*This post may contain affiliate links. As an Amazon Associate we earn from qualifying purchases.
It seems like Robinhood is always under the spotlight, whether it’s for good or bad reasons. Perhaps one of the most common concerns users have is if they own the stocks and shares they buy through the company.
After all, you’re buying them through a brokerage firm but does that mean the shares aren’t real?
Robinhood stocks and shares are real. In fact, they’re just as real as the stocks and shares purchased through any other brokerage firm. You actually own the shares purchased on Robinhood and you can even transfer them to another brokerage if you prefer (although there is a fee to do so).
That being said, you technically don’t own the crypto that you have purchased on Robinhood, so you can’t switch it to another firm. You would have to sell your crypto on Robinhood, withdraw the money, deposit it into another company and then buy that crypto again if you wanted to move your crypto from Robinhood.
In this article, I will go over whether or not Robinhood’s stocks and shares are real, if you actually own the shares you buy from the company, and what might happen if a stock you potentially own is no longer supported by the firm.
To see the most popular books about stock trading just click here.
Are the Shares on Robinhood Real?
The shares on Robinhood are real because they buy the stocks for you from the second your buy order is filled. They transfer the shares to your account, putting you in charge of them right away.
The same process works with index funds, option orders, put orders, and anything else you do through their traditional stock exchange.
This is what you should know about Robinhood’s shares:
- As Trading Strategy Guides explains, you have to transfer the money into your account before purchasing shares. Robinhood often recommends adding 10% more than you need in case the price spikes before your order goes through (or you can place a limit order instead). While it’s a rare occurrence, it’s worth adding to prevent buying fewer shares than you wanted to.
- Choose how many shares you want to buy, then allow Robinhood to place the order and transfer the shares into your account. Once the order is completed, you’re in 100% ownership of them until you sell them. You can switch them to another firm, sell them, hold them, or buy more shares.
- Robinhood doesn’t make money from regular trades, which is why people are confused about whether or not they own the shares. The company makes money from transfer fees, international certificate trades, and Robinhood’s Gold membership. Nevertheless, they never take control of their clients’ shares.
As you can see, you own your shares on Robinhood; And yes, they’re 100% as real as it gets. Robinhood is a user-friendly firm, but there are no gimmicks or hidden text that strips ownership of your stocks and shares.
That being said, there’s a part of Robinhood that doesn’t let you own what you buy and sell. As mentioned earlier that is only with crypto.
Robinhood has said that they will be adding a crypto wallet soon which should make it where you own the actual crypto on Robinhood as well but that hasn’t happened yet.
Do You Actually Own Stocks On Robinhood?
You actually own the stocks on Robinhood, the company is simply a middleman that places orders in your name and helps you hold all of your stock market activities in one space.
Robinhood charges for transfers between brokerage firms, but that’s an expected fee rather than them releasing ownership (as some have worried).
What Happens if An Owned Stock Isn’t Available On Robinhood?
If an owned stock isn’t available on Robinhood anymore, you can still sell the stock whenever you want to. The company will provide the same analysis until you decide to sell the shares.
However, you can’t buy any more of the stock through Robinhood, whether or not you currently own some of the shares.
Here are your three options if you own an unavailable stock on Robinhood:
- You can sell the stock right away since you technically can’t add more shares. Robinhood often takes stocks off of their listings because they dip too low or aren’t available in the country anymore. Another example is the cannabis industry; Robinhood doesn’t allow American cannabis companies, but they offer them from other countries.
- You can leave the stock and let it grow until Robinhood potentially brings it back to their listings. While this route is unlikely, you can always let your stocks stay in the same place indefinitely. As we mentioned throughout the post, you own the shares, so they can’t force you to sell them if you don’t want to.
- You can transfer your shares to another brokerage firm that offers the stock listing. Robinhood often charges up to $75 as a transfer fee to switch your shares to another company. While it might seem like a lot, it might be worth it if you want to buy more shares and stay invested in the stock ticker.
Just because Robinhood cancels a listing doesn’t mean you don’t own the shares anymore. You’re in charge of what happens to your stocks from the moment they’re transferred into your account after buying them.
Feel free to transfer, sell, or hold them as long as you want to.
Do You Actually Own Crypto On Robinhood?
While you own shares of the stocks that you buy, crypto on Robinhood is different.
The Making of a Millionaire explains that you don’t truly own the crypto purchased on Robinhood. You buy the right to buy and sell the ‘coins,’ but that doesn’t mean you own the actual currency.
Unfortunately, this problem has led many users to leave Robinhood’s crypto platform for other companies with full ownership.
So, what limitations are there if the crypto coins aren’t real?
For starters, you can’t transfer your crypto to another account. It’s locked on Robinhood until you sell it. They’re adding a new wallet service to let you trade crypto to other people within the platform, but that doesn’t help people who want to send their crypto to another brokerage firm.
Another issue with the fact that crypto isn’t technically real on Robinhood is that thousands of users feel uncomfortable purchasing something they don’t really own. After all, it feels more like renting a cryptocurrency rather than buying it;
Yet the buttons specifically say ‘Buy,’ tricking people into thinking they’re going to own the cryptocurrency.
Knowing that you own all of the stocks you’ve purchased from a firm is crucial for peace of mind and planning for the future. Robinhood makes it easy for beginners to invest without worrying if the company can somehow seize their shares.
They can’t make financial decisions for you or take the shares away, so you’re good to go!