Investing Archives | Page 158 of 221

Sep

2022

Investing for Retirement: Guide to Emerging Markets

Guide to Investing in Emerging Markets

By Mike Zaccardi, CMT, CFA | invest, Investing, Preparing for Retirement | Comments Off

Investing for retirement often includes both stocks and bonds, and within your equity allocation, emerging market stocks can play an important role in diversifying your portfolio.

Emerging market investments include owning shares in companies from countries like China, India, Brazil, and South Africa, among others. There are pros and cons to owning emerging market investments, but these stocks are a significant part of the global market.

Why invest in emerging markets when building a retirement portfolio? While it’s true that they can be volatile investments, this niche can provide strong returns and diversification benefits when preparing for retirement.

Understanding Emerging Markets

Opening a retirement account and including emerging markets in your portfolio may be a successful investing strategy.

Emerging markets are economies that are in the middle between the developing and developed stages. Emerging markets risk can be high since these areas often see rapid growth and high volatility with booms and busts. Some of the most well-known and biggest countries weighted in the emerging markets index include China, Taiwan, India, Brazil, and Saudi Arabia.

Emerging market investments are generally seen as a higher-risk area of the global stock market. Volatility can spike during periods of political upheaval and when emerging market recessions strike.

As investors get older, risk must be managed through diversified investment plans. You should consider reducing emerging market exposure in your portfolio as your time horizon shortens and retirement nears.

Why Invest in Emerging Markets?

Emerging market investments have been popular for decades. It became easy to own a broad emerging market index fund within an investment portfolio in the early 2000s when exchange-traded funds (ETFs) took off. That’s also when this group of stocks started to outperform U.S. equities.

The decade of the 2000s featured strong outperformance from the high-risk, high-reward profile of emerging market investments. But volatility in these markets has also been a factor.

People like to invest in areas of the stock market that exhibit rapid growth potential along with having the potential for diversification. High economic growth rates, such as those in China and India, often attract investors seeking to benefit from stocks of those nations. Indeed, there can be periods like the 2000s when strong bull markets take place.

Moreover, owning high-growth areas within a tax-advantaged account can be a savvy retirement savings strategy. When choosing a retirement plan, it’s helpful to consider what assets to own in which account.

Can You Build a Retirement Portfolio With Emerging Markets?

Retirement and emerging markets can go together. Boosting retirement savings can be done through this group of securities. Also consider that emerging market bonds are a growing piece of the global fixed-income market.

In addition, owning emerging market investments in retirement accounts is easier than ever with low-cost ETFs and both active and passive mutual funds. Moreover, many 401(k) plans offer an emerging markets fund so you can have exposure through your workplace retirement account.

When thinking about emerging markets, you should put them in context. Emerging markets stocks represent just 11% of the global stock market. Emerging market bonds comprise roughly a quarter of the global bond market. Those are significant weights, and you can own both areas in your retirement portfolio through low-cost funds.

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Pros of Investing in Emerging Markets

There are many pros and cons of investing in emerging markets. When you start saving for retirement, that can be a great time to own emerging market stocks since you have a long time horizon to weather volatility.

Growth Opportunity

Many people contend that higher economic growth in emerging market nations can translate into growth potential for their stock markets. What’s more, many U.S. companies have significant emerging markets exposure through their global sales. So, corporations see opportunities in this space, too.

Also consider that nearly 80% of the world’s population lives in emerging market countries, while just 11% of the global stock market is weighted to them. Investing for retirement should have at least some exposure to this area for risk-tolerant individuals.

Diversification Benefits

International investments can help offset the ebbs and flows of U.S. stocks through diversification. Consider that the domestic equity market is 61% of the global market. So if the U.S. goes into a bear market, foreign shares might outperform. Retirement investing should have a diversified approach.

Cons of Investing in Emerging Markets

Emerging markets can be volatile, and they expose investors to a host of risk factors. Political, economic, and currency risks can all hamper emerging market investments’ growth.

Due to the many risks, it’s common for retirement investors to tone down their stock allocation as they approach retirement. Reducing exposure to the emerging markets area also makes sense, but it should still be considered for your equity sleeve in retirement.

