Investing Archives

Dec

2025

A colorful photo of the looping tracks of a roller coaster represent the volatile nature of risk.

Risk Tolerance Quiz: How Much Risk Are You Willing to Take?

By Pam O’Brien | Growing Wealth, Investing | Comments Off

Table of Contents

Risk Tolerance Quiz
What Investment Risk Tolerance Is
What Your Risk Tolerance Means
Finding Investments That Match Your Risk Tolerance
FAQ

In finance, “risk” refers to the risk of losing money. Determining how much risk you feel comfortable with can help you decide how best to invest your money. The stock market can be volatile, and the assets and allocations you choose should be those that make you feel comfortable personally and financially.

Your risk tolerance may change, depending on the goal you’re investing for and your time horizon, as well as your personal circumstances. In some cases, you may feel more comfortable taking on a little more risk exposure when you have a longer time period to reach your goal.

Risk is a highly personal factor, though, and it takes careful thought to know where you stand. Take our Risk Tolerance quiz to gain insight into your own tolerance for risk.

Key Points

• Risk tolerance refers to an investor’s comfort level with the possibility of losing money.

• In general, higher-risk investments may provide greater returns but are less predictable than lower-risk investments, which typically offer lower returns.

• Investment goals, time-frame, financial circumstances, and personal temperament all help determine an individual’s risk tolerance.

• Investment styles are divided into conservative, moderate, and aggressive, which generally correspond to portfolios favoring lower-risk funds, a balance of assets, or high-potential-return assets, respectively.

• The article introduces a risk tolerance quiz to help evaluate an individual’s personal risk level.

What Investment Risk Tolerance Is

When it comes to investing, understanding risk tolerance involves the following three factors:

• Your risk capacity: This is your ability to handle risk financially — the amount of money you can afford to lose without impacting your financial security. How close you are to retirement and the financial obligations you have will affect your risk capacity, whether you’re investing online or through a traditional brokerage.

• Your needs and wants: These are your goals for your finances and your lifestyle. For instance, maybe you want to retire soon or save up for a down payment on a new house.

• Your emotional risk IQ: This refers to your personality and how you see risk. You might be a thrillseeker who likes to live on the edge. Or perhaps you prefer a sure and steady approach.

Understanding Risk vs. Reward

As you get familiar with various aspects of risk, as well as your own risk tolerance, it helps to understand the risk-reward continuum when it comes to your investments.

Remember: Higher-risk investments are generally less predictable, but may provide higher returns. Lower-risk investments generally offer lower returns, but they’re typically more reliable and less volatile.

Recommended: Stock Market Basics

What Your Risk Tolerance Means

Once you know whether your investment style is conservative, moderate, or aggressive, you can dig a little deeper to understand what’s driving your specific risk tolerance.

• First, of course, there are the goals you’re saving and investing for. Is it retirement? A down payment on a new house? Sending your kids to college? Where your money is going will make you more or less willing to take risks for the potential of higher returns.

• The length of your investment time frame often relates to risk tolerance. Investors with short-term goals, or those nearing retirement, often focus on strategies that prioritize capital stability, as there is less time to recover from market volatility before that money is needed.

A longer time horizon, such as for a newbie investor in their 20s, provides decades for potential market recovery. This time frame can align with growth-focused strategies that pursue higher potential returns. Conversely, investors with a medium-term horizon may consider a balanced approach that seeks to mitigate risk while still pursuing growth.

• Your financial circumstances, now and in the future, can also impact risk tolerance. Investors who anticipate income growth may find themselves with a higher risk tolerance. Conversely, individuals facing uncertain income, such as freelancers, or those not anticipating salary growth, typically prioritize capital preservation and a more cautious approach to investing.

Finally, there’s your temperament. If you invest in stocks, for example, are you going to be filled with anxiety every time the market dips? Or can you remain calm and focused?

Thinking about these different factors can give you some insights into your feelings about money, and the types of investments you may want to choose.

Finding Investments That Match Your Risk Tolerance

With this new knowledge in hand, you can invest your money in a way that makes sense for you and the amount of risk you feel comfortable with. These are some scenarios you might want to think about, depending on your investment style.

• Conservative: A conservative investor may opt for a portfolio that mainly consists of assets that tend to be stable and lower risk, such as money market funds and government bonds.

• Moderate: An investor who takes moderate risks might choose to balance their portfolio between riskier assets like stocks and more stable investments like money market funds and bonds.

• Aggressive: An investor who is interested in self-directed investing will likely gravitate to assets with a high potential for return, but also a higher potential for volatility and loss, such as growth stocks and alternative investments.

Whatever your risk tolerance is, it’s wise to diversify your portfolio across different asset classes including stocks, bonds, and commodities.

The Takeaway

Each investor has a risk tolerance level that depends on their individual circumstances. Using our risk tolerance quiz can help you evaluate how much risk you should take.

That said, it’s vital to know that all investments come with some degree of risk. A conservative investor will likely feel better with lower-risk investments, while an aggressive investor will typically look for assets with high growth potential, despite the higher risk they pose.

Once you have investments that suit your style and temperament, the better you may feel about your investment strategy. Just be sure to check your investments regularly to make sure they’re on target to help you to meet your financial goals.

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

Invest with as little as $5 with a SoFi Active Investing account.

FAQ

What is an example of risk tolerance?

If the idea of making an investment, and watching it possibly lose and gain money, is a source of anxiety, you may have a low tolerance for risk. If portfolio ups and downs don’t bother you, perhaps because you believe you may come out ahead eventually, you may have a higher risk tolerance.

How does risk tolerance relate to investing strategy?

Once you know how much risk you want to take on, you can choose investments that match your comfort level. If you prefer as little risk of loss as possible, you may want to invest in assets that provide a steady rate of return. If you can tolerate some risk of loss, you may want to consider investments with a higher risk/reward profile.

Remember: higher risk investments may have higher returns, but there are no guarantees. Lower risk investments tend to have lower returns, but typically provide a higher degree of stability.

Can your risk tolerance change?

Yes. Your risk tolerance can change over time. And your risk tolerance may also change depending on your circumstances, or the goal you’re investing for.

