AI helps you learn stocks.

Kid version: A company is a whole pizza. A stock is one slice. Own a slice, and you own a little bit of the company.

A stock gives you a share of ownership in a company. Companies sell stock to raise money, for things like new products or bigger buildings. Owners can make money if the price goes up, or if the company pays a dividend. But prices go down too, and you can lose money.

Source: Investor.gov (SEC): Stocks FAQs

Kid version: The stock market is like a giant farmers market, but people trade slices of companies instead of apples.

The stock market means trading stocks on exchanges, over-the-counter and on computer trading venues. Every U.S. stock has a short nickname called a ticker. U.S. tickers are usually short codes of 1 to 5 letters. You place an order through a broker, and the broker decides where to send it. It isn't instant, and where it goes can change your price. The New York Stock Exchange's main trading time is 9:30 a.m. to 4:00 p.m. Eastern (8:30 a.m. to 3:00 p.m. Central) on regular trading days.

Source: Investor.gov (SEC): Stock market; Investor.gov (SEC): Ticker; Investor.gov (SEC): Executing an order; NYSE: Holidays and trading hours

Kid version: An ETF is a lunchbox packed with lots of different snacks. You buy the whole lunchbox in one go.

An ETF is a fund that pools money from many people and buys stocks, bonds or other things. ETF shares trade on stock exchanges all day, at market prices. That price can be a bit higher or lower than what the stuff inside is worth. ETFs can follow an index, or be run by managers who pick.

Source: Investor.gov (SEC): Exchange-traded fund (ETF); Investor.gov (SEC): Updated Investor Bulletin: ETFs

Kid version: An index is a team roster. An index fund buys the whole team, so you don't have to guess the star player.

An index fund is a mutual fund or ETF that tries to match a market index. The S&P 500 Index and the Wilshire 5000 Total Market Index are examples the SEC names. Many indexes give bigger companies a bigger share of the basket. Index funds usually trade less often, but they can still lag their index because of fees and costs.

Source: Investor.gov (SEC): Investor Bulletin: Index funds

Kid version: Both are fruit baskets. A mutual fund basket gets its price tag once, after the store closes. An ETF basket's price changes all day long.

Both pool money from many investors and can spread it over many companies. You buy mutual fund shares from the fund, at a price set once at the end of each business day. ETF shares are bought and sold on an exchange while the market is open. You need a brokerage account to buy ETFs.

Source: Investor.gov (SEC): Characteristics of mutual funds and ETFs

Kid version: You own a slice of a lemonade stand. At the end of the summer, the stand shares some of its profit with you. That's a dividend.

A dividend is a part of a company's profit paid to owners, often on a set schedule. The company's board decides whether and when to pay a dividend. Yield is the yearly dividend divided by the share price. A pretend example: $1 a year on a $50 share is a 2% yield.

DRIP: a dividend reinvestment plan uses your dividends to buy more shares instead of paying you cash. Ex-dividend date: buy on or after this date, and the next dividend goes to the seller, not you. Dividend growth vs high yield: some companies raise their dividend over time, while others pay a big one now. Neither style is better. A yield can rise just because the price fell, so ask AI to explain what changed.

Source: Investor.gov (SEC): Dividend; Investor.gov (SEC): Direct investment plans and DRIPs; Investor.gov (SEC): Ex-dividend dates; Investor.gov (SEC): Stocks FAQs

Kid version: A growth stock is a puppy: growing fast and eating everything. A value stock is a toy on sale: it might be a bargain, or there might be a reason it's cheap.

Growth companies' earnings grow faster than average, and they rarely pay dividends. Value stocks have a low price compared to earnings (a low P/E). Sometimes they're cheap because people stopped liking them. Income stocks pay dividends steadily, and a stock can be more than one type.

Source: Investor.gov (SEC): Stocks FAQs

Kid version: Market cap is how big the whole pizza is. Large-cap is a giant party pizza. Small-cap is a personal pizza.

Market cap is one share's price times all the company's shares. Stocks are grouped as large-cap, mid-cap and small-cap by this size. Very small ones are called microcap, and the cheapest are penny stocks. Penny stocks may have little or no earnings, and they're very risky.

Source: Investor.gov (SEC): Market capitalization; Investor.gov (SEC): Stocks FAQs

Kid version: A brokerage account is your ticket into the stock market store. A fractional share lets you buy one bite of an expensive cookie instead of the whole cookie.

A brokerage account is where you buy, sell and hold stocks and ETFs. In a cash account, you pay the full price for what you buy. A fractional share is less than one share: $100 into a $1,000 share gets you 0.1 shares. Not every broker offers fractional shares, and rules differ, so read how yours works.

SIPC can help if a member brokerage firm fails and money or stocks are missing. It does not protect you when prices fall.

Source: Investor.gov (SEC): Types of brokerage accounts; FINRA: Investing in fractional shares; SIPC: What SIPC protects

Kid version: A retirement account is a special piggy bank with a tax shield. You promise to save it for when you're much older.

An IRA is a personal savings plan with tax benefits. With a traditional IRA, putting money in may lower your taxes now. With a Roth IRA, you don't get that deduction, but qualified withdrawals later can be tax-free. A 401(k) is a plan through a job, and employers can add money too.

Source: IRS: Individual retirement arrangements (IRAs); IRS: Roth IRAs; IRS: 401(k) plans

Kid version: Fees are tiny ants taking crumbs from your picnic. A few ants seem fine, but over many years they carry off a lot.

An expense ratio is the share of a fund's money used each year to run it. Fees can look small but add up. In the SEC's example, $100,000 growing 4% a year for 20 years ends near $208,000 with a 0.25% fee, but near $179,000 with a 1% fee. FINRA's free Fund Analyzer lets you compare fund costs.

