Dash: What's up guys? It's time for
another review. And today we're going to review a very popular investing app. One that's been
getting a whole lot of attention in recent months, Robinhood. We'll discuss the Robinhood apps pros,
cons, price, features even how it makes its some money, and then some... And by the end
of this video, I want you to have a big picture understanding of what the Robinhood app is,
how it works, and whether or not it's an investing app worth funneling your hard earned money into.
My name is Dash, and this is Mind Over Finance.
And to put the YouTube algorithm in its place, please disintegrate that like button.
Speaker 2: When it disintegrates…it disintegrates.
Dash: Founded back in 2013, Robinhood
is a financial services company that allows people to buy stocks, ETFs, and options via a mobile app.
Dash: Here's what
I like about Robinhood. Pro number one, no investment minimums. It doesn't cost you any
money to open a Robinhood account. And you can start with as little money as you like,
whatever fits your budget. And this is a major plus for that beginning investor,
who might want to just invest a little bit of money to get started investing in stocks.
Dash: Pro number two, Robinhood is simple.
The Robinhood app is about as simple as investing can get. So much of what you see in the Robinhood
app is color-coded. So you have these bright reds for losses and these deep greens for gains,
and that makes it easy for people. I've had a chance to tinker around with several
popular investing apps, some offered by some of the full service brokerages,
and I have to say that Robinhood is one of the easiest to understand, straight out of the gate.
Dash: Pro number three, commission-free
trades. The zero commission model for investing in stocks is pretty common now. So this is now
a pro that most brokerage share, but I think Robinhood had a big hand in that, because it was
one of the pioneers of the zero commission model. So bravo to Robinhood for making stock trading
commission-free for all of us. Wait while trading is commission-free, there is more to it. It makes
you stick around because in just a bit, we're going to talk about how Robinhood makes its money.
Dash: Pro number four,
fractional shares. This is a big pro because not all brokerages will let you do this. Yes, you can
buy fractional shares of stock using the Robinhood app. So let's say you had a crazy expensive stock,
like Berkshire Hathaway class A. And I think that stock costs like $301,000 a share right now.
I'm sorry, do you have $301,000 sitting around to buy a stock with? I don't. But I can literally
hop on my phone right now and buy $10 worth of a stock that costs $301,000 per share.
Now, granted that's only 0.000033 shares of the stock, but you can still invest in it.
Dash: Pro number five,
free stock gamification. I really like how when I signed up for Robinhood,
I got a free stock. So Robinhood takes the fun of those old school lotto scratch cards,
remember those? No? Okay. But it turns it into a fun way to get free stock.
It made me want to recommend Robinhood to more people so I could get more scratchcards, Yeah!
And pro number six, Robinhood has a great like button and you should probably press it.
Dash:
Here's what I don't like about Robinhood. Con number one, customer service access.
I'm new enough to Robinhood that I haven't had any customer service issues. But what I
have noticed from digging around in the app, and from searching online is that they handle their
customer service via email. I don't see any phone numbers, I don't even see a place for live chat.
And that is a giant red flag for me. It's pretty common with big tech companies to not give you
someone to contact nowadays. When's the last time you contacted Google or Facebook customer service?
Dash: When it comes to a search engine,
or a social media platform, if I can't get ahold of a live person to solve a problem,
it's not the end of the world. When it comes to my money though,
I want that peace of mind. I want to know that if there's a problem, that there's a live person, or
a team of live people that I can talk to, to get that problem resolved as soon as humanly possible.
Dash: Con number two
limited asset classes. The Robinhood app limits what types of investments you can make. Now this
may change, but at the time of this recording, as far as I can see, I can invest in common stock,
ETFs and cryptocurrency, but I can't invest in things like mutual funds, index funds, or bonds.
Dash: Con number three,
questionable security. I don't know if you've been following Robinhood in the news lately,
but I know I have. I've been reading articles and watching videos from reliable sources
about security breaches and personal information leaks. And that's a really big problem too. The
last thing any investor wants is to give important information to a company only
to have that critical information accessed by someone that you don't want to have it.
Speaker 3: Just how worried
should we be that an institution, as large as Robinhood is unable to protect people in this way?
Dash: And this is the scariest con for me.
Now are Robinhood's cons a deal-breaker? Well, make sure you stick around until the
end of the video, because I'm going to give you my Robinhood rating and my honest thoughts on that.
Dash: As I mentioned
a little bit earlier in the video, it is free to open a Robinhood account,
but when you want to buy stocks and ETFs, you do have to fund this account with your own money.
And with options trading, which I personally don't do, you have to be really careful because you can
end up losing way more money than you expect to, if you don't understand the options really well.
Speaker 4:
It can really hurt if you don't know what you're doing.
