Robinhood is known for its meme-stock and crypto traders. Its CEO says users are embracing passive investing too.
Passive investing in broad index funds has been in vogue for years and heralded by the likes of Warren Buffett as a way of avoiding the costs and risks of active trading, like transaction fees and picking the wrong stock.
Robinhood became synonymous with speculative day traders during the COVID-19 pandemic, pioneering the commission-free stock-trading model while drawing fire for gamifying investing with digital confetti and other visual cues.
The fintech company "kind of turned back the clock" on the shift toward simply owning the index, its CEO, Vlad Tenev, said. But traders on its platform have warmed to passive investing, he said on an episode of Bloomberg's "Odd Lots" podcast released this week.
"A lot of people trade more actively at first and then eventually end up doing more passive investing — mostly because they don't want to put in the time, they have other things to do, so they prefer all of their investments to be hands-off," he said.
'Motorheads' and minivan buyers
While some traders on the platform are active traders with the latest tech, others are casual retirement savers, Tenev added.
He likened the first group to "motorheads" who care about performance, high speeds, and harnessing the latest tech. "These are the folks that are strapped into their battle stations, and they have nine screens," he joked, adding that some are "incredibly sophisticated and wealthy, and they even have Bloomberg terminals."
The other group is "the mass market" and consists of "folks that buy minivans," he said. "They want a relatively hands-free and low-friction way of investing and saving for the long term, and we have products that serve both of those," he added.
Tenev pointed to the growth of Robinhood users using products such as retirement accounts. Robinhood's assets under custody in traditional Individual Retirement Accounts (IRAs) and Roth IRAs soared by about 600% last year to over $13 billion, according to its latest full-year earnings.
On a February earnings call, Tenev said people were now "comfortable moving in hundreds of thousands of dollars into Robinhood."
Robinhood's net revenue grew by 58% last year to nearly $3 billion, helping it swing from a pre-tax loss of about $500 million in 2023 to a nearly $1.1 billion profit in 2024. The improving financials have fueled a roughly four-fold rise in Robinhood's stock price over the past 12 months, lifting its market value to north of $80 billion.
Bullish retail investors and new products have also helped drive the rise. Robinhood's stock spiked earlier this week after it announced it was rolling out tokenized investing in Europe.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
43 minutes ago
- Yahoo
1 Warren Buffett stock I'm staying well away from
Investors always pay close attention to which stocks Warren Buffett's Berkshire Hathaway is buying – whether or not it's the CEO himself making the decisions. And one stands out to me. Constellation Brands (NYSE:STZ) looks like a classic example of being greedy when others are fearful. But despite the stock being down 31% in the last year, I'm staying away from this one. it's one of the largest US alcohol producers and marketers. And the industry as a whole looks as though it's in a transition phase at the moment. One of the biggest developments is the well-documented shift towards more premium products. This has been happening across beer, wine, and spirits. Constellation Brands isn't oblivious to the ongoing changes. The company has been looking to position its portfolio to align with this trend by divesting some of its lower-priced lines. This looks like a good strategy to me. But there's another ongoing trend that looks more problematic, which involves beer and wine losing market share to spirits. That's a problem for a firm where beer accounts for 85% of overall revenues. Despite growth in some of its premium divisions, the category as a whole being in decline is a big concern. The Berkshire Hathaway investment managers might be seeing something, but I don't know what that is. In the UK, Diageo (LSE:DGE) is also going to contend with challenges to the alcohol industry in general. These include the rise of GLP-1 drugs, which could well weigh on overall demand. I think, however, the FTSE 100 firm has a more attractive portfolio for dealing with these risks. Its sales predominantly come from spirits, with smaller contributions from beer and wine. The strength of Diageo's spirits portfolio is well-documented. But even in its relatively minor wine division, the company is firmly positioned towards the luxury end of the market. Through a joint venture with Moët Hennessy Louis Vuitton, Diageo has access to some of the top champagne names. These include Dom Pérignon, Moët & Chandon, and Veuve Clicquot. Its beer division primarily consists of Guinness, which some analysts have speculated the firm might be looking to sell. But I don't think this would be a particularly welcome development. Guinness sales have been strong recently, underscoring the shift towards premium lines across categories. So I see the division as another reason to be optimistic about Diageo's portfolio. A lot of recent attention has been focused on UK shares trading at lower multiples than their US counterparts. But that's not so obviously the case with Constellation Brands and Diageo. Despite a lower dividend yield and a higher price-to-earnings (P/E) ratio, Constellation Brands trades at a lower free cash flow multiple than its FTSE 100 counterpart. This means that — in one important respect — the stock is cheaper. On balance, however, I think Diageo is in a stronger position to deal with the challenges the alcohol industry is facing. That's why it's the stock I've been buying for my portfolio. The post 1 Warren Buffett stock I'm staying well away from appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool Stephen Wright has positions in Berkshire Hathaway and Diageo Plc. The Motley Fool UK has recommended Constellation Brands and Diageo Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025 Sign in to access your portfolio
