Robinhood is the most popular investment app among hobbyist traders. In this platform, you are able to buy and sell stocks with potential benefits from different companies or speculate with their price over time. The application takes its name and symbol (the pen) from the legendary English bandit who robbed the rich to give to the poor.
Traders may use online forums like Reddit to push stocks up or down in some companies while challenging Wall Street hedge funds.
Robinhood became a trend and people started to talk about it after the GameStop case, where the platform took part in a speculative scenario that was seen only a few times.
Let’s see how Robinhood app works.
Robinhood is a free trading platform. It offers users the ability to invest in a package of stocks listed on Wall Street and to buy and trade cryptocurrencies. With this platform, it is also possible to invest in gold and ETF, a type of investment fund. All independently, without going through consultants. And also without spending on commissions.
The company was founded in 2013 by Baiju Bhatt and Vlad Tenev, two Stanford graduates, with the goal of “democratizing Wall Street” by giving everyone, even the young and less well-off, the opportunity to make commission-free investments. It is one of the most successful fintech startups in the world.
It is not a new application, but it is undeniable that in recent months its notoriety has grown dramatically and it wants to demolish old powers and business models.
Over the years, Robinhood has been criticized several times for contributing to the “gamification” of the stock market. In fact, with its clean and cheerful interface and ease of use, the application has made entering the world of trading easy for anyone.
Even for those who see everything as a kind of “carefree pastime.” In particular, critics point to the presence of various elements of Robinhood that seem to come out of a video game.
Users, for example, can “level up” and unlock new features or riskier transactions from time to time. There is also an approach similar to that of social networks in the relationship with users.
Between nice notifications full of emojis and actions given away at registration, it is difficult not to notice similarities with the actions implemented by Facebook and Twitter to ensure community involvement.
“We are all investors.” This is one of the most popular slogans on the app. And its purpose is exactly this: to allow anyone to invest in the financial market, even without having large funds available, to play in the stock market. If there was no money involved, it would almost look like a video game. The user creates a profile, chooses which packages to bet on, checks the market, and decides when to withdraw their investments or when to convert them into other stocks.
The more operations you do, the more you level up. And the more levels you purchase, the more opportunities you have to invest. Once you have created the account and entered all the required data, you need to connect the bank account and start investing.
Within the platform, you can search for stocks, see the price and the trend of the stock up to 5 years before. Purchases can be made in both stocks and dollars. You can also set up recurring investments and price limits.
All operations can be done with a few taps on the screen. Robinhood is certified by the Securities Investor Protection Corporation and is regulated by the Financial Industry Regulatory Authority (FINRA). These certificates don’t guarantee that the investments are safe, but they do guarantee that the money will not be stolen in the middle of the operations.
It is important to know that Robinhood is not currently available outside of the United States. Only Americans, with at least 18 years of age, a social security number, and US citizenship, can use Robinhood.
- On the one hand, some accuse the platform of letting inexperienced people “play” with a complex tool. On the other hand, some defend the application by claiming the freedom of the markets, which must be accessible even without intermediaries.However, it should be noted that deposits are guaranteed up to $ 500,000 for securities, and up to $ 250,000 for cash, thanks to Securities Investor Protection Corporation (SIPC), while the fact that the platform is regulated by FINRA makes it sufficiently safe.Despite the deposit protection, there is no real-time customer service available with this app, so if there is a problem with it, it may take some time to get in touch and deal with the situation. You are not protected against the loss of value of the shares during this period.
Furthermore, Robinhood still requires users to make their investments in a lump sum which, without a good understanding of the trading market, is practically a gamble.
Acorn is a platform similar to Robinhood, with the same purpose. So let’s see which one is better:
- Robinhood is completely free in case you use the basic account type. Besides, it doesn’t charge commissions for operations. You can buy many stocks, ETFs, and other investments without fees.
- Robinhood is special for being a full-service stockbroker with many free-to-use features. Within the form, you can trade stocks, funds, options, whatever, all without having to pay commissions.
- Robinhood works quite well for active traders. It’s the perfect site if you’re experienced and looking for low-cost, self-directed stocks, ETFs, and cryptocurrency trading.
- Acorns offer different and diverse options to fund your account and the same platform takes care of the investments for you. While you won’t be picking individual stocks or ETFs like you would the other apps, you won’t have to worry about which one to pick.
- Acorns offer three plans, priced at $1, $3, and $5 per month.
Acorns are best for people who don’t want to worry too much about investing. Well, you just have to enter the application, configure it and let it work alone. The idea is to make long-term investments.