Changing into an investor is the brand new American dream, identical to residence possession was earlier than

I used to be born behind the Iron Curtain. For folks in my native Bulgaria managing cash was a easy proposition with simply two choices — protecting financial savings within the state financial institution or stashing it below a mattress. Investing, in fact, was off the desk, as was accessing a line of credit score. And monetary schooling, even for economists like my father, concerned a whole lot of quick speaking to come up with counter-revolutionary texts like Adam Smith’s “The Wealth of Nations.” 

The Berlin Wall fell whereas I used to be nonetheless a child and my household’s transfer from Bulgaria to the Commonwealth of Virginia is a uniquely American story of alternative. Within the U.S., my household discovered a rustic that celebrated alternative as a cornerstone of the capitalist system. Competitors and entry enabled the U.S. inventory market to turn out to be the best engine of wealth creation within the historical past of the world. 

However whereas the market is theoretically open to everybody equally, some folks have had higher entry, higher instruments, and a clearer invitation to take part. Others have been held again. Simply 10 p.c of US households maintain 87% of the whole worth of shares, and barely half of U.S. households take part within the inventory market in any respect.  

We conceived Robinhood within the wake of the Occupy Wall Avenue motion to stage that enjoying discipline. We pioneered commission-free buying and selling, enabling thousands and thousands of underserved folks to get extra concerned within the economic system and to make selections to form their very own monetary futures. Due to our impression, a whole trade modified — and now most brokerage platforms supply commission-free buying and selling.

 2020 was an unparalleled 12 months in American historical past. COVID-19 rocked the nation, spiking unemployment and resulting in lack of earnings for thousands and thousands of Individuals. In these turbulent instances, it offers us super satisfaction that Robinhood has expanded entry for a lot of to start their funding journey throughout the market rally. Though nearly all of these beneficial properties are unrealized and 2021 is certain to carry its personal twists and turns, we’re proud to have enabled our prospects to start collaborating within the markets and permit them to progress in the direction of their very own monetary independence.

Not everybody shares our optimism. The pandemic has breathed life into considerations over growing participation out there by retail traders. Observers have famous these new traders look completely different than the technology that got here earlier than them, and surprise if investing has turn out to be too straightforward. Ought to there be further gating necessities to restrict the danger for traders who’re simply studying the ropes? Does the typical American possess adequate command of economic ideas to navigate the markets responsibly?   

I would argue that those that query the aptitude of retail traders should not have the pursuits of on a regular basis Individuals at coronary heart. It is flawed to view the arrival of accelerating numbers of retail traders out there with dismay. It is short-sighted to proclaim that monetary devices integral to funding methods of the wealthiest Individuals ought to be left solely within the fingers of the outdated guard.

Take a look at Robinhood’s prospects seven years after our founding, they aren’t a band of reckless, wildcatting traders. As an alternative, we see proof that many are basic “purchase and maintain” stockholders whose portfolios, in line with the Nationwide Bureau of Financial Analysis, are comprised of bigger, extremely liquid corporations, and whose investing ways acted as a small however energetic market-stabilizing power throughout volatility in March. Claims of gamification by individuals who have by no means used our app miss the purpose. Those that criticize these traders ought to bear in mind who they are surely — hard-working, pragmatic people making wise, regular selections, versus clinging to some hackneyed stereotype of sports activities betting on smartphones on the fraternity home. 

Right now, traders are youthful and extra numerous than they had been when Robinhood began. They’ve taken their monetary schooling and financial fortunes into their very own fingers.  Our roughly 13 million prospects have a median age of 31, many are within the early levels of constructing wealth for the long-term, hopefully resulting in monetary independence and safety for them and their households. 

All of us have a accountability to encourage elevated monetary literacy. However we have to acknowledge that the better hazard to our society will not be that particular person traders will make the flawed selections. Extra importantly, it is that particular person Individuals is not going to be inspired to extend their monetary confidence or empowered to take part out there in any respect. At Robinhood, it appears clear to us that the reply to the issue is to not restrict entry, however to seek out new and inventive methods to show folks to take part responsibly. In any other case, we reinforce the bias of a decades-long exclusionary sample which has solely not too long ago been reversed right into a constructive path. 

Our mission is to democratize finance and is rooted in American idealism. America has all the time prided itself on the flexibility to foster upward mobility and alternative with few boundaries. This nationwide ethos of the “American Dream” is as outdated because the nation itself. Within the 20th century, it was all about residence possession, pushed partially by the 30-year mounted mortgage. Now, with commissions and minimums gone, the stage is ready for a brand new American Dream, one the place near 100% of our residents are traders. Let’s create it — collectively.