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Investing basics—in plain English.

Updated Jan 15, 2021Robinhood Learn

Picking an investment: How to approach analyzing a stock

Investing is like shopping for a car, but more consequential. You start with your personal needs, style, and objectives. Consider different makes and models, and compare choices based on key metrics. Then, make a decision that works for you.

Updated Jan 15, 2021Robinhood Learn

How to start investing for as little as 1 dollar

Investing in the stock market doesn’t mean you need to have thousands, or even hundreds of dollars to get started. Even if you have just one extra dollar, fractional shares (which are offered on Robinhood) can help you build your portfolio.

Updated Jan 15, 2021Robinhood Learn

What’s the purpose of a diversified portfolio?

A diversified portfolio is kind of like a nutritious diet... The better you spread your investments across different assets, the less likely they are to all experience a loss. Or in other words, your aggregate losses will likely be less severe.

I’m in my 20s — How should I approach investing?

Updated Jul 14, 2020Robinhood Learn

I’m in my 20s — How should I approach investing?

At Robinhood, we’ve got a BOMB acronym to help you think about your financial life. So, here are four tips on how to Budget, Organize, Maximize, and Balance your finances to help tee up your investing journey.

Updated Jan 28, 2021Robinhood Learn

The stock market has been super volatile – How can I make sense of it?

Volatility is like turbulence during a flight. You don’t know when it’ll strike or how severe it'll be. Many investors use standard deviation as a proxy for volatility, estimating the degree to which a stock fluctuates from its average price.

Updated Jan 07, 2021Robinhood Learn

Three charts that help explain this year’s stock market volatility

The stock market’s reaction to COVID-19 has been, well, vicious. Here, we reflect on how the 2020 decline compares to other historic drops, what investors are paying for bonds, and how the Fed’s interest rate policy compares to recent history.

Updated Jan 07, 2021Robinhood Learn

Does a market “selloff” mean long-term investors should sell?

Long-term investing is like seeking cover during an earthquake. Basic preparedness, like staying away from windows and heavy furniture, can help you stay strong during a difficult time. Likewise, long-term investing usually requires calm and caution.

Updated Jan 07, 2021Robinhood Learn

Interest rates are at their lowest since 2008 — What does that mean?

Adjusting the fed funds rate is like training as a weight lifter. The Fed raises interest rates (adds weight) to make loans more expensive, helping to manage inflation. To boost the economy, it lowers rates (removes weight) to make borrowing cheaper.

What is Market Capitalization?

Updated Jan 15, 2021Robinhood Learn

What is Market Capitalization?

Calculating the value of oranges by multiplying the number of oranges by the cost per fruit is like calculating the market capitalization of a company… It’s the value of all of the shares people own.

What is a Stock?

Updated Jan 15, 2021Robinhood Learn

What is a Stock?

A stock is a unit of ownership in a company — If you own a stock, that makes you a shareholder, meaning that you may be eligible to receive dividends if the company succeeds and you may have a vote in some company decisions.

What is an Investment?

Updated Jan 15, 2021Robinhood Learn

What is an Investment?

An investment is an asset bought by an individual or organization with the expectation that it will generate some future income or profit.

Updated Jan 15, 2021Robinhood Learn

What are Bull and Bear Markets?

Bull and bear markets are like the emojis of investing… They’re simplified labels to describe market movements up or down over time. You’ll notice the words’ meanings have expanded to capture the general sentiment of stocks, markets, or industries.

Updated Jan 15, 2021Robinhood Learn

What is Diversification?

Diversification involves owning assets that are not closely connected or affected by the market in the same way. By splitting up your investments, you limit your exposure to risk.

Updated Jan 15, 2021Robinhood Learn

What is the Stock Market?

The world’s stock markets are complex, but are all based upon one simple concept… Connecting stock buyers with stock sellers to trade under an agreed upon set of rules. This is the key role of every stock market, from New York to Hong Kong.

What is the S&P 500?

Updated Jan 15, 2021Robinhood Learn

What is the S&P 500?

The S&P 500 is like a stock scoreboard… When you want a helpful snapshot of what stocks are up to, go to the S&P 500. Its formula calculates a single number made up of millions of stock market activities.

What is a Portfolio?

Updated Jan 15, 2021Robinhood Learn

What is a Portfolio?

A portfolio is your investment pie. Each asset represents a slice of the pie, whether it be stocks, bonds, mutual funds, exchange-traded funds (ETFs), cash, etc. The size of each slice is proportionate to how much you own.

