As an advocate for young adults prudently beginning their investing journey as soon as possible, I’ve found it difficult to shake this recent story: A young man from Illinois took his own life less than 24 hours after checking his Robinhood account and seeing a negative cash balance of over $730,000.
For those who might not know, Robinhood is an online trading and investing platform that has become incredibly popular in recent years for the movement it sparked in the brokerage industry toward commission-free trading. The service boasts more than 13 million users with an average age of 31. Almost every incumbent broker must now offer this feature, lest they be unable to compete effectively against lower-cost peers.
But this story isn’t just about Robinhood. In recent years, several Robinhood alternatives have sprouted up offering similar functionality for the same cost and often induce investors to sign up with the lure of free stocks or sign-up bonuses, fractional share investing, near-instant account opening and no account or investment minimums. In other words, all elements a young investor might desire to begin investing in small amounts.
What many of these new investing platforms promote is simplified, free trading with fun and easy-to-use mobile app interfaces. Robinhood, in particular, utilizes a slick interface with confetti popping everywhere as if you had just won a prize when you execute a trade.
A College Student Dies in Despair
Alexander Kearns, a 20-year old University of Nebraska student who was home from college during