Investors put their money in stocks with the ultimate goal to grow their money via prudent investment in financial instruments. As a beginner, you might struggle in accessing these tools, and many investment platforms will siphon off a part of your money as commission. That defeats the purpose of investing, and you lose out on your money.Â
The exception to this is the Robinhood platform. It is a bias-free platform where everyone can access investment tools and not worry about paying commissions.
How to Become a Millionaire on Robinhood?
To become a millionaire on Robinhood your chances are as same as on any other trading platform. If you do not have large positions and a large portfolio you will need years and decades to create a fortune. However, commissions are very low and Robinhood can be interesting for testing short-term trading strategies.
The trading tools are also in accordance with the level of investors, and hence they are not very advanced. The extent to what you will earn on Robinhood depends on your investment decisions and the extent to which you use the tools on the platform. Keep reading to know about the various ways on how to harness the power of this platform. You might even become a millionaire in the process.
How to make money on Robinhood?
To make money on Robinhood you need to understand that Robinhood is just a platform for trading as any other. Advantages are low or no commission trading but you need to have a very large portfolio and high deposits if you want to achieve big profit. The best approach for new traders is to invest in long-term periods, especially big brand stocks.
Robinhood brokerage
Robinhood is a brokerage firm that was unveiled in 2013 for U.S. clients. The firm also has an application that provides a virtual place for investors to trade in stocks, options, ETFs (Exchange Traded Funds), and cryptocurrency without taking any commissions. You can trade either on the web or on mobile based on your preference.Â
Since Robinhood is not a full-service broker, you might find loops in certain places. It allows beginners to trade at a low cost which makes it suitable for them. It is a private company and not a part of any stock exchange.
Working process of Robinhood
To trade through Robinhood, the first step is to set up an account through the application. This process consumes five to six minutes. All you need for this is your bank info, smartphone, and social security number.
You will first be directed to the Robinhood sign-up page where you will fill your information in all the columns. You will need to pick if your system is ios or Android and then fill in the contact information including number and address.
Once you have verified your identity and accepted the T&C, you’ll receive an e-mail on the acceptance of your application. The next step is to add funds and trade on the platform’s website or application.
The platform is a haven for beginners because you don’t need minimum funds, and there is no cap on the amount that you can add. Hence, you can start trading right away. It also has a clearing system in place which makes it a 100% fee-free platform.
How to grow your money on Robinhood?
Becoming a millionaire on Robinhood is a debatable topic but it is unerring that you can grow your money on this platform. It has a plethora of options to trade in like commission-free ETFs, options, crypto, and stock trading without the hassle of opening more than one account. The interface of this platform is also easy to maneuver across.
Your money-making bar depends on your skills and your yearning for understanding the stock market. How most people make money is focusing on expanding their portfolio of stocks and bonds and being aware of stock pickers, and often interchanging ETFs for index funds.
However, long-term investing can also prove to be detrimental to your goals. Thus, the money you invest should be the excess of what you have and not the money that is meant for your sustenance.
The process of money-making
On the Robinhood platform, you can make money through investment in the stock market and financial instruments. These options comprise asset appreciation and dividends.Â
Dividends
The dividend is the profit that is distributed by a company to its stakeholders. The shareholders get the dividend only when the company makes a profit and has the intention of paying a part of this profit to shareholders.
To get a dividend, you need to choose a company. The factors that you need to evaluate before selecting include expansion, growth pains, performance, and a forecast for future innovations. Hence, before buying shares, you will need to conduct a meticulous study on the same.Â
You don’t need to rush the process. Find out about the history of the company and consult a knowledgeable person within your reach. You can also scour the internet for the annual reports of the company. Your main focus will be on analytics of revenue, profits, net income, price: earnings per share, etc.You can use the Robinhood application to add the stock to your portfolio after settling on a stock of choice.Â
A crucial detail that many people miss is that dividends are paid only when the company decides to distribute them instead of reinvesting them for future avenues. This dividend will depend on the stock price and price yield too.
Your dividend can further yield compound interest for you if you decide to reinvest it in the same shares through the dividend reinvestment feature. Hence, growing your money even further.Â
Asset Appreciation
This is the practice that needs you to buy when the prices are falling and sell once they are high. However, this is not an easy money-making scheme. Your information before selling or buying should be factual, and emotions should be redacted from the trading process.
Experienced investors do a thorough study to determine the price range of the stocks. Since, Robinhood provides offers for stop-limit, low-range, market orders, also limit orders. You can use these orders to your advantage to define the profitable exit and entry of your orders.Â
Robinhood also makes trading easier for you by listing potential companies and their payoffs for certain timelines. These patterns can help you decide if you should sell your previously bought stocks.Â
For example, a stock that you bought for $200 becomes $400 per share in the future then your asset appreciation will stand at $200 per share.
Who is the ideal user of the Robinhood platform?
New investors
Beginners have the autonomy to invest without any minimum charges or deposits, The platform is easy to use and this gives the users a chance to try their hands at marketing with access to financial tools too.
Market Researchers
Robinhood presents the trader with significant statistics for different stocks. Hence, you not only invest and make money but also enhance your knowledge along the way.Â
Margin Traders
Robinhood also has the Robinhood Gold alternative for margin traders. With this, you have full access to $5000-$50,000 based on your bank account. If you utilize an amount exceeding $1,000 you will have to pay 5% interest.
Who is not ideal for Robinhood?
Mutual bonds and fund investors
Robinhood does not provide the option to invest in bonds and funds. If you have a keen interest in investing in those, you can find other platforms that provide the service.
Retirement saver
The platform doesn’t provide retirement savings options. Hence, if you are a retired person looking for a secure investment account, you might have to find other alternatives.
Advanced technical traders
Robinhood is best suited for beginners as it provides simple tools for people who are just starting. While it is appealing to the people who are venturing out to investment right now, it will be too rudimentary for experts.Â
How long does it take to withdraw from Robinhood?
Usually, it takes around 7 days to withdraw money from Robinhood and get money in a bank account. First, you need to wait two days (the trade date plus two trading days) to settle the transaction. After two days you can make a request for withdrawing money to your bank account and then usually you need to wait 3-5 days to get money in your bank account.
Conclusion
The vision to become a millionaire is blurry for Robinhood, but you still have chances with an impeccable trading strategy. Since you won’t be paying any commission, your decisions can be flexible and you can start with a small amount too. If you are looking for a more streamlined option, consider the advanced brokerage firms where you have full access to every tool. You might not become a millionaire through Robinhood, but your money will surely grow in the long run.
