I've made a big investment move in my life and I wanted to share my thoughts so far about the transition I have made to the trading platform Robinhood. This article is completely based upon my own views and expressions and I'am at no way receiving any compensation from the company to publish this review.
I have known about the Robinhood platform for sometime now but due to sheer complacency and comfort with my current brokerage Fidelity I put off ever using it. The two biggest reasons I put off the platform were the lack of a dividend DRIP feature and the lack of a web based version.
As a DGI the dividend DRIP feature was a big deal to me as this is what allows those precious dividends to build upon them self and snowball into a nice pile of cash. This fact alone continually put me off towards the idea of eve using Robinhood for my dividend journey. However, as I thought about it more and more I kept asking myself how much money those fractional shares were actually earning me.
I know I have spent a pretty penny over the past 2 years of my investing journey on trading fees. Exactly to the tune of $526.25. After reflecting on this number and truly digesting it, I came to the conclusion that in the end if I can purchase a single share with $0 commission then that would be better then DRIP. Asking myself if those fractional shares in the end would ever add up to the amount I have spent in trading fees really hit it home to me.
I'm going to take a new approach towards reinvesting dividends. It is a very simple concept and is what truly swayed me to start using Robinhood as an applicable vehicle for my trading. Every time I receive the dividends I will immediately purchase to the whole share value of the said dividend. For example, when I receive my $90 from T I will manually be reinvesting those dividends and purchase 3 shares. Of course I'am going to be rounding up my shares to really knock it out of the park. This works for me and may not work for some other investors because most of the companies I'm invested into have a lower stock price. Obviously if this was AMZN then it wouldn't work out to well.
The second biggest reason was lack of a web browser supported website. I personally hate using my phone for stock trading as I can't monitor live feeds to make the best deal while setting up my trade information. I like the comfort of having numerous browsers up and in real time and coming up with a solid entry point. I have been using my Fidelity platform in conjunction with my Robinhood app for my most recent purchases.
This issue is coming to an end soon also as the company has announced that a web based version is in the works and will be launching early 2018. This was also a big factor in me making the move. Obviously the other big one is having $0 commission fee trades and I'm now able to purchase as few shares as possible without it affecting my funds. This also opens up a new approach to investing that I really like so far. Instead of me racking my brain and purchasing in $1,000 blocks and fighting between taking advantage of dips or opening a new position I can simple purchase a $350 block here or a $500 block here and then put the other $150 into there.
This allows me to take advantage of an upcoming dividend payout, a stock dip and also diversify more often. which, in the end is a win for my portfolio. Another big factor in this is I can diversify with less funds into a higher yielding fund while putting a higher amount of funds into an aristocrat to still keep my yield in the 4% range.
some of the cons to the Robinhood app that I have experienced so far is it's lack of meaningful graphs. The app is splashed with color everywhere and has way to much of a millennial feel to it which really turns me off to it. The app is extremely dumbed-down and I find it frustrating to view the graphs with just a simple line going up or down. It's kind of comical really how they use colors to show if the stock is on the rise or decline.
This leads me to the other con about the app being that their is very little information about any company you search up. The informational part is extremely lacking which just leads me to using a competitors platform to find the information I'm seeking before making a purchase decision. I understand that they are trying to make it simple for new investors but I personally would like to see them add more informational tools to the program.
The lack of pre-market and after hours trading is another negative feature that won't affect me to much but I have made a few after market purchases in the past years which I may have to be strategic about and simply use my Fidelity fund for.
Another really big negative feature to me is the hold time on transferred funds into the app. Robinhood only gives access to $1,000 of all transferred funds instantly with a 3-5 hold time on the remaining portion of all funds. This also won't affect me to much but for example I transferred over $1.3k this week and I couldn't invest my remaining $300 which in the end annoyed me because I did miss a good opportunity on a fund I was going to purchase into with these funds.
The company does have a way around this however and the offer the "gold" level program which to me is BS. They offer different levels of buying power as they call it based upon how much money in premium subscription price you pay per month. The levels are $2k available at $6 per month, 2.5k available at $9 per month and $3k available at $10 per month. This is extremly silly to me but to each is own. I'll find a way to manage with this inconvenience.
The app does have some cool new features such as investment account transfer and refer a friend program. For instance, they have feature where I can transfer all my assets from Fidelity to Robinhood for free. This is a cool feature that some may be interested in but for me I'm going to keep my funds where they are in Fidelity and simply add new capital to trade with to my Robinhood.
The refer a friend option is also very cool as it allows both the referrer and the invited to get a free share of a random company. Year to date I have gotten 2 free shares valued at roughly $10 which isn't much but hey, it's free income right? It would be better if the company offered a solid price of let's say $25 per referral but again, I'm making free trades and making some extra money.
So, how have my first few trades been with Robinhood? Pretty good actually. I made a slew of purchases already on my first week and I really enjoy how I can open smaller positions and diversify easier. I already made 4 purchases which added an extra $49.24 to my annual expected dividend income thus breaking the $2,000 barrier!
PG 3 shares $8.28, NRZ 14 Shares $28, ADM 6 shares $7.68 and EMR 3 shares $5.28
Total annual dividend income is now at $2,045.55. I've broken another single digit barrier and am slowly working my way up!
As everyone can see, this is a brand new style of investing and I'm very excited to give it a try as it has a certain ETF kind of feel to it but I'm the one in charge of making the additions. I'm really looking forward to how this will compare to my old investing style and I'll be able to run a short of experiment to see which way works out better.
Overall, I have mixed feelings about the Robinhood app but I'm going to give it a try for the sake of savings and extreme frugality sake. I would love to have started using this app years ago and have been able to save, earn dividends and investment income of the $500 that I simply gave away for trading stocks. I mean who wouldn't like to save $500 right? I'm really looking forward to having this documented in my Diligent dividend history to retirement also. I really enjoy looking back on previous articles and self reflecting at how far I've come and what moves I have made.
In my closing, if anyone is going to decide to give Robinhood a try, please use my referral link so that me and you both get a free stock! Click here in your mobile browser to get the free stock offer.
Thank you for stopping by and taking the time to read my personal review of Robinhood and I look forward to comments and feedback on what others think about this free plate form!