The Robinhood app allows users to direct their own financial future with low or no-cost investment options.
The premium offering today (for $5 a month) is Robinhood Gold. Here are its core features, recent changes, and a look at whether or not it’s worth it.
Recent changes to Robinhood Gold happened in April 2019 and impacted how users would pay for margin.
While formerly customers would pay a flat monthly fee for Gold membership depending on the extent of margin they’d like to access, today there is a single fee of $5 a month that grants everyone accesses to a given margin of $1000.
This also involved a shift in focus for Robinhood Markets, Inc., the freewheeling Californian investment brokerage.
They now offer more research and analysis tools, rather than making margin their core offering in the Gold membership.
This is also an improvement for investors, as the margin value stands, now supported by what Robinhood perceives to be the added intel considered important by users.
So what’s the quality of Robinhood’s research?
By all accounts, pretty top-drawer.
Having partnered with Morningstar (a premium investment research company), the research coming out of Robinhood is in fact third-party work, and Morningstar has a sterling reputation for its research.
Well done, therefore, to Robinhood, for adding something of value for its members.
Of course, Morningstar merely saves investors the task of aggregating information on companies that is available in the public domain.
There is no inside intel to be had from their research that you can’t amass yourself, but it is a huge boon to time-stressed users to have that information presented as a comprehensive report from a single source.
And, no, for those who are wondering, the research is never skewed in favor of vested interests.
It appears largely an unbiased and legitimate collating of needed intel that genuinely aids investors who want the facts and figures.
There’s no inherent advantage to the reports, however, to return to playing devil’s advocate, as there is with, for example, hedge funds’ reports.
Put differently, don’t go snapping up stocks just because Morningstar rates them a buy.
Stay with the facts, and decide for yourself whether you agree with their summary of what makes a good stock choice.
The reports from Morningstar via Robinhood are hugely valuable as an industry discussion that points to potential value, for sure, as they’ll typically sketch a company’s standing against the backdrop of the sector as a whole, while also highlighting what unique attributes a stock might have that make it valuable against that background.
For some investors, the reports add no value, as they insist that their personal intel gathering is as much a part of a successful trade as their trading strategy itself.
Of course, they aren’t the typical customers of Robinhood.
Some other considerations
Robinhood gives all customers an instant deposit cap of $1,000, Gold member or not. Gold members can, however, up their deposit limit if they’re prepared to up their account balance.
This is a nice egalitarian touch to the platform because most of its clients are not big hitters.
The platform also allows for instant deposits. Instant deposits are not unique to Robinhood, and many other brokerages offer the same kind of arrangement, although their costs are sometimes higher than Robinhood on this point.
The platform does offer extended trading hours, and that is something valuable to the majority of users, especially those who like the more volatile stocks, as these often shift in value on the back of late news.
The standard access to margin on Robinhood Gold tops at $1000 interest-free, which is generous of them, although of course, you’re paying the membership fee, so it’s not entirely devoid of costs.
So, is it worth it?
Yes and no is the only right answer, because when a platform－be that a trading or social media platform－resonates with users, you’ll experience bitter vitriol for not thinking it’s the best thing since cut cheese.
Emotions aside (as every good investor should be able to manifest), Robinhood Gold is a reasonable offer, absolutely, with some very nice touches and a young, cheeky feel.
They make much of their freebies and they’re not lying, but it’s worth mentioning that no-commission trading is nowadays on offer at almost all of the larger brokerage firms pitching themselves as a discount option.
More than that, they tend to offer a bigger package of resources for traders than upstart Robinhood, and many of them offer everything you’ll get from Robinhood Gold and then some, also at no charge.
Finally, although the SEC is now known for being a rather partial entity at times, they have alleged that Robinhood’s trading acumen and admin support is of such a low standard, that in spite of the freebies, users are worse off than were they utilizing another platform. Ouch.
So, cheeky but sloppy?
It all comes down to personal choice, but it’s also true to say that there are more satisfying and legitimate routes to investing－more professional architecture and far more peace of mind because of it.
Contact reputable industry players rather than a relatively young and, according to the SEC, quite messy outfit when you want to put your money to work.
Also Read: What is Gold Used For?