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Robinhood launches 3% checking account

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Re: Robinhood launches 3% checking account

#361

Post by jkqwzsoo »

gruez wrote: post #270
jcoffland wrote: post #259

Earlier quoted context omitted.

The stock market is a zero sum game. If HFTs are making money then someone else's is losing it. The other traders who's trades are closest are the most likely losers. HFTs will tell you what a great liquidity service they provide but they are doing nothing more than using the equivalent of insider information to skim the cream off the top.

>The stock market is a zero sum game. If HFTs are making money then someone else's is losing it. But who's that "someone else"? It's not the robinhood customer, because they're getting at least the best price on NMS[1]. So what's the issue? Would you rather pay $10/trade so your trade gets posted directly to the exchange and the profit goes to some random investment bank or daytrader rather than the HFT firm? [1] htt…

NMS regulations do not apply to "odd lots" (orders <100 shares). This likely constitutes 99.9999999999% of trades done on Robinhood (and most retail trading, to be fair).

Re: Robinhood launches 3% checking account

#362

Post by deminature »

rchaud wrote: post #358
deminature wrote: post #252

Earlier quoted context omitted.

Perhaps true, there's been an opening for a 'cool' millennial-oriented financial institution for a while now, so perhaps fewer customers will drop off than expected.

Seems like a weak market to go after, given that people likely to respond to a "cool" financial services brand may be a poorer demographic that maybe doesn't have any prior experience with "legacy" financial services providers. So just because they create accounts @3% doesn't mean they'll also open trading accounts.

Millennials may not have money now, but they'll accumulate more wealth as they get older. If you can convert them now, the friction to changing again is high enough that you'll probably still have them when they're worth something.

Re: Robinhood launches 3% checking account

#363

Post by whalesalad »

josteink wrote: post #355

People still have checking accounts? In 2018? And that’s a completely serious question. I literally haven’t seen a check used anywhere the last 25 years. I doubt any place I frequent would accept one. In fact I don’t know a single bank which issues checks... I assume most university students these days wouldn’t even know what a check was, if given one. So where is the market? The past? I mean... you’d need a time mac…

What country do you live in?

In America, the barebones basic place to keep your money is referred to as a 'checking account'.

Re: Robinhood launches 3% checking account

#364

Post by smallgovt »

This is a marketing bait and switch. One of two things must happen:

1) They lower the interest rate down the line after they've acquired a bunch of customers

2) They limit the offer to certain customers who are lucrative

If they sustain this offer for the general public, they will 100% go out of business.

The 5 year treasury rate is currently set at 2.75%. Traditionally, people use treasury bonds as a place to park safe money, but the SIPC insurance makes this just as safe (up to $250K).

Re: Robinhood launches 3% checking account

#365

Post by dunpeal »

graedus wrote: post #340
snowwrestler wrote: post #95

Earlier quoted context omitted.

Maybe: > SIPC insurance provides protection for your cash balance and securities holdings if Robinhood fails financially, but does not cover investment losses due to declines in the value of securities themselves . Emphasis mine. If you put $250,000 into an FDIC-protected checking account, that account holds cash and FDIC protects the full amount of that cash. If you put $250,000 in an SIPC-protected brokerage accoun…

> When the return is higher, the risk must have gone up too, somehow. I want to emphasize this point. You are never* getting returns for free, you are getting paid to take on some risk. If someone is trying to sell you "risk-free" returns that are higher than widely-known market rates, they are lying to you by downplaying, omitting or obfuscating the risk associated with those returns, and warning bells should be goi…

> You are never getting returns for free

Sure, but you can buy US treasury bills, and then your risk is "lose some money if the US government defaults", which is very low.

We all live every day with risks far greater than that risk level.

If you look at the current treasury yields, they are very close to 3%. Add the interchange revenue, and RobinHood can pull a 3% guarantee while still making a (narrow) profit.

If treasury yields go down, then no problem: RobinHood can instantly adjust their returns downward. If they go bankrupt because of an unlikely combination of events - lots of deposits coupled with a very sharp and unexpected decline in treasury yields - SIPC will pick up the pieces and make sure you get your cash and securities up to $500k.

