x Tonya Rapley

CLASS WORKBOOKBRIT.CO/LEARN

Investing 101

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Investing 101

A LETTER FROM YOUR TEACHER

Let ’s Stay in Touchinfo@myfabfinance.com www.myfabfinance.com#bcclasses, #robinhoodxbritco

Hi, I’m Tonya Rapley, a Certified Financial Educator, content

creator, author, and speaker. I started my company, My Fab

Finance, from my apartment in Brooklyn, NY. I’d reached

a point where I felt that I’d done everything they told me

I needed to do to become financially free, yet I was still

struggling. I wanted to figure out how I could make better

decisions that would lead to my own financial independence.

Nearly six years later, what started as a self-improvement

project has become a global brand impacting the lives of

thousands of men and women. My mission is to help people

break the cycle of living paycheck to paycheck so that they

can do more of what they love.

But saving money is not enough to achieve financial freedom.

You have to make your money work for you, and in this class,

I’m going to walk you through how you can get started

investing with as little as $1! You don’t have to be an expert

or a rocket scientist to start investing — you can start right

from your phone, or in the comfort of your home or office.

This isn’t your typical investing class, and we’re going to have

some fun in the process. I’ll break down all of the confusing

terminology and walk you through purchasing your first

stock, as well as understanding your stocks’ historical and

current performance.

I look forward to helping you with your first investments.

Tonya Rapley

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Investing 101

WELCOME TO CLASS! By the end of this class, you’ll know:

• Why you should consider investing in stocks

• The basics of how the stock market works

• Commonly-used financial terminology

• Different types of investment options

• And, you’ll be able to buy your own stock

using the Robinhood app on your phone or

computer!

INVESTING VOCABULARY

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Investing 101

Entering the investment arena can feel like entering

a whole new country. It’s got its own customs,

language, and rules, and trying to integrate yourself

into that can feel overwhelming. I totally get it.

Knowledge is power, and laying a solid foundation

to build on your financial knowledge is not as

difficult as you may think. Here is a list of terms

that you’re going to hear a lot as you start paying

attention to the stock market.

Stock:

A stock is essentially a piece of a company.

Companies raise money by issuing shares of the

company, also known as stock, to investors.

Bond:

Buying a bond is like lending money to an entity.

That entity can be backed by the U.S. government

(like a state or a public school), it can be a private

entity like a company, or even your local

shopping mall. These entities issue bonds to

raise money to fund projects, similarly to how

public companies issue stock. Unlike a stock,

however, you don’t own a piece of that entity,

you’re lending it money. And the entity owes

you your money back in full, in addition to

interest payments at a predetermined rate.

You collect this interest while you wait to get

your money back.

Exchange-Traded Fund (ETF):

These funds are a quick way to invest in a

group of companies all at once. There are many

different types of ETFs that focus on different

industries like clean energy, technology, or even

social impact. When you invest in an ETF, the

value of your investment will depend on how

the collective group of companies is doing.

Dividends:

A dividend is a payment made by a corporation

to its shareholders essentially as a reward for

owning stock in the corporation. Sometimes

these distributions are on a quarterly basis,

other times they are annual, and sometimes

they are a special event. Not every company

pays dividends, and dividend payments can be

made in cash or in the form of additional stock.

Diversification:

This is an investment strategy that minimizes

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Investing 101

risk by varying the types of investments

purchased.

Exchanges:

These are the markets where stock buyers and

stock sellers meet. The largest exchanges in

the United States are the NYSE and NASDAQ.

London, China, Japan, Canada, Germany, India,

Australia, and Korea are some of the countries

that have their own exchanges.

Broker:

A broker is a person or entity that can buy and

sell stock from the exchanges. Stockbrokers

are usually associated with a brokerage firm

and handle transactions for customers. With

Robinhood, you could literally purchase your

first or next stock by yourself, on your computer

or mobile device.

Portfolio:

Your portfolio consists of all of your financial

assets (stocks, bonds, cash, etc.). A portfolio can

be held and managed by the investor alone, or

held by a company who manages the assets for

the investor.

