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Investing basics—in plain English.

Updated Sep 28, 2021Robinhood Learn

What is a crypto wallet?

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

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.

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.

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.

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.

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.

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.

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).

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

Updated Aug 13, 2021Robinhood 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.

Updated Aug 13, 2021Robinhood Learn

What is a Bid?

A bid is like haggling in the world’s biggest flea market… You finally found that one of a kind rug that’s gonna look great in your living room. The price you offer to pay is your bid. The seller may accept or reject your bid.

Updated Aug 13, 2021Robinhood 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.

Updated Aug 10, 2021Robinhood Learn

What is a Buy Limit Order?

A buy limit order is like setting a strict household budget, but for buying stocks. You have a fixed amount of money to spend every month, so you can only buy things that fit within that budget.

Updated Aug 08, 2021Robinhood Learn

What is a Command Economy?

If a command economy were a puppet show, the government would be the puppeteer. In a command economy, the government makes all the major economic decisions. It controls all means of production in a country.

Updated Aug 08, 2021Robinhood Learn

What is Human Capital?

Human capital is like a trained chef in a kitchen. You can give anyone access to a fully stocked kitchen, but you need a chef with training, knowledge, and experience to turn that food and those tools into an exceptional culinary experience.

Updated Aug 08, 2021Robinhood Learn

What is a Market Economy?

A market economy is like a minimally tended garden. Flowers and weeds will grow or perish according to the laws of nature — It may be beautiful, but it could also get unruly.

Updated Aug 08, 2021Robinhood Learn

What is Inventory?

Inventory is like everything you bring to a yard sale. All the items you’re selling are part of it. Once someone purchases an item, it’s no longer your inventory. Furniture used to display wares isn’t for sale, so its not considered inventory.

Updated Aug 08, 2021Robinhood Learn

What is Annual Percentage Rate (APR)?

An APR can help you gauge how much a loan or credit product might cost. But you’ll need more information to estimate the true cost, such as how fast you intend to pay it off, whether additional costs are excluded, or the effect of compound interest.

Updated Aug 08, 2021Robinhood Learn

What is a Credit Union?

A credit union is like a community garden. A group of people own a small plot of land (the credit union), and everyone brings seeds (cash deposits). Membership in the garden is restricted to a certain group—people who live in the neighborhood.

Updated Aug 08, 2021Robinhood Learn

What is a Trust?

A trust is like a safety deposit box that someone else holds the keys for. The deposit box holds something valuable, but you don’t have the key to open the box to get what's inside. Instead, you have to ask the trustee to open the box for you.

Updated Aug 08, 2021Robinhood Learn

What is Encroachment?

Encroachment is like an offside penalty in a football game. Each team has the right to stand anywhere they’d like on their side of the line of scrimmage. If a player crosses into the other team’s area, they’re encroaching on that team’s property.

Updated Aug 08, 2021Robinhood Learn

What is Customer Service?

Customer service is like a waiter at a restaurant. Waiters take orders, serve food, and stand ready to assist. Their primary job is to help the customers and ensure that they have a positive experience — increasing the chances that they will return.

Updated Aug 08, 2021Robinhood Learn

What is an Externality?

An externality is like your neighbors playing music at high volume. If it’s keeping you up or you don’t enjoy it, that’s a negative externality. If it happens to be your favorite song and you feel like dancing, that’s a positive one.

Updated Aug 08, 2021Robinhood Learn

What is an Automated Clearing House (ACH)?

The Automated Clearing House (ACH) Network is like email for money. Instead of paper checks moving around the country, like paper mail used to, it's the electronic equivalent. It's cheaper, faster, and more reliable, but the basic logic is the same.

Updated Aug 08, 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.

Updated Aug 08, 2021Robinhood Learn

What is Indemnity?

A misfortune like your house burning down — or being sued for professional negligence — could wipe you out financially. But sometimes you can get out of this type of jam if you’ve paid an insurance company to indemnify you against such losses.

Updated Aug 08, 2021Robinhood Learn

What is Scarcity?

Scarcity is like having two sandwiches for four people. You may have to get creative, cutting the two sandwiches in half for four people. Or, you might sell the sandwiches to the two highest bidders, in which case the price of a sandwich will go up.

Updated Aug 08, 2021Robinhood Learn

What is Opportunity Cost?

Imagine a balancing scale... Every choice comes with some kind of trade-off — aka opportunity cost. It’s important to factor that cost into your decision-making process to avoid major losses.

Updated Aug 02, 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 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.

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.

Updated Feb 02, 2021Robinhood Learn

Welcome: Investing 101

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

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.

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.

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

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.

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.

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.

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 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.

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.

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.

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.

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.

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.

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What is a crypto wallet?

What is an Inheritance Tax?

What is a Recession?

What is Net Profit Margin?

What is Real Estate?

What is an Annuity?

What is Outsourcing?

What is Capital Gains Tax?

What is Arbitrage?

What is Surety?

What is Supply Chain Management (SCM)?

What is an Ex-Dividend Date

What is the Compound Interest Formula?

What is a Security?

What is Depreciation?

What is a Stock Option?

What is Relative Strength Index (RSI)?

What is Certificate of Deposit (CD)?

What is a Margin Call?

What is a Health Maintenance Organization (HMO)?

What is a Hedge?

What is Liquidity?

What is a Call?

What is a Bid?

What is Short Selling?

What is a Buy Limit Order?

What is a Command Economy?

What is Human Capital?

What is a Market Economy?

What is Inventory?

What is Annual Percentage Rate (APR)?

What is a Credit Union?

What is a Trust?

What is Encroachment?

What is Customer Service?

What is an Externality?

What is an Automated Clearing House (ACH)?

What is Forex?

What is Indemnity?

What is Scarcity?

What is Opportunity Cost?

How to start investing for as little as 1 dollar

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

How to read an S-1

Welcome: Investing 101

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

What’s the purpose of a diversified portfolio?

Picking an investment: How to approach analyzing a stock

What can I invest in? An overview of assets

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

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

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

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

Why should I think about investing?

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

Three things to do before you start investing

How much should I save for retirement?

Investing during times of uncertainty

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

Library

Explore the library