Robinhood is an online discount broker that offers commission-free trading through its mobile app and website. Robinhood is a 100 percent free trading platform. The broker doesn’t charge investors to buy or sell shares or other financial products. Let’s take a look at the popular investing app and How to Make Money on Robinhood App.
How can investors make money on Robinhood?
Investors can make money from stock markets in two ways — dividends and asset appreciation. A dividend is a distribution of profits from a company to its stockholders.
When a company earns a profit, it’s able to pay part of the surplus as a dividend to stockholders. Dividends come into play when a firm chooses to share earnings with shareholders instead of reinvesting the surplus back into the business.
Investors can earn money with a Robinhood investment account by holding shares of the companies that pay out dividends. Investors have a choice to reinvest dividends into additional shares with the dividend reinvestment feature offered by the broker.
Reinvesting dividends allows an investor to supercharge their long-term returns due to the power of compounding.
Robinhood investors can also earn money through asset appreciation. They buy a stock at a low price and sell it at a higher price.
It’s very difficult to buy low and sell high because investors don’t really know where the lows are. The most successful Robinhood customers do their own research and take advantage of the analyst recommendations provided by Robinhood.
How Does Robinhood Make Money?
Robinhood makes money from its premium subscription service.
Robinhood Gold costs $5 per month and includes more than margin trading capabilities. Additional research tools are also provided in the fee. This is called margin trading and it provides traders with leverage to buy more stocks with.
We have always just used the free service with Robinhood. The screenshot above shows the Robinhood trading dashboard. The graph illustrates how the value of your account has changed – thankfully ours has grown!
The panel on the right shows the prices of stocks, including the 1 share of ZNGA that we currently have in our portfolio.
What Type of Trading Can Robinhood Be Used For?
Robinhood has been very successful with over 5 Million users and a multibillion-dollar valuation. It can be used to buy stocks, options, cryptocurrencies and exchange-traded funds (ETFs).
The app can be used to buy stocks for short-term trading. It has the functionality of an expensive conventional brokerage platform but without any of the cost.
Who uses Robinhood?
The app is popular among young, first-time investors, as evidenced by its game-like interface. A flying confetti animation pops on the screen whenever you make a trade, and Robinhood sends you push notifications when there are updates in the market.
If you do some proper research, Robinhood can, at the very least, serve as a good introduction to investing. But no matter how savvy you are at picking stocks, you’re highly unlikely to beat the market over the long term.
And since Robinhood lets anybody with a bank account can buy and sell risky financial products, it’s no surprise that more and more people are opening up accounts.
How to get started to make money on Robinhood?
Investing through Robinhood is as easy as opening an account. All you need is to be 18 years or older, have a valid Social Security number, and a U.S. address.
If you’re new to investing, start with a small amount of money you’re OK with losing, and stick to stocks and ETFs.
Falcone suggests creating a diversified portfolio with at least fifteen stocks across different industries and company sizes that you’ve already done your due diligence on. Thanks to fractional shares, you can start investing with just a few dollars.
As you dip your toe in, Falcone suggests getting familiar with investing news sites (like Money.com!) and timely content from verified financial planners like herself. Morningstar.com is another good resource for staying up to date on fund performance, investment strategy, and fees.
You can also use a stock market simulator to create a “practice portfolio,” which will help you learn how the market fluctuates over time, and how to make healthy investing habits (like not checking your account a million times a day).
In other words: Learn to walk before you run, and take the time to understand what you’re actually buying and selling.
How to Make $5 to $500 from the Robinhood App
Here is exactly how to make money on Robinhood within a few minutes! You don’t even have to know how to trade stocks. It is possible make $200 today just by signing up to the app – however, the odds are not that great that you will make $200 today just from the free stock for signing up.
Robinhood is a relatively new app that allows people to invest in stocks free of charge. There are no fees for the basic account, which is pretty amazing because you can buy stocks commission free and with no minimum balance in the account.
This is not the case for conventional stock broker accounts, which usually require a minimum balance and charge $5 to $10 per buy or sell of a stock.
So how does this help you to make $5 to $200 today ? It is quite simple. All you have to do is to sign-up for the Robinhood app and we will both get a free stock worth anywhere from $5 to $200!
This might well be the easiest way to make $5+ that we have ever seen. You will receive a share of a company that you can sell or just hold on to. There is a minimum hold time of 3 days before the app will allow you to sell your share.
