Opening Your Account and Funding It

To buy stock through Robinhood, you first need to create an account on their app or website, then link a bank account so you can transfer money in. Robinhood is a brokerage — a company that lets you buy and sell stocks, options, and other investments. You do not need to go through your bank or a financial advisor; you do this directly through Robinhood's platform.

Download the Robinhood app or go to robinhood.com. You will need to provide your name, date of birth, Social Security number, and address. Robinhood will verify your identity, which usually takes a few minutes. Once your account is open, link your checking or savings account by entering your bank login information or routing and account numbers. Most transfers from your bank to Robinhood take one to three business days, though some are instant.

You must be at least 18 years old and a U.S. citizen or permanent resident to open an account. Robinhood does not charge a monthly fee to hold an account, but they do make money when you trade — they receive a small payment from market makers when you buy or sell.

Key Takeaways

  • You need a Robinhood account, a linked bank account, and money transferred in before you can buy your first stock.
  • Once money is in your account, you search for a stock by its ticker symbol (like AAPL for Apple), enter how many shares you want, and confirm the purchase.
  • Robinhood charges no commission on stock trades, but the price you pay may be slightly different from the price shown on the screen because of the time it takes to execute the order.
  • You own the shares once the trade settles, which is usually two business days after you buy them.
  • Robinhood holds your shares in a regular brokerage account unless you open a retirement account like an IRA.

Finding and Buying a Stock

Once money is in your Robinhood account, buying a stock takes about one minute. Open the app or website and tap the search icon. Type the company name or its ticker symbol — a one- to four-letter code that identifies each stock. Apple is AAPL, Microsoft is MSFT, Tesla is TSLA. Robinhood will show you the stock's current price and a chart of how it has moved over time.

Tap the stock name to open its detail page. You will see a "Buy" button. Tap it and enter the number of shares you want to purchase. If a stock costs $150 per share and you want to buy one share, you will need $150 in your account. Robinhood will show you the total cost before you confirm. Review the order and tap "Buy" again to complete it.

Your order goes to the market immediately. Most stock orders are filled within seconds during market hours (9:30 a.m. to 4 p.m. Eastern time, Monday through Friday). If you place an order after market hours or on a weekend, it will wait until the market opens the next trading day. The price you actually pay may be slightly higher or lower than the price shown when you placed the order, because stock prices move constantly.

Understanding Order Types and Timing

Robinhood offers two main ways to place a stock order: a market order and a limit order. A market order buys the stock at whatever price it is selling for right now. This is the default and the fastest way to buy. A limit order lets you set a maximum price you are willing to pay — if the stock drops to that price, your order fills automatically, but if it never reaches that price, your order stays open until you cancel it or it expires.

For most people buying their first stocks, a market order is simpler. You see the price, you buy at that price, and the order fills almost instantly. Limit orders are useful if you want to wait for a better price or if you are buying a stock that does not trade very often.

After you place an order, it takes two business days to settle — meaning the shares officially become yours and the money officially leaves your account. During those two days, you own the shares and can sell them, but Robinhood may restrict certain actions on your account. Once settlement is complete, you can do anything with the shares: hold them, sell them, or use them as collateral if you borrow money through Robinhood's margin feature.

What Happens to Your Money and Shares

When you buy a stock, Robinhood holds it in a brokerage account registered in your name. You own the shares outright. If the company pays a dividend — a cash payment to shareholders — Robinhood deposits it into your account automatically. If you sell the stock later, Robinhood sends the proceeds back to your account, and you can transfer that money back to your bank whenever you want.

Robinhood does not charge you to hold shares, and there is no limit to how long you can keep them. You pay taxes only when you sell — if you sell for more than you paid, you owe tax on the gain. If you sell for less, you may be able to deduct the loss on your tax return. Robinhood sends you a tax form (1099-B) at the end of each year showing all your sales.

If you want to move your shares to a different brokerage, you can transfer them out. This process, called an ACAT transfer, usually takes five to seven business days and may cost a small fee at the receiving brokerage.

Robinhood's Fractional Shares Feature

Robinhood lets you buy a fraction of a share, not just whole shares. If a stock costs $500 per share but you only have $100, you can buy 0.2 shares for $100. This makes it possible to own pieces of expensive stocks without waiting to save up for a full share.

Fractional shares work the same way as whole shares — you own them, you receive dividends on them (though the dividend is also fractional), and you can sell them anytime. The main limitation is that you cannot sell a fractional share during after-hours trading; you can only sell during regular market hours. Some other brokerages do not offer fractional shares at all, so this is one feature that sets Robinhood apart.

Fees and Costs You Should Know

Robinhood charges zero commission on stock trades. You do not pay per trade, and there is no monthly fee. This is different from many traditional brokerages, which charge $5 to $10 per trade or a monthly subscription.

However, there are other costs to be aware of. If you use margin — borrowing money from Robinhood to buy more stocks than you have cash for — you pay interest on the borrowed amount. Interest rates vary but are typically 5 to 12 percent per year depending on how much you borrow. If you trade options (a more complex investment type), Robinhood does not charge commission, but the bid-ask spread — the difference between what buyers will pay and what sellers will accept — can be larger than on stocks.

Robinhood also makes money through payment for order flow. When you place a trade, Robinhood sends your order to a market maker (a company that buys and sells stocks constantly). That market maker pays Robinhood a small amount for the order. This does not cost you directly, but it means the price you get may be slightly worse than if Robinhood routed your order differently.

Moving Money In and Out of Your Account

You transfer money from your bank to Robinhood by linking your bank account in the app. Go to Account, then Transfers, then Add Money. Enter the amount and choose whether you want an instant transfer (usually available for up to $1,000 per day) or a standard transfer (one to three business days, with higher limits). Instant transfers may have a small fee; standard transfers are free.

To move money back to your bank, go to Transfers and select Withdraw. Enter the amount and choose your bank account. The money usually arrives in one to three business days. You can only withdraw money that is not tied up in unsettled trades or margin debt. If you have just bought a stock, the settlement period is two business days, so you cannot withdraw that money until settlement is complete.

If you want to close your Robinhood account entirely, you must first sell all your shares and withdraw all your cash. Then contact Robinhood support to deactivate the account.

Frequently Asked Questions

Can I buy stock before the market opens or after it closes?

You can place an order anytime, but it will not fill until the market is open (9:30 a.m. to 4 p.m. Eastern, Monday through Friday). If you place an order at 6 p.m. on a Tuesday, it waits until 9:30 a.m. Wednesday morning. Some brokerages offer after-hours trading, but Robinhood does not for stocks — only for options.

What if I do not have enough money in my account to buy a stock?

You cannot buy a stock if you do not have the cash. However, Robinhood offers margin accounts, which let you borrow money to buy more than you have. This is risky and comes with interest charges and the possibility of losing more than you invested. Most new investors should not use margin.

Do I pay taxes on stocks I own but have not sold?

No. You only pay tax when you sell a stock. If you hold it for more than one year before selling, you may may have access to for a lower tax rate (long-term capital gains). If you sell within one year, the gain is taxed as regular income (short-term capital gains).

Can I set up automatic purchases of the same stock every month?

Robinhood does not have an automatic investment feature built in. You have to place each order manually. Some other brokerages offer automatic recurring investments, which may be better if you want to buy the same stock regularly without thinking about it.

What happens to my shares if Robinhood goes out of business?

Your shares are protected. Robinhood is a brokerage, and brokerages are required by law to keep customer assets separate from company assets. Even if Robinhood failed, your shares would be transferred to another brokerage and returned to you. Your cash is also insured up to $250,000 through the Securities Investor Protection Corporation (SIPC).