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SOIN-Q425-021

Dec

2025

A woman uses a laptop and calculator at a coffee table while sitting on a couch.

The Consumer Price Index (CPI): A Comprehensive Guide

By Austin Kilham | Growing Wealth, invest, Investing, Terminology | Comments Off

Table of Contents

What Is the Consumer Price Index (CPI)?
How the CPI Works
The Consumer Price Index (CPI) in Practice
CPI Versus Other Economic Indicators
Analyzing and Critiquing the CPI Methodology
CPI’s Broader Impact and Usage
Contemporary Relevance of CPI
Educational Resources and Further Reading on CPI
FAQ

The Consumer Price Index (CPI) is a monthly measure of how the aggregate costs of consumer goods and services in the United States are changing. Economists use CPI to help them understand whether the economy is in a period of inflation or deflation, and individuals can use it to get a sense of where prices might be headed.

Key Points

• The Consumer Price Index (CPI) measures average price changes for a basket of goods and services.

• The CPI is a major data point that influences Federal Reserve decisions on interest rates to meet a 2% annual inflation target.

• Rising CPI can increase interest rates, affecting mortgage costs and the housing market.

• Higher interest rates can reduce business sales, impact stock prices, and potentially increase unemployment.

• Despite limitations, CPI remains a relevant economic indicator, guiding policy decisions.

What Is the Consumer Price Index (CPI)?

The CPI measures the change of the weighted-average prices paid by urban consumers for select goods and services, according to the Bureau of Labor Statistics (BLS). In other words, the metric tracks the rise and fall of prices over a given period of time.

Definition and Significance

As mentioned, “CPI” is short for Consumer Price Index, and it’s an often-cited economic indicator.

The BLS produces indexes that cover two populations: CPI-U covers all urban consumers, representing more than 90% of the population. And CPI-W represents urban wage earners and clerical workers, representing approximately 30% of the population. The CPI excludes people who live in rural areas, the military, and imprisoned people.

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How the CPI Works

The CPI tracks prices for a basket of goods and services people commonly buy in eight major categories, including:

• Food and beverage

• Recreation

• Apparel

• Transportation

• Housing

• Medical care

• Education and communication

• Various services

CPI Formulas

Each month, the BLS contacts retailers, service providers, and rental spaces across the country gathering prices for about 80,000 items. It uses this data to calculate CPI using the following formula:

CPI = Cost of the Market Basket in a Given Year/Cost of the Market Basket in the Base Year.

The result is multiplied by 100 to express CPI as a percentage. The BLS uses the years 1982-1984 as its base year. It set the index level during this period at 100.

Annual CPI Calculation

Here’s an example of the annual CPI calculation, and comparing two different years to get a gist of the differences.

Imagine the cost of a hypothetical basket of goods in 1984.

	Sweatshirt	1 dozen eggs	Movie ticket
Price in 1984	$10	$1.50	$5
Quantity	2	6	10
Total Cost	$20	$9	$50

When you total the price of these goods you get $79. Using the CPI formula above you take $79/$79 x 100 = 100%. This is where the 1984 base rate of 100 comes from.

Now let’s consider the same basket of goods in 2025.

	Sweatshirt	1 dozen eggs	Movie ticket
Price in 2025	$24	$3	$15
Quantity	2	6	10
Total Cost	$48	$18	$150

When you total the prices of these goods you get $216. Now, when you plug this into the CPI formula you get $216/$79 x 100 = 273%. You can now tell that from 1984 to 2025 prices for this particular basket of goods have risen by 173%.

Diverse Categories Within CPI

The CPI tracks more than 200 categories of items, and within each category it samples hundreds of specific items at various businesses which serve to represent the thousands of items available to consumers. In addition to these categories, CPI includes government-charged user fees like water, sewage, tolls, and auto registration fees.

It also factors in taxes associated with the price of goods such as sales tax and excise tax. However, it does not include Social Security taxes or income taxes that aren’t directly related to the purchasing of goods and services.

The CPI also does not include the purchase of investments, like stocks and bonds.

The Consumer Price Index (CPI) in Practice

The CPI can be used in a variety of ways, but perhaps most prominently, in economic policy.

Usage in Economic Policy

The CPI is the most common way to measure inflation, the economic trend of rising prices over time, or deflation, the trend of falling prices. The federal government, or the Federal Reserve, more specifically, sets a target inflation rate of 2% annually, and the CPI can help the government understand whether or not its monetary policy is effective in meeting this target.

The Federal Reserve’s Utilization

The Federal Reserve may look at the CPI to gauge whether or not to raise interest rates, which may cool or heat up the economy, accordingly, by increasing the cost of borrowing. As borrowing costs go up, demand for goods or services tends to fall, lowering prices, and putting downward pressure on the CPI.

Implications for Other Government Agencies

Economists also use CPI as a measure of cost of living, the amount of money you need to cover basic expenses, such as housing, food, and health care. This is important because the government may make cost-of-living adjustments to programs such as Social Security benefits. As the cost of living rises, benefit amounts may be adjusted higher to keep up with the rising costs of goods.

Employers may also look at the cost of living to help them set competitive salaries and determine when to raise wages for employees.

CPI’s Influence on Market Sectors

The CPI can also have an influence on market sectors, like the housing markets, financial markets, and even labor markets. As noted, a lot of it is top-down — depending on how the Federal Reserve reads the CPI and decides to change interest rates, if at all.

Raising rates can temper demand in the housing market, as a mortgage can become more expensive. It can also slow down sales for all sorts of businesses, which is reflected in earnings reports and finally, in the stock market. That can then spill into the labor market, and potentially raise unemployment as companies look to cut costs.

All told, the CPI’s influence can run deep in an economy.

CPI Versus Other Economic Indicators

The CPI is only one of many economic indicators, as mentioned. Others include unemployment, and the Producer Price Index (PPI).

CPI vs Unemployment: Understanding the Relationship

As noted, there tends to be a relationship between the CPI and unemployment rate, as the Fed targets 2% inflation, and full employment. As such, it can decide to make changes to monetary policy to try and restore balance or at least get closer to its goals.

