How does the Robin Hood app actually work in regards to investing financial services stock? Hey guys, sean here now i want to talk about something spent all over the news. Lately, it's the Robin Hood app. Now it's been all the news I'm gon na get into why in just a second, but first of all, if you don't know what Robin Hood is at all, I've been using it for a while. It's essentially a disruptive force in the brokerage world for trading stocks.

Now, they're working in some financial management kind of, but basically you could trade stocks without any ETFs exchange traded fund. So when you use Scotts trade or e Trade, some of the big stock trading services - you got to pay. You know about five to ten to fifteen dollars per transaction, whether you want to buy stock. There's your feet, sell a stock, there's your feet.

The reason I like your Robin Hood and the reason a lot of other people like Robin Hood. It's because there's zero dollars in fees, which is pretty incredible now Robin Hood mainly targets Millennials like myself and is the reason why a lot of Millennials actually use the platform. Unlike the platform, it's a great beginner stock trading platform. There's no analytics are really dated to screen stocks, which is not the premise of a Robin Hood.

Robin Hood was designed back in 2014 to really just trade stocks. It was not meant to do a lot of research on Sox. Their idea was that Millennials are gon na be searching elsewhere for research anyway, so might as well just have a very simple app, very simple service to trade stocks. But that raises the question: well, it's too good to be true.

How does Robin Hood end up making its money if it's not charging these fees like these, other companies are well. Robin Hood makes their money based on the uninvested capital. You have in your account, so I'm gon na show you here's my Robin Hood account on my phone. You should be able to see it on-screen now, I'm gon na sign in I've only got about one hundred and thirteen dollars in here right now.

I'm making this video, but pretty much far too come over into my profile here, and I go to my account summary you can see. I've got a hundred and thirteen dollars and 22 cents actually invested in stocks right now. Now I've also got 46 cents of cash. Just hanging out, in my account doing nothing really should be a lot higher than that, but it's really just chilling there doing nothing except all of my money in stocks which, at the time I'm making this video is pretty terrible, because markets been a little rough lately, But I've got all my all my money in my Romney account pretty much in stocks, except for that 46 cents, not 46 cents is then taken into a big pot that Robin intones and they're earning interest off of that big pot.

So me, my neighbor down the street, my neighbor down the street even further, all of us with our idle cash in our Robin Hood account is then put into a big pot and that's how Robin Hood makes her money pretty ingenious. If you ask me and it's why Robin Hood is known as a disruptor in this force, because again, this is new. This is exciting this. What a lot of people really like they like to be able to make these micro transactions without having to pay a fee? If you're like a very simple trader, you're, not really heavy into it, you're only you know trading less than $ 1,000.

Let's say you're! You know, trading 100, 200 $ 300. It's really not worth paying the fee to trade socks, because if I dropped $ 100 into my account and wanted to buy some stock, I'd already lose $ 10. Let's say $ 10 fee right there and then let's say my stock went up 10 % great. Let me cash out: that's a great returns.

Let me cash out on my on my investment. Well, then, I'm paying another fee and I'm really not making any money off it. Robin Hood is a great service to use because you wouldn't be losing your money right there. If I dropped in $ 100 into his stock, it generated, you know, it went up 10 %, and then I cashed it out.

I just make ten bucks, but the reason that Robin Hood has been in the news lately is because they just released something. A few days ago, at the time I'm making this video basically saying that in 2019, they're gon na be starting a 3 % checking and savings account which absolutely blew people's mind. Big banks basically poop their pants and did not have it and remember Robin Hood is still pretty small right now. Not a lot of people really know about it, which still blows my mind again, I'm millennial, but it does blow my mind because I think that Robin Hood is phenomenal and everyone should be using it, but anyway, in the cash management kind of section of their app.

It's their new feature again with this 3 % checking and savings, you can see how many people have been kind of signed up, so I signed up. I'm about you know a quarter of a million in line right now and there's almost a million people signed up for this, and you can kind of see your friends and everyone you signed up, but we don't even know if this is actually gon na. Be a real feature reason when Robin came out this again big banks and everyone else did not have it. Everyone else was not happy about this, because it's super competitive, a 3 % interest rate on idle cash is insane.

Essentially, if you had a hundred thousand dollars sitting in your account, you'd earn three percent of that back every single year. So if I had a hundred thousand dollars in there, I'd make three grand a year for doing absolutely nothing. Let's say someone made 40 grand a year: that's an additional three thousand dollars that year that they'll take home for doing absolutely nothing. It's pretty incredible.

Most banks are being competitive around the 2 percent range 2 percent is so really good, but 3 percent is unheard of again. Is this too good to be true? Well, it's not necessarily FDIC insured. It's si PC insured, which is a little bit different and it's only insured up to about a quarter of a million dollars. But we don't even know if it s like PC insured.

Yet because, according to si PC guidelines, it can't necessarily be a checking or savings account, there's all these little caveats that are coming to play, which is why we don't know if this is actually gon na be a thing yet. However, I'd love for it to be a thing, because I would love 3 % cash back on some idle cash. In my account, I think it's phenomenal idea again. Robin Hood is doing this to gather a massive target market right here.

They're there looking to take as much market share as possible with this move to when rates are actually in the 3 % for having idle cash for the big banks. They've already gathered a huge percent of the market and then they're gon na start making their money off their other services that they offer again. This might just be way over your head right now and I'm not looking to get into super depth with this. I just want to give a brief overview of Robin Hood cuz.

A lot of people are very interested in right now. It's all over the news. People are wondering how what is this Robin Hood service? How is it 3 %? You know I'm on my money. That's in my account I was losing their mind, so I just want to make a very brief video on it.

I personally think Robin and his amazing app and I just remembered that they actually have a referral system, and I don't know if this is still a thing. I should actually look, but they had a referral system, which is how they grew up in the first place. Was if you signed up in Robin Hood and you invited a friend, you and your friend would get a free stock which is wiki cool and no one else that I know of is really doing that which is really cool. I don't know if it's so thing.

If it is little thing I'll leave my link down below so, if you guys haven't signed up for Robin Hood yet, and you want to check it out, then you can click the link and we'll both get a free stock out of it. So let's can have like a stock to look at most one, we're gon na be like a $ 4 stock or a $ 3 stock. But hey you just made 4 bucks. No, so not only are you not paying a fee but you're getting like 4 bucks to start, I know Robin Hood's amazing.

I think it's phenomenal. I'm millennial. I don't know what other people are thinking about this, but I wanted to make this video to inform as many people as possible, but I do want to know your opinion on Robin Hood from what I've told you from what you've seen. Do you think it's a pretty solid service? Let me know in the comments down below also, let me know if you think this 3 % interest rate is really gon na, be a thing moving into 2019.

I really hope it is, but I think they've got some things to work out. Robin has got some things work out, but again I just want to make this video inform as many people as possible. If you found it helpful or learned anything go ahead and smash that, like button, also, if you're new to the channel, make sure you subscribe, we go over some pretty cool stuff. On this channel, I like to make some of these informative videos that could make you better well off, and things like that.

So definitely that subscribe button turn on the bell for some notifications, and I think it's from a call a bit over today. So hope you guys did learn something new smash. The like drop comment: I've seen the next one.