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Robinhood knows that people can just buy index funds and sit (which is what I do). But this doesn't make money, so they encourage people to buy individual stock
by huac 10y ago
Robinhood knows that people can just buy index funds and sit (which is what I do). But this doesn't make money, so they encourage people to buy individual stocks, "whatever new Elon Musk stock is out there", and trade on leverage.
To some extent they want to make Robinhood a game, rather than an investment platform.
- metalliqaz 10y agoWall street did that a loooong time ago
- stuffedBelly 10y agoRobinwood's target audience seems to be younger generation, most of whom are not hot about investment, not to mention whether they know what Wall Street did a long time ago (aside from 2008's financial crisis).
- webninja 10y agoRobinhood makes money off of uninvested capital and margin accounts, not trade commissions. So why would they care what we buy or whether we make purchases rarely or not?
- huac 10y agoSomeone who trades frequently is more likely to upgrade to Robinhood Gold than somebody who buys an index fund once and forgets.
- usefulcat 10y agoAccording to TFA they also make money off of rebates, which are proportional to the number of shares traded.
- matt_wulfeck 10y agoSo then they make money of both.