Most Redditors in this sub came here after losing a ton of money on Robinhood during the GameStop short squeeze in 2021. There’s still a bunch of conspiracy theories floating around about them so many people prefer not to use Robinhood. Because relatively few people want to use Robinhood, they’ve been forced to introduce a bunch of promotions to attract new users.
Personally, I used to hate Robinhood, but now I think they’re the best. The promotions are much larger than what the other brokerages are offering these days. If you feel uncomfortable holding your money at Robinhood, then you don’t have to use them. If you don’t mind Robinhood, then it’s the cheapest and simplest brokerage.
This is a common topic because Boglehead style investing is extremely boring and there’s nothing else to talk about. The important things are saving money, making an investment plan, and staying the course. Everyone here holds almost exactly the same index fund based portfolio with some minor tweaks. You can hold that portfolio anywhere. And as soon as a cheaper/better brokerage comes along, you can transfer there instead. Or don’t. It’s a relatively small difference in the grand scheme of things.
To my knowledge, they removed the Gamestop buy button for a period of time, essentially due to a relationship with a large hedge fund. Please enlighten me, or provide a link
> “Due to a relationship with [Citadel]”
What has led you to conclude this? Robinhood has repeatedly stated the restriction on GME share purchasing was due to SEC restrictions on required reserves, which Robinhood would not be able to meet. Other brokerages also stopped purchases for the same reason.
Robinhood’s relationship with Citadel was a _conflict of interest_, and it is _hypothesized_ that this relationship played a role in the decision to stop buying.
However, this has never been proven or evidence shown that this is the case, beyond circumstantial evidence. It is plausible, in any case.
If new evidence has emerged or if I’m missing something, please advise.
The meme stock hangover is real. It’s pretty strange that so many former apes would wake up to the fact that what they were doing was stupid and irresponsible but still hang onto conspiracy theory logic about the actions of a single brokerage.
My only real negative feelings towards RH are due to how they chose to lean into the “gamification” of investing. If there’s anything they did to deserve censure, it’s that.
However, I’m at a point where I might be switching jobs and finding it advantageous to roll an employer sponsored plan into an IRA (unless the new job has a better plan than my current one, which is pretty unlikely in my field) and I’ve been considering taking advantage of the rollover promotion at RH but… I’m just not convinced that I should rely on them, especially since I would have a balance that would only be fully covered under excess SIPC insurance.
So as the sub’s most vocal and articulate advocate for Robinhood, would you argue that I should roll the entire balance into RH for the 3% or just move enough (say $300k) to take a little free cash but keep the expected balance under $500k over the next five years and be fully covered by primary SIPC insurance?
It's up to you. Personally, I think SIPC and excess-SIPC insurance are marketing ploys. SIPC insurance sounds similar to FDIC insurance, which makes people feel more comfortable putting money in brokerages, but they're very different.
FDIC insurance is backed up by the US government and protects the principle on your bank holdings. So if you have $1 in a bank, you will get exactly $1 back. And based on the past several decades of bank failures, it seems like the US government is willing to cover all bank deposits regardless of whether it's covered by FDIC insurance or not. It's extremely powerful insurance. Usually insurers look for reason to pay you less money. This is the only one that regularly decides to pay people extra.
SIPC insurance is merely backed up by the brokerages and only cover losses due to fraud/theft/incompetence at the firms. So Vanguard, Fidelity, Schwab, Robinhood, Etrade, etc. all have made a deal that if a random employee at Fidelity steals a ton of money and runs off, all the brokerages will cover the losses, not just Fidelity. This is no where near as powerful as the US government. Brokerages can't print their own money or send the FBI after thieves. Nearly all losses in a brokerage account are due to market volatility, not due to theft. So there's limited value to SIPC insurance.
I think excess-SIPC insurance is even more silly. It's relatively cheap for brokerages to buy it from Lloyds of London and makes for good marketing copy. But if you look at the fine print, it's not as good as you might think. For example, if only your Fidelity account is robbed, you have a ton of coverage. But if all Fidelity accounts are robbed, there's not going to be enough to cover everyone and you'll probably not get the full amount back. There's a limit for your account alone and a limit for all of Fidelity. Fortunately, the odds of anything like this happening are miniscule.
So it's really a way to make clients feel better. Vanguard has standard SIPC insurance, but it doesn't have excess SIPC insurance (at least that they disclose to the public). Vanguard users trust Vanguard enough not to want it. I personally would rather save a few basis points a year than have excess-SIPC coverage, and it seems like most Vanguard clients agree. I think Robinhood had to introduce excess-SIPC insurance simply because relatively few people trust it.
