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Investing basics—in plain English.

What is a Credit Privacy Number (CPN)

Updated Nov 15, 2022Robinhood Learn

What is a Credit Privacy Number (CPN)

When you’re wearing a good costume, your mask and outfit conceal your real identity, and no one knows who you really are. Similarly, a CPN purports to mask your identity and credit history. Unfortunately, you can’t use your CPN in the real world.

What is a Budget Deficit?

Updated Nov 15, 2022Robinhood Learn

What is a Budget Deficit?

A budget deficit is like not bringing enough food on a trip. If you go for a long hike and camp in the woods, but run out of food, your body will enter a calorie deficit, which is like going into debt or dipping into your savings.

What is Yield?

Updated Nov 11, 2022Robinhood Learn

What is Yield?

Think of yield as a way to measure your harvest. If you plant 100 seeds on one plot of land and get 10,000 plants, and you plant 100 different seeds on another equivalent plot and get 50,000 plants, the second variety has a higher yield.

What is an Exchange-Traded Fund (ETF)?

Updated Nov 10, 2022Robinhood 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 a Liability?

Updated Nov 10, 2022Robinhood Learn

What is a Liability?

A liability is money that a company owes and has promised to pay in the future, whether it be to a bank who lent them money or to employees who have worked for them. Companies use these IOUs in the course of their normal business operations.

What is Common Stock?

Updated Nov 02, 2022Robinhood 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 Tenancy In Common (TIC)?

Updated Nov 01, 2022Robinhood Learn

What is Tenancy In Common (TIC)?

Tenancy in common slices ownership in a property into multiple, but not necessarily equal, pieces.

What is an Appraisal?

Updated Oct 29, 2022Robinhood Learn

What is an Appraisal?

An appraisal is like an Olympic judge's opinion. The audience may love an athlete's performance, but it's the judges' scores that matter. If an appraiser determines a home's worth is under market value, it's less likely to get a loan for more.

What is Cash?

Updated Oct 29, 2022Robinhood Learn

What is Cash?

Cash is almost anything that you could give your friend to pay them back when they cover your meal at a restaurant. You might hand her a $20 bill, but you could just as easily use an app to send an electronic transfer from your bank account.

What is Short Selling?

Updated Oct 25, 2022Robinhood Learn

What is Short Selling?

Short selling is kind of like Opposite Day. Instead of buying first, you borrow shares, sell them first, and buy them back later, hopefully at a lower price. Once you buy them back, you can return them to the place you borrowed them from.

What is an Asset?

Updated Oct 19, 2022Robinhood Learn

What is an Asset?

Assets are like magic beans. Jack traded his cow for a bag of magic beans. His mother got upset, but Jack believed that the magic beans would lead to something valuable. Likewise, companies hold on to assets believing that those resources have worth.

What is a Lien?

Updated Oct 03, 2022Robinhood Learn

What is a Lien?

A lien is like a first right of refusal. If you make payments on property such as a house or car, you get to keep the asset. But if you stop, or try to sell the asset, whoever has a lien on it has the first right to the property.

What is a Code of Ethics?

Updated Oct 03, 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 Comparative Advantage?

Updated Oct 03, 2022Robinhood Learn

What is Comparative Advantage?

A comparative advantage exists when you can produce something at a lower opportunity cost than someone else.

What is Demand?

Updated Oct 03, 2022Robinhood Learn

What is Demand?

Demand is an expression of a customer’s willingness and ability to purchase a good or service. When that willingness goes up, so does demand, and vice versa.

What is Aggregate Demand?

Updated Oct 03, 2022Robinhood Learn

What is Aggregate Demand?

Aggregate demand first measures the market for each particular good or service in an economy then finds the sum of those demands.

What is Marginal Cost of Production?

Updated Oct 03, 2022Robinhood Learn

What is Marginal Cost of Production?

The marginal cost of production is like measuring snowfall. When you get up in the morning, and the ground is covered, you might wonder how much it snowed last night. To find out, you need to subtract what was already there when you went to bed.

What is a Book Value?

Updated Oct 03, 2022Robinhood Learn

What is a Book Value?

Book value is an estimate of how much an asset is worth today, although it doesn’t guarantee someone will pay that much for it.

What is a Corporation?

Updated Oct 03, 2022Robinhood Learn

What is a Corporation?

A corporation is kind of like a landmark. Like Seattle’s Space Needle, many landmarks begin as an idea of one or a few people. But over time, landmarks take on a life of their own, independent of its original creators or even the city it exists in.

What is a Work-in-Progress (WIP)?

Updated Oct 03, 2022Robinhood Learn

What is a Work-in-Progress (WIP)?

A work-in-progress tells investors how much the company has currently in production in relation to the number of finished goods they have on hand, as well as in relation to the costs of goods sold each period.

What is a FICO score?

Updated Oct 03, 2022Robinhood Learn

What is a FICO score?

Your FICO score is like your report card for how you’ve handled debt in the past, based on things like your payment history, current debt balance, and the number of loans you have. Your maximum grade is 850 - the closer to that, the better.

What are Statistics?

Updated Oct 03, 2022Robinhood Learn

What are Statistics?

