i dont use gold for the leverage, but for access to execute trades after hours... do i automatically fall into dumb millennial trading on margin?
Robinhood stock trading app confirms $110M raise at $1.3B valuation
191–200 of 394 posts
Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation
#192Earlier quoted context omitted.
As someone who has looked into but not actively used Robinhood - the main benefit of the Gold subscription is for day traders. With a free account, if I decide I want to sell AAPL and buy GOOG, I have to wait 3+ days before I get the money from selling AAPL credited to my account. With Gold, they basically let you float, so you can immediately get into a new position after getting out of the previous one, without hav…
I'm a current robinhood non-gold user and they actually eliminated this restriction around 6 months ago. Now as soon as I sell a position I can buy my next with the funds from the sale.
Which they have branded the loan they give you until deposits and sales settle "Robinhood Instant". Since you are trading without settled cash in the account, I believe the SEC considers this a margin account.
Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation
#193Their margin rates are very high at best and potentially usury at worst. They are counting on you not using the full amount of margin on the tier you paid for and further, counting on you being too lazy to downgrade to a lower (or no) tier when you no longer need it. There was nothing I could find in the FAQ about them automatically dropping the tier as your use declined.
For comparison - and I have no vested interest here - Interactive brokers currently charges 0 - 100,000 2.41% (BM + 1.5%) and 100,000.01 - 1,000,000 1.91% (BM + 1%) on USD margin loans.
If you think you will be an active user of margin I would go elsewhere unless you can justify savings on the commission side against paying 0.005/shr elsewhere.
Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation
#194Earlier quoted context omitted.
> so your naiive "how people spend their money has no consequences" attitude Who said it has no consequences? People make bad decisions with money their all the time. In fact, many of the working class get their fix in real casinos, where there's no real chance of winning, even if you know what you're doing. But the parent argument is going in the direction of "people shouldn't have the freedom to use this type of pr…
If you gave me a choice between running $1k through a blackjack table, or backing $1k of an unsecured loan for margin trading by a random Robinhood user, I might go for the blackjack.
The loan is secured by the assets purchased, it's not unsecured.
Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation
#195“But ‘how are you going to make money long-term?’ has been a question mark” Bhatt says. Gold has answered that question.” A Gold subscription lets users borrow up to double the money in their account to trade on margin with leverage Wow, so that's effectively opening up new easy to get credit vehicles for unsophisticated investors. How could that go wrong? Even if you are a professional trader you'll take a bath on m…
"Always invest what you cant afford to lose" is a very common investing advice given to beginners. You don't need and an Economics PhD to understand this concept
Wonderful advice, right up there with "Buy High, Sell Low"
Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation
#196Earlier quoted context omitted.
Wouldn't want to enable people to make their own decisions with their money, would we? The fact that you have to make a paid account to use leverage (whereas you can trade indefinitely for free) is deterrent enough for most people who do not already actively manage their investments. I think Robinhood is doing a great service -- I just wish they would expose a better API.
As a small investor, borrowing money to invest is almost invariably a terrible, terrible idea, because any return you make on the investment will likely be cancelled out by the interest paid to borrow the money. I just looked up margin interest rates, for loans of 10 000 or less (which is what we are likely talking about with robin hood) the interest rate is Base Rate + 1.25% which is 8.50% interest. I don't know man…
Where are you getting these numbers? Their rates appear to go from ~4.8-7.2%[1]
Also, it should be noted that Gold is a flat fee based on account value brackets and margin brackets not a percent fee of your margin like every other brokerage. That means your effective margin rate can be much higher. e.g. if you borrow $100 for a $2000 account, you're looking at an effective margin rate of 72%.
[1] https://d2ue93q3u507c2.cloudfront.net/assets/robinhood/legal... (linked to from their FAQ[2], sorry for the sketch URL)
[2] https://support.robinhood.com/hc/en-us/articles/214681823-In...
Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation
#197From my experience having used Robinhood for almost two years now, it's fine up until something happens with your account and you need to talk to someone. Their customer support seems almost nonexistent, no phone number, only an email where their response time is anywhere from a day to a week+ and you have to bug them to follow up. On top of that, the support that I have gotten hasn't been very clear, like they don't know what's really going on with my account. When I have several thousand dollars somewhere with active investments, I don't want to have to wait around and deal with a different support person for each message.
Just recently I had to email them first to find out that they have an issue with my account and "any sell, dividend, etc. will have 28% removed and sent to the IRS." And I "will need to reach out to IRS regarding those funds." They did not tell me anything when they apparently started doing this. I was paying for Robinhood Gold too at the time.
I'm sure most people will have OK experiences with Robinhood, but I'm closing my account and moving to another broker with better support and communication.
Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation
#198Earlier quoted context omitted.
Wouldn't want to enable people to make their own decisions with their money, would we? The fact that you have to make a paid account to use leverage (whereas you can trade indefinitely for free) is deterrent enough for most people who do not already actively manage their investments. I think Robinhood is doing a great service -- I just wish they would expose a better API.
Except it's credit, not their own money, so your naiive "how people spend their money has no consequences" attitude, doesn't hold water. That's the whole point.
Sure. It's Robinhood's money, which they're choosing to lend to their customers. So Robinhood can bear the consequences if the loan can't be repaid. (As others have pointed out, they have ways to protect themselves. Margin calls, forced liquidations, etc)
Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation
#199“But ‘how are you going to make money long-term?’ has been a question mark” Bhatt says. Gold has answered that question.” A Gold subscription lets users borrow up to double the money in their account to trade on margin with leverage Wow, so that's effectively opening up new easy to get credit vehicles for unsophisticated investors. How could that go wrong? Even if you are a professional trader you'll take a bath on m…
Brokerages have been doing this for ages. What's new? There's no test for "sophisticated investor." You fill out a paper form and margin is enabled. Oh, you want options, too? You check another box.
Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation
#200Earlier quoted context omitted.
What are returns like on "boring index-tracking ETFs"?
Ask Jack Bogle... I'm sure he'll have a lesson or 5 for you.
I got here: http://johncbogle.com/wordpress/
But I'm not sure where to go to find information about the returns.