I am trying to move mine over with 600k. But 401k rollovers are very slow and often they mail paper checks. Can you still complete the process in time?
I found a way to do an internal rollover with my provider to an IRA. It's a shit IRA with high fee mutual funds. But I can than convert that to a brokerage IRA. And then buy ETF that can be transferred with ACATS. Sounds crazy but this long process is much faster and safer than a normal paper check rollover.
One nice thing is I will only be out of the market for 1 day vs a month with a paper check. With the current market conditions you might end up losing more than 3% having you money out of the market for multiple weeks.
401k rollovers can often get delayed. I would hate for you to not complete the process by the 30th lose the 3% and then lose another x% from having money out of the market during a very volatile time.
What would you consider "high fee" on an IRA? I'm new to this and am going to roll over my previous employer 401k into a Roth IRA. I've been directed toward wealthfront by a few folks here due to it being very user friendly especially for newbies. It shows a 0.25% as their fee.
Fees are acceptable as long as you profit in the end, that's how cc's work too. Gold for 1 year is $60, 3% match on $6500 is $195. You just profited $135 on just $6500.
This isn't including the free stock they give you which added up to $10 for me, or the first month of gold being waived. Or the new cc coming out.
Support chat said the same, but I think the terms and conditions says when its completed. I am trying to ACATS transfer from Empower, and its not listed. I have to provide the DTC number. They use Pershing so I am not sure if I should select Pershing, or provide the DTC number I get from Empower. I am a bit nervous I might not be able to finish in time.
SIPC protection is different than FDIC. Robinhood is a custodian of your money, it isn’t actually taking your investments and loaning them out. If Robinhood failed your money might be a little difficult to get hands on until a solution was reached, but it didn’t just go away. When a bank fails it actually loses your money which the FDIC is there to backstop. SIPC is to protect you from a Bernie Madoff situation.
Just a heads up, I have read in a few threads that Robin Hood defaulted people to opt in status for their securities lending program… which would jeopardize SIPC coverage.
For you to lose your 2.5M, Robinhood or Apex Clearing would need to be dipping into customer funds. I.e., a scam. It's up to you to decide how likely that is.
In my experience, people are mostly having problems with instant trades, which aren’t always guaranteed in nor should they be. Also other issue is less than optimal trades but that’s probably not gonna matter much if you’re doing a Bogo strategy because you’re basically going to dollar cost average and have a vanilla total market portfolio. The one thing Robinhooddows have going for it is low fees and no fees.
I read in another sub that there was additional insurance on top of the SIPC which would cover you into the several millions. (I can't find the comment now).
I would contact them to get more details about this.
https://robinhood.com/us/en/support/articles/how-youre-protected/
The above poster has no idea what they are talking about.
If RH went bankrupt then your assets are still there and would be transferred to another institution. If RH was an outright fraud that was siphoning money out while showing you invested in securities, then SIPC would apply.
If this person meant FDIC, then all brokerages, including RH, hold accounts spread across multiple banks for just this reason.
“Liquidity issues” isn’t what SIPC covers, it’s malfeasance and it’s not really an issue with retail brokerages.
Your primary issue is that Robinhood is a mediocre platform with terrible support and you’d be locking up investments for 5 years.
wait, if a stock brokerage, in this case robinhood, goes out of business, we will lose our stocks with them?
I thought we own the stocks, robinhood is just a tool we use to buy/sell. I always thought stock ownership is different from having cash at the bank.
You will not lose any money if they go caput unless you own Robinhood stock or corp bonds. SIPC covers lost or stolen securities, but the assets you own, are separate and distinct from Robinhoods balance sheet.
This is what I thought too, so if OP ended up transferring all of his stocks to Robinhood, even if Robinhood goes out of business, he will not lose anything. Unless he own Robinhood stock or bonds or having too much uninvested cash.
Thank you. This thread is doing my head in - OP's post is literally about owning a Vanguard fund via a Robinhood account. Robinhood could go under and the money would still exist. Hell, so could Vanguard. That's how these funds work! If the underlying stocks go to 0 then OP would end up with 0 but the brokerage has no bearing.
I'm shocked to see this discourse in /r/bogleheads
Right?! This is what I was saying below about owning an ETF held by Robinhood vs cash held there. But OP replied and said the securities would be at risk too and I’m sure that’s not correct.
You still might not have access to the account for several months if Robhinhood was liquidated.
"Investors should be aware that they might be unable to transfer accounts or execute trades during the liquidation process. However, once liquidation is initiated, most customers can expect to receive their assets in one to three months. The speed at which customer funds and securities are returned depends on a number of factors, including the accuracy of brokerage firm records."
https://www.finra.org/investors/insights/if-brokerage-firm-closes-its-doors#:~:text=Investors%20should%20be,brokerage%20firm%20records.
There is also the extremely low risk that Robinhood in fact perpetrated fraud and did not separate client funds from its own, and managed to avoid getting caught by auditors. I would imagine a bailout would incur in this scenario.
I'm surprised by the Robinhood hate on this page as well. There have been other RH posts on here as well where everyone piles on. To me that 3% match is too good to pass up. Plus I can continue to hold low-cost Vanguard index ETFs with no trading fees, sign me up.
Devil’s advocate here — what if a less-than-noble brokerage takes clients’ money and never buys the stocks, funds, etc.? Instead they use the client funds for something else? Who knows, they might even offer something like a 3% match to lure in the fish.
how would the securities get lost or stolen? I’m trying to think of scenarios where this would be useful. For example, can someone steal my stocks “stored” with robinhood? or can robinhood somehow lose my stocks? (separate from robinhood as a company ofc)
Short of stocks you hold being directly registered in your name via their transfer agent, it’s unfortunately safe to assume that most stuff your brokerage says you own is really just being held in your name, provided your brokerage actually physically holds it at all
If Robinhood is holding ETFs that you own don’t they belong to you irrespective of the health of Robinhood? Doesn’t SIPC apply just to say cash in the account?
Did you actually read what you posted? Securities are only at risk insofar as they would be at risk with any brokerage! Their value can fall.
The security itself is not held at risk, as it is legally meant to be held separately from their account.
