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Renting out part, or all, of your home on a rental platform can be a lucrative sideline. Just keep in mind that it can take an investment of time, effort, and money to create and maintain a welcoming space for guests. And, the plan could potentially backfire if you side-step some key legal and insurance steps.

To help ensure your venture is a success, here are some things you may want to consider before you start renting on Airbnb or a similar site.

1. Understanding Local Rental Laws

Before listing your home on a home-sharing site, it’s a good idea to research and make sure you fully understand local laws regarding renting out your home.

Laws that govern home shares vary around the country. In some cities, for instance, it’s illegal to rent a home as an Airbnb unless it’s your primary residence. In others, hosts can only rent out a portion of their home, and must be present during the guests’ stay. Laws about short-term rentals are also constantly changing.

If you own a condo or belong to a HOA, there may be other legal hoops to jump through, since you will likely need to get permission before opening your doors.

2. Checking With Your Landlord (if You’re Renting)

Looking to rent out a room in your home you rent? It can be wise to first carefully read through your own rental agreement.

Leases and agreements can contain language barring renters from subletting the home outright or without the express consent of the landlord. If you’re unsure even after reading the fine print, you may want to have a conversation about it with your landlord.

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3. Talking to Your Neighbors

While neighbors can’t tell you what you can and can’t do on your own property, they can make things difficult for you.

Prior to renting out your home, you may want to do the neighborly thing and pop in or give them a call to let them know what you are planning and do your best to ease any of their concerns. Who knows — they might even end up keeping an eye on the property for you while you’re away.

4. Being Prepared to Pay Taxes

Sure, renting your home on Airbnb may bring in a nice source of passive income. Like all income, however, this may be subject to state and federal taxes.

Generally, if you rent all or part of your home for more than 14 days in a year, you will need to pay taxes on the income. Vacation rental host sites typically send a Form 1099-K to hosts who had more than 200 reservations, earned over $20,000 in a year, or had taxes withheld from their payouts.

5. Considering All the Expenses Involved in Renting

While it may be more fun to think about the extra income that could result from your home rental, it can also be important to think about all the expenses involved.

For example, you may have to purchase items to get the space ready, along with any amenities you will offer guests (like toiletries or coffee), and cleaning supplies (or, pay for a cleaning service), and more.

You may want to make a list of all your potential expenses and consider how it will affect your potential profits.

💡 Quick Tip: If you’re creating a budget, try the 50/30/20 budget rule. Allocate 50% of your after-tax income to the “needs” of life, like living expenses and debt. Spend 30% on wants, and then save the remaining 20% towards saving for your long-term goals.

6. Finding a House Manager if You’d Rather Not do all the Work

Does managing your listing, bookings, and maintaining your rental property sound like a lot? You might consider hiring a manager to do it for you.

There are a number of property management companies around the country. that specialize in managing short-term home rentals.

These agencies will handle everything from writing (or boosting the exposure of) your listing to communicating with guests to cleaning and taking care of repairs. Some charge a commission (i.e., a percentage of bookings), while others charge a flat monthly service fee.

7. Making Space for Guests

Prior to accepting your first guests, it’s a good idea to make sure you have room for them — and that typically means more than just a clean, freshly made bed.

You may also want to offer some empty drawers so that guests can unpack their clothing, and possibly also a free shelf in the bathroom for their toiletries.

8. Putting Away Valuables

While it’s nice to think that everyone is trustworthy, that may not always be the case. It can be a good idea to safely stow away any valuables when you are opening your home to people you don’t know.

You can do this by getting a heavy-duty safe. Or, you might want to lock off one room of the home as an “owner’s closet” that guests cannot access.

9. Checking With Your Insurance Company

Airbnb offers its hosts its own insurance known as Host Protection . Though this covers a wide array of potential issues, including bodily injury to guests and any damage to the property, it may not cover everything. Plus, different home-rental platforms may offer different levels of insurance coverage.

It can be a good idea to also check in with your own homeowners or renters insurance to see what type of coverage these policies offer.

10. Writing a Detailed Description

Ready to list? When it’s time to write a description of your home, it’s a good idea to make your listing as detailed as possible, and even include the flaws of your home. A home need not be perfect to list on Airbnb. However, the company suggests that honesty is the best policy.

