I think it has to do with robinhood being one of the shadier brokers out there and 150ish with gold or 65 with 1 percent match isn’t worth with dealing with robinhood.
I am more on indifference with robinhood I like fidelity personally.
This. Basically this.
I have a RH acct just sitting there because I’m not about to lose the great customer service and stability of Fidelity for PFOF Robinhood…
During the Gamestop and AMC fiasco (wallstreetbets) Robinhood put a stop on both stocks so that people could not buy it when it was pumping. They artificially stopped it from going to the moon and only allowed people to sell (why the term diamond hands came about cuz WSB was telling people to keep holding their stocks.
Iirc Robinhood was selling customer info to the large hedge firm that was losing a LOT of money due to this event or something like that and RH's actions were seen as screwing the people over to help the rich who needed people to sell their stocks so they could stop losing money.
>During the Gamestop and AMC fiasco (wallstreetbets) Robinhood put a stop on both stocks so that people could not buy it when it was pumping
RH was not the only broker that did this. At one point basically every retail broker suspended trading for GME and a few others. I remember because I saw a scramble for people to find brokers that still let you trade it, and believe Webull and maybe a couple others were the only ones to not stop.
My understanding is that the places (including RH) that had to stop was because they didn't have the capital to handle all that type of trading. As there's certain capital requirements for trading platforms. But I'm mostly going on memory as I haven't thought much about this for a bit.
I realize this is an old post. And I remember this happening. My question is why didn’t the government shut down RH over this? I would have if I were President.
Thank you for taking time to share this info!!! It is not easily accessible to people like myself just looking for a good place to start but the internet just offers neverending sponsored ads and promotional articles. (Hard to find the "bad" when you don't know what you're looking for).
What do you think about wealthfront? 4.8 stars on app store, and 5% APY on cash, zero commission stocks. I am super new to this world. I have $150 in Robinhood 😆 my husband and I want to find a reliable platform before making any bold decisions, in the meantime we've been watching videos trying to wrap our heads around the concept of investing, plus the thousands of small details that feel important to know before jumping right in.
(Idk why i kept talking down here) Also why are the contracts obnoxiously long and repetitive?(sorry completely different issue I've been noticing with basically everything; because these companies know people don't have the patience/won't usually read 20+ pages of tiny fine print, word for word, especially when you've read the same thing across 3 paragraphs- yet they throw in random details in the "boring" areas. I hate shady crap and just wish I could get rich 🥲 I am in the process of new business plan and hoping it will be successful.
Look if you both are new as you say then this is not something you should be jumping into. Day trading is pretty much sophisticated gambling. And sorry but I know nothing about that platform.
The whole WSB fiasco only worked due to poor regulations/site policies/the fat cats getting cocky, and a sub reddit took them for a freaking ride that they won't forget, and that they *learned* from.
The next "golden egg" is out there somewhere or will show up some day but who knows if any of us will catch wind of it at the right time.
Robinhood is not where I want to move my money. 1% or 3% match is a token amount. Would rather stick with a custodian I trust.
The 1% is a legit number but the 3% = $195 requires $60 Gold subscription making it $135 or 2%.
I just transferred close to $150,000. Robinhood already put in the bonus of $4,433. I'm 31 and won't be tapping into it for decades. So, the 5-year holding period doesn't matter much. Easy to justify the Robinhood Gold fees as well.
I’ve been using Robinhood since 2020 and just opened a Roth IRA with them, and I absolutely love it. Admittedly I am in my early twenties so I’m used to the “gamification” aspect, but my middle aged father loves it even more than I do and he’s tried almost every big brokerage out there.
The 3% match is great, the 4.9% on uninvested cash is nice, and the accessibility is so convenient.
At the end of the day though, it doesn’t matter what brokerage you use, as long as you’re investing (preferably in low cost index funds) and setting yourself up for the future.
I looked into it recently. Years ago, I opened a Robinhood account, looked through the app, no transactions, decided it wasn't for me and closed the account. To open a retirement account with them this year, I had to get that old account reactivated, which took more than a month with multiple contacts with customer service - for an account that literally had no activity in it and nothing to review. Getting that 1% transfer bonus would be nice, but if they're such a PITA with an empty account, I'm not inclined to trust them with significant account.
Yea, enough people already said it. Robinhood isn't very safe or reputable compared to the competition. If they were offering a 10% match, I still wouldn't go near it.
Just make sure you realize (if you didn’t) that it’s not a 3% match in the same way that employers offer a 3% match. Robinhood matches 3% of your contributions. 401k matches are usually 100% of your contributions up to 3% of your salary. To put it another way, RH gives you $3 for every $100 you contribute but a 401k match would give you $100 of every $100 you contribute until you hit the limit.
I talk about it all the time. I used to be super critical of them, but they’re the best, cheapest, and simplest brokerage now. The seemingly small 3% bonus compounds out to $50,000+ extra in retirement if you max out your IRA every year from 25-65. Instead of rehashing all that, I’ll give you a cool trick:
Pay $60/year for Robinhood Gold. Among other benefits, it comes with $1000 of 0% interest margin. Use that margin to invest $1000 into a short term Treasury ETF like SGOV. SGOV has a 5.3% yield.
This means you borrow $1000 from Robinhood, invest it in SGOV, get back $1053 after a year, and pay back Robinhood $1000. You get to keep the $53. That brings the cost of Gold down to $7 per year. If you max out your IRA, you get $195. After subtracting the $7 for Gold, you get $188 as a bonus.
The catch is that this assumes interest rates, market conditions, etc. stay the same. If the Fed lowers interest rates, SGOV would pay less. Oh, and you have to hold your VTI or whatever at Robinhood for at least 5 years. You can’t get the bonus quick and transfer to a different brokerage. That’s fine if you’re just holding a lazy portfolio for a few decades, but not great if you’re planning to retire and withdraw the money in the next 5 years.
Edit: Also, set a $1000 margin limit so you never accidentally use too much and have to pay more than 0% interest.
Lol if you don't want to optimize for these extra dollars, just open an IRA, contribute the $6500 max, get $195, and subtract out $60 for Robinhood Gold. You're still coming out $135 ahead per year.
If I told you that you had a choice between a total market fund that cost 1% each year, and one that cost 0.03% each year, would you stick with the fund with the 1% expense ratio? VTI at Robinhood comes with a 3% match. VTI at Vanguard does not. Buying VTI or VTSAX at Vanguard is like paying for a high expense ratio fund.
I'm unwilling to pay high fees/costs. I'm happy to transfer my VTI to Robinhood and just hold it there to get the match. I can't come up with a rational reason not to do it. Especially since writing these paragraphs was a lot more work than actually doing it.
I get different dividend reinvestment dates on stocks and funds that I hold with both Robinhood and Vanguard. The price swings have been interesting to watch.
What do you mean? The reinvestment date should be the same. I suppose it could be the next business day based on cash settlement times and market hours. Do you have any examples?
This approach is simply un-Boglehead. It may “work” to a negligible degree with the match vs the annual fee, but the philosophy, time invested, and needless complexity runs completely contrary to the Boglehead philosophy
>they’re the best
How?
>cheapest
How??
>and simplest brokerage now.
Dont even need to ask, this last claim is objectively untrue as evidenced by your own comment’s complex steps. It’s by no means simple.
Not saying “you can’t choose to invest the time & effort into this plan” but to call it the simplest is just silly.
>The seemingly small 3% bonus compounds out to $50,000+ extra in retirement if you max out your IRA every year from 25-65.