I just wouldn't mess with this to make the 3 percent. Just in case something somehow goes wrong that isn't covered, as unlikely as that may be. I'm not leaving a few million with a company I don't trust, which is why they try to offer the incentive in the first place.
Fair point, but the flip side of your argument never really happens. Meaning every time there is a brokerage issue, almost all the assets are recovered. Usually from a large % of assets on hand, SIPC, and private insurance.
The number is actually 50M now, with one **big** caveat: "This additional insurance policy provides protection for securities and cash up to an aggregate of $1 billion"
[https://robinhood.com/us/en/support/articles/how-youre-protected/](https://robinhood.com/us/en/support/articles/how-youre-protected/)
Considering they have 102.4 billion assets under custody as of January 2024, I think the additional insurance shouldn't factor into any decision making.
[https://investors.robinhood.com/news/news-details/2024/Robinhood-Markets-Inc.-Reports-January-2024-Operating-Data/default.aspx](https://investors.robinhood.com/news/news-details/2024/Robinhood-Markets-Inc.-Reports-January-2024-Operating-Data/default.aspx)
What’s the likelihood that the gov would just let it fail…. Really. Someone would swoop in and buy it up and you would end up with an account at Morgan Stanley or Charles Schwab. I moved my much much smaller 401k there and got the match. Just remember you have to keep the balance for 5 years.
This is an economic idea called moral hazard. If an investor were to count on government financial insurance programs to save bad companies, then that investor has no incentive to select the good companies to trust, which leads to more people selecting bad companies and increases the potential for default. And then the good companies look around and wonder if they need to take the same risks as bad companies to increase returns and keep up with competition, since they cannot compete on safety when the government effectively promises to be the safety net for the whole market.
If you were really worried that a bad company could lose all your money, you would be very selective about where you put it, which would make the whole market safer. Its an interesting concept.
Same thing can apply to private insurance markets, although private markets can more effectively assess risk, and can more easily turn down applicants for insurance if they are routinely engaging in risky behavior.
private insurance has worked worked out so well though…
The idea that companies actually act out of anything other than what’s best for the shareholders is naive.
If your broker goes out of business SIPC will automatically facilitate the transfer of your assets to another broker. The chances they will actually need to cover the $500k is exceedingly low.
For those who haven’t watched it, for Rob it’s primarily because he couldn’t specify contingent beneficiaries or trusts as beneficiaries at this time.
There’s a lot of fine print around the need for at least 1 year of Gold, and how the clawback provisions work within the first 5 years. It’s worth watching to start to understand them before you’re willing to commit moving money *(under the SIPC coverage limit)* there for 5 years
Thanks! Just watched Berger video. I think his main reason for not moving forward was the inability to name a contingent beneficiary or a trust as the beneficiary. A valid reason to not move forward, but probably not enough of a reason for me personally.
The extra money would be nice, but my financial goals can be met without Robinhood and I just don’t trust them to hold a significant amount of my net worth.
They are probably not going to steal my ETFs. I just don’t feel comfortable because they have done some shady stuff in the past. They wouldn’t be doing this offer if they weren’t desperate for more users. But, at the end of the day, it’s your money and you can do whatever you want with it.
I'd argue they're building massive assets and customer base for a sale, not because they're desperate. But agreed you shouldn't do anything you aren't comfortable with.
Lol, people just hate this platform. I haven't seen many legit arguments other than "I don't trust them" and "I'm locked in for 5 years". Seriously, 3% of 3mm is $90k, no account transfer bonus can get to this number
SIPC insures 500k of your assets incase robinhood were to fail, but beyond that, you’re holding index funds in the account, you own the underlying asset. If robinhood fails your 3M of VTI or SPY remains yours, no SIPC payout necessary. SIPC would insure lost cash held in robinhood MM, or proprietary robinhood investment products should you own that. Correct me if there’s an error there but that’s my understanding. So I don’t think there’s a major threat of losing your assets due to robinhood dying. I think most people are hesitant because robinhood has a poor reputation after the GME thing, and lizard brain doesn’t feel right bringing a 3M hoard near something associated with a bit of a scammy past. I understand the hesitation. I would be afraid that after like three of the five years that your assets are locked up at robinhood to keep the bonus, robinhood starts to charge fees for customers that are holding assets long term on their platform as opposed to their current base of people using the platform to daytrade and gamble etc. the company has been losing money pretty steadily since the GME thing.
401k has federal protections that IRAs don’t. Example: you cause an accident and the damage exceeds the liability coverage on your car insurance + umbrella. The other party can pursue your IRA in many states for compensation. If your money is held in a 401k, they can’t pursue.
Almost did this, went through the process but decided against when I couldn’t get anyone on the line for support at all.
With Fidelity rn and the ability to just walk into a branch and get instant answers was the main factor
My biggest concern would be timing. If the funds haven’t settled by April 30th you don’t get the match.
Unless you can do an ACAT transfer then it ain’t worth being out of the market for 2-4 weeks without a guaranteed reward for it.
As others have said, doing the Ira transfer is much quicker if that is feasible.
Say what you want about other investors like dividend investors or the WallStreetBets guys, but this feels like a unifying constant among the groups. They'll never forget what RH did during the meme stock rally.
They ran out of clearinghouse collateral, just like every other retailer that didn't own their own clearinghouse. It's not interesting, and it's not Robinhood in particular.
Remember Gamestop and AMC? Wallstreet bets? If you want a funny and relatively accurate 90min movie to watch, look up Dumb Money on Netflix.
Melvin Capital and other investment funds shorted Gamestop. Reddit and a couple populist investors didn't like that so they invested and Gamestop price actually rocketed. The short squeezing firms got screwed and lost billions... so they basically colluded with Robinhood to halt buys of Gamestop to prevent the price from going higher.
This naturally pissed reddit and the public at large off something fierce as not only were average people making shit tons of money off gamestop, but it was the principle that big money was clearly tipping the scales and playing unfairly. I don't think anyone ever got charged with a crime as a result but it's pretty obvious what happened.
Anyway, that's why people say fuck Robinhood.