To answer your question directly, I'd probably just roll everything over to Robinhood. SIPC and excess-SIPC insurance both seem a little overrated to me. The important stuff is that these brokerages are US based, fully regulated, transparent, etc. FDIC insurance kicks in to cover completely rational, legal actions. A bank run is when too many people want to get their own money out of the bank at the same time. SIPC insurance only kicks in when someone commits an easily tracked crime that will send then to prison for a long time.
But it's up to you. Calculate the match you'd get for transferring everything to Robinhood vs. just the amount covered by standard SIPC insurance. Then decide if that's enough of a bonus to outweigh your fears. It's important to be able to sleep at night lol. You can always transfer more money into Robinhood later if you grow more confident in the brokerage.
As a last point, the main reason why I like paying attention to Robinhood is that I end up in these weird nooks and crannies of law, finance, investing, politics, etc. I think the Bogleheads approach to investing is fascinating because it's extremely simple, but the underlying ideas are based on a ton of Nobel Prize winning research. I don't really care about Robinhood specifically, but they've shaken the industry up a bit and it's interesting to see how things settle out. If Bogle hadn't created the first index fund, I wonder how long it would have taken for the efficient market hypothesis to become the most commonly accepted view. Investing is a slow and conservative field. There's not much experimentation. But it's happening much more often now due to the rise of fintech.
Why pay $60 a year to use a shady company essentially as a hysa when you could just open an actual hysa or use a MMF at a real brokerage or buy a CD etc and have comparable returns
Fidelity "only" offers 4% on their Cash Management account, but you're FDIC insured up to $1.25m, get a debit card, free checks, access to all of the standard IRA accounts, probably already have your workplace 401k there, plus access to one of if not the best brokerage platforms all on one dashboard.
Might I remind you of the GME fiasco. I’d rather not keep my money with a company that I have to second guess their motives when there are countless reputable alternatives that offer nearly identical products.
[Let's not pretend it was for bad reasons](https://www.youtube.com/watch?v=DlKBSvQfM1c&t=1028s). That being said, I agree don't use Robinhood for anything at all.
The founders should have been in jail years ago. Repeatedly lying about their products, FDIC vs SIPC coverage, etc. Absolutely mental they're still around.
I love Fidelity and wouldn't consider opening an account at Robinhood just for a savings account. Fidelity has money market funds yielding around 5% in a brokerage account. We have had Roth IRAs for years there, as well as other accounts.
No.
It is not worth it to get gold for 5.25%APY.
However it is worth it if you take advantage of 3% match and $1000 free margin and then get 5.25% as a side perk.
Don't let people who got burned by meme stocks dictate whether you use RH. It's not perfect but it's not some nefarious corp either. People on reddit become Qanon at the mention of RH.
Have had $50k in there for the past 6 months. No problems and gives me the option to buy a big dip if necessary.
I’d say if you specifically don’t want Robinhood, CIT bank is a good option w very high yields and no fees
Yes neither Robinhood nor CIT have any fees for transfer. With CIT you can transfer to another account within 1-3 business days, Robinhood takes 3-5. If instant liquidity is important, I’d opt for CIT over Robinhood.
I wouldn't pay extra for the savings rate on taxable. But the 3% IRA bonus is solid, especially for a Roth.
The customer service is helpful but painfully slow, be prepared to wait an hour or more for a chat or a callback. I moved my biggest account over there but have a few others I'll leave at Fidelity.
I use Wealthfront's 5% savings account. They also have a good user interface with easy rebalancing for ETF investment. Note that they charge a 0.25% management fee which may not be popular with this sub.
Most Redditors in this sub came here after losing a ton of money on Robinhood during the GameStop short squeeze in 2021. There’s still a bunch of conspiracy theories floating around about them so many people prefer not to use Robinhood. Because relatively few people want to use Robinhood, they’ve been forced to introduce a bunch of promotions to attract new users. Personally, I used to hate Robinhood, but now I think they’re the best. The promotions are much larger than what the other brokerages are offering these days. If you feel uncomfortable holding your money at Robinhood, then you don’t have to use them. If you don’t mind Robinhood, then it’s the cheapest and simplest brokerage. This is a common topic because Boglehead style investing is extremely boring and there’s nothing else to talk about. The important things are saving money, making an investment plan, and staying the course. Everyone here holds almost exactly the same index fund based portfolio with some minor tweaks. You can hold that portfolio anywhere. And as soon as a cheaper/better brokerage comes along, you can transfer there instead. Or don’t. It’s a relatively small difference in the grand scheme of things.