Source: Investor.gov (SEC): Expense ratio; Investor.gov (SEC): Understanding fees; FINRA: Fund Analyzer

Kid version: Don't carry all your eggs in one basket. And putting the same allowance into savings every week, rain or shine, is like dollar-cost averaging.

Risk means you could lose money, and stock prices move up and down. Diversification means spreading money across many investments, so one loser hurts less. It can lower risk but can't remove it. Dollar-cost averaging means putting in the same amount on a regular schedule. You buy more when prices are low and less when they're high.

Source: Investor.gov (SEC): What is risk?; Investor.gov (SEC): Diversification; Investor.gov (SEC): Dollar cost averaging

Kid version: A stock page is like the back of a baseball card: lots of stats about one player.

EPS (earnings per share) is a company's profit divided by its shares. P/E is the price divided by EPS, a way to see if the price is high or low compared to the past or to others. The 52-week range is the lowest and highest prices a stock traded at over the past 52 weeks. No single number tells you whether to buy. A company's yearly report, the 10-K, has the full story.

Source: Investor.gov (SEC): Earnings per share; Investor.gov (SEC): Price-earnings (P/E) ratio; Investor.gov (SEC): How to read a 10-K

Kid version: If you sell your slice for more than you paid, the extra is a capital gain. The government's tax depends on how long you kept the slice.

Profit from selling a stock is a capital gain, and a loss is a capital loss. Keep it more than one year, and it's long-term. Keep it one year or less, and it's short-term. Long-term gains may get a lower tax rate than regular income. Tax rules change, so check the IRS page or ask a tax professional.

Source: IRS: Topic no. 409, Capital gains and losses

Kid version: If a stranger says a magic bean will grow into a money tree overnight, it's a trick.

Mistakes to avoid: putting all your money in one stock, ignoring fees, and buying because of hype. In a pump and dump, scammers spread hype to push a price up, then sell, and the price falls. The SEC, NASAA and FINRA warn about "AI trading systems" that claim they can't lose or guarantee winners. Look up anyone selling investments on FINRA BrokerCheck.

Source: Investor.gov (SEC): Pump and dump schemes; Investor.gov (SEC, NASAA, FINRA): AI and investment fraud alert; FINRA BrokerCheck

Kid version: A price chart is a growth chart on the kitchen wall, but for a stock. It shows where the price has been, not where it will go.

Line chart: one line that connects closing prices over time. Candlestick chart: each candle is one time period. The fat body runs from the opening price to the closing price. It's often green if the price closed higher and red if it closed lower. The thin wicks show that period's highest and lowest prices.

Volume (plain definition): volume is how many shares changed hands in a set period. Volume bars show it. Timeframes let you zoom from one day out to many years. A moving average smooths the prices into one line so the general direction is easier to see. Support and resistance are price areas where people watch for a fall or a rise to pause. They're ideas traders watch, not guarantees. And the SEC says past performance does not predict future returns.

Source: Charles Schwab: How to read stock charts; Fidelity: What is technical analysis?; Investor.gov (SEC): Mutual funds (past performance)

The Schwab and Fidelity links are education pages, not endorsements. We don't recommend any broker.

AI can misread charts. It may get the dates, prices or colors wrong. Check the numbers on the chart yourself.

Kid version: An option is like paying a small fee to reserve a toy at a set price until Saturday. If the toy's price goes up, your reservation is valuable. If nobody wants the toy, your reservation runs out and the fee is gone.

Calls and puts: a call gives the buyer the right to buy a stock at a set price until a date. A put gives the right to sell it. Strike is that set price, expiration is the last date, and the premium is what the option costs. One contract usually covers 100 shares, so a $2.20 premium costs $220 (the SEC's example).

In, at or out of the money: a call is in the money when the stock price is above the strike, and a put is in the money when it's below. "At the money" means they're the same. Time decay: an option loses time value as expiration gets closer, and the loss speeds up near the end.

Buying vs selling: a buyer has the right but not the obligation, and can lose at most the premium. A seller collects the premium but must buy or sell shares if assigned. That's why selling can mean big losses. A covered call means selling a call on stock you already own, giving up gains above the strike. A cash-secured put means selling a put and setting aside cash to buy the stock if assigned.

Rules before anyone trades: a brokerage firm must approve an account for a specific options level, because some strategies carry big risk. Everyone must read the Options Disclosure Document, Characteristics and Risks of Standardized Options, before buying or selling an option.

A beginner path, learning only: 1) learn the words here, 2) take the OIC's free courses on OCC Learning, 3) read the ODD (OIC's Quick Guide helps), and 4) keep learning before any real money is involved.

Tip: some brokers offer practice (paper-trading) accounts that use pretend money, so you can see how options orders work without risking real cash. Practice results won't match real trading. (The free OIC Options Calculator also shows theoretical trade simulations.)

Source: Investor.gov (SEC): An introduction to options; FINRA: Options; OIC: Theta (time decay); OIC: Covered call (buy/write); OIC: Cash-secured put; OCC: Characteristics and Risks of Standardized Options (ODD); OIC: ODD Quick Guide; OIC: OCC Learning (free options courses)

Copy these in order. Each one builds on the last. Check every answer on the official sources above.

Can AI tell me which stock to buy?

No, and you shouldn't ask it to. AI can be wrong or out of date. Use it to learn words and compare facts, then check them yourself.

Is this financial advice?

No. Not financial advice. It is education only, for beginners.

Do I need a lot of money to learn?

No. Learning is free. You can practice by asking AI questions and reading the official pages.