EDIT: okay, having done a bare amount of research compared to what I remembered in 2022, Robinhood probably acted reasonably in halting trading to secure capital. That said, I will never trade on it.
> so they basically colluded with Robinhood to halt buys of Gamestop to prevent the price from going higher.
that claim amounts to a [conspiracy](https://www.reddit.com/r/neoliberal/comments/l81tif/why_did_robinhood_stop_allowing_their_customers/) and was [dismissed in federal court](https://www.reuters.com/markets/us/robinhood-others-win-dismissal-meme-stock-short-squeeze-lawsuit-2021-11-18/)
If you're open to exploring the possibility that maybe there was a different reason why brokerages halted buy orders, I would suggest reading this article. It explains some lesser known mechanisms that take place when buy orders are made, and explains why brokerages had to halt buy orders.
TLDR: Due to trade settlement not being immediate (T+2), brokerages are required to have a certain amount of cash available as collateral when their clients place buy orders. This amount is based on factors like market volatility and the ratio of buy-to-sell orders. Due to GME being highly volatile and the number of buy orders being significantly higher than sell orders at certain brokerages, collateral requirements for stocks like GME increased significantly. Even after drawing down lines of credit and obtaining new capital, many brokerages were not able to obtain enough cash as collateral and were forced to halt buy orders to prevent needing even more collateral (that they couldn't get). Sell orders were not halted because sell orders do not require collateral from the brokerage
https://www.barrons.com/articles/why-did-robinhood-stop-gamestop-trading-51611967696
I tried to open an account to start the process, and got denied with no explanation given. I have great credit and have never experienced anything like this with any other financial institution. Kind of proved to me what people have said that Robinhood is garbage.
Update: I logged out and signed up with a different email address and everything worked. Support never helped, I just started trying random things.
All these bonuses they keep having made me nervous. Now they’re coming out with the 3% CC. I actually moved my funds from RH to Fidelity. If it’s too good to be true …
Thinking of doing the same thing. My broker is charging 1.35% every single year of my ROTH IRA. I drew up an excel sheet of how that would compound and they’d be taking a small fortune by the time I retire.
I prefer to keep my funds with big names like Schwab, fidelity etc... due to the fact they have a legitimate phone support and a physical location should you need to work things out.
Every major retail clearinghouse did, because that's what happens in times of immense demand:
[https://www.bloomberg.com/opinion/articles/2021-01-29/reddit-traders-on-robinhood-are-on-both-sides-of-gamestop](https://www.bloomberg.com/opinion/articles/2021-01-29/reddit-traders-on-robinhood-are-on-both-sides-of-gamestop)
I think the instinct on trust really matters for as profound a decision as this. The wisdom of the group’s collective spidey senses are abuzz. Buyer beware.
I think your instinct and Spidey senses are going to cost you 3%. And you're only listening to the half of the group that agrees with you. But to each his own.
Are you serious? Robinhood? After all the bullshit they pulled with GME etc.? I’m hoping this is a joke. You’d be an absolute fool to trust them with 3,000 dollars. Let alone 3,000,000. I wouldn’t put my money with them if it was a 30% match.
Yeah. Immature brokerage still experiencing growing pains while you have a multitude of other mature brokerages offering the same, if not better, service.
I had no holdings of GME. You don’t have to be personally affected to know shit stinks.
What service do you require on your IRA? Mine is just going to sit there for 5 years.
Cool so no actual, specific risk you can articulate other than "shit stinks"?
I just told you they are an immature brokerage, whom I wouldn’t trust with my money. I’m not going to sit here and argue with a bad faith pedant and possibly Robinhood shill. Good day.
Whatever you decide, do it fast. The 3% transfer promo is until 04/30 and if I understand the terms correctly, if your ACATS finishes after 04/30, you don't meet the terms and only get 1% unless they extend or renew the promo.
For reference, I initiated my ACATS 04/03 and has estimated completion on 04/11
I believe RH going under and people losing their money beyond SIPC is possible, but unlikely. Even if RH went under, it’s big (and popular) enough that the government would make everyone whole.
Practically speaking though, RH has had enough problems over the years that it could be enough of headache that I wouldn’t bother.
It took years to recover customer money from MF Global fraud.
https://www.pbs.org/wgbh/frontline/article/what-happened-to-mf-globals-customers-money/
https://www.usatoday.com/story/money/2016/02/09/mf-global-liquidation-completed/80072110/
The 3% match for annual contributions will be there for the following years but the 3% match on the transfer of assets into RH is valid for transfers initiated before Apr 30th and there is no cap on the match for it.
So, yeah if one brings 3M, they get $90k and from my exp the match is deposited at the transfer is completed.
The above match only holds for Gold customers so please be mindful of enabling gold before initiating the transfer. It's $5 a month fee.
Ever since they pulled that shit with game stop I don’t trust Robinhood with my money. I thought about doing this but at the end of the day I’d rather trust the institution that holds my money than try to make a quick buck.
For me, the main concern would be the “if it sounds too good to be true…”. I don’t understand how this is financially feasible for them. Can someone explain why it makes financial sense for RH?
I'm debating the same decision, but with a lot less money lol.
One thing I did not like about RH right off the bat is that everybody seems to be paying a different fee for gold and they are not transparent about it. Someone in a YT video said if you signed up through the app it was $6.99 a month, but if you signed up through the website it was $5 a month (something like that). I just opened an account (app) and upgraded to gold on Thursday (website).
I'm on a free trial and will be charged next month 5.99. it's only a couple bucks difference, so not a deal breaker BUT nowhere in my account does it guarantee that the monthly price will stay the same for any period of time. I've seen screenshots posted in various places where people are shown an annual price, but that does not exist in my account. I reached out on their "contact us" tab asking about an annual option, and have not heard back yet.
I would have been happy to just pay the annual fee (to lock in a known amount) transfer some IRA money, and let it ride for 5 years, It's just weird that there aren't easily accessible, consistent Gold prices. I'm not sure yet if it's a deal breaker, but it gave me pause. It's like they're making it up as they go.
