Robinhood is a popular online brokerage firm that offers a range of investment products, including stocks, ETFs, options and cryptocurrency.
Among its features is the Auto Invest function, which allows investors to schedule recurring investments in their preferred securities.
Recurring investments are automatic investments in stocks, ETFs, or crypto at a frequency of the investor's choosing.
This feature helps to make investing a habit and builds portfolios over the long term.
Setting up a recurring investment on Robinhood is easy:
Recurring investment orders are processed typically between 11 AM ET and market close on the scheduled date, and are typically filled during regular market hours (9:30 AM to 4 PM ET).
If a recurring investment order falls on a day that the market is closed, such as a weekend or holiday, it will be scheduled for the next trading day.
Robinhood fills recurring investment orders by grouping them into batch market orders.
Each batch order is converted into one or more share-based orders that are routed to the market for execution.
To determine the number of shares an investor will receive for a recurring investment, Robinhood divides the investment amount by the weighted average price per share for each batch order.
Investors may receive fractional shares.
Not all securities on Robinhood are eligible for recurring investments.
Securities that have a share price of over $1 and a market cap of $25 million or more are generally eligible, but there are some exceptions.
For instance, Robinhood does not support recurring investments for inverse exchange-traded products or leveraged exchange-traded products.
Robinhood also offers instant deposits, which allows investors to access their money before the bank transfer is processed.
If an investor funds their recurring investment with a bank account, some of their instant deposits may be used to place the order while the money from their bank is on the move.
If an investor doesn't have enough instant deposits available for a recurring order, the order will be placed once the transfer from the bank is added to their brokerage account, which can take up to five business days.
In conclusion, Robinhood's Auto Invest feature is an easy way for investors to schedule recurring investments in their preferred securities, helping them build portfolios over the long term.
However, investors must keep in mind that all investing involves risk, including the loss of principal.
If a recurring investment fails to go through, Robinhood might pause it automatically.
Some reasons for this might include insufficient funds in the bank account, unlinked primary payment methods, trade restrictions, or technical errors.
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