The new offering from the fintech firm, Robinhood, has a waitlist. In an uncertain economy, Robinhood Markets offers its consumers retirement accounts for the first time, hoping that the tax benefits and matching contributions will spur investment interest.
Until a user’s annual contribution limit is reached, the company will match 1% of what they contribute to their traditional or Roth IRAs. The Internal Revenue Service determined the limit for Robinhood users under 20 in 2022 to be $6,000, which would result in a match of $60 this year.
Users may begin signing up for Robinhood’s IRAs on Tuesday. The service will be available in January. Early access to the program will be granted to users within 24 hours if they refer a friend to join the waitlist.
The Company Has “been Thinking About What a Retirement Product Could Be for Robinhood for A While”
Millions of first-time investors flocked to Robinhood during last year’s pandemic lockdown and dumb stock boom. However, high inflation and a depressed market have dampened the interest of many users in investing.
In October, the number of daily retail stock and option trades on Robinhood fell by 36% to 1.9 million. October’s average daily volume on Robinhood dropped by 55% to 200,000 crypto trades daily.
According to Chief Executive Vlad Tenev, the rapid expansion of Robinhood last year necessitated a significant investment in basic infrastructure and customer service. He said this year spent more time on “some of the fundamental product gaps in the investing offering.”
Most of Robinhood’s clients are buy-and-hold investors, according to the company. Until now, it hasn’t provided an option to invest without paying taxes or delaying payments.
According to a Robinhood executive in January, retirement accounts were supposed to begin rolling out in mid-2022. However, the company did not meet this timeline. Robinhood launched services and features this year before retirement accounts. One of these services is the ability to buy and sell Shiba Inu digital coins and trading options on a cash account.
Mr. Tenev said that making IRAs available before the 2022 tax-filing season was a major priority for the company. He added that it wasn’t a big deal that they didn’t launch midyear. He said that retirement products are more sophisticated than any other products they offer.
On the other hand, Robinhood currently only allows stocks and exchange-traded funds to be purchased and sold in retirement accounts.