It can be a good idea to tell guests exactly what they’ll find when they arrive, as well as highlight your home’s special features, such as the location or unique amenities of your space. For more ways to make your listing stand out, you may want to check out Airbnb’s writing tips .

11. Taking High Quality Photos

Before taking photos of your space, you may want to spend some time arranging everything as if you were getting ready to welcome your first guest. This can help showcase your space to its best advantage, and also help set your guests’ expectations before they book.

It’s also a good idea to shoot in landscape format (photos in search results are typically displayed in landscape, so vertical photos won’t showcase your space as well), shoot in the middle of the day when there is plenty of light, and to highlight any unique features or amenities.

12. Creating an Information Binder

It can be helpful to make a packet of information for your guests which includes key information, such as the Wi-Fi password, your contact number, and house rules (such as check-out time and anything that guests need to take care of before they leave).

You may also want to include instructions on how to work on anything quirky, such as the television or coffee maker, as well as local entertainment and restaurant options.

13. Offering A Few Extra Amenities

There are millions of listings on Airbnb. If you’re hoping that your rental will make financial freedom a reality, you’ll want it to stand out from the crowd.

Throwing in some extras can help encourage guests to choose your home over others. Are you near a popular beach? You may want to consider keeping some beach chairs and sand toys stored in the garage for guests to use.

Simple add-ons, like the use of your bicycles or a parking tag, may not cost you much (or anything) to offer, yet significantly increase the popularity of your listing — along with your earnings.

14. Making a Decision about Pets or No Pets

Before you list your property it’s a good idea to decide if you want your home to be a space for pets or not.

This is a personal decision, but you may want to consider whether or not your space is well-suited for pets (a light suede couch, for example, might not last very long). If you do decide to make your home pet-friendly, you could add in an additional fee for cleaning.

15. Learning How to Price a Property Right

You may think your home looks and feels like a million bucks, but that doesn’t mean travelers will pay a premium.

To understand how to price an Airbnb listing correctly, it’s a good idea to comb through comparable listings in your area to get a sense of what other people are charging.

You can also use a free calculator like airDNA . You just need to input all your data, including home size, if it’s pet-friendly, location, etc., to get a recommended price for your listing.

Recommended: How to Invest in Single-Family Rental Homes

💡 Quick Tip: An emergency fund or rainy day fund is an important financial safety net. Aim to have at least three to six months’ worth of basic living expenses saved in case you get a major unexpected bill or lose income.

16. Deciding How You Want to “Screen” Guests

It is against Airbnb’s nondiscrimination policy to decline a booking based on “race, color, ethnicity, national origin, religion, sexual orientation, gender identity, or marital status” or impose different standards for specific guests.

What hosts can screen for are people who may not be a good fit for their property by being as descriptive as possible in their listing. If your home is not a good fit for children, you may want to make that clear in your listing.

Do you want to limit the noise after specific hours to respect neighbors? You may want to be specific about that in your listing so you bring in the type of customer you are hoping to attract.

17. Learning About Enhanced Cleaning Standards

Airbnb, along with other rental platforms, now require hosts to use an enhanced five-step cleaning protocol to help curb the spread of Covid-19.

The protocol includes special measures, such as using disinfectants approved by your local regulatory agencies for use against Covid-19 on all high-touch surfaces (and letting them stand for the amount of time specified on the label) and washing all dishes and laundry at the highest heat setting possible.

18. Thinking About Turnover Time

Before you rent all or part of your home on a rental platform you will want to think about not only when you want to rent your home out, but also how long it will take you to get it properly cleaned (using the five-step protocol) and ready for the next guests.

Will you need 24 hours between guests or can you get the home ready in just a couple of hours? This will determine exactly what dates you are able to accept guests, as well as what check-in time you want to put in your listing.

19. Testing Your Rental With Friends

When you’re getting close to listing your space, you may want to try testing out the system with a few friends.

Inviting people you know and trust to rent your space (free of charge or for a low fee) won’t do much to get that extra income stream flowing, but it can help you work out the kinks, as well as garner you some (hopefully positive!) reviews.

Friends can also tell you honestly what you might do differently or change to improve the rental experience. This way, you’ll feel confident once people you don’t know arrive.

