Robinhood Gold Features: Are You Missing Out on Free Money?
Learn how to make more than it costs with Robinhood Gold
INVESTING
4/27/20244 min read
Don't Wanna Read It All? I Got You
The financial cost-benefit analysis at a glance:
Benefits
3% matching for IRA contributions
~$210/year
3% cash back on credit card
~$180/year
$1000 free margin
~$100/year
Costs
Annual fee
$50/year
Breakdown: $210 + $180 + $100 - $50 = $440 year benefit
It's easy to see that the benefits outweigh the costs tremendously. There are some basic assumptions and considerations with this simplified analysis; see below to understand what those are.
What is Robinhood Gold?
Are you looking for a platform that offers more than just basic stock trading? Look no further than Robinhood Gold! Robinhood Gold is a paid version of the Robinhood investing platform that provides additional features. This unlocks larger instant deposits, additional market data, and a few tangible benefits that I argue are more than worth the cost of the annual fee. With its exclusive features and benefits, Robinhood Gold provides a unique opportunity for investors to take their trading experience to the next level. In this article, I'll explore why you should consider signing up today.
Deeper Dive on the Benefits
3% Match for IRA
One of the standout features of Robinhood Gold is the 3% match for Individual Retirement Accounts (IRA). Investing in an IRA is a smart way to save for retirement, and Robinhood Gold makes it even more enticing. By offering a 3% match, Robinhood Gold effectively boosts your retirement savings, helping you reach your financial goals faster.
The maximum you can contribute to an IRA is $7000 (2024) which yields a maximum benefit of $210 if this is maxed out. Alternatively, if you want to simply offset the $50 annual fee that only requires contributing ~$1700 per year (or about ~$140/month).
Robinhood Gold Card - 3% Cash Back
Imagine getting rewarded for every purchase you make. With the Robinhood Gold Card, you can earn a remarkable 3% cash back on every purchase you make with no cap! Whether you're buying groceries, dining out, or shopping online, the Robinhood Gold Card allows you to earn cash back effortlessly. This feature sets Robinhood Gold apart from other trading platforms and provides an additional source of savings for its users.
Spending a conservative $500/month values this benefit at around $180 per year. While there are other credit cards that can provide better benefits, this is much easier as there are not categories to keep track of. The best alternative credit cards that compete with this only provide 2% cashback so if those are the alternative and you're only looking at the incremental gain (1%), that's still a value of $60 per year.
Note: This card is not available yet.
$1000 of Free Margin Trading
Margin trading allows you to amplify your trading power by borrowing funds from Robinhood. With Robinhood Gold, you get $1000 of free margin trading, enabling you to make larger trades and potentially increase your profits. If additional margin is used it will cost 8%; I don't recommend doing this unless you have a tremendous amount of capital.
This $1000 can be put in a low-cost index fund (like SPY) and with annualized longtime returns averaging around 10% per year, that makes the value of this benefit around $100 per year. The utilization of this margin should be for long-term investing with low-risk options. I'm admittedly oversimplifying this benefit as it will fluctuate with the market but one can easily simulate this and understand this is a sufficient approximation.
Caution: I recommend having at least an additional $1000 invested to act as a buffer should the market go down. If there aren't enough funds in the account it may trigger a margin call which is fun to deal with.
Why Robinhood Offers These Benefits
Now, you might be wondering why Robinhood would provide such lucrative benefits to its users. The answer lies in their strategic goal of gaining market share. Robinhood is committed to attracting and retaining customers by offering unique and valuable features that set them apart from their competitors.
By providing a 3% match for IRA, Robinhood aims to position itself as a top choice for long-term investors. This benefit not only encourages users to open an IRA account with Robinhood but also incentivizes them to stay on the platform for years to come.
The Robinhood Gold Card, with its 3% cash back feature, is a clever way to encourage users to make Robinhood their primary spending card. By offering this attractive cash back incentive, Robinhood aims to increase user engagement and loyalty, ultimately solidifying their position in the market.
Lastly, the $1000 of free margin trading is a strategic move to attract experienced traders who seek additional leverage in their trading activities. By offering this benefit, Robinhood aims to appeal to a wider range of traders and establish itself as a comprehensive trading platform for both beginners and seasoned investors.
Did I convince you? I'd appreciate it if you used my referral links :)
Robinhood Referal link (we each get stock up to $200!)
Disclaimer
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Your financial situation is unique and the information on this website may not be appropriate for your specific circumstances. Before making any investment decisions, you should always consult with a qualified financial advisor who can consider your individual needs and goals.
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