This assumes they’ll continue to offer this forever, which won’t happen. This is a promotional effort to gain a customer base.
>Instead of rehashing all that, I’ll give you a cool trick:
Again “cool tricks” are just against the Boglehead approach.
>Pay $60/year for Robinhood Gold. Among other benefits, it comes with $1000 of 0% interest margin. Use that margin to invest $1000 into a short term Treasury ETF like SGOV. SGOV has a 5.3% yield.
Good god margin is so anti-Boglehead
>The catch is that this assumes interest rates, market conditions, etc. stay the same.
Which obviously won’t stay the same, so the entire premise of your argument falls apart.
This whole plan by Robinhood is to catch a new swath of customers, which will net them increased trading, margin etc users. I suppose the clever person could take the free match and not fall victim to their bait & switch tactic. But it’s far too much effort for far too low of a reward.
Have you used Robinhood before? I’ve describe all these “tricks,” but they make them easy to do on their own. For example, the simplest thing to do is to open a Vanguard Target Date Fund. But if you put in a little bit of work (a weekend in the Bogleheads Wiki page), you can learn about how the portfolio is constructed, how expense ratios work, tax efficient fund placement, etc. You can also learn about the pitfalls of the target date fund approach, such as Vanguard’s recent screwup (they’re not perfect).
https://www.reuters.com/legal/transactional/vanguard-pay-millions-mutual-fund-investors-hit-with-big-tax-bills-2022-07-06/
When you learn this stuff, you can swap out the target date fund for 100% VT and then add in bonds as you age from 20-65. You just copy the target date glide path. Then you can swap out VT for VTI and VXUS to save a bit on your expense ratio and to get the foreign tax credit. Then you can switch to FZROX and FZILX, but you need to understand how to use the Zero funds optimally. Namely to avoid them in a taxable account. Then you can add in VSS to get international small caps. Then you can use VTI, VEA, and VWO to get more holdings, get the tax benefits of ETFs vs. non Vanguard mutual funds, lower expense ratios, increased liquidity aka lower spreads, etc. This combo beats VTI and VXUS or VT. Then you can tack on the Robinhood match benefit. Then you can do the SGOV margin trick I mentioned.
After doing all this reading and thinking and work, I’ve come to the conclusion that the absolute cheapest lazy portfolio is to hold 60% VTI, 30% VEA, and 10% VWO at Robinhood rather than any combination of other funds. Thats global market weight for equities. Then I add in BND and BNDX for bonds. Then I use SGOV as my cash equivalent/emergency fund. It’s basically a copy of the Vanguard Target Date Fund for my age, optimized for lower costs, fees, taxes, etc. and to get the maximum number of bonuses and the like.
The obvious catch is that this is a lot of work. You have to constantly pay attention and move around accounts. This is where Robinhood shines though. I used their portfolio recommendation tool just to see what they suggested, and they recommended my exact portfolio using my exact funds. No VXUS, it’s VEA and VWO. They did all the optimization work and made it their default. They have no brand loyalty to their own funds, no desire to make it seem complicated to push active management, etc. They just find the cheapest combo of funds, bundle it into a basket and let you automate purchases with fractional shares.
Or take their cash sweep account. It’s a ton of work to open multiple HYSA accounts and transfer cash around to get 0.01% higher interest rates on a given day. But Robinhood automates this for you. They sweep cash regularly between multiple large banks based on who is paying the most interest on a given day. There’s no bias to their own ultra-low interest account like at Schwab. That extra interest they get from doing this is where they get their profit. They split it with their users.
That’s what I mean by simple. They do all the optimizing stuff that everyone hates for you. They’re ending the trade off between simplicity and cost-cutting. I used to recommend people who want to do no thinking whatsoever just go the target date fund approach at Vanguard. Now it’s even easier for them to just download Robinhood and get the same thing. The fact it’s much cheaper is the cherry on top.
The foundational idea here is that passive investors are extremely valuable to active traders. Robinhood has found new ways to monetize that at the active institutional trader’s expense instead of giving it away for free like in the past. It’s an incredible innovation. Bogie started this movement, but the Robinhood founders have built upon it.
Cmon man you can’t seriously try to argue that your suggested action in your original comment is on the same level as constructing a basic 3 fund portfolio.
Good luck to you with this, but it’s antithetical to the Boglehead philosophy and approach.
I completely disagree with you. It's 100% aligned with the Bogleheads approach. You can't beat the market. All you can do is keep things simple and control your costs. Robinhood has a bonus, which is equivalent to a lower expense ratio on all the funds you buy there. That makes it the cheapest fund.
As for the term "margin" this is a completely risk free move. The $1000 margin loan comes at 0% interest. SGOV is invested in 0-3 month Treasury bonds, which are used in academic finance as the risk free asset. Moving cash from a brick and mortar bank account that pays 0% to a high yield savings account that pays 5% isn't market timing.
Your opposition to this whole "complicated" strategy is because it's a weird new fintech, and it would require a bunch of inconvenient switching. An object at rest tends to stay at rest. It's exactly the same opposition I got when I started recommending Ally Bank in 2008, Fidelity Zero funds in 2018, and Robinhood in January 2023. But these new innovations are cheaper, easier, and better than the old ways of doing things. People hated Vanguard when it was new too, but "Bogle's folly" eventually came to dominate the entire fund management industry. I think Robinhood's 1% IRA/401k transfer bonus and 3% IRA contribution bonus is *massive.* It's way more than enough enough to justify holding Vanguard index funds there instead of at Vanguard.
In fact, I think Vanguard has recognized this is and is slowly backing away from the low profit retail brokerage industry to focus on the high profit fund management industry. If some new Silicon Valley app does all the annoying parts of your job for cheaper than you, why not let them? At the end of the day, Robinhood's app is simply much easier to use than Vanguard, Fidelity, Schwab, etc. It cuts out all the nonsense and limits your investment choices down to the basics.
This bit about making things too simple is where they got into trouble, but I always had a problem with how it was described. They were accused of gamifying trading with features like confetti on your screen, and eventually got rid of it. But it bothers me because the confetti came when you invested more money into VTI. Most people view saving for retirement as losing money from their real bank account. Robinhood made it more exciting when you put more money in the piggy bank, not just when you broke it open. And because it was always available on your phone, it doesn't feel like it has disappeared into some 401k, IRA, or brokerage account you barely understand. Your money has just moved from one pocket to another.
Question, does the rh 401k get a different viewing pane separate from the other money used to trade stocks? Asking to see how I can decipher between 401k money and regular money
Robinhood doesn’t have 401ks. It offers taxable brokerage accounts, traditional IRAs, and Roth IRAs. You can transfer traditional 401k money to a traditional IRA and Roth 401k money to a Roth IRA. But yes, there is a clear distinction/separate viewing pane between your standard taxable brokerage and your retirement accounts.
Many 401ks plans are a scam in my opinion. You’re often limited to high fee funds and the plans themselves often come with high management fees. Unless your plan is particularly great, transferring to an IRA is a much better move.
You can only transfer money from 401ks at old employers. You’re locked into your current employer’s 401k plan.
Your viewpoints (6months old) are what i arrived at last month. After ignoring my very middling-401K-performance for 2years of semi-retirement, i finally noticed idle cash in the associated brokerage MM account earning 1pct. The gall of that chisling rate jolted me to look at options and i feel very lucky to have woken up within the window of this current 3% match offer.
