Is Robinhood safe?
Assets under management by broker: $20 billion - Robinhood $600 billion - E-Trade $1.3 trillion - TD Ameritrade $3.3 trillion - Fidelity $3.8 trillion - Charles Schwab I understand their UI and app look nice but, at the same time, it looks like Robinhood would be first in line if it came to insolvency during a financial crisis. Why are people comfortable using them to host their capital and investments? Do you trust Robinhood with your money?
Isn’t my deposited money insured through FDIC up to 250k?
Upto 500k
Then why people panic?
$8.8 trillion - Vanguard
Vanguard issues huge funds and is the brokerage for them. That number must be including the funds/ETFs which would be inaccurate to compare to the rest of the brokerages
Several of the brokers listed in OP have their own funds...
Never use Robinhood, beyond getting the free stock they give you. They don’t hold the shares, they only send your orders to Shitadel for processing.
Are other brokers different?
@apple Depends - you can verify on the broker's 606 order routing form. An example is here: https://www.reddit.com/r/IAmA/comments/l81l3g/dan_pipitone_cofounder_of_tradezero_fought_our/ Tradezero makes 0.70c on $1000, RH makes $2.60 Anecdotal experience - Fidelity gives me "price improvements" on trades which I never got on RH. My net savings from getting better execution has vastly outpaced trading fees paid to Fidelity, even back when there were trading fees on stocks.
They’re just a shiny UI
how did ppl not see this coming?
Robinhood is nice to play around with small amounts before moving to the real deal. That's what I felt and did a few years ago
Because their UI
This should show ppl how important UI /UX is
Did you know you don’t actually own any shares on Robinhood? Robinhood owns them and lends them out for commissions. Read the fine print. They make money on routing your orders to citadel and lending out the shares you think you own. So when they do go bankrupt...good luck getting your shares. You might get the settlement cash from selling the securities...but once it’s frozen, you won’t be in control. Scary huh?
Is Fidelity different?
Yeah you actually own the shares that you buy with real cash.
I think most sane people saw this coming.