Robinhood App Scam? A Fake Investment Scheme?

Robinhood App Scam? A Fake Investment Scheme?

They say this is the best time to buy stocks and invest! So you head to your search engine and look for the best way to do it. And Robinhood is one of the free-trading app that is mainly used by millennial.

Learning stocks could be a bit overwhelming and trusting someone else to do it for you is another thing. How secured and safe are your investments?

Robinhood Review Summary


Robinhood is an investing platform that offers free stock, options, ETF and cryptocurrency trades, and no account minimum. Mutual funds and bonds are not covered and only taxable investment accounts are available.
However, there are now far better investing apps that offers free stocks or commission-free.

All about Robinhood

Vladimir Tenev and Baiju Bhatt, former financial company owners, founded Robinhood Company to include everyone in the financial system, so as their mission states: “provide everyone with access to the financial markets, not just the wealthy”.

With the observation that in every traditional trade, it is the American that always gets the commission and has higher opportunity to be wealthy. So, one of the main characteristic of Robinhood is being commission-less which means that nothings goes to the company like fee or charges.

They actually make money from payments for order flow, a common although controversial practice whereby a broker receives compensation and other benefits for directing orders to different parties for trade execution.

How to earn using Robinhood

Robinhood is one of the leading competitors in the very promising and fast-growing fintech industry. The traditional way of investing and banking is now being put into the digital platform where billions of dollars are being invested on it.

It supports trading of more than 5,000 stocks, including most equities and exchange traded funds (ETFs) listed on U.S. exchanges; options contracts; cryptocurrencies such as Bitcoin and Ethereum; and American Depository Receipts (ADRs) for more than 250 globally-listed companies.

Coding problems and Loopholes!

Coding problmes and stocks

Robinhood faced series of coding problems in their system for the recent years and there is a new just this year! After an issue is resolved, another one comes up specially during hit-in or peak time. The company also suffered loss and their users as well. Let’s take a closer look at them.

Infinite Leverage

Robinhood users, mainly Gold members are manipulating the app by the use of a cheat code which is being spread through Reddit App. (News by 2019) In the comment section, a user bragged about gaining a $1M position with just a $4000 deposit.

This is caused by a loophole the app that puts the borrowed money into the user’s capital. This means that when the user will borrow money from the company they will give them a higher value and so the cycle goes on.

The glitch in Robinhood’s trading app allowed users to trade with unlimited amounts of borrowed cash, with one trader saying they turned a $3,000 deposit into a more than $1.7 million position.

Outage

After the issue on “Infinite leverage bug”, there is an outage last March 2020 which is a busy time for trading because of the Pandemic. This another code error of the company led to an error that locked users from accessing their accounts. This also caused users loss in their potential trade during that hit in and peak time.

Unsupported Mutual funds and bonds

Robinhood also lacks an automatic dividend reinvestment program, which means dividends are credited to accounts as cash rather than reinvested in the security that issued them. The company has said it hopes to offer this feature in the future. Also, investments only come through individual taxable accounts.

Customer support only comes through emails.

There is no available phone or telephone numbers which are commonly available for other brokerage customers. You can also send your queries through their online help center. Their website is easy to navigate.

How about the good points?

Free Investment Photo

There are also numerous reasons why a lot of people, specially newbies in stocks, are drawn to use Robinhood. Commission Free and Low -Cost expenses mixed with a very promising future surely catches anyone who’d like to earn big time!

Commission Free

The Company’s initial success in the industry is brought by their commitment to providing 100% commission-free in all their products. This means that you can also save and have a return from the supposed to be commission or fee.

Low costing

Most of the service charges in any trade or transaction come from the maintenance of accounts. Because Robinhood has their own subsidiaries for different services like, The Clearing (the company’s own clearning system), this reduces some of the service’s account fees.

Products

They have varied products for investment like stock, options, ETF and cryptocurrency trades. They are members of the Financial Industry Regulatory Authority (FINRA) except for the cryptocurrency. It is stated in their website that cryptocurrency under Robinhood Cryto:

“Cryptocurrency trading is offered through an account with Robinhood Crypto. Robinhood Crypto is not a member of FINRA or SIPC. Cryptocurrencies are not stocks and your cryptocurrency investments are not protected by either FDIC or SIPC.”

Mobile and web trading platforms

They have an easy to use web interface and design. Their process of application/signing up also only takes few minutes of verification and validation. This is made easier when you use the application using your phone!

They also offer automatic bank transmittal verification which lessens the user’s concern of to go the bank for registration or notification. The reflection on the account also depends on the amount being transferred. It normally takes 3-5 banking days to process. Users can set up automatic deposits on a weekly, biweekly, monthly or quarterly schedule.

No Minimum Account

There is no minimum account and it allows fractional shares which mean you can divide your investments into multiple portfolios. This enables you to buy many more companies, even if you don’t have a lot of money to invest. This is also a good way to manage investment, in case one investment goes down you still have 2 or more investments to go with.

Is it a Scam? How safe is it?

Robinhood is accountable to and is being regulated by top-tier financial and government authorities which make it safer and ensured the legitimacy of the company. The risks on coding errors which led to money loss and deceit are also present. Now, let’s ask a more relevant question: Is Robinhood for me? Does it suit the investment I want?

Robinhood is obviously for those who are well-versed in stocks, options and other investment products. That is why the safety of the investment also falls on how well you do you know the game.

Here is another form of investment that will surely suit your needs!

Safer Way to Invest and Have a Passive Income!

Make Money Online Photo

Affiliate marketing is one of the growing platforms where in people invest their time, money and effort. What you do is simply to be affiliated with a product that you like and market them on your own website! It is a good source of passive income and involves lesser risks money loss! Check how it works.

  1. Free – there is no capital needed! No capital means no loss. All you need to do is custom a website which will serve as you platform. Don’t have one? Marketing Affiliate will help you do it!
  2. Commission – earning comes from getting a commission from a product that was bought through you website. So the more traffic in your website, the more chances of selling then the more commission you will get. You literally earn while you sleep!
  3. You own your time – You do not have a boss think about or a dropping stock market to worry about. You can work in the most convenient time and place for you!

This will get more interesting as you join the community of Wealthy Affiliate. This is an online platform that commits to help you earn your money online for FREE! It has over millions of members and thousands added every week.

Training and Tools

They offer training, tools and modules that will help you start up this business. Here a rough list of what you’ll have for free:

  • Live Help
  • Websites
  • Website Backup
  • Beginner Training Course
  • Personal Affiliate Blog
  • Affiliate Bootcamp Training
  • Video Walk-Through
  • Keyword Research Tool
  • Training Classrooms
  • Affiliate Program
  • 1-on-1 Coaching

Community

You will not go through it alone! You can learn from people who have been where you are right now and learn from their experiences!

If you are looking for a one-stop platform for everything that you need then Wealthy Affiliate is also an excellent choice for you. It covers market research tools, web building tools, domain registration, website hosting, website backups, site security, and other related concerns! Instead of paying different services from different companies, choosing Wealthy Affiliate will lessen your effort and expenses! It literally provides everything so you can start earning. Try it out!

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