Dash:
And now let's take a look at some of Robinhood's most important features together. Let's take a
look at Robinhood's five main screen options. The app starts you off on this icon that looks like
the line graph. At the top of the screen, I can see how much money I have in my Robinhood account.
I can see how my stocks are performing over the course of a day, a week, a month, three months,
a year, or all-time performance. And you'll find Robinhood notifications just beneath that chart.
And if I scroll down, I can see a list of the stocks I own, a list of stocks that's
built into the app already, crip those to watch, this ETFs list is one that I created,
and you can create other watch lists of your own. And if we click on a stock, we can look at the
stocks price, more detailed charts and stats, news, analysts ratings, earnings, and more.
Dash: And if we click on the wallet icon,
it looks like this is just a way for Robinhood to try to get you to invest more of your money
with them through bank accounts, et cetera, that are linked to them. And I don't think you need to
worry about this one too much because it doesn't look like it's a service that's available yet.
And if we click on the magnifying glass icon, we can search for companies,
look at popular lists, look at investment news, see top movers and more. And you click on the
messages icon just to see what messages Robinhood has sent you, and apparently I need to open mine.
Dash: And on our last screen,
the screen with the person icon, we can see our accounts total value, try Robinhood gold,
invite friends to get free stock, sign up for Robinhood's newsletter,
and see the most popular stocks from Robinhood. And in addition, free stocks, investing,
transfers, statements and history, your account settings, and you can get help if you need it.
Dash:
So if it's free to open a Robinhood account, and trading is commission-free
and, it's all sunshine and rainbows for the investor, how do they get paid?
Oh, they get paid. We won't go into all the details of how Robinhood makes its money
because that's a deep rabbit hole to go down. But let's look at a couple of major ways that
Robin hood makes money off of you as an app user. One way that Robinhood makes money is offer of
Robinhood gold memberships. Robinhood gold is the upgraded chunkier, more feature heavy version of
the app that costs users $5 a month. And the other big way that Robinhood makes its money
is on the back end of all of those trades that they make every day. This is the side of stocks
and options that we don't see as consumers and it's called payment for order flow.
Dash: And it rakes in
hundreds of millions of dollars for Robinhood. So users place orders on the Robinhood app every day,
right? And if I've got this right, Robinhood has a relationship with a market maker that fulfills
these orders that you and I make every day. And because Robinhood is bringing in so many orders,
the market maker gives Robinhood a rebate when these trades happen. Now, I don't think it's a
ton of rebate money that Robinhood gets for each of these trades, but don't quote me on
that. But when you have 13 million users and growing this adds up to some serious money.
Dash:
Robinhood is great for the beginning investor. With its fractional shares, Robinhood is also
great for the person who might not have much money to invest. Robinhood is great for the
investor who wants to focus on common stocks. It's also for the investor who likes to keep it simple.
Dash:
I don't think Robinhood is the best platform for the seasoned investor,
because you have limits on what types of trades you can make, and what asset classes you can
invest in. I don't think Robinhood standard app is good for heavy stock traders. I don't do any
stock trading at all, so I'm definitely not the definitive voice on that. Robinhood gold may be
good for traders, but I can't say for sure because I've never used it. I don't think Robinhood is for
the long-term conservative investor. Why? Because you can't buy index and mutual funds. Personally,
I use Vanguard for those, and I don't think Robinhood is for the overly impulsive investor,
because it's so easy to buy and sell stock, or to get involved with options on Robinhood,
I think that can quickly turn into a double edge sword for an overly impulsive investor.
Dash: Robinhood is an app that makes it easy for almost
anyone to get started investing in stocks. And that's great, but Robinhood is still a very young
investing platform. And as of late, it's had its fair share of very public customer service and
security issues. And all things considered, I'm going to give the Robinhood app a B-.
Speaker 5: I'm sorry guys,
I'm going to have to change that rating. I've been teetering on C+ and B-, but I'm
going to have to go with the lower. We're going to have to go with the C+ because I
just can't ignore those security issues. I know not everybody's having them, but they're there.
Dash: Now, I don't think that Robinhood's cons
and issues are necessarily a deal breaker, but in a space like FinTech, where things move so fast,
you have to deal with issues like these swiftly and definitively.
And because Robinhood is a newer, more untested platform, how they deal with these challenges,
and whether or not the company changes for the better only time will tell.
Dash: Well, that will do it
for today's Robinhood review, as always, thank you so much for watching. If you enjoyed this video,
please don't forget to turn that like button blue. Share. And if you're brave enough, subscribe
and join me on this journey to grow Mind Over Finance to 1000 subscribers strong.
If after doing that your own research, you'd like to try Robinhood for yourself and get a
free stock, I'll leave a link to Robinhood in the description box below. And yes, I also get
a free stock when you sign up. And what do you think? Is Robinhood an investing app worth using?
Let me know in the comments below, and I'll catch you in the next video. Till next time guys, peace.