Robinhood 1% on Brokerage Sweep

[BackToSchoolDad]

Yesterday I got an email from Robinhood that they're going to offer 1% on brokerage settlement accounts, FDIC insured. I went ahead and signed up and the process was super easy. They handle the sweep so all you have to do is transfer your money into your regular sweep account. This isn't going to replace my savings account, but I may shift some funds over until Ally catches up.

I know the Bogleheads aren't fond of Robinhood in general, I only use the app for play money. That said, the app itself is great and intuitive to use, I believe it's fine for those who can avoid the allure of day trading and margin.

[rascott]

I wouldn't trust RH to do anything involving my money. Not worth 0.4% interest over Ally.

[PersonalFinanceJam]

If you already have an established brokerage account someplace like Vanguard, Fidelity or Schwab I don’t see how this is remotely interesting. For funds not needed in the next few months you can buy a 3 month t-bill yielding almost 1% or a 6 month bill yielding around 1.3%. My guess is at the current rate of increases the notable high yield savings accounts and money markets will be at or above 1% in the next few months.

I think RH is a fine brokerage for some things if you can tune out their noise. Their marketing/statements about them being the only ones to democratize investing turn me off however.

[av111]

OP

Thanks for posting. I had money at RH from the crypto gambles and it was an easy sign up to get 1% fdic insured. Not sure if I will go to the 250k limit though

[GreendaleCC]

the crypto gambles

[richard.h.gao]

The folks in the Personal Finance forum would appreciate this more.

[kevin99]

Yesterday I got an email from Robinhood that they're going to offer 1% on brokerage settlement accounts, FDIC insured. I went ahead and signed up and the process was super easy. They handle the sweep so all you have to do is transfer your money into your regular sweep account. This isn't going to replace my savings account, but I may shift some funds over until Ally catches up.

I know the Bogleheads aren't fond of Robinhood in general, I only use the app for play money. That said, the app itself is great and intuitive to use, I believe it's fine for those who can avoid the allure of day trading and margin.

Cool, thanks for posting. It's easy enough to transfer and since it's FDIC insured there is no downside. No harm in earning a few hundred dollars more on an emergency fund for no extra work.

[richard.h.gao]

Robinhood up +25% after hours.

[secondopinion]

Yesterday I got an email from Robinhood that they're going to offer 1% on brokerage settlement accounts, FDIC insured. I went ahead and signed up and the process was super easy. They handle the sweep so all you have to do is transfer your money into your regular sweep account. This isn't going to replace my savings account, but I may shift some funds over until Ally catches up.

I know the Bogleheads aren't fond of Robinhood in general, I only use the app for play money. That said, the app itself is great and intuitive to use, I believe it's fine for those who can avoid the allure of day trading and margin.

Cool, thanks for posting. It's easy enough to transfer and since it's FDIC insured there is no downside. No harm in earning a few hundred dollars more on an emergency fund for no extra work.

I earn more than this with my emergency fund because I use mostly short-term fixed-income rather than cash. But 1% is a welcome change for cash; I wonder if this will spur some of the other HYSAs to up their rates. Of course, the Fed rates should help as well, I hope.

[stay_the_course]

That’s nice but I wouldn’t touch RH with a ten foot pole after a horrific experience

[secondopinion]

That’s nice but I wouldn’t touch RH with a ten foot pole after a horrific experience

Like what exactly? Please share some details.

[reader79]

I get 1% on my cash at M1 Finance in their spend account. I am an M1 plus member, which gives me access to the spend account. The first year was free. I loved the system, their focus on long-term investing, and customer service, so I'm happy to pay for the M1 plus membership now ($125/yr). The interest arbitrage from the cash there pays for it easily compared with what I was getting elsewhere.

[stoptothink]

We use Robinhood for our "play investing" and usually have $1k or so in cash waiting for recurring investment, so might as well pick up a few pennies (literally). I signed up, but I'm not really sure if it is enabled. Says there should be a "cash sweep program" section in your account tab, but I'm not seeing it.

[JackoC]

If you already have an established brokerage account someplace like Vanguard, Fidelity or Schwab I don’t see how this is remotely interesting. For funds not needed in the next few months you can buy a 3 month t-bill yielding almost 1% or a 6 month bill yielding around 1.3%. My guess is at the current rate of increases the notable high yield savings accounts and money markets will be at or above 1% in the next few months.

I think RH is a fine brokerage for some things if you can tune out their noise. Their marketing/statements about them being the only ones to democratize investing turn me off however.

True, the key point isn't how you like RH, it's that 1% is not good now compared to T-bills for money you can even slightly* tie up for even 6 months. That's not always true. Often in a stable or falling rate environment competitive forces result in the best FDIC insured demand accounts handily beating 6 mo or even 1yr T-bills, but not now true of a 1% rate IMO unless you put an extraordinary emphasis on being to withdraw at any time at guaranteed absolute 0 gain/loss and no minor tax event to record on your return. We've shifted much of our cash reserve to 6mo and year bills recently and 1% deals aren't worth opening new accounts now IMO, especially if it's anything more complicated than just a bank account.

*the bill is probably the most liquid publicly traded security in existence, and the possible mark to mark loss on sale prior to 6 months very limited.

[BackToSchoolDad]

We use Robinhood for our "play investing" and usually have $1k or so in cash waiting for recurring investment, so might as well pick up a few pennies (literally). I signed up, but I'm not really sure if it is enabled. Says there should be a "cash sweep program" section in your account tab, but I'm not seeing it.

If you go to the settings and look in investing it should tell you if it's enabled.