How to Invest Through Robinhood: The Holy Grail for New Investors

Dollabuzz Shows You How to Invest Through Robinhood

Robinhood is Easy To Understand and Use

Welcome, Dollabuzzers! As many of you know Dollabuzz is all about investing in the market for the long-term. Historically, investing in the stock market has been a great way to Dollabuzz. Most people invest through their employer (401k), but you can also invest through sites like Betterment and Wealthfront. But today, Dollabuzz shows you how to invest through Robinhood.

I like Robinhood for three specific reasons. Robinhood is easy to understand and use, numerous investment options, and Robinhood is commission-free. Now let’s break down each one of these and take a closer look at what makes Robinhood so special.

How to Invest Through Robinhood: Reason #1: Easy to Understand and Use

Opening a Robinhood account is really simple, and unlike other brokerage accounts, there is no minimum account deposit. This is especially great for new investors who are ambitious to learn, but hesitant in putting up a lotta Benjamin’s.

Big Ben Would Approve of Investing Through Robinhood.

Anyone who has opened a brokerage account in the past knows that it takes awhile to learn all the different functions that your account is capable of. The advantage that I believe Robinhood has is its simplicity and user experience.

Investing Through Robinhood is Sooo Easy.

Visibly, their interface only uses a handful of colors which makes navigating the site easy. They also cleaned up the “home page” reducing the numbers that are displayed. Percent change, Last Price, and Equity are readily available which is all you need. A quick glance will show you how your investments are performing.

How to Invest Through Robinhood: Reason #2: Investment Options

Currently, stocks, bonds and Exchange Traded Funds (ETFs) are the main investment options on Robinhood which is all you need to D’Buzz hard. Some of the more complicated trading vehicles like options and futures are not yet available but I am sure they will be in the years to come. For the new investor that is A-OK and will help you Get.Your.Money.Right. As Robinhood continues to grow they expand their services so new investors can grow right alongside them.

Exchange Traded Funds Allow You To Dollabuzz

So Mr. Dollabuzz what Do I Invest In?

If you are under the age of 30, ideally you should be 100% in stocks. Straight up. Bonds won’t get you where you need to go. I know that sounds crazy but you have time on your side and a long-term time horizon for the stock market will help you Dollabuzz. Now, if are more conservative that is fine. Everybody is different. I would recommend keeping 10-20% in cash so you can capitalize on any buying opportunities.

How to Invest Through Robinhood: Reason #3: Commission-Free…Yay Yay!

My favorite part about Robinhood is there not being any commission costs. If that sounds too good to be true, I applaud your skepticism. You would be correct though. There are exchange fees that you will be charged, but the costs are insignificant; especially with a small account.

Commission Free = Mo Money For You.

If you are new to trading/investing Robinhood makes it is easy to take a small amount of money, $100, plan it out, and then execute your strategy. Imagine if you had to pay $10 for each trade. Commissions would eat you alive. CHOMP! If you aren’t trading with a large amount of money commissions will take a big chunk out of your investment returns and can have a significant impact on how soon you retire. Zoinks!

Dollabuzz Takeaway

Investing in the stock market for the long-term can be a great way to build wealth and is part of the money plan. Whether it be a 401k through work or an IRA/investment account through Betterment/Wealthfront the key is to invest and invest early. The sooner you begin, the longer your money will be able to work for you, so get started today! Oh, and as an added bonus, if you refer your friends to Robinhood you can each get a free stock! Cha-Ching!

Which Is Better a 401k or a Roth IRA?

Dollabuzz Your Money

Yo, Dollabuzz readers… It’s debate time! A frequent question we hear is: “Which is better, a 401k or a Roth IRA?” The answer, like many answers in life, is: “It depends.” The 401k and Roth IRA options are great ways to invest, and they both have their pros and cons.

The sooner you begin investing, the sooner your Dollabuzz will be right. This post will compare a few of the benefits and drawbacks of the 401k and Roth IRA options. After reading this post, you’ll have a better understanding of the 401k vs Roth IRA debate, and you’ll be able to make the right decision for your financial plan.

Image result for 401k
NOT a good investment plan

Why Invest in a 401k?

For those of you who are new to investing, “401k” refers to the IRS code section which regulates the 401k retirement plan. A 401k plan is usually offered through your employer, and you make pre-tax contributions into this plan. Your employer may offer a matching contribution, and these combined contributions are usually invested in stocks, bonds, or a combination of the two.

Having contributions withheld from your take-home pay makes it easy to save. Your investments can grow faster since you’re able to invest money that has not yet been taxed. However, you will be taxed once you withdraw the money. The government always wants their take.

What Are the Drawbacks of a 401k?

The biggest drawback to the 401k is that it’s difficult to access your money. In addition to being taxed, you will be hit with a 10% penalty if you withdraw early.

But it’s MY money. Why do I have to pay a penalty?

The penalty is designed to keep people from withdrawing their money before retirement.

You may be able to borrow money through a 401k loan, but you will be taxed twice. These loans are repaid with after-tax dollars and taxed again upon withdrawal. Due to the double taxation and the risk of missing out on a stock market run, it is not advised to borrow from your 401k. I know its tempting, but just don’t do it!

Image result for investing
Which is better, a 401k or a Roth IRA? Both are great ways to invest, but they have their pros and cons.
Image by: cafecredit.com via flickr.com

Why Invest in a Roth IRA?

A Roth IRA is a special retirement account where you contribute after-tax money into your account, and all future withdrawals are tax-free! The Roth IRA offers greater flexibility, since you can access your contributions penalty-free. In addition to a retirement account, the Roth IRA can be used as an ordinary investment vehicle.

Although contributions to the Roth IRA are limited to $5,500, the Roth IRA is great for younger investors. Looking for an easy read with an overview of the Roth IRA? Dollabuzz got you here.