Bull Market:

Any period of time when stocks have increased

by 20 percent. Keep in mind that since there are

many different sectors, this term can apply to

any sector of the market and not necessarily all

of it.

Bear Market:

The opposite of a bull market. Any time that

stocks enter a period where they have declined

by 20 percent, it can be considered a bear

market.

Initial Public Offering (IPO):

The process of getting listed on the exchanges

is called going public. The very first sales of

stock issued by a company to the public are

called an initial public offering, or IPO.

Market Order:

A market order is an order to buy or sell

immediately at the best available price. The

last-traded price is not necessarily the price at

which the market order will be executed. If you

place an order to buy a stock when it is $33.94,

yet the stock price increases to $35.63 by the

time your order is processed, you will get the

stock at the market price price, $35.63.

Limit Order:

A limit order sets the maximum or minimum

price at which you are willing to buy or sell. For

example, if you wanted to buy a stock at $10,

you could enter a limit order for this amount.

If the stock stays above that after you place an

order, your order won’t go through.

Risk Tolerance:

This is the amount of risk an investor is willing

to take.

Investment Horizon:

The investment horizon is the amount of

time an investor expects to hold onto an

investment or portfolio. This impacts the type of

investments that should be made.

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Investing 101

The Dow:

The Dow is a stock market index that shows

how 30 large, publicly-owned companies based

in the United States have traded during a

standard trading session in the stock market.

Stock Split:

When companies notice that their share price

increases or decreases to levels that are either

too high or too low, they may decide to split the

stock. Once a stock is split, investors now own

more shares or fewer shares depending on the

terms of the split, but the overall value of the

stocks remains the same.

HOW THE STOCK MARKET WORKS

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Investing 101

Before you start investing, you should know some

basics about how the stock market works. According

to a US News 2017 article, “5 Reasons to Invest in the

Stock Market,” real estate and the stock market are

the two biggest ways to increase your wealth. Of the

two, the stock market is a much more accessible way

to get started with investing. You can get started

with as little as $1 and be on your way to having your

money work for you.

In the short term, the stock market can be

subject to a lot of day-to-day changes, but in

the long term, no other form of investing tends

to perform better. For example, the Standard &

Poor’s 500 Index, or S&P 500, which was created

to be a leading gauge of American stocks, has

gained about 6.6% in the last 60 years. Keep in

mind, though, that past performance doesn’t

necessarily guarantee future returns.

So how do you carve out parts of your budget to

start investing? It’s important to first remember

to never invest money that you can’t afford to

lose.

Think of your budget as slices in this cake

chart. Your slices for rent, living expenses

(like healthcare and non-housing utilities),

transportation, and savings—those remain

intact. That last slice of cake is your

expendable income, which is ideal to use

for investing.

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Investing 101

Even if that number isn’t a lot—don’t worry. You

can still get started with whatever you have. Or, you

can start setting that money aside in a brokerage

account, until you have enough to buy the more

expensive stock you’ve had your eye on.

You’ve probably heard of brokers—maybe from

the news or in the movies—and you might be

wondering if you need one to get started.

A broker is a person or entity that can buy and

sell stock from the exchanges. Stockbrokers are

usually associated with a brokerage firm and

handle transactions for customers, often for a fee.

However, thanks to technological advancements like

Robinhood, you no longer have to go into a physical

brokerage office, or even talk to a broker on the

phone to trade stocks in the market.

If you’re purchasing large volumes of stock,

or if you’d like to outline an initial investment

strategy with a professional, you might consider

hiring an investment advisor.

There are a few key concepts that are critical to

understand about the process of buying your

first stock:

Exchanges

Whether you’re purchasing stock through a

stockbroker or through an app, it goes through

an exchange. The exchange is where stock

buyers and stock sellers meet. The largest

exchanges in the United States are the New

York Stock Exchange (NYSE) and Nasdaq, and

countries like the UK, China, Japan, and Canada

all have their own exchanges. Think of it as

shopping mall where you to go buy products

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Investing 101

from a variety of sellers.

