Robinhood Investing for Beginners 2021 (Step by Step Tutorial)
👋🏼 Hey friends, in this post I want to walk through investing via Robinhood. I’m going to give you a step-by-step tutorial of how it works for a complete beginner.
The good news is Robinhood is completely commission-free with no monthly fees or anything like that associated with your brokerage account. There is a Gold subscription that costs $5 a month but you don’t actually need it to trade. I have never signed up for it and don’t think it would benefit me.
💵 Sign up for a free Robinhood account and get a free stock.
So how does the free stock offering with Robinhood work? Well basically if you open up with them and fund it with any amount of money. They’re going to give one completely free stock worth anywhere from $2.50 up to $200. It is a lottery type system so odds are, you’re going to get a lesser valued stock. But If you are lucky you might get one worth up to $200.
If you’d like to support me, you can use my affiliate link - but of course it’s not mandatory.
A lot of people are often cautious when an app is asking them for their social security number. This is going to be a full-blown financial account here so you are going to have to supply the information but Robinhood collects this in a secure manner and doesn't store this information about you.
🧐 What Stocks and ETFs Are Available?
Robinhood allows you to trade stocks as well as ETFs and even a few cryptocurrencies. All 100% commission-free. However what you're going to find is that not every stock or ETF, or investment that trades on a major exchange is available for trading up Robinhood. The good thing is the majority of stocks and ETFs that people are looking for are available through Robinhood so that being said, let me go ahead cover one asset you're going to find on Robinhood.
US Exchange-listed stocks. Those are major companies like Apple, Google, Tesla and also popular funds like the Vanguard S&P 500 Index Fund which I happen to own.
You’re also going to find options contracts for US Exchange-listed stocks and ETFs. If you’re looking to buy some basic call and put options and even some more sophisticated ones once those are available here on Robinhood and will discuss those a little later.
You're not going to find preferred stocks or mutual funds on Robinhood you're not going to find Bonds or fixed-income investments however you will find some bonds investments through ETFs so if you're looking for like a Vanguard bond ETF for example you're able to purchase that on Robinhood you just can’t purchase bonds directly.
🦾 Crypto Trading
Robinhood is unique because they offer commission-free cryptocurrency trading. You can purchase bitcoin, bitcoin cash, Bitcoin sv, Dogecoin, Ethereum Classic, and Litecoin that list just changes from time to time so you’re gonna wanna keep track of that If there's a specific cryptocurrency that you are looking for. For a more robust app I would recommend Coinbase. Which would allow you to trade things like Doge, Ripple, Shiba etc. At their Shareholders meeting, Robinhood did state it is looking to add more Cryptocurrencies.
⌥ Option trading
You have to request access to options trading and fill out a questionnaire about your individual training experience based on your experience level. Robinhood will decide what types of options they want to allow you to trade because options are a very high risk in a speculative investment where the majority of people who trade them lose 100% of their money or more.
I'm not here to tell you to go buy them or not to buy them, that's up to you to make that decision. I just want to give you the information.
🤖 Set up your account
I already have my Robinhood account funded but what I want to go ahead and do is move some more money into this account. So you guys can see what that process looks like and also is going to show us something interesting called Robinhood instant deposits. In order to do that was going to do is go over to the person icon after you click on the person icon you going to go over to transfers in this for you have a couple of different options:
You can link multiple banks, if you have a lot of different bank accounts on I just have one main account that I use for funding the brokerage account that I already have linked so let say I going to move $100 from my bank account to my Robinhood account. I would type $100 and then click review and submit. Now the big difference between Robinhood and other apps out there is that a lot of trading apps would not let you trade with that money until the deposit has settled.
However, with Robinhood, you have an instant deposit of up to $1,000 for everybody for free which is a really cool feature so you can actually invest that money right away.
💸 How To Withdraw Money
Now I want to show you how to move money out of your Robinhood account. So let's say for example you’ve placed some successful trades you made some money and now you wanna move some of your cash out of your Robinhood account. What you would do with you would go back to the person icon you going to click on the same menu there would just transfer but this time you’re going to transfer to your bank account.
Which means you're taking money out of that Robinhood account and putting it t back into the linked bank account. So let me go ahead do that quick here and I actually don't have any money available to do this because not of my deposit had actually settled. It will it hit your bank account in 3-5 business days.
If you have stock that you want to cash out on you would actually have to sell you shares, and then transfer out - more on this later on. Keep in mind the taxation rates.
The last way to take cash out of your account is via the Robinhood debit card. You can use it, well, like a debit card. Accounting would become a pain if you use this as a primary debit card.
