First of all, let me clarify that I'm not an expert but the information I am about to share comes from listening and learning to people who have been long time investors, have accumulated wealth, and their experiences, and being an investor myself for the last few years.
So let's dwell to what really is Robinhood. Basically, it is a brokerage account where you can actively trade for free, including cryptocurrency. No fees. All you have to do is download the app, sign up and start investing. Isn't that easy? Overwhelming ang magstart investing so Robinhood breaks that barrier. With just few taps on the phone, boom you're in.
But don't get me wrong. I think Robinhood made a great job attracting people to join the stock market. And some people really made a lot of money from using it. And yet, this isn't the best medium to invest for the following reasons:
1. It is not tax advantaged. Ibig sabihin, lahat ng earnings or gains mo in trading is taxable. So basically, it is just a liquid money and you end up cashing out. Compare mo yan sa mga other vehicles for retirement like IRA that are tax advantaged where you can grow your money.
2. Robinhood is active trading, meaning you see everyday yung performance mo on your stock portfolio. But this method is very risky because you could act impulsively. It becomes a game.
3. Robinhood isnt a quick rich scheme. I'm not saying you shouldn't invest in this account pero what I'm saying is it seems like a lot of people think they could make a lot of money thru this broker account. And yes there have been some people who really made a lot of money but it was a gamble. In reality, there's no such thing as quick rich scheme unless you really get lucky like winning a lottery.
4. This isn't for long term. Dahil taxable ang assets mo in this account, hindi siya pang buy and hold talaga, thus short term lang. But if you really want to build wealth, I think the best way is to let your capital gains grow. Unfortunately, Robinhood doesn't have this incentive.
Thus, Robinhood isn't the best way to optimize money growth so before ka mag invest dito, I'd suggest maxed out your contributions on IRA and 401k first, Kung saan may potential talaga to grow your money over the long run.
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