CPI vs PPI (Producer Price Index)

The Producer Price Index or PPI measures the average change over time in the selling prices received by domestic producers of goods and services. In simpler terms, this metric measures wholesale prices for the sectors of the economy that produce goods. Like the CPI, the PPI can help analysts estimate inflation, as higher prices will show up on the wholesale level first before they get passed on to consumers at the retail level.

Analyzing and Critiquing the CPI Methodology

The CPI is a useful measure in many ways, but it does have some limitations.

First, it doesn’t apply to all populations in the United States. CPI considers urban populations alone, so it is not necessarily representative of the costs for those who live outside of those areas.

Also, the CPI calculation does not take into account all of the goods and services available to consumers or new technologies not yet considered consumer staples. What’s more, the metric does not provide any contact into what’s causing prices to move up and down, such as social or environmental trends.

CPI’s Broader Impact and Usage

CPI reports are typically issued monthly by the BLS, and are available to anyone who wants to access them online. They give a broad breakdown of the previous month, and compare price changes year-over-year, and month-over-month.

Breaking Down the Monthly CPI Report

The standard CPI report has an introduction that discusses the changes over the previous month, followed by a table that outlines changes in specific price categories over the past year and several months. It further breaks down food, energy, and “all items less food and energy,” providing additional insight for each category.

Anticipating the Next CPI Report

The BLS publishes the date and time of the upcoming CPI report on its website, typically the second week of the month, at 8:30am ET.

Contemporary Relevance of CPI

In recent years, many people have kept a closely-trained eye on the CPI and CPI reports, after prices rose dramatically due to the pandemic in 2020. While there were a variety of reasons as to why prices increased, that bout of inflation — the first serious case of inflation since the 1980s — caught many people off guard, and strained consumers’ budgets. Though it has moderated in the years since, the cost of living has remained a contentious issue in the U.S.

It also led to the Fed increasing interest rates. Inflation, or the increase in the CPI over the past couple of years, peaked at more than 9% during the summer of 2022, and as of late 2025, was back down to around 3%.

Educational Resources and Further Reading on CPI

There are numerous resources and places to learn more about the CPI, especially after all the attention it has garnered in recent years.

Learning More About CPI

A simple internet search will net a cornucopia of results, loaded with information and insight into the CPI. You’re also likely to find opinion pieces and other media discussing the CPI’s shortcomings or strengths — it can be a good idea to consider everything, and formulate your own opinion.

But in terms of learning more about the CPI itself, the BLS publishes a handbook discussing the concepts and methods it uses, which can also be helpful if you’re hoping to bolster your CPI IQ.

CPI-Related Statistics and Where to Find Them

The BLS publishes the CPI, and a whole host of data and statistics related to it. With that in mind, it can be a great place to start when hunting down CPI-related data. There are multiple other sources that utilize the BLS’ data to compile charts, graphs, and more, but typically, it’s all sourced back to the BLS.

The Takeaway

Rising inflation decreases the value of individuals’ cash savings over time. Investing in stocks, bonds and other investments that offer inflation-beating returns may help consumers protect the value of their savings. Understanding CPI, and how it’s moving, can help you devise a strategy for your investment portfolio.

The CPI can be a deep topic, especially when you consider how it intersects and relates to other elements of the economy, such as unemployment and interest rates. And again, the more an investor understands about the underlying machinations of the economy, the more knowledge they’ll have to power their decisions in the market.

¹Opening and funding an Active Invest account gives you the opportunity to get up to $3,000 in the stock of your choice.

FAQ

What does CPI stand for?

CPI is an acronym that stands for “consumer price index,” and is a monthly measure of how the aggregate cost of goods and services changes over time.

What produces or calculates the CPI?

The CPI is calculated by the Bureau of Labor Statistics (BLS), a government agency. The BLS actually produces several CPI indexes, such as the CPI-U (Consumer Price Index for All Urban Consumers) and CPI-W (Consumer Price Index for Urban Wage Earners and Clerical W, among others.

What categories of goods or services are included in the CPI calculation?

The BLS tracks food and beverage, recreation, apparel, transportation, housing, medical care, education and communication, and other various service costs when compiling the CPI.

Photo credit: iStock/Prostock-Studio

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SOIN-Q425-012

Dec

2025

A woman reviews her investments on her laptop while sitting on a couch.

How to Pick Stocks: Essential Steps for Investors

By Samuel Becker | Growing Wealth, invest, Investing | Comments Off

Table of Contents

Step 1: Define Your Investment Goals
Step 2: Learn the Art of Diversification
Step 3: Research and Select Potential Stocks
Step 4: Analyze Stock Value and Performance
Step 5: Learn Risk Management in Stock Picking
Step 6: Utilize Tools for Effective Stock Selection
Step 7: Seek Answers to Your Stock-Picking Questions
FAQ

You’re ready to start buying stocks. But as you look at all the stocks available, you may be wondering which ones to choose. What’s the best way to pick a stock? And how do you know which stocks might be right for your portfolio?

This guide will walk you through what you need to know about how to pick stocks.

Key Points

• Defining investment goals and understanding financial objectives help determine the right stocks, whether investing for retirement, home purchase, or education, considering both timeframe and risk tolerance.

• Diversification across different sectors, company sizes, and asset types can help mitigate unsystematic risk while potentially improving portfolio performance, though it doesn’t guarantee protection from losses.

• Thorough company research involves examining financial statements, quarterly filings, price-to-earnings ratios, dividend yields, and market news to evaluate profitability, performance, and competitive positioning.

• Risk management requires balancing potential returns against personal risk tolerance, with aggressive investors pursuing higher-growth stocks and conservative investors favoring stable, lower-risk options.

• Stock screeners, market news sources, and financial tools enable investors to filter stocks by criteria like earnings per share and return on investment while staying informed about market trends.

Step 1: Define Your Investment Goals

Before you start exploring different stocks, think about what you’re investing for. Of course you’re investing to make money, but what do you want to accomplish overall? In other words, what are your investment goals? Figuring out your purpose can help you when you’re choosing investments and determining how to pick stocks.

Understanding Your Financial Objectives

What are you hoping to achieve with your investments? Think about this carefully. Is it retirement? Are you saving for a downpayment on a home or your child’s college education? Knowing your financial goals is very important to your investment strategy.

