Most of the stocks I have invested in were purchased through my 401K retirement program. These stocks are mananged by a company and my involvement is limited to picking a few options around how agressively I think they should attempt to generate returns for my account. I am by no means a financial expert, I am not being paid to write this article. Following any advice, or using any software mentioned in the post is a choice you are making at your own risk.
A while back I had decided that I wanted to try my hand at the markets. As my readers know, I’m a gamer at heart and what is the stock market if not a giant game? One that risks real capital, but a game none the less. My knowledge of the markets was pretty limited so I did what I always do, a bunch of research on-line and pestered the people I know for advice. The consensus at the time was that opening an E*TRADE brokerage account was one of the best ways for a novice person to get started trading on their own.
I liked the tools that E*TRADE offered, the app was fairly simple to figure out, and they had some of the lowest fees in the business. Over time I noticed that I mostly bought stocks and then did little with them. I came to the conclusion that I didn’t like the fees I was dinged with every time that I made a transaction. I wanted to learn how the markets worked by experimenting, but those experiments could be costly.
While discussing the situation with a friend, I learned that he had found another option. He told me that the brokerage he used didn’t have transaction fees or account minimums and that he could buy and sell stock for free. If it hadn’t been a person I trusted, I would have suspected that I was being pitched a scam-ball.
Robinhood really does let you trade for free. Mind that you have to purchase the stocks you want to trade. Except for the first one that is. If you sign up for an account via a referral from an existing customer you’ll get a free stock. It comes in the from of a game and you have a chance out getting a premium share like Apple. If only you knew someone who would send you an invitation…
Setting up an account couldn’t be easier. Download the app from the Play store, App store, or logon to the web-site and click or tap the option to create a new account. If you want to take advantage of the free referral stock, you’ll need to use the link you were sent to start the account. Once you get started you’ll be asked for your financial information: Name, SS#, Phone Number, Address, Employer, Marital Status, etc., you’ll also have to tie the Robinhood account to your bank. After you give them the routing information for your account they will verify it by making a couple of small deposits. You won’t get your free stock until all of this has been completed.
While helping a buddy setup his account, he mentioned that he was concerned about Robinhood asking for all of this private information. Buying and selling stocks is a taxable form of income. When you generate a profit or receive dividends, your broker will report it to the IRS so they need the same information your employer does. You link your Robinhood and Bank accounts in order to enable fast financial transactions. If Netflix is low and you want to buy a few shares you wouldn’t want to have to wait for a check to clear before the funds were available in your account. Linking anything to your bank account involves taking some risk but it’s no different from the automatic payments in use by many entities today.
Once your account has been created and your bank account verified (took two hours for me), you’ll be ready to rock and roll. I approach this form of investing in the stock market the same way I do playing a slot machine at my favorite casino. I never invest more than I can afford to lose because loss is inevitable. I never use credit to purchase stocks because paying interest on losses is painful. I also never trade while drinking.
Much like that slot machine, the trick to making money in the markets is knowing when to cash out at move on. To help you make that call, Robinhood provides all kinds of charts, news, analyst’s opinions, and various other tools. Analysis paralysis is a real problem when playing the markets. You can get lost in all the data if you aren’t careful.
I often use the collections tool to find interesting new stocks. This table shows you a category of stocks and basic information about each company. Clicking on any of them drills in to a detailed analysis of that companies’ performance.
Most investors suggest that you wait for market prices to fall before you start investing. As luck would have it, that is occuring right now. Getting started is easier than ever, I wish I would have setup a broakerage account years ago. Best of luck if you decide to invest on your own and send any good leads you find my way.