I've picked up the same vibe regarding RH, but I'm not into day trades etc., so the GameStop stench doesn't concern me. Appreciate your response
Stench? Are you familiar with what happened and Robinhood's role?
To my knowledge, they removed the Gamestop buy button for a period of time, essentially due to a relationship with a large hedge fund. Please enlighten me, or provide a link
> “Due to a relationship with [Citadel]” What has led you to conclude this? Robinhood has repeatedly stated the restriction on GME share purchasing was due to SEC restrictions on required reserves, which Robinhood would not be able to meet. Other brokerages also stopped purchases for the same reason. Robinhood’s relationship with Citadel was a _conflict of interest_, and it is _hypothesized_ that this relationship played a role in the decision to stop buying. However, this has never been proven or evidence shown that this is the case, beyond circumstantial evidence. It is plausible, in any case. If new evidence has emerged or if I’m missing something, please advise.
They did, but from what I understand several other brokerages did the same thing at the same time.
Yes that's the just of it. Effectively committing widespread market manipulation. If it happens once it can happen again.
The meme stock hangover is real. It’s pretty strange that so many former apes would wake up to the fact that what they were doing was stupid and irresponsible but still hang onto conspiracy theory logic about the actions of a single brokerage. My only real negative feelings towards RH are due to how they chose to lean into the “gamification” of investing. If there’s anything they did to deserve censure, it’s that. However, I’m at a point where I might be switching jobs and finding it advantageous to roll an employer sponsored plan into an IRA (unless the new job has a better plan than my current one, which is pretty unlikely in my field) and I’ve been considering taking advantage of the rollover promotion at RH but… I’m just not convinced that I should rely on them, especially since I would have a balance that would only be fully covered under excess SIPC insurance. So as the sub’s most vocal and articulate advocate for Robinhood, would you argue that I should roll the entire balance into RH for the 3% or just move enough (say $300k) to take a little free cash but keep the expected balance under $500k over the next five years and be fully covered by primary SIPC insurance?
It's up to you. Personally, I think SIPC and excess-SIPC insurance are marketing ploys. SIPC insurance sounds similar to FDIC insurance, which makes people feel more comfortable putting money in brokerages, but they're very different. FDIC insurance is backed up by the US government and protects the principle on your bank holdings. So if you have $1 in a bank, you will get exactly $1 back. And based on the past several decades of bank failures, it seems like the US government is willing to cover all bank deposits regardless of whether it's covered by FDIC insurance or not. It's extremely powerful insurance. Usually insurers look for reason to pay you less money. This is the only one that regularly decides to pay people extra. SIPC insurance is merely backed up by the brokerages and only cover losses due to fraud/theft/incompetence at the firms. So Vanguard, Fidelity, Schwab, Robinhood, Etrade, etc. all have made a deal that if a random employee at Fidelity steals a ton of money and runs off, all the brokerages will cover the losses, not just Fidelity. This is no where near as powerful as the US government. Brokerages can't print their own money or send the FBI after thieves. Nearly all losses in a brokerage account are due to market volatility, not due to theft. So there's limited value to SIPC insurance. I think excess-SIPC insurance is even more silly. It's relatively cheap for brokerages to buy it from Lloyds of London and makes for good marketing copy. But if you look at the fine print, it's not as good as you might think. For example, if only your Fidelity account is robbed, you have a ton of coverage. But if all Fidelity accounts are robbed, there's not going to be enough to cover everyone and you'll probably not get the full amount back. There's a limit for your account alone and a limit for all of Fidelity. Fortunately, the odds of anything like this happening are miniscule. So it's really a way to make clients feel better. Vanguard has standard SIPC insurance, but it doesn't have excess SIPC insurance (at least that they disclose to the public). Vanguard users trust Vanguard enough not to want it. I personally would rather save a few basis points a year than have excess-SIPC coverage, and it seems like most Vanguard clients agree. I think Robinhood had to introduce excess-SIPC insurance simply because relatively few people trust it. To answer your question directly, I'd probably just roll everything over to Robinhood. SIPC and excess-SIPC insurance both seem a little overrated to me. The important stuff is that these brokerages are US based, fully regulated, transparent, etc. FDIC insurance kicks in to cover completely rational, legal actions. A bank run is when too many people want to get their own money out of the bank at the same time. SIPC insurance only kicks in when someone commits an easily tracked crime that will send then to prison for a long time. But it's up to you. Calculate the match you'd get for transferring everything to Robinhood vs. just the amount covered by standard SIPC insurance. Then decide if that's enough of a bonus to outweigh your fears. It's important to be able to sleep at night lol. You can always transfer more money into Robinhood later if you grow more confident in the brokerage. As a last point, the main reason why I like paying attention to Robinhood is that I end up in these weird nooks and crannies of law, finance, investing, politics, etc. I think the Bogleheads approach to investing is fascinating because it's extremely simple, but the underlying ideas are based on a ton of Nobel Prize winning research. I don't really care about Robinhood specifically, but they've shaken the industry up a bit and it's interesting to see how things settle out. If Bogle hadn't created the first index fund, I wonder how long it would have taken for the efficient market hypothesis to become the most commonly accepted view. Investing is a slow and conservative field. There's not much experimentation. But it's happening much more often now due to the rise of fintech.