Also, consider your timeframe, as you need access to the money in the next several years. If that’s the case, you may want to be more conservative with your investments. Or are you investing for the far-off future? In that case, you may be interested in stocks that have higher growth potential — with the understanding that higher-growth investments can also carry more risk.

Identifying Your Investor Profile

There are different types of investors. Pinpointing which type you are can help as you’re building your portfolio.

Investors who are looking for income (for instance, retirees who want to supplement their retirement funds) may want to buy stocks in companies that pay regular dividends. Investors who want to safeguard their money will likely want to look for stocks in companies that are stable. And investors who want to try to increase their earnings as much as possible might focus on buying higher-risk, higher-growth stocks.

Step 2: Learn the Art of Diversification

Diversifying your portfolio may help mitigate investment risk and may even improve investment performance, studies show. However, diversification is no guarantee and there is still risk when you invest.

The Role of Diversification in Risk Management

When you choose stocks, your inclination might be to stick to just a few companies you’ve researched and feel good about. This approach might seem like it could protect you from losses. But, in fact, limiting your portfolio could actually increase your chances of losing money.

That’s because unsystematic risk is a risk that’s unique to a particular company or industry. So if you invest in the stocks of food manufacturers, for instance, and extreme weather damages some of the crops they use for their products, their stock prices could plummet, which could cause investment losses for you. But if your portfolio is diversified and holds a range of stocks from different sectors or industries, it helps mitigate risk. That’s because while one stock might drop, others could remain stable.

Techniques for Effective Portfolio Diversification

To build a diversified portfolio, there’s something known as the 60/40 rule that calls for investing 60% of your portfolio in equities like stocks, and 40% in fixed income vehicles like bonds and cash.

However, even if you’re building a strictly stock portfolio, you can still diversify it. Instead of owning shares in just one company, for example, you can buy shares in a number of different companies.

You can also choose stocks in different sectors, such as consumer goods, energy, and agriculture. And you can vary the types of stocks by buying stocks in a mix of small-, mid-, and large-cap companies.

If this sounds too complicated and involved, you might be interested in investing in mutual funds or exchange-traded funds (ETFs) that contain assets from many different companies. This is another way to diversify your portfolio.

Step 3: Research and Select Potential Stocks

Now you can start considering which stocks to buy. How to pick stocks? One strategy could be to go with a company for which you have an affinity or one that you’re quite familiar with. Think of the brands that are household names, for instance.

Once you have a few companies in mind, it’s time to find out more about them.

Conducting Company Research

When doing research on companies, these are some of the things you’ll want to look into: Are the companies profitable? How do they perform against others in their industry? Has there been bad news recently about them?

Here are some resources to discover more.

Company Filings

The U.S. government requires most companies to file financial data on their performance and notable changes in the corporation. Look for the company’s quarterly and annual balance sheet, income statement, and the cash-flow statement. It’s also a good idea to look at each company’s retained-earnings statement and its shareholders’ equity.

You can find these on the company’s website under the Investor Relations section, or you can go to the Securities and Exchange Commission website to find any required filing. You’ll need to get acquainted with financial ratios. They will help you contrast and compare different companies so you can make a final decision. You’ll find them invaluable for selecting your first stock to buy.

Market News Sites

Plenty of sites devote pages of content on what companies are doing, where sectors are heading, and how the market is reacting. Get in the habit of browsing a few every day. You can even set up alerts. That way, when you learn how to buy your first stock, you can keep up with all the news.

Deep Analysis Sites

Many companies offer stock-market research and make the task of evaluating stocks easier. Some offer information at no cost, others charge a subscription. Many online brokerages also offer analysis content you can use.

Step 4: Analyze Stock Value and Performance

Next, you can look at the performance of the stock over time and its price to see if it represents a good value. Here’s how to do that.

Assessing Financial Health and Earnings

To evaluate a stock’s price, you can look at its price-to-earning ratio (you can generally find this information on the company’s website), which is a company’s share price divided by its earnings per share over the past year. If a stock’s PE is below its historic average, this typically indicates the stock is at a good price.

Another metric to check out is a stock’s dividend yield. If the dividend yield is above average, that could be an indication that the stock is at a good price. These types of metrics can give you an idea of how profitable and efficient a company might be.

💡 Quick Tip: Distributing your money across a range of assets — also known as diversification — can be beneficial for long-term investors. When you put your eggs in many baskets, it may be beneficial if a single asset class goes down.

Step 5: Learn Risk Management in Stock Picking

A risk management strategy can help protect you from big losses. That involves never risking more money than you can afford to lose and knowing your risk tolerance level.

Balancing Risk and Potential Returns

How comfortable are you with risk? Are you the aggressive type who is willing to accept higher risk if it means you have the potential for higher returns? Or are you a conservative investor whose priority is to safeguard their money, so you are willing to accept lower returns for investments with lower risk?

In general, higher-growth stocks tend to be riskier, which aggressive investors may gravitate to. Stocks that are more stable and offer lower returns might appeal to a conservative investor.

Understanding how much risk you can tolerate, and balancing that risk with the potential rewards it might offer, is key to choosing which stocks to invest in.

Strategy for Long-Term vs Short-Term Investments

Investors who have a longer investment timeframe — for instance, those investing for retirement, which is 20 or more years away — may be willing to choose higher growth, higher risk stocks because they have time to try to recoup any losses they suffer.

Investors who are investing for the short-term — perhaps they want to buy a new house in two years, or their child will soon be heading off to college — may do best choosing a more conservative investment strategy to help maximize their savings and minimize their losses.

Step 6: Utilize Tools for Effective Stock Selection

There are tools that help you screen stocks. They’re available on many brokerage trading platforms, sometimes for free.

In addition, when selecting stocks, it can be a good idea to keep on top of news regarding the market in general as well as any specific sector or industry you might be interested in.

Navigating Stock Screeners and Tools

Stock screeners are tools that let you filter through many different stocks using criteria you choose based on your personal investment goals. You could screen by the industry or sector you’re considering, for instance, and by such data as on return on investment (ROI) or earnings per share (EPS). Look for these tools on brokerage trading platforms.