What is a Dividend?

Updated Jan 15, 2021Robinhood Learn

What is a Dividend?

A dividend is like a ripe coconut falling from a tree... When a coconut falls from a tree, it’s as if the tree is a company, distributing some of its fruit back to you. As an investor, you have a choice of keeping the coconut or planting it.

Updated Jan 14, 2021Robinhood Learn

What is an Exchange-Traded Fund (ETF)?

An ETF is like an investment smoothie… Similar to a smoothie, it’s one thing you can invest in that’s made up of a mix of ingredients, available in different asset flavors (i.e., industries, sectors, etc.).

What is Capital Gains Tax?

Updated Jan 12, 2021Robinhood Learn

What is Capital Gains Tax?

Capital gains tax is a tax on the profit made from the sale of an asset (e.g., stock, property).

What is a Roth IRA?

Updated Jan 08, 2021Robinhood Learn

What is a Roth IRA?

A Roth IRA is like a Redwood tree. You pay for sapling and the supplies to grow it. You put in a bit of effort over time to make sure that the tree is maturing. And when you’re ready to retire, you won’t have to pay more money to enjoy its shade.

Updated Jan 08, 2021Robinhood Learn

What is a Fractional Share?

A fractional share is like a slice of a gem… If a share in a company is like a gem, a fractional share is like a slice of that jewel. Not everybody wants (or can afford) an entire gem, but these jewels can be broken into smaller pieces.

What is a Bond?

Updated Jan 07, 2021Robinhood Learn

What is a Bond?

It’s an IOU you can trade — but it's not guaranteed… A bond forms a borrower/lender relationship. The borrower is the company issuing a bond, the lender is the investor who buys a bond. Borrowers get cash, lenders usually get interest payments.

What is a PE Ratio?

Updated Jan 07, 2021Robinhood Learn

What is a PE Ratio?

How much does one dollar of profitability cost?… That’s the P/E ratio. It’s a tool to help investors understand how expensive a stock is by pegging it to a dollar of profitability.

Updated Jan 07, 2021Robinhood Learn

What is Forex?

Foreign exchange is the language of money… Not everyone speaks the same language. Not everyone wants the same money. The foreign exchange market is where translations happen from one currency to another.

What is the Dow?

Updated Jan 07, 2021Robinhood Learn

What is the Dow?

Getting selected to the Dow is an honor… The Dow’s 30 companies are some of the most prestigious and well-known brands in the United States. Investors look to the Dow to learn how markets are doing in general.

What is an IPO (Initial Public Offering)?

Updated Jan 07, 2021Robinhood Learn

What is an IPO (Initial Public Offering)?

With great excitement comes great responsibility… When a company IPOs, its stock becomes listed on the public investing menu for the first time. These stocks can be tempting to purchase because there’s often hype surrounding the event.

What is the Nasdaq?

Updated Jan 07, 2021Robinhood Learn

What is the Nasdaq?

Picture your one tech-obsessed buddy (everyone’s got one)… She learned to code before she could text. That’s like Nasdaq. Born out of tech innovation, it is known for attracting tech companies to list their shares for IPOs.

What is an Option?

Updated Jan 07, 2021Robinhood Learn

What is an Option?

An option is like an umbrella... It could be valuable for you, or it could end up having no value at all. The beauty with an option, and with an umbrella, is that you don’t have to use it. It’s your option whether to exercise it or not.

What is a Security?

Updated Jan 07, 2021Robinhood Learn

What is a Security?

Picture securities as different vegetables you can plant in your garden... They’re available in many varieties, such as stocks, bonds, ETFs, and mutual funds, but there’s a risk they don’t grow.

Updated Jan 07, 2021Robinhood Learn

What is an Ex-Dividend Date

The ex-dividend date is like a conductor blowing a horn to tell passengers a train is about to leave the station... It’s a cut off point that defines if an investor buying a stock (that offers dividends) will be eligible or not to receive them.

What is a Balance Sheet?

Updated Jan 07, 2021Robinhood Learn

What is a Balance Sheet?

A balance sheet is like taking a financial portrait of a company with a polaroid camera... It’s a snapshot, taken at one point in time, that helps capture a company’s health by showing the value of its assets, liabilities, and shareholders’ equity.

What is an Income Statement?

Updated Jan 07, 2021Robinhood Learn

What is an Income Statement?