Recent Underperformance

Emerging market stocks have done poorly over the last decade, particularly compared to how well the domestic stock market performed. In 2022, Russian equities were the latest area to pressure the emerging markets index hard. That stock market was forced to close, and its stocks plummeted in other markets.

Correlations Might Be Changing

Some argue that emerging markets today have more correlation to other markets, so having exposure might simply expose someone to the risks and not the benefits.

Highly Volatile

Older investors might want to steer away from the boom-and-bust nature of emerging markets. The process of evolving from an emerging market to a developed market is usually fraught with risk. In some areas, political turmoil might cascade into a full-blown economic recession.

Emerging market fixed-income investors can also suffer when high-risk currency values fall during such periods of volatility. Back in 1998, the “Asian Contagion” was an emerging markets-led debacle that caused a big decline in markets across the globe.

Uncertainty in China

China is now the biggest weighting in many emerging market indexes, up to one-third in some funds. That can be a lot in just one country, particularly in one as uncertain as China, given its one-party controlled economy.

Start Investing for Retirement With SoFi

Building a retirement portfolio often includes owning many areas of the global stock market. Emerging market investments can play a pivotal role to ensure your allocation has higher growth potential, but you must be mindful of the risks.

SoFi offers all the retirement planning tools you need, including online resources and complimentary access to financial advisors for SoFi members. When you’re ready to start investing for retirement, it only takes a small amount to open a traditional or Roth IRA account. Using the secure SoFi app, you can invest your retirement portfolio in stocks, exchange-traded funds (ETFs), fractional shares, and more. Get started now!

FAQ

Is it worth investing in emerging markets?

Strong growth potential and diversification benefits are reasons to own emerging markets for your retirement portfolio. That said, emerging markets are a small part of the global stock market. A diversified retirement portfolio should include this slice of the market, but investors also must recognize the risks. There are periods during which emerging market investments can underperform the U.S. stock market.

What is the best emerging market to invest in?

When figuring out emerging markets, you might be curious which one is the best. It is hard to say there is one in particular. Emerging market risk can be high, so to help mitigate that, owning the entire basket can help ensure the benefits of diversification.

Should my entire retirement portfolio be in emerging markets?

Building a retirement portfolio with emerging markets is common but putting all your eggs in the emerging market basket might not be the wisest move. Young investors can perhaps own a larger weight in this volatile equity area, but older investors should think about winding down their emerging markets stock exposure as they near retirement.

Photo credit: iStock/Kateywhat

SoFi Invest®
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit 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.

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

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 email customer service at [email protected]. Please read the prospectus carefully prior to investing.
Shares of ETFs must be bought and sold at market price, which can vary significantly from the Fund’s net asset value (NAV). Investment returns are subject to market volatility and shares may be worth more or less their original value when redeemed. The diversification of an ETF will not protect against loss. An ETF may not achieve its stated investment objective. Rebalancing and other activities within the fund may be subject to tax consequences.

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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Sep

2022

Comparing Crypto Mining vs Staking

By Brian Nibley | Growing Wealth, invest, Investing | Comments Off

Crypto mining and staking are two different ways for a blockchain network to achieve consensus. They use different means to achieve a similar end. While mining uses an algorithm called proof-of-work (PoW), staking uses an algorithm called proof-of-stake (PoS).

Crypto mining and crypto staking are also ways for individuals to participate in a crypto network’s consensus. Staking involves locking up tokens for a fixed period, while mining requires running specialized hardware.

Here, we’ll define mining vs. staking, discuss the basics of each consensus method, and look at some of staking and mining’s positive and negative attributes.

Crypto Staking vs Mining: Similarities and Differences

There are both similarities and differences between crypto staking and mining. Let’s take a deeper look at both.

Similarities

Both staking and mining provide a way for a network’s nodes to agree on which transactions are valid. In both cases, miners or validators have a chance to win the next block reward of newly minted coins. Users can also participate in a network’s consensus through either mining or staking.

Differences

While mining uses special hardware to solve complex computational problems, staking locks up crypto for a fixed period. PoW is energy intensive, whereas PoS requires less energy. PoW relies on a high hash rate to secure a network, whereas PoS relies on a large amount of tokens (money) — a high level of market capitalization.