Publicly Traded Companies and IPOs

You may have heard the advice “invest in the

companies that you use,” but not every company

ever created is listed on the stock market. These

companies are considered private. Companies

that are listed on an exchange have undergone a

lengthy process with the United States Securities

and Exchange Commission (SEC) and have met the

requirements laid out by underwriters. This process

is called “going public.” The very first sales of stock

issued by a company to the public are called an

initial public offering, or IPO.

Dividends

A dividend is defined as a payment made by a

corporation to its shareholders. It’s essentially a

reward given to shareholders for owning stock in the

corporation. Sometimes these distributions are on

a quarterly basis, other times they are annual, and

sometimes they are a special event. Every company

doesn’t pay dividends, and dividend payments can

be made in cash or in the form of additional shares

of stock.

Order

Once a person becomes interested in buying a

share of a company, they put in an order. With the

Robinhood app, you can place your order anytime,

anywhere and right from your phone or computer in

minutes. Whether using Robinhood, or working with

a trader, here are two kinds of orders that you can

make:

• A market order is an order to buy or sell

immediately at the next available price. The

last-traded price is not necessarily the price

at which the market order will be executed.

Because of SEC rules and regulations, a lot

has to happen between the time you press

“order” and the time the stock becomes

yours, and sometimes things change in the

market during that process. So if you’ve

placed an order to buy one stock at $33.94,

yet the stock price increases to $35.63 by the

time your order is processed, you will get the

stock at the price it was when the order was

processed, at $35.63.

• A limit order sets the maximum or minimum

price at which you are willing to buy or sell.

For example, if you wanted to buy a stock

at $10, you could enter a limit order for this

amount. So if that stock is $12 when your

order is processed, your order won’t execute,

and you won’t receive the stock. But, if the

stock does go to $10 or lower, your order may

execute.

VOLATILITY (CYCLES, BULL VS. BEAR MARKET)

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Investing 101

Just like most things in life, the stock market often

operates in cycles, and the cycles often reflect the

price and public outlook on the market. These cycles

can be influenced by anything including tariffs,

natural disasters, changes in political office, etc. A

company could announce a big product rollout that

sends a stock price up because people are excited

about the future of the company. But, that same

company’s earnings report could be less than stellar,

sending the price of the stock down.

This is why it’s so important to pay attention to

current events in whatever way you like: that could

be reading the newspaper, listening to podcasts,

or watching the news. Be an informed investor!

Do your research and stay aware.

Market participants often refer to any period

of rising stock prices as a “bull market.”

The commonly accepted definition of a bull

market is any period of time when stocks have

increased by 20 percent. Keep in mind that

since there are many different sectors, this term

can apply to any sector of the market and not

necessarily all of it.

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Investing 101

A “bear market” is the opposite of a bull market.

When stocks enter a period where they have

declined by 20 percent, many investors may refer to

this as a bear market.

If you’re able to “buy low” and “sell high” you could

potentially see significant gains in your investments.

Of course the inverse can also happen, you could

“buy low” and the stock could continue to fall. The

stock market is always changing, and investing

in a volatile time means taking a risk. That is why

it’s important to do your research and familiarize

yourself before attempting to actively time the

market.

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Investing 101

INVESTMENT STRATEGIES

Your investment strategy is your personalized

plan for how to generate income with your

investments, and it should fit your lifestyle and

your goals.

An investment horizon is the amount of time an

investor expects to hold onto an investment or

portfolio. This impacts the type of investments

you should make. As a general rule of thumb, the

longer you can afford to leave your money in the

market, the more risk you can afford to take. This

is generally known as your risk tolerance, which

varies from person to person.

In general, the higher the return, the higher

the risk. A stock is often riskier during the IPO

because you don’t know how it’s going to perform

once it goes public. If the stock does well, you

experience the rewards of getting in early. If a

company doesn’t perform well, you risk losing the

money you invested.

There is no one-size-fits-all strategy when it

comes to investing. Your strategy should depend

on a few things:

1. Your Overall Goal for Investing: How long can

you afford to allow money to work for you in the

market? As a general rule of thumb, while you are

in your 20s or 30s, you might have fewer financial

responsibilities and are far from retirement, so

you may consider more high-risk investments.

