First trade recommendations

Right after you join Robinhood, you should be able to access first trade recommendations through cards on the Investing or Browse tabs.

If you already placed a trade in your Robinhood brokerage account, you won’t be able to access the experience to receive a recommended portfolio. Residents of Massachusetts also don't have access at this time.

If these exclusions don't apply to you, make sure your app is updated to the latest version.

A portfolio is a group of investments, and each recommended portfolio is made up of 4 exchange-traded funds (ETFs) that we choose for you using an algorithm we built. Our algorithm is basically an automated system that uses your answers to our questions to match you to a portfolio that makes sense for you.

In investing, a fund tracks the performance of a bundle of investments, and exchange-traded means it’s bought and sold on a stock exchange. An ETF is a security that trades just like a stock, but performs like a larger bundle of investments.

ETFs allow you to invest in multiple things at once, meaning that you’re able to put your eggs in many baskets. If you just own a stock, you’re invested in a single company—but if you own an ETF with 50 stocks in it, that’s like owning a small slice of each of those 50 stocks. Having your money spread across lots of investments may help reduce risk, so you might have some cushion if one company or industry doesn’t perform well.

Check out What is an Exchange-Traded Fund (ETF) to learn more about ETFs and how they work.

To make sure your recommended portfolio is diversified, our algorithm selects index-based ETFs across four asset classes. An asset class is basically just a group of investments that tend to behave similarly, and the asset classes we chose represent a significant portion of the overall universe of investments. It’s generally considered good practice to have a mix of different asset classes in your portfolio so that asset classes that are performing well can help balance out those that are not. Keep in mind that this doesn’t guarantee that your investments will perform well or that you won’t lose money—it’s just one strategy for diversifying your portfolio and potentially reducing risk.

Our algorithm picks 4 ETFs—one in each of the following asset classes:

• US equities: Stocks from American companies
• Developed markets equities: Stocks from companies in developed international (outside of the US) markets, which are more established countries that are more advanced economically
• Emerging markets equities: Stocks from companies in emerging markets, which are fast-growing countries that are developing economically
• US bonds: Government and corporate bonds from American companies. Bonds are essentially units of debt that you can buy, and that the borrower has to pay back with interest. Investing in bonds can help to balance out the risk of investing in stocks.

Among other factors, here are some of the main criteria that our algorithm uses to choose an ETF:

• High assets under management (AUM): AUM refers to the total amount of money managed by the ETF—in other words, how much money has been invested in that ETF. If an ETF has a high AUM, it likely means that the ETF is a popular choice for investors.
• High trading volume: Trading volume refers to the total value of the shares that are traded on a given day.
• Low expense ratios: The expense ratio is a small fee that helps cover managerial and administrative costs for the fund. They’re typically expressed as a percentage. For example: if you invested $100 in an ETF with a 0.1% expense ratio, $0.10 of your investment would go toward the expense ratio. Our algorithm favors low expense ratios because this means less of your investment is going towards this fee.
• Low tracking error: The 4 ETFs we recommend are index ETFs, which means that they aim to track a certain benchmark index. Tracking error is the difference in actual performance between an ETF and the index the ETF is tracking. Our algorithm looks for ETFs with a lower tracking error because they have historically tracked the underlying index more closely than ETFs with a higher tracking error.

We recommend splitting your money across your portfolio a certain way so you take on an amount of risk that makes sense for you. This is called “asset allocation,” and the general idea behind it is that some asset classes are more risky than others, which determines how you may need to split your money across them.

Vanguard is an investment firm that manages ETFs, and their ETFs tend to score well when it comes to the criteria our algorithm cares about: they’re large, they’re traded frequently, and they have low fees, among other factors. This doesn’t necessarily mean that our algorithm will always recommend Vanguard ETFs. Each quarter, the algorithm may consider alternatives and may choose different ETFs that it thinks are a better fit.

It has to do with the math our algorithm does to determine your recommended portfolio. It requires the $20 minimum in order to correctly calculate and divide your money across the 4 ETFs to meet your investing needs.

If you answer the questions differently each time, you may receive a different portfolio based on how your answers change.

If you answer the questions exactly the same each time, you’ll receive a portfolio with the same risk level each time. However, if you repeatedly fill out the questionnaire using the same answers across several days, you may notice that the way we split up your recommended portfolio across the 4 ETFs may be slightly different day to day. This is because our algorithm updates the data it uses to recommend portfolios each day to reflect changes in the market.

Here’s some additional context behind how we come up with recommended portfolios:

• Robinhood data scientists designed the algorithm that generates your recommendation and it’s been carefully reviewed by investment professionals and third-party experts to validate that the algorithm is working as intended based on our investment methodology. Our algorithm’s main goal is to recommend a portfolio that seeks to optimize your expected returns while taking on an amount of risk that makes sense for you.
• When we make any recommendation to you, we’re required to learn about your investing needs and prioritize your best interest above all else. You can read more about this in our Regulation Best Interest disclosure.

This experience is designed to help new investors who may want help making their first investment, so it’s only available for customers who haven’t placed a trade on Robinhood yet. If you’ve already invested in your recommended portfolio, you can’t access the experience again.

Right now, if you want to invest more money in your recommended portfolio you’ll need to place a buy order for each individual ETF.

The recommended portfolio was provided to you at the point in time you made the investment. However, you are responsible, as a self-directed investor, for all investment decisions you make with those 4 ETFs going forward including when to make additional purchases for an ETF, considerations for rebalancing the portfolio, and when you would like to sell those investments. Robinhood will not monitor your portfolio or perform ongoing recommendations for it.

We don’t offer any other recommendations for investments at this time. If you’d like to learn more about starting to invest and setting goals, you can explore Learn the basics.