Crypto Mining vs Staking Similarities	Crypto Mining vs Staking Differences
Achieves consensus for a blockchain	PoW requires hardware; PoS requires crypto
Gives participants a chance to earn newly minted coins	PoW uses a lot of energy; PoS uses much less energy
Allows users to participate in the consensus process	PoW relies on hash rate for security; PoS on market cap

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Minable Coin Examples

Proof-of-work coins offer miners newly minted tokens as a reward for helping to solve the computational problems involved in processing a block of transactions. Some popular PoW cryptocurrencies include:

• Bitcoin (BTC)

• Bitcoin Cash (BCH)

• Litecoin (LTC)

• Dogecoin (DOGE)

• Monero (XMR)

• Zcash (ZEC)

Note that different PoW coins can use different mining algorithms. While Bitcoin uses SHA-256, Litecoin and Dogecoin use Scrypt, for example. Moreover, to mine a specific coin, the hardware — be it ASICs or GPUs — must be compatible with the type of algorithm used to mine that coin.

Stakeable Coin Examples

The native tokens of PoS blockchains let users lock up their tokens on the platform in exchange for a reward of newly minted tokens. Some popular PoS cryptocurrencies include:

• Cronos (CRO)

• Avalanche (AVAX)

• Polkadot (DOT)

Becoming a validator often requires a large sum of tokens, along with keeping a computer up and running constantly. Validators can receive a penalty for not having 24/7 uptime, and starting your own validator node can come with a hefty price tag.

Deciding Which Mining Method Is Best for You

Making a decision about crypto staking vs. mining comes down to a few important things. Those interested in participating in the mining or staking process might want to ask themselves questions like:

• How much time and money do I want to devote?

• What is my level of technical expertise with crypto and computers?

• Which network do I want to support?

• Do I want to become my own miner/validator, or have someone else do the heavy lifting?

Those with technical knowledge who want to handle things themselves could consider mining an appealing option. Or, those looking to invest less time and money might simply choose to stake some tokens on an exchange. The potential profit you can fetch from staking vs. mining varies according to how much an individual is willing to invest upfront, as well as the market price of the token involved.

FAQ

Is crypto staking more profitable than crypto mining?

The potential profit of crypto staking vs. mining profit depends on a few things. Staking could be more profitable for the average user because the only thing required is money. Mining requires special hardware, access to cheap electricity, and some technical knowledge.

The value of the coin in question is also important. Users could mine a lot of coins or have a lot of coins staked, but if the coin’s value falls against their local fiat currency, they could still realize losses.

Then there are the barriers to entry. Many exchanges allow users to stake any amount of proof-of-stake (PoS) tokens and earn a small yield. Mining, on the other hand, requires buying the necessary hardware and learning how to use it.

Is staking the same thing as cloud mining?

No. Staking involves locking up tokens on a PoS platform in exchange for a share of the network’s next block reward. Cloud mining involves purchasing a contract from a company that handles the proof-of-work (PoW) mining on behalf of a user and pays them a share of the mining rewards. These two things might look similar based on the fact that in both cases, users simply put up a certain sum of money and earn income over time. But, on the backend, they are two entirely different processes.

What are the advantages of mining vs buying cryptocurrency?

Mining cryptocurrency helps support a given cryptocurrency’s platform, provides miners with more anonymous coins, and could be profitable if the coin’s price rises in the future. Because mined coins aren’t purchased on an exchange, they could be held more anonymously than usual.

Every PoW network needs miners to survive, so being involved in mining aids the network of a miner’s choice. And if done at the correct time, mining coins while they are cheap and the difficulty is low could be profitable if miners hold onto their coins and prices rise. Electricity and hardware costs still must be taken into account, however.

Photo credit: iStock/nortonrsx

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.

Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments. Limitations apply to trading certain crypto assets and may not be available to residents of all states.

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

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.
SoFi Invest®
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit 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.

Fund Fees
If you invest in Exchange Traded Funds (ETFs) through SoFi Invest (either by buying them yourself or via investing in SoFi Invest’s automated investments, formerly SoFi Wealth), these funds will have their own management fees. These fees are not paid directly by you, but rather by the fund itself. these fees do reduce the fund’s returns. Check out each fund’s prospectus for details. SoFi Invest does not receive sales commissions, 12b-1 fees, or other fees from ETFs for investing such funds on behalf of advisory clients, though if SoFi Invest creates its own funds, it could earn management fees there.
SoFi Invest may waive all, or part of any of these fees, permanently or for a period of time, at its sole discretion for any reason. Fees are subject to change at any time. The current fee schedule will always be available in your Account Documents section of SoFi Invest.