Bloomberg
2 hours ago
- Bloomberg
Live Q&A: How Xiaomi Succeeded in EVs Where Apple Failed
Linda Lew Xiaomi has emerged as the only major tech company to successfully break into the EV market — achieving in three years what Apple couldn't in over a decade. Lei Jun's confident jab at Apple during the Beijing SUV launch — paired with nearly 300,000 orders in under an hour — has sparked a global conversation. With its affordable pricing, slick Porsche-like designs, and seamless smartphone integration, Xiaomi's cars are seeking to redefine the smart vehicle landscape. Bloomberg's Annabelle Droulers, Linda Lew, Katrina Nicholas, and Vlad Savov unpack the rapid rise of Xiaomi's EV ambitions, its competitive edge in China's hyper-charged auto market, and what this means for global players like Tesla. Join the Live Q&A on July 7, 2025 at 11 a.m. HKT / 8:30 a.m. IST / 11 p.m. ET (July 6, 2025) Bloomberg digital subscribers and Terminal clients have the exclusive opportunity to ask our team live questions. This conversation will be recorded and be made available to listen and share.
Yahoo
3 hours ago
- Yahoo
9 myths about home equity: What homeowners often get wrong
Home equity sounds like a pretty straightforward concept: it's the portion of your home you truly own, free and clear of debt. However, when it comes to understanding concepts like how home equity grows, the differences between home equity products, or how much equity you can borrow against – people can get a lot of things wrong. As a Certified HELOC Specialist, I often field many questions from confused homeowners on everything about home equity, including what it is, how to tap into your home's value, how that may impact your primary mortgage and more. A quick scroll through social media or online forums reveals a lot of misinformation out there. To help cut through the noise, I'm using this Bankrate column to dispel nine myths and misconceptions about home equity and home equity borrowing – revealing the truth that every homeowner needs to know. Just because the value of your home is $500,000 doesn't mean you have $500,000 in equity. Home equity is based on your home's worth, but it's not the same thing. To figure out your home equity, you have to subtract your mortgage balance from the appraised value of your home. So, if your home is valued at $500,000, but you still owe $350,000, your equity stake is $150,000. Understanding this distinction is important, especially if you're considering borrowing against your equity or selling your home. 2. Myth: Home equity always grows over time Since the COVID pandemic, home prices and homeowner equity levels have soared to record highs. Some people assume that both will keep climbing — but as anyone who owned a home in 2008 can tell you, that's not always the case. Residential real estate values declined drastically during the Great Recession. In fact, millions of homeowners found themselves in negative equity: owing more on their mortgages than their homes were worth. Markets fluctuate and if home prices drop, so can your equity. Take what we're seeing in 2025. The median home prices hit an all-time high of $422,800 in May 2025, and the average mortgage-holding homeowner has $302,000 in accumulated home equity as of the first quarter of this year, according to Cotality. But the pace of home price growth is slowing. And as home price appreciation slows, so do equity stakes. In fact, that $302,000 represents a loss of more than $4,000 in equity over the past year. Not always. True, when you take out a mortgage, your home equity builds slowly at first as the early payments mostly cover your loan's interest. As time passes, a greater portion of the payment goes to principal, speeding up equity growth. This process is known as mortgage amortization. But not all paths to home equity growth involve the long game of paying down your mortgage. You can gain immediate equity by making a larger down payment or paying closing costs upfront instead of rolling them into the mortgage when you buy a home. Additionally, making extra payments towards your loan's principal can help you increase your housing stake faster. Home renovations can also boost your property value and, in turn, your equity. But remember, not all renovations offer the same return on investment (ROI). Some improvements, like kitchen or bathroom upgrades, tend to have a higher ROI than others. I've often heard the terms HELOCs (home equity lines of credit) and home equity loans used interchangeably when describing home equity borrowing. Yes, both are financing products that allow you to borrow against your home's value. Both also use your home as collateral, meaning you could lose it if you don't make payments on either of them. That's where most of the similarities end. A home equity loan gives you a lump sum at a fixed rate, keeping your payments stable for the life of