Keeping Up-to-Date with Market Trends

As discussed earlier, there are a number of market news sites you can follow to stay on top of the latest trends and happenings in the market. There are also financial podcasts you can listen to.

Step 7: Seek Answers to Your Stock-Picking Questions

Finally, before buying a stock, there are some key questions you should ask. These questions include:

• What does the company do?

• What is the company’s profit or revenue?

• What is the market for the company and who are the customers?

• What is the company’s price-to-earnings (PE) ratio?

• How does it differentiate itself from competitors?

• Why are you investing in this stock? What do you want it to do for your portfolio?

Once you research the answer to these questions, if the stock seems profitable and well-positioned for the future, you may want to consider it for your portfolio.

The Takeaway

Picking stocks involves a number of steps, such as determining your investment goals, understanding your risk tolerance, and researching companies and stocks that are a good fit with your purpose for investing.

Consider carefully which stocks look strong and could help you meet your investment objectives. And remember to look for stocks that can help you diversify and balance your portfolio as you work to set yourself up for financial success.

¹Opening and funding an Active Invest account gives you the opportunity to get up to $3,000 in the stock of your choice.

FAQ

What is the best formula for picking stocks?

There is no one best formula for picking stocks. One strategy you can use involves several steps, such as: figuring out your investing goals, researching companies to make sure they are a good fit with your goals and that they’re profitable and have a good business plan in place for the future, and evaluating the stock’s price to make sure it’s a good value.

How do you know if a stock is good?

To help determine if a stock might be a good investment, get answers to questions about the way the company operates. Additionally, look at key metrics such as the price-to-earning (PE) ratio to help measure a stock’s value, and earnings per share (EPS) for an indication of its financial strength.

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

Mutual Funds (MFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or clicking the prospectus link on the fund's respective page at sofi.com. You may also contact customer service at: 1.855.456.7634. Please read the prospectus carefully prior to investing.Mutual Funds must be bought and sold at NAV (Net Asset Value); unless otherwise noted in the prospectus, trades are only done once per day after the markets close. Investment returns are subject to risk, include the risk of loss. Shares may be worth more or less their original value when redeemed. The diversification of a mutual fund will not protect against loss. A mutual fund may not achieve its stated investment objective. Rebalancing and other activities within the fund may be subject to tax consequences.

Exchange Traded Funds (ETFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or by emailing customer service at [email protected]. Please read the prospectus carefully prior to investing.

Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

¹Claw Promotion: Probability of Member receiving $1,000 is a probability of 0.026%; If you don’t make a selection in 45 days, you’ll no longer qualify for the promo. Customer must fund their account with a minimum of $50.00 to qualify. Probability percentage is subject to decrease. See full terms and conditions.

Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.

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.

SOIN-Q425-061

Dec

2025

A pencil lies next to a tablet with multi-colored lines.

5 Investment Strategies for Beginners

By SoFi Editors | Growing Wealth, invest, Investing | Comments Off

Table of Contents

5 Popular Investment Strategies for Beginners
FAQ

There are a ton of investment strategies and ideas out there, and it can be difficult to figure out which one might be right for you. Simple strategies, particularly for beginners, include utilizing asset allocation, diversification, rebalancing, and buy-and-hold tactics.

With that in mind, investing is a powerful tool that allows you to put your money to work to help you reach future financial goals. But if you’re new to investing, you may be asking yourself what investment strategies should you pursue? Here are some strategies to help you get started.

Key Points

• Asset allocation is a strategy that involves choosing how to balance potential risk and reward within a portfolio.

• Diversification refers to managing risk with a mix of different investment types.

• Rebalancing includes shifting asset allocation and diversification mixes over regular periods of time.

• Buy-and-hold strategies involve buying investments and hanging on to them for long periods of time.

• Dollar-cost averaging is a strategy that involves investing a fixed amount at regular intervals.

5 Popular Investment Strategies for Beginners

There are many investment strategies for beginners to consider. Here are some that can help you get started.

1. Asset Allocation

Asset allocation refers to proportioning out different types of investments across your portfolio.

Once you’ve opened an investment account and you begin to build your portfolio, asset allocation is an important strategy to consider to help you balance potential risk and rewards. A typical portfolio might divide its assets among three main asset classes: stocks, bonds, and cash. Each asset class has its own risk and return profile, behaving a little bit differently under different market circumstances.

For example, stocks tend to offer higher gains, but they are also more volatile, presenting increased potential for losses. Bonds are generally considered to be less risky than stocks, while cash is typically more stable.

The proportion of each asset class you hold will depend on your goals, time horizon, and risk tolerance. Your goal is how much you aim to save. Your time horizon is the length of time you have before reaching your goals. And your risk tolerance is how much risk you’re willing to take to achieve your goals.

Your asset allocation can shift over time. For example, someone in their 30s saving for retirement has a long time horizon and may have a higher risk tolerance. As a result their portfolio may contain mostly stocks. As that person grows older and nears retirement, their portfolio may shift to contain more bonds and cash, which are typically less risky and less likely to lose value in the short-term.

2. Diversification

Another way to help manage risk in your portfolio is through diversification, which is building a portfolio with a mix of investments across assets to avoid putting all your eggs in one basket.

Here’s how it works: Imagine you had a portfolio consisting of stock from one company. If that stock does poorly your entire portfolio suffers.

Now imagine a portfolio consisting of many stocks, from companies of all sizes and sectors. Not only that, it also holds other investments, including bonds. If one stock suffers, it will have a much smaller effect on your overall portfolio, spreading out the risk of holding any one investment.

3. Rebalancing

Rebalancing involves shifting around your portfolio’s holdings to make sure it aligns with your broader strategy and goals.

Your portfolio can change over time, shifting your assets allocation and diversification. For example, if there is a bull market and stocks outperform, you may discover that you now hold a greater portion of your portfolio in stocks than you had intended.

At this point, investors typically rebalance their portfolio to bring it back in line with their goals, time horizon, and risk tolerance. In the example above, an investor may decide to sell some stock or buy more bonds, for instance.

4. Buy-and-hold Strategy for Investing

Market fluctuations are a natural part of the market cycle. However, investors may get nervous and be tempted to sell when prices drop. When they do, investors might lock in their losses and miss out on subsequent market rebounds.