²Terms and conditions apply. Earn a bonus (as described below) when you open a new SoFi Digital Assets LLC account and buy at least $50 worth of any cryptocurrency within 7 days. The offer only applies to new crypto accounts, is limited to one per person, and expires on December 31, 2023. Once conditions are met and the account is opened, you will receive your bonus within 7 days. SoFi reserves the right to change or terminate the offer at any time without notice.

First Trade Amount		Bonus Payout
Low	High	Bonus Payout
$50	$99.99	$10
$100	$499.99	$15
$500	$4,999.99	$50
$5,000+		$100

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Sep

2022

Understanding a Retirement Gap Analysis

By Mike Zaccardi, CMT, CFA | invest, Investing, Preparing for Retirement | Comments Off

A retirement gap analysis helps individuals identify a potential shortfall between how much they have saved and what they will need in retirement.

Tallying all accounts, projecting ahead, then comparing that amount to how much a fully funded retirement costs, given your unique circumstances, can help people bridge the financial gap between the present and retirement. It’s a great way to visualize how you are tracking towards your retirement goals.

Online resources are useful, and working with an experienced financial planner can help you see your retirement gap and then take steps to reduce it.

What Is a Retirement Analysis?

A retirement analysis is a report a financial advisor creates for individuals who want to know if they are on track for retirement. Saving for retirement is an important process for those who are looking forward to a secure future with a steady stream of income.

Knowing the difference between what you have saved versus what you will need in order to retire on time is valuable information. You can take extra steps to boost your savings rate once you have a retirement gap analysis and risk assessment performed; change your investing strategy; consider purchasing an annuity or other products, and more.

A retirement gap analysis considers a range of retirement assets to determine if you are on track for retirement. Your 401(k) through your employer, any individual retirement accounts (IRAs) you might own, annuities, individual taxable brokerage accounts, and even Social Security are common assets to tally in a retirement gap analysis. The sum of those assets is then compared to what you will need in the future, so that you can retire with confidence.

How Do You Conduct a Retirement Gap Analysis?

Conducting a retirement analysis can be done using online tools or by meeting with a financial advisor. It’s all about knowing when you can retire. Often, individuals will take action to improve their financial habits and retirement savings when they see what they must do.

What Goes Into a Retirement Gap Analysis?

For example, a retirement gap on a chart can be a powerful visual to inspire people to save more. Performing a retirement analysis requires careful input of all assets and some assumptions about future rates of return, as well as a person’s spending habits and goals in order to determine how long their savings and other assets may last.

Assets and liabilities are analyzed, and future cash flow is projected. Conducting a retirement analysis also includes estimating how long somebody might live. Longevity risk is a key consideration, and Social Security and other annuities can help reduce the risk of running out of money. There are many facets to performing a retirement gap analysis. Seeking out the help of an experienced fiduciary advisor can be a smart move so that you are confident in your retirement plan.

How Does Communication Come Into Play?

A critical factor of a retirement analysis is the communication aspect. This is where a financial planner can show their skills.

Simply seeing numbers on a spreadsheet might not cause people to change course on their journey to retirement. Communicating a retirement gap in the right context can drive home the message that saving more today will lead to a better tomorrow.

How Does a 401(k) Plan Factor Into the Analysis?

A high-level retirement gap analysis should be mixed in with detailed cash flow planning.

Your 401(k) plan is a major account that is assessed during a retirement analysis. An employer retirement account is a large part of many workers’ overall retirement plan. A 401(k) gap can be found by analyzing the value of a participant’s pre-tax and Roth accounts versus what they will need to retire.

What’s great about a 401(k) account is that it often features an employer matching contribution, which is almost like free money so long as you meet the plan’s matching contribution requirements. Many plans will match, say, 50% of the employee’s contribution up to 6%. For a $100,000 salary, that means $3,000 per year of employer contributions, in addition to $6,000 from the employee. That’s $9,000 per year.

