Hello, everyone and welcome back to your new video Shawn's, a name and finances the game. Today, hey thanks. Shawn we've got breaking news most commonly known as the stock trading app that charges its users zero dollars in trading fees aka, Robin Hood has just clap back. Yes, if you don't know what Robin is pause, the video go in the description of this one click: the link down there to take you to my original Robin Hood video, where I break down exactly what the company and the app is all about once you watch That video come back to this one and press play so in case you don't know Robin announced something that made some serious headlines about ten months ago.

Yeah we're talking about there's three percent cash back checking and savings account when they first announced this. It blew everybody's minds, including some big dogs who immediately shut them down, but anyone who knew a Robin Hood was immediately signed up for this, because 3 % cash back on a checking and savings account is absolutely unreal, so unreal that it was a bit too good To be true immediately after they announced they're checking savings account, the SBIC basically said what the are you thinking Robin Hood? You cannot do this. This money will not be SBIC insured and it basically killed the dreams of Robin Hood for their checking and saving accounts, or did they earlier this week they announced something entirely different than a checking and saving account that they announced 10 months ago. It's a cash management account completely different than a checking and savings account, because a checking and savings account doesn't manage your money, bro and the debit cards you get for.

Your cash management account are entirely different than the cards. You would have gotten for your checking and savings account hahahahahaha, but yeah. Basically, the SP. I see states that they only protect cash, that is deposited with a brokerage firm for one limited purpose and that is to purchase securities, not to pay your bills.

Out of a check Union savings account so this time around. Robin Hood has learned their lesson and they have partnered up with some big dogs in the industries like goldman sachs, citibank, the saint of a bank that never does anything wrong Wells, Fargo and other big names. Like HSBC Bank and US bank, basically this money in your cash management account is now FDIC insured up to 250,000 dollars per affiliate bank, which equates to one point, two five million in total. Now the real question is: if you are able to drop 1.25 million dollars into this cash management account, should you do it? I mean, while two point: zero.

Five percent. Isn't that fat juicy yummy three percent? We are all hoping for with the checking and savings accounts that were announced earlier this year. It is still pretty impressive. Considering most major banks would only give you about half of that in a money market account, but there's a catch, there's always a catch in the financial industry, because it's all about that money baby, if you're making money someone else needs to be making money.

So, what's the not so sexy thing about this new cash management account well, for starters, it's not a guaranteed two point: zero five percent. It could vary depending on the banks. So let's say you drop that 1.25 million year bank account you're thinking yeah I'll, make like twenty five thousand six hundred and twenty five dollars this year for literally doing nothing. But then, after about a month or two that two point, zero five percent goes down to.

One point: five: five percent: okay, now you're only making 19 thousand three hundred and seventy five dollars this year, still not bad, but now we're below the rate of two percent inflation, and that 1.25 million could definitely be invested elsewhere with way better returns. That could be just as safe now. This isn't to say that the two point - zero five percent rate couldn't go up. It definitely can, but just know that this is a variable rate and it's not something that set in stone where you sign on the dotted line and you're guaranteed two point: zero, five percent on this account.

Another thing I want to touch on real, quick and this isn't necessary the icon to the Robin Hood cash management account, but it's the fact that that 2.0, 5 % is calculated over the course of an entire year. It's not calculated over the course of a month, because a lot of people will do the math out on how much money they have and say. Oh I'm, making 2.0 5 percent on 10 grand every single month. Oh, my god, I'm gon na be super loaded, not the case.

It's calculated over the course of the year you're just getting paid out every single month on that earnings for the year. Good news is that Robin it does actually calculate it based on compound interest. So the money you make is then compounded and calculated for the next month when you get paid. So you are getting two point: zero, five percent over the course of the year.

But your money is growing every single month, which is actually really dope. But the thing that is working me the most and that's pissing me off the most about this entire Robin Hood. Cash management account is the fact that there are some hidden fees and a lot of people who will not know about these fees, because Robin Hood claims we don't have any fees with this cash management account and that's true. They don't have any fees, but their affiliate banks do it's most likely just a marketing trick for Robin Hood to say no we're, not the ones charging you all these fees, it's our affiliate banks, but we can all assume that Robin Hood is probably getting a kickback On all of those fees, I mean: there's fees like getting paper statements in check, deliveries and receipts and insane wire transfer fees and the one that urged me.

The absolute most is the fact that they say: hey, Shawn, come come put your money in our account. Come drop as much money as you want into our account, and it's totally free drop money in here, but if you want to pull that money back out in your bank account yeah we're gon na charge, you 75 bucks to do that, not five dollars. Seventy five big ones: that's insane! Why? Because the average Robin Hood user is not a big baller. The reason Robin Hood got so popular and it is what it is today is because they basically marketed to a bunch of young dumb people.

Like me and said, hey stop paying five to ten to fifteen dollars. Every transaction you do in the stock market come trade with us for free. I know you don't have much money to invest in. That's fine drop a hundred dollars in this account.

You can start investing basically for free today, so come do it and all those dumb young people heard those four letters that we love fr EE and was like. I am there. I am, let's do it it's hella cheap. Can you blame us? So what do you think everyone is going to do once they hear about this? Cash management account hey yo, J boy.