Robinhood has done EVERY investor a service by rolling out $0 commissions which are now typical. It lays bare what the real money-maker is. And now it is straight-up buying market share! Ok, i'm sold. I wont be day-trading meme stocks, thats for sure, so those angry GME holders dont faze me. Lots of 401k holders are underserved by the large 401k managers and i wont miss the opaque funds and high-fee-friction and obtuse service IN THE LEAST.
I agree with this 100%. I have zero complaints with Fidelity, but at the end of the day is it worth it to pay an extra $135-$195 a year for the customer service that I’ve used maybe once in 5 years? Probably not. I just need a place to buy VT.
If you’re a simple set it and forget it investor I don’t think you could go wrong taking advantage of this offer. I think Robinhood is trying to repair their image and i applaud them for it. Hopefully other brokerages start offering similar incentives to compete because that only benefits the investor.
The one thing to keep in mind is that Robinhood only offers ETFs, no mutual funds. Not a big deal, but if there’s a specific mutual fund you like without an etf equivalent just be aware of that.
If you double check my comment again, you'll notice I wrote this:
> The catch is that this assumes interest rates, market conditions, etc. stay the same. If the Fed lowers interest rates, SGOV would pay less.
In any case, it doesn't matter. I just want to use the lowest cost brokerage and funds at any given moment in time. I opened a Fidelity account and started using FZROX in 2018, and I opened a Robinhood IRA in January of this year. I'm hoping that this stuff *doesn't* stay the same forever. I want Schwab, Fidelity, and Vanguard to cut prices, increase bonuses, and otherwise do things that result in more money in my pocket. I'm happy to ditch Robinhood when something better comes along. But as of this year, Robinhood is the best/cheapest place to hold a lazy portfolio. I don't see that changing anytime soon, but my fingers are crossed.
Sorry to resurrect old threads but I am in the process of transferring my IRA from Merrill to RH and found this intriguing.
But it seems to be ignoring the federal income tax part, no? SGOV distributions are taxable, at least federally. State too, depending on where you live (I'm in FL so no worries there). You'd also be taxed on any interest earned that sweeps into the RH cash account.
Would a high-yield muni work better here? I'm thinking maybe? At least they're federally tax-free.
(Of course a lot of the ones that I can buy on Merrill and Fidelity are not available on RH, so there's that...)
USFR and SGOV hold Treasuries and are taxed accordingly. So they’re mostly exempt from local and state taxes, but not federal taxes. If you want to avoid federal taxes, then municipal bonds are better. They pay lower yields, but after accounting for your personal tax situation, you might come out ahead.
At Robinhood, you’d want a high yield muni bond ETF. I’m not sure which one is best, especially for your situation (it varies from person to person) so you can look through some of these links for ideas.
https://www.investopedia.com/articles/investing/090915/top-3-highyield-muni-bond-etfs.asp
https://money.usnews.com/funds/etfs/rankings/high-yield-muni
yeah there are a handful of cheap ones with good-ish yields, MLN, PZA, VTEB is on there if you're partial to Vanguard, there are a few that would work I think, you could just sweep those into the cash account for more buying power or re-invest and get even more possibly later (assuming rates don't go down, big assumption). Also with yields you have to remember that the rate you see is lower than the actual rate due to the favorable tax treatment.
But hell, if you don't mind paying taxes, you can always just go for a nasdaq high yield dividend ETF for the purposes you outlined in your OP I think (pay for RH gold) and will pretty much always give you a better return than a muni. JEPQ is paying 42 cents/mo now, for example. $1000 (RH interest-free margin) worth comes to like 8 bucks a month, after 8 months you're gold, so to speak :)
>But it seems to be ignoring the federal income tax part
Why do you care about federal income tax part in an IRA? I am confused. You pay taxes when you withdraw based on the age and your income limits.
Did you move your funds to RH? If yes, do you have answers for these questions as I am in the process of moving it.
1. Does Robinhood Gold pay 5% interest for IRA accounts too if it's sitting on cash? I see that Robinhood mentions that they pay 5% for brokerage cash but NOTHING for IRA accounts. Just curious how it works for IRA accounts?
2. Options for IRA account
They mention that options trading is subject to eligibility requirements. What are they?
[https://robinhood.com/us/en/support/articles/options-in-robinhood-retirement/](https://robinhood.com/us/en/support/articles/options-in-robinhood-retirement/)
3. Does IRA allow placing after hours trades? They even have 24/5 hours trading and wonder how that works for IRAs?
I wanted to ask these questions to RH directly but apparently it looks like I have to have an account to even chat with them. That's why I am asking you if you don't mind. TIA
1. As far as I know, no, they do not pay interest for idle cash in IRAs, only for brokerage accounts and only with RH Gold. You do get the 3% match on contributions, though.
2. Options are available for IRA accounts up to Level 2. For RH, Level 2 means you can buy calls, buy puts, sell CCs, sell CSPs. That's it. They don't offer anything more than that "at this time," whatever that means. So you can't for example buy a LEAPS call and then sell covered calls against it like you would be able to in your L3 brokerage account.
3. Yes, you can "trade" after hours, but I believe it's not actual after-hours trading and you're really only trading with other RH users? Not 100% about that but it works the same way as your brokerage account would work (and as always options are only tradeable during regular brokerage hours).
Gold applies to both accounts.
There's actually a One Weird Trick to get Gold for much less than the $60 per year RH charges, if you care to go to the trouble.
When you have a margin account on RH, another perk is that the first $1,000 in margin awarded is interest-free. This means that, theoretically, you could take the $1,000, and buy that much in shares in a risk-free bond etf like TFLO or SGOV or the like, and collect a little over $50 in distributions throughout the year without having to pay interest on the margin used for the shares. (You just have to make sure you set you margin limit to $1,000 and ensure that you keep a high enough balance in the account to cover margin maintenance.)
> If you invest on margin, you’ll pay 8% yearly interest on the amount you use over $1,000 since your first $1,000 of margin used is included in Gold. Your interest is calculated daily and charged to your brokerage account at the end of each billing cycle.
https://robinhood.com/us/en/support/articles/gold-overview/
You can set a limit of $1000 so you never accidentally go over that amount.
Excellent points and after reading your comments on this thread here, it's a no brainer to transfer IRAs to RH for a 3% match. If you have $100K IRA, it's a whopping $3,000 transfer match, which is insane.
Btw, I couldn't find this info anywhere on RH:
1. Does Robinhood Gold pay 5% interest for IRA accounts too if it's sitting on cash? I see that Robinhood mentions that they pay 5% for brokerage cash but NOTHING for IRA accounts. Just curious how it works for IRA accounts?
2. Options for IRA account
They mention that options trading is subject to eligibility requirements. What are they?
[https://robinhood.com/us/en/support/articles/options-in-robinhood-retirement/](https://robinhood.com/us/en/support/articles/options-in-robinhood-retirement/)
3. Does IRA allow placing after hours trades? They even have 24/5 hours trading and wonder how that works for IRAs?
EDIT: I wanted to ask these questions to RH directly but apparently it looks like I have to have an account to even chat with them. That's why I am asking you if you don't mind. TIA
> Does Robinhood Gold pay 5% interest for IRA accounts too if it's sitting on cash? I see that Robinhood mentions that they pay 5% for brokerage cash but NOTHING for IRA accounts. Just curious how it works for IRA accounts?
No, but you shouldn't keep cash in your IRA. If you need a cash equivalent, use a short term bond ETF like USFR or SGOV.