Selling your free share is easy and completely free. But the best part is that you can get even more free shares!
You can make up to $500 by sharing your referral link with your friends and family. Every time they sign-up you will both get another FREE STOCK! There is a limit of $500 per person but it really doesn’t get much easier to make $500 in a month or so with the Robinhood app.
What Are Your Odds to Make $5 to $500 with a Single Free Share?
Robinhood are very transparent about your odds of getting a high value share. You are most likely to get a free share that is worth under $10 (98% chance).
This has been our experience with all the shares we have received being between $4 and $10. This adds up quickly if you share your referral link to your family, friends, and on social media.
You and your referral will be notified by the app that you have a free share waiting for you. You have up to 60 days to claim the free share. Sometimes we have found that the shares will just be deposited into the account without any need to actually claim them.
Unfortunately, you have to wait 30 days after selling any of your shares before you can withdraw the money and send it to your bank account.
How US entities generate their revenue:
- Robinhood Gold, a suite of powerful investing tools, which starts at $5 a month
- Rebates from market makers and trading venues
- Income generated from cash
- Stock loan income from counterparties
- Interchange fees from purchases made with the Cash Management debit card, and fees from program banks
Here’s more detail on how our US entities make money:
Robinhood Gold, a suite of powerful investing tools, gives you access to Morningstar research reports, NASDAQ Level II Market Data, bigger instant deposits, and margin investing.
You pay a $5 monthly fee for the service. When you invest on margin, you’re borrowing funds from Robinhood Securities. After the first $1,000 of borrowing, you pay interest at an Annualized Percentage Rate of 5%.
Rebates from Market Makers and Trading Venues
When you buy or sell stocks, ETFs, and options through your brokerage account, your orders are sent to market makers for execution. To compete with exchanges, market makers offer rebates to brokerages. Market makers typically offer better prices than exchanges.
Robinhood Securities has relationships with a number of market makers and sends your order to the one believed to be most likely to give you the best execution quality. Rebates aren’t considered when your brokerage orders are routed.
Similarly, when you buy or sell crypto on Robinhood Crypto, your order is sent to one of various trading venues that allow you to receive competitive prices. Robinhood Crypto receives volume rebates from trading venues. Rebates aren’t taken into consideration when your crypto orders are routed.
Income from Cash
Robinhood Securities generates income on uninvested cash that isn’t swept to the Cash Management network of program banks, primarily by depositing this cash in interest-bearing bank accounts.
Stock Loan Income
Robinhood Securities earns income from lending stocks purchased on margin to counterparties.
Sutton Bank, which issues the Robinhood debit card pursuant to license by Mastercard® International Incorporated, receives an interchange fee that is passed to Robinhood Financial, our US introducing broker.
Interchange fees are earned by most debit and credit card issuers and are meant to cover things like transaction processing and fraud loss. The Robinhood debit card is offered in connection with a brokerage account provided through Robinhood Financial LLC, member of SIPC and FINRA.
Robinhood Securities and Robinhood Financial also receive fees from program banks for sweeping funds to them.
What are other investors doing?
One of the best ways to earn money with Robinhood is by closely monitoring what other investors around you are doing. A common reflex for beginners in the share market is to sell stocks within a short time of buying.
Beginners tend to buy the most popular stocks based on past performance. Since stocks can be expensive, following the wave isn’t the best long-term investment strategy.
Investors should do their own research. Also, they shouldn’t make an investment decision based on emotions.
Robinhood Affiliate Program
Finally, you can make extra money from Robinhood using the Robinhood affiliate program! By sharing your links with friends, you can each get a free stock – possibly worth up to $200 per share!
The Robinhood affiliate program limits the value of these free stocks to $500 per account.
We use the Robinhood trading app for commission-free trades.
This may be a good match for someone that wants to try out trading as a way to make some extra money.
We use a disciplined approach and only trade stocks that show a high probability chart pattern. By cutting out losses quickly on the losing trades, we are able to consistently make money trading stocks.
We really love the Robinhood app and the fact that you can make $5 to $200 just for signing up or referring other people is fantastic. The app allows you to trade stocks or invest with no commissions and no minimum balance. This app is truly revolutionary for people that have always wanted to get started with investing in stocks but didn’t know where to start or were put off by the high commission barriers to entry.
Hopefully, you now know how to make money on Robinhood by trading stocks and by cashing in on the free stock just for signing up!