Robinhood Financial is a broker platform that opens doors to the financial markets by offering commission-free trades on an easy-to-use mobile app.
It does not require any account minimums. They don’t charge any fees when you open an account, transfer funds to it, or for for maintaining your account.
However, for $5 per month you can get access to something called Robinhood Gold. Is it worth it?
Here's what we think...
Anyone out there with a Robinhood account can try Robinhood Gold for 30 days. After that, they will charge you $5 per month.
Here's what this will get you:
So, the main perks associated with Robinhood Gold are the research reports, better data and larger instant deposits. This means you can invest a larger amount of money immediately rather than having to wait for your deposit to settle from the bank.
For $5 a month, you get all the Robinhood Gold premium features.
The platform will include your first $1,000 of margin. Robinhood will charge you $5 every 30 days at the beginning of your billing cycle.
If you use more than $1,000 of margin, you’ll pay 5% yearly interest on the amount you use above $1,000. Robinhood will calculate your daily and charge your account at the end of each billing cycle.
Robinhood Gold is a margin account, so there are additional risks and responsibilities you should be aware of. With margin investing, the returns on any stocks bought on margin directly affect your account value, whether they’re positive or negative.
You DO NOT need to use the margin features if you choose to purchase Robinhood Gold. You can simply say no to margin investing.
Investing on margin means that you’re borrowing money from your broker to buy stocks. This lets you invest more money - your own money plus borrowed money.
It lets you leverage more money without having to sell off any of the assets in your current portfolio.
It’s vital to remember that when you use a margin account, it could result in both major profits or huge losses. This is because it’s possible to lose not only the borrowed money, but also the value of the securities in your cash account.
If you start to show losses that are greater than the limit set by the broker, this can lead to Robinhood making a margin call. When this happens, the brokerage platform can force the sale of securities or other assets in your account.
The firm can also sell your securities or other assets without contacting you. You are not entitled to a time extension while in a margin call.
Margin trading involves interest charges and risks, including the potential to lose more than deposited or the need to deposit additional collateral in a falling market.
With margin investing, the returns on any stocks bought on margin directly affect your account value, whether they’re positive or negative. If the stock loses value, the losses will be deducted from your account value—not the funds you borrowed—so it’s possible for margin to increase your losses.
You can track how much margin you can use in the Gold settings screen.
At the end of the day, whether or not Robinhood Gold is worth it for you comes down to whether or not you plan on using it.
Ask yourself the following questions:
If the answer to some (or all) of these questions is yes, it might be something to consider. The good news is you can try it free for 30 days to see if you actually use it!
However, every investor must make up their mind about whether to venture into margin trading. It depends on a wide array of factors, including your knowledge of the market, experience, your specific investment objectives and the value of your portfolio and cash account. It is extremely risky!
Think carefully before you sign up to trade on margin on this – or any - financial platform.