Investors practicing buy-and-hold strategies tend to buy investments and hang on to them over the long term, regardless of short-term movements in the market. Doing so may help curb the tendency to panic sell, and it might also help minimize fees associated with trading.

Buy and hold might also affect an investor’s taxes. Holding a long-term investment vs. short-term one can make a big difference in terms of how much an individual pays in taxes.

If you profit from an investment after owning it for at least a year, it’s a long-term capital gain. Less than that is short-term. Capital gains tax rates can change, but generally, longer-term investments are taxed at a lower rate than short-term ones.

💡 Quick Tip: How to manage potential risk factors in a self-directed investment account? Doing your research and employing strategies like dollar-cost averaging and diversification may help mitigate financial risk when trading stocks.

5. Dollar-Cost Averaging

Dollar-cost averaging is a strategy in which individuals invest on a regular basis by making fixed investments on a regular schedule regardless of market prices.

For example, say an investor wants to invest $1,000 every quarter in an exchange-traded fund (ETF) that tracks the S&P 500. Each quarter, the price of that fund will likely vary — sometimes it will be up, sometimes it will be down. The amount of money the individual invests remains the same, so they are buying fewer shares when prices are high, and more shares when prices are low.

This strategy may help individuals avoid emotional investing. It’s also straightforward and can help investors stick to a plan, rather than trying to time the market.

The Takeaway

There are many different strategies and tactics that investors can use, and some are likely more beginner-friendly than others. Those could include asset allocation, diversification, rebalancing, and buying-and-holding strategies.

Investing is an ongoing process. Your life, goals, and financial needs will all change as your circumstances do. For example, may you get a raise at work, get married and have a child, or decide to retire early. Factors like these will change how much money you need to save and how you invest. Monitor your portfolio and make adjustments as needed.

¹Opening and funding an Active Invest account gives you the opportunity to get up to $3,000 in the stock of your choice.

FAQ

Is rebalancing the same as diversification?

Rebalancing and diversification are not the same, though they’re similar. They can be used in tandem to manage investment risk, but the main difference is that rebalancing involves periodically adjusting investments to align them with your goals, while diversification involves spreading investment across asset types to manage risk.

What does a buy-and-hold strategy entail?

A buy-and-hold strategy is more or less what it sounds like: Buying investments, and holding onto them for a long period of time, despite short-term ups and downs in the market.

What is dollar-cost averaging?

Dollar-cost averaging is an investment strategy in which individuals invest a fixed amount on a regular schedule, regardless of market prices. This can help investors avoid timing the market, and over time can enable them to buy more investment shares when prices are low and fewer when prices are high.

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

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.

¹Claw Promotion: Probability of Member receiving $1,000 is a probability of 0.026%; If you don’t make a selection in 45 days, you’ll no longer qualify for the promo. Customer must fund their account with a minimum of $50.00 to qualify. Probability percentage is subject to decrease. See full terms and conditions.

Exchange Traded Funds (ETFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or by emailing customer service at [email protected]. Please read the prospectus carefully prior to investing.

Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

S&P 500 Index: The S&P 500 Index is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S. It is not an investment product, but a measure of U.S. equity performance. Historical performance of the S&P 500 Index does not guarantee similar results in the future. The historical return of the S&P 500 Index shown does not include the reinvestment of dividends or account for investment fees, expenses, or taxes, which would reduce actual returns.
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.

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.

Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.

Dollar Cost Averaging (DCA): Dollar cost averaging is an investment strategy that involves regularly investing a fixed amount of money, regardless of market conditions. This approach can help reduce the impact of market volatility and lower the average cost per share over time. However, it does not guarantee a profit or protect against losses in declining markets. Investors should consider their financial goals, risk tolerance, and market conditions when deciding whether to use dollar cost averaging. Past performance is not indicative of future results. You should consult with a financial advisor to determine if this strategy is appropriate for your individual circumstances.

SOIN-Q425-033

Dec

2025

Numbers and stock quotes appear on a computer screen in multiple colors.

What Are the Different Types of Stocks?

By Amanda Holden | Growing Wealth, invest, Investing | Comments Off

Table of Contents

An Overview Of Stocks
Categories of Stocks
Different Market Caps
Types of Stock Classes
Stocks By Sector
Stocks by Country
FAQ

There are numerous types of stocks, categorized by company characteristics, size, region, sector, and more. Equipped with an understanding of different stock types, an investor can start building a diversified portfolio. Though all stocks can experience volatility and potentially lose value, holding a mix of different types of shares can mitigate the risk of being too heavily invested in any one category.

Key Points

• Stocks represent ownership in publicly traded companies and have the potential to generate returns, such as through capital appreciation or dividend payments, or result in losses.

• Different stock categories include value stocks, growth stocks, common stock, preferred stocks, and various classifications based on market capitalization and sector.

• Stocks can be classified by market capitalization into categories, such as micro-cap, small-cap, mid-cap, large-cap, and mega-cap.

• Various stock sectors exist, including industrials, materials, consumer discretionary, health care, and financials, allowing for diversified portfolio creation.

• Investors can also consider international stocks, including those from developed regions like EAFE or emerging markets, to further diversify their portfolios.

An Overview Of Stocks

A stock represents a percentage of ownership in a publicly traded company. So essentially, investors can own small pieces or “shares” of companies.

Generating returns via the stock market can usually happen in one of two ways. First, the value of the stock can increase over time, something known as capital appreciation. The second is through dividend payments, where companies make cash payouts periodically to all owners of that company’s stock. Some people make investments based on a company’s ability to pay consistent dividends, or “income.” Utility and telephone companies often fit into this bucket.

When you own a stock, you hold equity (or ownership) in that company. That’s why stocks are sometimes referred to as equities. Each individual share represents an equal proportion of ownership. Owners of stocks are often referred to as stockholders or shareholders.

💡 Quick Tip: Are self-directed brokerage accounts cost efficient? They can be, because they offer the convenience of being able to buy stocks online without using a traditional full-service broker (and the typical broker fees).

Categories of Stocks

There are several ways that different stocks are categorized, which is important to know if you’re brushing up on the stock market basics. Stocks are also sometimes classified by styles of investing. These categories often have to do with how that company makes money and how the stock is valued. You may often hear this associated when discussing value vs. growth stocks.