Someone older, or someone with more financial

responsibilities, may want to invest in low-risk

investments to maintain their savings or their

retirement fund. One thing to consider when

you’re making an investment is your personal

time horizon, or the amount of time you’re

willing to leave your money in the investment.

2. Your Personal Short- and Long-Term Goals:

Stocks are volatile, and returns are never

guaranteed, so if you want to start your own

business or buy a home within the next five

years, you should keep this in mind when

you’re choosing which investments to make.

Stocks aren’t necessarily a short- or long-term

investment, so you choose how long you hold

them for.

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Investing 101

3. Any Investment Assets You Currently Have:

For example, do you already have a well-funded

retirement plan, or are you just starting? If you

already have a well-funded retirement plan,

you’ll want to select stocks that compliment

your existing strategy and help balance out your

portfolio. If you’re just starting, you might want

to consider solid investments that help build your

portfolio base, and then add other options to

diversify.

spanning industries and types of assets. This will

help to prevent the whole portfolio from being

too vulnerable to market crashes, or too safe to

prevent you from meeting your financial goals. A

diversified portfolio might contain stocks, bonds,

and mutual funds. Mutual funds may be invested

in different industries such as consumer goods,

healthcare, technology, and real estate.

For example: The price of oil drops due to

excessive supply. A portfolio solely invested

in oil companies could see huge losses. But, a

diversified portfolio that only has a portion of

its assets invested in oil companies, and is also

invested across industries such as technology

and healthcare, will not see as huge of a loss

because it has other investments that could

potentially provide gains to offset the loss.

If you’re seeking to establish a diverse portfolio,

consider exchange-traded funds, or ETFs. These

funds are a quick way to invest in a group of

companies all at once. There are many different

types of ETFs that focus on different industries

like clean energy, technology, or even social

impact. When you invest in an ETF, the value of

your investment will depend on how the collective

group of companies is doing.

Once you’ve identified which strategy works for

you, you can begin to determine which stocks

make sense for your portfolio.

Even if you’ve decided that a high-risk, high-

reward strategy is right for you, you should

probably not have a portfolio that is all gas and

no brake. It’s important to strive for a balanced,

diversified portfolio. A solid, diversified portfolio

will be made of different kinds of investments,

HOW TO BUY YOUR FIRST STOCK WITH ROBINHOOD!

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Investing 101

Buying stocks is easier than you think with

Robinhood; and now that we’ve covered the basics,

you’re ready to buy your first stock! You have two

options: the mobile app and the desktop platform.

The Robinhood mobile app allows people to buy

and sell stocks, certain cryptocurrencies (select

states), ETFs, and options–all commission-free from

anywhere you want.

Robinhood for Web has the same features as the

mobile app for your desktop, along with discovery

tools to find stock ideas, additional company

information, stock details, and more.

The first thing you’ll need to do is open a Robinhood

brokerage account. You can do this by downloading

the app or visiting britco.robinhood.com.

While setting up your account, you will

be asked to provide personal information

such as your address and social security

number. Robinhood is required by federal

law to request this information. However,

they take your personal security seriously,

and measures are taken to ensure that your

information is protected. To learn more about

how your information is protected, visit

Robinhood’s Help Center.

Within seven minutes, you should be all set

up and ready to go!

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Investing 101

As a result, investments in large-cap stocks

may be considered more conservative than

investments in small-cap or mid-cap stocks.

They tend to pose less risk but offer less

aggressive growth potential.

• Mid-Cap Companies: Typically, this refers to

businesses with a market value between $2

billion and $10 billion. These are established

companies that may be in the process of

increasing market share and improving

overall competitiveness. Mid-cap stocks

generally fall between large-caps and small-

caps on the risk/return spectrum. Mid-caps

may offer more growth potential than large-

caps, and possibly less risk than small-caps.