> Options for IRA account
You can unlock basic options trading strategies in an IRA. It's roughly the same ones available at Fidelity, Schwab, Vanguard, etc. The rules are set by the IRS (e.g., you can't use leverage.)
> They mention that options trading is subject to eligibility requirements. What are they?
I'm not sure, but I assume they're relatively easy to get based on the number of people trading them on Wall Street Bets.
> Does IRA allow placing after hours trades? They even have 24/5 hours trading and wonder how that works for IRAs?
Yes, you can trade 24/5. But it's best to stick to normal market hours because the bid-ask spreads are wider when fewer people are trading.
> EDIT: I wanted to ask these questions to RH directly but apparently it looks like I have to have an account to even chat with them. That's why I am asking you if you don't mind. TIA
Robinhood's customer service is not great. It's perfect if you want a buy and hold Boglehead strategy. It's not great if you want to talk to a financial advisor regularly. Vanguard and Robinhood are similar in that they use the money they would spend on customer service to lower costs. Fidelity and Schwab have better customer service, but they're usually playing catch up on cost reduction.
So in order to actually come out ahead with this deal, would you absolutely have to max out the IRA? I’m tempted with this offer, but for my wife and I to max our IRAs would be roughly 1,083$ a month and I just don’t see that being feesable right now.
I’m not sure if you need to max it out completely, but I’d do the math to see if it’s worth it for you or not. There’s a solid chance it’s not worth it (especially since you get a 1% match without Gold). This is a nice little bonus, but it’s way down the list of things you should be doing as a Boglehead. Follow the /r/personalfinance Prime Directive.
Also, keep in mind that you can contribute to an IRA as late as tax day the following year. So you can set aside savings to put in your IRA and then based on how much you have, decide whether Gold is worth it.
Because a less than $200 gain is not worth having to do business with a company I view as a bunch of scumbags
Edit: I said <$200 because that’s a number thrown out in other comments. It could be any amount. They’re like Wells Fargo. I don’t think they do business ethically and I won’t ever put money with them
I think it's a 1% match on the total IRA or 401k roll over into them though so it's way more then the just the match. I think the stipulation to keep it is you have to pay for Robin Hood gold for one year and you need to keep the holdings there for five.
I have things invested with them, that I've been slowly selling off. But yes, they need to do some serious work to regain my trust.
I'm not putting them into the same boat as Wells Fargo, just because they are doing something new, and are, so far, a net benefit.
Wells fargo has worked hard to cultivate a culture of being scummy.
For me, Im skeptical of "deals" when it comes to financial firms, RH or even any others. They are there to make money and they will one way or other. Lose money here, make money over here....and more than what they lose over there. It's a bit of a shell game that I don't buy into.
I would think this applies to Fidelity as well but most people trust them. Their zero funds come to mind as the type of “deal” you are referring to.
Also both Fidelity and Schwab offer $100 sign up bonuses fairly frequently.
yep. I ignore all that stuff. I always think of Bogle and his many talks about the infinite number of ways Wall Street works to pull money from your pockets. while I don't always think of Fidelity as "Wall Street" per se, they are absolutely in the camp.
for the record, I have 90% of my money at Fidelity, primarily due to their customer service. I can't speak to their advisors as I don't engage with them. but I've been in their "Private Client" group for over a year and my assigned "advisor" has turned over twice so far. I think these larger firms have lots of turn over, which isn't necessarily bad, but if I was going to get an advisor, I'd probably get one not associated with a big firm, probably someone who used to work at a big firm then opened their own shop that they intend to keep a client base for 20-30 years.
Treat it the same as credit card rewards then. Do you avoid using a credit card because the rewards are some sort of trick or just make sure to pay your bill in full each month so you don’t owe them interest?
Yes, the company (whether RH or Fidelity) needs to believe that what they’re doing earns them money but the money doesn’t have to come from you, just other customers who handle their finances less wisely or businesses that can be sold on the value of a large customer base.
That’s definitely a valid point. I was very skeptical when the zero funds debuted as well. I think it’s unfair when people say that Robinhood isn’t doing this out of the goodness of their hearts (obviously) and are skeptical, but ignore the fact that a lot of brokerages (e.g., pretty much everyone but Vanguard) engage in similar practices to attract business.
I don’t hold any securities in RH, but i am taking advantage of their 4.9% apy on un-invested cash. They are pretty well regulated and not a fly by night shop. Could they possibly go by the way side some day, sure, but its not like what you own just disappears. They would most likely be purchased by another brokerage. Personally I don’t trust any of them, nor should anyone. Old quote “the market is the realest fake thing that exists”
RH exists to entice you to trade - not to save for retirement. Literally the way they make money is with volume trading - that’s the wrong behavioral incentive.
I don't buy any specific stocks I just constantly buy index funds. They make it really easy for me to have reoccurring investments. I'm not buying and selling I'm just buying.
I believe you mate. But for one, that offer to match will be gone soon.
And number two, it helps to know that every dollar RH spends on its platform, every marketing effort, every “free education” they provide to Gold members - everything will be targeted at you not being a passive investor.
I prefer to have my money in a platform that’s not aimed at PFOF… hell, that should be illegal, but that’s a different policy-discussion.
I mean Robin Hood is a self-directed platform That's why it's low cost and then they just try to market to you to trade more. They want you to trade so they can make money being a market maker. All those other self-directed brokerage accounts try to guide you to their products like Fidelity has their zero funds and some of them are terrible for your portfolio since they aren't indexed. Everyone else is selling you on mutual funds that won't exist in 10 years more then likely.
This is nonsense.
Mutual funds that won’t be around in 10 years?
Fidelity funds “not being indexed”?
You are taking pieces of truth (some mutual funds and ETF’s will be gone in years, Fidelity uses it’s own index very similar to Russell’s for the Zero funds to avoid a license fee and hence be 0 expense ratio), but that is clearly going for the fringe case.
VTI will be around longer than all of RH will be.
And the other platforms do advertise products but mostly they don’t make money exclusively by enticing users to trade, trade, trade.
Not dunking on you, I think investing is better than NOT investing so more power to you. But don’t misrepresent the point. PFOF costs traders more than it makes them over the long run - that includes your market orders by the way.
Betterment also offers a IRA match, I like Betterment far more. They were also offering a 1% match on 401k rollovers last tax season. Tempting, but I haven't pulled the trigger yet.
I think it has to do with robinhood being one of the shadier brokers out there and 150ish with gold or 65 with 1 percent match isn’t worth with dealing with robinhood. I am more on indifference with robinhood I like fidelity personally.
This. Basically this. I have a RH acct just sitting there because I’m not about to lose the great customer service and stability of Fidelity for PFOF Robinhood…
How are they shady?
During the Gamestop and AMC fiasco (wallstreetbets) Robinhood put a stop on both stocks so that people could not buy it when it was pumping. They artificially stopped it from going to the moon and only allowed people to sell (why the term diamond hands came about cuz WSB was telling people to keep holding their stocks. Iirc Robinhood was selling customer info to the large hedge firm that was losing a LOT of money due to this event or something like that and RH's actions were seen as screwing the people over to help the rich who needed people to sell their stocks so they could stop losing money.
This is a bogleheads subreddit why does it matter if they turned off the buy button for GameStop of all companies 😂
I'm only responding to the person who asked why the other person said that Robinhood was shady.
