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Investing basics—in plain English.

What is a Security?

Updated Feb 19, 2025Robinhood 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 Arbitrage?

Updated Feb 19, 2025Robinhood 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 Hedge?

Updated Feb 18, 2025Robinhood 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 an Investment?

Updated Feb 18, 2025Robinhood 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.

Three things to do before you start investing

Updated Feb 17, 2025Robinhood 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.

What’s the purpose of a diversified portfolio?

Updated Feb 17, 2025Robinhood 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.

Welcome: Investing 101

Updated Feb 17, 2025Robinhood Learn

Welcome: Investing 101

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

What is Market Capitalization?

Updated Feb 13, 2025Robinhood 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 13, 2025Robinhood 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 06, 2025Robinhood 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.

Why should I think about investing?

Updated Feb 06, 2025Robinhood 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 the S&P 500?

Updated Feb 03, 2025Robinhood 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 a Dividend?

Updated Feb 03, 2025Robinhood 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 a Stock?

Updated Feb 01, 2025Robinhood 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 the Stock Market?

Updated Jan 22, 2025Robinhood 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.

How much should I save for retirement?

Updated Dec 26, 2024Robinhood 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 a Buy Limit Order?

Updated Dec 26, 2024Robinhood 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 are Capital Gains?

Updated Dec 26, 2024Robinhood 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 an Exchange-Traded Fund (ETF)?

Updated Dec 25, 2024Robinhood 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.).

How to start investing for as little as 1 dollar

Updated Dec 23, 2024Robinhood 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.

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

Updated Dec 23, 2024Robinhood 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 a Roth IRA?

Updated Dec 23, 2024Robinhood 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 is the Nasdaq?

Updated Dec 13, 2024Robinhood 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 Alpha?

Updated Nov 19, 2024Robinhood Learn

What is Alpha?

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

What is an Asset?

Updated Oct 14, 2024Robinhood 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 bid/ask spread?

Updated Oct 01, 2024Robinhood 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 a Limit Order?

Updated Aug 16, 2024Robinhood Learn

What is a Limit Order?

Limit orders are just one tool in an investor’s toolkit. Investors can place max bids for what they're willing to pay for a stock. If you’re a seller, a limit order lets you pick the minimum price you're willing to sell a stock for.

What is a Present Value?

Updated Aug 08, 2024Robinhood Learn

What is a Present Value?

Present value is like a time machine for money. By understanding present value, you see what your future money is worth today. And it also helps you know what the money you have today could be worth in the future.

What is Interest?

Updated Aug 08, 2024Robinhood Learn

What is Interest?

People don’t always like to share. Especially, when there are no guarantees they’ll get their stuff back. Interest gives the lender the confidence they need to part with their money for a while and take on all the risks that entails.

What are Liquid Assets?

Updated Aug 08, 2024Robinhood Learn

What are Liquid Assets?

Picture an empty swimming pool that you want to fill with coins and dollar bills in the next few days. Your liquid assets include all the cash that’s already in the pool, plus anything else that will sell quickly so you can fill the pool even more.

What is Deflation?

Updated Aug 08, 2024Robinhood Learn

What is Deflation?

Deflation is like a bad cough… A cough is a symptom of a disease, but it’s not the disease itself. Likewise, deflation is a sign of a more significant problem in the economy. Deflation is a symptom of a disease, but it’s not the disease itself.

What is a Stock Split

Updated Jul 18, 2024Robinhood Learn

What is a Stock Split

Yogi Berra nailed it... "Cut my pizza into 4 slices — I’m not hungry enough to eat 8." But it doesn’t matter how you cut it, the pizza is still the same size!

What is Profit?

Updated Jul 18, 2024Robinhood Learn

What is Profit?

Profit is like the honey produced from a company’s beehive… It’s how much a company is earning or losing, based on the difference between the money it brings in (revenue) and what goes out (costs).

What is Dividend Yield?

Updated Jun 22, 2024Robinhood 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 Relative Strength Index (RSI)?

Updated Jun 22, 2024Robinhood 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 Ex-Dividend?

Updated Jun 21, 2024Robinhood Learn

What is Ex-Dividend?

Buying a stock ex-dividend is like waiting in line for a rollercoaster. Everyone behind a certain point has to wait for the next trip (the next dividend). If you counted the people before you and the no. of seats, you can determine the cut-off point.

What is a PE Ratio?

Updated Jun 21, 2024Robinhood Learn

What is a PE Ratio?

How much does one dollar of profitability cost?… That’s the P/E ratio. It’s a tool to help investors understand how expensive a stock is by pegging it to a dollar of profitability.

What is Gross Domestic Product (GDP)?

Updated Jun 21, 2024Robinhood Learn

What is Gross Domestic Product (GDP)?

Gross Domestic Product is like a report card. Every year, most countries record and report their GDP. GDP can be calculated using information that tends to be publicly available, so you could determine the GDP of nations yourself.

What is a Bond?

Updated Jun 20, 2024Robinhood 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 Inflation?

Updated May 20, 2024Robinhood Learn

What is Inflation?

Inflation is like a leak in your money bucket. If the inflation rate is low, the leak is smaller. If the inflation rate is high, the leak is bigger. The more leakage there is, the less your money is worth.

What is a Derivative?

Updated May 20, 2024Robinhood 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 Fractional Share?

Updated Apr 29, 2024Robinhood 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 a Debenture?

Updated Apr 26, 2024Robinhood Learn

What is a Debenture?

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

What is a 401(k) Plan?

Updated Apr 24, 2024Robinhood 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 EPS?

Updated Apr 05, 2024Robinhood Learn

What is EPS?

EPS is one tool to help investors get to know a stock… Earnings per share shows what part of a company’s total profits is “owned” by each individual share. Tracking a company’s EPS over time helps you assess the stock’s change in value over time.

What is Gross Margin?

Updated Mar 30, 2024Robinhood 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 Net Profit Margin?

Updated Mar 30, 2024Robinhood 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 Venture Capital?

Updated Mar 30, 2024Robinhood 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.

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

Updated Mar 29, 2024Robinhood 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 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 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.

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.

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.