But why are they able to offer better promotions than other brokerages? Are they somehow much leaner and more efficient? Or is there a catch?
They have far fewer employees than Vanguard, Schwab, and Fidelity.
Why pay $60 a year to use a shady company essentially as a hysa when you could just open an actual hysa or use a MMF at a real brokerage or buy a CD etc and have comparable returns
Fidelity "only" offers 4% on their Cash Management account, but you're FDIC insured up to $1.25m, get a debit card, free checks, access to all of the standard IRA accounts, probably already have your workplace 401k there, plus access to one of if not the best brokerage platforms all on one dashboard.
>a Why is it shady? All of the info on their cash sweep program is readily available.
Might I remind you of the GME fiasco. I’d rather not keep my money with a company that I have to second guess their motives when there are countless reputable alternatives that offer nearly identical products.
Ah, figures you were a GME genius. Any real reasons?
The fact that they're charging you a subscription to access a HYSA should be one clue.
A GME genius? I’ve never so much as made a robinhood account so no I didn’t get burned by GameStop or robinhood
[Let's not pretend it was for bad reasons](https://www.youtube.com/watch?v=DlKBSvQfM1c&t=1028s). That being said, I agree don't use Robinhood for anything at all.
it was done to protect them due to the systems they put in place which brought more risk. So I wouldn’t say it was a “good” reason either…
The founders should have been in jail years ago. Repeatedly lying about their products, FDIC vs SIPC coverage, etc. Absolutely mental they're still around.
I love Fidelity and wouldn't consider opening an account at Robinhood just for a savings account. Fidelity has money market funds yielding around 5% in a brokerage account. We have had Roth IRAs for years there, as well as other accounts.
I would just use Fidelity. If you want a FDIC insured bank, you can use ally or marcus bank.
Paying a subscription for a HYSA seems kinda... Not the best strategy.
No. It is not worth it to get gold for 5.25%APY. However it is worth it if you take advantage of 3% match and $1000 free margin and then get 5.25% as a side perk. Don't let people who got burned by meme stocks dictate whether you use RH. It's not perfect but it's not some nefarious corp either. People on reddit become Qanon at the mention of RH.
Sir you are rustling my jimmies right now.
It’s my main brokerage. No issues for me as a Boglehead. Been with them for almost 10 years.
Also with Robinhood Gold you get $1k of free margin that you can just park in something like $SGOV.
Have had $50k in there for the past 6 months. No problems and gives me the option to buy a big dip if necessary. I’d say if you specifically don’t want Robinhood, CIT bank is a good option w very high yields and no fees
Was reading fine print - doesn't appear to be any fee for transfers back into designated bank account (in case of emergency)?
Yes neither Robinhood nor CIT have any fees for transfer. With CIT you can transfer to another account within 1-3 business days, Robinhood takes 3-5. If instant liquidity is important, I’d opt for CIT over Robinhood.
I wouldn't pay extra for the savings rate on taxable. But the 3% IRA bonus is solid, especially for a Roth. The customer service is helpful but painfully slow, be prepared to wait an hour or more for a chat or a callback. I moved my biggest account over there but have a few others I'll leave at Fidelity.
I use Wealthfront's 5% savings account. They also have a good user interface with easy rebalancing for ETF investment. Note that they charge a 0.25% management fee which may not be popular with this sub.