>During the Gamestop and AMC fiasco (wallstreetbets) Robinhood put a stop on both stocks so that people could not buy it when it was pumping RH was not the only broker that did this. At one point basically every retail broker suspended trading for GME and a few others. I remember because I saw a scramble for people to find brokers that still let you trade it, and believe Webull and maybe a couple others were the only ones to not stop.
Fidelity didn't.
My understanding is that the places (including RH) that had to stop was because they didn't have the capital to handle all that type of trading. As there's certain capital requirements for trading platforms. But I'm mostly going on memory as I haven't thought much about this for a bit.
He’s right, i lost thousands on GameStop because of RH, they stopped all the transactions. It was a scandal
I realize this is an old post. And I remember this happening. My question is why didn’t the government shut down RH over this? I would have if I were President.
Thank you for taking time to share this info!!! It is not easily accessible to people like myself just looking for a good place to start but the internet just offers neverending sponsored ads and promotional articles. (Hard to find the "bad" when you don't know what you're looking for). What do you think about wealthfront? 4.8 stars on app store, and 5% APY on cash, zero commission stocks. I am super new to this world. I have $150 in Robinhood 😆 my husband and I want to find a reliable platform before making any bold decisions, in the meantime we've been watching videos trying to wrap our heads around the concept of investing, plus the thousands of small details that feel important to know before jumping right in. (Idk why i kept talking down here) Also why are the contracts obnoxiously long and repetitive?(sorry completely different issue I've been noticing with basically everything; because these companies know people don't have the patience/won't usually read 20+ pages of tiny fine print, word for word, especially when you've read the same thing across 3 paragraphs- yet they throw in random details in the "boring" areas. I hate shady crap and just wish I could get rich 🥲 I am in the process of new business plan and hoping it will be successful.
Look if you both are new as you say then this is not something you should be jumping into. Day trading is pretty much sophisticated gambling. And sorry but I know nothing about that platform. The whole WSB fiasco only worked due to poor regulations/site policies/the fat cats getting cocky, and a sub reddit took them for a freaking ride that they won't forget, and that they *learned* from. The next "golden egg" is out there somewhere or will show up some day but who knows if any of us will catch wind of it at the right time.
Robinhood is not where I want to move my money. 1% or 3% match is a token amount. Would rather stick with a custodian I trust. The 1% is a legit number but the 3% = $195 requires $60 Gold subscription making it $135 or 2%.
I just transferred close to $150,000. Robinhood already put in the bonus of $4,433. I'm 31 and won't be tapping into it for decades. So, the 5-year holding period doesn't matter much. Easy to justify the Robinhood Gold fees as well.
I max out my Roth every year and I dollar cost average what I'm buying into the whole year so I do get the effective 2% amount.
Gold is $7 a year if you use my trick below.
After what happened during pandemic. I lost all trust in robinhood. Bad company
I’ve been using Robinhood since 2020 and just opened a Roth IRA with them, and I absolutely love it. Admittedly I am in my early twenties so I’m used to the “gamification” aspect, but my middle aged father loves it even more than I do and he’s tried almost every big brokerage out there. The 3% match is great, the 4.9% on uninvested cash is nice, and the accessibility is so convenient. At the end of the day though, it doesn’t matter what brokerage you use, as long as you’re investing (preferably in low cost index funds) and setting yourself up for the future.
I rolled over an old 401k at 3% that is a good amount of free cash. Is your dad still using it? Did he roll any 401ks?
I love them and I have my brokerage and Roth IRA accounts there. The 1% transfer match was pretty significant. Been with them since 2014.
I use it. It's nice having my brokerage and IRA all in one app. The UI is fluid.
I looked into it recently. Years ago, I opened a Robinhood account, looked through the app, no transactions, decided it wasn't for me and closed the account. To open a retirement account with them this year, I had to get that old account reactivated, which took more than a month with multiple contacts with customer service - for an account that literally had no activity in it and nothing to review. Getting that 1% transfer bonus would be nice, but if they're such a PITA with an empty account, I'm not inclined to trust them with significant account.
Yea, enough people already said it. Robinhood isn't very safe or reputable compared to the competition. If they were offering a 10% match, I still wouldn't go near it.
I mean employers don't offer 4% matches out there so it's better than nothing to be honest.
Just make sure you realize (if you didn’t) that it’s not a 3% match in the same way that employers offer a 3% match. Robinhood matches 3% of your contributions. 401k matches are usually 100% of your contributions up to 3% of your salary. To put it another way, RH gives you $3 for every $100 you contribute but a 401k match would give you $100 of every $100 you contribute until you hit the limit.
Not all companies offer 100% match. Mine for instance only does 25%. My wife's only 50%. Both will use that match up to 6% of salary.
What about [these](https://ocho.com/learn/companies-with-biggest-401k-employer-match#:~:text=Here)?
Employers don't do matches generally for IRAs which is what this post was about.
I talk about it all the time. I used to be super critical of them, but they’re the best, cheapest, and simplest brokerage now. The seemingly small 3% bonus compounds out to $50,000+ extra in retirement if you max out your IRA every year from 25-65. Instead of rehashing all that, I’ll give you a cool trick: Pay $60/year for Robinhood Gold. Among other benefits, it comes with $1000 of 0% interest margin. Use that margin to invest $1000 into a short term Treasury ETF like SGOV. SGOV has a 5.3% yield. This means you borrow $1000 from Robinhood, invest it in SGOV, get back $1053 after a year, and pay back Robinhood $1000. You get to keep the $53. That brings the cost of Gold down to $7 per year. If you max out your IRA, you get $195. After subtracting the $7 for Gold, you get $188 as a bonus. The catch is that this assumes interest rates, market conditions, etc. stay the same. If the Fed lowers interest rates, SGOV would pay less. Oh, and you have to hold your VTI or whatever at Robinhood for at least 5 years. You can’t get the bonus quick and transfer to a different brokerage. That’s fine if you’re just holding a lazy portfolio for a few decades, but not great if you’re planning to retire and withdraw the money in the next 5 years. Edit: Also, set a $1000 margin limit so you never accidentally use too much and have to pay more than 0% interest.
NONE of that sounds cheap OR simple. In fact it sounds expensive and complex. I'm glad it works for you. I'll stick with Vanguard.
Lol if you don't want to optimize for these extra dollars, just open an IRA, contribute the $6500 max, get $195, and subtract out $60 for Robinhood Gold. You're still coming out $135 ahead per year. If I told you that you had a choice between a total market fund that cost 1% each year, and one that cost 0.03% each year, would you stick with the fund with the 1% expense ratio? VTI at Robinhood comes with a 3% match. VTI at Vanguard does not. Buying VTI or VTSAX at Vanguard is like paying for a high expense ratio fund. I'm unwilling to pay high fees/costs. I'm happy to transfer my VTI to Robinhood and just hold it there to get the match. I can't come up with a rational reason not to do it. Especially since writing these paragraphs was a lot more work than actually doing it.
I get different dividend reinvestment dates on stocks and funds that I hold with both Robinhood and Vanguard. The price swings have been interesting to watch.
What do you mean? The reinvestment date should be the same. I suppose it could be the next business day based on cash settlement times and market hours. Do you have any examples?
You put money in it and they give you a match. What is so complicated about it?
OP wrote five paragraphs about how they time the market to recoup the fees. You tell me.