My understanding is that any cash and securities you own when they go out of business is covered up to the limit. So if you have $250k in your RobinHood checking/saving, that will be guaranteed by SIPC.

DISCLAIMER: I am not a financial adviser and nothing I ever post is financial advice.

Re: Robinhood launches 3% checking account

#366

Post by justsayinstuff »

y_molodtsov wrote: post #296
gruez wrote: post #270

Earlier quoted context omitted.

>The stock market is a zero sum game. If HFTs are making money then someone else's is losing it. But who's that "someone else"? It's not the robinhood customer, because they're getting at least the best price on NMS[1]. So what's the issue? Would you rather pay $10/trade so your trade gets posted directly to the exchange and the profit goes to some random investment bank or daytrader rather than the HFT firm? [1] htt…

In 2018 people like to scream about “selling their data” way too much.

In 2018 I'm still not being paid for my data.

Re: Robinhood launches 3% checking account

#367

Post by shadowoflight »

mrnobody_67 wrote: post #173
vthallam wrote: post #17

Link to their blog post instead - https://blog.robinhood.com/news/2018/12/13/introducing-robin...

I wonder if they will cut off people who deposit 7 figures.

The accounts are only insured to $250k, so putting in 7 figures could be risky.

Re: Robinhood launches 3% checking account

#368

Post by coryfklein »

webninja wrote: post #350
sonnyblarney wrote: post #264

Earlier quoted context omitted.

" Their whole business is to encourage folks that should not be day trading to day trade" Also using the ridiculously upside down moral convention that they are somehow 'the good guys defeating the system' i.e. 'Robin Hood'. "We wanted to do something after occupy Wall Street, you know. Something real. So, how about, get all the young people to, you know, put their money into Wall Street" is basically their 'storyboa…

I’m still up 12% (although down from 30%) in this bull market. The trick to buy an array of better companies and to not sell/trade them. Every trade you make gives the HFT MIT quants an opportunity to take money out of your pocket! Hold at least 1 year for the substantial tax advantage, 2 years for gains to materialize (Peter Lynch’s Advice), or indefinitely as Warren Buffet has advised. Also don’t touch or put more…

> The trick to buy an array of better companies

Congratulations, you just reinvented the S&P 500.

Re: Robinhood launches 3% checking account

#369

Post by dragonwriter »

rchaud wrote: post #358
deminature wrote: post #252

Earlier quoted context omitted.

Perhaps true, there's been an opening for a 'cool' millennial-oriented financial institution for a while now, so perhaps fewer customers will drop off than expected.

Seems like a weak market to go after, given that people likely to respond to a "cool" financial services brand may be a poorer demographic that maybe doesn't have any prior experience with "legacy" financial services providers. So just because they create accounts @3% doesn't mean they'll also open trading accounts.

> So just because they create accounts @3% doesn't mean they'll also open trading accounts.

From the Robinhood website fine print “Robinhood Checking and Savings is an added feature to existing Robinhood accounts and is not a separate account or a bank account.”

So, yes, opening a Robinhood Checking & Savings account does mean that they will open a trading account, because they aren't actually different accounts. (And it's a waitlisted feature where you get moved up the waitlisted by referring others to RobinHood, so it's a clear way of getting the overall service in front of more users.)

Re: Robinhood launches 3% checking account

#370

Post by dunpeal »

talltimtom wrote: post #302
abhiminator wrote: post #154

Earlier quoted context omitted.

>Banks are going to have to decide whether they want to raise their rates to compete, or face bleeding customers. I'm sure the big boy banks are here stay. Most of them are in the category of, "too big to fail" (as the crisis a decade ago highlighted) and upstarts like Robinhood are but a blip-in-the-radar than a real threat to the established players, imo.

To big to fail doesn’t really protect them if they lose their costumers. A bank with tons of customers that’s bleeding cash due to a market crash is salvageable(and remember the investment in bailing them out payed off), a bank that’s bleeding cash because it doesn’t have any customers is not salvageable and no longer “big”, so it will fail.

> To big to fail doesn’t really protect them if they lose their costumers.

In fact, if they lose their customers they will no longer be "too big to fail".

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