🔥 — day streak★ — XP0 / 28 units · 280 lessons

Investing starts with understanding

Build your knowledge.
Then build your plan.

Learn how the stock market works, understand the risks, and practice with pretend money.

No one can guarantee a profit. Learning helps you make informed decisions.

Key terms

Definitions grouped by unit, in the same colors as your learning path.

Unit 1

Start with a goal

Saving: Setting money aside so it is available when you need it.
Investing: Buying assets that may grow in value or pay income. You can also lose money.
Time horizon: How long you have before you need the money for a goal.

Unit 2

Savings accounts and CDs

Interest: Money paid for using someone else’s money. A bank may pay you interest on savings; a borrower pays interest on a loan.
APY: Annual percentage yield: the interest a deposit would earn over a year, including compounding, if its rate stays the same.
CD: Certificate of deposit: a bank or credit union deposit held for a set time. Taking it out early may cost a penalty.
Deposit insurance: Protection for eligible deposits at FDIC-insured banks or federally insured credit unions covered by the NCUA, within coverage limits. It does not protect stocks or funds from market losses.

Unit 3

How the stock market works

Stock exchange: A marketplace where listed investments are bought and sold under trading rules.
Buyer: Someone who wants to purchase an investment at an agreed price.
Seller: Someone who wants to sell an investment at an agreed price.
Ticker symbol: The short code used to identify a traded investment, such as a company’s stock.

Unit 4

Stocks: owning a piece

Share: One small unit of ownership in a company or fund.
Shareholder: Someone who owns shares of a company.
Dividend: Money or other value a company pays to shareholders. Companies can reduce or stop dividends.
Earnings: A company’s profit after its expenses. Earnings are different from total sales.

Unit 5

Bonds: lending money

Bond: A loan an investor makes to a government or company. The borrower agrees to repay under the bond’s terms.
Interest: Money paid for using someone else’s money. A bank may pay you interest on savings; a borrower pays interest on a loan.
Issuer: The government or company that creates a bond or other security.
Credit risk: The chance that a borrower will not pay interest or repay money as promised.

Unit 6

Treasuries and savings bonds

Treasury bill: A short-term U.S. government security, usually bought for less than the amount repaid at maturity.
Treasury bond: A long-term U.S. government security that pays interest. Its market price can fall before maturity.
Savings bond: A U.S. government savings security that earns interest and cannot be traded on a stock exchange. Cashing it has timing rules.
Maturity: The date a bond or deposit reaches the end of its agreed term.

Unit 7

Funds and diversification

Mutual fund: A fund that pools investors’ money into a portfolio. Ordinary mutual fund purchases and sales use the next calculated daily net asset value.
ETF: Exchange-traded fund: a basket of investments whose shares trade on an exchange during market hours.
Index fund: A fund designed to track a chosen market index. It can be a mutual fund or an ETF.
Diversification: Spreading money across different investments to reduce dependence on any one of them. It cannot prevent every loss.

Unit 8

Mutual funds versus ETFs

Net asset value: A fund’s assets minus its liabilities, divided by its shares. Often shortened to NAV.
ETF: Exchange-traded fund: a basket of investments whose shares trade on an exchange during market hours.
Mutual fund: A fund that pools investors’ money into a portfolio. Ordinary mutual fund purchases and sales use the next calculated daily net asset value.
Spread: The difference between the highest price a buyer will pay (bid) and the lowest price a seller will accept (ask). Wider spreads raise trading costs and are common in thinly traded stocks.

Unit 9

Index funds and active funds

Index: A group of investments tracked together to measure a part of the market.
Passive management: Following a chosen index or rules instead of regularly picking investments to beat the market.
Active management: Choosing investments in an attempt to meet a goal or outperform a benchmark. Success is not guaranteed.
Benchmark: A reference, often an index, used to compare an investment’s performance.

Unit 10

Money market accounts and funds

Deposit account: An account at a bank or credit union used to hold deposited money, such as savings or a money market deposit account.
Money market fund: A mutual fund investing in short-term debt. It is different from a bank money market account and is not protected by deposit insurance.
Liquidity: How easily and quickly you can turn an asset into cash without a large loss in value.

