How to build a FREE stock portfolio on robinhood for beginners

Hey, It’s Jake, I’m doing a guest post today. I hope you enjoy my guide to Robinhood for beginners.

Warren Buffet once said something to the effect of, “Be fearful when others are greedy, and be greedy when others are fearful.” Let’s face it. Whether they want to admit it or not, everyone is a little fearful right now with the current state of things. Before the start of outbreak, of what is now the new “C” word, I was already very interested on how to get into “playing” the stock market. I had spoken to more experienced family and friends who told me to start as early as possible to maximize the benefits. And to be honest I had just put it off until I started seeing the stock market tanking all over the news. You know what they say, buy low/sell high, and with the current falling (or bear) market, now is as good as any time to get in and buy low.

Choosing a stock platform:

Before doing anything, I had to set a goal in mind.  The main goal, first and foremost, was education, learning, and studying what I could to make myself more equipped to make an informed decision, rather than just throwing money around. I wasn’t “shooting for the moon” so to speak. Also, right off the bat, I knew that I was not super comfortable playing with my entire retirement portfolio. And lastly, I didn’t want to be paying double for mistakes made while engaging in this learning curve. In summary, I wanted a platform that was easy to learn, would let me invest into the markets that I choose at a rate at which I choose and wouldn’t nickel and dime me for every transaction. (Some brokers charge you for each transaction made and that didn’t sit too well with me) A quick google search of “best beginner stock apps 2020” and one quick social media poll later. I started reading into Robinhood.

Right out of the gate, it looked perfect. It had decent reviews and from, what I could tell it was completely free. I have always remembered a saying about free services. “If a company is providing a free service they wouldn’t be in business. Therefore, if you cannot find the product or commodity they are selling, it’s probably you and/or your info.” A little more digging into it and I came to find that Robinhood makes their money from a few different products they offer,

• Robinhood Gold (a paid more in-depth analytic service – in-app)
• FDIC insured cash management banking option (where they make money off interest as a normal bank would)
• Marginal trading.

It made sense to me and eased my skepticism. I downloaded the app via a link from a friend (important info regarding this soon) and started to create an account.

Setting up your account:

The app asks basic info to begin. Like your name, address, and other generally public information. Then, it asks for your employer and SSN info and….

WOW, STOP, HOLD UP.

Why is this app asking for all this personal data, including my SSN? Don’t get me wrong, I am a USMC veteran, we gave out our social when asked without blinking an eye. – It really is a surprise I am not a victim of identity theft more often. – But seriously what’s going on here. After a good deal of investigating and reading later, as well as reading their entire ToS & just like any broker, Robinhood is required to report information to the SEC and the IRS. Alright, seems legit, so I pushed on.

After getting through the simple information questionnaire, I was taken to the main dashboard. From here it had various information tags, to learn more about the app & how to use it. This is where it asks you to link a bank account, which I found to be standard as well, in order to deposit funds when you decide you want to. Now we’re finally to the best part. since I downloaded the app via referral, I got a free single share in a random stock.

Receiving a free stock:

After linking my bank account, I was presented with 3 blank cards. These free stocks could be anything valued from $1-500/share *que internal flashbacks of my first run-through of Pokémon Red.* Nervous to choose the wrong one, I had my smoking hot wife choose. Come on, if anyone was going to choose the best one it was her right? And if not, it’s not on me. She scraped the digital scratch off and CLF – Cleveland-Cliffs appeared. Cleveland-Cliffs is an iron ore mining company, and at the end of that day CLF closed at a market value of $3.83. Not bad, I got a free stock that had potential to rise over time. If all else fails, I could always sell it off for another stock, I was more interested in, later.

To receive your own free share click here!

Signing up with a referral code gets you and your referee a free stock! Once you’ve signed up, you can send your code to your friends to keep earning free stocks.

Choosing Stock:

So, I started looking at every brand I could think of, that I knew, was going to be “fine” in a recession Amazon, Disney, Apple, Netflix, etc. I also researched commodities like gold, real estate, and oil. Blown away by the prices of those stocks, I felt lost and out of my comfort zone.

How do I make money if I don’t have money to start? Well, there are more options than people realize when it comes to the stock markets. I may not have $2400 to spend on a single share of Amazon, but I do have $20 to spend on companies that I know and trust. Say, like, Nordstrom ($JWN) for example. Let’s hop in a look at their numbers.

Nordstrom was founded in 1901, employs 60-70k people (not accounting the current layoffs/furloughs), & has raked in a net revenue of $15.86 billion in FY 2019(as per Wikipedia). Their operating expenses are less than their total assets, and it’s a well-known & respected company, within its industry. In the past 6 months (August 2019 – Feb 2020) the share prices increased from roughly $25/share to approx. $41/share. that’s a little over 160% increase. As I am writing this, Nordstrom’s current market value is $17.95/share. This low price along with the other factors of stability make this a comfortable investment for me and my goals. This is intended to be a long-term hold stock that over time should net me maybe 2-3x my initial investment. Along with a possibility of dividends once the economy balances back out. But if it absolutely tanks, and Nordstrom goes bankrupt and shuts down, I am only out $18. Think about that.

The upside is a great investment that could potentially increase my “financial freedom”, while the downside is no Starbucks over the next week or two.

Fractional Shares:

One of the better features Robinhood is starting to roll out is fractional shares. I am currently on the waiting list for this feature and cannot wait.

Remember that intimidating $/share of Amazon? Well, with fractional shares, I have the option to still buy into Amazon without paying the full price. Instead of buying a whole share at market value, you buy a percentage of a share with whatever price you see fit.

Fractional Shares give you more possibilities without being limited by your current financial standings.

For Example:

• Say I wanted to take $20 and put it towards Amazon. I may not be “raking in dough” as their stock prices rises a stupid amount in a day, but I will proportionally get the same gains.
• Let’s say they had a good day, and their stock prices raised by 5% and is now $2520. My $20 will also raise that same 5% to a whopping $21.
• Doesn’t seem like much, huh? Positive gains are still just that – gains. It’s another $1 you didn’t have a day ago, and it’s all relative.
• Take that same scenario, but instead invest $1000 in the beginning. It’s still not a full single share, but I still get 5% at the end of the day. My new total is $1050.

Other Investment options:

Now there are other ways to invest in stocks that I may possibly write about in the future.

• Penny stocks
• Day trades/Swing-trades
• Options (calls/puts).

Check back! As I get more comfortable I will write about them & share them here!

IN CONCLUSION:

I didn’t know much when first starting & to be honest there is so much more to learn. I see the opportunity here and have been telling every living soul I encounter to get in and get theirs while they still can!

Food for thought, how much of your time is spent during the day on the “refresh trap” of social media? Cycling  endlessly through each app looking at the same stuff from the same people each day? How much of that time is earning you money? How much of that time are you willing to give up to not only make money, but learn something that affects you whether you choose to invest or not? For me, it’s a no-brainer.

If my guide to Robinhood for beginners interested you to sign up, CLICK HERE for my referral link. As I mentioned before, by clicking the link, signing up, and linking a bank account, you (as well as I) will gain access to a free share of commonly traded stock/security.

Wash your hands and use common sense.

Semper Fidelis. – Jake

*Disclaimer, I am not, nor have ever been, a licensed financial advisor or broker. This publishing is not implicit or explicit investment or market advise. This publishing is not a recommendation or solicitation of specific stocks/securities. Please consult with a professional and licensed advisor/broker. I am currently invested in and have positions in various above mention stocks/securities. By opening this page, the reader accepts and agrees to these terms.

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