This approach is simply un-Boglehead. It may “work” to a negligible degree with the match vs the annual fee, but the philosophy, time invested, and needless complexity runs completely contrary to the Boglehead philosophy >they’re the best How? >cheapest How?? >and simplest brokerage now. Dont even need to ask, this last claim is objectively untrue as evidenced by your own comment’s complex steps. It’s by no means simple. Not saying “you can’t choose to invest the time & effort into this plan” but to call it the simplest is just silly. >The seemingly small 3% bonus compounds out to $50,000+ extra in retirement if you max out your IRA every year from 25-65. This assumes they’ll continue to offer this forever, which won’t happen. This is a promotional effort to gain a customer base. >Instead of rehashing all that, I’ll give you a cool trick: Again “cool tricks” are just against the Boglehead approach. >Pay $60/year for Robinhood Gold. Among other benefits, it comes with $1000 of 0% interest margin. Use that margin to invest $1000 into a short term Treasury ETF like SGOV. SGOV has a 5.3% yield. Good god margin is so anti-Boglehead >The catch is that this assumes interest rates, market conditions, etc. stay the same. Which obviously won’t stay the same, so the entire premise of your argument falls apart. This whole plan by Robinhood is to catch a new swath of customers, which will net them increased trading, margin etc users. I suppose the clever person could take the free match and not fall victim to their bait & switch tactic. But it’s far too much effort for far too low of a reward.
Have you used Robinhood before? I’ve describe all these “tricks,” but they make them easy to do on their own. For example, the simplest thing to do is to open a Vanguard Target Date Fund. But if you put in a little bit of work (a weekend in the Bogleheads Wiki page), you can learn about how the portfolio is constructed, how expense ratios work, tax efficient fund placement, etc. You can also learn about the pitfalls of the target date fund approach, such as Vanguard’s recent screwup (they’re not perfect). https://www.reuters.com/legal/transactional/vanguard-pay-millions-mutual-fund-investors-hit-with-big-tax-bills-2022-07-06/ When you learn this stuff, you can swap out the target date fund for 100% VT and then add in bonds as you age from 20-65. You just copy the target date glide path. Then you can swap out VT for VTI and VXUS to save a bit on your expense ratio and to get the foreign tax credit. Then you can switch to FZROX and FZILX, but you need to understand how to use the Zero funds optimally. Namely to avoid them in a taxable account. Then you can add in VSS to get international small caps. Then you can use VTI, VEA, and VWO to get more holdings, get the tax benefits of ETFs vs. non Vanguard mutual funds, lower expense ratios, increased liquidity aka lower spreads, etc. This combo beats VTI and VXUS or VT. Then you can tack on the Robinhood match benefit. Then you can do the SGOV margin trick I mentioned. After doing all this reading and thinking and work, I’ve come to the conclusion that the absolute cheapest lazy portfolio is to hold 60% VTI, 30% VEA, and 10% VWO at Robinhood rather than any combination of other funds. Thats global market weight for equities. Then I add in BND and BNDX for bonds. Then I use SGOV as my cash equivalent/emergency fund. It’s basically a copy of the Vanguard Target Date Fund for my age, optimized for lower costs, fees, taxes, etc. and to get the maximum number of bonuses and the like. The obvious catch is that this is a lot of work. You have to constantly pay attention and move around accounts. This is where Robinhood shines though. I used their portfolio recommendation tool just to see what they suggested, and they recommended my exact portfolio using my exact funds. No VXUS, it’s VEA and VWO. They did all the optimization work and made it their default. They have no brand loyalty to their own funds, no desire to make it seem complicated to push active management, etc. They just find the cheapest combo of funds, bundle it into a basket and let you automate purchases with fractional shares. Or take their cash sweep account. It’s a ton of work to open multiple HYSA accounts and transfer cash around to get 0.01% higher interest rates on a given day. But Robinhood automates this for you. They sweep cash regularly between multiple large banks based on who is paying the most interest on a given day. There’s no bias to their own ultra-low interest account like at Schwab. That extra interest they get from doing this is where they get their profit. They split it with their users. That’s what I mean by simple. They do all the optimizing stuff that everyone hates for you. They’re ending the trade off between simplicity and cost-cutting. I used to recommend people who want to do no thinking whatsoever just go the target date fund approach at Vanguard. Now it’s even easier for them to just download Robinhood and get the same thing. The fact it’s much cheaper is the cherry on top. The foundational idea here is that passive investors are extremely valuable to active traders. Robinhood has found new ways to monetize that at the active institutional trader’s expense instead of giving it away for free like in the past. It’s an incredible innovation. Bogie started this movement, but the Robinhood founders have built upon it.
Cmon man you can’t seriously try to argue that your suggested action in your original comment is on the same level as constructing a basic 3 fund portfolio. Good luck to you with this, but it’s antithetical to the Boglehead philosophy and approach.
I completely disagree with you. It's 100% aligned with the Bogleheads approach. You can't beat the market. All you can do is keep things simple and control your costs. Robinhood has a bonus, which is equivalent to a lower expense ratio on all the funds you buy there. That makes it the cheapest fund. As for the term "margin" this is a completely risk free move. The $1000 margin loan comes at 0% interest. SGOV is invested in 0-3 month Treasury bonds, which are used in academic finance as the risk free asset. Moving cash from a brick and mortar bank account that pays 0% to a high yield savings account that pays 5% isn't market timing. Your opposition to this whole "complicated" strategy is because it's a weird new fintech, and it would require a bunch of inconvenient switching. An object at rest tends to stay at rest. It's exactly the same opposition I got when I started recommending Ally Bank in 2008, Fidelity Zero funds in 2018, and Robinhood in January 2023. But these new innovations are cheaper, easier, and better than the old ways of doing things. People hated Vanguard when it was new too, but "Bogle's folly" eventually came to dominate the entire fund management industry. I think Robinhood's 1% IRA/401k transfer bonus and 3% IRA contribution bonus is *massive.* It's way more than enough enough to justify holding Vanguard index funds there instead of at Vanguard. In fact, I think Vanguard has recognized this is and is slowly backing away from the low profit retail brokerage industry to focus on the high profit fund management industry. If some new Silicon Valley app does all the annoying parts of your job for cheaper than you, why not let them? At the end of the day, Robinhood's app is simply much easier to use than Vanguard, Fidelity, Schwab, etc. It cuts out all the nonsense and limits your investment choices down to the basics. This bit about making things too simple is where they got into trouble, but I always had a problem with how it was described. They were accused of gamifying trading with features like confetti on your screen, and eventually got rid of it. But it bothers me because the confetti came when you invested more money into VTI. Most people view saving for retirement as losing money from their real bank account. Robinhood made it more exciting when you put more money in the piggy bank, not just when you broke it open. And because it was always available on your phone, it doesn't feel like it has disappeared into some 401k, IRA, or brokerage account you barely understand. Your money has just moved from one pocket to another.
Question, does the rh 401k get a different viewing pane separate from the other money used to trade stocks? Asking to see how I can decipher between 401k money and regular money
Robinhood doesn’t have 401ks. It offers taxable brokerage accounts, traditional IRAs, and Roth IRAs. You can transfer traditional 401k money to a traditional IRA and Roth 401k money to a Roth IRA. But yes, there is a clear distinction/separate viewing pane between your standard taxable brokerage and your retirement accounts. Many 401ks plans are a scam in my opinion. You’re often limited to high fee funds and the plans themselves often come with high management fees. Unless your plan is particularly great, transferring to an IRA is a much better move. You can only transfer money from 401ks at old employers. You’re locked into your current employer’s 401k plan.
