What is Robinhood and why it isn't the best investing strategy

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. 

What is an IRA and why open one??

We all work today and set aside money on the side para by the time we retire we have the money to support us. Maliban sa pension, ang 401k, 403b, TSP are retirement vehicle Kung saan nagcocontribute Tayo out from paycheck for retirement. We own a little piece of the company and thus, the money is invested. I won't go into details on the differences of the three pero Ang max contribution annually is $19500 currently.

So ano ang IRA? Ang IRA is actually an account Kung saan you can put money voluntarily, with a max contribution of $6000 a year. 

You may have heard Roth IRA vs IRA (or traditional IRA). Ang difference is timing of being taxed. Sa ROTH IRA, you are being taxed Everytime you contribute so that by the time you withdraw, Hindi ka na matataxan. Ang IRA or traditional IRA is getting taxed when you withdraw. 

Walang age limit Ang ROTH IRA pero may income restriction and vice versa sa traditional IRA. So while you are not on that income bracket or age restriction, go ahead and maximize your contribution

So what works best for you? Depende Yan sayo at sa mga plans mo for the future. But think of it this way, usually the higher income bracket ka, the higher you get taxed. So by the time you withdraw the money, saan bracket ka? So think about it and decide which suits you best.

Now, paano Ito makakatulong sa retirement if account Lang siya. Ito Ang kahalagan ng pag open ng IRA account- you can build wealth thru linking it to the stock market. There are different kinds of stocks pero I won't go into detail here. Pero investing the money through stocks is better than keeping cash Kasi ang cash nagdedepreciate ang value. Stocks on the other hand, appreciates over the long run. Just be careful Kung among klaseng stocks bibilhin mo.

Now, the earlier you open an account and invest, the more you will gain because of compounding interest. So yeah, that's the very reason you should open an IRA account - to make money work for you.

Now contributing to a 401k at the same time with an IRA might be hard pero you don't have to maximize it right away. Contributing on it is still better than keeping the cash. Now if sobra sobra ang natitira sayo monthly, then look for other way of where to put the money -- real estate or business!

So don't settle on contributing sa 401k/tsp/403b if may extra cash na natitira monthly. Contribute it to an IRA.