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The vast majority of people should just be maxing out their 401k and investing in index funds. They shouldn't be using Robinhood to buy individual stocks, buy

The vast majority of people should just be maxing out their 401k and investing in index funds. They shouldn't be using Robinhood to buy individual stocks, buy cryptocurrency, or do options trading.

jldugger 8y ago
I just use Robinhood to buy ETFs for SP500 and AGG without trading fees. I don't have that much left over after maxing out all my tax advantaged options, so trade fees aren't insignificant. But people like me should recognize that the people using Robinhood to trade individual stocks, buy cryptocurrency, trade options or trade on margin are effectively subsidizing those who do. Along with the participants of Robinhood's funding rounds, I guess.
- jkqwzsoo 8y ago
  But you could buy those same ETFs with the same $0 fee on Vanguard (or Fidelity and a couple other platforms now), a substantially more established financial firm, and you could keep your residual cash in well established money market funds like VMMXX, also with $0 fee, or VMSXX for tax-exempt growth. The only real reason to have money in RH, IMO, is if you're gambling with <$1000 on penny stocks and options-cum-lottery tickets.
  - te0x 8y ago
    I buy Vanguard ETFs and many other index funds (that Vanguard doesn't offer) on Robinhood. The user interface is 100x better, and why wouldn't I want to keep it all in 1 place? They just need an IRA product and most people would be set.
    - jkqwzsoo 8y ago
      What index funds doesn't Vanguard offer?
      - stickfigure 8y ago
        Why isn't "the user interface is 100X better" enough of a justification? I'm not a Robinhood user, but I use simple.com as a bank. It's like every other bank in that it holds money. If anything it's somewhat less convenient than banks with physical branches. But the online UX is so vastly superior to every other bank I've used (large sample size) that I'm a rabid fan.
        jkqwzsoo 8y ago
        Oh, I didn't want to address that because I wasn't sure if the person above was generically referring to all ETFs and ETNs as "index funds", when I was specifically responding to someone who was suggesting that they were using Robinhood for buy-and-hold index investing, buying things like S&P 500 etfs (eg. SPY, VOO, IVV). I was trying to think of what investment-quality ETFs Vanguard might not offer. Leveraged ETNs (TQQQ, DRIP, SPXS, etc.), commodity futures ETNs, and volatility products (e.g. SVXY) may not be offered by Vanguard (I'm not sure, actually), but these products are !!!not!!! buy-and-hold investments which, again, was what I was responding to. [Anecdotally, someone on r/tradexiv or r/tradevol or somewhere on Reddit had a post about their Vanguard advisor cautioning them about buying XIV earlier in the year, telling them, more or less, "you're either exposing yourself to a lot of risk, or you're too smart to be trading with Vanguard" ...... he was not, it turned out, too smart.] My claim was that RH should not be where you have money that you use for long-term buy-and-hold investment, even outside of an IRA. I think using RH for speculative investment is fine(-ish) if you accept that their order execution is poor (you don't really see this until you get into options), the company has severe product issues (e.g. the options order error the other day causing them to halt all options trading), and the company is not very well established (so there is a non-zero, greater than average, default risk). I think it's undeniable that RH's UI is prettier than most other brokers. However, I think it's obvious that "prettier" and "better" are not necessarily the same thing. Again, if you are a buy-and-hold investor (which, again, is what I was responding to), being able to make a quick trade is not important, since you should probably only rebalance your portfolio once a quarter (maybe monthly or biannually, depending on your level of engagement). But specifically, RH's UI is deliberately minimalistic, to a degree that I think is starting to verge on dangerous. They only recently moved from spark lines to offering optional OHLC bars, and their charts have no axes, which makes it difficult to get a sense of the products price movements. RH doesn't show you historical OHLC data, or historical dividends (just yield). The app offers no stock screening. The charts offer no volume analysis, which makes it difficult to see whether or not you'll be able to exit a position. My mom (who thankfully understands that she should only put money she's willing to lose into RH) recently told me she entered into a position with some low-volume real estate company, and couldn't exit the position for some days due to lack