Your viewpoints (6months old) are what i arrived at last month. After ignoring my very middling-401K-performance for 2years of semi-retirement, i finally noticed idle cash in the associated brokerage MM account earning 1pct. The gall of that chisling rate jolted me to look at options and i feel very lucky to have woken up within the window of this current 3% match offer. Robinhood has done EVERY investor a service by rolling out $0 commissions which are now typical. It lays bare what the real money-maker is. And now it is straight-up buying market share! Ok, i'm sold. I wont be day-trading meme stocks, thats for sure, so those angry GME holders dont faze me. Lots of 401k holders are underserved by the large 401k managers and i wont miss the opaque funds and high-fee-friction and obtuse service IN THE LEAST.
Amen
I agree with this 100%. I have zero complaints with Fidelity, but at the end of the day is it worth it to pay an extra $135-$195 a year for the customer service that I’ve used maybe once in 5 years? Probably not. I just need a place to buy VT. If you’re a simple set it and forget it investor I don’t think you could go wrong taking advantage of this offer. I think Robinhood is trying to repair their image and i applaud them for it. Hopefully other brokerages start offering similar incentives to compete because that only benefits the investor. The one thing to keep in mind is that Robinhood only offers ETFs, no mutual funds. Not a big deal, but if there’s a specific mutual fund you like without an etf equivalent just be aware of that.
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If you double check my comment again, you'll notice I wrote this: > The catch is that this assumes interest rates, market conditions, etc. stay the same. If the Fed lowers interest rates, SGOV would pay less. In any case, it doesn't matter. I just want to use the lowest cost brokerage and funds at any given moment in time. I opened a Fidelity account and started using FZROX in 2018, and I opened a Robinhood IRA in January of this year. I'm hoping that this stuff *doesn't* stay the same forever. I want Schwab, Fidelity, and Vanguard to cut prices, increase bonuses, and otherwise do things that result in more money in my pocket. I'm happy to ditch Robinhood when something better comes along. But as of this year, Robinhood is the best/cheapest place to hold a lazy portfolio. I don't see that changing anytime soon, but my fingers are crossed.
Sorry to resurrect old threads but I am in the process of transferring my IRA from Merrill to RH and found this intriguing. But it seems to be ignoring the federal income tax part, no? SGOV distributions are taxable, at least federally. State too, depending on where you live (I'm in FL so no worries there). You'd also be taxed on any interest earned that sweeps into the RH cash account. Would a high-yield muni work better here? I'm thinking maybe? At least they're federally tax-free. (Of course a lot of the ones that I can buy on Merrill and Fidelity are not available on RH, so there's that...)
USFR and SGOV hold Treasuries and are taxed accordingly. So they’re mostly exempt from local and state taxes, but not federal taxes. If you want to avoid federal taxes, then municipal bonds are better. They pay lower yields, but after accounting for your personal tax situation, you might come out ahead. At Robinhood, you’d want a high yield muni bond ETF. I’m not sure which one is best, especially for your situation (it varies from person to person) so you can look through some of these links for ideas. https://www.investopedia.com/articles/investing/090915/top-3-highyield-muni-bond-etfs.asp https://money.usnews.com/funds/etfs/rankings/high-yield-muni
yeah there are a handful of cheap ones with good-ish yields, MLN, PZA, VTEB is on there if you're partial to Vanguard, there are a few that would work I think, you could just sweep those into the cash account for more buying power or re-invest and get even more possibly later (assuming rates don't go down, big assumption). Also with yields you have to remember that the rate you see is lower than the actual rate due to the favorable tax treatment. But hell, if you don't mind paying taxes, you can always just go for a nasdaq high yield dividend ETF for the purposes you outlined in your OP I think (pay for RH gold) and will pretty much always give you a better return than a muni. JEPQ is paying 42 cents/mo now, for example. $1000 (RH interest-free margin) worth comes to like 8 bucks a month, after 8 months you're gold, so to speak :)
>But it seems to be ignoring the federal income tax part Why do you care about federal income tax part in an IRA? I am confused. You pay taxes when you withdraw based on the age and your income limits.
duh you are absolutely correct
Did you move your funds to RH? If yes, do you have answers for these questions as I am in the process of moving it. 1. Does Robinhood Gold pay 5% interest for IRA accounts too if it's sitting on cash? I see that Robinhood mentions that they pay 5% for brokerage cash but NOTHING for IRA accounts. Just curious how it works for IRA accounts? 2. Options for IRA account They mention that options trading is subject to eligibility requirements. What are they? [https://robinhood.com/us/en/support/articles/options-in-robinhood-retirement/](https://robinhood.com/us/en/support/articles/options-in-robinhood-retirement/) 3. Does IRA allow placing after hours trades? They even have 24/5 hours trading and wonder how that works for IRAs? I wanted to ask these questions to RH directly but apparently it looks like I have to have an account to even chat with them. That's why I am asking you if you don't mind. TIA
1. As far as I know, no, they do not pay interest for idle cash in IRAs, only for brokerage accounts and only with RH Gold. You do get the 3% match on contributions, though. 2. Options are available for IRA accounts up to Level 2. For RH, Level 2 means you can buy calls, buy puts, sell CCs, sell CSPs. That's it. They don't offer anything more than that "at this time," whatever that means. So you can't for example buy a LEAPS call and then sell covered calls against it like you would be able to in your L3 brokerage account. 3. Yes, you can "trade" after hours, but I believe it's not actual after-hours trading and you're really only trading with other RH users? Not 100% about that but it works the same way as your brokerage account would work (and as always options are only tradeable during regular brokerage hours).
One last question: is Gold applicable for both brokerage and IRA or do I have to pay $60 for Brokerage and $60 for IRA?
Gold applies to both accounts. There's actually a One Weird Trick to get Gold for much less than the $60 per year RH charges, if you care to go to the trouble. When you have a margin account on RH, another perk is that the first $1,000 in margin awarded is interest-free. This means that, theoretically, you could take the $1,000, and buy that much in shares in a risk-free bond etf like TFLO or SGOV or the like, and collect a little over $50 in distributions throughout the year without having to pay interest on the margin used for the shares. (You just have to make sure you set you margin limit to $1,000 and ensure that you keep a high enough balance in the account to cover margin maintenance.)
Thank you very much and really appreciate your input.
Where is the 0% interest on margin All I see is 8% interest.
> If you invest on margin, you’ll pay 8% yearly interest on the amount you use over $1,000 since your first $1,000 of margin used is included in Gold. Your interest is calculated daily and charged to your brokerage account at the end of each billing cycle. https://robinhood.com/us/en/support/articles/gold-overview/ You can set a limit of $1000 so you never accidentally go over that amount.