• Small-Cap Companies: Typically, this refers

to companies that have a market value of

$300 million to $2 billion. These tend to be

younger companies that serve niche markets

or emerging industries. Small-caps are

considered the most aggressive and risky of

the three categories, but may offer significant

growth potential to long-term investors who

can tolerate volatile stock price swings.

When assessing a stock’s performance,

you want to review a few key things:

• Open: The price the stock was when the

market opened.

• The 52-Week High/Low: Robinhood lists

the high/low price of a stock for that trading

day. This will help you determine how the

stock has performed historically and how

it is performing now compared to past

performance. The 52-Week high/low is just

that. It’s the highest price and the lowest

price of a stock over a 52-week period.

• Volume: The number of shares or contracts

traded in a given period of time. On

Robinhood, it reflects the daily volume and

weekly average volume.

• Market Capitalization or Market Cap: This

refers to the total dollar market value of

a company’s shares. It allows investors to

understand the relative size of one company

versus another. It is calculated by multiplying

a company’s shares outstanding by the

current market price of one share. If you

aren’t a math whiz, no problem because

Robinhood calculates this for you.

• Large-Cap Companies: Typically, this

refers to companies with a market value

of $10 billion or more. Large-cap firms

often have a history of consistent dividend

payments and steady growth. They are

often dominant players within established

industries, and their brand names may be

familiar to a national consumer audience.

The Price/Earnings or P/E ratio: This is the price

an investor is pays per $1 of a company’s earnings

or profit. Acceptable ratios vary by industry, but

if you’re comparing a stock to other stocks in its

industry, you can use the P/E ratio to compare

the prices of similar companies. For example, if

company ABC and XYZ are both selling for $50 a

share, one might seem more overvalued than the

other depending how profitable the company is,

and how fast it is growing. Share price does not

necessarily correlate to company profitability.

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Investing 101

MANAGING YOUR PORTFOLIO

If you work with a financial advisor, this is a

good way to assess how your investments

are performing, and you can ask your advisor

questions about performance and strategy. If

you don’t work with one, don’t worry. Robinhood

gives you a broad overview of the activity in your

account in your monthly account statements. They

can keep you up to date on your portfolio’s worth,

the transactions you’ve made, the dividends

you’ve earned, and everything you need to know

to understand how your portfolio is performing.

Not everybody uses a financial advisor, so don’t

worry! It’s totally possible to achieve your goals

without one. Robinhood has the tools you need to

reach your own goals.

In addition to these figures, you’ll find some really

cool features for each stock in your Robinhood

app, like news articles, analyst ratings, earnings

charts, and even companies that similar to the

ones you’re already invested in. I’ve mentioned

before that it’s important to be an informed

investor (and I’ll mention it again before this

workbook is over, it’s that important). These

features on Robinhood’s app helps you be just

that. Here are some tips on how can use each of

these features:

• Your account balances

• What you have in that particular account

• A summary of any recent transactions

Once you own shares of a company, it can be

helpful to keep up with the company’s financial

performance. You can do this by going on their

investor relations website and taking a look at

their quarterly financials.

You can also check your financial statements. You

can access these in the “Account” section of your

Robinhood app. You’ll notice that they’re similar

to bank statements and help you understand the

health and status of your investment account.

Your statements will tell you a few basic things to

help you understand how your investments are

doing:• News articles - these are curated to give you

a sense of what’s happening with companies

in the market, to help you become well-

informed about the company.

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Investing 101

Remember we spoke about dividends in

previous lessons? Well, if you have stocks that

pay dividends, you’ll receive dividend payouts.

You can decide to cash these dividends, or elect

for them to be reinvested through a dividend

reinvestment program (DRIP), which allows

investors to reinvest their dividends for additional

shares or portions of shares, which compound

over time. Keep in mind that not all brokerages

support DRIP.

It’s like a snowball. The larger it grows, the more

snow it collects; the more snow it collects, the

larger it grows.

What is a stock split?

Stock splits are another event that might occur

over the lifetime of your stock ownership.