A 401(k) account, among other retirement plans offered through work, is a major piece of someone’s retirement asset pie. It’s simple to increase contributions to it without noticing much of a difference in your paycheck. Moreover, the auto-enrollment and auto-escalation features are great tools to help more people save more for retirement so that their 401(k) gap shrinks over time. A 401(k) analysis can be helpful for workers young and old.

Retirement Gap Analysis Example

Let’s run through a retirement gap analysis example to better show the steps involved.

Retirement Gap Analysis, Step-by-Step	Rationale
Retirement Income Assessment: Summing all retirement savings accounts to find a portfolio value.	Identifies any potential shortfall between required monthly income and total projected income between Social Security, retirement plans, and other accounts.
Review liabilities and future spending habits.	No retirement gap analysis is complete without a thorough assessment of what you owe and current and future spending.
Analyze changes to an individual’s retirement date.	Can make arriving at retirement easier if more time is allowed to increase saving.
Strategize about Social Security options.	Delaying benefits until age 70 will increase total payout; might reduce longevity risk.
Outlining steps to take to shore up retirement income.	Increasing a 401(k) contribution rate can help narrow the retirement gap. Reducing spending and increasing your savings rate are other actions.

How to Calculate Retirement Income

Knowing if your 401(k) is enough is important, but so too is a broader look at your assets and liabilities along with what income to expect in retirement. No retirement gap analysis is complete without it.

Calculating retirement income can be done using various online calculators, but you might want to sit down with a financial planner to map out what income you, personally, will need in retirement. Variables like your spending habits, inflation, discounted cash flow rates, and possible risks all must be considered.

You can also leverage the Social Security Administration’s Retirement Estimator calculator to find out what you should expect to receive when you decide to retire. While the output is just an estimate, it can go a long way toward bridging your retirement gap if you have a gauge of what income you will have in retirement.

Another way to calculate retirement income is to sum up your retirement assets, assume a contribution rate between now and retirement along with a rate of return, then take that asset base as an amount from which to draw income during retirement.

Many planners use the “4% rule”, which states that a retiree can withdraw up to 4% of their retirement account value each year without a high risk of running out of money. This is just a rule of thumb, however, and it might not work as well today as it did decades ago.

Investing for Retirement With SoFi

Identifying where you are on your retirement journey is an important part of financial planning. Doing a retirement gap analysis is an essential part of that process. As time passes, our lives and lifestyles, our goals, and often our physical health can change. All these factors can impact how much we’ll need to spend in the future.

By conducting a retirement gap analysis to identify any shortfalls in savings, it’s possible to make adjustments, and course-correct to get savings goals on track.

If you’re concerned about your retirement savings, you don’t need to wait. You can start investing today with SoFi by opening and funding an IRA online. SoFi offers traditional, Roth, and SEP IRA accounts that can provide tax-advantaged retirement savings. Establishing regular contributions to your 401(k) and a SoFi IRA can quickly get you in the habit of saving more for tomorrow.

Open an IRA Today

FAQ

What is a retirement gap?

A retirement gap is a difference in the amount you have saved for retirement versus how much you will need. A retirement gap analysis can be performed to help identify how much more you will need to save for retirement. Once you know the amount, you can then take steps to boost your savings and investment accounts so that you can retire on time.

How do I find out if I have a retirement account?

Many individuals have a 401(k) or another retirement plan through their employer. Check with your HR department to see if there is an account set up for you. You might also have retirement accounts established on your own through investment brokerage companies. Also consider that you can likely collect a monthly Social Security benefit in retirement. Be sure to check with the Social Security Administration.

Will my retirement account be enough for me?

This is a tough question, but an important one. Knowing how much you will need for retirement is crucial to developing a retirement savings strategy and living a confident retirement. It’s wise to meet with a financial advisor to develop a plan. You can also use online resources, tools, and calculators to help determine if your current portfolio is enough to fund your retirement.

Photo credit: iStock/MicroStockHub

Sep

2022

Dogecoin Price History: 2013 to 2023

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

Dogecoin (DOGE) — the infamous meme coin that launched in 2013 — has had a wild history of price fluctuations. At one point, it was worth a fraction of a penny, but then saw a “to the moon” moment where it peaked at an all-time high of about 74 cents in May of 2021.

