The Robinhood Comeback

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“Robinhood works great whenever you don’t need it to work great. It breaks every time s**t hits the fan.” - Dave Portnoy

The Robinhood Comeback

Robinhood…loved by some, hated by others.

Your bias aside, last month Robinhood announced a number of new features for their Robinhood Gold users. These new perks are actually quite attractive and even have Robinhood critics asking themselves “should I go back?”

In order to help yourself answer that question, here is a look at these perks, where you can find more information, and a short history of Robinhood’s shady past.

Let’s get into it 👇️ 

Robinhood’s Record

Starting off with a brief history of Robinhood. If you are still hanging around we’ll cover details of the benefits.

Founded in April 2023, Robinhood had a mission to “provide everyone with access to financial markets, not just the wealthy.” Their main draw was offering free trades to investors, which was huge news as brokerages typically charged upwards of $10 to place a trade at this time.

(I’ll be honest, I started with a Robinhood account for this reason. Free trades were huge for a broke college kid.)

Fast forward to 2020 and the Robinhood platform had millions of users, the majority of which were in their 20’s. Then the controversies began to role in…

Outages March 2020 - Robinhood experienced a system wide outage on March 2nd during the largest daily point gain in the Dow Jones’ history. During this investors were locked out of buying or selling any positions.

Suicide of Alexander Kearns (June 2020) - University student Alexander E. Kearns committed suicide after seeing a temporary negative balance of $730,000 in his Robinhood margin trading account, which he misunderstood. Robinhood pledged to increase requirements for customers seeking high-level options authorization and settled a wrongful death lawsuit with Kearns' family.

Gamestop Short Squeeze (Jan 2021) - Robinhood restricted trading (aka removed the buy button) from certain stocks, including GameStop, following a surge in prices driven by none other than the legendary Wallstreetbets Reddit forum. This outraged the investing community, as it seemed the “Robinhood” platform was throwing the little guy under the bus in order to save billion dollar hedge funds. Not a good look.

(The movie “Dumb Money” is a surprisingly good take on the entire event).

On top of these events Robinhood has been part of controversies involving payment for order flow (selling investor data to hedge funds), SEC fines, and public criticism from popular investing figures.

That concludes a high level look at Robinhood’s criminal record.

Assuming you have a soft spot for them still, here is a break down on the features offered to Robinhood Gold members (they are good, maybe too good).

Perk Summary

• 5% yield on cash

• 3% cash back credit card

• 3% match on IRA deposits

• 1% match on all deposits

• FDIC insurance up to $2.25M

5% Yield on Cash - Similar to how high yield savings accounts work this money is FDIC insured (up to $2.25M) and will yield a 5% annualy. This is subject to change as rates move, but 5% is one of the highest yields you will find in savings accounts right now. This interest on non-invested cash will be paid monthly.

3% Cash Back Credit Card - You read that right, 3% cash back on all purchases all the time. There is also no annual fee, along with a few other mixed benefits you can read by clicking here. Not that it matters, but it’s also stainless steel which might be your thing. PSA, please please please fully pay off your card (this goes for any credit card). If not Robinhood is going to charge you 20-30% interest.

3% Match on All IRA Deposits - This one is pretty sweet. Robinhood is going to provide a 3% match on all deposits into IRA accounts. Sounds too good to be true? Well there is a few catches to get the full match which include holding the contributions in your IRA for at least 5 years and maintaining your Gold membership for at least 1 year. You can read the full FAQ here.

1% Match on All Deposits - This feature is “coming soon” but according to their website Robinhood will be offering a 1% match on all other deposits. The interesting (or weird) part of this is that it will be paid out in 24 monthly payments. The funds also have to stay in your account for two years and if you cancel your Gold membership you lose all future payouts.

Conclusion

It probably sounds like this was a hit piece on Robinhood. Yes…and no. As mentioned I personally used and enjoyed Robinhood for a number of years. The free trade feature was amazing, and their app was years in front of any other brokerage.

In the end I decided to transfer my money out of Robinhood and into Fidelity. Lack of live support, along with the shady event after event made me uncomfortable with keeping my main portfolio on their platform.

Overall though the features of Robinhood Gold are great. For those currently with Robinhood I think it’s a no-brainer to pay for Gold and give these benefits a try.

Personally, it’s not enough for me to switch back to Robinhood as my primary brokerage. My hope is that Robinhood is laying the foundation for similar features to be adopted by other companies.

Keep that buy button on dawg. ~ Cade

Cade's Finds

The Robinhood Credit Card: The Best Card Ever? - Good video by Andrei Jikh breaking down the pros and cons of the Gold card. See how much you need to spend in order to recoup the fees.

7 Best ETFs To Make You Wealthy: We are big ETF fans in these parts. Here is a solid video by JJ Buckner on his top seven ETF picks for 2024.

How To Get Hired: One of my new favorite reads is the Big Desk Energy email sent out by Beehiiv creator Tyler Denk. In this post Tyler shares why 99% of people suck at getting hired and what he thinks the best candidates do to standout.

Reminder if you haven’t yet to check out this week’s sponsor Betterment up above!

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Happy Solar Eclipse week to those who celebrate.

Investing > politics.

Nothing in this email is intended to serve as financial advice. Do your own research. Thanks for reading, if you have any questions, comments, suggestions, etc. about the email don’t hesitate to send me a reply.