Value Stocks

Value stocks are stocks that are considered to be trading below their actual worth, and are a key component in value investing. Investors hope that by buying companies that are priced below their “true” value, they can profit as the gap narrows over time.

Growth Stocks

Growth stocks are companies that are growing at a fast pace or those that are expected to continue growing at a faster rate than other stocks or competitors. Investors can encounter higher valuations in growth investing.

Common Stock

Common stock represents shares of ownership in a corporation. When an investor receives common shares, they are typically also granted voting rights to the company and can participate in shareholder voting processes — usually one vote for each share. For investors, it can be helpful to understand the differences between common versus preferred stock.

Preferred Stocks

Preferred stocks make regular dividend payments, but holders of preferred shares often have zero or limited voting rights. If a company becomes financially insolvent however, preferred stockholders have a claim on assets before common shareholders do.

Exchange-traded Funds (ETFs)

Exchange-traded funds, or ETFs, group multiple securities into a single share. For instance, a stock ETF will hold numerous companies, while a bond ETF can hold many individual bonds, whether it’s a collection of Treasurys or high-yield debt. ETFs are popular because of the cheap, instant diversification they offer.

There are many types of ETFs, too, including low-cost ETFs, and ETFs with their holdings concentrated in certain sectors.

Initial Public Offerings (IPOs)

An initial public offering (IPO) is the process of a private company listing and debuting on a public stock exchange. Investors can buy IPO shares on their first day of trading.

Special Purpose Acquisition Companies (SPACs)

SPACs are shell companies that go public on the stock exchange, and then try to find a private operating business to purchase.

Real Estate Investment Trusts (REITs)

REITs are companies that own and operate real estate, usually focusing on one type of property, such as warehouses, hotels or office buildings. There are pros & cons to investing in REITs. For example, one pro is that they tend to pay consistent dividends. Cons include sensitivity to interest rates, and taxed dividends.

Blue Chip Stocks

Blue chip stocks are stocks that large, well-established companies issue and usually have a long-standing history of growth. They’re generally considered to be financially sound, and may be considered lower-risk than other stocks.

Cyclical and Noncyclical Stocks

Cyclical investing concerns making stock selections surrounding economic changes, and cyclical stocks are those that may see their performance closely align with larger economic shifts. Noncyclical stocks, on the other hand, do not see their performance tied to larger economic changes.

Defensive Stocks

Defensive stocks may be used as a part of a defensive investing strategy, and usually involves investing in stocks that may be seen as lower-risk. This can include blue-chip stocks, or stocks from sectors like utilities and consumer staples.

Penny Stocks

Penny stocks are low-priced stocks that generally trade for less than $5 per share, and many trade for less than $1. They’re usually risky, and highly-speculative stocks.

Income Stocks

Income stocks are a category of stocks that tend to offer regular, steady income to investors. That income generally comes in the form of dividends.

Environmental, Social, and Corporate Governance (ESG)

ESG stocks are those that may have certain non-financial criteria that appeal to certain investors. ESG stocks are shares of companies that are socially and environmentally responsible, though there is no universally-shared or accepted set of ESG criteria.

Different Market Caps

The sizes of stocks are classified by the market capitalization of the company’s publicly traded stock. Market cap is calculated by multiplying the stock price by the total number of outstanding shares.

Generally speaking, larger companies tend to be older, more established, and have greater international exposure, so a higher percentage of a large-cap company’s revenue comes from overseas. Meanwhile, smaller-cap stocks tend to be newer, less established and more domestically oriented. Smaller-cap companies can be riskier but also offer more growth potential.

Similarly, if you’re interested in buying mid-cap stocks, that generally means you’re investing in mid-sized companies.

stock market caps

While the market-caps that determine which companies are small or large can shift, here’s a breakdown that gives some rough parameters.

Micro-Cap: $50 million to $300 million

Small-Cap: $300 million to $2 billion

Mid-Cap: $2 billion to $10 billion

Large-Cap: $10 billion or higher

Mega-Cap: $200 billion or higher

Types of Stock Classes

There are also stock classes that investors should be aware of, and those generally involve Class A, Class B, and Class C shares, which all may be issued by the same company. The specifics of each category will vary from company to company, too.

For some rough guidelines, though, Class A shares tend to have more voting power and higher priority for dividends. Class B shares may have lesser voting power than Class A shares, but no preferential treatment for dividends. Class C shares are often given to employees as a part of a compensation package, and may have associated trading restrictions.

💡 Quick Tip: What makes a robo advisor effective? Typically these automated investing services offer automatic deposits, a diversified portfolio of low-cost ETFs, and automatic rebalancing — all of which are designed to help you reach a specific goal. They can be less flexible and cost more than some other options, however.

Stocks By Sector

stock sectors

Additionally, stocks are often grouped by the industry that that company works within. According to the Global Industry Classification Standard (GICS), there are 11 recognized sectors, with numerous industries within those sectors. They include (but are not limited to):

Energy: Energy equipment and services, oil, gas, and consumable fuels. If you want to invest in energy stocks, this is the category to look at.

Materials: Chemicals, construction materials, containers and packaging, metals and mining

Industrials: Aerospace and defense, building products, machinery, construction and engineering, electrical equipment, industrial conglomerates

Consumer Discretionary: Automobiles, automobile components, household durables, leisure products

Consumer Staples: Food products, beverage, tobacco, household products

Health Care: Health care equipment and services, pharmaceuticals, biotechnology, life sciences

Financials: Banks, insurance, consumer finance, capital markets, financial services

Information Technology: IT services, software, communications equipment

Communication Services: Diversified telecommunication services, media, entertainment

Utilities: Electric utilities, gas utilities, water utilities, independent power and renewable electricity producers

Real Estate: Real estate management and development, various REITs (retail, residential, office, etc.)

Again, these categories can be helpful to investors looking to diversify their portfolios. If you want to add some real estate stocks, or even invest in tech stocks, sector investing may be something to research further.

Note, too, that there may be other categories or sectors of stocks not listed above, such as retail stocks.