20. Being Ready for Bookings Right Away

With millions of users all over the world, it may be a good idea to go into listing your property believing you’ll receive guests right away.

While this may not happen, it’s better to be prepared for visitors, than wait to see how your listing performs before readying your space for guests.

21. Looking At Your Reviews

After guests depart they may leave you a review of their stay. It’s a good idea to not only look at the reviews but to take them to heart. Reviews can make or break Airbnb rentals.

While it can be tough to digest criticism of your home, if guests complain about something that can be easily fixed, it can be in your best interest to fix it.

Reading positive reviews can be a good way to see your rental from an outsider’s perspective and make changes to improve your listing.

22. Accepting the Fact You Can’t Please Everyone

Sometimes, people are just difficult, or nitpicky, or just aren’t the right match for your listing and will leave a nasty review that feels unwarranted.

If you see a review that falls into that camp, it can be wise to just forget it and move on. This can often be a better approach than starting a fight in the comment section, which may only end up making you look bad to potential future guests.

23. Working Toward Superhost Status

Becoming an Airbnb superhost can increase your earnings by giving your more visibility and letting guests know that they can expect the best when staying with you.

Superhosts are featured in search results and get a Superhost badge on their profiles and listings to help them stand out. After each year as a Superhost, they’ll get a $100 travel coupon.

To become a Superhost, hosts must complete at least 10 stays in the past year (or 100 nights over at least three completed stays), have a 4.8 or higher average overall rating, respond to 90% of new messages within 24 hours, and cancel bookings less than 1% of the time.

Recommended: Is It Smart to Buy an Investment Property While Renting?

24. Deciding If Airbnb Is the Only Platform for You

After deciding to list on Airbnb, it’s then time to decide if that’s enough. There are, after all, a number of other home rental platforms to choose from, including Vrbo, Booking.com , and Flipkey . It’s up to you how many different listings you’re willing to maintain.

25. Keeping Your Calendar Up to Date

Once you list your home on Airbnb (or any other rental platform), it can be wise to keep your rental calendar as up-to-date as possible. This way, guests don’t accidentally book a stay when you have your in-laws visiting or when you otherwise want to use your own space.

If a date looks to be free to a potential guest but you forgot to mark it as unavailable, it can become a frustrating experience for both parties.

The Takeaway

If you have an extra room, or your home is vacant for several months out of the year, you may be tempted to list it on a home rental site.

But before you start posting photos on Airbnb, there are several things you may want to think through — from legal and insurance issues to the time and expense involved in getting (and keeping) your space ready for guests.

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SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
SoFi members with direct deposit can earn up to 4.20% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 1.20% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 4/25/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
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Pets can bring love, companionship, and fun into your life. But they can also bring a lot of added expenses. In fact, the lifetime cost of owning a dog can run anywhere from $19,893 to $55,132, while owning a cat for its full natural life can range between $4,250 to $31,200.

If you’re yearning for a furry companion, but the high cost of owning a pet gives you worry, you don’t necessarily have to give up on the idea. There are actually a number of cheap pet options out there, and many are also low maintenance and adapt quickly to their new homes.

From small birds to bunny rabbits, here are nine cheap, easy-to-care-for pets you may want to consider adding to the family.

Guinea Pigs

If you’re looking for something cuddly that’s easier on the wallet than a puppy, you may want to consider a guinea pig. These entertaining creatures live about five to seven years, so they also typically require less of a time commitment than a cat or a dog.

A guinea pig can cost anywhere from $10 to $70. If you go for an exotic guinea pig from a local breeder, you can pay up to $120. In addition to the guinea pig, you’ll need to have a cage that has enough room for it to move around and some bedding that will get changed fairly often.

Guinea pig food is relatively cheap — around $15 for a five-pound bag. But these affordable pets can also live off leftover vegetable and fruit scraps.

Guinea pigs thrive as social creatures, so you may want to purchase more than one guinea pig or ensure you’re spending ample time with your furry companion.

Recommended: Ways to Pay for Unexpected Vet Visits

Hermit Crabs

While hermit crabs aren’t cuddly, they can make great pets if you’re looking for a low-key companion that doesn’t require much supervision.