the loan. In contrast, a HELOC is a revolving line of credit with a variable rate, meaning your monthly payments may fluctuate based on the amount you borrow and market conditions. The other differences? With a home equity loan, the interest is applied to the entire loan amount, but with a HELOC, interest is only charged on withdrawn funds. Mixing up the two and not fully understanding the differences can lead to some expensive surprises down the road. It's true that home equity loans and HELOCs often come with lower rates than personal loans or credit cards. But we must not confuse 'lower' with 'low.' In today's higher interest rate environment, they're not always the deal they once were. For example, as of July 2, HELOC rates were averaging just over 8.25 percent, and some ran as high as 12.50 percent, according to Bankrate's national survey of lenders. Home equity loan rates were similar, running as high as 10.47 percent. The exact rate you are offered depends on several factors, including the lender, the loan type, your credit score and even where you live. Some advertised rates also include discounts if you sign up for automatic payments or have a checking account with that lender. No matter what some TikTok influencers are saying, a HELOC is NOT like refinancing your mortgage. HELOCs and home equity loans are considered second mortgages, which means they're completely separate debt from your primary mortgage. Everything connected with that stays untouched, including its interest rate. The confusion may arise from another equity-tapping vehicle, the cash-out refinance. This refi involves replacing your original mortgage with a bigger one; you take the difference — which is based on your equity stake — as a cash payout. That means you start fresh with a new mortgage, rate and terms. Even if they miss HELOC or home equity loan payments, some homeowners assume that as long as they're paying their primary mortgage, their home is safe from foreclosure. They couldn't be more wrong. While HELOCs and home equity loans are second mortgages, they are still secured by your home. Regardless of whether your first mortgage is in good standing, the home equity lender has the right to start foreclosure proceedings if you are in default, which is 90 to 120 days of missed payments. In the event of a foreclosure, your primary lender does get paid first. But that doesn't stop the second lender from trying to recoup its share. Both lenders have a legal claim to your home, and if you're in default on the second mortgage, it can trigger a foreclosure that puts your home at risk. Just because you have a large percentage of equity in your home, doesn't mean you can borrow all of it. Most lenders won't let you go above 80 to 85 percent of your home's value when borrowing, also referred to as the loan-to-value (LTV) ratio. Put another way: You have to leave 15 to 20 percent of your ownership stake untouched. Limiting the amount you can borrow provides a cushion that protects both you and the lender if your home falls in value. How much equity you can borrow also depends on your mortgage balance. When computing that LTV, home equity lenders look at both the amount you want to borrow and your current mortgage debt. So if the LTV limit is 80 percent, and your mortgage balance makes up 50 percent of your home's value, you'll only be able to borrow 30 percent of the value, regardless of how much equity you have. That said, there are some lenders that allow you to borrow 90, 95 or even 100 percent of the equity in your home. But there's usually a trade-off: you will likely be charged a higher rate. You also have to meet certain requirements, like having a very strong credit score, a strong loan-to-value ratio, or borrowing within a specific loan amount range. The bottom line: While hundreds of thousands of dollars in equity might look like a big number on paper, it's not real cash in your pocket. Nor will all of it ever be. Even if you own your home entirely, usually you'll be required to leave around one-fifth of your equity untapped. A reverse mortgage is a loan that allows you to borrow against your home equity. But instead of you having to pay the bank, the bank pays you (hence, the name). Whether taken in installments or as a lump sum, the funds are tax-free (though not interest-free). It is true that you must be at least 62 years old to qualify for a Home Equity Conversion Mortgage (HECM), the most popular type of reverse mortgage, which is backed by the Federal Housing Administration. However, a HECM isn't the only option. Proprietary reverse mortgages are available for homeowners 55 and older. Offered by private lenders, these mortgages are not insured by the government. They are sometimes referred to as jumbo reverse mortgages because they allow homeowners to access larger amounts than the HECM limit, which is $1,209,750 in 2025. Designed for higher-valued homes, loans are typically available in amounts up to $4 million, though you have to meet specific home equity, income and credit score requirements. A home and its equity is the biggest asset many people will ever own. So it's important to understand how your equity works and how you can – and can't — use it. With all the confusing jargon, hard-sell ads, and questionable advice on social media, it's easy to get steered in the wrong direction. Always consult a professional financial advisor or lender before making any moves: They'll help you distinguish home equity fact from fiction. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
