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Investing basics—in plain English.

What is a W-2 Form?

Updated Mar 21, 2023Robinhood Learn

What is a W-2 Form?

A W-2 form is kind of like a scrapbook. Instead of recording the memories of last year’s family vacations, it documents the money you made and the money you paid in taxes that year.

What is Forex?

Updated Mar 21, 2023Robinhood 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 Correlation?

Updated Mar 21, 2023Robinhood Learn

What is Correlation?

Correlation is like fish moving about in an ocean. Some fish move in a school, all moving in unison with coordinated movements (high correlation). Some move independently and in different directions (low correlation).

What is Fully Paid Securities Lending?

Updated Mar 20, 2023Robinhood 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.

How to read an S-1

Updated Mar 20, 2023Robinhood 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.

What are Treasury Bills?

Updated Mar 07, 2023Robinhood Learn

What are Treasury Bills?

A Treasury bill, or T-bill, is a bit like an IOU from a friend who’s short on cash for lunch. Your friend promises to pay you $10 next week if you pay for his $8.50 hamburger today.

What is Capex?

Updated Mar 06, 2023Robinhood Learn

What is Capex?

Think of a new car. The vehicle itself is a capital expenditure because it’s a physical asset that you’ll enjoy in the future. But the gasoline is an operational expenditure, or an "Opex" because you don't see the benefit month after month.

What is Arbitrage?

Updated Mar 03, 2023Robinhood 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 Internal Rate of Return (IRR)?

Updated Mar 02, 2023Robinhood Learn

What is Internal Rate of Return (IRR)?

Calculating the IRR is like guessing about how far your jump over a stream. If it takes you far enough, you’ll make it to the other side (lots of profit); if it falls short, you’ll get all wet (i.e., lose money by making a suboptimal investment).

What is a 401(k) Plan?

Updated Mar 02, 2023Robinhood 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.

What is Depreciation?

Updated Mar 01, 2023Robinhood 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.

Why should I think about investing?

Updated Feb 28, 2023Robinhood 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.

What is an Investment?

Updated Feb 27, 2023Robinhood 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.

What is a Hedge?

Updated Feb 22, 2023Robinhood 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 can I invest in? An overview of assets

Updated Feb 21, 2023Robinhood 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.

What is Market Capitalization?

Updated Feb 17, 2023Robinhood 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 Short Selling?

Updated Feb 17, 2023Robinhood 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 a Broker?

Updated Feb 16, 2023Robinhood 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 an Initial Public Offering (IPO)?

Updated Feb 16, 2023Robinhood 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 a Margin Call?

Updated Feb 16, 2023Robinhood 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 Dividend?

Updated Feb 07, 2023Robinhood 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.

What is the S&P 500?

Updated Feb 07, 2023Robinhood 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 the Stock Market?

Updated Feb 05, 2023Robinhood 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 a Stock?

Updated Feb 03, 2023Robinhood Learn

What is a Stock?

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

What is a Fractional Share?

Updated Feb 03, 2023Robinhood 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 an Exchange-Traded Fund (ETF)?

Updated Feb 02, 2023Robinhood 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 Buy Limit Order?

Updated Jan 10, 2023Robinhood 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.

What is a Roth IRA?

Updated Jan 09, 2023Robinhood 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.

What are Capital Gains?

Updated Jan 09, 2023Robinhood Learn

What are Capital Gains?

Remember trading baseball cards as a child. Capital gain is the profit you earn on the sale of that one card in the deck you knew you were going to trade because it could sell for more money than you paid for it.

What is a Health Savings Account (HSA)?

Updated Jan 09, 2023Robinhood Learn

What is a Health Savings Account (HSA)?

Think of an HSA as a combination of health insurance and a savings account. You’re essentially self-insuring against a future medical emergency. The list of expenses eligible for your HSA covers even more than most health insurance plans.

What is a Progressive Tax?

Updated Jan 05, 2023Robinhood Learn

What is a Progressive Tax?

A progressive tax system is like an airplane. The better (or worse) the seat you have on the plane, the higher (or lower) the cost you’ll have to pay for your ticket. Similarly, the better your income, the more you have to pay in taxes.

What is the FICA Tax?

Updated Jan 03, 2023Robinhood Learn

What is the FICA Tax?

The FICA tax is like being forced to save retirement funds. You pay a percentage of each check you recieve to the government. When you retire, you get Medicare and Social Security based on several factors, like the amount of FICA taxes you paid.

What is an Inheritance Tax?

Updated Dec 30, 2022Robinhood 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 Modified Adjusted Gross Income (MAGI)?

Updated Dec 30, 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 Deferred Compensation

Updated Dec 30, 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 Inheritance?

Updated Dec 30, 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 Self-Employment?

Updated Dec 29, 2022Robinhood Learn

What is Self-Employment?

Being self-employed is like adulting. You get to choose when you work and when you play, but you’re also responsible for making sure the bills (aka taxes) get paid.

What is the Old-Age, Survivors, and Disability Insurance (OASDI) Program?

Updated Dec 29, 2022Robinhood Learn

What is the Old-Age, Survivors, and Disability Insurance (OASDI) Program?

Over the years, you contribute money to OASDI through your taxes and your money is waiting for you when you’re ready to take it out. You can only take out funds once you’re at least 67 or become disabled, and you can’t get them all at once.

What is the Social Security Tax?

Updated Dec 29, 2022Robinhood Learn

What is the Social Security Tax?

Everyone pays a Social Security tax to fund the Social Security program. Then, when an individual retires or becomes disabled, they are paid a monthly check out of the savings account.

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

Updated Dec 29, 2022Robinhood 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.

What is the Standard Deduction?

Updated Dec 28, 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.

How much should I save for retirement?

Updated Dec 28, 2022Robinhood 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.

What is an Itemized Deduction?

Updated Dec 28, 2022Robinhood Learn

What is an Itemized Deduction?

Itemized deductions are like mailing in for a rebate. You give the government an itemized list of what you spent money on. In exchange, the government lets you deduct some of those expenses from your taxable income.

What is the Nasdaq?

Updated Dec 27, 2022Robinhood 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 a Bridge Loan?

Updated Dec 26, 2022Robinhood Learn

What is a Bridge Loan?

A bridge loan is like using your credit card for a large purchase right before payday. The money isn’t in your checking account just yet, but you know it will be in a few days.

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.

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.

Welcome: Investing 101

Updated Feb 02, 2021Robinhood Learn

Welcome: Investing 101

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

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.

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.

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.

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.