Is Robinhood Safe? (2024)

FAQs

Is Robinhood Safe? ›

Yes. Robinhood is safe for the beginner investor. They are regulated by the Securities and Exchange Commission (SEC), similar to other popular brokers.

FINRA is a self-regulatory body that many brokerages participate in. As you may recall, your money in Robinhood is protected by the Securities Investor Protection Corporation (SIPC). The SIPC protects up to $250,000 for cash claims and $500,000 for securities–so 99% of investors have NOTHING TO WORRY ABOUT.

Cons Explained

Limited research: Research tools and information at Robinhood don't measure up to competitor standards, making it difficult for traders to get the most out of the platform. There are no stock or ETF screeners available at all, and other research tools are rudimentary at best.

Yes. Anytime you give out your personal information to a third-party, there is always a risk that the information will be stolen or leaked. Robinhood has a good track record of protecting users' Social Security numbers, though, so providing yours is as safe as giving it to most reputable financial apps.

Is my money insured? Cash in your Robinhood spending account is eligible for FDIC insurance coverage of up to a total maximum of $250,000.

Your securities and cash are protected by SIPC

Robinhood Financial LLC and Robinhood Securities, LLC are both members of SIPC, which protects securities for customers of its members up to $500,000 (including $250,000 for claims for cash) for each investing account, including IRAs.

The Bottom Line: Yes, Robinhood is safe and legit, but it has had a number of issues… Robinhood became the center of controversy on January 28, 2021 after preventing users from buying stock in several companies, including Gamestop, AMC and Nokia.

Why can't I withdraw money from Robinhood? You probably can't withdraw money from Robinhood because your funds are unsettled. You can only withdraw “settled funds”, money that hasn't been transacted with in the last 2 business days. This is known as Robinhood Withdrawable Cash.

If you're linking a bank account, we recommend linking a checking account rather than a savings account to avoid potential transfer reversals. You can also link an external debit card account for instant transfers to your Robinhood investing account or spending account.

Robinhood is good for simple trades, while Fidelity's mobile offering is more comprehensive and a better platform when it comes to the complete mobile trade experience.

Can you make money on Robinhood? ›

Get the opportunity to earn income on stocks you already own—just by turning on Stock Lending. Robinhood Wallet is your self-custody home for crypto, NFTs, dapps, and more. Sign up for Robinhood or refer a friend to choose your free fractional share in companies you love. Certain limitations apply.

If you forget to tap on the notification, you can claim your reward stock by navigating to Messages to check if you have new claimable stocks under Robinhood Rewards. You can also navigate to the Rewards tab/icon on the home page and click on “Past” to see previously-granted rewards.

RHY currently partners with JP Morgan Chase Bank, N.A. to hold funds in your spending account, and Sutton Bank holds funds associated with your Cash Card. Review the Robinhood Cash Card Agreement and the Robinhood Spending Account Agreement for more information.

If you're interested in investing in Robinhood, or in any other individual stock, consider keeping the amount to a small portion of your overall portfolio, financial advisors suggest 5% to 10%. It's also a good rule of thumb to invest only an amount you won't need for the foreseeable future, say five years.

Robinhood Gold costs $5 monthly or $50 yearly after a 30-day free trial. There is no monthly fee for the normal Robinhood account. If you're strategic with your Robinhood Gold benefits, you could earn enough to cover the subscription fee (or even a little extra).

Robinhood is a member of the Securities Investor Protection Corp. (SIPC). This means that any loss of an investor's securities (e.g., stocks and bonds) and cash held by Robinhood is protected up to $500,000 in the event the firm fails or goes out of business. This includes up to $250,000 protection for cash holdings.

Once funds are swept to a program bank, they are no longer held in your individual investment account and aren't protected by SIPC. However, these funds are eligible for FDIC insurance through the program banks subject to FDIC insurance coverage limits and any capacity limitations at the banks.

There is a risk that Robinhood Securities could default on its obligations to you under the Stock Lending program and fail to return the securities it has borrowed. If Robinhood Securities defaults and is unable to return loaned securities, you won't be able to trade such securities as usual.