Statistical methods are useful to analyze, evaluate, and summarize large volumes of data and also have several applications in financial analysis and investing.

What is Disbursement?

Updated Oct 03, 2022Robinhood Learn

What is Disbursement?

A disbursement is like sending someone money with a peer-to-peer payment app. When you use a peer-to-peer payment app, you send cash directly from your bank account to another person’s, disbursing funds from your account to theirs.

What is Pre-Foreclosure?

Updated Oct 03, 2022Robinhood Learn

What is Pre-Foreclosure?

Pre-foreclosure is like a smoke alarm warning that something is wrong. It could be a big fire, a little fire, or just smoke, but you have to investigate and respond. If you can’t stop the fire, the house may burn down (enter foreclosure).

What is a Contingent Beneficiary

Updated Oct 03, 2022Robinhood Learn

What is a Contingent Beneficiary

Your primary beneficiary is Plan A. When you die, your primary beneficiary is the person you most want to receive your life insurance benefit. Most often, this person is an immediate family member like a spouse, parent, or adult child.

What is Expropriation?

Updated Oct 03, 2022Robinhood Learn

What is Expropriation?

Expropriation is like buying something that isn’t for sale. The owner doesn't want to sell, but the government has deemed the sale more important. That’s how expropriation works, they’re forcing the sale of land for vital public use.

What is an Investment Company?

Updated Oct 03, 2022Robinhood Learn

What is an Investment Company?

An investment company is like an investment club at a much bigger scale. Investment clubs pool money to invest primarily in the stock market. Investment companies pool more money, face more regulation, and can sell retail products to investors.

What are Checks and Balances?

Updated Oct 03, 2022Robinhood Learn

What are Checks and Balances?

Like with speed limits, the checks and balances in government protect everyone from one branch of government moving too fast and putting our government and country at risk.

What is a Certified Check?

Updated Oct 03, 2022Robinhood Learn

What is a Certified Check?

A certified check is like collateral on a loan. When you enter into a financial agreement with another party, they want to know they'll get the money you promised. In the case of a check, the payee might have your bank certify the check.

What is Inelastic?

Updated Oct 03, 2022Robinhood Learn

What is Inelastic?

Demand for an inelastic good can change, but the change is considerably smaller than that of an elastic product, which works more like a rubber band.

What is a bid/ask spread?

Published Sep 22, 2022Robinhood Learn

What is a bid/ask spread?

For every stock or options contract, there is an ask price, which is the lowest price a seller is asking for, and a bid price, or the highest price a buyer is currently willing to pay. The difference between the bid and ask price is called the bid/ask spread.

What is Outsourcing?

Updated Sep 03, 2022Robinhood 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 Year-to-date (YTD)?

Updated Aug 16, 2022Robinhood Learn

What is Year-to-date (YTD)?

YTD is like your car’s odometer. The dometer represents the number of miles you’ve driven since the beginning of a certain period. Likewise, YTD represents the passage of days since the beginning of a certain period.

What is Modified Adjusted Gross Income (MAGI)?

Updated Aug 13, 2022Robinhood Learn

What is Modified Adjusted Gross Income (MAGI)?

Modified adjusted gross income is like an airline size limit for your luggage. You’ll need to put your income (your bag) on the scale (through a series of calculations). If it’s too big, you may have to check your bag and pay more in fees (taxes).

What is a net operating loss (NOL)?

Updated Aug 13, 2022Robinhood Learn

What is a net operating loss (NOL)?

A net operating loss is a credit you can use down the line. If your business has a less-than-stellar tax year, you can apply the credit at a more profitable time.

What is Collateral?

Updated Aug 13, 2022Robinhood Learn

What is Collateral?

Just like you hope you never have to use your insurance for an emergency, your lender hopes they don’t have to seize your collateral. But at least they know it’s there to help reduce their losses if they need it.

What is an Inheritance?

Updated Aug 13, 2022Robinhood Learn

What is an Inheritance?

An inheritance is like a gift. You may or may not know what your parent, grandparent, or other loved one plans to give you — The gift they leave as an inheritance may be unexpected, though it’s something you may cherish as a lasting legacy from them.

What is a Pension?

Updated Aug 13, 2022Robinhood Learn

What is a Pension?

A pension plan is like your employer planting a garden for you. While you work, your employer plants seeds. They hope the seeds will grow enough food for your retirement. If the garden doesn’t provide enough, they’ll buy you food.

What is Deferred Compensation

Updated Aug 13, 2022Robinhood Learn

What is Deferred Compensation

When you participate in a deferred compensation plan, you can have money taken out of your paycheck and put into an account for the future. Then, when a rainy day comes along, you can begin to withdraw the money.

What is an Exempt Employee?

Updated Aug 13, 2022Robinhood Learn

What is an Exempt Employee?

An exempt employee is like a monthly music subscription. You pay the exempt employee more money (a monthly salary), but you don’t pay extra the more work you give them.

What is Tax Withholding?

Updated Aug 13, 2022Robinhood Learn

What is Tax Withholding?

Your landlord wants to be paid every month that you live in their building, not just in a lump sum at the end of the year. Likewise, the IRS wants to be paid taxes on your income as you’re earning it, not after the fact.

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 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.

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.