Unit 11

Real estate through REITs

REIT: Real estate investment trust: a company that owns or finances income-producing real estate. Its investments can lose value.
Rental income: Money received from renting property, before subtracting property expenses.
Publicly traded: Available to buy and sell on a public securities market, usually through a broker.
Liquidity: How easily and quickly you can turn an asset into cash without a large loss in value.

Unit 12

Research a company

Revenue: Money a business earns from selling its goods or services, before subtracting expenses.
Profit: The money a business has left after its expenses. High revenue does not automatically mean high profit.
Debt: Money owed to someone else, usually with repayment terms and sometimes interest.
SEC EDGAR: The U.S. Securities and Exchange Commission’s database of public company filings and other reports.

Unit 13

Price, value and valuation

Share price: The price of one share. A low share price alone does not make a company a bargain.
Market value: What something is worth at current market prices. For a company’s equity, market capitalization is share price times shares outstanding.
P/E ratio: Price-to-earnings ratio: share price divided by earnings per share. It compares price with earnings; it does not tell you by itself whether to buy.

Unit 14

Risk and protecting your plan

Market risk: The chance of losing money because investment prices move down across a market.
Concentration: Having a large amount of money tied to one investment, industry or similar group.
Asset mix: The proportions of your money in categories such as stocks, bonds and cash. Also called asset allocation.

Unit 15

Compounding, costs and taxes

Compounding: Earning growth on both your starting money and earlier growth when returns are reinvested.
Expense ratio: A fund’s yearly operating expenses as a percentage of its assets. Those costs reduce investors’ returns.
Tax: Money owed to a government under tax rules. Interest, dividends and investment gains may be taxed differently.

Unit 16

Accounts versus investments

Custodial account: An account an adult manages for a minor. In a typical U.S. UGMA or UTMA account, the assets belong to the child and control transfers under state rules.
Brokerage account: An account used to hold and buy or sell investments. The account is a container; its investments determine much of its risk.
IRA: Individual retirement arrangement: an account with special tax rules for retirement saving. Contributions generally require eligible earned income.
529: An education savings plan with tax benefits and rules about how the money is used. Investment-based plans can lose value.

Unit 17

Orders and trading basics

Broker: A firm or person that helps execute investment trades. Check registration, account rules and fees.
Market order: An instruction to trade at the best available price. The final price can differ from the last price shown.
Limit order: An instruction to buy only at your limit price or lower, or sell only at your limit price or higher. It may never execute.
Bid: The highest price a buyer is currently offering for an investment.
Ask: The lowest price a seller is currently asking for an investment.

Unit 18

Regular contributions and rebalancing

Dollar-cost averaging: Investing the same amount on a regular schedule. It buys more shares when prices are lower and fewer when higher, but does not guarantee a profit.
Rebalancing: Adjusting a portfolio back toward a chosen asset mix. Trading may create fees or taxes.
Contribution plan: A schedule for adding money toward a goal, such as a set amount every month.

Unit 19

Avoid costly mistakes and scams

FOMO: Fear of missing out: pressure to buy because other people seem to be making money. It is a feeling, not evidence that an investment is good.
Fraud: Deliberate deception used to take someone’s money or information.
Leverage: Using borrowed money or other tools to increase exposure. It can magnify losses as well as gains.
Options: Contracts giving a buyer the right to buy or sell an asset at a set price within a stated time. They are complex and can produce large losses.

Unit 20

Index funds: build a broad foundation

Holdings: The individual investments a fund owns.
Total-market fund: A stock fund covering companies of several sizes across its chosen market.
Market-cap weighting: An index method giving larger companies a larger share based on market capitalization.
Fund costs: Expenses paid by a fund, including operating expenses reflected in its expense ratio, that reduce investors’ returns.
Tracking difference: The gap between a fund’s return and its index’s return over a stated period.
Fund wrapper: The structure, such as an ETF or mutual fund, that an investment strategy is packaged in.
Fund overlap: Shared investments owned by different funds in a portfolio, which can reduce diversification.
Drawdown: A decline from a previous high.
Prospectus: A document explaining a fund’s objective, costs, risks and other important information.
Investment fit: Matching an investment’s risks and features to your goal.