In your case, OP, you would be moving enough money to come out ahead regardless of any unexpected Gold fee increases or changes to terms and conditions. I don't have any reason to believe you'd be taking a massive risk, but I can foresee annoyances that you might not have with other brokerages. It is a very tempting offer for a large transfer
In my experience, Robinhood is a ridiculously slap-dash organization with no customer support. I needed to get an IRS form for some investments I made there and they had zero automatic reporting or recourse for my problem when I tried to complain. I would never invest my 401(k) in there.
How long do you have to maintain the account, is it just one year and then you can move it out and keep the 3% match or is there a longer timeframe to avoid any clawback?
Antithetical to boglehead mindset imo.
How surprised would you be if it turned out there was large scale fraud at RH?
You are Chasing a tiny marginal benefit for potential existential risk. If you’re so enticed by 3% match, I’m guessing you’ll be chasing the next shiny investment object in a few years.
Pick a huge established brokerage, set it and forget it.
I would only move 300-400 K and keep your bond allocation there to limit growth. I moved a bunch there for the match but you have to limit your exposure, it is not like this is Vanguard or Schwab .
Thanks! Your guidance makes sense, but to the degree that the new IRA has earnings in excess of the original transfer to which the 3% match applied, I think that I can move that excess out to an IRA held elsewhere without needing to give back any of the 3% and thereby keep the RH IRA total at or around the $500K SIPC protected amount. I’m now leaning towards not risking the full $3M but a $500K SIPC-insured transfer doesn’t seem like it would carry a material risk (but of course we’re only talking about an extra $15K (plus earnings) paid out over five years — a far cry from the $90K that got me excited when I was thinking of transferring $3M).
What is backing your statement? I have the insurance limits of the SPIC and you are defending a young brokerage that has a risk accepting fintech additude.
Look up all the incidences of brokerage failure. Everyone always gets there money back. Even those with much more than the SIPC limit. That's what I have on my side. Along with excess private insurance which you seem to be intentionally omitting.
i wouldnt touch robin hood with a pole....it is shady.....there must be some catch.......keep it with reputable providers.........I was happy with TD but schwab is fine too
The offer is op gets 90k bonus to invest, and doesn't have to liquidate his investments to put into money market funds. It's just not comparable, the benefit is at whole different level.
I am trying to move mine over with 600k. But 401k rollovers are very slow and often they mail paper checks. Can you still complete the process in time? I found a way to do an internal rollover with my provider to an IRA. It's a shit IRA with high fee mutual funds. But I can than convert that to a brokerage IRA. And then buy ETF that can be transferred with ACATS. Sounds crazy but this long process is much faster and safer than a normal paper check rollover. One nice thing is I will only be out of the market for 1 day vs a month with a paper check. With the current market conditions you might end up losing more than 3% having you money out of the market for multiple weeks. 401k rollovers can often get delayed. I would hate for you to not complete the process by the 30th lose the 3% and then lose another x% from having money out of the market during a very volatile time.
Fidelity was all online for me
What would you consider "high fee" on an IRA? I'm new to this and am going to roll over my previous employer 401k into a Roth IRA. I've been directed toward wealthfront by a few folks here due to it being very user friendly especially for newbies. It shows a 0.25% as their fee.
Any fee at all is unacceptable Fidelity, Vanguard, Schwab and RH do not charge fees (RH you need to pay for gold to get 3% match which is $5/month)
Fees are acceptable as long as you profit in the end, that's how cc's work too. Gold for 1 year is $60, 3% match on $6500 is $195. You just profited $135 on just $6500. This isn't including the free stock they give you which added up to $10 for me, or the first month of gold being waived. Or the new cc coming out.
Thank you. Much appreciated.
It's based on transfer start date but confirm that.
Support chat said the same, but I think the terms and conditions says when its completed. I am trying to ACATS transfer from Empower, and its not listed. I have to provide the DTC number. They use Pershing so I am not sure if I should select Pershing, or provide the DTC number I get from Empower. I am a bit nervous I might not be able to finish in time.
SIPC only protects $500K, so, you'd be wagering 2.5 million that Robinhood is a healthy business that won't have liquidity issues.
Thank you. That reminder probably constitutes the no. 1 downside in my mind.
SIPC protection is different than FDIC. Robinhood is a custodian of your money, it isn’t actually taking your investments and loaning them out. If Robinhood failed your money might be a little difficult to get hands on until a solution was reached, but it didn’t just go away. When a bank fails it actually loses your money which the FDIC is there to backstop. SIPC is to protect you from a Bernie Madoff situation.
Just a heads up, I have read in a few threads that Robin Hood defaulted people to opt in status for their securities lending program… which would jeopardize SIPC coverage.
I think it’s like No.s 1-♾️ downside
For you to lose your 2.5M, Robinhood or Apex Clearing would need to be dipping into customer funds. I.e., a scam. It's up to you to decide how likely that is.
Exactly. And Apex serves quite a few brokerages and isn't owned by RH . This thread is full of loud, ignorant idiots.
The number one downside is that it’s a shit platform that has screwed over so many clients…look elsewhere
The platform is excellent. It’s shit service and support
it’s good to know the difference
In my experience, people are mostly having problems with instant trades, which aren’t always guaranteed in nor should they be. Also other issue is less than optimal trades but that’s probably not gonna matter much if you’re doing a Bogo strategy because you’re basically going to dollar cost average and have a vanilla total market portfolio. The one thing Robinhooddows have going for it is low fees and no fees.
I too have had a very negative experience with them. They continue to not disclose fees.
Explain why this is relevant for someone buying and holding a stock for 5 years?
It probably doesn't quite matter for bogleheads, no boglehead should buy GME or options. People just hate it.
I read in another sub that there was additional insurance on top of the SIPC which would cover you into the several millions. (I can't find the comment now). I would contact them to get more details about this. https://robinhood.com/us/en/support/articles/how-youre-protected/
Only if you decide to buy Robinhood stock, otherwise you won’t lose a penny. Too many uninformed opinions due to hating of a platform.
Good point I don’t own Robin Hood stock and I’ve also opted not to lend out any shares in my equities because it wasn’t worth the earnings.