The cost of owning a hermit crab is pretty low (a crab runs around $3 to $25 through a breeder or at a pet store). You’ll also need to get a tank with a vented lid, drinking and humidity sponges, a water dish, climbing wood, and a humidity gauge. Once crabs have outgrown one shell, you’ll need to buy their next, larger shell, which is a small cost.

Hermit crabs need humidity levels between 70% and 80%, which means you’ll need to mist them and their tanks at least once a day to keep these creatures happy and healthy. It’s also important to clean their quarters and change their water often.

Being small creatures, crabs don’t cost much to feed. You can feed these cheap pets vegetable scraps, fruit, or pellet food.

💡 Quick Tip: Want to save more, spend smarter? Let your bank manage the basics. It’s surprisingly easy, and secure, when you open an online bank account.

Sea Monkeys

Sea Monkeys are a novelty pet marketed as “instant pets.” They’re actually a type of brine shrimp sold in kits, usually targeted to children.

Developed in a lab in the 1950s, sea monkeys are sold as packets of eggs that hatch when you add water. These small pets will hatch in a few days and stay alive for about two years. They also reproduce, so you could have a steady supply for some time.

Sea monkey kits, which include the eggs, an aquarium, and growth food, only run around $16. To keep your Sea Monkeys alive, all you need to do is to top up water levels occasionally and feed them once a week.

Dwarf Frogs

African dwarf frogs are small, completely aquatic, and among the easiest types of frogs to keep as pets. This species can be a good beginner frog for owners who are content to look-only — handling them is not a good idea.

Dwarf frogs grow to around 1½” and live up to five years with good care. They can live in an aquarium alongside docile fish like tetras if you want to own a few creatures.

Besides the frog, which typically only costs around $5, owners of these low-cost pets will need to purchase a tank with a tight-fitting lid (which you may be able to find second-hand), gravel or sand for the bottom, and some decorative hiding spots, such as live or silk plants and small terra cotta plant pots placed on their sides.

Keeping dwarf frogs healthy is really just a matter of making sure that their aquarium water is clean and offering them a proper dwarf frog diet — they like to munch on frozen mysis shrimp, bloodworms, food pellets, and brine shrimp.

💡 Quick Tip: If you’re creating a budget, try the 50/30/20 budget rule. Allocate 50% of your after-tax income to the “needs” of life, like living expenses and debt. Spend 30% on wants, and then save the remaining 20% towards saving for your long-term goals.

Goldfish

Goldfish can add interest to any room, are fun to watch, and pretty low maintenance. The fish themselves usually only run between 20 cents and $5, depending on the type of goldfish.

While you may picture this fish living in a classic goldfish bowl, these days many experts recommend investing in a filtered tank in order to keep their habitat clean. Aquariums with filters and decor aren’t super cheap, but the only additional cost after that is the food. Purchasing a container of fish pellets or flakes will set you back about $5.

To save some money, you may want to search for used equipment at yard sales and thrift stores or through online marketplaces. Once you’ve invested in a tank and decor, these items will last indefinitely and can be re-used for future fish.

Leopard Geckos

These tiny lizards are friendly and fun to have around, and don’t require a lot of upkeep. As with goldfish, the biggest cost is likely to be a habitat. You may be able to save here by buying one second-hand from an online marketplace.

In addition to the cost of the leopard gecko (normal breeds run around $20 to $40) and tank, you’ll also need to get some type of lighting (with an incandescent bulb), a hide-out, and possibly a heat pad, depending on temperatures in your home.

Other than that, you’ll need to regularly feed them a diet of insects, including crickets and waxworms, as well as fresh vegetables and clean water.

Ants

If you’re looking for one of the cheapest pets, that is also low-maintenance, an ant farm may fit the bill. While ants don’t provide bonding or cuddling opportunities, it can be fun and fascinating to watch an ant farm grow, particularly for kids.

Depending on the kit, ant farms will set you back anywhere from $14 to $34 and some include ants (you can also purchase live ants online or at your local pet store).

While kits have traditionally been made from sand, modern ant farms are now often made with a clear, edible gel that lets you watch your ants tunnel much more closely.

After you get the farm and the ants, there isn’t much to do other than making sure you provide water and the occasional bits of food.

