Is Robinhood Good For Beginners? Find Out Here
Robinhood rose to prominence because they don’t charge commissions for cryptocurrency trading or stocks. Because this industry can change over time, Robinhood has become more user-friendly for beginning investors and for mobile users in general. They have made the trade experience and options more understandable and simple. At the same time, almost everything is free including the signups with minimal payment for premium accounts.
Robinhood is good for beginners because of free signup, easy usability, simple trade experience, available trading options, and budget-friendly costs. This application has its fair share of advantages, especially for beginners.
In this article, we’ll discuss the advantages that Robinhood can give to beginners. We’ll also justify some answers to the most frequently asked questions, so you’ll be lightened on how Robinhood works. Such questions would include how Robinhood work for beginners, in areas of earning money and the processing days for payment.
Is Robinhood good for beginners?
As a beginner in trade and stock exchange, it’s only wise to have questions about how Robinhood works. Since many trade and stock exchange apps are emerging nowadays, one cannot fully decide which mobile app they should consider. As for Robinhood, it guarantees you many advantages while paying a minimum amount for its service and mandatory fees.
1. Free Signup
Signing up for Robinhood is easy for every new member because they don’t need to deposit any money. This company had promised its new member of attaining high-value stocks like Facebook for free. Upon signing up, you just have to provide your e-mail, password, and mailing address. This information is pre-requisite, especially when consumers are signing up for a financial account.
2. Easy Usability
Robinhood can give you easy accessibility on the mobile app, which makes it easier for you to invest through an interface. However, because of its simplicity, you can only do so little to customize your profile. The order ticket will automatically pop-up if you’re searching for a specific stock, crypto coin, or option. Prices are updated, however, the mobile app may lag while it’s searching for real-time data.
3. Simple Trade Experience
Unlike other mobile trading applications, Robinhood will give you a simple detail in trading. Robinhood also deals not just with the subsection of equities, but also with the stocks and ETFs that you can trade on the app. Therefore, the process for trading and placing orders has been straightforward. Since October 2020, Robinhood permits its customers to auto-schedule investments regularly, so the stocks and ETFs can easily and potentially grow for future investment.
4. Available Trading Options
You can earn and trade money in many ways, such as selling your stocks to different firms and available Robinhood Gold. Robinhood Gold may require you to pay $5.00 per month, a tool that can help you monitor the stocks. If you’re into cryptocurrency trading and investing, it’s also available since it can help you trade in BitCoin, Dogecoin, and Ethereum.
5. Budget-Friendly Costs
Robinhood is not charging you anything for the trading fees, however, there are some areas where you have to pay, such as the account transfer fee and wire fees. At the same time, there’s no account minimum for most investors, while there’s a $5.00 charge for premium accounts per month.
How does Robinhood work for beginners?
Robinhood Trading App is one of the most favorite investing apps among everyday traders and beginners. To comprehend this app better, Robinhood works as a commission-free trading platform, which means that its consumers can invest in cryptocurrencies and stocks without having to trouble themselves with a traditional brokerage.
Before you start downloading an investing app, you must question yourself if this is for a long-term investment or just a temporary setback. Robinhood serves as a great introduction for beginners because it can explain how investment moves most simply. At the same time, you’re most likely to beat the market if you’re planning to do this for a long time.
Should you use Robinhood to invest?
Based on people’s opinions on how the app works, Robinhood received a 4-star rating based on its efficiency. As mentioned above, this app is app-friendly, because it’s committed to keeping the investor’s costs at a very low price. However, one of the biggest fees that a consumer has to pay is the $75.00 outgoing (domestic and international) transfer fee.
If you’re a beginner, Robinhood will introduce you to topics, such as fractional brokers, recurring investment, and fractional shares. To validate their identity as a discount stock broker, they’re boasting more than 10 million users across the world and hosted billions of legit transactions.
Can you make money on Robinhood?
There are two ways, where you can make money on Robinhood: Dividends and Asset Appreciation. The dividend is where the profits are being distributed by Robinhood to its shareholders, while Asset Appreciation comes with the meaning of buying stocks at a low price and selling your stocks at a higher price. Here is the more elaborative explanation about Dividends and Asset Appreciation:
When a company earns a profit, it means it can pay a percentage of the profit as a distribution to the shareholders. This will only happen if the corporation decides to share its earnings with its shareholders, rather than deciding to reinvest their profits. On the other hand, the dividend yield is produced when the dividends are released depending on the portion of the stock price.You can earn money with Robinhood once the stocks are paying out a fair distribution of dividends. However, you have to remember that you have the choice to reinvest that money back, so it would grow. When you reinvest, it would make you earn compound interest.
2. Asset Appreciation
“Buy Low, Sell High” is the lifestyle motto of a successful investor, where they have to buy stocks in a larger quantity with a lower price. Although some investors came out successful using this philosophy, along with it is being consistent with your research on how the market is doing. Trades can come like a flash of lightning, where Robinhood has to handle how to place, limit, or stop the orders.For example, the phone that you bought in 2015 is $115.00. As time passed by, you can sell the phone for $450.00 this 2021. Looking at the capital gain, the total profit would be $335.00 just by following the Asset Appreciation principle.
How do you get paid on Robinhood?
Robinhood can process the payment through dividends automatically, which means that the cash dividends will be deposited directly to the investor’s account by default. If you have enabled your Dividend Reinvestment, you have the option to reinvest the cash that you have received from the dividend payments.
To do so, you have to go to the Account tab in the bottom right corner of the mobile app and search for Statements and History. Tap Show More, and lastly, tap Dividends which is found on top of the screen.
If you have a scheduled dividend that wasn’t paid yet, then the Pending category will appear on the screen. When you click the Pending tab, you’ll find out the scheduled date and amount next to the stock symbol. If the dividends were paid recently, you can click on it so you can check for more information about it.
2. Reversed Dividend
Another term of payment is through Reversed Dividends which means reversing the dividend right after you have received the payment. If this happened, then you can see the reversed dividend in the Dividends tab. This will only occur if the company will amend the foreign tax rate, currency, dividend rate, and critical dates.
3. Dividend Reinvestment
As mentioned, Dividend reinvestment is reinvesting your profit back to the underlying stock or ETF. Once you have allowed the Dividend Reinvestment, you’ll be seeing a list of investments you have formerly owners with a pending dividend you are allowed to reinvest. The only times where the dividends are not allowed to be reinvested is when the equity is not enough for Dividend Reinvestment if the dividend was reversed, or the market was simply closed. How long does it take to make money on Robinhood?
It would be an advantage if you have a Robinhood Instant, where you can transfer your money from the trading app to your bank account. This transaction will take around 3 business days. If there’s a stock that you felt buying, we suggest to keep eyeing on it, yet careful enough of buying abruptly.
Robinhood also has provisional money, where the money will be provided to you immediately after selling the stocks. This is where you are allowed to do an instant transfer. However, this might complicate your mode of payment, as banks and brokers will have to access your funds as soon as they need them.
As for the fractional shares, it is not readily available nor transferable to your bank account, as Robinhood secures the eligibility for fractional shares orders. This security has been in the Customer Agreement and offered through Robinhood Financial LLC, which is one of the biggest subsidiaries for Robinhood Markets, Inc.
Your investment is safe in Robinhood, however, you must be aware of the risk and possible loss you’ll be getting, especially when you’re dealing with a large amount of money. Since Robinhood offers what’s best for mobile users and beginners, and allow you to make investment returns, I’d say that this is a solid choice for investment. Just remember to learn everything about Robinhood before deciding to sign up.