Robinhood is one of the most valuable private companies in Silicon Valley. The stock-trading mobile app is on a fast track for success with plans to go public in 2021.
Robinhood was one of the first trading platforms to provide free stock trading, causing online brokerage firms to cut commissions and helping create the now-manufacture standard of commission-free trades.
Robinhood’due south offerings include disinterestedness, cryptocurrency, options trades, and cash management products. They also accept a premium account for users called Robinhood Gold. This commodity will explain how Robinhood Gold works, what it includes, and who benefits from this premium account.
What Is Robinhood Aureate?
Robinhood Gold is a suite of tools, data, and strategies that allows users to heighten their brokerage accounts with Robinhood. There are four premium features.
1. Bigger Instant Deposits
Using Robinhood Gold, you get instant access to your money with larger instant deposits rather than waiting five business concern days for the funds to articulate. This can increase your buying power, allowing you to invest when opportunities come upwards instead of waiting.
Robinhood Aureate calculates your instant eolith limit based on your account residuum:
- If your portfolio balance is over $50,000, then you have a $50,000 instant deposit limit.
- If your portfolio balance is $25,000, and then yous have a $25,000 limit.
- If your portfolio balance is $ten,000 residual gives yous a $10,000 limit.
- If your portfolio balance is under $10,000, you get a $5,000 limit.
Without Robinhood Gold services, all Robinhood users get $one,000 in instant deposits, regardless of their business relationship value.
ii. Professional Enquiry From Morningstar
Robinhood Gold’s partnership with the independent investment enquiry company Morningstar provides its gilt users with unlimited access to Morningstar’s premium, in-depth stock research reports.
These enquiry reports are available on 1,700 stocks with frequent updates based on current visitor events. The reports cover data including the company’southward business organisation strategy, economical moat, fair market value, risk, and leadership.
Inquiry reports let Robinhood Gold investors to brand more informed investment decisions. They tin be accessed on the Robinhood mobile app as well equally the website.
3. Level II Market place Data From Nasdaq
In partnership with Nasdaq, Robinhood Gold offers its users a wealth of information on the stock marketplace across just the best enquire and the best bid. It shows yous aggregated quantities at the individual asks and bids, which can help investors effigy out the availability or desire for a stock at a given price.
4. Admission to Investing on Margin
Having a margin account allows users to infringe money from Robinhood in order to buy more stocks, giving its users greater potential gains or losses. When you enable borrowing, you have greater buying power represented past your cash combined with what you lot have borrowed from Robinhood.
The Financial Manufacture Regulatory Potency (FINRA) dictates that you must accept a minimum of $2,000 portfolio value, minus whatsoever cryptocurrency positions, in your Robinhood business relationship to qualify for margin trading.
If you lot are interested in margin trading merely don’t want to take on too much additional risk, Robinhood Gold too allows you to set your ain limit as to how much money you can borrow. You can set this limit at whatever amount.
You can track how much margin you utilize in the Robinhood app’s Margin Investing settings. This will tell you your:
- Total Margin, the maximum margin you are allowed based on your portfolio value;
- Margin Used, the portion of the margin you are currently using; and
- Borrowing Limit, your own self-imposed limit on how much money you lot can borrow from Robinhood.
What Is the Pricing of Robinhood Gold?
Robinhood users can sign upward for Robinhood Gold at whatever time, and can try the premium account costless for 30 days. After that, the service costs only $5 a month, with your get-go $one,000 of margin included.
If you use more than $1,000 of margin, you lot will be charged 2.v% yearly margin interest above the $1,000 benchmark. Robinhood Gilded calculates your margin involvement daily, and it’s charged to your account at the stop of each monthly billing bike.
Who Wants Robinhood Gold and Why?
Should you pay the monthly fee for access to Robinhood Gilt? It volition depend on how you plan on utilizing their premium features. If you want to trade on margin, and so you will need a Robinhood Gold account.
However, you also want to consider if you lot will read the inquiry reports that Morningstar provides, or utilize the Level 2 market data when you lot make your investments. It will also depend on if you are probable to accept reward of the larger instant deposits, or if yous aren’t that committed of an investor.
