Getting Started With Your First Investment

To invest through Robinhood, you first read the app or visit the website, create an account with your name and Social Security number, link a bank account, and then deposit money. Once your cash settles in your Robinhood account (usually one to three business days), you can search for a stock or exchange-traded fund (ETF) and place a buy order. Robinhood charges no commission on stock and ETF trades, which is why many people use it instead of traditional brokers.

The process is intentionally straightforward — Robinhood was built to remove the friction that kept people out of investing. You do not need a minimum balance to open an account, and you can buy as little as one share of any stock. If you have never owned a stock before, the platform walks you through each step with plain language and confirmation screens before your money actually moves.

Key Takeaways

  • You need a valid Social Security number, a bank account to link for deposits, and a few minutes to complete account setup before you can buy your first investment.
  • Robinhood charges zero commission on stocks and ETFs, but you still pay the bid-ask spread (the difference between what buyers offer and what sellers ask) when you trade.
  • Your cash deposit takes one to three business days to settle, and you cannot invest until that money is fully available in your account.
  • You can place a market order (buy when ready at the current price) or a limit order (buy only if the price drops to a number you set), and you can cancel either type before it fills.

Setting Up Your Account and Linking Your Bank

Start by downloading the Robinhood app from the Apple App Store or Google Play, or go to robinhood.com on a web browser. Tap or click "Sign Up" and enter your email address, create a password, and provide your full name, date of birth, and Social Security number. Robinhood uses this information to verify your identity and comply with federal regulations that explore to all brokers.

Next, you will see a screen asking you to link a bank account. Click "Link a Bank Account" and choose your bank from the list, or select "I don't see my bank" to enter your account details manually. Robinhood will ask for your online banking username and password (or will direct you to your bank's website to authorize the connection). Once linked, your bank account shows in Robinhood as a funding source.

You do not have to deposit money when ready. Many people set up their account, explore the app, and research stocks for a few days before funding it. When you are ready, tap the account icon, select "Transfers," choose "Add Money," and enter the amount you want to deposit. The money typically arrives within one to three business days, though some banks are faster. Until it settles, you will see it in your account as "pending" and cannot use it to buy investments.

Understanding Market Orders and Limit Orders

A market order buys or sells a stock when ready at whatever price the market is currently offering. If you search for Apple stock and tap "Buy," then enter the number of shares you want and confirm, Robinhood executes that trade at the next available price — usually within seconds. Market orders fill fast, but you do not control the exact price you pay. The price you see on screen may shift slightly by the time your order fills, especially if the stock is moving quickly.

A limit order lets you set a maximum price you are willing to pay (or a minimum price you are willing to accept if you are selling). If you want to buy Apple at $150 per share but it is currently trading at $155, you can place a limit order to buy at $150. Your order sits in the queue and fills only if the price drops to $150 or lower. If the stock never reaches that price, your order never fills — it stays open until you cancel it or until the market closes on the day you set it to expire.

For most new investors, market orders are simpler: you decide how many shares you want, you buy them, and you own them seconds later. Limit orders are useful if you have a specific price in mind and are willing to wait, or if you want to avoid overpaying during a sudden price spike. Both order types can be canceled before they fill, so you are not locked in once you place them.

What Robinhood Charges and What It Does Not

Robinhood charges zero commission on stock trades, ETF trades, and options trades. This is the main reason people choose Robinhood over older brokers like Fidelity or Charles Schwab, which also offer commission-free trading now but did not always. You will not see a $5 or $10 fee deducted from your account when you buy or sell.

However, you still pay the bid-ask spread, which is the difference between what buyers are offering to pay and what sellers are asking to receive. If you buy Apple stock, you might pay $155.02 per share even though the last trade was $155.00 — that $0.02 difference is the spread, and it goes to market makers, not to Robinhood. The spread is usually small for popular stocks but can be wider for less-traded stocks or ETFs.

Robinhood also offers a paid subscription called Robinhood Gold, which gives you margin (the ability to borrow money to invest) and other features. You do not need Gold to start investing — it is optional. Some accounts may also incur fees if you maintain a negative balance or use certain advanced features, but a basic account with deposits and stock purchases has no hidden costs.

