Robinhood has launched a feature that will generate investing recommendations for newbie investors.
The trading app said in a blog post Tuesday that it’s introducing a feature called First Trade Recommendations to “help new investors begin their financial journey.”
New Robinhood users who have yet to place a trade can fill out a questionnaire on their investing goals. Based on their answers, the app will recommend a “small, diversified portfolio of four exchange traded funds” that will provide exposure to domestic and international stocks and the US bond market.
The novice investors can then learn more about each ETF — like the number of stocks, annual returns, and expense ratio — before investing as little as $20, Robinhood said.
“This allows customers to learn by doing,” Robinhood said in the post. “They can determine how much (or how little) they’re comfortable investing and put their knowledge to practice.”
For those who need even more help, the commission-free trading app has added a feature dubbed “Tours” that will run through essential investing terminology and symbols, like tickers and price charts.
“Participation is power,” the app said. “And we want to help more people kick off the new year feeling empowered to start investing.”
Robinhood has been a popular trading platform for the wave of retail investors that have entered the market for the first time during the pandemic, though it has also had its share of negative publicity. The company was in in the spotlight early last year for halting trading of meme stocks like GameStop and other stocks as retail traders tried to drive a short squeeze. The move sparked backlash from users, a congressional hearing, and controversy over the payment for order flow business model, in which market makers execute trades for retail investors and collect on the difference between the bid and ask price.
Despite the negative headlines early in the year, the app went public in July 2021 at a $32 billion valuation. The stock has since sunk about 22%, and was worth $17.40 as of the Tuesday close.