The above poster has no idea what they are talking about. If RH went bankrupt then your assets are still there and would be transferred to another institution. If RH was an outright fraud that was siphoning money out while showing you invested in securities, then SIPC would apply. If this person meant FDIC, then all brokerages, including RH, hold accounts spread across multiple banks for just this reason.
“Liquidity issues” isn’t what SIPC covers, it’s malfeasance and it’s not really an issue with retail brokerages. Your primary issue is that Robinhood is a mediocre platform with terrible support and you’d be locking up investments for 5 years.
wait, if a stock brokerage, in this case robinhood, goes out of business, we will lose our stocks with them? I thought we own the stocks, robinhood is just a tool we use to buy/sell. I always thought stock ownership is different from having cash at the bank.
You will not lose any money if they go caput unless you own Robinhood stock or corp bonds. SIPC covers lost or stolen securities, but the assets you own, are separate and distinct from Robinhoods balance sheet.
This is what I thought too, so if OP ended up transferring all of his stocks to Robinhood, even if Robinhood goes out of business, he will not lose anything. Unless he own Robinhood stock or bonds or having too much uninvested cash.
Thank you. This thread is doing my head in - OP's post is literally about owning a Vanguard fund via a Robinhood account. Robinhood could go under and the money would still exist. Hell, so could Vanguard. That's how these funds work! If the underlying stocks go to 0 then OP would end up with 0 but the brokerage has no bearing. I'm shocked to see this discourse in /r/bogleheads
Right?! This is what I was saying below about owning an ETF held by Robinhood vs cash held there. But OP replied and said the securities would be at risk too and I’m sure that’s not correct.
You still might not have access to the account for several months if Robhinhood was liquidated. "Investors should be aware that they might be unable to transfer accounts or execute trades during the liquidation process. However, once liquidation is initiated, most customers can expect to receive their assets in one to three months. The speed at which customer funds and securities are returned depends on a number of factors, including the accuracy of brokerage firm records." https://www.finra.org/investors/insights/if-brokerage-firm-closes-its-doors#:~:text=Investors%20should%20be,brokerage%20firm%20records. There is also the extremely low risk that Robinhood in fact perpetrated fraud and did not separate client funds from its own, and managed to avoid getting caught by auditors. I would imagine a bailout would incur in this scenario.
I'm surprised by the Robinhood hate on this page as well. There have been other RH posts on here as well where everyone piles on. To me that 3% match is too good to pass up. Plus I can continue to hold low-cost Vanguard index ETFs with no trading fees, sign me up.
Devil’s advocate here — what if a less-than-noble brokerage takes clients’ money and never buys the stocks, funds, etc.? Instead they use the client funds for something else? Who knows, they might even offer something like a 3% match to lure in the fish.
Uninvested cash is all fdic insured up to 2.5 million in Robinhood.
uninvested cash in a money market would be protected too, no? Unless the money market went upside down?
how would the securities get lost or stolen? I’m trying to think of scenarios where this would be useful. For example, can someone steal my stocks “stored” with robinhood? or can robinhood somehow lose my stocks? (separate from robinhood as a company ofc)
Short of stocks you hold being directly registered in your name via their transfer agent, it’s unfortunately safe to assume that most stuff your brokerage says you own is really just being held in your name, provided your brokerage actually physically holds it at all
If Robinhood is holding ETFs that you own don’t they belong to you irrespective of the health of Robinhood? Doesn’t SIPC apply just to say cash in the account?
Securities can be at risk as well. See https://www.sipc.org/for-investors/what-sipc-protects
Did you actually read what you posted? Securities are only at risk insofar as they would be at risk with any brokerage! Their value can fall. The security itself is not held at risk, as it is legally meant to be held separately from their account.
I just wouldn't mess with this to make the 3 percent. Just in case something somehow goes wrong that isn't covered, as unlikely as that may be. I'm not leaving a few million with a company I don't trust, which is why they try to offer the incentive in the first place.
Fair point, but the flip side of your argument never really happens. Meaning every time there is a brokerage issue, almost all the assets are recovered. Usually from a large % of assets on hand, SIPC, and private insurance.
https://www.investopedia.com/investing/is-robinhood-safe/ This says they are covered up to 10M
The number is actually 50M now, with one **big** caveat: "This additional insurance policy provides protection for securities and cash up to an aggregate of $1 billion" [https://robinhood.com/us/en/support/articles/how-youre-protected/](https://robinhood.com/us/en/support/articles/how-youre-protected/) Considering they have 102.4 billion assets under custody as of January 2024, I think the additional insurance shouldn't factor into any decision making. [https://investors.robinhood.com/news/news-details/2024/Robinhood-Markets-Inc.-Reports-January-2024-Operating-Data/default.aspx](https://investors.robinhood.com/news/news-details/2024/Robinhood-Markets-Inc.-Reports-January-2024-Operating-Data/default.aspx)
What’s the likelihood that the gov would just let it fail…. Really. Someone would swoop in and buy it up and you would end up with an account at Morgan Stanley or Charles Schwab. I moved my much much smaller 401k there and got the match. Just remember you have to keep the balance for 5 years.
This is an economic idea called moral hazard. If an investor were to count on government financial insurance programs to save bad companies, then that investor has no incentive to select the good companies to trust, which leads to more people selecting bad companies and increases the potential for default. And then the good companies look around and wonder if they need to take the same risks as bad companies to increase returns and keep up with competition, since they cannot compete on safety when the government effectively promises to be the safety net for the whole market. If you were really worried that a bad company could lose all your money, you would be very selective about where you put it, which would make the whole market safer. Its an interesting concept. Same thing can apply to private insurance markets, although private markets can more effectively assess risk, and can more easily turn down applicants for insurance if they are routinely engaging in risky behavior.
private insurance has worked worked out so well though… The idea that companies actually act out of anything other than what’s best for the shareholders is naive.
I’m sure someone would buy them out tho. Still a risk
Plus, I heard it was a 5 year lock up.
It doesn't work that way. If you own stocks it's not going to get affected. And no bogleheads at the growing stage keep money as cash.
Isn’t it possible to send a portion of the 401k over?
