You can make money on Robinhood through stock and ETF appreciation, dividend income, interest on uninvested cash, retirement contribution matches, and options trading. The platform charges no commissions on stock or ETF trades, which means more of your returns stay in your pocket. Here’s how each method works and what to expect.
Buying Stocks and ETFs
The most straightforward way to make money on Robinhood is buying shares of stocks or ETFs and selling them later at a higher price. You can purchase fractional shares starting at $1, so you don’t need hundreds of dollars to own a piece of a company trading at a high share price. There are no commissions on trades, which is especially helpful if you’re investing small amounts regularly.
Your returns depend entirely on what you buy and when. A broad market index ETF that tracks the S&P 500 has historically returned roughly 10% per year on average over long stretches, though individual years can swing wildly. Picking individual stocks can produce higher returns or devastating losses. If you’re new to investing, starting with a diversified ETF and adding money on a consistent schedule is the simplest path to building wealth over time.
Earning Dividends
Many stocks and ETFs pay dividends, which are regular cash payments companies distribute to shareholders. On Robinhood, any dividend-paying stock or ETF that supports fractional shares is eligible for automatic dividend reinvestment. When you turn this feature on, your dividends buy more shares instead of sitting as cash, which compounds your returns over time.
To enable dividend reinvestment in the app, go to Account, then Menu, then Investing, and toggle on Dividend Reinvestment. The cutoff to enable or disable reinvestment is 12 AM ET on the day the dividend is scheduled to be paid. If you miss that window, the dividend lands in your account as cash instead.
Dividend yields vary. High-dividend ETFs focused on utilities, real estate investment trusts, or established blue-chip companies often yield between 2% and 5% annually. That may not sound dramatic, but reinvesting dividends over years adds meaningfully to your total balance. A $10,000 portfolio yielding 3% generates $300 a year in dividends, and reinvesting those payments means the next year’s dividends are calculated on a slightly larger base.
Earning Interest on Cash
Robinhood Gold subscribers earn 3.35% APY on eligible uninvested cash through the platform’s High-Yield Cash Program. That rate is competitive with many online savings accounts. Gold costs $5 per month, so the subscription pays for itself once your cash balance exceeds roughly $1,800.
This feature works best if you keep a meaningful cash balance while deciding what to invest in, or if you use Robinhood partly as a savings vehicle. The interest accrues automatically. You don’t need to move cash into a separate account or take any extra steps beyond subscribing to Gold and having uninvested dollars in your account.
Getting a Match on IRA Contributions
Robinhood offers a match on contributions to its individual retirement accounts. Gold subscribers receive a 3% match on annual IRA contributions, while non-Gold members receive 1%. You can also get a 1% match on IRA transfers or old 401(k) rollovers with no cap on the transfer match amount.
The catch: you must hold the assets that earned the match in your IRA for at least five years. If you withdraw or transfer before that holding period ends, you forfeit the matched funds. Think of it as free money with a patience requirement. On the maximum traditional or Roth IRA contribution, a 3% match adds a couple hundred dollars per year to your retirement savings. That may seem modest, but compounded over decades it adds up, and very few brokerages offer any match at all on IRA contributions.
Trading Options
Options let you buy or sell the right to purchase a stock at a specific price by a certain date. They can amplify your gains, but they can also amplify losses just as quickly. Robinhood offers multiple levels of options access. Basic levels allow covered calls and cash-secured puts, which are relatively conservative strategies. Level 3, which includes more advanced multi-leg strategies, is only available in margin accounts.
A common income strategy is selling covered calls. If you own 100 shares of a stock, you can sell a call option against those shares and collect the premium upfront. If the stock stays below the option’s strike price, you keep both the shares and the premium. The tradeoff is that your upside is capped: if the stock surges past the strike price, the buyer exercises the option and you sell your shares at the agreed price, missing out on gains above that level.
Options are not beginner-friendly. The pricing is driven by volatility, time decay, and the underlying stock’s movement, which means you can be directionally right about a stock but still lose money if your timing is off. Start with paper-trading concepts or very small positions before committing significant capital.
Using Margin to Amplify Returns
Robinhood Gold members get $1,000 in margin included with their subscription. Margin is borrowed money you can use to buy more investments than your cash balance alone would allow. If you borrow beyond the first $1,000, interest rates start at 5% for balances up to $50,000 and drop as you borrow more, reaching 3.95% for balances above $50 million.
Margin makes sense only when your expected return exceeds the borrowing cost. If you’re earning 10% on an index fund and paying 5% on margin, the spread works in your favor during good years. In a down market, though, losses are magnified. If your portfolio drops enough, Robinhood will issue a margin call, forcing you to deposit more cash or sell holdings at potentially the worst time. Margin is a tool for experienced investors who understand and accept the risk of amplified losses.
What You’ll Actually Keep: Taxes and Costs
Profits from selling stocks held less than a year are taxed as ordinary income, which could mean a federal rate anywhere from 10% to 37% depending on your bracket. Stocks held longer than a year qualify for long-term capital gains rates, which top out at 20% for most people and are 0% if your taxable income is below certain thresholds. Dividends from most U.S. stocks are taxed at the same favorable long-term rate as long as you meet a minimum holding period.
On the cost side, Robinhood charges no commissions on stock, ETF, or options trades. The main recurring cost is Gold at $5 per month if you want the higher cash interest rate, the larger IRA match, and the included margin. There are also small regulatory fees on sell orders, but these amount to fractions of a penny per share and rarely add up to more than a few cents per trade.
Retirement accounts like Robinhood’s IRA shelter your gains from taxes while the money stays invested. In a traditional IRA, you defer taxes until withdrawal. In a Roth IRA, you pay taxes upfront but withdrawals in retirement are tax-free. If your goal is long-term wealth building rather than quick trading profits, using the IRA with its contribution match is one of the most efficient ways to grow money on the platform.