One of the biggest decisions you need to make as a trader or investor is to find the right broker that fits your needs. Robinhood allows you to customize your portfolio and makes investing in financial markets more fun, more intuitive and more affordable, no matter how much experience you have.
Caught up in the shorted stocks story this week? Robinhood's made a name for itself this week due to its involvement with surging stocks like GameStop, AMC and BlackBerry.
1 Minute Review
Robinhood dubs itself the pioneer of commission-free investing, and it's true. Robinhood lets you make unlimited commission-free stock, ETF and options trades with Robinhood Financial. You can buy and sell cryptocurrencies with Robinhood Crypto and can even invest in fractional shares with as little as $1. Invest with just a few taps on the Robinhood app.
- Beginners
How to Open a Robinhood Brokerage Account
It will probably take you less than 4 minutes to set up your Robinhood brokerage account. If you want to look at other competing offers, check out our Robinhood alternatives.
Here’s what you’ll need to get started with the account setup process:
- Social Security number
- A mobile device
- Bank information to fund your account (you can set this up later)
Robinhood doesn’t charge any fees for opening or maintaining a brokerage account and you won’t incur charges when you execute your trades. However, the company offers a Robinhood Gold service starting at $5 per month, which offers investors additional features like larger deposit amounts and after-hours trading.
You can also compare TD Ameritrade vs. Robinhood brokerage accounts.
- Set Up Your Account
First, visit Robinhood’s sign up page, where you’ll provide some simple details like your name and email address. You’ll also receive a prompt to create a username and password. At the bottom of this sign up page, Robinhood will confirm whether you own a mobile device running Android or iOS. The company asks this because all trades are done on its mobile app. You can set up your account on your computer and log in to the app to start investing.
- Provide Your Contact Details
In this section, provide some personal information like your phone number and mailing address. Some other questions you’re likely to encounter here are:
Are you or an immediate family member employed by a member firm of the Financial Industry Regulatory Authority (FINRA)?
Are you or any of your family members a director of a publicly traded company?
Do you or any of your family members own 10% shares in a publicly traded company?
Are you or any of your family members a senior officer of a publicly traded company?
In this section, you’ll also see answers to questions you might have regarding the application process, like why the company needs your mailing address. - Verify Your Identity
Here, you’ll find a page explaining why Robinhood requires your Social Security number. According to the company, this information prevents known terrorists and money launderers from accessing the stock market.
What follows is a page asking for your citizenship status, Social Security number, date of birth, number of dependents, marital status and employment status. Answer these quickly and proceed to the next step. - Fund Your Account
With Robinhood, you won't pay minimum deposits or fees for funding or withdrawing from your account. You can fund your account from various financial institutions, though it isn’t mandatory at this stage. You can fund your account later via the mobile app.
Compare eTrade vs.Robinhood funding options. - Submit Your Application
You’ll need to review the account agreement before you submit your application. Robinhood will send you an email when the account is approved.
- Download the Mobile App
After submitting your application, you’ll redirect to a page that prompts you to download the app so you can start making trades.
- Log in to the Application
After downloading the app, log in with the credentials you created in Step 1. Once you’re in, you will see a message that your account has been approved, as well as a prompt to fund your account.
Check out our Robinhood app review.
How to Fund Your Robinhood Account
You can link your bank account to the app and fund your Robinhood account directly. These funds will appear as pending until they are clear in about 5 business days. Keep the money in your account for these 5 days to ensure that your transfer is not canceled due to a lack of funds. The company allows you to fund your brokerage account from various financial institutions.
Direct deposits allow you to use a paycheck from any job you choose as a means to fund your Robinhood account. You can also set up automatic deposits into your brokerage account on the mobile application. Just choose a schedule — weekly, biweekly, monthly or quarterly — and Robinhood will initiate the deposits automatically.
You can make up to 5 deposits per day totaling $50,000. Robinhood is a user-friendly site, allowing you to cancel transfers as needed.
Understand Fees
Unlike most brokerage accounts, Robinhood is the pioneer of commission-free investing. There are no fees for opening or maintaining an account. Besides, you won’t incur any charges once you make your trades.
Now that there are no fees to pay, you’re probably asking, how does Robinhood make money? Here are some streams of income for Robinhood:
- Robinhood Gold service is a premium feature that allows investors to use margin trading and a few other benefits. This service starts at $5 per month. Note that you can try Robinhood Gold for free for the first 30 days. After your free trial ends, Gold costs $5 and every 30 days thereafter. The free trial only covers the $5 monthly fee and does not cover your margin interest.
- Similar to other stockbrokers, Robinhood earns some interest from its customers’ transfers, services
and premium services. - Robinhood Securities maintains relationships with a number of market makers or trading venues.
- Robinhood generates income on uninvested cash not put in program banks.
There are no hidden fees with Robinhood.
How to Research Stocks to Buy
Robinhood offers various assets you can invest in, from cryptocurrencies to stocks. The company allows you to trade with more than 5,000 stocks, including most exchange-traded funds (ETFs) and U.S. equities listed on U.S. exchanges. However, you shouldn’t buy stocks without some basic investing knowledge.
Look at company annual reports, readily available on their websites. Reading a company’s annual report allows you to easily value a company whose stocks you want to buy. You should focus on metrics like net income, revenue,
Once you’ve settled on the stocks you want to buy, you can easily add them to your portfolio with just a few clicks, whether you’re using Robinhood’s website or mobile app. Then decide the type of order to place for your stock and execute trades according to your order preferences.
It is also wise to ensure that you temper any stock tips or trending investment strategies with evidence and common sense. Given the proliferation of social media investment trends that have, at times, caused the market to shift, you must understand when it is a good idea to invest your money in these trends. There is no such thing as a get rich quick scheme, but you can make some extra money if you treat these trends with care.
You can compare Robinhood vs. Ally Invest for stock investment options.
Enjoy Commission-Free Trades
You can trade ETFs, stocks and options with the swipe of a finger. Its platform combines real-time trading with a customizable portfolio to provide great trading ease for novice investors.
A Robinhood brokerage account also gives you access to financial news, professional research from Morningstar