- Commission-free stock trading app Robinhood announced it is launching several new features, including fractional shares, dividend reinvestment, recurring investments, and cash management.
Robinhood — the commission-free stock trading app founded by Vlad Tenev and Baiju Prafulkumar Bhatt — has made some huge announcements this week. Robinhood company is officially relaunching its bank account feature. Plus the company is launching a Fractional Shares feature, which will be available next week. And the company is also launching a Dividend Reinvestment Plan (DRIP) and Recurring Investments early next year.
Cash Management
In terms of the bank account, the money that is not invested in stocks sitting in Robinhood accounts will gain interest at 1.8% per year. Robinhood attempted to launch the banking feature last year, but it hit a few regulatory roadblocks along the way.
But now the Robinhood Cash Management feature will have Federal Deposit Insurance Corp. coverage on deposits. Robinhood is also offering a debit card, which can be used anywhere Mastercard is accepted. Or you can withdraw cash from 75,000+ free ATMs. Or you can pay your bills and use Apple Pay, Samsung Pay, or Google Pay with the Robinhood Cash Management feature.
Fractional Shares
It can be expensive to buy some of the most popular tech stocks. For example, Amazon costs over $1,700 per share and Microsoft is trading at more than $152 per share. But soon you will be able to buy shares in fractions through Robinhood.
“Some stocks and ETFs cost hundreds or thousands of dollars for a single share. This means that many people may not be able to invest in their favorite companies or funds. With Fractional Shares, you can invest in stocks including Amazon, Apple, Disney, Berkshire Hathaway, and thousands of others with as little as $1,” said the company in an announcement.
Robinhood is not the only stock trading app that offers access to fractional shares. Square Cash offers it and so does a commission free stock trading app called Public.
Other New Features Coming Soon
Robinhood is also planning to launch two highly requested features early next year. Robinhood will be supporting Dividend Reinvestment Plan (DRIP) and Recurring Investments. This means you can automatically reinvest cash dividends back into your stocks and ETFs. And you can also schedule recurring investments.
“We believe that if you want to invest, it shouldn’t matter how much money you have. With fractional shares, we’re opening up a whole universe of stocks and funds, including Amazon, Apple, Disney, Berkshire Hathaway, and thousands of others,” said Robinhood product manager Abhishek Fatehpuria in an interview with TechCrunch.
