I am not a financial advisor and this is not financial advice!
Robinhood seems like an OK way to keep a free portfolio of ETFs approximating a Vanguard all-in-one fund.
My super-unscientific portfolio is loosely based on Vanguard's LifeStrategy Growth & Moderate Growth funds with a sliver of MGK that seemed to both boost returns and moderate declines.
A $5k portfolio would be 6 MGK (10%), 19 VTI (40%), 23 VXUS (20%), 12 BND (20%), 9 BNDX (10%).
From what I can tell, you can hold this portfolio in Robinhood for free. Shouldn't need to re-balance more than once per year or so.
Stay far away from Robinhood. What a bunch of scammers. Not only is their software terribly buggy - and in core functions, too, like... Oh, I don't know, calculating the actual portfolio value instead of giving a figure 200% off. But their customer service blatantly ignores droves of customers' emails when those customers report bugs or request that their so-called Instant account be degraded because it turns out to be something completely different than what is advertised.
Seems their game is to trick people into depositing money and then trap their money there if the person cares to leave, because that means RH can't front-run the person's trades anymore.
And this by the way is only one of their numerous issues.
No well informed person could conscionably recommend RH. In fact I wouldn't be too surprised if they get sued or even some sort of criminal charges.
I knew that Instant is a margin account. I didn't enter the terms ignorantly.
1. How does RobinHood make money?
2. Why are the bid-ask spreads so much greater on their platform versus others?
3. Why doesn't the application show you how much buying power is coming from the Instant account's margin account versus your own cash?
4. What will the SEC think of a company that misleads novice investor-consumers into a margin account that is branded merely as instant access to funds (even though the terms you have to accept state it's a margin account) and then obscures the actual amount of margin buying power to be used in the app's UI? It's absolutely in RobinHood's business model's financial interest to keep user's money in said margin accounts. That misaligns the company's incentives with the goals of the customers.
I really don't understand the appeal of Robinhood... if you're going to hold stocks for years you really shouldn't be skimping on an $8 commission. Get a proper broker with a reputation.
I use robinhood even though I have a "proper" brokerage account. I would be happy to pay an $8 commission if I knew what I was getting for the money over what robinhood offered, but as far as I can tell I'd just be paying $8 to use a crappier UI to make my trades.
But as already mentioned, this entire portfolio can be constructed at Vanguard with commission-free trades. Their brokerage is better than Robinhood too (fractional shares for one, better execution)
Thanks, this is the sort of answer I was looking for. I just added a brokerage account to my Vanguard 401k account, and I will use that for ETFs from now on.
Well for one, it's about disruption and change. The creators are more than familiar with brokerage, and it shouldn't be a shocker that most brokers do not operate trades, it's mostly electronic.[1] If you're going to hold stocks for years, why not skimp on an $8 commission? If you make a purchase of 100 shares of $FB, it could save you at least $800 for that sale.
Last time I looked you couldn't hold fractional shares (i.e. by reinvesting dividends) at Robinhood. Obviously, most real brokerages such as Vanguard will allow this.
Robinhood seems like an OK way to keep a free portfolio of ETFs approximating a Vanguard all-in-one fund.
My super-unscientific portfolio is loosely based on Vanguard's LifeStrategy Growth & Moderate Growth funds with a sliver of MGK that seemed to both boost returns and moderate declines.
A $5k portfolio would be 6 MGK (10%), 19 VTI (40%), 23 VXUS (20%), 12 BND (20%), 9 BNDX (10%).
From what I can tell, you can hold this portfolio in Robinhood for free. Shouldn't need to re-balance more than once per year or so.
https://personal.vanguard.com/us/funds/snapshot?FundIntExt=I...
https://personal.vanguard.com/us/funds/snapshot?FundIntExt=I...
Pay off your credit cards and max out your 401k/IRA first.