Robinhood: Where To Invest Today

Robinhood is a popular investment platform that offers commission-free trading of stocks, ETFs, cryptocurrency, and options through its mobile app or website. The platform is designed to be easy to use, with a streamlined interface that makes trading simple and accessible to new investors. However, its simplicity may encourage active trading, which is not suitable for most investors.

Robinhood offers a range of investment options, including stocks, bonds, ETFs, real estate, commodities, and cryptocurrencies. It also provides access to IPOs and fractional share trading. However, it does not offer mutual funds or bonds, which can make it challenging to build a diversified portfolio.

When considering what to invest in on Robinhood, it is important to assess your risk tolerance and investment goals. Generally, investments with higher potential returns come with greater risk. While Robinhood can be a good choice for intermediate or advanced investors, it may not offer the customer support and educational resources that beginners need.

Currently, some of the standout stocks on Robinhood include Microsoft, Google parent Alphabet, and Robinhood Markets. These stocks offer a mix of solid fundamentals and technical performance.

Before investing, it is crucial to do your own research and carefully consider your financial situation and risk tolerance. Investing involves risks, and there is always the potential for losses.

Microsoft, Google and Robinhood stocks

When considering what stocks to invest in on Robinhood right now, it is important to remember that buying stocks is deceptively easy, but purchasing the right stock at the right time without a proven strategy is incredibly hard.

At the moment, Microsoft (MSFT), Google parent Alphabet (AMD), and Robinhood Markets (HOOD) are standout performers and are part of the Robinhood Top 100 Stocks list, which features the platform's most popular stocks among traders. These stocks offer a mix of solid fundamental and technical performance, unlike meme stocks such as GameStop (GME) and AMC Entertainment (AMC).

Microsoft stock is flirting with a flat base ideal entry point of 430.82, with the relative strength line moving sideways since late November. The stock is in the top 22% of issues in terms of price performance over the last 12 months, with an IBD Composite Rating of 84 out of 99. Microsoft has seen EPS grow by an average of 25% over the past three quarters, which meets the IBD requirements. Earnings have grown by an average of 14% over the past three years, impressive growth for such a large firm, and are expected to grow by 20% in 2024 and 13% in 2025. Microsoft is currently seen as a leader in the AI space, with its new AI chip, the Azure Maia AI Accelerator, designed to ease its dependence on Nvidia GPUs.

Google parent Alphabet Inc. Class C stock is one of the most followed on Google. However, Google is not an investment advisor and does not express any view, recommendation, or opinion regarding any companies or securities.

Robinhood Markets is just below a cup-base buy point of 20.55 after briefly clearing the level. HOOD stock has been rallying solidly after briefly dipping following earnings, with the brokerage stock recently moving back above the 50-day moving average. Robinhood stock is also seeing its relative strength line driving higher, which would add further credibility if it stages a breakout. HOOD stock holds an IBD Composite Rating of 96 out of 99, with earnings performance improving, netting it an EPS Rating of 80. Robinhood is up nearly 60% for the year so far, with fundamental performance looking to be improving.

While these stocks are strong performers, it is important to remember that the stock market can quickly change, and it is crucial to stay on top of sell signals. Any stock that falls 7% or 8% from your purchase price should be sold. Additionally, investors should be aware of significant headline risks, such as inflation, the Russia-Ukraine conflict, and the current issues in Israel, which can impact the market.

Crypto trading

Robinhood Crypto is currently available across the US, the US Virgin Islands, Puerto Rico, and the District of Columbia. It is important to note that not all coins are available in every state and may be subject to regulatory approval in certain states.

Robinhood offers advanced trading tools and custom price alerts, along with advanced charts, to help you build trading strategies and manage your crypto. You can also transfer crypto with ease, as there are no deposit or withdrawal fees.

When investing or trading crypto on Robinhood, there are various order types to be aware of:

• Limit orders: You can place an order to buy or sell a specified amount at a specified price or better.
• Stop orders: An order to buy or sell crypto once it reaches a specific price, known as the stop price.
• Stop-limit orders: A combination of a stop order and a limit order. When a coin hits a stop price, it triggers a limit order.

Robinhood also offers a no-commission crypto trading feature, allowing you to buy and sell crypto with no commission fees. You can start with as little as $1 and grow your holdings over time.

It is important to note that crypto trading carries significant risks, including volatile market price swings, market manipulation, and cybersecurity risks.

Retirement accounts

Robinhood offers two types of retirement accounts: a traditional IRA and a Roth IRA. You can open one of each type of IRA at Robinhood, even if you already have an IRA at another financial institution or a workplace retirement plan, such as a 401(k).

A traditional IRA allows you to invest for retirement with pre-tax dollars and tax advantages. This means you may be able to deduct qualified contributions now and pay taxes later upon withdrawal or distribution. Your contributions may be fully or partially deductible, depending on your filing status, income, and whether you or your spouse are covered by a workplace retirement plan. For the 2024 tax year, anyone with earned income is eligible for an annual contribution limit of $7,000 if you are under 50 years old, or $8,000 if you are 50 or older.

A Roth IRA allows you to contribute after-tax dollars to invest for retirement. This means you pay taxes on contributions now with potential tax-free withdrawals later. Any earnings are tax and penalty-free if they meet certain requirements. For the 2024 tax year, you are eligible to contribute if your income is under $161,000 if filing single, and under $240,000 if filing jointly—with an annual contribution limit of $7,000 (or $8,000 if you are over 50).

To get started, select Retirement → Get Started and then follow the prompts to set up your account within the Robinhood app or on the web. You can open a traditional IRA, a Roth IRA, or both. If you skip opting in on features, you can always opt in later.

Next, you can choose to either get a new, one-time recommended portfolio or pick your own investments for your IRA. A portfolio is a group of investments, and each recommended portfolio includes 5-8 exchange-traded funds (ETFs) chosen for you with an algorithm-based investment process. The process uses your answers to match you to a portfolio that works with your retirement timeline.

You can also create your own portfolio by exploring investments such as stocks and ETFs, and options (subject to eligibility requirements).

Options trading

Robinhood offers options trading on its platform with some of the lowest margin rates in the industry and no contract fees. When placing an options trade on Robinhood, you can search for the stock or ETF you want to trade options on, select the trade option, and choose your strategy. You can also track and modify technical indicators such as moving averages, relative strength index, and moving average convergence divergence.

It is important to note that options trading entails significant risk and may not be suitable for all investors. Before investing, it is crucial to carefully consider your investment objectives and risks. Additionally, make sure you are aware of the various types of orders you can place, such as Good-til-canceled (GTC) and Good-for-day (GFD) orders.

With a Level 2 designation on Robinhood, you can execute options trades like long calls, covered calls, and long puts. A Level 3 designation allows for more complex trades, including limited-risk spreads like credit spreads, debit spreads, iron condors, and iron butterflies.

Remember, options trading is a complex and risky investment strategy. It is important to thoroughly understand the risks and potential outcomes before placing any trades.

IPO access

To be eligible for IPO Access, you cannot be employed by or associated with a broker-dealer, be a portfolio manager, or be an immediate family member of such persons. Regulatory requirements identify industry professionals who are generally restricted from participating in IPOs.

Robinhood uses a random allocation process to determine who receives IPO shares. Each eligible request has the same likelihood of receiving all, some, or none of the IPO shares requested. The number of shares requested does not change your chances of receiving an allocation.

Robinhood does not charge any fees for accessing IPO shares. You simply pay for the shares allocated at the IPO price.

IPOs are considered speculative and risky investments and may not be appropriate for every investor.

Frequently asked questions