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Investing basics—in plain English.

What is Forbearance?

Updated May 22, 2022Robinhood Learn

What is Forbearance?

Forbearance allows you to take a short-term break from paying your debt, but eventually, you’ll have to start making payments again to finish paying off that loan.

What is an Excise Tax?

Updated May 22, 2022Robinhood Learn

What is an Excise Tax?

Governments often use excise taxes to try to turn people away from unhealthy or costly activities like smoking.

What is an Endowment?

Updated May 22, 2022Robinhood Learn

What is an Endowment?

An endowment is like a high-interest savings account. There’s a catch, though. You can’t spend the money you put into your savings account. Instead, you can only spend the money you have earned in interest.

What is Due Diligence?

Updated May 21, 2022Robinhood Learn

What is Due Diligence?

In finance, due diligence involves gathering research to increase the odds of making the right financial decision.

What is Diversification?

Updated May 21, 2022Robinhood 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.

What is a Derivative?

Updated May 21, 2022Robinhood Learn

What is a Derivative?

Derivatives trading is like an escalator compared to the staircase of the traditional markets. Derivatives can offer investors more opportunity for speculation and increased gains. But this opportunity also exposes traders to escalated losses.

What is a Debenture?

Updated May 21, 2022Robinhood Learn

What is a Debenture?

Investors lend money to companies and governments through debentures, trusting they’ll get the funds back.

What is a Cost-Benefit Analysis?

Updated May 21, 2022Robinhood Learn

What is a Cost-Benefit Analysis?

Anytime businesses are considering a big decision, they want to use cost-benefit analysis to make sure that whatever choice they make is expected to result in more money for the company in the long-run.

What is a Code of Ethics?

Updated May 21, 2022Robinhood Learn

What is a Code of Ethics?

Companies want to operate in specific ways based on the leadership’s personal beliefs or industry norms and standards. Creating a code of ethics gives people in that company a checklist they can follow when making decisions.

What is the Clayton Antitrust Act?

Updated May 21, 2022Robinhood Learn

What is the Clayton Antitrust Act?

The Clayton Antitrust Act is a law that makes it difficult for businesses to limit their competition unfairly. It was signed into law in October of 1914.

What is a White Paper?

Updated May 21, 2022Robinhood Learn

What is a White Paper?

White papers inform an audience about a company’s products, services, or technology without overtly selling. Instead, they give consumers information to help them make informed buying decisions and reach the destination on their own.

What is Enterprise Resource Planning (ERP)?

Updated May 21, 2022Robinhood Learn

What is Enterprise Resource Planning (ERP)?

Enterprise Resource Planning (ERP) is kind of like urban planning. When you plan a city, you need to make sure all the facilities are connected to each other and have easy access to all the important city information.

What is Vertical Integration?

Updated May 21, 2022Robinhood Learn

What is Vertical Integration?

Vertical integration is like a ladder. Each business in the supply chain is a rung. Goods move from rung to rung up and down the ladder. When a company owns two or more businesses next to each other on the ladder, it is vertically integrated.

What is Cash Flow?

Updated May 20, 2022Robinhood Learn

What is Cash Flow?

Cash flow is essential because it provides the money that companies must spend in order to stay afloat. A company brings in cash flow by selling its goods and services.

How to start investing for as little as 1 dollar

Updated May 20, 2022Robinhood 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.

What is a Balance Transfer?

Updated May 20, 2022Robinhood Learn

What is a Balance Transfer?

With a balance transfer card, the cardholder is looking to reduce their payment and interest rate so they can get control of their debt.

What is Accruing?

Updated May 20, 2022Robinhood Learn

What is Accruing?

When a business sells its goods or services, its customers may promise to pay at a later time. An accrual is like recording those promises on the company’s books. It lets everyone know the commitments have been made, regardless of when they’re due.

What is a crypto wallet?

Updated May 17, 2022Robinhood Learn

What is a crypto wallet?

Crypto wallets provide you with secure access to your crypto for managing, spending, and sending.

What is the Standard Deduction?

Updated May 02, 2022Robinhood Learn

What is the Standard Deduction?

If you take the standard deduction on your 1040, you don't need to claim most of your deductions. Standard deduction allows you to get the benefit of reducing your income in the same way as claiming your deductions, but without the extra paperwork.

What is Fully Paid Securities Lending?