Recommended: Dog-Friendly Vacation Ideas — Plus Tips for Traveling with Pets

Canaries

Canaries can be great pets that offer companionship and melodies, and can even learn to do little tricks like playing with a ball or stepping onto your hand. These types of birds live around 10 years and aren’t as expensive as more exotic breeds.

Costs include a cage, small toys, food, and the occasional veterinary visit (if they’re sick). You can purchase canaries from pet stores or breeders — the latter may offer more options depending on where you live.

You could pay around $300 for a bird, so it’s not necessarily the cheapest pet on the list. However, it’s still considered a low-cost pet compared to a dog or cat.

Recommended: How Much Is Pet Insurance?

💡 Quick Tip: When you feel the urge to buy something that isn’t in your budget, try the 30-day rule. Make a note of the item in your calendar for 30 days into the future. When the date rolls around, there’s a good chance the “gotta have it” feeling will have subsided.

Rabbit

While rabbits are as large as some cat and dog breeds, they qualify as a cheap, low-maintenance pet. If you buy a rabbit from a breezer, you can expect to pay around $50 for a non-pedigreed rabbit. However, you may be able to adopt a rescue through the Humane Society or ASPCA for considerably less.

Rabbits also need both hay and veggies, which can run about $40 per month. These fluffy companions will also need a rabbit hutch, but you may be able to find one cheaply through a second-hand marketplace. Or, you can build one yourself.

Rabbits are happy to live outside or in (they can actually be potty trained). If you opt for indoors, you may want to keep in mind that they can chew on wires and furniture legs if allowed to roam free. Some breeds, such as angora rabbits, also require grooming.

These furry friends live about seven to 10 years.

Recommended: 15 Tips to Cut Costs When Traveling with Pets

The Takeaway

Whether furry, feathered, or reptilian, owning a pet doesn’t need to cost a small fortune. As you can see from the list here, there are plenty of cheap pets that are easy to care for and waiting for you to take them home.

Before you make a commitment to a pet, however, you may want to make sure your little companion will fit into your lifestyle and that you have time to take care of it.

And since even an inexpensive pet will add to your household expenses, you may want to start putting some money aside in some type of savings account to cover your start-up and ongoing pet expenses.

Better banking is here with up to 4.20% APY on SoFi Checking and Savings.

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SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
SoFi members with direct deposit can earn up to 4.20% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 1.20% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 4/25/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Stock share prices go up and down throughout each trading day, and on a basic level, share prices for stocks traded on public stock exchanges are determined through supply and demand. Demand is determined by expectations and emotions.

What this means is if there is less supply of a stock, there may be more demand for it since it’s more rare. In that situation, the price of the stock will rise. Conversely, if there is more supply and less demand, the stock price will decrease. If either of these trends continues for a lengthened period of time, it can lead to a bull or bear market in which there’s an ongoing trend of increasing or decreasing prices.

7 Factors That Determine Stock Price

Beyond the basic principles of supply and demand, there are other factors that contribute to changes in stock prices. Those include investor behavior, the news cycle and earnings data, and more.

Investor Behavior

A current stock price is based on a prediction of the future success of a company. Hypothetically, if investors have reason to believe that a company will be successful in the future, they will invest in the company, causing the price of shares to increase. Similarly, if the outlook for a company is negative, investors may sell off the shares they own, causing the price to decrease.

Basically, if a few million people think that Company X is going to be successful in the near future and that shares of Company X will see price appreciation, that will lead them to buy the stock and its price will increase.

Emotions such as fear, panic, anxiety, greed, and hope can have a significant impact on investor behavior. This is the basis of the field of behavioral finance. There are a few different ways investors try to predict the future success of companies.

Company News and Data

You should know that stock price predictions can be made based on reading charts and making calculations, as well as looking at news stories, fundamental analysis like reading over company earnings and reports, and other information. News about changes in management, production, scandals, and other stories can cause share prices to quickly change.

World Events

Beyond news and outlooks specifically related to companies, outside factors can also influence investor behavior. For instance, a presidential election, a pandemic, political unrest, or signs of a recession can create panic in the market, influencing investors to sell off stock shares in order to protect from losses or put their money into safer investments.

