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Robinhood Checking and Savings at 3%
Old 12-13-2018, 05:41 PM   #1
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Robinhood Checking and Savings at 3%

Looks like Robinhood is paying 3% on checking and savings with no fees per
a recent ad. It doesn't start until 2019 and has 250,000 SIPC protection.

May be a good option for some cash.

https://checking.robinhood.com/

VW

Edited to correct to SIPC protection
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Old 12-13-2018, 05:44 PM   #2
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Good deal that a lot of people won't get. The waiting list is almost 300,000 people long...

Oh, and it's NOT FDIC protected; it's protected by SIPC.
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Old 12-13-2018, 05:50 PM   #3
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And this little bit might make you think a little too. How does Robinhood make money?

Quote:
Robinhood app sells user customer data to make a quick buck from the high-frequency trading (HFT) firms on Wall Street," that is what we wrote last month, in one of the first articles that expressed concern over the popular Robinhood investing app for millennials, which has shady ties to HFT firms and undermines its image of an anti-Wall Street ethos. Almost a month after our report, Bloomberg has now confirmed that more than 40% of Robinhood's revenues earlier this year were derived from selling its customers' orders to firms, like Citadel Securities and Two Sigma Securities.
https://www.zerohedge.com/news/2018-...-firms-citadel
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Old 12-13-2018, 05:51 PM   #4
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Yeah
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Every Robinhood account is SIPC insured up to $250,000 in cash and protected by modern encryption so you can rest easy and save confidently.
SIPC is a completely different animal from FDIC, and it's not clear how well cash is protected by SIPC. Something to always take into consideration with brokerage accounts.
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Old 12-13-2018, 06:27 PM   #5
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Robinhood doesn't plan to make money. Their business model is to become a thorn in the side of the big players who will buy them out just to get rid of them.
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Old 12-13-2018, 06:50 PM   #6
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https://www.usatoday.com/story/money...ed/2303674002/
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Old 12-13-2018, 07:31 PM   #7
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Old 12-13-2018, 07:43 PM   #8
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If Robinhood went under, not sure one would receive their cash monies back.
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Old 12-13-2018, 07:53 PM   #9
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Originally Posted by gstillson View Post
Robinhood doesn't plan to make money. Their business model is to become a thorn in the side of the big players who will buy them out just to get rid of them.
interesting.....
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Old 12-13-2018, 08:53 PM   #10
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Originally Posted by Dtail View Post
If Robinhood went under, not sure one would receive their cash monies back.
You may not be sure, but it is a fact that one would receive their cash monies back.

https://www.sipc.org/about-sipc/introduction
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Old 12-13-2018, 09:00 PM   #11
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Originally Posted by ExFlyBoy5 View Post
Good deal that a lot of people won't get. The waiting list is almost 300,000 people long...

Oh, and it's NOT FDIC protected; it's protected by SIPC.
1. Everybody who signs up will get the deal. How difficult do you think it is to open an account? It's not as if it's 300,000 people who have ordered a Tesla. And the list is now approaching 500,000.

2. If you have concerns about SIPC, then you might want to consider closing all of your brokerage accounts.
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Old 12-13-2018, 09:45 PM   #12
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Originally Posted by njhowie View Post
1. Everybody who signs up will get the deal. How difficult do you think it is to open an account? It's not as if it's 300,000 people who have ordered a Tesla. And the list is now approaching 500,000.

2. If you have concerns about SIPC, then you might want to consider closing all of your brokerage accounts.
SIPC protection is real, but this is not the same as full faith and credit that comes with FDIC protection. I will pass.
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Old 12-13-2018, 09:53 PM   #13
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SIPC protection is real, but this is not the same as full faith and credit that comes with FDIC protection. I will pass.
Of course it isn't the same. Then again, neither is your car insurance, your health insurance, your homeowners insurance, your life insurance - they don't come with full faith and credit either. It is insurance provided by an insurance company and you accept that it has sufficient backing to provide the product that will protect you in the event of a loss. Not any different with SIPC.

Again, for anyone who is not comfortable with SIPC protection, you should immediately close all of your brokerage and mutual fund accounts...Fidelity and Vanguard included.
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Old 12-13-2018, 10:16 PM   #14
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Again, for anyone who is not comfortable with SIPC protection, you should immediately close all of your brokerage and mutual fund accounts...Fidelity and Vanguard included.
SIPC protection is secondary to the firm's resources and hopefully lack of fraud with respect to your assets. We aren't talking about one of the big 3 here. We are talking about a flaky startup that is already in bed with high speed trading shops.
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Old 12-13-2018, 10:27 PM   #15
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Per the Barron's article, the CEO of SIPC isn't excited about covering funds that aren't going to be used to purchase securities:



https://www.barrons.com/articles/rob...ks-51544723146

Quote:
“SIPC protects cash that is deposited with a brokerage firm for one limited purpose...the purpose of purchasing securities,” wrote Stephen P. Harbeck, the president and CEO of SIPC. “Cash deposited for other reasons would not be protected.”
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Old 12-14-2018, 04:00 AM   #16
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Originally Posted by brewer12345 View Post
SIPC protection is secondary to the firm's resources and hopefully lack of fraud with respect to your assets. We aren't talking about one of the big 3 here. We are talking about a flaky startup that is already in bed with high speed trading shops.
It may come as a surprise to you, but many (though not all) big brokerages also sell their order flow to the same high speed trading shops.

For the average retail investor, high speed trading shops have absolutely no influence with regard to the execution pricing received, and are the direct beneficiaries of reduced commissions.

Many people here, as is the case when it comes to the high speed trading shops in general, are posting misinformation.

I will bow out of this discussion, as these usually rapidly spin out of control with folks becoming extremely "passionate" about their beliefs.
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Old 12-14-2018, 04:03 AM   #17
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Originally Posted by Spock View Post
Per the Barron's article, the CEO of SIPC isn't excited about covering funds that aren't going to be used to purchase securities:



https://www.barrons.com/articles/rob...ks-51544723146
Thanks for that.
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Old 12-14-2018, 07:39 AM   #18
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Originally Posted by njhowie View Post
It may come as a surprise to you, but many (though not all) big brokerages also sell their order flow to the same high speed trading shops.

For the average retail investor, high speed trading shops have absolutely no influence with regard to the execution pricing received, and are the direct beneficiaries of reduced commissions.

Many people here, as is the case when it comes to the high speed trading shops in general, are posting misinformation.

I will bow out of this discussion, as these usually rapidly spin out of control with folks becoming extremely "passionate" about their beliefs.
Of course, that is the market these days. A bit at odds with this goofy shop's positioning, though.
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Old 12-14-2018, 10:48 AM   #19
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At the top of my google news feed today:
https://www.bloomberg.com/news/artic...-s-new-product



Quote:
The Securities Investor Protection Corp. said a new checking account from Robinhood Financial LLC raises red flags and that the deposited funds may not be eligible for protection.
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Old 12-14-2018, 11:08 AM   #20
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Originally Posted by bobandsherry View Post

From the article:
Quote:
As a broker-dealer, the company can invest your cash in Treasurys. The return they get on those investments is enough – possibly more than enough – to cover the 3 percent they pay on your checking and savings balances in your brokerage account.
Maybe I'm looking in the wrong place, but all the Treasuries this side of 10 years pay less than 3%... and 10 years is a long time for the on-demand uses of a checking account.

One article mentioned sharing in the debit transaction fees, but those fees are usually less than 3%
I don't see where their business model works. What am I not seeing?
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