Robinhood has taken the investing world by storm, democratizing individual investing along the way. Much has been written about Robinhood‘s potentially irresponsible tactics of luring inexperienced traders by pushing complex financial products with dopamine inducing bursts of confetti and fun emojis. See here for a solid article detailing this phenomena.
But we are going to assume that’s not you. You don’t get lured into making irresponsible trades by a cool hip tech company right? Right.
The pressure that this once small and scrappy start-up has put on the likes of Fidelity, E-Trade, and Charles Schwab to fundamentally change their business model is nothing short of astounding. When we talk about a game changer, Robinhood is what we mean.
By the way, if you want a free stock, sign up for Robinhood here.
| Date of Shift to Zero-Commission | |
| Fidelity | Oct 10th, 2019 |
| E-Trade | Oct 7th, 2019 |
| Charles Schwab | Oct 1st, 2019 |
It is no coincidence that these announcements followed some significant market share stealing from Robinhood, and all but forced the hands of the major players to get with the digital times.
So what do we owe Robinhood for initiating this dominoes game of zero commisions? How much have they helped us shift towards Financial Freedom, Faster?
Let’s find out!
A study of individual investors suggests that some individual traders (top 10%) trade stocks upwards of 70 times per year. On the other end of the spectrum are low frequency traders, those who trade an average of only 5 or 6 times per year. In the middle we have those who average around 20 trades per year. Without the help of Robinhood, each of these trades would have come with something like a $4.95 commission. We can now get to financial freedom, faster.
We will break up our estimate of free time for these three groups of individuals, you can answer for yourself which group you most neatly fit into: High, Medium, or Low volume individual traders.
| High Volume | Medium Volume | Low Volume | |
| Trades per year | 70 | 20 | 5 |
| Old trade commission | $4.95 | $4.95 | $4.95 |
| Total Annual Saved | $346.5 | $99 | $24.75 |
Using our free times calculation as described in this post, the above annualized savings represents the following free times values.
| High Volume | Medium Volume | Low Volume | |
| Free Time | 126 days | 36 days | 9 days |
The impact that Robinhood has had on the brokerage industry, and the downward pricing pressure they have applied will help YOU achieve financial freedom faster. Especially if you are the type of person who likes to trade stocks regularly. To reiterate the above results, if you make trades an average of 70 times per year, zero commissions will allow you to retire with the same income in retirement ONE HUNDRED AND TWENTY SIX working days, tied to your desk, sooner.
Robinhood’s Worth it rating:
If you would like a free stock from Robinhood, sign up here.
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