Getting Started: Opening an Account and Funding It

To invest through Robinhood, you first need to download the app or visit the website, then create an account with your email, phone number, and Social Security number. Robinhood will verify your identity and ask basic questions about your investment experience and financial situation. This process usually takes a few minutes.

Once your account is open, you need to fund it. Link a bank account through the app — Robinhood supports most major U.S. banks — and transfer money from your checking or savings account. Your first transfer typically takes one to three business days to arrive. After that, transfers are usually faster. You can start investing only after the money has cleared in your Robinhood account.

Robinhood does not charge account fees, monthly minimums, or commissions on stock and exchange-traded fund (ETF) trades. You can start with any amount — even $1 — though most people find it practical to start with at least $25 to $100 to have room to build a position.

Key Takeaways

  • You need a Social Security number, a valid email, and a linked bank account to open a Robinhood account, and the process takes a few minutes.
  • Money you transfer to Robinhood takes one to three business days to clear before you can use it to buy stocks or ETFs.
  • Robinhood charges no commissions on stock and ETF trades, but you still pay the bid-ask spread — the difference between what you pay to buy and what you receive when you sell.
  • You can buy individual stocks, ETFs, options, and cryptocurrencies through Robinhood, each with different risk levels and complexity.
  • Robinhood offers fractional shares, meaning you can buy a portion of an expensive stock rather than waiting to save for a full share.

Understanding What You Can Buy

Robinhood lets you buy stocks, ETFs, options, and cryptocurrencies. Most new investors start with stocks or ETFs because they are straightforward: you own a piece of a company (stocks) or a basket of companies (ETFs), and you hold it as long as you want.

ETFs are often easier for beginners because they spread your money across many companies at once, reducing the risk that any single bad investment will hurt you badly. A stock ETF might hold 100 or 500 different companies. You buy and sell ETFs the same way you buy stocks — just search for the ticker symbol, enter the number of shares, and confirm.

Options are contracts that let you bet on whether a stock price will go up or down by a certain date. They are more complex and riskier than stocks or ETFs, and Robinhood requires you to pass a quiz and request options access before you can trade them. Most beginners should skip options until they have months of stock trading experience.

Cryptocurrencies like Bitcoin and Ethereum are available on Robinhood, but they are highly volatile — prices swing wildly — and most financial advisors suggest treating them as a small, speculative part of a portfolio, not a core holding.

How to Place Your First Trade

Open the Robinhood app and tap the search icon at the bottom. Type the company name or stock ticker symbol — for example, "Apple" or "AAPL" — and tap the result. You will see the stock's current price, a chart of its recent performance, and news about the company.

Tap the "Buy" button. Robinhood will ask how many shares you want. You can enter a whole number or a fractional amount — for instance, 0.5 shares if you want to invest $50 in a $100 stock. Enter the amount and review the order. The price shown is the current market price, but the actual price you pay may be slightly different if the market is moving fast.

Tap "Submit Order" to confirm. Your order will execute during market hours (9:30 a.m. to 4 p.m. Eastern time on weekdays). If you place an order after hours or on a weekend, it will wait until the market opens. Once the order fills, the shares appear in your account and you own them.

To sell, find the stock in your holdings, tap it, tap "Sell," enter how many shares to sell, and confirm. The same process applies — your order executes during market hours and the cash returns to your account.

Understanding Costs and Fees You Will Actually Pay

Robinhood advertises "commission-free" trading, which is true — you do not pay a flat fee per trade. However, you still pay a real cost called the bid-ask spread. This is the difference between what buyers are willing to pay (the bid) and what sellers are asking (the ask). When you buy, you pay the ask price; when you sell, you receive the bid price. That gap is money you lose on every trade.

For popular stocks like Apple or Microsoft, the spread is tiny — often just a penny or two per share. For less-traded stocks or small companies, the spread can be much wider, costing you real money. This is why beginners should focus on well-known, heavily traded stocks and ETFs.