So, Dollabuzz… Which Is Better, a 401k or Roth IRA?
Image result for confused
Should you choose a 401k or Roth IRA? This can be confusing, but Dollabuzz can help.

If I had to choose one, I would go with the 401k for two reasons: First, you can save more money annually by investing through the 401k. These investments grow tax-free for decades. Second, a 401k offered through your employer often comes with a matching contribution, which is free cash money. Dolla dolla bills!

The Dollabuzz Exception to Every Rule

Like every other rule, the wisdom of a 401k being better than a Roth IRA has its exceptions. At Dollabuzz, we encourage our readers to start investing as early as possible, which can be done through a Roth IRA. In addition to its flexibility, a Roth IRA is beneficial for younger investors and those who don’t have access to a 401k yet. They still wanna Dollabuzz! If you’re a young investor and investing through a Roth IRA, you can withdraw your contributions to buy a house or pay for a wedding without having to worry about any taxes or penalties.

How Do I Invest Without a 401k or Roth IRA?
Image result for cash
Investing is key to getting your money right

Whatever side of the 401k vs. Roth IRA debate you fall on, the key is to invest and to start as soon as possible.

Looking to get started on your Dollabuzz and not sure where to start? We got you covered like stink on dog poo. In addition to this post, we recently wrote a post on investing through Betterment. Betterment is a great investing tool, and we couldn’t recommend it more highly. Check out that post here.

One Final Dollabuzz Takeaway

Please do NOT withdraw or borrow money from your retirement account. In addition to shortchanging your future, most withdraws are used for dumb stuff. I know someone who borrowed $10,000 from their 401k to pay off their car… and then they sold the car for $7,000. That’s a 30% loss! Since that time, the stock market is up at least 30%. What he did is NOT how you Dollabuzz. Don’t act a fool!

Image result for fool

Why You Should Open a Betterment Account

Taking the First Step Toward Wealth with Betterment

Welcome to Dollabuzz! For those just off the bench and new to the game, investing in the stock market can be confusing and intimidating. But don’t worry—it’s actually pretty simple. Here at Dollabuzz, we believe that investing in the stock market for the LONG term is essential. We’re not about get-rich-quick scams here; we’re about building wealth over the long term, which is done by investing through Betterment.

one hundred dollar bills wrapped in a rubber band
Investing for the long haul will allow you to Get.Your.Money.Right

Opening a Betterment account is a great way to get started, no matter how much money you have. Betterment is a low-cost investing service that can get you on the path toward achieving your investing goals. Start your Betterment journey NOW and you’ll be feeling a strong Dollabuzz in no time.

Why I Recommend Betterment

I discovered Betterment when I was 19 years old. I started by putting $100/month into a Roth IRA account. The cost was low, the interface was easy to use, and it had the account types I was looking for. For the first year of my Betterment account, I paid less than a crumpled-up Lincoln in fees.

File:Lincoln on 5 USD bill.jpg
For the first year of my Betterment account, this is how much I paid in fees.

That’s a Dollabuzz right there. This is dirt cheap compared to many other accounts. Their website and mobile app are really simple and easy to use, especially for beginners. Betterment makes it painless to open the account type you want and check up on your investments.

Betterment’s Available Options

Betterment is a straightforward service, and you DO NOT have to hand over bags of cash. At Dollabuzz, we recommend opening an IRA or 401k as soon as you can. The Roth and traditional IRAs have different tax advantages, so you have to find which works best for you. Just remember, in the long-term, every dolla bill adds up!

How Does Betterment Work?

Betterment uses Exchange Traded Funds (ETFs) as their investments vehicle. This includes four bond ETFs and six ETFs that are made up of different stocks. This simplifies your investing portfolio, and you get to decide what percent you’re invested in each. If you’re not sure how aggressive or conservative you should be, Betterment will start you off with their best recommendation. Keepin’ it simple!

How to Join Betterment

Betterment.com is the website, and you’ll find a “Get Started” button right on the homepage. This will get you rolling with the sign-up process and you’ll be asked a few questions. These are designed to give them a better understanding of the kind of investor you are, as well as your risk tolerance.

sign that says investment

After Creating Your Betterment Account

Once you sign in, you’ll connect your checking account in order to transfer funds to your account. Next, you’ll select the type of account you’d like to open; this will vary for everyone depending on their individual situation.

Keep in mind that just because you’re invested in ETFs and not picking individual stocks/bonds, this is still the stock market. Whenever you invest in the stock market, there’s always a chance you could lose some or all of what you have invested. Check back in periodically and adjust your investing strategy as your life and the market changes.

Other Ways to Dollabuzz

I recommend Betterment because it’s an investing service that I use myself—and I have for a long time—but I understand that it’s not right for everyone. There are similar sites (like Wealthfront.com) which are also popular, but I don’t have any money invested there myself. It’s impossible to keep track of all the options out there, so if you know of any that should be mentioned, please send me an email and I’ll check it out!

wealthfront logo
Wealthfront is another investing platform.

Dollabuzz Takeaway

We believe that investing in the stock market for the long-term is essential to a strong Dollabuzz, and historically the stock market has provided a way to build wealth. Will there be bumps in the road? You bet—it’s always been this way, and it won’t stop anytime soon. Some years are better than others, but in the long term, the stock market is a smart way to make money.

Making smart money decisions and having a money plan are the keys to financial success. If you have any other questions about Betterment or any other topics I’ve discussed, I would love to hear from you. Shoot me an email and I’ll respond as soon as possible.

Dollabuzz Update: Good thing you stuck around until the end, because we have something new to share. Ever heard of the stock-trading app Robinhood?! As a special reward, check out the new post on Robinhood and find out why it is the HOLY GRAIL for new investors! Commission-free, of course!