A stock split is a decision a company’s leadership

and shareholders make to increase or decrease

the number of shares the company has

outstanding

For example, in a 2-for-1 forward stock split,

you get two shares of the company for every

one share you owned before the split. So, if

a company had 10 million shares outstanding

before the split, it will have 20 million shares

outstanding after a 2-for-1 split. During a stock

split, the share amount does not affect the

total value of the stock. So, if this company’s

individual stock was priced at $480 before the

split, the split shares are now worth $240 each.

• Analyst ratings - these give you access to the

expertise of independent, third-party market

analysts who predict the success or failure of

a stock’s future performance. These are only

predictions, but they can be helpful after

you’ve done your own research.

• Earnings - Robinhood also gives you clear

visualizations of a company’s earnings.

Earnings are like quarterly report cards for

companies. During earnings announcements,

companies make a public disclosure about

their profits or losses, and also provide

guidance on what to expect in the future.

They can be in the form of a press release,

a conference call (which you can listen to on

Robinhood), and an official filing with the

SEC “10-Q.” Investors pay close attention to

earnings calls because this is one of the few

times you can hear a company’s CEO share

how their company is performing.

Finally, you can find stocks for companies like

the one you’re searching by scrolling to the

People Also Bought and Featured In sections.

• People Also Bought - this will show you a

few stocks that shareholders of the company

you’re looking into also own on Robinhood.

• Featured In - this will gives you a collection of

topics, interests, and industries the company

is a part of, so that you can easily find other

stocks in that sector.

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Investing 101

Think of two mason jars. The first is full and

represents Stock A and the empty one represents

nothing, until stock A splits. When Stock A splits,

half of the contents are poured into stock B,

and now both have equal value of liquid in each

jar. But, I’ve doubled my amount of containers

holding liquid.

A forward stock split is usually done by companies

that have seen their share price increase to

levels that are either too high or are beyond the

price levels of similar companies in their sector.

The primary motive is to make shares seem

more affordable to small investors, even though

the underlying value of the company has not

changed.

What happens to your stock if the company

is sold?

The reality is, mergers and acquisitions happen

in business all of the time; and sometimes,

these agreements happen to publicly-traded

companies.

If another company acquires the company you

own stock in, the company’s leadership will decide

how you’ll be compensated for the shares you

own. You can receive a set amount of cash for the

shares you own, you can receive shares of stock

in the acquiring company, or some combination

of the two. If it’s an all-cash deal, shares of your

stock will disappear from your portfolio following

the deal’s official closing date, and they’ll be

replaced by the cash value of the shares specified

in the buyout. In other words, the acquiring

company will pay you what it decides your shares

are worth.

If it is an all-stock deal, the shares will be replaced

by shares of the company doing the buying.

They won’t ever leave you in the cold, but it’s

important to pay attention to any mail you

receive, as well as news stories involving the

merger, so that you have an idea of how you

will be affected and compensated.

What happens if the company goes bankrupt?

Bankruptcy is also a possible and unfortunate

reality when investing in public companies.

In the event that a publicly listed company

declares bankruptcy, the company’s shareholders

may be entitled to a portion of the liquidated

assets, depending on which shares they hold

and how many liquid assets are left over.

However, the stock itself will become worthless,

leaving shareholders unable to sell their shares.

Therefore, in the case of corporate bankruptcy,

the only recourse is to hope there is money left

over from the firm’s liquidated assets to pay the

shareholders.

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Investing 101

FINAL WORDS

I know I’ve said this before, but I’m just going

to say this one more time because it’s that

important: Regardless of your investment

strategy, it doesn’t hurt to remain aware of what

is happening with the markets and how current

events are affecting the markets. I encourage you

to access this content how you prefer, whether it’s

television programming, e-newsletters, podcasts,

print publications, or the news feature in your

Robinhood app. If you’re invested in a retail chain,

visit the store every now and again. If you are

invested in a consumer good, check it out at your

local store. Take pride in owning a portion of that

company, and do your part to contribute to its

success.

Remember, you’re not just investing in the stock

market, you’re giving yourself a gift for your

future. Congratulations on taking your first steps,

and happy investing!

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