Unit 21

Penny stocks: low price, high risk

Penny stock: Low-priced shares, generally under $5 under the SEC’s usual benchmark, with regulatory exceptions. Often traded over the counter and highly speculative.
Microcap: A very small company by market capitalization.
OTC market: A network for trading securities outside major stock exchanges.
Thin trading: Trading with relatively few shares changing hands.
Bid-ask spread: The difference between the highest price a buyer will pay (bid) and the lowest price a seller will accept (ask). Wider spreads raise trading costs and are common in thinly traded stocks.
Paid promotion: Advertising or recommendations from someone paid to attract buyers, rather than provide independent research.
Pump and dump: A scheme using misleading promotion to push a price up while promoters sell their shares.
Dilution: A reduction in existing owners’ percentage ownership when a company issues additional shares.
Reverse split: A reverse split combines shares into fewer shares with a higher price per share.
Verification: Checking a claim against reliable evidence.

Unit 22

Dividend investing: income and total return

Cash dividend: A distribution of money to shareholders.
Dividend yield: Annual dividend per share divided by share price, expressed as a percentage.
Total return: Income plus changes in investment value, usually expressed as a percentage of the initial investment.
Payout ratio: Dividends divided by earnings, expressed as a percentage; check which earnings measure is used.
Free cash flow: Cash from operations minus capital spending, under a common definition.
Ex-dividend date: The date on or after which buying shares does not qualify you for the upcoming ordinary dividend; you must own the shares before it. Special distributions can follow different rules.
Dividend reinvestment: Using distributions to buy additional shares.
Dividend fund: A fund grouping stocks selected partly for their distributions.
Dividend cut: A reduction in a company’s dividend payout.
Income investing: An approach emphasizing cash distributions while still considering total return and risk.

Unit 23

International investing: beyond one country

Home bias: Favoring investments from your own country.
Country fund: A fund focused on a single national market.
Emerging market: A market commonly classified as developing in economic or financial-market terms.
Currency risk: The effect of exchange-rate changes on an investment’s return.
ADR: An American depositary receipt: a security representing an interest in shares of a foreign company.
International fund: A fund investing in markets outside the U.S.; a global fund can include both U.S. and foreign investments.
Country risk: Exposure to political, economic or legal changes in a market.
Currency hedge: A strategy attempting to reduce exchange-rate exposure.
Market hours: The times when a market is open for trading. Foreign markets may be open while your local exchange is closed.
Global exposure: The countries and markets represented in your investments. Global funds can include the U.S. as well as other countries.

Unit 24

Sector and thematic funds: focused bets

Sector fund: A fund concentrated in an industry group, such as technology or healthcare.
Thematic fund: A fund selecting investments connected to an idea, such as clean energy or robotics.
Expectations: Expectations are beliefs about a company’s future that can influence its price.
Correlation: A measure of how investment returns move together.
Revenue exposure: The sources of a business’s sales, such as countries or industries.
Valuation risk: The chance that a price reflects overly optimistic assumptions.
Portfolio overlap: Shared investments owned by different funds in a portfolio, which can reduce diversification.
Turnover: A measure of how much a fund changes its holdings over a period.
Position size: The portion of a total portfolio allocated to an investment.
Investment thesis: A reasoned explanation of why an investment may fit your plan.

Unit 25

Growth and value stocks: compare the business

Growth stock: Commonly associated with expectations of faster business expansion.
Value stock: Viewed as relatively inexpensive compared with a chosen measure of business value.
Earnings per share: An earnings measure divided by a share count; basic and diluted EPS use different share counts.
Negative earnings: A company with negative earnings is losing money under that earnings measure.
Funding need: The money a business requires to continue or expand.
Profit margin: Profit divided by revenue, expressed as a percentage.
Value trap: An investment that looks cheap but remains weak because the underlying business has lasting problems.
Competitive advantage: A feature that may help a business perform better than rivals.
Scenario analysis: An examination of several possible outcomes instead of a single prediction.
Style risk: The chance that an investing approach performs poorly relative to other approaches for a long period.