You see that Romney had brought back that thing. That gives us free money. Uh yeah dude, I'm like number 430 mm on the wait list. Let's go: oh dude same, I'm like five hundred thousand on the list, but I've been clicking on the app every single day getting closer and closer to the front.

Nice dude, I'm gon na drop. My entire life savings into this counts like become super rich dude, you're. Dropping all 2,000 in it yo hands down. This scenario has probably happened thousands of times since this cash management account has been announced and the sad thing about it is if you drop two thousand dollars in this account after an entire year, you're only going to make forty-one dollars.

If you don't spend any of the money in your cash management account which is gon na be super hard because we're all gon na get these badass and trendy cards that we're gon na want to show off and use. So let's say you get this cash management account. Then, after twelve months you go, you know what I wan na go buy a Tesla because I'm young and dumb - and that sounds like a lot of fun. You go to get a Tesla which we all learned, that it only costs twenty-five hundred dollars up front watch that video, if you haven't, seen it, but we go okay.

Let me just transfer some money for my rubbin and account back into my bank account. So I can go buy this super safe Tesla. Oh, I have to pay $ 75, get my money out of this count. Well, I only made $ 41.

So technically now I'm taking a loss on this cash management account, and I guarantee you. This is going to happen to probably hundreds of thousands of users who use Rob nude, because most people will not know about this $ 75 withdrawal fee. And I don't know, a lot of people are gon na, say well, Sean. Who really cares? You have a debit card, go use that card and make your purchases.

That way - and I agree you can make some purchases with your debit card, which, by the way, has some amazing amazing protection. Robin Hood has done a phenomenal job with the card protection on that so kudos there. But this cash management account is going to be hard to use for large purchases and could give you some issues for asset verification scenarios. So it's not a bank account, and honestly I mean that's my biggest gripe with this cash management account the variable interest rate no big deal in my opinion and $ 75, wouldn't really a major issue in most investment portfolios.

But the fact that this is on Robin Hood and the average user on Robin Hood is very dirt poor and only has a couple hundred dollars in their account. This is going to kill a lot of people. In fact, I guarantee it's gon na kill. 99 % of people who don't read the fine print, but I mean other than those few things I mean this cash management account does seem pretty legit this time and I did join the wait list so we'll see if it actually does come to fruition.

But am I gon na drop a lot of money in this account when I do get to the front of line on the wait list, I don't know. I think I will because a lot of my money right now is in a money market account that only earns me about half a percent, but I have been debating a lot of larger investment strategies lately and because of that, it kind of turns me off from The Robin Hood cash management account because another slight bummer which isn't going to affect most people, but some people will run into this issue and it's the fact that you can't draw large amounts of money. Out of this account very easily Robin, and it has this withdrawal limit of 510 out of an ATM or $ 5,000 that month out of an ATM, and only fifty thousand dollars can be transferred out during a single business day. So again, if you want to participate in a large investment, you can't get access to those funds right away.

You have to get fifty thousand dollars a day, not a huge deal, but again, you're gon na be charged. Seventy five dollars on each one of those transfers and it's gon na. Take you like twenty five days to get all of your money out. If you had the full 1.25 million dollars in that account, which is crazy, because if you did make twenty-five transfers out of that account, Robin Hood would make like a thousand eight hundred and seventy five dollars on it, which you're literally just trying to transfer it back Into your bank account so food for thought, but I do think I am going to be dropping some money in this account.

I will say I don't see a ton of value in this Robin Hood. Cash management account past forty thousand dollars because again you're going to be generating and accruing money in there. So if you want to pull more than that, fifty thousand now you're gon na run into some issues. But if you were to drop forty thousand dollars in this account, you'd still make some very good interest on it, and I mean it's pretty safe to kind of move around and do whatever you like with it.

But if you've got tons of cash laying around you know more than forty fifty thousand dollars, you really shouldn't be using this Robin Hood. Cash management account should be investing that money elsewhere. That's gon na give you a way a higher return than a 2.0 percent variable interest rate. You could easily go get four to seven percent on a very safe investment, so overall thoughts.

I probably give it a B - it's not great, but it is still very good. Let me know what you think in the comments down below, but I will say: I'm no financial adviser so do not take my advice seriously, you're legally or any of this BS. But I will say, if you're planning on dropping less than five thousand dollars into this cash management account, I don't really recommend it because on five thousand dollars, you're only going to be making about a hundred and two dollars a year in the interest that you're gon Na be getting if the interest rate doesn't go down so again, if you're gon na transfer money out you're, not really gon na, be making a whole lot. However, if you are gon na put more than five thousand dollars in this account, I do see it being very useful and I mean it could make you some good money either way.

That's my two cents on this new Robin Hood feature. I think it's cool at Robin Hood's trying to work their way into different industries, and I love their user interface and I love them always coming up with these game-changing ideas in the financial industry, so I do wish them the best of luck. I do hope that it actually does come to fruition, and I hope that people can make some good money with it. So we'll see what happens again.

Let me know your thoughts down below I'd love, to hear your feedback on this and also, if you enjoyed the video or found it helpful at all. Please hit that like button and please share it with a friend, because if you do that, I love you long time otherwise subscribe. If you're new around here - and I will see you in the next video.