of buyers. She was unaware of the liquidity of the product she was trading (and complained that RH should have warned her... but that's another story). Even worse is their options platform. At minimum, it's useful to show the days-to-expiration when selecting the expiration date. The options platform deliberately hides important information, such as implied volatility (probably the most important figure for an options contract), Black-Scholes greeks, volume and open interest, and a probability of profit estimate, behind an unlabeled corner button after you've selected an option to purchase. RH introduced multi-leg orders over the summer, but these still don't really give you the tools you need to construct strategies like spreads, calendars, straddles, strangles, condors, and butterflies. These are fairly complex trades with non-linear responses to spot and volatility changes, but RH won't even show you your net position delta before placing a trade (it will show it to you after you've entered a position). If you want to see what a real options trading platform looks like, you can demo ThinkorSwim or Tastyworks. Yes, it's more complicated, but that's because it's necessary. So no, I disagree with the claim that RH's UI is "100x better". I think it's UI is maybe "50x prettier", but I don't think it's "better" for the user (and I've seen some wretched UIs, like Ameritas). In options trading, I think that RH's interface is objectively worse than those offered by other platform. Unlike checking and savings, which are generally regarded as low-risk activities, I think that RH's UI is deliberately designed to encourage risky behavior, and minimize "information overload" (in favor of "blissful ignorance") in what is inherently a risky activity for which most customers are not adequately prepared, under the thin guise of "democratization" (hence its beeline from stock investing (risky) to stock investing on margin (riskier) to cryptocurrency meme investing (extremely risky, and launched during peak bubble) to options trading (extinction-level-event risky for novices)).
city41 8y ago
You can buy index funds in Robinhood. That's how I use it. Just a simple, to the point, interface for buying and holding index funds.
- pertymcpert 8y ago
  How do you do that?
  - astura 8y ago
    ETFs are traded exactly like stocks. For example, if I wanted to invest in the S&P 500 index, I could just buy a few shares of $IVV on Robinhood.
dwild 8y ago
> They shouldn't be using Robinhood to buy individual stocks, buy cryptocurrency, or do options trading. What if they do it for fun? Personally, I would have fun having a few thousands there (but I'm Canadian), it's not worse than having a few thousands over a gaming computer, or gambling at the casino. If you consider Robinhood as the way to finance your retirement, well you are doing something pretty bad, but that was always true for any stock trading.
- SnowingXIV 8y ago
  This is a big part of it, which true some people get burned and lose money. But that doesn't mean they shouldn't do it. In fact, I'd argue it's slightly healthy to have a little bit of skin in the game to understand how these things work. If you're into numbers, it's nothing more than a game or say fantasy football and you can cheer for your favorite players (companies). Robinhood presents a nice way of making it easy to get into the stock market with a pretty interface and without going through a cumbersome broker and paying fees for things you don't understand. Do seek professional help if you are looking for 401k and retirement guidance. If anything, RH is sophisticated gambling.
- vec 8y ago
  If you understand what you're signing up for and still want to dabble in stock trading for fun then sure. Go wild. Everyone needs a hobby. But the homepage of robinhood.com has the following call to action above the fold: > Investing, Checking & Savings. All for Free. > Robinhood gives you the tools you need to grow your savings, invest in your future, and do more with your money. Does that sound like "this is not an appropriate way to finance your retirement" to you?
  - anthuswilliams 8y ago
    What should their ad copy say instead? "Robinhood gives you the tools to lose all of your money making impulsive decisions" ? All brokerage accounts advertise themselves as investments, even if the reality is that idiots open them and lose all of their money trading options. I mean, if you really have this expectation of marketing copy, I don't blame you, that's a totally legitimate position to hold. It's just not one I would expect many people to share.
pbreit 8y ago
You can buy Vanguard and other ETFs in Robinhood. For free.
guelo 8y ago
No, you have to explain why robinhood is worse than etrade. You can buy the same index funds or individual stocks with either brokerage.