Based on a viral internet meme of a Japanese Shiba Inu dog, Dogecoin (pronounced “dohj”) was created by two software engineers, Billy Marcus and Jackson Palmer, in 2013. The coin has never been worth even one dollar.

Doge was originally designed to be a simple blockchain-based payment system. However, it quickly attracted a large number of supporters who developed new use cases for it, including a third-party tipping service bot called “DogeTipBot” that interfaced with Reddit, where users could send tips for content posted on the site.

Table of Contents

Dogecoin Price History: Overview
Dogecoin Price in 2013
Dogecoin Price 2014 to 2019
Dogecoin Price in 2020
Dogecoin Price in 2021
Dogecoin Price in 2022
Considerations When Investing in Dogecoin

Dogecoin Price History

The code for Dogecoin is based on Litecoin, and uses scrypt technology. That scrypt technology set it apart from other kinds of cryptocurrency, including Bitcoin, which uses a different proof-of-work algorithm called SHA-256.

Essentially, Dogecoin’s code allows for an unlimited supply of dogecoins, which has contributed to its historically low price.

This makes Dogecoin a so-called “inflationary coin,” whereas Bitcoin and similar cryptocurrencies are considered deflationary, because there’s a fixed limit to the number of coins miners can create. Dogecoin launched with a total supply limit, similar to Bitcoin’s total coin limit, but the Doge supply is no longer capped. Plus, anyone can begin mining Doge immediately.

The price of Doge picked up in popularity over the years, with prices rising and dipping in 2017, and then hitting a peak in 2018 from bullish investors’ support. The cryptocurrency reached another level, however, when Tesla CEO Elon Musk and some other celebrities began tweeting about Doge at the start of 2021.

Between January and May 2021, Doge rose by 9,884%, from about 3 cents to 74 cents.

Dogecoin Price in 2013: The Start

Dogecoin Price in 2013: $0.00 to $0.0004

On December 15, 2013, Doge was first traded on cryptocurrency exchanges at a price of $0.00. The currency became popular among crypto users, and two weeks after its launch, the r/Dogecoin Reddit channel started attracting thousands of users and contributors.

Within the first two weeks of its launch, the Doge’s price soared from $0.0002 to $0.0023, which amounted to a 1,061% increase, although the ultimate value at the end of 2013 was still miniscule.

Dogecoin Price 2014 to 2019: Catching the Public Eye

Dogecoin Price 2014 to 2019: $0.0003 to $0.0020

The 2014 launch of DogeTipBot, a crypto tipping service, was a watershed moment for the cryptocurrency because it attracted users who normally would not have used Doge. It also attracted users who would not have had exposure to other types of cryptocurrency or digital tokens.

In 2014, the Doge community also used the currency to donate more than $170,000 in Doge to charitable organizations, including the Dogecoin community’s 2014 donation of 27 million Dogecoins (roughly $30,000 at the time) to help the Jamaican bobsled team compete at the Sochi Winter Olympic games.

The token did not see major price hikes until March 2017, when Doge’s price rose by 1,494%. Then, bullish investors began taking interest in Doge in November of 2017 when the price rose again.

That January 2018, Doge prices rose again and reached another peak, at $0.018. Dogecoin’s market capitalization broke $1 billion around that time. For the following two years, however, Doge had low trading activity.

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Dogecoin Price in 2020

Dogecoin Price in 2020: $0.0023 to $0.0046

In January of 2020, Doge was $0.0023. That year, the price hit a new peak in July at $0.0032 and then dipped over the next couple of months, until the price surged again in November and reached $0.0035. The year wrapped with Doge at $0.0046.

Dogecoin Price in 2021: All-Time Highs

Dogecoin Price in 2021: $0.0368 to $0.1702

In 2021, Doge began to gain traction again with renewed public support and interest. Between January and May of 2021, Doge rose by 9,884%. By May 2021, Dogecoin rose to its all-time high of $0.74, which is remarkable considering it started the year at $0.0368.

Dogecoin Price in 2022: Settling Down

Dogecoin Price in 2022: $0.1416 to $0.0858

Doge started at $0.1416 in January 2022, which saw a 16.8% price decrease from December 2021. The price surged in March to $0.1380 and then decreased again in May to $0.0858. As of July 20, 2022, Doge was worth $0.074, with a total circulating supply of about 132 billion coins.