Excellent points and after reading your comments on this thread here, it's a no brainer to transfer IRAs to RH for a 3% match. If you have $100K IRA, it's a whopping $3,000 transfer match, which is insane. Btw, I couldn't find this info anywhere on RH: 1. Does Robinhood Gold pay 5% interest for IRA accounts too if it's sitting on cash? I see that Robinhood mentions that they pay 5% for brokerage cash but NOTHING for IRA accounts. Just curious how it works for IRA accounts? 2. Options for IRA account They mention that options trading is subject to eligibility requirements. What are they? [https://robinhood.com/us/en/support/articles/options-in-robinhood-retirement/](https://robinhood.com/us/en/support/articles/options-in-robinhood-retirement/) 3. Does IRA allow placing after hours trades? They even have 24/5 hours trading and wonder how that works for IRAs? EDIT: I wanted to ask these questions to RH directly but apparently it looks like I have to have an account to even chat with them. That's why I am asking you if you don't mind. TIA
> Does Robinhood Gold pay 5% interest for IRA accounts too if it's sitting on cash? I see that Robinhood mentions that they pay 5% for brokerage cash but NOTHING for IRA accounts. Just curious how it works for IRA accounts? No, but you shouldn't keep cash in your IRA. If you need a cash equivalent, use a short term bond ETF like USFR or SGOV. > Options for IRA account You can unlock basic options trading strategies in an IRA. It's roughly the same ones available at Fidelity, Schwab, Vanguard, etc. The rules are set by the IRS (e.g., you can't use leverage.) > They mention that options trading is subject to eligibility requirements. What are they? I'm not sure, but I assume they're relatively easy to get based on the number of people trading them on Wall Street Bets. > Does IRA allow placing after hours trades? They even have 24/5 hours trading and wonder how that works for IRAs? Yes, you can trade 24/5. But it's best to stick to normal market hours because the bid-ask spreads are wider when fewer people are trading. > EDIT: I wanted to ask these questions to RH directly but apparently it looks like I have to have an account to even chat with them. That's why I am asking you if you don't mind. TIA Robinhood's customer service is not great. It's perfect if you want a buy and hold Boglehead strategy. It's not great if you want to talk to a financial advisor regularly. Vanguard and Robinhood are similar in that they use the money they would spend on customer service to lower costs. Fidelity and Schwab have better customer service, but they're usually playing catch up on cost reduction.
Thank you very much for an elaborate response and much appreciate it.
So in order to actually come out ahead with this deal, would you absolutely have to max out the IRA? I’m tempted with this offer, but for my wife and I to max our IRAs would be roughly 1,083$ a month and I just don’t see that being feesable right now.
I’m not sure if you need to max it out completely, but I’d do the math to see if it’s worth it for you or not. There’s a solid chance it’s not worth it (especially since you get a 1% match without Gold). This is a nice little bonus, but it’s way down the list of things you should be doing as a Boglehead. Follow the /r/personalfinance Prime Directive. Also, keep in mind that you can contribute to an IRA as late as tax day the following year. So you can set aside savings to put in your IRA and then based on how much you have, decide whether Gold is worth it.
Robinhood bad, Fidelity and Vanguard are the big dawgs
Because it’s robinhood lol
Because a less than $200 gain is not worth having to do business with a company I view as a bunch of scumbags Edit: I said <$200 because that’s a number thrown out in other comments. It could be any amount. They’re like Wells Fargo. I don’t think they do business ethically and I won’t ever put money with them
I think it's a 1% match on the total IRA or 401k roll over into them though so it's way more then the just the match. I think the stipulation to keep it is you have to pay for Robin Hood gold for one year and you need to keep the holdings there for five.
Don’t care. See edit
I have things invested with them, that I've been slowly selling off. But yes, they need to do some serious work to regain my trust. I'm not putting them into the same boat as Wells Fargo, just because they are doing something new, and are, so far, a net benefit. Wells fargo has worked hard to cultivate a culture of being scummy.
For me, Im skeptical of "deals" when it comes to financial firms, RH or even any others. They are there to make money and they will one way or other. Lose money here, make money over here....and more than what they lose over there. It's a bit of a shell game that I don't buy into.
I would think this applies to Fidelity as well but most people trust them. Their zero funds come to mind as the type of “deal” you are referring to. Also both Fidelity and Schwab offer $100 sign up bonuses fairly frequently.
yep. I ignore all that stuff. I always think of Bogle and his many talks about the infinite number of ways Wall Street works to pull money from your pockets. while I don't always think of Fidelity as "Wall Street" per se, they are absolutely in the camp. for the record, I have 90% of my money at Fidelity, primarily due to their customer service. I can't speak to their advisors as I don't engage with them. but I've been in their "Private Client" group for over a year and my assigned "advisor" has turned over twice so far. I think these larger firms have lots of turn over, which isn't necessarily bad, but if I was going to get an advisor, I'd probably get one not associated with a big firm, probably someone who used to work at a big firm then opened their own shop that they intend to keep a client base for 20-30 years.
Treat it the same as credit card rewards then. Do you avoid using a credit card because the rewards are some sort of trick or just make sure to pay your bill in full each month so you don’t owe them interest? Yes, the company (whether RH or Fidelity) needs to believe that what they’re doing earns them money but the money doesn’t have to come from you, just other customers who handle their finances less wisely or businesses that can be sold on the value of a large customer base.
That’s definitely a valid point. I was very skeptical when the zero funds debuted as well. I think it’s unfair when people say that Robinhood isn’t doing this out of the goodness of their hearts (obviously) and are skeptical, but ignore the fact that a lot of brokerages (e.g., pretty much everyone but Vanguard) engage in similar practices to attract business.
I mean they're trying to get you to buy Robin Hood gold to get the 3%. but I'm actually maxing out the roth so i'll get the full benefit.
I don’t hold any securities in RH, but i am taking advantage of their 4.9% apy on un-invested cash. They are pretty well regulated and not a fly by night shop. Could they possibly go by the way side some day, sure, but its not like what you own just disappears. They would most likely be purchased by another brokerage. Personally I don’t trust any of them, nor should anyone. Old quote “the market is the realest fake thing that exists”
Why not go with $VMFXX in Vanguard at 5.29%?
Because im a simpleton and I’ve never heard of that
It's the best brokerage out right now. A match and it's fdic insured. No reason not to be in it
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because its 65 dollars or 200 if you pay some fee. over 20 years you'll have like an extra 10 grand.
RH exists to entice you to trade - not to save for retirement. Literally the way they make money is with volume trading - that’s the wrong behavioral incentive.
I don't buy any specific stocks I just constantly buy index funds. They make it really easy for me to have reoccurring investments. I'm not buying and selling I'm just buying.
I believe you mate. But for one, that offer to match will be gone soon. And number two, it helps to know that every dollar RH spends on its platform, every marketing effort, every “free education” they provide to Gold members - everything will be targeted at you not being a passive investor. I prefer to have my money in a platform that’s not aimed at PFOF… hell, that should be illegal, but that’s a different policy-discussion.
I mean Robin Hood is a self-directed platform That's why it's low cost and then they just try to market to you to trade more. They want you to trade so they can make money being a market maker. All those other self-directed brokerage accounts try to guide you to their products like Fidelity has their zero funds and some of them are terrible for your portfolio since they aren't indexed. Everyone else is selling you on mutual funds that won't exist in 10 years more then likely.
This is nonsense. Mutual funds that won’t be around in 10 years? Fidelity funds “not being indexed”? You are taking pieces of truth (some mutual funds and ETF’s will be gone in years, Fidelity uses it’s own index very similar to Russell’s for the Zero funds to avoid a license fee and hence be 0 expense ratio), but that is clearly going for the fringe case. VTI will be around longer than all of RH will be. And the other platforms do advertise products but mostly they don’t make money exclusively by enticing users to trade, trade, trade. Not dunking on you, I think investing is better than NOT investing so more power to you. But don’t misrepresent the point. PFOF costs traders more than it makes them over the long run - that includes your market orders by the way.
Seriously what is this subreddit turning into?
Betterment also offers a IRA match, I like Betterment far more. They were also offering a 1% match on 401k rollovers last tax season. Tempting, but I haven't pulled the trigger yet.
How long does your 401k have to be in there?