How to set up recurring crypto purchases on Robinhood
Recurring cryptocurrency purchases helps you build wealth gradually by buying the same dollar amount at regular intervals, regardless of price fluctuations. This strategy, called dollar cost averaging, removes the guesswork from market timing and lets you focus on consistent investing habits. When you set up recurring crypto purchases on Robinhood, you automate this process and potentially reduce your average cost per coin over time.
What are recurring crypto purchases
Recurring crypto purchases automatically buy a fixed dollar amount of cryptocurrency on a schedule you choose. Instead of trying to time the perfect moment to buy, you purchase the same amount weekly, bi-weekly, or monthly. When prices are high, your fixed dollar amount buys fewer coins. When prices are low, that same amount buys more coins. Over time, this approach typically results in a lower average purchase price compared to making one large purchase.
Cryptocurrency markets operate 24 hours a day, seven days a week, with prices changing constantly. This volatility makes it nearly impossible to consistently buy at the lowest prices. Recurring purchases help you navigate this volatility by spreading your purchases across different price points automatically.
Why this strategy works for crypto investors
Dollar cost averaging reduces the emotional stress of investing in volatile assets like cryptocurrency. You remove the psychological burden of watching charts and trying to predict short-term price movements. Instead, you focus on your long-term investment goals while market fluctuations work in your favor.
This approach particularly benefits new crypto investors who may feel overwhelmed by market complexity. You start with small, manageable amounts and build confidence as you learn about the market. Even experienced investors use this strategy because it eliminates timing risk and creates disciplined investing habits.
The strategy becomes especially powerful during market downturns. While others panic and avoid buying, your recurring purchases continue automatically, acquiring more cryptocurrency at lower prices. These lower-priced purchases can significantly boost your returns when markets recover.
Setting up your first recurring crypto purchase
Start by opening your Robinhood app and navigating to the cryptocurrency you want to purchase regularly. You can search for specific coins using the search function or browse the available cryptocurrencies in the crypto section. Robinhood supports popular cryptocurrencies including Bitcoin, Ethereum, Dogecoin, and many others.
Once you select your preferred cryptocurrency, tap the "Trade" button at the bottom of the screen. This opens the purchase interface where you normally buy crypto manually. Next, tap "Buy" to access the purchase options.
Look for the dropdown menu in the upper right corner that displays "Dollars" or "Shares." Tap this dropdown to reveal additional purchase options. You will see "Recurring Investment" as one of the available choices.
Choosing your purchase frequency and amount
Select "Recurring Investment" to begin configuring your automatic purchases. Robinhood offers several frequency options: daily, weekly, every two weeks, or monthly. Choose the frequency that aligns with your budget and investment strategy.
Weekly purchases work well for investors who receive weekly paychecks and want consistent market exposure. Bi-weekly purchases match most salary schedules and reduce transaction frequency while maintaining regular investment habits. Monthly purchases require less monitoring and work well for investors with longer-term perspectives.
The minimum recurring purchase amount is just one dollar, making this strategy accessible to virtually any budget. Start with an amount you can comfortably afford to invest consistently. Remember, consistency matters more than the specific dollar amount. You can always increase your recurring purchase amount later as your financial situation improves.
Consider what percentage of your income you want to dedicate to cryptocurrency investments. Financial experts typically recommend limiting cryptocurrency investments to a small portion of your total investment portfolio due to their volatility.
Selecting your payment method
After choosing your purchase frequency and amount, select your payment method. Robinhood gives you two primary options: your linked bank account or your existing buying power within the Robinhood account.
Using your bank account for recurring purchases ensures the money comes directly from your checking or savings account each time. This option works well if you want to keep your crypto investing separate from other Robinhood activities. The platform will automatically transfer the specified amount from your bank account for each scheduled purchase.
Using your buying power means the recurring purchase draws from funds you have already deposited into your Robinhood account. This option provides more control since you can see your available balance and know exactly when you have sufficient funds for the next purchase. However, you need to ensure adequate buying power remains in your account for each scheduled purchase.
Reviewing and confirming your recurring purchase
Before finalizing your recurring crypto purchase, carefully review all the details. Check that you selected the correct cryptocurrency, purchase amount, frequency, and payment method. This review prevents costly mistakes and ensures your automatic purchases match your investment intentions.
The review screen displays when your first purchase will occur and shows the ongoing schedule. Most recurring purchases begin the next business day after setup, though this can vary based on your selected frequency and current market conditions.
Pay attention to any backup payment options if you selected buying power as your primary payment method. A backup payment method ensures your recurring purchase continues even if your buying power falls below the required amount. You can choose to skip the backup payment option, which means purchases will only occur when sufficient buying power exists in your account.
Managing and monitoring your recurring purchases
After setting up recurring crypto purchases, monitor their performance through your Robinhood account. The platform tracks your purchase history, showing the price paid for each automatic transaction. This information helps you understand how dollar cost averaging affects your average purchase price over time.
Review your recurring purchases monthly to ensure they still align with your financial goals and budget. Life circumstances change, and you may need to adjust your purchase amounts or frequency. Robinhood allows you to modify or cancel recurring purchases at any time through the same menu where you set them up originally.
Keep track of your total cryptocurrency allocation within your broader investment portfolio. As recurring purchases accumulate, crypto may represent a larger portion of your investments than initially intended. Rebalance periodically to maintain your desired asset allocation.
