(Update 8/18/24: Reminder that the $2,000 limit is ending today. Limit is back down to $1,000.)
(Update 5/15/24: Seems that some people are seeing a higher $2,000 limit now in their Robinhood account.)
Yesterday I learned a cool tip from the good folks on Bogleheads forum:
Robinhood Gold costs $6.99 per month or $75 annually. Others pay $5/month or $50/year. One of the benefits of Robinhood Gold is that your first $1,000 in margin loan is completely free. (After that the cost is 8% annually.) See a full list of Robinhood Gold benefits here.
Robinhood Gold members don’t want to invest on margin can still pull out that free $1,000 and invest it somewhere safe to earn some interest.
In order to be able to pull out the $1,000, you’ll need a collateral. For example, if you have $2,000 in regular investments in your Robinhood account you should then be able to pull out the $1,000 margin loan. Also note, in order to use the full $1000 of free margin you can’t have a cash balance. For example, if you have $2000 invested and $1000 in free margin, and then you deposit $100, your margin usage will go down to $900.
To be clear, margin investing is not something I personally do, nor recommend for most people. Taking this free $1,000 from Robinhood and investing it in a risk-free fund like SGOV is an easy way to offset some of the $75 annual cost for Robinhood Gold.
Robinhood Gold is becoming increasingly interesting to a lot of readers in order to gain access to their 3% IRA match bonus offer and their upcoming 3% credit card.