About a year ago, I wrote about why I made a ridiculous investment.
The investment was so bad that I had to quote Benzinga:
“Greece ETF Needs A Shot Of Confidence… There are problems aplenty for Greek banks, too, and that is problematic for GREK because the ETF allocates nearly 39 percent of its weight to bank stocks… The ratings agency’s standalone viability rating on Greek banks is ‘F.’… “
I’m investing my kids’ money, ages 2 and 3, who were too young to know to complain to their dad. (A year later, they are still too young to know to complain.)
Free Stock Trading Changes Everything
The idea behind the article was that if a stock broker gives you free trades, you can (and probably should) do some silly things. In this case, I had bought as many shares of Vanguard Total Stock Index ETF (NYSE: VTI) as I could, but I had ~$85 left of uninvested money. It wasn’t enough to buy another share.
With free trades, there is little reason to hold cash. Greece had been doing pretty bad for a number of years and I figured they’d probably see brighter economic days sometimes in the next 70 years. It’s also a somewhat diversified investment as it wasn’t dependent on a single company.
I pulled the trigger and bought 12 shares at around $7. Today GREK trades at $10.68. I turned their $85 into more than $125. I am Super-Dad!!! (Yes, I know it’s only $40.)
Overall, I’ve made them nearly 20% more money in year by investing. The VTI threw off some dividends and again, because there was no cost to invest, I used the $28 to buy a 2 shares of Twitter. Yes, literally 2 shares. Those shares are worth $40.
The only catch is that I have to remember not to sell and realize gains. This is the only non-retirement account I have so it is tempting to think that capital gains don’t exist.
So What is this Brokerage with Free Trades?
I guess I gave that away in the title, right? The brokerage is Robinhood. And they are sweetening the pot with some free stock when you sign-up. In order to get the bonus you need to:
- Sign up for a new account through this link
- Verify your email address and install the phone app (it works mostly through your phone)
- Link your bank account to fund your account
If all goes well (and it should), you can then share your referral link with friends to get more shares! And for people who don’t realize it, I’m sharing my referral link here, so my kids will get more shares too. (Isn’t it great that we’ll all win?!?!)
What share will you get? Well that’s a mystery. They say in my app that there’s a 1 in 200 chance of getting Facebook, Apple, or Microsoft. There’s a 1 in 250 of getting Ford, Sprint, or GoPro. So, strangely you have better odds at getting the better companies. They simply say that you’ll get one share of stock. Maybe every month, I should update this point with the shares of stock I’ve gotten from people who sign up? Then we’ll have an idea of what’s out there.
I realize that sounds a little pyramid scheme-y, but Robinhood is free. It costs nothing to open an account and the trades are free. Maybe you are wondering how Robinhood makes money with all this free stuff? According to their website they are hoping you sign up for a Robinhood Gold account. I decided not to do that as it isn’t a match for the purpose of my kids’ money. They also make money by investing the uninvested cash in the accounts. Sorry Robinhood, I think my GREK trick foiled you by leaving you with very little uninvested cash in my account.
What I like best about Robinhood is that it is perfect for getting started with investing. My kids didn’t have a large amount of money to get started with, but it’s growing a lot more than it would in a bank account. (Keeping my finger’s crossed.)
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