Lately, I have been hearing my friends talk about a new investing app called Robinhood. Naturally, I began wondering what the buzz was all about. So, I decided to sign up and check it out for myself. Here is what I learned my first week using my Robinhood account.
What is Robinhood?
Robinhood is an investing website that offers brokerage services to individual investors. It helps facilitate online securities transactions for its members. However, it does not monitor your accounts without written consent. Nor does it provide recommendations to its users.
Since other brokers have eliminated or reduced fees, Robinhood has had to find other ways to set itself apart. The site allows you to freely access educational resources and investing tools through your Robinhood account. Furthermore, there are no account minimums. Although some investors complain about the lack of options, the bare bones platform is great for those new to investing.
How Do You Set Up a Robinhood Account?
Just like any website you join, you have to sign up. They walk you through the typical rundown of personal information. However, the laws and industry regulations usually require a bit more than your typical account. In addition to your name, address, and contact information, you must provide your Social Security Number, date of birth, and country of citizenship.
You should be aware that you cannot hold or maintain a Robinhood Account if you are a Public Official or Politically Exposed Person, a Foreign Financial institution, or a Foreign Bank. The first step was simple, but did take some time. After I entered all my information and agreed to the terms and conditions, they sent a text message with a verification code.
The next step was to fund my account. They work with accounts from several financial institutions. I linked it to my Wells Fargo account and put $100 in to get me started. Although, you can transfer up to $50,000 to invest. Once the money was in my account, I was ready to start choosing stocks.
After you create your account, you also receive one free stock for signing up. I got one share in Prospect Capital, but you do have a chance at more valuable stocks like Apple, Microsoft, or Visa.
How Did My Robinhood Portfolio Perform in the First Week?
Now that I had money to invest, I took my $100 and chose five different companies. I wanted to test investing strategies for 2021. So, I looked at companies in sectors that I feel will show significant profit margins over the next year. Remember, I am no expert. However, based on research and the advice of financial analysts, I feel some industries are well positioned for a comeback.
Uncertain which specific stocks to choose, I utilized one of Robinhood’s daily lists and looked at the day’s 100 most popular stocks. I was most interested in companies within the Energy, Healthcare, Technology, Airlines, and Entertainment sectors. Buying $20 worth of shares in each, here is how they performed this week.
Energy – GE
My first stock choice was in the Energy sector. GE is a well-established Fortune 500 company that has been publicly traded since 1892. Many brokers consider big businesses like GE a safe investment because of their longevity. It was selling at $11.47 a share, which seemed relatively low for such a large company. It was posting daily gains, so I bought 1.74 shares.
After making consistent profits throughout the week, the stock price took a dive on Friday. As the market closed, shares sold for $11.34. Despite this week’s losses, long term projections suggest it will turn around and gain momentum.
Healthcare – Pfizer
Pfizer seemed like an interesting choice since they partnered with BioNTech to produce a Covid-19 vaccine. If it proves effective, I suspect the stock’s value will increase as more people get the vaccine. So I purchased 0.536121 shares while it was trading at $37.31 a share.
Unfortunately, this week proved just as volatile for PFE. Shares dropped to $36.62 after a steady decline since Monday. It will be interesting to see how political developments and delivery schedules affect stock prices in the coming weeks.
Airlines – Southwest Airlines
Even though people are not traveling much these days, there will always be a need to fly. Once the spread of the virus is contained, social distancing measures will loosen. When this happens, passengers will certainly begin traveling more. I believe discount carriers like Southwest Airlines will be the airlines of choice. So, I bought 0.418935 at $47.75 a share.
Southwest was another stock that was performing very well until Friday. It showed a steady decline until the market closed with stock selling at $46.90 a share. Like GE, this is another company that is likely to turn around and post profits over time.
Technology – Fuelcell Energy
I firmly believe that we should be researching and investing in cleaner energy sources. Although I looked at several energy companies, Fuelcell Energy seemed to be in a prosperous stage of development. Leading their industry with innovative designs, I decided to take a chance. At $15.77 a share, I was able to buy 1.267323 shares.
At first, FCEL looked like it was going to skyrocket. It hit a 52 week high on January 12. However, prices leveled off at $16.04 a share. Although it is not the most impressive profit margin, I have high hopes for this investment.
Entertainment – fuboTV
Online entertainment has seen huge gains during this pandemic. While so many sports venues remain closed, more fans turn to live streaming website to watch their favorite teams. Furthermore, the Super Bowl is just around the corner. Knowing how much Americans love their sports, I purchased 0.716204 shares in fuboTV while it was trading at $27.86 a share.
Despite the steep dive on Friday, FUBO finished the week in a better position than it had started. Shares were up to $32.11 a piece, showing a significant increase. This stock was responsible for the lion’s share of my gains after my first week investing with the app. I suspect it will continue to rise in the days leading up to the Super Bowl.
Finance – Prospect Capital
The most interesting stock pick this week was the free one I got just for creating a Robinhood account. Prospect Capital is an investing company that focuses on business development. I looked at this stock as my independent market variable.
As the week opened, shares sold for $5.62 a share. The stock price remained at nearly the same price all week until Friday. While my other stocks took a dive, PSEC posted significant gains. At the close of the day, the share price was $6.00. It just goes to show you that sometimes luck plays a role in how your portfolio performs.
What Are the Benefits of a Robinhood Account?
Although Robinhood may not be for everyone, I found the site very user- friendly. Since I am not looking for every option, I appreciate the streamlined platform. Verification, funding, and transactions were instant and easy. The mobile app made it even more convenient to check my portfolio’s performance as well.
Despite the limited account and securities options, Robinhood can facilitate transactions for a variety of stock options. The free stocks for signing up and inviting friends is another great incentive to join, because who doesn’t love free stuff? My plan is to use my Robinhood account to test different investing strategies before making larger additions to my portfolio. I like having complete control over a smaller portfolio. With no account minimums, you can invest as much as you feel comfortable with. With my Robinhood account, I determine exactly when and how I purchase stocks.