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PSA--Robinhood Checking Acct


Bootsie
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There have been some questions on this board in the past regarding the safety of using Robinhood to invest in stocks.  This week Robinhood announced a new product--a no fee, no minimum deposit checking and savings account which earns 3% interest.  On its website, Robinhood compares these accounts to accounts offered at traditional commercial banks (Bank of America) and with money market accounts at brokerage firms like Fidelity.  

However, Robinhood's account is not covered by FDIC insurance protection as an account at a bank would be.  Robinhood states "Every Robinhood account is SIPC insured up to $250,000 in cash and protected by modern encryption so you can rest easy and save confidently."  However, the SIPC stated today that the insurance does not extend to these accounts.  SIPC insurance provides protection that if an investor gives Robinhood 1000 to buy XYZ stock, the XYZ stock is actually purchased and owned by the investor (it does not guarantee the value of that stock). This does not insure that if you place money in an interest bearing account, and Robinhood invests that money, and then Robinhood's investments go sour and they go out of business that you will get any of the money in that account back.  

 

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Honestly, any bank/ investment company that calls itself Robinhood already sets off all sorts of red flags in my brain just because of the name.  Whoever thought that was a good idea?  So, if I get beyond a certain amount of money, they will steal it from me and give it to those whose bank accounts are in the lower percentages?  Sounds horrible.

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On 12/15/2018 at 11:21 AM, bethben said:

Honestly, any bank/ investment company that calls itself Robinhood already sets off all sorts of red flags in my brain just because of the name.  Whoever thought that was a good idea?  So, if I get beyond a certain amount of money, they will steal it from me and give it to those whose bank accounts are in the lower percentages?  Sounds horrible.

Seriously.  Have they even read the book?

Edited by solascriptura
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On 12/15/2018 at 10:21 AM, bethben said:

Honestly, any bank/ investment company that calls itself Robinhood already sets off all sorts of red flags in my brain just because of the name.  Whoever thought that was a good idea?  So, if I get beyond a certain amount of money, they will steal it from me and give it to those whose bank accounts are in the lower percentages?  Sounds horrible.

But all those who think they are the poor who will get a transfer will want to be their customers... Just ignore the fact that you have to attract some of the "wealthy" customers for that plan to work...

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