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3% Interest on Checking and savings Accounts

If banks and online accounts were to follow this would mean higher risk premiums for bonds and stocks. What do you guys think? Is it sustainable for such a liquid investment to pay 3%?

https://www.forbes.com/sites/jeffkauflin/2018/12/13/in-a-bold-asset-grab-robinhood-offers-3-interest-on-checking-and-savings-accounts/

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cosnidering nim is roughly about 3% right now. id say its a really bad deal for a typical bank. they are essentially wiping out any type of profit at that point.

I love my cheese. I got to have my cheddar.

It is not profitable to offer that rate. In fact, the company stated that they’re going to lose money for 3-5 years, and it will probably be indefinite if they continue this rate. This is consistent with what they also said about investing in “treasuries and other low risk investments”. No US Treasury bond below 30y has above 3% yields at the moment. 1 month LIBOR is 2.45% and Fed Funds are 2.19%. Essentially, they are operating on the technology company strategy to get users and think of monetizing later. 

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right! consider their valuation just went from 1b with 2m users in 2017 to 6b with 4m users in 2018. all is well while they can get cheap funding. lol

I love my cheese. I got to have my cheddar.

That $6 billion was on the back of their crypto trading announcement though… I don’t know how it looks now…

“Visit the Water Cooler forum on Analyst Forum. It is the best forum.”
- Everyone

If RH is offering 3% and can get 2,5% in the next year, they’re only paying ~50bps to grow. Or 5 million if they can get 1BN in deposits.

I’ve heard nothing but complaints from commercial banks on how hard it is to get customers to switch from bank to bank. If robinhood is able to grow as quickly as this should allow, they’ll be seen as geniuses. If they can then get users to also open up a brokerage account (since they’re already on the robinhood platform) they’ll be set.

RH just raised 350 million, I think they’re making the right call with their focus on growth while it’s cheap.

This is a scam. It’s not insured and not risk free. I hope they get hit with UDAP but cfpb probably won’t pursue under this administration 

i wouldnt put a dime in until SIPC signs off

"You want a quote? Haven’t I written enough already???"

RIP

ohai wrote:

That $6 billion was on the back of their crypto trading announcement though… I don’t know how it looks now…

HODL GANG!

I love my cheese. I got to have my cheddar.

They think they can tackle global capital markets like this?

In before they go belly up. 

¯\_(ツ)_/¯ It be like that sometimes.

Not a top 3 brokerage, hacksaw

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6-month T bills and no state tax!!

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