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Investing basics—in plain English.

What is an Initial Public Offering (IPO)?

Updated Apr 27, 2021Robinhood 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 the Standard Deduction?

Updated Mar 24, 2021Robinhood 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 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.

What is an Itemized Deduction?

Updated Mar 22, 2021Robinhood 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 Capital Gains Tax?

Updated Mar 19, 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 the Stock Market?

Updated Mar 19, 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 are Bull and Bear Markets?

Updated Mar 19, 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.

What is a Broker?

Updated Mar 19, 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 Forex?

Updated Mar 19, 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 an Index Fund?

Updated Mar 19, 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 Arbitrage?

Updated Mar 19, 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 a Portfolio?

Updated Mar 16, 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 Venture Capital?

Updated Mar 16, 2021Robinhood Learn

What is Venture Capital?

Securing venture capital funding can prove to be a fortune for a new, inexperienced business. But venture capitalists are not buying into the risk and uncertainty for nothing. In exchange for funding, VCs are likely to ask for equity.

What is the Nasdaq?

Updated Mar 16, 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 the S&P 500?

Updated Mar 16, 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 the Dow?

Updated Mar 16, 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 the Rule of 72?

Updated Mar 12, 2021Robinhood Learn

What is the Rule of 72?

The rule of 72 is like measuring a room by walking across it. You’re making an estimate. You should probably get out a tape measure (or do a more sophisticated calculation) before you start knocking down walls (making your investment decision).

What is Gross Margin?

Updated Mar 12, 2021Robinhood Learn

What is Gross Margin?

Think of a one-person food cart… Your gross margin is simply the difference between your sales and the costs of those ingredients. You’d compare the amount of money that you made to the amount you spent on buying hot dogs and buns.

What is a Debt Ratio?

Updated Mar 12, 2021Robinhood Learn

What is a Debt Ratio?

Historically, when a canary passed away in a coal mine, the miners would know it was time to make a fast exit. The bird served as a measure of risk. Likewise, the debt ratio indicates the level of financial risk from a company to firm stakeholders.

What is CAGR?

Updated Mar 12, 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 Beta?

Updated Mar 12, 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 Dividend Payout Ratio?

Updated Mar 12, 2021Robinhood Learn

What is Dividend Payout Ratio?

Dividend payout ratios are like slicing a pie… The company’s income is the pie, and the slice that you receive is the dividend that the company pays. The larger the dividend, the larger the slice that you receive.

What is Internal Rate of Return (IRR)?

Updated Mar 11, 2021Robinhood 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 the Sharpe Ratio?

Updated Mar 11, 2021Robinhood Learn

What is the Sharpe Ratio?

The Sharpe ratio is like online reviews for skydiving companies. You want the fun (return on investment) that comes with skydiving, but you want to have that fun with the least amount of risk possible. It’s the same with investing.

What is Alpha?

Updated Mar 11, 2021Robinhood Learn

What is Alpha?

Alpha is a measure that tells you about the performance of an investment in relation to its “peers.”

What is a Bond Yield?

Updated Mar 11, 2021Robinhood Learn

What is a Bond Yield?

A bond yield is like comparing a pizza slice to the size of the whole pizza. If a slice from a small pizza is the same size as a slice from a large pizza — it represents a different percentage of each pizza.

What is a Bond?

Updated Mar 11, 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 the CBOE Volatility Index (VIX)?

Updated Mar 11, 2021Robinhood Learn

What is the CBOE Volatility Index (VIX)?

If rain concerns you, you can check the weather report. The VIX is similar. If you're concerned about when to invest, you could check the VIX to see what other investors think the stock-market weather will look like in the near term.

What is a Call Option?

Updated Mar 11, 2021Robinhood Learn

What is a Call Option?

Call options, are like a grocery store coupon. They give you the right to buy a specific item, for a certain price, before the coupon expires. However, if you find the same item at another grocery store for cheaper, you probably won’t use the coupon.

What is a Call?

Updated Mar 11, 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.

What is Short Selling?

Updated Mar 11, 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.

What is a Put Option?

Updated Mar 11, 2021Robinhood Learn

What is a Put Option?

Buying a put option means that you have the right, but are not required, to sell a security at a specified price for a set time.

What is a COO?

Updated Mar 11, 2021Robinhood Learn

What is a COO?

Remember the vice principal at your high school. He managed assemblies, coordinated activities, and made sure things ran smoothly. A COO usually handles logistics and the day-to-day, freeing up the chief executive to focus on the big picture.

What are Consumer Packaged Goods (CPG)?

Updated Mar 11, 2021Robinhood Learn

What are Consumer Packaged Goods (CPG)?

Consumer packaged goods are like camping essentials. You wouldn’t want to go into the woods without toilet paper, deodorant, packaged food, or water. You use them often enough that you’d want them when you’re out in the middle of nowhere.

What is an Investment Company?

Updated Mar 11, 2021Robinhood 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 is an Investment Banker?

Updated Mar 11, 2021Robinhood Learn

What is an Investment Banker?

Investment bankers can help companies get the money they need by connecting them with potential investors. To do that, the investment banker has to convince the investors that your business is worth the risk of them investing their cash.

What is Dividend Yield?

Updated Mar 11, 2021Robinhood Learn

What is Dividend Yield?

Dividend yield is like a stock’s bang for your buck… It’s a ratio comparing the income an investor gets from holding a stock (that pays dividends) to the price of that stock, shown as a percentage.

What is a W-2 Form?

Updated Mar 11, 2021Robinhood 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 all the money you made and all the money you paid in taxes that year.

What is Tax Withholding?

Updated Mar 11, 2021Robinhood 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.

What is an Investment?

Updated Mar 01, 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.

What is the Federal Unemployment Tax Act (FUTA)?

Updated Mar 01, 2021Robinhood Learn

What is the Federal Unemployment Tax Act (FUTA)?

When you put money into your emergency fund, you’re saving money for a financial emergency. The federal unemployment tax works kind of the same way, except employers contribute to one big emergency fund that workers can use if they lose their job.

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.

How to start investing for as little as 1 dollar

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.

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.

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

Updated Oct 27, 2020Robinhood 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.

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.