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How to Start Using Robinhood

Guide to using this new force in the investment world.

By Heather ClarkPublished 4 years ago 4 min read
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Robinhood is a great microsaving app that lets you buy small stakes in stocks, which makes it a great way to get your foot into the investment world.

Thanks to this handy app's easy to understand investin g features, it makes it perfect for the younger crowd and has proven immensely popular with Millennials.

Robinhood provides 100% commission-free stock, options, ETF and cryptocurrency trades, and its account minimum is $0 too. Mutual funds and bonds aren't supported though, and there's only one account option. Still, if limiting costs is your No. 1 concern, Robinhood is a recommendation for you!

So Robinhood is easy to use, but has anyone made money on using this app? The answer is a big, resounding yes. Read the tips below to learn how you can maximize your usage and end up with the most bang for your buck.

If you use this link you'll get a free stock to start off with when you sign up with Robinhood

Get Started Young

The best time to start investing was 10 years ago. The second best time is today. The earlier you can start investing, the more time compound interest has to work in your favor. It also gives you room to recover from losses from risky investments as well

Begin with a Firm Foundation

Instead of dabbling in micro investing with your extra dollars too soon, channel your extra money into saving a $1,000 starter emergency fund, paying off your debt, and then building a bigger emergency fund to cover 3-6 months of expenses.

You’re not ready to invest until you’ve taken care of those steps first. Paying off debt frees up your income. So instead of trying to send off your loose change, you should actually work toward saving 15% of your income toward your future first.

Surprise expenses happen to all of us, which is why saving for those expenses first rather than taking risks with investing is greatly encouraged.

Stick with a Simple Investing Plan that Works

It may be a good idea for you to invest 15% of your income toward retirement savings. Here’s how to get started:

Start with your workplace investing options. If you get a company match on your 401(k), take full advantage of it! Use whatever opportunities are available to you. That means that if your company offers a 100% on your contributions up to 3%, invest at least 3%.

If you have a Roth 401(k) option with good mutual fund options, you can keep increasing your retirement contributions until your reach your full 15% in your Roth 401(k). With a Roth 401(k), you can take advantage of your company match, if available, as well as tax-free withdrawals after you retire.

If you have a traditional 401(k), invest up to the match and then talk to your financial advisor about opening a Roth IRA. A Roth IRA is a great addition to your 401(k) because you have more mutual fund options and won’t owe taxes on the money you withdraw in retirement.

Keep a Long-Term Perspective

Micro investing may be a great for short-term savings for now, but you can’t count on it for long-term investments.

If you want to bring your retirement dreams to life, you can't rely on micro-investing to bring you macro results.

Get Involved in Your Investment Plan

Micro investing may be fun, but you have to go in with the mindset that it will only return you no more than chump change in return. If you want a confident retirement future, you need a plan.

It's overwhelming to plan and save for your future, especially if you are new to personal finance. It could be in your best interest to partner with a professional to help you learn. It doesn’t matter if you’re new to investing or if you’ve been doing it on your own for years; it’s never too late to benefit from the guidance of an expert.

You want a future you can count on, and working with an investing counselor or mentor is the first step toward setting your wealth-building goals and reaching them.

Other Factors to Consider

One thing to keep in mind no matter where you’re investing is that you have little to no control over how the markets behave day to day. You’ll have good days and bad days and days where nothing at all happens with your money. You may even lose some, be prepared to only put in the money that you expect to lose.

Getting the most out of investment apps is less about the market’s performance and more about your financial habits.

You should also consider where you are in your career and investing levels to see how much of an impact these apps can have for you. If you’re low income or just starting your career, it’ll be more beneficial for you to invest in tax-advantaged accounts like an IRA or a 401(k) rather than investment accounts you need to pay taxes on.

If you’re further along in your career but haven’t started investing, these apps will help give you a good start. In addition to any retirement accounts you’ve already got set up, they all give you an opportunity to increase your overall investment rate and add to your investment portfolio. With inflation the ever-so-rising inflation, investing is a better use of your money than simply tucking it away into a savings account.

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About the Creator

Heather Clark

Heather is a film student and model living in the midwest. She loves anything entertainment and art related.

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