Robinhood also offers a paid subscription called Robinhood Gold that costs $5 per month. It gives you access to margin (borrowing money to invest) and other features. Most beginners do not need it and should skip it until they understand how investing works.

If you hold a stock and the company pays a dividend — a cash payment to shareholders — Robinhood deposits it into your account automatically. You do not pay a fee for this. Similarly, if you sell a stock at a profit, you may owe capital gains tax when you file your taxes, but Robinhood does not charge you directly.

Choosing Between Active Trading and Long-Term Holding

Robinhood makes it easy to buy and sell quickly, which can tempt new investors to trade frequently. However, frequent trading usually hurts returns because of bid-ask spreads, taxes on short-term gains, and the simple fact that most people are not good at timing the market.

A more common approach for beginners is to pick stocks or ETFs you believe in, buy them, and hold for years. This strategy is called "buy and hold." It works because companies tend to grow over long periods, and you avoid paying taxes on gains until you actually sell. Many successful investors recommend this approach for people just starting out.

If you do want to trade more actively — buying and selling the same stock multiple times — understand that you will pay the bid-ask spread on every trade, and short-term capital gains (profits on stocks held less than a year) are taxed at your regular income tax rate, which is usually higher than the long-term rate.

Managing Risk and Avoiding Common Mistakes

The biggest mistake new investors make is putting all their money into one or two stocks. If that company has bad news, your entire investment suffers. Instead, spread your money across different companies and industries. ETFs do this automatically, which is one reason they are good for beginners.

Another common mistake is investing money you might need soon. The stock market goes up and down. If you need the money in the next year or two, you might be forced to sell at a bad time. Keep money you need for emergencies in a savings account, not in stocks.

Do not try to time the market — buying before it goes up and selling before it goes down. Almost nobody can do this consistently, even professionals. Instead, invest regularly (for example, $100 per month) regardless of whether prices are high or low. This approach, called dollar-cost averaging, reduces the risk that you buy everything at the worst possible time.

Finally, do not invest money you cannot afford to lose. Stocks can go down, sometimes sharply. If losing your investment would hurt your finances or stress you out, you are investing too much.

Tracking Your Performance and Staying Informed

Robinhood shows your account value, total gain or loss, and the performance of each individual stock right in the app. You can see how much you have made or lost in dollars and as a percentage. This information updates during market hours.

However, seeing your account go up and down every day can tempt you to make emotional decisions. If your stock drops 10%, resist the urge to panic-sell. If it jumps 20%, resist the urge to buy more just because it is going up. Successful investing requires patience.

To stay informed without obsessing, check your account once a week or once a month, not every hour. Read news about the companies you own, but do not let short-term headlines drive your decisions. Focus on whether the company's long-term business is sound.

Frequently Asked Questions

Can I invest in Robinhood if I am under 18?

No. Robinhood requires you to be at least 18 years old and a U.S. citizen or permanent resident to open an account. Some brokers offer custodial accounts for minors, but Robinhood does not.

What happens if Robinhood goes out of business?

Your stocks and cash are protected by the Securities Investor Protection Corporation (SIPC), which covers up to $500,000 per account if a brokerage fails. Your stocks belong to you, not to Robinhood, so they would transfer to another broker.

Can I set up automatic investments on Robinhood?

Robinhood does not offer automatic recurring investments like some other brokers do. You have to manually transfer money and place trades. If you want automatic investing, you may want to consider other platforms.

What is the difference between a market order and a limit order?

A market order buys or sells immediately at the current price. A limit order lets you set a price — for example, "buy only if the price drops to $50" — and the trade executes only if the stock reaches that price. Limit orders give you more control but may not fill if the price never reaches your target.

Do I have to report my Robinhood investments on my taxes?

Yes. When you sell a stock at a profit, you owe capital gains tax. When you receive dividends, you owe tax on that income. Robinhood provides tax documents (Form 1099) at the end of the year that you use to file your taxes. Keep records of what you bought, when, and for how much.