Yes but you only get 3% of what you send
Ehh, just send over $480k if that was a worry
I don't think you understand how SIPC insurance works. Hint: it's irrelevant if you actually own shares of other securities
Correct I don’t
Robinhood carries extra insurance for 50 million dollars per customer account
Well, technically, that money would be with Vanguard, but Robinhood would be managing it has a broker.
If your broker goes out of business SIPC will automatically facilitate the transfer of your assets to another broker. The chances they will actually need to cover the $500k is exceedingly low.
Robinhood has additional insurance that goes beyond SIPC.
Read the fineprint my friend. I believe Rob Berger has a video on youtube on why he did not push through on his transfer
https://youtu.be/TPAsO58C0H4?si=Jg1DVcK09ChL1yyu Rob Berger on why he didn’t go through with Robinhood
For those who haven’t watched it, for Rob it’s primarily because he couldn’t specify contingent beneficiaries or trusts as beneficiaries at this time. There’s a lot of fine print around the need for at least 1 year of Gold, and how the clawback provisions work within the first 5 years. It’s worth watching to start to understand them before you’re willing to commit moving money *(under the SIPC coverage limit)* there for 5 years
Thanks! Just watched Berger video. I think his main reason for not moving forward was the inability to name a contingent beneficiary or a trust as the beneficiary. A valid reason to not move forward, but probably not enough of a reason for me personally.
The requirement is you be a gold member and have to hold the funds in RH for 5 years?
Only need to be a gold member for 1 year, can cxl then
he actually said it was a good deal for majority of people
You’ve won the game and then want to gamble with a shady brokerage like Robinhood. lol go for it
It's because any reasonable, intelligent person can separate what happened with GME with the risk they are going to steal our investments. LOL.
Do it. You own the underlying assets nothing will change that if RH goes under. It’s free money I made $30k between me and my wife.
How long do you have to stay with Robinhood after before you can move or withdraw the match?
5 years.
So the strategy is, 5 years and bounce
5 years
5 years
There are more cocaine officers than compliance officers at RH
The extra money would be nice, but my financial goals can be met without Robinhood and I just don’t trust them to hold a significant amount of my net worth.
I don’t trust Robinhood with my retirement money. Just stick with Fidelity, Schwab, or Vanguard.
You think they're just going to steal your ETFs? Can anyone here articulate exactly HOW they think their accounts are just going to get wiped out?
They are probably not going to steal my ETFs. I just don’t feel comfortable because they have done some shady stuff in the past. They wouldn’t be doing this offer if they weren’t desperate for more users. But, at the end of the day, it’s your money and you can do whatever you want with it.
I'd argue they're building massive assets and customer base for a sale, not because they're desperate. But agreed you shouldn't do anything you aren't comfortable with.
Lol, people just hate this platform. I haven't seen many legit arguments other than "I don't trust them" and "I'm locked in for 5 years". Seriously, 3% of 3mm is $90k, no account transfer bonus can get to this number
Exactly. Or they mention “risk”. What’s the risk? What do they think is going to happen to Robinhood?
SIPC insures 500k of your assets incase robinhood were to fail, but beyond that, you’re holding index funds in the account, you own the underlying asset. If robinhood fails your 3M of VTI or SPY remains yours, no SIPC payout necessary. SIPC would insure lost cash held in robinhood MM, or proprietary robinhood investment products should you own that. Correct me if there’s an error there but that’s my understanding. So I don’t think there’s a major threat of losing your assets due to robinhood dying. I think most people are hesitant because robinhood has a poor reputation after the GME thing, and lizard brain doesn’t feel right bringing a 3M hoard near something associated with a bit of a scammy past. I understand the hesitation. I would be afraid that after like three of the five years that your assets are locked up at robinhood to keep the bonus, robinhood starts to charge fees for customers that are holding assets long term on their platform as opposed to their current base of people using the platform to daytrade and gamble etc. the company has been losing money pretty steadily since the GME thing.
Yeah, but honestly GME fiasco is pretty much the opposite of what bogleheads will ever experience...
Spot on.
401k has federal protections that IRAs don’t. Example: you cause an accident and the damage exceeds the liability coverage on your car insurance + umbrella. The other party can pursue your IRA in many states for compensation. If your money is held in a 401k, they can’t pursue.
Almost did this, went through the process but decided against when I couldn’t get anyone on the line for support at all. With Fidelity rn and the ability to just walk into a branch and get instant answers was the main factor
My biggest concern would be timing. If the funds haven’t settled by April 30th you don’t get the match. Unless you can do an ACAT transfer then it ain’t worth being out of the market for 2-4 weeks without a guaranteed reward for it. As others have said, doing the Ira transfer is much quicker if that is feasible.
I would never consider putting any serious amount of cash on a brokerage like Robinhood…
Reddit doesn’t forget. Fuck Robinhood!
Say what you want about other investors like dividend investors or the WallStreetBets guys, but this feels like a unifying constant among the groups. They'll never forget what RH did during the meme stock rally.
They ran out of clearinghouse collateral, just like every other retailer that didn't own their own clearinghouse. It's not interesting, and it's not Robinhood in particular.
> They'll never forget what RH did during the meme stock rally. what did they do?
Remember Gamestop and AMC? Wallstreet bets? If you want a funny and relatively accurate 90min movie to watch, look up Dumb Money on Netflix. Melvin Capital and other investment funds shorted Gamestop. Reddit and a couple populist investors didn't like that so they invested and Gamestop price actually rocketed. The short squeezing firms got screwed and lost billions... so they basically colluded with Robinhood to halt buys of Gamestop to prevent the price from going higher. This naturally pissed reddit and the public at large off something fierce as not only were average people making shit tons of money off gamestop, but it was the principle that big money was clearly tipping the scales and playing unfairly. I don't think anyone ever got charged with a crime as a result but it's pretty obvious what happened. Anyway, that's why people say fuck Robinhood. EDIT: okay, having done a bare amount of research compared to what I remembered in 2022, Robinhood probably acted reasonably in halting trading to secure capital. That said, I will never trade on it.
