Why I love Robinhood app

What is Robinhood?

Robinhood Financial is a start-up company based in CA that offers free stock, options, cryptocurrencies, and ETF’s trading. It was established in 2013 and it proved to be a disruptive force to the financial market. Their goal was to make investing available to anyone, not just the people with deep pockets. That’s why trading is free of commission.

The growth of the company is amazing. In 2016 they had 1 million active users, but as of December 2019, the number was 10 million!  And it keeps growing. According to CNBC, two other brokerage companies Charles Schwab and  TD Ameritrade combined have 24 million clients. The pressure that Robinhood put on all banks and brokerage firms was real, and one after the other followed the suit and stopped charging fees for trading. Thanks, Robinhood!

How does Robinhood make money?

Nothing is free in this world, and Robinhood employees should make a decent living. Although using Robinhood doesn’t have to come with the price tag, if you want some extra features you should prepare to pay for it.

The company introduced Robinhood Gold, a subscription service, that offers investors the option to borrow money to trade with. That’s called trading on margin. The fee is $5 per month, plus a 5% yearly fee that investors pay on the money they borrow, but the first $1000 is interest-free. For example, if you turn on Robinhood Gold, and borrow $5000 to purchase some stocks, you will be paying $5 every month until you cancel your subscription and 5% on $4000. You don’t have to use margin, and I do not recommend using it unless you have some trading experience.

Robinhood Gold (RG)

has other tools for investors: bigger instant deposits (that’ the money that still didn’t hit your account but you can use it for trading), access to Morningstar research, with detailed stock analysis and data from Nasdaq.

It is very easy to turn off RG if you no longer want to use it. I always hate when companies make it so hard to cancel their services or subscriptions.

Why I love Robinhood so much?

When I was introduced to investing, I started with what any beginner should start with – Robo-adviser. It was easy to set up the account, and someone else, aka robot, was investing my money for me. After a few months, I decided that I would like to have control over where my money goes and was looking for a good place to start investing on my own. Then, a friend sent me a link for Robinhood, that came with a free stock when I opened the account. I got a share of Zynga! At the time, I had no idea what Zynga was, but hey, I was happy! It was fun! And free!

The best thing about Robinhood at the time was I didn’t have to worry about the commission on buying stocks. Other companies were charging around $5 per trade, so buying only one or two stocks at the time was not a sound investing idea. With Robinhood, I was able to do just that. Buy 1 share at the time. And one more, when I had the capital.  Perfect for beginners.

New features, old love

I consider myself a loyal customer. Once I find a company or a product I like, I stick with it, in good and bad times. I knew that Robinhood is a young company and that there were better brokerage companies out there for experienced investors. However, as a young/inexperienced investor myself, with limited investment capital, I was looking for something that would be easy to understand. Robinhood is very user friendly.

As I was learning and growing as an investor, the company was doing the same. Since I started using the app in early 2018, Robinhood introduced many new products  I believe made many users excited and happy. Here are some of them:

Robinhood snacks

This is a newsletter you receive every morning with little snippets of what’s going on in the market. They are short, super funny but very informative. If you have no time to spend on frantically reading every bit of news (and who has?) this is an awesome chance to catch up with the latest movements on Wall Street. I enjoy them tremendously. And I learn quite a bit.

Cash Management Program

In pre-COVID times, interest rates on savings accounts used to be decent. Not great, but decent. For a long time, I used Ally bank but later switched to American Express. Still have that one, and it offers a competitive rate of 1,15% APY. If you are interested in opening a savings account, you can do it here.

Robinhood wanted to enter that market, and they did with the Cash Management program. Essentially, they partnered with various banks, all members of FDIC,  and offered 2.05% APY on your uninvested cash. “Uninvested cash is money you have in your brokerage account that you plan to invest, but haven’t yet invested or spent“, they explained. They paid interest at the end of every month, with no fees attached.

As with any banks, the interest rates are subject to change due to the market condition. Unfortunately, because of the COVID-19 situation, the APY rate went down to 0.30%. I am positive that once the economy goes back to normal, the rate will be much higher. In the meantime, the money that is not being invested, waiting for the golden opportunity to arise is still collecting some interest. Better than sitting in a checking account with 0% earning potential.

Debit card

At the same time, partnering with Sutton Bank, Robinhood issued a Mastercard debit card, with four different designs, American flag, Black/White, White, and Green/White. A debit card is linked to your brokerage account and you can use it anywhere Mastercard is accepted. If you don’t like plastic in your pocket or wallet, you can decide to have a virtual debit card which you can use for online shopping, or through Apple, Google, and Samsung Pay. Cool, ha?

Robinhood debit card


DRIP is short for Dividend ReInvesting Plan. Simply, when you receive a dividend payment from one of your companies, the money is automatically invested in the same company. The beauty of this program is that you don’t have to buy a whole share, you can purchase FRACTIONAL SHARES, which is one more additional features to the app.

What does that mean? Let’s say the share price of company A is $100. You have 50 shares of that company and every quarter you receive $25 in dividends (50 cents for each). If your DRIP plan is on, that $25 will be reinvested in company A, but you will only buy 1/4th of the share ($100/25). If you do not wish to use DRIP or use it only a few companies instead of the entire portfolio, you can set that up easily.

Another beauty of buying only a fraction of a share is a possibility for a young investor with limited capital to invest in companies that would otherwise be out of reach. Yes, I am talking about Amazon, Google, Apple, etc. For one share of Amazon, you would need to prepare more than 2 grand. But with this availability, it doesn’t matter if you only have 1 dollar or 100 bucks this month to spare, you will still be able to get a little slice of it, just not the whole pie.

I hope we grow old together

Investing is a lifelong journey. I would love to keep using Robinhood app for many years to come. I wish them all the best!

If you decide you are ready to open an account on Robinhood, you can follow this link.

Disclaimer: I am not getting paid for this post. If you use the link above to sign up and link your bank account, both you and I will receive a free stock. It might be Apple, Ford, Facebook, or some other. Good luck!





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