🤑 How to Buy A Stock
In order to purchase a stock on Robinhood, what you are going to do is going to go to the search bar and you're going to type in either Ford or the symbol which is just F, so let me type it F and then I'm go ahead and search and as you can see ford motor shows up immediately so If you click on that we can see that Ford is currently trading at $X in one penny per share and so now if I want to buy one share of ford, all I wanna do is click on the trade button and I'm going to click buy so I'm just going to buy one share of ford for demonstration purposes so this is where you decide how many shares you actually want to purchase and by default it is going to be a market order, which means it is going to close at the current market price at this instant point in time.
💸 How to Sell A Stock on Robinhood
So now, let me go ahead and cover how to sell a stock on Robinhood. I have that one share of Ford that I just purchased for $9 per share. So it hasn't really moved that all because I just bought it but I'm going to go ahead and sell it for demonstration purposes so we go to my homepage you can see what stocks I already have my 1 share of ford and let say I just decide hey, I changed my mind I want to sell that stock. Then you would click on the trade button, and then you have the option to sell at this point because you own shares on ford.
So you click that sell button, and you type in how many shares you're looking to sell. I only have one so we’re just gonna sell that one share and again it because I'm just drop down here you can also sell in dollar amount or sell a whole shares depending on whether or not you use the fractional shares and you also have different order types for the cell if you want to use more sophisticated order types like the limit order, trailing stop, etc.
🤖 How to buy Crypto
So now i'm going to show you how to purchase cryptocurrency with Robinhood but before I do that it is important to understand that one of the big differences between Robinhood and other exchanges out there for purchasing crypto is that Robinhood does not allow you to send or receive cryptocurrency in and out of your portfolio.
The reason behind this is because Robinhood is going to keep track for you what your capital gains are on your cryptocurrency that way they can report this the IRS and you can pay your applicable taxes while the problem is if people are able to send and receive crypto in and out of that account it would be impossible to keep track of the cost basis and you would have to keep track of it on your own.
Something you need to be aware of before you put a bunch of money into cryptocurrency is up to you to make that decision of whether or not you're comfortable with being unable to move your cryptocurrency in and out of the account that being said guys I'll show you how to do it assume that you are comfortable with that and you want to buy some bitcoin or other support a cryptocurrency, regardless.
So first of all, in order to find cryptocurrencies that are supported you're going to have to go to the search tab. Then under popular lists click crypto.
So let me click on Bitcoin and I'll show you how to purchase it. This shows you but it's been doing over the last week last month. You're going to click the green buy button at the bottom in your going to type in what dollar amount in us dollars you want to put into this cryptocurrency so right now you're can be paying the price of about x dollars for bitcoin but most people don't have that much money to buy a whole coin, so you’re gonna buy a small amount of a coin. So I'm gonna do a $100 worth just for demonstration purposes. Just for demonstration purposes and then shortly after I'm going to sell it that way you were aware of how to actually sell cryptocurrency on Robinhood as well.
So that being said I want to buy $100 dollars worth it's going to be about 0.001 bitcoin. So we're going to click review
Swipe up and submit the order and purchase bitcoin through Robinhood. If I go back home now you'll see that I have a little bit of bitcoin under the cryptocurrencies section.
How to Sell Bitcoin/Crypto On Robinhood
Now I'm going to show you how to actually sell your cryptocurrency that way down the road when you decide to sell it hopefully for a profit, you’ll know how to go about that.
So what are you going to do to sell the cryptocurrency is pretty simple. You look at your homepage in you click on the cryptocurrency that you own in your portfolio and then you're going to click on the green sell button. Once you do that, put in the dollar amount that you're looking to sell of the total value of your crypto so right now my total value of $99.69 cents to sell and you have to decide how much you want to sell so I'm just going to $50 worth and that is going to sell $50 of my bitcoin and put that back into us dollars at this point you clicked the review button and you swipe up to submit that order. And just like that in the snap of a fingers guys. We sold a portion of my bitcoin and got a credit of $50.
🚩 Robinhood Cash Management Explained
So now that you guys understand how to actually purchase stocks, crypto and different assets on Robinhood, and how to sell them. I want to cover a couple of different features and tools available on Robinhood that you may want to be aware of as a new user.
The first one is something called Robinhood cash management so with your Robinhood account if you open up an account with them you're going to open a taxable brokerage account or a margin account and this depends on whether or not you want to borrow money to invest with the majority of people the answer is going to be no but that's something you have to decide on your own when opening the account but most people just going to open a cash account where any money that they’re investing with is their own money, and they are not using borrowed money.
