I have subscribed to email newsletter from Capital Minded.
In the latest newsletter, below information was presented regarding Robinhood.
Robinhood is totally fine for fun money, but it's not a mature enough platform for the kind of investing you'd stake your future on. Here's why:
- No reliable customer service if something goes wrong.
- There's no way to name beneficiaries. If the TaskRabbit worker you hired to clean your dishes (do people do that?) murders you with a serving fork...your money goes into probate.
- Apex, their clearing house, has a reputation for struggling with the basics of accounting. Tax time or doing an in-kind transfer without a capital gains hit could be fun (see #1).
- You can't do real Tax Loss Harvesting, they only offer FIFO accounting.
- No interest paid on cash holdings. Other brokers offer up to 2%.
- I've heard trade execution inside bid/ask spreads can be an issue (can't confirm, but would negate the value of free trades)
- There's a strong case they'll get bought or pivot instead of becoming the boring, safe broker you'll want to trust with your money decades from now.
I am really concerned about #7. What will happen in case Robinhood gets acquired or they pivot to something else? Are there examples from the past where this has happened? And does any one know if these points apply to M1Finance as well.