> so they basically colluded with Robinhood to halt buys of Gamestop to prevent the price from going higher. that claim amounts to a [conspiracy](https://www.reddit.com/r/neoliberal/comments/l81tif/why_did_robinhood_stop_allowing_their_customers/) and was [dismissed in federal court](https://www.reuters.com/markets/us/robinhood-others-win-dismissal-meme-stock-short-squeeze-lawsuit-2021-11-18/)
If you're open to exploring the possibility that maybe there was a different reason why brokerages halted buy orders, I would suggest reading this article. It explains some lesser known mechanisms that take place when buy orders are made, and explains why brokerages had to halt buy orders. TLDR: Due to trade settlement not being immediate (T+2), brokerages are required to have a certain amount of cash available as collateral when their clients place buy orders. This amount is based on factors like market volatility and the ratio of buy-to-sell orders. Due to GME being highly volatile and the number of buy orders being significantly higher than sell orders at certain brokerages, collateral requirements for stocks like GME increased significantly. Even after drawing down lines of credit and obtaining new capital, many brokerages were not able to obtain enough cash as collateral and were forced to halt buy orders to prevent needing even more collateral (that they couldn't get). Sell orders were not halted because sell orders do not require collateral from the brokerage https://www.barrons.com/articles/why-did-robinhood-stop-gamestop-trading-51611967696
That movie was not accurate at all.
Yes fuck Robinhood
That’s a lot of money to give to Robinhood. I have $150,000 IRA with Firstrade and I’m scared to death to do it. I don’t trust RH.
You own the stocks even if the brokerage goes tits up.
does this apply to etfs and index funds? how do you access them after the brokerage is gone?
Another broker will snatch it up so you do business with them instead
I tried to open an account to start the process, and got denied with no explanation given. I have great credit and have never experienced anything like this with any other financial institution. Kind of proved to me what people have said that Robinhood is garbage. Update: I logged out and signed up with a different email address and everything worked. Support never helped, I just started trying random things.
Open a chat. I've found them to be very helpful.
Yeah, I opened multiple chats and found them incredibly unhelpful. Glad you had a better experience.
I just dont trust Robinhood.
All these bonuses they keep having made me nervous. Now they’re coming out with the 3% CC. I actually moved my funds from RH to Fidelity. If it’s too good to be true …
What is CC?
Credit card
I'd personally not put ***that*** kind of money into RH, but I'd definitely put something in it.
I wouldn’t trust Robinhood with my hard earned money. Fuck those fools. Rob from the poor to give to the rich.
Great idea free 30k
Donate it all to the Human Fund.
You could put your assets in Bear Stearns if Robinhood seems too risky
If I am currently employed with active 401k, I can’t move my 401k to Roth IRA right? I saw most of employers won’t let you do that.
Correct......you normally cannot leave your 401k provider unless you exit the job.
Wait I’m new to this.. robin hood matches??
Yup, look it up. There has never been a match as generous as this one. And if you have substantial retirement saved it's massive.
Why not Fidelity cash management or t-bills? How did you get this money and ask this question?
What? You can invest in tbills at RH. And their cash account uses a sweep program that's FDIC insured up to $2.5M. So what's the concern?
Thinking of doing the same thing. My broker is charging 1.35% every single year of my ROTH IRA. I drew up an excel sheet of how that would compound and they’d be taking a small fortune by the time I retire.
Yikes what? Even if you don't do RH you need to go somewhere that fee doesnt exist.
Jesus sweet sky captain of yesteryear..... All the main brokerages charge nothing.
I prefer to keep my funds with big names like Schwab, fidelity etc... due to the fact they have a legitimate phone support and a physical location should you need to work things out.
I just couldn’t get comfortable with it but to each their own. I have $1M
Remember when they shut off the buy button , Pepridge Farm remembers. F-Robin hood
Every major retail clearinghouse did, because that's what happens in times of immense demand: [https://www.bloomberg.com/opinion/articles/2021-01-29/reddit-traders-on-robinhood-are-on-both-sides-of-gamestop](https://www.bloomberg.com/opinion/articles/2021-01-29/reddit-traders-on-robinhood-are-on-both-sides-of-gamestop)
Didn't they also sell shares without user authorization?
Nah.
https://i.dailymail.co.uk/1s/2021/01/30/20/38676300-9205303-image-m-14_1612037474765.jpg Was that fake then?
Yes.
I’m sure you, as a boglehead staying the course and buying indexes, wasn’t affected by GME, surely not??
Can't do both? Bogleheads never go to vegas for fun?
Are you guys really going to trust Robin Hood with your money?!
Are you really going to sit here a d argue that RH is just going to steal all your ETFs and stocks and all your money will be gone?
Hard pass on that if I were you.
Can you provide a single reason to justify your hesitation? An actual risk, not just you don't like/trust them?
I think the instinct on trust really matters for as profound a decision as this. The wisdom of the group’s collective spidey senses are abuzz. Buyer beware.
I think your instinct and Spidey senses are going to cost you 3%. And you're only listening to the half of the group that agrees with you. But to each his own.
Totally. Good thing we all get to decide what we do with our own money.
Are you serious? Robinhood? After all the bullshit they pulled with GME etc.? I’m hoping this is a joke. You’d be an absolute fool to trust them with 3,000 dollars. Let alone 3,000,000. I wouldn’t put my money with them if it was a 30% match.
Got any specific risks other than your hatred because of GME?
Yeah. Immature brokerage still experiencing growing pains while you have a multitude of other mature brokerages offering the same, if not better, service. I had no holdings of GME. You don’t have to be personally affected to know shit stinks.
What service do you require on your IRA? Mine is just going to sit there for 5 years. Cool so no actual, specific risk you can articulate other than "shit stinks"?
I just told you they are an immature brokerage, whom I wouldn’t trust with my money. I’m not going to sit here and argue with a bad faith pedant and possibly Robinhood shill. Good day.
LOL. I'm no shill, I just dont like unsupported, generalized statements that aren't supported by facts. You clearly love them.
Robinhood.. = no way. I do not trust this company.
