Investing 101: Should You be Investing during a Shock? Featuring Robinhood.

Jun 14, 2020
3 min read

Updated: Jun 14, 2020

To investing or save during an economic shock? That is the question.

Hi guys! One way or the other, we've all been affected by this pandemic. If you can't afford to invest money right now, don't! If it's better for you to save money, save it! Now more than ever, how you handle your money to fit your current situation is critical. But, if you can afford, now is the time to invest.

“Risk comes from not knowing what you're doing.” - Warren Buffet

The stock market is volatile. It can change in a blink of the eye, both positively and negatively. The fast-paced trading and selling of stocks can fluster any first-time trader. In my previous post, I talked about how Ellevest created a portfolio of investments for you and all you had to do was keep depositing money into it. In this post, I'm going to introduce you to Robinhood, the app that I use to actively trade on the NYSE.

What is the NYSE and what are stocks? Well, the majority of American trading occurs on the New York Stock Exchange (NYSE). And while stocks aren't the only things traded on NYSE, I'm going to focus stocks to keep things simple. Every day, the buying and selling of shares of publicly-traded companies occur on a stock exchange. When you own a share (or stock) in a publicly-traded company (Facebook, Amazon, Walmart, etc.), you can receive shareholder dividends every quarter or you can sell your stock when it's a higher price. What does this mean for you? It means that because of the stock that you own, you are own a small (very small) part of the company of your choosing.

So What's Robinhood?

Robinhood is an app that makes it easy for the common folk to trade on the NYSE. Robinhood takes out the stockbrokers which means that you don't have to pay a commission-fee to trade on the stock market. After you fill out the online application, you can start trading at any amount. From there, select which shares you want in your portfolio. It could be in large companies, like Amazon and Walmart, or smaller companies, like ADT and GoPro. The goal is to have a diverse portfolio in different industries. That way, if another shock happens, your portfolio is strong enough to weather the storm, so to speak. That's what I did five weeks ago during the lowest point of this economic shock.

I can't stress enough to only start investing if you can afford to. I was extremely lucky during this time to try something new and invest some of my money in the stock market, especially during a pandemic. However, the reason I choose to start investing now was because of the lower stock prices. When traders pull out of the market rapidly, like they did back in March, you'll often see a staggering drop in the price of stocks in nearly every industry. For example, I have one share in the Royal Bank of Canada (RBC). Before the shock, one share cost $82.62 as of 2/21/2020. After the shock, that same share's price fell to $49.61 on 3/23/2020. That's a loss of $33.01 per share in one month. Now imagine if you had 100 shares with RBC and this happened. That's a loss of $3,301! That's fear of losing money on the stock market why traders pulled out of the market and why people are afraid to start investing to begin with. It's too risky. However, if you never take the risk, you'll never receive it's benefits.

And oh boy, can you receive benefits! Remember that $150 deposit I started Robinhood with? Now my portfolio is worth $214. That an increase of $64 for doing nothing! Look, America is going through some major changes right now and 2020 became a year that absolutely no one saw coming! However, the stock market will get better and there is no reason why you shouldn't benefit from it!

Robinhood is super easy to use. All you have to do is tap the screen to buy and trade (see above). When you're reviewing your chosen stock, you'll be able to see the company's statistics, such as market capital, price per earnings ratio, how the stock has performed the last five years, etc. Also, Robinhood's browse feature gives you news articles about the company that your searching. That way, you can read up about it before you buy. I've left my referral code below for you guys to use. Once you do, we both get free stocks! Happy investing!

This is Vienna, signing off! See you later!