Robinhood is an app designed for the average person to invest money in stocks, funds, options, and cryptocurrency. They attract users by giving them one free stock when they join and by allowing them to trade commission-free. The app requires users to be at least 18 years old, however, kids younger than 18 could set up an account if they know certain information about their parents, such as their social security number and ID number. It is a choice to invest in the stock market, either personally or through an advisor or broker; however, by doing it personally, it can become addicting and consume a lot of family time.
Buying and selling stocks is simple on Robinhood. You can buy stocks for any publicly traded company, such as Apple and Google. Trading stocks carries relatively low risk because most companies will increase in value over time. Robinhood also allows users to buy stock options, which carry very high risk and could be viewed as a type of gambling. Stock options give an investor the opportunity to buy or sell a stock at an agreed upon price on an agreed upon date. You can “bet” that a stock’s value will decline by purchasing a “put” or you can “bet” that a stock’s value will rise by purchasing a “call.” Stock options are considered riskier than buying a stock at its face value because in order to buy a stock option, you need to pay a premium. The premium can be entirely lost if the stock value is not at the agreed upon price of the stock option by the expiration date of the option. Therefore, you can buy options for a premium and lose all of the money without owning any stocks by expiration date, whereas if you would invest in an actual stock, it is very unlikely its value would go to 0 in the same amount of time. For more information on stock options, visit the following website:
Robinhood poses a potential threat to beginning investors who put some money in the stock market without knowing what they are doing. It is also attractive to teens because they could maybe make money by investing, when in reality they probably have little knowledge about investing. This could be viewed as a type of gambling. They could invest money and see the value of their stocks increase or decrease and not know how to handle their emotions properly. During the summer of 2020, a 20 year old committed suicide because he thought he had lost $730,000 even though he really did not lose money at all – Robinhood was still in the process of completing all of the transactions for his account.
Here is a link for more guidance on Robinhood and teens: https://protectyoungeyes.com/robinhood-and-teen-gambling/
In conclusion, it can be dangerous if the wrong people (i.e. teens and inexperienced investors) use the app as if they are professional investors. If you find this app on your child’s phone, it would be a good idea to investigate a little more and determine if they actually know what they are doing. If you choose to use this app, a good recommendation would be to start out with a small amount of money to figure out how the stock market works and what it’s like to buy stocks. Once you become more comfortable with investing, you can always transfer more money to your Robinhood account. Never invest more money than what you are willing to lose!
*Please note, that although we have found valuable information from an external web page for our blog post, we do not endorse all information, religious views and opinions posted on these third-party websites.