An income statement is kind of like a video reel... It calculates a company’s net profit, by adding total revenue and subtracting total costs over a specific period of time. It’s one of the most widely cited financial statements.

What is EPS?

Updated Jan 07, 2021Robinhood Learn

What is EPS?

EPS is one tool to help investors get to know a stock… Earnings per share shows what part of a company’s total profits is “owned” by each individual share. Tracking a company’s EPS over time helps you assess the stock’s change in value over time.

What is Profit?

Updated Jan 07, 2021Robinhood Learn

What is Profit?

Profit is like the honey produced from a company’s beehive… It’s how much a company is earning or losing, based on the difference between the money it brings in (revenue) and what goes out (costs).

What is Beta?

Updated Jan 07, 2021Robinhood Learn

What is Beta?

Beta's a tool to measure a stock's volatility... Beta compares the movement of a stock to the broader moves of the market. The more volatile a stock or other traded investment is, the higher its beta tends to be.

What is Common Stock?

Updated Jan 07, 2021Robinhood Learn

What is Common Stock?

Common stock is like general admission at a concert, while preferred shares are the VIP passes… Both types of stocks are slices of ownership in a company, and typically come with voting rights, or even perks like income paid back to shareholders.

What is a Broker?

Updated Jan 07, 2021Robinhood Learn

What is a Broker?

Online brokers are like professional matchmakers. They offer a fast and efficient way to place trades and connect with people on the other side of a transaction. Some OG firms charge a commission for the service.

What is CAGR?

Updated Jan 07, 2021Robinhood Learn

What is CAGR?

Compound annual growth rate is kind of like the average historical performance of a sports player over multiple seasons of their career… It measures the performance of an investment over a set amount of time, assuming it was compounding.

What is an Index Fund?

Updated Jan 07, 2021Robinhood Learn

What is an Index Fund?

An index fund acts like a mime... It tries its very best to replicate the makeup of stock indexes, such as the S&P 500, and seeks to move just like the stock market index does.

What is a Stock Split

Updated Jan 07, 2021Robinhood Learn

What is a Stock Split

Yogi Berra nailed it... "Cut my pizza into 4 slices — I’m not hungry enough to eat 8." But it doesn’t matter how you cut it, the pizza is still the same size!

What is a Bitcoin Fork?

Updated Dec 29, 2020Robinhood Learn

What is a Bitcoin Fork?

Reaching a Bitcoin fork is like a “kayaker hitting different branches in a river.” One branch, the soft fork, has calmer waters. The other branch, the hard fork, has more turbulent waters, and only kayakers wearing specialized equipment can enter.

What is a 401(k) Plan?

Updated Dec 21, 2020Robinhood Learn

What is a 401(k) Plan?

Sort of like a cake, a 401(k) is made up of a variety of ingredients, that bake over time. The level of retirement fund you ultimately develop in a 401(k) will depend on the kinds of ingredients and length of time it bakes, among other things.

Updated Dec 18, 2020Robinhood Learn

What is Disposable Income

Whenever you go to the doctor’s office, the nurse or doctor takes your blood pressure. They use that as an indicator of your overall health. Your disposable personal income is an indicator of your family’s financial health.

What is a Tariff?

Updated Dec 15, 2020Robinhood Learn

What is a Tariff?

A tariff is like a tollbooth on international commerce… If a country raises the toll to get in, the products going through the tollbooth will be more expensive.

What is a Call?

Updated Dec 15, 2020Robinhood Learn

What is a Call?

A call is like a bid. The term can be used in different contexts. Sometimes putting in a bid is only gives you the option to follow through and buy something; sometimes it commits you to the sale.

What is a Margin Call?

Updated Dec 15, 2020Robinhood Learn

What is a Margin Call?

Margin is the deposit you’ve put up against the borrowings you’ve made to finance your position. If your position is losing money, then you’ll need to put up additional deposits if your account goes below a certain minimum equity.

What is a Stock Option?

Updated Dec 14, 2020Robinhood Learn

What is a Stock Option?

Stock options are like growing fruit. You hope the seeds turn into something that can be picked at harvest. If the fruit is inedible, you lose the cost of the seeds. If the fruit is ripe, you have the option to pull the fruit off the tree.

What is a Fund?

Updated Dec 11, 2020Robinhood Learn

What is a Fund?

A fund is like a bucket of water… What it’s used for depends on who owns it and what he or she wants to do with it. An individual might want to drink from it now or store it for later.