Robinhood Rises In New Investors -What to Look Out for
With so many people stuck at home during the coronavirus pandemic, millions of Americans have turned to stock investing in recent months, lured by the advent of free trades.
Online brokerages such as TD Ameritrade, Schwab, and Fidelity have reported an uptick in customer accounts.
According to co-CEO of stock trading app Robinhood, Research shows, however, that the new entrants to the market have played a key part in the quick recovery of the economy in recent months.
The Dow Jones and S&P 500 indexes closed out their worst first-quarter performances in history after stock collapsed at the beginning of the virus and right when lockdowns started.
However, in a report published in September, the nonprofit concluded that investors on Robinhood “did not panic or experience margin calls during the market meltdown and “collectively acted as a (small) market-stabilizing force.”
Robinhood alone saw its customer base soar from 10 million to 13 million during the first four months of 2020, an unprecedented surge far beyond anything the company was expecting.
With an average age of 33, many of Robinhood’s users are much younger than traditional stock investors, and critics say the app seems very much designed to appeal to a generation raised on online games.
This could also be because for once, stock trading has become affordable to the younger generations.
Robinhood is another investment platform that offers commission-free trades also with a $0 account minimum. There are zero fees to start, zero monthly fees, and zero trade fees.
According to Bloomberg Intelligence’s Larry Tabb, “Altogether, retail traders now make up a fifth of equity trading volume, second only to infrastructure providers like market makers and high-frequency traders.”
Because it’s so user-friendly to these young first-time investors there looking for a way to make quick returns and not doing the research before investing for the long term.
Robinhood then directs users to the same stocks that could have potential risks.
Investing always has potential risks associated and you should take the extra measures in doing the research before ever investing in a company.
The danger is that investors may not always understand the risks associated especially if their first-time traders.
It is always recommended to analyze a stock before investing in order to succeed long term. Investors make buying and selling decisions in the hopes that they can make multiple times return from their investment.
Robinhood has paved the way in investing in the form of a unique digital experience, however, the addictive model can lead you on the wrong path if you’re not careful.
The plan for any investor is to grow your money while entering different types of investment opportunities to maximize your funds at a low cost.