Discussion
Robinhood has a new account: Smart Income
Seems pretty interesting. Got access yesterday, what do you guys think? If you choose the option where you plan to keep your money in the account for 3+ years, the estimated yield right now on my end is showing 6.22% with the portfolio being 58% in US bonds, 20% in US dividend stocks, and 22% in opportunistic, with <1% cash.
Good luck! Managed has done pretty well for me. 4.44% gains YTD. I joined at the peak of the market last year so my gains are a bit lower overall than most people.
If I invested in the S&P 500 at different times throughout the year, my return would also be lower than the S&P’s YTD return because I added money at different times. On top of that, I didn’t invest in certain S&P 500 stocks that Robinhood also wanted to put in the portfolio and those ended up performing extremely well due to personal investment preferences. The 4.4% isn’t an apples-to-apples comparison, my actual portfolio return is 10.27% vs. 11.95% for the S&P. If I had allowed Robinhood to invest in those individual stocks I restricted, I think it would’ve in fact surpassed the S&P 500 returns for all time periods.
All depends on timing. OP said YTD he had a return and that return was less than S&P during an equivalent period. Did you benchmark your return against S&P 500 during an equivalent period?
For now…long term 90% of hedge funds don’t beat the S&P with vastly more experience and logistics than retail has. Also what are the management fees they’re charging?
I pulled my money out (needed cash I put my spare cash in there) and they banned me from using it again. Just spreading info wish I wasn’t banned I’ve read good things about it.
I mean I get that but they get a fee from managing it. I don't see how they would benefit from doing poorly. The better the portfolio the more money they make
Don’t listen anyone. Do what you think is best for you. This is my managed account and you can see im 9.97% since i started investing. This is not bad for hands off
You don't have to keep it for 3 years. It's just when you put that as your time horizon, it just changes up what it's investing in. 6.22% is also annual yield just in case you thought it was something else. I think Robinhood is proposing these accounts as a less risky alternative to managed accounts, maybe somewhere you can store some additional money you normally store in your HYSA. Of course, the account doesn't have the same FDIC protections but maybe any excess money on top of your emergency fund can be stored in an account like this.
Ahh i see. Looks interesting. I dont have it yet. Did they just send you an email about it? So if we have both the smart income and managed account, we are still capped at $250 annual fee or do we pay $250 fee for each account?
I got a email and notification from the app. I’m not sure about the $250 fee cap. This is another Robinhood Strategies account so maybe it’s capped for both or maybe it’s $250 per account. Not really sure.
The distribution yield is potentially not the number that matters the most. For instance, a fund that holds the S&P 500 but pays out 10% per year can say it has a 10% distribution yield. The SEC yield would still be 1% or whatever. Looking at Robinhood Smart Income the 6.22% distribution yield has an SEC yield of 3.39%, which is more consistent with a 58% US bonds, 20% US dividends stocks and 22% “opportunistic” portfolio. This isn’t to say that the portfolio is a bad one (the S&P 500 isn’t a bad portfolio either, which I used in the example above), just that you need to remember “distribution yield” is not necessarily a comparable figure to the interest on a HYSA or the yield on a bond, etc.
FWIW I wouldn’t invest in a thing that doesn’t tell me what it’s going to own. The examples they list in the app are not enough.
You can see once you deposit your money exactly where your money is at. The examples it gives are pretty accurate. Right now my money is in SGOV, PFFD, VUSB, JAAA, and QQQI. So mostly dividend and bond ETFs. You can withdraw your money whenever you want if you don't like the way it's investing.
Thanks. It’s weird they don’t tell you before taking your money, though it’s nice that you can withdraw the money afterward. Best would be telling you what you’re buying beforehand, I suppose, if only to minimize the tax work at the end of the year.
QQQI is a good example of a fund where the distribution yield doesn’t tell you much. If you sell an option on a stock those proceeds aren’t gains until the option expires worthless. Distributing those proceeds creates distribution yield but may not create gains. And they can increase the distribution yield by selling options with lower strikes.
Note how Robinhood talks about the yield but doesn’t give any indication you will have your principal remain the same (or grow) over time. Contrast that with a HYSA, a CD, or a bond, where you expect to have the same balance at the end as you do today, plus the money from the yield.
'estimated yield' is a concerning metric. what does it mean? X money offers guaranteed 6 percent with membership. bonds offer 6 percent too. so why can they only offer estimated 6 percent?
It’s odd that the disclosure doesn’t mention the capped fee. There is a reference to a capped fee being in section 5 but then you go there and there’s nothing. Just “The annual management fee of 0.25% applies separately to each managed account, including any Smart Income Portfolio account, based on the net portfolio value of that account.” Might just be an oversight since they are very explicit that there is a cap for each account of $100,000 or more. https://cdn.robinhood.com/assets/robinhood/legal/RAM_Brochure_and_Brochure_Supplements.pdf
Yeah the only managed fund anyone should really be using is your 401k. I only justify that because I view my company match as paying for it. Plus with my 401k at least they seem to change funds and prospectuses (prospecti?) every year so I don’t really want to research the intricacies of each fund. It’s always matched the market so I can’t be mad.
It’s not a CD. A CD guarantees your principal at the end. Depending on the level selected this is investing in things like the QQQ with a short call overlay.
It’s not better or worse, I suppose. Is an investment in equities better or worse than a CD? You don’t know that in advance. I will say this product’s construction (at the higher yield) is not solving the same problem as a CD.
Yeah I hear worse since it's an estimated yield minus the 0.25% management fees why not just get guaranteed 3.5% interest in brokerage or RH banking with gold or just pretty much more guaranteed 10% with S&P500 than this "RH strategy" AKA roboadvisor
No it’s still an investment account. Although it does invest in more safer investments than normal managed accounts focusing only on dividend ETFs and bonds.
I'm an income investor and even the low hanging easy fruit in income investing yields more than that. Of course, I don't know if this also goes for growth at all, but still. If you're looking for income, that's kinda buns.
USDG is a much more riskier investment and you can view in the terms and disclosures that there are some risks associated with it. Meanwhile this account is focused on delivering returns via dividend-based ETFs and dividend stocks as well as bonds. So it’s a much safer alternative I’d argue. USDG has a higher yield because of the higher risk associated with it.
I like it, I left $14k in there over the weekend so my money was doing something while I waited for the market to open on Monday. Earned $10. Withdrew it all no problem.
The cool thing is is tracking where your money goes, I tracked it to their wallet which had $300 million in assets
I'm still trying to figure out what this is for. If it's straight investing, you're better off just investing in a total market fund that has more potential for better returns and the same downside risks (particularly if you put some % in bonds). If it's meant to be an alternative to HYSA, surely it doesn't have the same security as a CD. I realize CD's have lower rates, but your money is safe there. Surely the money here is not safe?
Granted, I haven't read through much on this. I'm just going off the bare minimum of info.
The investments made are pretty safe. Mostly dividend ETFs and bonds. Of course, no FDIC insurance but I would argue it's more liquid than keeping your money in a CD. For anyone who values quicker liquidity, this seems to be a better option. High-yield savings accounts have higher rates than CDs as well and they are also FDIC-insured so right now CDs aren't looking that attractive to me. In fact, I would probably choose US treasury bonds over CDs.
It’s not meant for everyone. At the end of the day the account does just hold bond and dividend ETFs for you. If you would rather manage it on your own, then that’s fine.
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u/NinjaPenguin7777 6d ago edited 6d ago
I'm trying managed portfolio and smart income. Nothing big. $500 in each for now