Unit 26

Bond funds and ladders: understand income risk

Bond fund: A fund owning a collection of debt securities.
Interest-rate risk: The possibility that market-rate changes reduce an investment’s value.
Duration: A measure of a bond’s sensitivity to interest-rate changes.
High-yield bond: A bond with a lower credit rating and generally greater default risk.
Treasury fund: A mutual fund or ETF that invests in U.S. Treasury securities.
Yield measure: An estimate of income relative to price, calculated using a specific set of rules.
Bond ladder: A collection of bonds with staggered maturity dates.
Reinvestment risk: The chance that money received must be reinvested at a less favorable rate.
Real return: The return after accounting for inflation.
Credit quality: A borrower’s ability to meet its obligations.

Unit 27

Target-date and balanced funds: a ready-made mix

Balanced fund: A fund combining asset categories, such as stocks and bonds, under a stated strategy.
Target-date fund: A fund adjusting its asset mix over time around a selected future year.
Glide path: The planned changes to a target-date fund’s asset mix over time.
“To” vs. “through” glide path: A glide path reaching its more conservative mix near the target year (“to”), or continuing to change after that year (“through”).
Automatic rebalancing: Adjustments returning investments toward their intended asset mix.
Layered fees: Multiple levels of costs when a fund invests in underlying funds.
Fund of funds: A fund holding other funds rather than only individual securities.
Combined allocation: Your total asset mix across accounts and funds.
Goal review: A check of whether your target amount, deadline and ability to handle losses have changed.
Allocation fit: Choosing a mix consistent with your purpose, time horizon and risk tolerance.

Unit 28

Build and review a plan

Portfolio: The collection of investments and cash you own.
Goal: A specific purpose for your money, with an amount and a deadline.
Diversification: Spreading money across different investments to reduce dependence on any one of them. It cannot prevent every loss.
Review: Checking whether your plan still fits your goals, time horizon, costs and ability to handle losses.

Practice lab · pretend money

Build a portfolio. Explore what happens.

Markets have good years, bad years and surprises. Change the events and see how your plan holds up.

Starting money ($)What is the stock portion?Stock / real estate portion: Bond fund:

Cash savings:

Time: 5 yearsMarket story

Add each year ($)Withdraw each year ($)Annual fee (%)Portfolio upkeep

Change one thing at a time

Try a crash in the last year. Compare a diversified fund with one company. Then add regular savings or a higher fee.

End balance

$1,000

Choose what happens each year

Edit an event or any return below. Returns include price changes and income. The preset 5-year story repeats for longer periods; it is an invented stress test, not a forecast.

Year	Event	Stocks %	Bonds %	Cash %	Inflation %

For a single company or REIT, the model adjusts the stock return to illustrate different risks. Actual investments do not follow a fixed formula.

Year	Growth / loss*	Balance	In today’s buying power

*After the annual fee, before deposits and withdrawals. Deposits and withdrawals happen at year end, followed by rebalancing if selected. Income is reinvested. No taxes, transaction costs or borrowing. Cash earns the assumed rate; bond funds and REITs can lose value. Diversification cannot guarantee a profit.

Time + growth

With and without compound interest.

Compare reinvesting interest with keeping it aside. Both include the same starting money and deposits.

Starting amount ($)Monthly savings ($)Time: 10 yearsAssumed nominal annual interest rate: 5%Interest added

With compounding

Interest earns more interest.

Without compounding

Interest is kept aside and earns nothing.

Year	Money deposited	Without compounding	With compounding

A constant nominal annual interest rate, with no fees, tax or inflation. Monthly compounding uses the annual rate divided by 12; its APY is slightly higher than the nominal rate (5% becomes about 5.12%). Yearly compounding has the same APY as the nominal rate. Monthly savings are deposited at month end for monthly compounding; for yearly compounding, that year’s savings are deposited at year end. Simple interest applies only to deposited money; earned interest is counted in the total but never earns interest itself. Stock returns are variable and are not guaranteed interest.

Learn more: How compound interest works · Diversification and risk

Build your knowledge.Then build your plan.

A course from the ground up.

Experiment with $1,000.

Think before real money.