How I Made Money with Robinhood, Shopify and Free Stocks!

People often say there's no such thing as a free lunch, but there is and here's how to take advantage of it. I recently made $839.69 out of thin air by taking advantage a "refer a friend" and you both get a free stock promo with the Robinhood app. For those who aren't familiar with the app, they're a silicon valley startup and have been around since 2013 and are best known for their commission free stock trading. While companies like Etrade and TD Ameritrade charge investors $6.95 every time they want to buy or sell a stock, the RH app has made it free. But what's the catch? How do they make money and why would they give you a free stock just for signing up?

In this post I'm going to explain everything above as well as how you can and should take advantage of it. I'll show you my dashboards on exactly how I turned a $1 deposit into a $1,540.69 account and how you can do the same. Even if you're not a stock investor, this blog post will help you understand customer acquisition, affiliate marketing,  insider investing and when not to listen to mainstream media. I also talk about setting up automatic market limit buy and sell orders as well as how you can how invest in cryptocurrencies such as Bitcoin and Ethereum using the new Robinhood Crypto feature. Keep reading to see the case study of how I turned my free Robinhood stocks into pure profit.

How it Works

The big secret on how Robinhood and other companies that offer "free lunches" for signing up is simple. Normally a company would need to spend money on advertising or pay an affiliate some type of commission for referring new signups. Instead Robinhood gives both the referrer and the new user  a free stock when someone signs up. You can use my Robinhood referral link to get a free stock when making an account.  To calculate how much they can afford to give away, the company simply has to calculate the average lifetime value of the customer. For a free app that gives free trades, it's a bit more difficult to figure out what the customer acquisition cost should be. 

Robinhood makes money in two ways. The first is that it collects interest on the cash that you leave in your account untouched. For an example, I currently have $333.32 in cash just sitting in my account that I've completely forgotten about until now that Robinhood is lending out and earning an interest on. The second way Robinhood makes money is through using a freemium model where some users pay an extra $6 a month to access Robinhood Gold which allows afterhours market trading as well as making trades on margin. A margin trade is basically buying more stock than you actually have cash for, increasing both your reward if the stock goes up, and your risk if the stock goes down. 

So there you have it, that's how they can give away both free stocks and free trades. In the next section I'm going to show you how I used my free stocks from signing up using a friend's link and referring others to turn an $839.69 profit. 

Inside my dashboard, Get a Free Robinhood Stock.

Free for Great

So even though I would have loved to say that I made $840 through referrals alone but it actually a combination of trading up for better stocks and market appreciation. Even though I managed to get a free share of Microsoft which was worth around $90 at the time, most of the other shares I got were from Zynga, Sirius XM, Groupon and Chesapeake Energy. What I did next was sell all of the stocks from companies I don't know anything about or believe in and trade them for an opportunity that I did. 

The number rule in investing is simple according to Warren Buffet. It's "Never Lose Money." 

So even though I technically got all of the shares for free, I only sold the ones that were currently up and waited for the ones that were down to go back up which most do unless there's a huge problem or the company itself is doing poorly. I sold all of my shares of Zynga the makers of Farmville, Groupon the online coupon site, and Sirius XM the satellite radio station as I don't use any of their services anymore and think they're outdated and don't have a bright future. In turn, I bought something that was on sale, at a discount and because I truly believed in them even when others didn't. I bought Shopify Stock at $90-$96. 

Selling Free Stocks to Buy Shopify Stock

How I Knew

If you've been following my facebook page for a while, you'll know that I bought Shopify stock at an average of $94.50 a share when there was a media panic calling "ecommerce a scam" and that the dropshippers making accounts and growing Shopify's user base would soon disappear thus tanking their stock. But I knew that wouldn't happen, and I knew that with panic people would sell, lose money and I'd be able to buy up stock of a great company at a huge discount. I did the same a few years ago when I first bought shares of Facebook at $70 then learned a ton about investing and bought more at $55 making my average cost per share $56.72.

My advice to everyone is to never invest in individual stocks unless you have inside knowledge. Instead, if you want to invest in the stock market, you should invest in low cost index funds such as Vanguard ETFs. Here is everything I invest in and what I would recomend to you. Below is a screen shot of my Charles Schwab account. Most of my Vanguard funds are invested directly with the company to avoid the trading fees, both are shown below.

My Schwab Dashboard with FB Stocks

My Vanguard Dashboard with ETFs

Final Thoughts

Even though it's fun to turn nothing into something, and picking individual stocks can be exciting, it's honestly not worth the time it takes or the gamble involved. I'd say, yes sure, make a free account at Robinhood and claim your free stock and if you happen to run into a fire sale on a stock that you know is worth more than it's trading for, especially if there is mass market panic, then go for it. I sold all of my free shares from Robinhood plus put another $700 in to buy some more using the market limit order, which in total more than doubled my investment. Honestly even though I knew the stock would go up, I didn't put more money into it because I really don't like gambling with individual stocks. I'd rather use my time, energy and money to invest in myself and into businesses and suggest you do the same.

If you want to start a store, you can get 20% off if you use my Shopify Link. 

If you want to learn how to start a business, take the Dropshipping Course where I learned everything I know total about ecommerce. 

If you want to know more about my personal journey and how I've made well over $250,000 now in net profit from dropshipping on Shopify, read this blog post.

I'm super curious what Andrew Left and Citron Research did with their shorted stocks and how much money they lost on it. The most annoying thing about it all is that if he got lucky and was somehow right, he's be a stock picking genius. I hope blog posts like this show you what investing really is all about and the truth behind it all. Feel free to ask me anything below in the comments. Let me know what stocks you invest in and why. 

Speaking about Dropshipping on Shopify at Affiliate World

Warm Regards,

Johnny FD

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