How Dividends and Stock Splits Work on Robinhood

If you own a stock that pays a dividend, Robinhood deposits the cash into your account automatically on the payment date. You do not have to do anything — the dividend just appears. You can then use that cash to buy more stocks, or leave it sitting in your account earning a small amount of interest (Robinhood offers cash management features that pay interest on uninvested cash, though the rate varies).

When a company splits its stock — for example, a 2-for-1 split that doubles your share count and halves the price — Robinhood handles the adjustment automatically. If you own 100 shares before the split, you will own 200 shares after it, and the price per share will be half what it was. You do not need to do anything, and you do not pay a fee. The split is purely mechanical and does not change the total value of your position.

Selling Your Investments and Withdrawing Cash

To sell a stock or ETF you own, open the app, find the investment in your portfolio, and tap it. You will see a "Sell" button. Tap it, enter the number of shares you want to sell, choose market or limit order, and confirm. The sale executes the same way a purchase does — when ready for a market order, or when your price target is hit for a limit order. Once the sale fills, the cash lands back in your Robinhood account.

To move that cash out of Robinhood and back to your bank account, tap your account icon, select "Transfers," choose "Withdraw," and enter the amount. Robinhood will ask which bank account you want the money sent to (you can link multiple accounts). The withdrawal typically takes one to three business days, depending on your bank. There is no fee to withdraw.

Keep in mind that if you sell a stock for more than you paid for it, you will owe capital gains tax on the profit. Robinhood does not withhold this tax automatically — you are responsible for reporting it when you file your tax return. If you held the stock for less than a year, it is taxed as short-term capital gains (at your ordinary income tax rate). If you held it for more than a year, it is taxed as long-term capital gains (usually at a lower rate).

Common Mistakes to Avoid When Starting Out

The biggest mistake new investors make is treating Robinhood like a trading game rather than a long-term wealth-building tool. Because trades are free and when ready, it is tempting to buy and sell constantly, chasing small price movements. This usually costs you money through bid-ask spreads and taxes, and it distracts you from the real driver of wealth: buying good investments and holding them for years.

Another common mistake is investing money you might need soon. If you deposit your emergency fund into Robinhood and the market drops 20% next month, you will be forced to sell at a loss to pay a bill. Robinhood is best for money you can afford to leave invested for at least five years, ideally longer. Keep three to six months of expenses in a savings account first, then invest the rest.

New investors also sometimes buy individual stocks without understanding what they own. You see a company name you recognize, the stock price looks cheap, and you buy it without reading anything about the business. A safer approach for beginners is to start with a broad ETF like VOO (which tracks the S&P 500) or VTI (which tracks the entire U.S. stock market). These give you when ready diversification and require far less research.

Frequently Asked Questions

Can I invest in stocks from other countries on Robinhood?

Robinhood primarily offers U.S.-listed stocks and ETFs. You can buy stocks of foreign companies if they are listed on a U.S. exchange (like Toyota or Samsung), but you cannot directly buy stocks listed only on foreign exchanges. For international investing, most people use broad international ETFs available on Robinhood, such as VXUS or VEA.

What happens to my investments if Robinhood goes out of business?

Your stocks and ETFs are held in your name and are protected by the Securities Investor Protection Corporation (SIPC), which covers up to $500,000 per account if a broker fails. This means your investments are yours regardless of what happens to Robinhood. Cash in your account is also insured up to $250,000 per bank partner through FDIC insurance.

Can I set up automatic investments on Robinhood?

Robinhood does not offer automatic recurring investments the way some brokers do. You have to manually deposit money and place buy orders. However, you can set up automatic transfers from your bank to Robinhood, then manually buy investments when the cash arrives. Many investors do this monthly to build a habit of regular investing.

What is the difference between a stock and an ETF?

A stock is ownership in a single company. An ETF is a fund that holds many stocks (or bonds, or other investments) bundled together. When you buy one share of an ETF, you own a tiny piece of all the companies inside it. ETFs are less risky than individual stocks because your money is spread across many companies instead of betting on one.

Do I have to pay taxes on my investments while I hold them?

No. You only owe taxes when you sell an investment for a profit, or when you receive a dividend. straightforward owning a stock that goes up in value does not trigger a tax bill. You pay when you realize the gain by selling, or when the company pays you a dividend. This is why long-term holding is tax-efficient — you defer taxes for years.