. After looking at other well-known online stock brokers, there seems to always be a fee for stock trading. For example, Trade King cost $4.95 per trade and Scottrade charges a whooping $7 for every online trade.
In the long run, it’s my intention to reinvest dividends. I will save that update for a future post. This post is to let you guys know if Robinhood is really free or not.
My First Deposit
At first, I had no clue about the details of owning stock or what it meant to receive dividends from them. One of my co-workers briefly explained it to me during a conversation where we discussed ways to save for retirement. He mentioned various online brokers and the fees they carried- this included Robinhood.
The idea of owning stocks without having to pay monthly fees or trading fees intrigued me. I wanted to try Robinhood.
I wanted to get my feet wet in the investment market, and considering myself a newbie, I felt Robinhood would be the best start for me. In December of 2016, I began my first investment with just $1.00!
My First Profit
With the $1.00 that I invested, I knew that there wasn’t much that I could buy. Still, I wanted to test the waters to see how it felt to purchase stock. I purchased one share of a company called Sunshine Heart Inc (SSH). It cost just $0.2573. Even with such a small purchase amount, I was not charged any fees.
On January 3, 2017, I noticed that the price of Sunshine Heart Inc went up. To test the “free-trading waters” once again, I decided to sell the one share. I sold the share for $0.3501- I made a $0.0928 profit in just a month!
I know this seems like a low amount, but I highly doubt you would be able to do this with other stock brokers without paying a fee.
Robinhood Pros & Cons
No monthly fees.
No minimum balance requirements.
Can’t trade foreign stock.
No Dividend Reinvestment Plans(DRIP). This means you will have to manually reinvest your dividends, and only when it’s enough to buy a full share.
It’s only available as an app.
Does Robinhood offer free stock trading as they claim? Yes! So far, I have not paid a monthly fee nor any trading fees.
In fact, I’ve already started my “dividend-paying stock collection”, and will be posting updates on the how things are going with those.
If you’re a newbie to the stock market as I am, then I suggest you give Robinhood a try. Just remember, don’t invest what you can’t afford to lose! Until next time…
UPDATE 04/16/17: I have added a list of dividend paying stocks that I have begun investing in. Read 10 Best Dividend Stocks For Retirement.