Updated Apr 27, 2022Robinhood Learn

What is Fully Paid Securities Lending?

Fully Paid Securities Lending may sound complicated, but the goal is pretty simple: profit off of an existing security (like a stock in your portfolio) by loaning it.

What is an Initial Public Offering (IPO)?

Updated Mar 22, 2022Robinhood Learn

What is an Initial Public Offering (IPO)?

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 an Inheritance Tax?

Updated Sep 15, 2021Robinhood Learn

What is an Inheritance Tax?

A company may be willing to give you their e-book for free, but there’s a catch — You have to give them your email address. Similarly, you’re welcome to keep the inheritance you received as long as you pay the tax authorities what they require.

What is a Recession?

Updated Sep 14, 2021Robinhood Learn

What is a Recession?

Economies are generally in a constant state of growth, but there are moments when this growth reverses. This reversal is relatively healthy , but if it goes on for too long, it creates adverse effects for everyone involved.

What is Net Profit Margin?

Updated Sep 14, 2021Robinhood Learn

What is Net Profit Margin?

The net profit margin is like a snapshot of a company’s profits. It captures a company’s financial health in one number — and that number reflects profitability.

What is Real Estate?

Updated Sep 04, 2021Robinhood Learn

What is Real Estate?

Investing in real estate is like investing in a business. If you devote the proper resources to it, it’s likely to grow in value. But if you neglect it, it’s likely to fall apart. And in both cases, its value can be influenced by outside factors.

What is an Annuity?

Updated Sep 04, 2021Robinhood Learn

What is an Annuity?

Annuities are like a freezer full of ice cream. There are many flavors of ice cream, and each tastes different, but it is all still ice cream made from milk and sugar. The freezer keeps the ice cream cold and lets you save it for another day.

What is Outsourcing?

Updated Sep 04, 2021Robinhood Learn

What is Outsourcing?

Companies outsource work because they benefit in some way. It could save them money in wages, free up resources for more core functions such as research and development, or expose them to highly skilled specialists.

What is Capital Gains Tax?

Updated Sep 01, 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 Arbitrage?

Updated Aug 31, 2021Robinhood Learn

What is Arbitrage?

Arbitrage trading requires finding unique circumstances in different markets (for example, a foreign market) that cause the same goods to be priced differently.

What is Surety?

Updated Aug 30, 2021Robinhood Learn

What is Surety?

Say you enter into a contract, and the original deal falls through. Often, this means you’re out of luck. But if you’ve entered into a surety agreement with the other party and a guarantor, you have someone else to fall back on.

What is Supply Chain Management (SCM)?

Updated Aug 25, 2021Robinhood Learn

What is Supply Chain Management (SCM)?

Supply chain management is like a restaurant meal coming together. A restaurant is a compact supply chain. Raw materials are transformed into a dining experience. The goal is to satisfy the customer in the most efficient and profitable way possible.

What is an Ex-Dividend Date

Updated Aug 25, 2021Robinhood Learn

What is an Ex-Dividend Date

The ex-dividend date is like a train taking off from 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 the Compound Interest Formula?

Updated Aug 25, 2021Robinhood Learn

What is the Compound Interest Formula?

Compound interest is kind of like a snowball rolling downhill, gathering more snow as it speeds down... The compound interest formula is the math that tells you how big that will be when it gets to the bottom.

What is a Security?

Updated Aug 25, 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.

What is Depreciation?

Updated Aug 25, 2021Robinhood Learn

What is Depreciation?

Understanding a company’s depreciation method is like understanding a company’s language. It allows you to read between the lines, helping you analyze the strength of a stock’s earnings.

What is a Stock Option?

Updated Aug 25, 2021Robinhood Learn

What is a Stock Option?

Some characteristics of stock options are like growing fruit. You hope the seeds planted will grow into fruit that is ripe at harvest, so you have the option to pull it off the tree. But if the fruit is inedible, you lose the cost of the seeds.

What is Relative Strength Index (RSI)?

Updated Aug 25, 2021Robinhood Learn

What is Relative Strength Index (RSI)?

Using the RSI is like trying to predict the next sale at your favorite clothing store. If you’ve been following recent price changes for that sweater you’re eyeing, you may do a better job of predicting how much it will cost in the future.

What is Certificate of Deposit (CD)?

Updated Aug 24, 2021Robinhood Learn

What is Certificate of Deposit (CD)?