Stocks by Country

Different overseas stocks can be classified by the country or region in which they’re headquartered, even if the company’s operations are global. Individuals looking to invest in international stocks have found that they can do so easily with ETFs, which hold numerous foreign companies within a single share.

Regions that are commonly used in the world of stock investing are:

EAFE is an acronym which stands for Europe, Australasia, and the Far East. Investors may see this used when making investment choices, as the MSCI EAFE is a common index used for international stock funds. These countries are all “developed” nations, which means they have established financial markets, stable political climates, and mature economies.

Emerging-market stocks, which stocks with companies based out of countries whose economies are described as developing. Brazil, Russia, Mexico, China, and India are just a few emerging markets. Emerging markets may be riskier to invest in but may pose an opportunity for high rates of growth.

The Takeaway

There are numerous types of stocks on the market, and it can be important for investors to understand the differences between them. The stock market can be volatile and prone to dramatic declines, but in order to shield themselves from the risks, investors often create diversified portfolios by stocking their holdings through various different stock types.

Diversification is easier to do if an investor understands the different types of stocks that exist in the U.S. equity market. From mega-cap stocks to ETFs to emerging-market companies, there are a myriad of investing opportunities in the equity market.

¹Opening and funding an Active Invest account gives you the opportunity to get up to $3,000 in the stock of your choice.

FAQ

What are the benefits of investing in different types of stocks?

Investing in different types of stocks can be beneficial to investors as it can diversify their portfolio, which may help reduce investing risk as the market fluctuates.

What is the riskiest type of stock?

Penny stocks are likely the riskiest type of stock, as they are shares of companies that are new, unproven, and highly volatile. While there’s a big potential upside to investing in penny stocks, the risks are significant.

What stocks are best for beginners?

While it’ll depend on the individual investor, beginner investors may want to look at investing in blue chip stocks, ETFs, or other stocks that have either built-in diversification, or a long track record of viability, which can be a sign of lower associated risks.

What are the risks and opportunities of investing in emerging markets?

Emerging markets can be volatile or unstable, and there may be political, monetary, and economic risks that investors are unaware of in those markets.

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

¹Claw Promotion: Probability of Member receiving $1,000 is a probability of 0.026%; If you don’t make a selection in 45 days, you’ll no longer qualify for the promo. Customer must fund their account with a minimum of $50.00 to qualify. Probability percentage is subject to decrease. See full terms and conditions.

Exchange Traded Funds (ETFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or by emailing customer service at [email protected]. Please read the prospectus carefully prior to investing.

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.

Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

Investing in an Initial Public Offering (IPO) involves substantial risk, including the risk of loss. Further, there are a variety of risk factors to consider when investing in an IPO, including but not limited to, unproven management, significant debt, and lack of operating history. For a comprehensive discussion of these risks please refer to SoFi Securities’ IPO Risk Disclosure Statement. This should not be considered a recommendation to participate in IPOs and investors should carefully read the offering prospectus to determine whether an offering is consistent with their investment objectives, risk tolerance, and financial situation. New offerings generally have high demand and there are a limited number of shares available for distribution to participants. Many customers may not be allocated shares and share allocations may be significantly smaller than the shares requested in the customer’s initial offer (Indication of Interest). For more information on the allocation process please visit IPO Allocation Procedures.

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.

SOIN-Q425-036

Risk Tolerance Quiz: How Much Risk Are You Willing to Take?

Risk Tolerance Quiz

What Investment Risk Tolerance Is

Understanding Risk vs. Reward

What Your Risk Tolerance Means

Get up to $1,000 in stock when you fund a new Active Invest account.*

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Finding Investments That Match Your Risk Tolerance

The Takeaway

FAQ

What is an example of risk tolerance?

How does risk tolerance relate to investing strategy?

Can your risk tolerance change?

The Consumer Price Index (CPI): A Comprehensive Guide

What Is the Consumer Price Index (CPI)?

Definition and Significance

How the CPI Works

CPI Formulas

Annual CPI Calculation

Diverse Categories Within CPI

The Consumer Price Index (CPI) in Practice

Usage in Economic Policy

The Federal Reserve’s Utilization

Implications for Other Government Agencies

CPI’s Influence on Market Sectors

CPI Versus Other Economic Indicators

CPI vs Unemployment: Understanding the Relationship

CPI vs PPI (Producer Price Index)

Analyzing and Critiquing the CPI Methodology

CPI’s Broader Impact and Usage

Breaking Down the Monthly CPI Report

Anticipating the Next CPI Report

Contemporary Relevance of CPI

Educational Resources and Further Reading on CPI

Learning More About CPI

CPI-Related Statistics and Where to Find Them

The Takeaway

FAQ

What does CPI stand for?

What produces or calculates the CPI?

What categories of goods or services are included in the CPI calculation?

How to Pick Stocks: Essential Steps for Investors

Step 1: Define Your Investment Goals

Understanding Your Financial Objectives

Identifying Your Investor Profile

Step 2: Learn the Art of Diversification

The Role of Diversification in Risk Management

Techniques for Effective Portfolio Diversification

Step 3: Research and Select Potential Stocks

Conducting Company Research

Company Filings

Market News Sites

Deep Analysis Sites

Step 4: Analyze Stock Value and Performance

Assessing Financial Health and Earnings

Step 5: Learn Risk Management in Stock Picking

Balancing Risk and Potential Returns

Strategy for Long-Term vs Short-Term Investments

Step 6: Utilize Tools for Effective Stock Selection

Navigating Stock Screeners and Tools

Keeping Up-to-Date with Market Trends

Step 7: Seek Answers to Your Stock-Picking Questions

The Takeaway

FAQ

What is the best formula for picking stocks?

How do you know if a stock is good?

5 Investment Strategies for Beginners

5 Popular Investment Strategies for Beginners

1. Asset Allocation

2. Diversification

Get up to $1,000 in stock when you fund a new Active Invest account.*

Access stock trading, options, alternative investments, IRAs, and more. Get started in just a few minutes.

3. Rebalancing

4. Buy-and-hold Strategy for Investing

5. Dollar-Cost Averaging

The Takeaway

FAQ

Is rebalancing the same as diversification?

What does a buy-and-hold strategy entail?

What is dollar-cost averaging?

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