About one year ago, I decided to sign up for Robinhood.  It’s basically a service backed by Google which is used to buy and sell stocks with $0 in commissions/fees.  Robinhood also offers a premium paid service for some folks that buy/sell a lot more often than I do.
Buying individual stocks is generally considered a poor financial strategy due to volatility, so my real investments stay away from single stocks. Â Since there are no commissions or fees, I thought it would be fun to try and see if I how well I could do at playing the market based on my limited knowledge and some minimal research.
I put in a tiny initial investment, with a recurring weekly deposit of $15. Â This represents the maximum amount of money I’m willing to try on single stocks. Â My expectations are to break even overall and gain some learning when it comes to the overall market. Â If it all goes to 0, I’m comfortable with that. Â This area of investment represents a very small percentage overall for me.
The Robinhood app and service has been great. Â To date, I have made probably around 40 trades, both buying and selling. Â I have never been charged a commission or fee of any sort. Â In addition to regular buying/selling, the app will also allow limit purchases. Â I often use this method to purchase stock. Â With this method, you can specify the maximum amount you’re willing to pay per share.
Over the year, I have learned quite a bit about the stock market. Â My first trades involved solar energy companies. Â I felt like the technology was affordable and made sense for a lot of consumers. Â I even went pretty far into the process to acquire Solar City solar panels for my own house. Â After purchasing a couple stocks in that area(SCTY and SUNE), I eventually determined that Solar City wouldn’t work for me. Â In a short time, I was able to see a 25% return on the initial purchase, and knew it was time to sell.
My personal investment strategy is based off a simple algorithm. Â I generally invest in companies that make a product that I use and really like. Â If it’s not a product I use, it’s a product that I could see myself using. Â I have also put some investments in some medical companies with great dividends. Â When it comes time to sell, I only sell if I have made money. Â I will never sell a stock for a loss. Â This logic is almost certainly flawed, I know.
I have been a customer of Netflix since the beginning. Â Overall, it’s a great service. Â Coupled with a few other streaming services, it makes sense to cut the cord on cable. Â I made a large(for me) buy on Netflix at a price of $85.19 per share. Â The stock had just taken a dip due to some bad press. Â I was confident that it would recover. Â I’m still holding the stock for now at a current market price that you can check for yourself. Â Depending on when you read this, it has either been a good or terrible idea.
I bought Fitbit back at a time when the stock was around $16. Â At the time the expert consensus was that it would hit somewhere around $28. Â I have been a Fitbit user since 2013, and generally like their products. Â My first Fitbit product was the flex, I have also worn the Charge HR until it disintegrated last month. Â I recently purchased the Charge 2 which has worked pretty well over the last month or so. Â When the stock started to dip a bit, I decided that would be a good time to buy even more(at a perceived discount). Â At the time, I thought the stock was still stronger than suggested by the price, and if things went bad, I had effectively cut down my average cost price so I could get out at a lower price. Â At present time, I hold 55 shares of a stock all experts feel is a terrible buy.
I like the company and its products. Â Hoping to see a recovery after Christmas. Â Either way, I’m staying on the ship.
One drawback to buying and selling small amounts of stock is the tax implication. Â There are some rules about paying taxes on gains from stocks. Â Since I’m not really making a lot of money, the actual amount taxed is low, however tax preparation is a bit more costly. Â I generally use TurboTax, and I now have to buy the more premium package to do my yearly taxes. Â Robinhood does a good job of providing tax documents that ease with tax preparation. Â However, the added cost of TurboTax effectively negates pretty much all gains over the year in my situation.
Overall, Robinhood is a great app that allows both small and large investors trade for free. Â There are no catches other than some tax implications. Â It just seems that you might want to know something about the market before putting a large amount of money in. Â If you’re like me, and looking to play a few single stocks for the fun of it, Robinhood is the best way to go about it.
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