The vast majority of people should just be maxing out their 401k and investing in index funds. They shouldn't be using Robinhood to buy individual stocks, buy cryptocurrency, or do options trading.

jldugger 8y ago

I just use Robinhood to buy ETFs for SP500 and AGG without trading fees. I don't have that much left over after maxing out all my tax advantaged options, so trade fees aren't insignificant. But people like me should recognize that the people using Robinhood to trade individual stocks, buy cryptocurrency, trade options or trade on margin are effectively subsidizing those who do. Along with the participants of Robinhood's funding rounds, I guess.

jkqwzsoo 8y ago
But you could buy those same ETFs with the same $0 fee on Vanguard (or Fidelity and a couple other platforms now), a substantially more established financial firm, and you could keep your residual cash in well established money market funds like VMMXX, also with $0 fee, or VMSXX for tax-exempt growth. The only real reason to have money in RH, IMO, is if you're gambling with <$1000 on penny stocks and options-cum-lottery tickets.
- te0x 8y ago
  I buy Vanguard ETFs and many other index funds (that Vanguard doesn't offer) on Robinhood. The user interface is 100x better, and why wouldn't I want to keep it all in 1 place? They just need an IRA product and most people would be set.
  - jkqwzsoo 8y ago
    What index funds doesn't Vanguard offer?
    - stickfigure 8y ago
      Why isn't "the user interface is 100X better" enough of a justification? I'm not a Robinhood user, but I use simple.com as a bank. It's like every other bank in that it holds money. If anything it's somewhat less convenient than banks with physical branches. But the online UX is so vastly superior to every other bank I've used (large sample size) that I'm a rabid fan.
      - jkqwzsoo 8y ago
        Oh, I didn't want to address that because I wasn't sure if the person above was generically referring to all ETFs and ETNs as "index funds", when I was specifically responding to someone who was suggesting that they were using Robinhood for buy-and-hold index investing, buying things like S&P 500 etfs (eg. SPY, VOO, IVV). I was trying to think of what investment-quality ETFs Vanguard might not offer. Leveraged ETNs (TQQQ, DRIP, SPXS, etc.), commodity futures ETNs, and volatility products (e.g. SVXY) may not be offered by Vanguard (I'm not sure, actually), but these products are !!!not!!! buy-and-hold investments which, again, was what I was responding to. [Anecdotally, someone on r/tradexiv or r/tradevol or somewhere on Reddit had a post about their Vanguard advisor cautioning them about buying XIV earlier in the year, telling them, more or less, "you're either exposing yourself to a lot of risk, or you're too smart to be trading with Vanguard" ...... he was not, it turned out, too smart.] My claim was that RH should not be where you have money that you use for long-term buy-and-hold investment, even outside of an IRA. I think using RH for speculative investment is fine(-ish) if you accept that their order execution is poor (you don't really see this until you get into options), the company has severe product issues (e.g. the options order error the other day causing them to halt all options trading), and the company is not very well established (so there is a non-zero, greater than average, default risk). I think it's undeniable that RH's UI is prettier than most other brokers. However, I think it's obvious that "prettier" and "better" are not necessarily the same thing. Again, if you are a buy-and-hold investor (which, again, is what I was responding to), being able to make a quick trade is not important, since you should probably only rebalance your portfolio once a quarter (maybe monthly or biannually, depending on your level of engagement). But specifically, RH's UI is deliberately minimalistic, to a degree that I think is starting to verge on dangerous. They only recently moved from spark lines to offering optional OHLC bars, and their charts have no axes, which makes it difficult to get a sense of the products price movements. RH doesn't show you historical OHLC data, or historical dividends (just yield). The app offers no stock screening. The charts offer no volume analysis, which makes it difficult to see whether or not you'll be able to exit a position. My mom (who thankfully understands that she should only put money she's willing to lose into RH) recently told me she entered into a position with some low-volume real estate company, and couldn't exit the position for some days due to lack of buyers. She was unaware of the liquidity of the product she was trading (and complained that RH should have warned her... but that's another story). Even worse is their options platform. At minimum, it's useful to show the days-to-expiration when selecting the expiration date. The options platform deliberately hides important information, such as implied volatility (probably the most important figure for an options contract), Black-Scholes greeks, volume and open interest, and a probability of profit estimate, behind an unlabeled corner button after you've selected an option to purchase. RH introduced multi-leg orders over the summer, but these still don't really give you the tools you need to construct strategies like spreads, calendars, straddles, strangles, condors, and butterflies. These are fairly complex trades with non-linear responses to spot and volatility changes, but RH won't even show you your net position delta before placing a trade (it will show it to you after you've entered a position). If you want to see what a real options trading platform looks like, you can demo ThinkorSwim or Tastyworks. Yes, it's more complicated, but that's because it's necessary. So no, I disagree with the claim that RH's UI is "100x better". I think it's UI is maybe "50x prettier", but I don't think it's "better" for the user (and I've seen some wretched UIs, like Ameritas). In options trading, I think that RH's interface is objectively worse than those offered by other platform. Unlike checking and savings, which are generally regarded as low-risk activities, I think that RH's UI is deliberately designed to encourage risky behavior, and minimize "information overload" (in favor of "blissful ignorance") in what is inherently a risky activity for which most customers are not adequately prepared, under the thin guise of "democratization" (hence its beeline from stock investing (risky) to stock investing on margin (riskier) to cryptocurrency meme investing (extremely risky, and launched during peak bubble) to options trading (extinction-level-event risky for novices)).

