Thursday, September 29, 2016

Robinhood Gold

If you use the Robinhood App for trading stocks, you might have received a notification about Robinhood Gold. You can read more about it here - http://blog.robinhood.com/news/2016/9/28/robinhood-gold.

Robinhood is and has been an amazing app. When I tried reading through about Robinhood Gold, not everything was clear, which was a little troubling. Robinhood Gold lets the users do 2 new things and 1 "new" thing. You'll see why I put "new" in quotes in a bit.

  • Robinhood Gold Feature #1 - Trade 30 minutes before the stock market usually opens, and trade for 2 hours after the markets close.
  • Robinhood Gold Feature #2 - Margin. The Robinhood site says the users can receive a credit of an amount that is twice of the buying power. What is my buying power right now? Under $3. So if I deposit ~$97, I'll have $100 in buying power. With Robinhood Gold, this would be like have $200 to spend on stocks. Traditional brokerages charge interest on this credited money. Robinhood is implementing a subscription system of a flat rate per month. (I'm not sure how this will work if users are losing money, but I have no doubt you'll have to pay back money that you lose). I'm going to look more into this, or I might even try it. 
  • Robinhood Gold Feature #3 - Using money right away from your bank to buy stocks, and using money right away to buy more stocks after you sell stocks. I feel like I could already do this with Robinhood Instant. I don't think this is a "new" feature. 

There is a cost to using Robinhood Gold, which is great. Why is it great? Buying and selling stocks will still be commission free, but Robinhood will also make money with Robinhood Gold. If we want Robinhood to keep growing, it needs to make money. Robinhood is a business. I believe it will someday overtake ETrade and TDAmeritrade, and this is one way that they will do it. Below is a screenshot of the costs (at least at my $ amount invested) to use Robinhood Gold. 

I'll keep digging into this and try and learn more. 

Signed,

Mitch






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