Yes, you do. When you purchase stocks or exchange-traded funds (ETFs) on the Robinhood platform, you are indeed the owner of those shares.
Understanding Stock Ownership on Robinhood
Your ownership of shares on Robinhood is the same type of stock ownership you would get when purchasing investments through most other brokerage companies. Robinhood acts as a broker-dealer, meaning it facilitates the trades and holds your assets in a custodial account on your behalf.
Here's a closer look at what that means for your ownership:
- Legal Ownership: You are the legal owner of the shares you buy. Robinhood does not own them; they simply hold them for you, ensuring they are properly recorded in your name.
- Digital Records: Stock ownership in modern investing is primarily digital. You won't receive physical stock certificates for your shares in most cases, whether on Robinhood or other major platforms. Your ownership is recorded electronically.
- Shareholder Rights: As the owner, you retain the fundamental rights associated with stock ownership. This includes the right to receive dividends (if the company pays them) and, typically, the right to vote on company matters through proxy voting services provided by the brokerage.
- Asset Protection: Your investments held with Robinhood are protected by the Securities Investor Protection Corporation (SIPC) for up to $500,000, including $250,000 for cash. This protection safeguards your assets in the unlikely event that Robinhood itself fails, but it does not protect against a loss in the market value of your investments.
Robinhood vs. Traditional Brokerages: A Comparison
The core concept of stock ownership is consistent across reputable brokerage firms, regardless of their operational model or fee structure.
| Feature | Robinhood | Traditional Brokerages (e.g., Fidelity, Schwab) |
|---|---|---|
| Underlying Ownership | You directly own the stocks/ETFs. | You directly own the stocks/ETFs. |
| Custody of Assets | Robinhood holds your assets as the custodian. | The brokerage holds your assets as the custodian. |
| Access to Shareholder Rights | You typically retain shareholder rights (e.g., voting, dividends). | You typically retain shareholder rights. |
| Transferability of Shares | Your shares can generally be transferred to another brokerage. | Your shares can generally be transferred to another brokerage. |
Practical Insights for Investors
- Your Portfolio is Yours: Any gains or losses in the value of your stocks directly affect your personal wealth, not Robinhood's.
- Control Over Assets: You have full control over when to buy, sell, or hold your investments.
- Account Safety: While stock market fluctuations are inherent, the security of your account and the ownership of your assets are paramount and regulated.
In conclusion, when you invest in stocks through Robinhood, you are purchasing and owning genuine shares of companies, just as you would with any other established brokerage.
