How to Find More Money to Invest by Using Robinhood
We may earn money or products from the companies mentioned in this post.
For over the past 3 months, I have been using my zero commission brokerage account, Robinhood to add shares of stock to the Money Sprout Index. Yes, Robinhood offers zero commission trades for all US listed stocks and ETFs!
While there are a few limitations to using Robinhood, the advantages make it worth opening an account. The most important benefit for me to using Robinhood is that it saves me money.
Let’s take a look at the type of transactions I have made with this brokerage so far this year.
- made 8 different transactions since February
- purchased stock in 4 different companies (O, EMR, BHP, and AFL)
- invested a total of $2,072.01 so far this year
- average trade has been $250+
Saving Money Using Robinhood
As you can see from the information above, I have purchased shares in 4 dividend paying stocks from 8 different transactions. My average trade on Robinhood has been just over $250.
If I were to have made these same 8 trades in my Fidelity account, it would have cost me $63.60 in commissions (8 trades @ $7.95).
While $63.60 may not seem like a lot of savings, it is 3% of my total investment of $2,072.01. The commissions alone almost wipe out any dividend distribution I would receive from these stocks the first year!
Note – It is important to point out that I would not have made 8 trades if I were using Fidelity. I would have likely only made 4 transactions to buy positions in each of the 4 companies listed above. That is still over $30 that would have been spent on commission that I have saved using Robinhood.
What About LOYAL3?
My other favorite zero commission broker is LOYAL3. Each month I buy shares in some great dividend paying companies like Microsoft (MSFT), Kraft (KRFT), and Wal-Mart (WMT).
Unfortunately, LOYAL3 does not offer all US traded stocks like Robinhood. None of the 4 dividend paying stocks that I have purchased in my Robinhood account can be purchased through LOYAL3.
That is another advantage to using Robinhood over other zero commission brokerages.
By investing through Robinhood, I have saved approximately $63.60 compared to investing in another brokerage like Fidelity. Instead, I was able to keep that money and invest it in stock – which raises my 12 month forward dividend income by another $2.78.
Every little bit of savings adds up overtime and allows my wife and I to meet our investment goals. As we continue to actively invest this year (and beyond) in dividend paying stocks through Robinhood, these savings will begin to really add up!
Do you take advantage of any zero cost brokerages to buy dividend stocks? Which ones do you use? How much have you saved so far?
Full Disclosure – At the time of this writing, I owned shares in the following stocks noted in this post – AFL, BHP, EMR, KRFT, O, MSFT, and WMT. The material above is not a recommendation to buy. Please do your own research on a company before deciding to invest.