Free topic in the app · 109 lessons
Investing 101 explains the parts before the products: what owning a share means, what a bond is, why fees and inflation matter so much over decades, and why most people who pick funds do better with an index.
No tips, no hot picks. The four lessons below are from the app, each with its quiz.
A stock is a tiny slice of an actual business. That's it.
When you buy a share of a company, you own a fraction of it, entitled to a share of profits (via dividends) and a share of the company's growth (via the price going up). You're a part-owner, not a gambler.
Try this Pick one company you use daily. Look up its market cap. That's the price of owning all of it.
Quick check
What does owning one share of a company actually give you?
A bond is a loan you make to a government or company.
When you buy a government bond, you're lending the state money. They pay you interest twice a year and return your principal at the end. Boring, predictable, and the backbone of every retirement portfolio.
Try this Look at a 60/40 fund's chart through 2008 and 2020. That's the smoothing effect.
Quick check
Why might a balanced portfolio include bonds?
Divide 72 by the return rate. That's how many years to double your money.
At 6% return, your money doubles every 12 years (72/6). At 9%, every 8 years. At 3%, every 24 years. It's a back-of-envelope trick, but it instantly tells you whether a 'savings rate' is keeping up.
Try this Take your savings rate. Divide 72 by it. That's your doubling cadence.
Quick check
At 8% annual return, roughly how many years to double your money?
Your portfolio went up 8%. Inflation was 3%. Your real return: 5%. That's what you can actually buy with.
Real returns are nominal returns minus inflation. They measure actual purchasing power gain. A 10% nominal return during 8% inflation is only 2% real. Long-term planning should always use real returns; nominal numbers can be misleading, especially over decades.
Try this Plan in real returns (after inflation). Stocks ~7% real; cash ~0% real. The gap is the cost of safety.
Quick check
Why are real returns more useful than nominal returns for long-term planning?