Is Your Money Safe? What Happens if Robinhood Shuts Down? (2024)

FAQs

Will I lose my money if Robinhood shuts down? ›

Robinhood is a member of the Securities Investor Protection Corp. (SIPC). This means that any loss of an investor's securities (e.g., stocks and bonds) and cash held by Robinhood is protected up to $500,000 in the event the firm fails or goes out of business. This includes up to $250,000 protection for cash holdings.

Your securities and cash are protected by SIPC

Robinhood Financial LLC and Robinhood Securities, LLC are both members of SIPC, which protects securities for customers of its members up to $500,000 (including $250,000 for claims for cash) for each investing account, including IRAs.

It has a moderate odds of going through some financial hardship in the next 2 years. Robinhood Markets' Probability of distress is determined by interpolating and adjusting Robinhood Altman Z Score to account for off-balance-sheet items and missing or unfiled public information.

As you may recall, your money in Robinhood is protected by the Securities Investor Protection Corporation (SIPC). The SIPC protects up to $250,000 for cash claims and $500,000 for securities–so 99% of investors have NOTHING TO WORRY ABOUT.

Though delisting does not affect your ownership, shares may not hold any value post-delisting. Thus, if any of the stocks that you own get delisted, it is better to sell your shares. You can either exit the market or sell it to the company when it announces buyback.

Your money might be unavailable for a few reasons, including: One of your pending transfers was reversed because of an issue with your bank account. The money from that transfer won't be available in your spending or investing account. One of your pending transfers failed due to a one-time system error.

Cash in your Robinhood spending account is eligible for FDIC insurance coverage of up to a total maximum of $250,000.

We encourage turning on 2FA to add an additional layer of security to your Robinhood account. 2FA helps protect your Robinhood account by requiring 2 sources of verification to sign in to your Robinhood account: something you know (your password) and something you have (a one-time code or device approval request).

Robinhood's range of offerings is extremely limited in that it only offers stocks, ETFs, options, and cryptocurrency trading. Robinhood doesn't support mutual funds or fixed-income products, and you can't trade commodities, forex, or futures.

Robinhood has lost over 1 million users from last year and revenue from equities trading was down 73%.

Is Robinhood good in 2024? ›

It's been a fantastic start to 2024 for Robinhood Markets (HOOD 12.23%). As of this writing, shares are up 46% this year. This gain was boosted by Q4 2023 financial results that were certainly well-received by the market. Investor enthusiasm seems to be on the way up with this booming fintech stock.

Robinhood Financial has been ordered to pay nearly $70 million to resolve “systemic supervisory failures” that resulted in “significant harm” to millions of customers after the brokerage misled them, exposed them to risky trading tools and failed to supervise its technology, a failing that led to trading outages, an ...

Robinhood has a good track record of protecting users' Social Security numbers, though, so providing yours is as safe as giving it to most reputable financial apps. Unfortunately, U.S. FinCEN requires you to provide your Social Security number to your stock brokerage for identity-verification purposes.

Fidelity's fee structure is somewhat different, as this platform offers significantly more products and services than Robinhood. Fidelity doesn't charge trading fees or commissions on stocks and ETFs. However, unlike Robinhood, it does charge $0.65 per contract to trade most options.

The best Robinhood alternatives are Webull, TradeStation and Coinbase. Robinhood faced scrutiny from its users in early 2021 relating to the GameStop fiasco (that started on Benzinga Live). This sent many looking for an alternative.

Because the security no longer trades on the same exchanges, a national best bid and offer (NBBO) no longer exists. Typically, you can't open new positions in the security but you may be able to close your position.

You can lose more money than you deposit. You'll be responsible for any deficit if falling prices reduce the value of your securities below the margin maintenance requirement, and you may have to deposit additional funds to your investing account on short notice to cover market losses.

You may have negative buying power if your portfolio value drops below your initial margin requirement. While having negative buying power doesn't necessarily mean that you're in a margin call, we cancel these orders because they would put you at a much higher risk of a margin call.