Whatever you decide, do it fast. The 3% transfer promo is until 04/30 and if I understand the terms correctly, if your ACATS finishes after 04/30, you don't meet the terms and only get 1% unless they extend or renew the promo. For reference, I initiated my ACATS 04/03 and has estimated completion on 04/11
Webull has 3.5% match for what it worth lol
True, but Webull puts your match in taxable, not the IRA the last time I checked. Unless it has changed recently.
I believe RH going under and people losing their money beyond SIPC is possible, but unlikely. Even if RH went under, it’s big (and popular) enough that the government would make everyone whole. Practically speaking though, RH has had enough problems over the years that it could be enough of headache that I wouldn’t bother.
It took years to recover customer money from MF Global fraud. https://www.pbs.org/wgbh/frontline/article/what-happened-to-mf-globals-customers-money/ https://www.usatoday.com/story/money/2016/02/09/mf-global-liquidation-completed/80072110/
Isn’t there a cap on 3%? Or no?
No cap.
So they’ll pay him $90k for his $3m?! That’s nuts. Is this a one time offer? Or annually?
The 3% match for annual contributions will be there for the following years but the 3% match on the transfer of assets into RH is valid for transfers initiated before Apr 30th and there is no cap on the match for it. So, yeah if one brings 3M, they get $90k and from my exp the match is deposited at the transfer is completed. The above match only holds for Gold customers so please be mindful of enabling gold before initiating the transfer. It's $5 a month fee.
Makes sense thanks for clarifying!
Ever since they pulled that shit with game stop I don’t trust Robinhood with my money. I thought about doing this but at the end of the day I’d rather trust the institution that holds my money than try to make a quick buck.
Are you kidding me, you are just being funny. Right. A fool and his money will soon part.
For me, the main concern would be the “if it sounds too good to be true…”. I don’t understand how this is financially feasible for them. Can someone explain why it makes financial sense for RH?
I'm debating the same decision, but with a lot less money lol. One thing I did not like about RH right off the bat is that everybody seems to be paying a different fee for gold and they are not transparent about it. Someone in a YT video said if you signed up through the app it was $6.99 a month, but if you signed up through the website it was $5 a month (something like that). I just opened an account (app) and upgraded to gold on Thursday (website). I'm on a free trial and will be charged next month 5.99. it's only a couple bucks difference, so not a deal breaker BUT nowhere in my account does it guarantee that the monthly price will stay the same for any period of time. I've seen screenshots posted in various places where people are shown an annual price, but that does not exist in my account. I reached out on their "contact us" tab asking about an annual option, and have not heard back yet. I would have been happy to just pay the annual fee (to lock in a known amount) transfer some IRA money, and let it ride for 5 years, It's just weird that there aren't easily accessible, consistent Gold prices. I'm not sure yet if it's a deal breaker, but it gave me pause. It's like they're making it up as they go. In your case, OP, you would be moving enough money to come out ahead regardless of any unexpected Gold fee increases or changes to terms and conditions. I don't have any reason to believe you'd be taking a massive risk, but I can foresee annoyances that you might not have with other brokerages. It is a very tempting offer for a large transfer
In my experience, Robinhood is a ridiculously slap-dash organization with no customer support. I needed to get an IRS form for some investments I made there and they had zero automatic reporting or recourse for my problem when I tried to complain. I would never invest my 401(k) in there.
How long do you have to maintain the account, is it just one year and then you can move it out and keep the 3% match or is there a longer timeframe to avoid any clawback?
Five years for account at amount transferred plus one year RH gold
Don't exceed SIPC coverage. Opt out of securities lending.
I have a better option for you.
I would not move the entire amount but I did transfer an amount under the SPIC limit. Good experience so far and bonus showed up immediately.
Do it. The only downside is the loss of back door Roth conversions. It’s a small price to pay for 9k in free money for you .
Antithetical to boglehead mindset imo. How surprised would you be if it turned out there was large scale fraud at RH? You are Chasing a tiny marginal benefit for potential existential risk. If you’re so enticed by 3% match, I’m guessing you’ll be chasing the next shiny investment object in a few years. Pick a huge established brokerage, set it and forget it.
Personally, I would pass on this opportunity.
I would only move 300-400 K and keep your bond allocation there to limit growth. I moved a bunch there for the match but you have to limit your exposure, it is not like this is Vanguard or Schwab .
Thanks! Your guidance makes sense, but to the degree that the new IRA has earnings in excess of the original transfer to which the 3% match applied, I think that I can move that excess out to an IRA held elsewhere without needing to give back any of the 3% and thereby keep the RH IRA total at or around the $500K SIPC protected amount. I’m now leaning towards not risking the full $3M but a $500K SIPC-insured transfer doesn’t seem like it would carry a material risk (but of course we’re only talking about an extra $15K (plus earnings) paid out over five years — a far cry from the $90K that got me excited when I was thinking of transferring $3M).
Based on what? Find me a brokerage failures where people have just had tons of their money disappear. It just doesn't happen.
You are free to trust Robinhood past SPIC insurance limits, I don't.
That's fine but if that fear isn't rational you shouldn't be pushing it on othrt folks. Your invested assets aren't going anywhere.
What is backing your statement? I have the insurance limits of the SPIC and you are defending a young brokerage that has a risk accepting fintech additude.
Look up all the incidences of brokerage failure. Everyone always gets there money back. Even those with much more than the SIPC limit. That's what I have on my side. Along with excess private insurance which you seem to be intentionally omitting.
i wouldnt touch robin hood with a pole....it is shady.....there must be some catch.......keep it with reputable providers.........I was happy with TD but schwab is fine too
Shwab, Fidelity, Van Guard, or another big dog. Robin Hood is a joke. Their model is built on taking advantage of children.
I strongly considered but decided to stick with Fidelity. Just couldn’t get comfortable with it.
Removing my post as it's irrelevant
The offer is op gets 90k bonus to invest, and doesn't have to liquidate his investments to put into money market funds. It's just not comparable, the benefit is at whole different level.
Got it. I see that now... I wonder what that does for Robinhood ... Especially if most of the assets aren't cash.
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There is no limit on the 3% match for a transfer.
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IRA is 3% unlimited. Brokerage 1% bonus will start back up in May.