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Written by Cari Scribner on December 6, 2020
Category: 
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Robinhood Gold Review 2021: Is Robinhood Gold Worth It?

Robinhood Financial LLC is a broker platform that opens the doors to the financial markets by offering commission-free trades on an easy-to-use mobile app.

It does not require any account minimum to get started. 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 a premium subscription called Robinhood Gold. Is it worth it?

Here's what we think...

What Is Robinhood Gold?

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:

  1. Larger instant deposits ($5,000 to $50,000)
  2. Professional Morningstar research reports on over 1,000 popular stocks
  3. Level II market data
  4. Access to margin (interest paid separately)

So, the main perks associated with Robinhood Gold are the access to margin trading, 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.

robinhood gold

What Does Robinhood Gold Cost?

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 have a magnified effect on 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. 

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What Is 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. This way you are able to open larger positions to magnify your results.

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.

You'll also be paying interest on any borrowed cash throughout the duration of the investment. This will be a fixed cost that can eat away at your investment the longer you hold it.

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 have a greater impact on 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.

robinhood gold features

How To Check Your Margin

You can track how much margin you can use in the Gold settings screen.

  • Total Margin - The total margin that your account is allowed to have based on your account equity and the volatility of your holdings.
  • Margin Available - The margin available in your account is based on the minimum of your total margin and your borrowing limit.
  • Margin Used - The portion of your margin available that you are currently using.
  • Borrowing Limit - Your set maximum limit on the amount of money you can borrow.

What Are Instant Deposits?

With all brokerage accounts, when you deposit cash into your account you'll have to wait for that cash to settle before you're able to invest it. This is done to protect the brokerage and it can take up to five business days for your funds to be available of Robinhood.

However, Robinhood will allow up to the first $1,000 of that investment to become available instantly. This is called an instant deposit.

With Robinhood Gold, this amount will be raised to anywhere from $5,000 - $50,000 depending on your account size and the amount of trust that Robinhood has with you.

In the case of Instant Deposits, they are essentially giving you a very short-term interest-free loan because they have not yet received your money. For this reason, the amount they will extend to you is based on trust.

What Is Level II Market Data?

With many trading apps like Robinhood, their goal is to keep things simple so they only provide you with Level I Market Data. With Level I Market Data, you're only able to see minimal information about the bid and ask on different securities.

As a long-term investor, this likely won't make a huge difference, but as an active trader, you'll want to have as much information as possible on your trade. That's where Level II Market Data comes in.

Level II Market Data provides additional data about the bid and ask prices of securities. Instead of just showing you the current bid and ask, you'll be able to see the next 10-15 bid and ask prices as well as the lot size of each. This provides you with a wider picture on what the market for that stock is like and gives you a leg up over other traders.

Without this information, active traders are putting themselves at a bit of a disadvantage. However, there are apps like Moomoo that provide Level II Market Data for free.

Is Robinhood Gold Worth It?

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:

  1. Will I read the Morningstar research reports?
  2. Will larger instant deposits allow me to get in on an investment sooner?
  3. Does Level II quotation data mean anything to me?
  4. Do I plan on using margin?

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.

Keep Reading:

is robinhood gold worth it
Article written by Cari Scribner
Cari Scribner is a career journalist with 20 year’s experience writing for newspapers and magazines. Now a freelance writer, she is also a published fiction writer with more than 15 short stories in literary mags. She recently completed a novel that is on the desk for consideration at two publishing houses. She lives with her two small dogs, Miloh and Lucy, in Upstate NY.

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