Usually there is some up or down price movement in stock prices, and some stocks are more volatile than others. It’s rare for prices to completely stop moving or remain static. It’s also rare for prices to drastically increase or decrease suddenly, but this is what happens during a market crash.

A market crash can happen when many investors begin to sell, creating a snowball effect where more and more investors pull their money out of the stock market. At that point, the market could crash, resulting in actual losses that wouldn’t have occurred if people hadn’t sold.

Stock Buybacks

Another factor that can affect stock price is company buybacks of stocks. Companies will sometimes buy back their own stock from investors, thereby reducing the supply of shares to the public. They do this in an attempt to increase stock prices. If companies issue more shares of stock, they are then increasing the supply, which can cause the price to decrease.

Primary and Secondary Markets

When some companies first start selling stock to the public, they hold an IPO, or initial public offering. At the time of the IPO, an initial share price is set and investors can begin to buy the stock at that price. After the IPO ends, the stock gets listed on stock exchanges and the price starts to fluctuate as shares get bought and sold — and supply and demand begin to play a role in share price.

When companies don’t have an IPO, their shares get bought and sold privately, in which case share price is determined between the buyer and seller.

Stock Valuation

The valuation of a stock is made by looking at the company’s past and projected earnings, large trades made by institutional investors, overall market trends of the S&P 500, and ratios and calculations made by analysts.

Four ratios and calculations that are used to determine the valuation of a stock are price-to-earnings (P/E) ratio, price-to-book (P/B ratio), price-to-earnings-to-growth (PEG) ratio, and dividend yield. These calculations can help investors figure out whether a stock is currently under- or overvalued.

Bid and Ask Price

A share price ultimately gets determined through the bid, ask, and sale price on stock exchanges. The bid price is the maximum amount an investor will pay for shares of a stock, while the ask price is the lowest price a seller will accept. When the two prices match up, a sale is made, and that price sets the new price per share of the stock. Ultimately it gets down to what someone is willing to pay and if a stock owner is willing to sell to them at that price.

What someone is willing to pay or sell for is determined by psychological and market factors, as discussed. If a buyer thinks the stock is undervalued at the asking price, they will buy, and vice versa. Generally the difference between the bid and ask price isn’t very large, but if a stock doesn’t have a large trading volume it can be.

Companies that are a similar size or have a similar valuation can have very different share prices because the number of shares each company issues can differ greatly. Because of different market caps and numbers of liquid shares, the share price doesn’t say much about the actual value of the company, and one can’t use share prices to compare companies. However, the share price does reflect what investors currently think the stock of a company is worth.

How to Handle Changes in Stock Price

Attempting to time the market is extremely challenging, and can result in significant losses, not to mention anxiety. Once an investor sells a stock, they are then in the difficult position of trying to figure out when and whether to buy back into it at a lower price, if it even continues to decrease in value. Likewise, they could sell at what they think is the peak of the market, only to watch the price continue to rise.

Historically, the stock market has continued to rise over the long term, with plenty of ups and downs along the way. Although past trends are never a guarantee of future outcomes, it’s likely that investors with a longer time horizon, who are willing to hold onto their stocks throughout up and down cycles, will eventually see positive returns.

That said, market volatility can provide opportunities to invest when the stock market is down, or sell at higher prices, especially if they were already considering buying or selling a stock.

The Takeaway

Ultimately, supply and demand drive stock prices — which is informed by market conditions, world events, and investor behavior, among other influences. Although there is no way to look into the future to predict share prices, investors tend to look at past performance, charts, and market trends to attempt to predict price movements. In general, it’s best not to try and time the market, but to focus on building a solid long-term portfolio that will grow over time.

There are numerous investing strategies to explore, too, and some of them don’t involve investors worrying too much about stock prices in the immediate term.

Ready to invest in your goals? It’s easy to get started when you open an Active Invest account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

For a limited time, opening and funding an account gives you the opportunity to win up to $1,000 in the stock of your choice.

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The information provided is not meant to provide investment or financial advice. Also, past performance is no guarantee of future results.
Investment decisions should be based on an individual’s specific financial needs, goals, and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC registered investment advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal. Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or prequalification for any loan product offered by SoFi Bank, N.A.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Claw Promotion: Customer must fund their Active Invest account with at least $10 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.
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