Understanding the benefits and limitations
Recurring crypto purchases offer several advantages beyond dollar cost averaging. They create consistent investing habits that can improve your overall financial discipline. The automation removes the need to remember manual purchases, reducing the chance you skip investing during busy periods.
This strategy also prevents large, emotionally-driven purchases during market euphoria when prices may be artificially inflated. Instead of investing a lump sum when everyone is talking about crypto, you invest steadily regardless of market sentiment.
However, dollar cost averaging is not guaranteed to produce better results than lump sum investing. If cryptocurrency prices trend consistently upward during your investment period, a single large purchase at the beginning would generate higher returns. The strategy trades potentially higher returns for reduced risk and emotional comfort.
The approach also means you continue buying during prolonged market downturns, which requires discipline and conviction in your long-term investment thesis. Some investors struggle to maintain automatic purchases when they watch their investment values decline week after week.
Tax considerations and record keeping
Each recurring crypto purchase creates a separate tax lot for reporting purposes. When you eventually sell cryptocurrency, the IRS requires you to report the purchase date and price for calculating capital gains or losses. Robinhood provides tax documents that include this information, but maintaining your own records helps ensure accuracy.
Consider the tax implications of your selling strategy if you plan to take profits periodically. The first-in-first-out accounting method means you sell the cryptocurrency you purchased earliest first. This can affect whether you qualify for long-term capital gains treatment, which requires holding assets for more than one year.
Keep detailed records of all recurring purchases, including dates, amounts, and prices paid. This information becomes crucial for tax reporting and helps you calculate your actual returns over time.
Getting started with your recurring crypto strategy
Start your recurring crypto purchase journey by choosing one cryptocurrency you understand and believe has long-term potential. Bitcoin and Ethereum are popular choices for beginners due to their established track records and widespread adoption. Avoid spreading initial recurring purchases across multiple cryptocurrencies until you gain experience.
Begin with a modest amount you can afford to lose entirely. Cryptocurrency investments carry significant risk, and you should never invest money you need for essential expenses. Consider starting with amounts as low as five to ten dollars per week to test the strategy and build confidence.
Set up your first recurring purchase using the steps outlined earlier, then monitor its progress for several months. This hands-on experience will teach you how dollar cost averaging works in practice and help you decide whether to increase your investment amounts or add additional cryptocurrencies to your recurring purchase strategy.
Remember that successful investing requires patience and discipline. Recurring crypto purchases work best as a long-term strategy, so resist the urge to constantly adjust your approach based on short-term price movements. Focus on consistency and let the power of dollar cost averaging work over time to potentially improve your investment outcomes.
FAQs
Can you set up recurring buys on Robinhood?
Yes, you can set up recurring cryptocurrency purchases on Robinhood. The platform allows you to automate regular purchases of various cryptocurrencies using either your linked bank account or existing buying power.
How do I create a recurring investment or order for crypto?
Navigate to your chosen cryptocurrency in the Robinhood app, tap "Trade," then "Buy." Look for the dropdown menu that shows "Dollars" or "Shares" and select "Recurring Investment." From there, you can set your frequency and purchase amount.
How frequently can I trade crypto on Robinhood?
You can set up recurring crypto purchases to occur daily, weekly, bi-weekly, or monthly. For manual trading, you can trade crypto 24/7 on Robinhood, as cryptocurrency markets never close.
Is it cheaper to buy crypto on Robinhood or Coinbase?
Robinhood generally offers lower fees compared to Coinbase as they don't charge direct commission fees. However, costs are built into the spread between buying and selling prices.
How do recurring investments work with instant deposits for crypto?
Recurring investments can be funded through your linked bank account or existing buying power in your Robinhood account. If using buying power, ensure sufficient funds are available for each scheduled purchase.
How does the timing of a crypto recurring order work?
Recurring orders typically begin the next business day after setup and continue according to your chosen schedule. The exact timing may vary based on your selected frequency and market conditions.
Why did I receive less than my recurring order amount for crypto?
This can happen due to price fluctuations in the cryptocurrency market or if there were insufficient funds in your account at the time of purchase.
Why was my crypto recurring order paused or skipped?
Recurring orders might be paused or skipped if there are insufficient funds in your account, issues with your payment method, or technical problems with the platform.
Are all cryptocurrencies eligible for recurring investments?
Not all cryptocurrencies are eligible for recurring investments. Only cryptocurrencies supported by Robinhood's platform can be purchased through recurring orders.
How do I edit or cancel a recurring investment or order for crypto?
You can modify or cancel recurring purchases at any time through the same menu where you initially set them up. Navigate to your recurring investments section and select the order you wish to edit or cancel.
What should I do if my recurring investment gets paused automatically?
Check your account balance and payment method to ensure they're valid and have sufficient funds. If the issue persists, contact Robinhood support for assistance.
How do I skip the next scheduled recurring deposit for crypto?
You can pause or skip individual recurring purchases by accessing your recurring investment settings and selecting the specific order you wish to skip.
Why can't I set up a recurring crypto order?
This might occur if you haven't completed account verification, have insufficient funds, or are trying to set up recurring purchases for an unsupported cryptocurrency.
How do I skip the next scheduled recurring deposit for crypto?
Access your recurring investment settings, find the specific recurring order, and use the skip or pause option for the next scheduled purchase.