A CD is like a bank vault. You put your money in the vault and give someone the key. They agree to come back on a specific day with the key. If you wait, you’ll get your money plus interest. If not, they'll charge you an early withdrawal penalty.

What is a Margin Call?

Updated Aug 17, 2021Robinhood 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 Health Maintenance Organization (HMO)?

Updated Aug 17, 2021Robinhood Learn

What is a Health Maintenance Organization (HMO)?

An HMO is like an umbrella. As long as you visit a doctor or hospital that falls under the umbrella, you’re generally fine. If they're not covered, you’ll probably have to pay more out of pocket — and you may get soaked with high medical bills.

What is a Hedge?

Updated Aug 17, 2021Robinhood Learn

What is a Hedge?

A hedge is like an insurance policy. When you own a car, you usually purchase insurance to cover losses from potential accidents. If the car is totaled, you expect to gain value from the insurance company covering the damage.

What is Liquidity?

Updated Aug 16, 2021Robinhood Learn

What is Liquidity?

To understand liquidity, think about water. Water is a liquid that’s ready to drink. But you can’t drink an ice cube as it is. You have to wait for it to melt. Similarly, cash is liquid but if you own a house, you need to sell it to have cash.

How can I start budgeting? Learn how to spend, save, and invest

Updated Aug 02, 2021Robinhood Learn

How can I start budgeting? Learn how to spend, save, and invest

Before you can save or invest, you probably have to cover the basics: food, housing, healthcare, transportation, and insurance. If you’re able to, it’s helpful to spend less money than you earn. It’s one of the keys to building wealth.

How to read an S-1

Updated Mar 23, 2021Robinhood Learn

How to read an S-1

If a company wants to go public in the US, it must file a Form S-1 with the Securities and Exchange Commission. Also called a registration statement, the form includes details on the company’s business, managers, future plans, and finances.

Welcome: Investing 101

Updated Feb 02, 2021Robinhood Learn

Welcome: Investing 101

Ready to invest, but don't know where to start?

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

Updated Jan 30, 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.

What’s the purpose of a diversified 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.

Picking an investment: How to approach analyzing a stock

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.

What can I invest in? An overview of assets

Updated Jan 15, 2021Robinhood Learn

What can I invest in? An overview of assets

Investing is the act of purchasing an asset in the hope that it will deliver some profit, potentially through appreciation, dividends, or interest. Examples of investments include stocks, bonds, ETFs, and real estate.

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

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.

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

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.

We’re in a bear market — So, what does that mean?

Updated Jan 07, 2021Robinhood Learn

We’re in a bear market — So, what does that mean?

Investing in a bear market is kind of like bungee jumping. History indicates that the stock market bounces back from its declines. However, you must be aware, the bottom could fall out, leaving the economy and your investments in freefall.

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

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.

Why should I think about investing?

Updated Dec 21, 2020Robinhood Learn

Why should I think about investing?

Like planting a tomato patch, investing requires time and patience. Often, there are challenges along the way. But with care and consistency, you give yourself the chance to build a rich harvest. So, let’s see that green thumb.

Bitcoin’s mining reward is about to be cut in half — What investors should know about the “Halvening”

Updated Nov 25, 2020Robinhood Learn

Bitcoin’s mining reward is about to be cut in half — What investors should know about the “Halvening”

Every 210,000 blocks, the reward for mining bitcoin gets cut in half, a process that’s designed to repeat until 21 million units have been created. Based on current activity, the “block reward” is expected to drop to 6.25 bitcoins on May 11, 2020.

Three things to do before you start investing

Updated Nov 25, 2020Robinhood Learn

Three things to do before you start investing

Your investment plan starts with a few key questions: Where are you now? And where do you want to be in the future? You can prepare to invest by reflecting on your goals, paying off high-interest debt, and creating an emergency fund.

How much should I save for retirement?

Updated Nov 25, 2020Robinhood Learn

How much should I save for retirement?

Saving for retirement is like preparing for a long vacation. While you can’t pinpoint the exact cost of the entire trip, you’ll need to save enough so you hopefully don’t run out of money along the way.

Investing during times of uncertainty

Updated Nov 25, 2020Robinhood Learn

Investing during times of uncertainty

Everything about 2020 has been unprecedented, from COVID-19 to the US presidential race. This year, millions of new investors experienced the stock market’s highs and lows, a reflection of the uncertainty that gripped our nation.

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.