The stock market has risen by over 90 percent and has been showing a lot of promise, but there are risks involved. Inflation has been a consistent factor for some time now and the U.S. Federal Reserve has forecast more inflation in the years ahead. If you’re considering a Robin Hood investment, it’s important to know what you’re getting into.
One thing you’ll want to know before you make your Robin Hood investment is that you’ll be limited to only a certain number of shares. The total number of shares in an offering will depend on the number of investors, the pricing, and the broker-dealer book-building process. This can be problematic if you are just getting started investing.
Before you invest with Robinhood, you’ll need to make sure that you’re 18 years old, have a valid Social Security number, and an address in the U.S. If you’re a beginner, start with a small amount that you’re comfortable losing and stick with stocks and ETFs.
While the SEC has announced plans to investigate market structure and other aspects of the Robin Hood model, the payment for order flow system continues to remain controversial. Critics have argued that the payment model is detrimental to retail investors. As such, the SEC has stated that it might ban this practice. In addition, the U.K. has declared this payment for order flow to be illegal. Other major brokerage firms, like Charles Schwab and E-Trade, have largely stopped relying on this payment model for their own operations.