Personal Finance & Money Asked on March 26, 2021
I have an account with a "traditional" stock broker but recently discovered Robinhood which is quite convenient to use and is commission-free. Is it considered safe to keep all my investment money with Robinhood or should I keep my money with multiple brokers to be safe? My main concerns are:
Are the fears justified? Note that this question applies to any stock broker, not just Robinhood.
Correct answer by Manziel on March 26, 2021
Other than the convenience of a phone app, it eludes me why anyone with a decent amount of assets would use Robinhood. I provided the reasons for that belief in response to the question: Why is Robinhood a second rate stock broker?. Robinhood is often in the news with bad press (outages, SEC settlements, payment for order flow issues, the "Robinhood Glitch", etc.). Google for details.
Note that SIPC insurance covers the custodial function of your broker. If your account becomes inaccessible due to hacking, broker bankruptcy, etc., you are not protected against if market prices move against you.
If you're a buy and hold investor, having only one account might be acceptable. Personally, I think that it's a good idea to have at least two funded accounts because if one broker's platform is down, you can trade at the other if you need to defend an existing position.
Answered by Bob Baerker on March 26, 2021
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