city41 8y ago

You can buy index funds in Robinhood. That's how I use it. Just a simple, to the point, interface for buying and holding index funds.

pertymcpert 8y ago
How do you do that?
- astura 8y ago
  ETFs are traded exactly like stocks. For example, if I wanted to invest in the S&P 500 index, I could just buy a few shares of $IVV on Robinhood.

dwild 8y ago

> They shouldn't be using Robinhood to buy individual stocks, buy cryptocurrency, or do options trading. What if they do it for fun? Personally, I would have fun having a few thousands there (but I'm Canadian), it's not worse than having a few thousands over a gaming computer, or gambling at the casino. If you consider Robinhood as the way to finance your retirement, well you are doing something pretty bad, but that was always true for any stock trading.

SnowingXIV 8y ago
This is a big part of it, which true some people get burned and lose money. But that doesn't mean they shouldn't do it. In fact, I'd argue it's slightly healthy to have a little bit of skin in the game to understand how these things work. If you're into numbers, it's nothing more than a game or say fantasy football and you can cheer for your favorite players (companies). Robinhood presents a nice way of making it easy to get into the stock market with a pretty interface and without going through a cumbersome broker and paying fees for things you don't understand. Do seek professional help if you are looking for 401k and retirement guidance. If anything, RH is sophisticated gambling.
vec 8y ago
If you understand what you're signing up for and still want to dabble in stock trading for fun then sure. Go wild. Everyone needs a hobby. But the homepage of robinhood.com has the following call to action above the fold: > Investing, Checking & Savings. All for Free. > Robinhood gives you the tools you need to grow your savings, invest in your future, and do more with your money. Does that sound like "this is not an appropriate way to finance your retirement" to you?
- anthuswilliams 8y ago
  What should their ad copy say instead? "Robinhood gives you the tools to lose all of your money making impulsive decisions" ? All brokerage accounts advertise themselves as investments, even if the reality is that idiots open them and lose all of their money trading options. I mean, if you really have this expectation of marketing copy, I don't blame you, that's a totally legitimate position to hold. It's just not one I would expect many people to share.

pbreit 8y ago

You can buy Vanguard and other ETFs in Robinhood. For free.

guelo 8y ago

No, you have to explain why robinhood is worse than etrade. You can buy the same index funds or individual stocks with either brokerage.