One of life’s most important financial strategies is retirement savings. Robinhood, a retail brokerage and stock trading app, wants to help by offering free money when donated to personal retirement accounts.
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In a Dec. 6 announcement, Robinhood said it would pay a 1% match for customers’ contributions to the Robinhood IRA. The program is available to anyone who opens an IRA on the app, but through his employer he is specifically aimed at customers who do not have a 401(k) plan. This primarily means gig workers and the self-employed.
“People are relying on themselves,” Robin Hood said in the announcement. “They are doing gig work, side jobs, and starting their own companies. .”
Here’s what Robinhood customers need to do to win a match:
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Select IRAs. You can choose to invest in stocks and ETFs via either a traditional IRA or a Roth IRA.
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Invest on your own terms. Choose your own investments or combine both to build a custom portfolio through Robinhood’s in-app recommendations. The signup and onboarding process only takes a few minutes.
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IRA Instant Deposit: Donations give you instant access to funds to start investing (up to $1,000).
According to CNBC, Robinhood will match 1% of new pre-tax or Roth account contributions to annual IRA contribution limits.
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The company began rolling out a new 401(k)-type program on Tuesday. Given that only one in three Americans has access to a corporate retirement plan, according to census data cited by CBS News, this could meet a major need for investment. Claims to be a matching IRA provider.
“There is a growing disconnect between how people live and work and how they set their savings,” Steph Gild, head of investment strategy at Robinhood, told CBS Moneywatch.
But while some experts say Robinhood’s IRA match could spur and boost savings, skeptics say it’s primarily a way to draw attention to the company and attract customers. suggesting.
Phillip Chao, principal and chief investment officer at Experiential Wealth in Maryland, told CNBC: “You should always ask the motives of the entity or individual offering you a free lunch.”
Some wonder whether the 1% match will lead to fundamental changes in financial behavior. This matching is considerably less than the 3% to 6% matching many employers offer in his 401(k) plans, and employer matching is based on annual income rather than individual contributions.
As CBS News pointed out, Robinhood’s matching donation means that whoever puts in the IRA’s annual maximum ($6,000 in 2022) will receive a $60 match. I can see. But Robinhood officials say it could convince people to sign up for the program and start saving.
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“We have interesting data on 401(k) matches. When companies offer matches, savings and participation rates increase significantly, but there is no correlation between match rates offered and participation rates. Robinhood Retirement Sam Nordstrom, lead product manager at
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This article originally appeared on GOBankingRates.com: Free retirement: Robinhood offers 1% match on new IRA contributions