Warrior Trading’s Report
The stockbroker guide, Warrior Trading, created a report to explicate whether each feature of Robinhood Gold is worthwhile. Warrior Trading found that the Morningstar research reports provided past Robinhood Gold don’t give their readers an inherent border, and a favorable rating doesn’t hateful you lot should necessarily purchase the stock. They likewise point out that Charles Schwab and other brokers provide Morningstar reports for free.
Warrior Trading found that the Level 2 Marketplace Data information is more useful, particularly for users to identify short-term supply and demand. They also constitute that the increased instant deposits brand a lot of sense as a feature, as the average Robinhood user doesn’t have a big account rest. Even so, they also point out that stockbrokers like Charles Schwab offer a Bill Pay option where your funds tin can clear within i business day.
Every bit for margin trading, Warrior Trading points out Robinhood Golden’s interest rate is lower than discount brokerages like TD Ameritrade and Schwab, but higher than Interactive Brokers.
Considerations
Before you sign up for Robinhood Gold or similar services, figure out what kind of investor you are, and before you throw all of your money behind risky margin trading, effigy out if you lot have the requisite stock market place knowledge, experience, and objectives, along with enough money in your portfolio and cash account.
The Robinhood platform generally also works better for mobile app users, individual taxable accounts, margin accounts, and cryptocurrency.
Is Robinhood Gilt Worth It?
Because Robinhood Gilded is a margin business relationship, that comes with extra levels of run a risk and financial responsibility. With margin investing, the returns on your stocks directly affect your account value, whether they are positive or negative.
If the stock loses value, the losses are deducted from your account value and not the funds you borrowed. Therefore, margin ofttimes increases your loss only every bit often as it brings higher rewards, which yous need to be prepared for if you choose to invest on margin.
When yous trade on margin, you can lose not but your borrowed money, merely the value of the securities already in your account. Yous will also exist paying interest on borrowed greenbacks for the elapsing of the investment.
If yous bear witness losses that are greater than the limit ready by the broker, Robinhood might make a margin call. This happens when a brokerage platform forces the sale of securities and other assets in your account to make up for your losses. Firms can brand a margin call without contacting you, and you lot are not given a time extension.
However, you tin besides make a peachy profit using margin trading, then every bit long as you empathize the risks and have done your inquiry, it can be a benefit to your portfolio.
You should also consider the pros and cons of Robinhood as a platform generally; in a crowded market place, there are many other options for trading stocks that might benefit you more than.
Pros
Robinhood is a free-trading app that allows investors to trade stocks, options, exchange-traded funds (ETFs), fractional shares, and cryptocurrency trading without paying commission or fees. It also has a new recurring investments characteristic in guild to stand out in the marketplace, and it’due south one of the few brokers that allows its users to trade cryptocurrencies like Bitcoin or Dogecoin.
Robinhood also has no business relationship minimum, and a streamlined interface that both piece of work to its advantage.
Cons
Diverse problems with Robinhood include that it does not offer common funds or bonds, has no retirement accounts, and in that location is limited customer support. At that place is likewise a lack of range in tradable securities and account options.
Robinhood has also been the topic of more than one scandal this yr, with outages, merchandise restrictions, and volatility in the market working to its disadvantage.
In Conclusion
Before you lot cull Robinhood as a trading platform, you should be aware that in December of 2020, Robinhood was charged by the Securities and Exchanges Commission (SEC) for misleading customers, with customer orders executed at inferior prices compared to other brokers. They were also the center of the GameStop controversy in January of 2021 when they restricted trading during extreme market place volatility on GameStop and other heavily shorted stocks.
Choosing your investment platform is a personal decision, and if margin trading and cryptocurrency trading are more than important to you than annihilation else, Robinhood might be your best option. However, since many other platforms offer commission-gratuitous trades now, do your research before committing to Robinhood, or upgrading to Robinhood Gilt.
Imprint image from Robinhood
Source: https://candor.co/articles/tool-reviews/robinhood-gold-a-how-to-guide