But that being said they also offer a different online savings account called Robinhood Cash Management which is totally separate from the brokerage account.
Now with the cash management account, you’re gonna get a couple of different things.
First of all, it currently pays, 0.3% APY which is about six times higher than the national average which is 0.05% APY. So if you are looking to maximize the interest from your saving this may be an option to explore. It’s also FDI insured through their custodial bank up to $1.25 million, and you have full flexibility here for doing direct deposit paying bills and they also offer a virtual Robinhood debit card if you want to to use a checking account as well. And you will have fee-free withdrawals from over 75,000 different ATMs.
I don't personally use cash management myself. I use a different account for my online savings.
so that's not something that I use, but I wanted you guys to be aware of it. In case that's something you’re interested in. and the other advantage here too, is that if you have your money with Robinhood cash management it's very easy to move money from cash management over to your Robinhood investment account to actually buy and sell assets.
The next thing I wanna show you is more of the research tools and data available within the app if you’re simply looking to find investments and you don't necessarily know what you're looking to buy.
👀How to Create a Watchlist
So now I wanna show you guys how to set up a watchlist on Robinhood. So let say, for example, you're just getting started with investing, and you wanna keep an eye on a couple of different stocks more funds but you're not quite ready to pull the trigger you're going to do is roll down here to the lists section and then you're going to create a new list and then you're going to give it a name and set an Icon.
So I am going to call this one stock I am watching and then I'm going to set icon here, and it looks like you have a couple of different options, so let me do like the monkey emoji cause that's kind of funny, so there we have a new list called stocks I am watching. So now I am going to add stocks to that list. So let say for example I am keeping an eye on Tesla, Microsoft, and Netflix. I am going to add those three stocks now.
So you would simply type in the name of the stock and click the plus icon that adds that to my watch list do the same thing now Microsoft at that and then I'll do the same exact thing here with Netflix as well and add that to my watch list. So now I click the X, I now have created a watch list of Netflix Microsoft, and tesla and you can also sort this by symbol, price, and percent change date today so that is how you would create a watch list if you are going to keep an eye on a number of different investment.
Now, also guys you will find this message tab here at Robinhood, just getting notifications when you sell or buy a stock or earn a dividend or anything like that going to show up over here on the messages tab and finally all the way to the right where you have a person icon is going to be your settings. In here you can Invite friends, if you wanna earn more free stocks, You can take a look at your different balances and get an idea under total asset allocation between cash, crypto and stocks options. It shows you your instant deposit limits, pending deposit different things like that it will also give you an idea here if you are utilizing margin whether or not you have a healthy amount of deposits or if you are at risk for a margin call. But it is a little bit above and beyond of the scope of this video.
You can also transfer, as you saw, that's where you transfer money in and out of Robinhood from into your bank account, you also set up auto transfers here if you want to do this on regular basis understatements and history this is where you're going to get recent history in terms of your buy and sell orders this is also where you would go to get your tax documents and monthly account statements and other than that you have your settings if you want to turn on and off Robinhood gold, set up subscriptions and change different settings within the app.
The things I want to show you guys is how to turn on drip or dividend reinvestment so if you do end up buying stocks that pays dividends and assuming you have fractional shares turned on which you have to turn on when you actually purchase that stock by purchasing in dollar increments. Rather than whole shares, if you have fractional shares turned on, you can also do dividend reinvestment for free. Which is going to allow you to reinvest dividends in $1 increments back into the issuing stock
So in order to do that guys what you're going to do is look at the investing and you're gonna scroll down and you are going to see where you have dividend reinvestment disabled all you do is to click enable dividend reinvestment I don't have any dividend stocks in this portfolio so I'm going to skip that for now, but that is how you would go ahead and do that.
So anyways guys there you have it that is a step-by-step overview of how to buy stocks on Robinhood and also pretty much probably answers all of the other questions about how does app works for a complete beginner like I said if you want to support me to put in this video together and you're opening up a Robinhood account feel free to use my link below it's basically at zero additional cost to you if what's a little bit of extra money in my pocket and allows me to make more helpful videos like this on youtube.
So again that is never expected but always appreciated I am affiliated with Robinhood, if you guys found this video to be helpful please drop a like and subscribe and hit that bell for notifications and also feel free to give me a comment with your feelings about Robinhood or any questions that you may have or topics for future video but thank you so much for tuning in guys and I hope to see you in the next video and happy investing.
Links to get started:
https://join.robinhood.com/josev20
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