Why I opened a Robinhood Account
Apparently Robinhood launched in April of 2013 as the first-ever completely free investment platform. Since that time, many if not all brokerage companies that want to hold onto their customers have either eliminated or drastically reduced the cost to trade stocks and ETFs. Fidelity Investments no longer charges me for any trades, with the exception of some small fees for options trades. Robinhood certainly allows investors to trade stocks, ETFs, REITs (Real Estate Investment Trusts), and options just like other brokers. So why did I bother opening a Robinhood account?
The first reason was curiosity about the platform and how well it might meet a beginning investor’s needs. I wanted to see if it was easy to understand and use. I realize many in the younger generation are very accustomed to using their smart phones for just about everything. But just because something is simple, doesn’t always make it a good long-term solution.
The second reason was a continuing increased interest in some new types of currency: cryptocurrencies are all the buzz and there are reports of some making huge piles of cash investing in this new frontier of currencies. Because Fidelity Investments limits access to cryptocurrency trades, I wanted to see how Robinhood might provide a way to gain entry to this wild, wild area of the investing frontier. I may be teaching a home school class on the subject of investing, and I expect to receive questions from the students, including questions about cryptocurrencies.
The Joy of Cryptocurrency Speculation
According to one source (Investing Simple) I read, Robinhood provides access to Bitcoin, Ethereum, Dogecoin, OmiseGO, Lisk, Dash, Monero, Zcash, NEO, Stellar, Qtum, Ripple, and Litecoin. Dogecoin, for example, “is a cryptocurrency created by software engineers Billy Markus and Jackson Palmer, who decided to create a payment system as a “joke”, making fun of the wild speculation in cryptocurrencies at the time.” (SOURCE: Wikipedia)
According to Yahoo Finance, one DOGECOIN is now worth $0.125022. If you had eight DOGECOINS, they would be worth $1.00. However, they might be worth $0.99 on Monday or worth $1.10 next Friday. In May 2021, DOGECOINS were trading at $0.57 each. So, you only needed a couple of them to have a dollar of value. You see the problem, don’t you? There is a lot of volatility and risk in this type of investment. This is not investing. This is speculating and probably more like gambling.
My Robinhood Account Activity
To start my account, I moved $100 from our checking account to my Robinhood account. Then I started buying a few investments. In addition, when someone uses the link I provide, I receive free partial shares of a stock from a small selection of stocks. According to Robinhood, “We’ll add 1 share of free stock to your account when you link your bank account and fulfill the conditions in your promotion. You’ll be able to keep the stock or sell it after 2 trading days.”
I bought an investment to see how their trading process worked. I also received some free shares. My $100 account was up to $108.51 earlier this week and closed down to $103.50 on Friday. This is due to the type of investments I am buying.
How does Robinhood choose which stock I get? “The shares of free stock are chosen randomly from our inventory of settled shares. Because the shares are chosen randomly, you may not receive the same stock as others.” If you decide to try Robinhood, please use this link. Robinhood may give me a free stock if you follow through. LINK
An Example of a Trade: Buy Limit one share of GSL
The following images show the process on Robinhood to buy one share of GSL using a buy limit order. A buy limit order is usually the best way to buy any stock or ETF. Market orders can result in paying too much for an investment.
Don’t buy any cryptocurrency as an investment. Buy it like a lottery ticket. Expect to wind up poor or at least with less than you started with.
Wisdom from Solomon
Proverbs 13:11 “Wealth gained hastily will dwindle, but whoever gathers little by little will increase it.”
All scripture passages are from the English Standard Version except as otherwise noted.
Yahoo Finance Dogecoin