Considerations When Investing in Dogecoin

There are a few considerations to keep in mind when investing in Dogecoin. While the coin has seen some incredible peaks and troughs, Doge has never been worth more than a dollar. There’s an unlimited supply of Dogecoin, which means that the value relies on buyers constantly buying new Doge that enters circulation.

There may be higher security risks with Doge because it hasn’t had the same level of code security or scrutiny that many other currencies have had. That goes back to the fact that it initially wasn’t treated as a serious cryptocurrency.

Another consideration is that holdings are becoming increasingly concentrated (much like with other crypto assets) — in fact, nine wallets hold more than 40% of all Dogecoin, one of which holds close to 30%. That means that those investors have a heavy hand on how the price could potentially change — they could cash out and the price of Doge would fall, or they could use their large position to manipulate the price of Doge.

The entities with large holdings that could potentially move the markets are often called “whales.”

The Takeaway

For a currency that started at $0.00, its lowest price, Doge has had a remarkable journey. Its most exciting phases include the tipping service DogeTipBot and Musk’s public support of the currency, which caused its peak price of $0.74 and a 9,884% increase within five months in 2021.

Photo credit: iStock/beavera

SoFi Invest®
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit 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.

Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments. Limitations apply to trading certain crypto assets and may not be available to residents of all states.

²Terms and conditions apply. Earn a bonus (as described below) when you open a new SoFi Digital Assets LLC account and buy at least $50 worth of any cryptocurrency within 7 days. The offer only applies to new crypto accounts, is limited to one per person, and expires on December 31, 2023. Once conditions are met and the account is opened, you will receive your bonus within 7 days. SoFi reserves the right to change or terminate the offer at any time without notice.

First Trade Amount		Bonus Payout
Low	High	Bonus Payout
$50	$99.99	$10
$100	$499.99	$15
$500	$4,999.99	$50
$5,000+		$100

SOIN0622003

Sep

2022

Guide to Crypto Staking: What It Is, How It Works, and How to Get Started

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

Generally, when investors contemplate investing in cryptocurrencies, they think about either mining crypto or purchasing it outright on a crypto exchange. But crypto staking—or staking coins, as it’s often called—is another viable alternative for the crypto-curious to get assets in their crypto wallets.

While “staking” may be a relatively new addition to the financial lexicon, it’s important for those interested in crypto investing to understand what it is, how it works, and what cryptocurrencies it can be used to obtain.

Crypto staking may feel like it’s a step beyond simply learning how to buy Bitcoin or how a crypto exchange works, but learning about cryptocurrency staking can broaden your knowledge, making you a more informed investor.

This article will run through it all, from staking basics to the platforms investors can use for staking coins.

Table of Contents

What Is Staking in Crypto?
How Crypto Staking Works
How to Stake Crypto
Pros & Cons of Staking Coins
Popular Crypto Staking Coins
Where to Stake Crypto
Is Crypto Staking Profitable?

What Is Staking in Crypto?

Crypto staking is the process of locking up crypto holdings in order to obtain rewards or earn interest. Cryptocurrencies are built with blockchain technology, in which crypto transactions are verified, and the resulting data is stored on the blockchain. Staking is another way to describe validating those transactions on a blockchain.

Depending on the types of cryptocurrency you’re working with and its supporting technologies, these validation processes are called “proof-of-stake” or “proof-of-work.” Each of these processes help crypto networks achieve consensus, or confirmation that all of the transaction data adds up to what it should.

But achieving that consensus requires participants. That’s what staking is—investors who actively hold onto, or lock up their crypto holdings in their crypto wallet are participating in these networks’ consensus-taking processes. Stakers are, in essence, approving and verifying transactions on the blockchain.

For doing so, the networks reward those investors. The specific rewards will depend on the network.

It may be helpful to think of crypto staking as similar to depositing cash in a savings account. The depositor earns interest on their money while it’s in the bank, as a reward from the bank, who uses the money for other purposes (lending, etc.). Staking coins is, then, similar to earning interest.

Recommended: Proof of Stake, Explained

How Crypto Staking Works

For the investor, crypto staking is a passive activity. When a crypto investor stakes their holdings (in other words, leaves them in their crypto wallet), the network can use those holdings to forge new blocks on the blockchain. The more crypto you’re staking, the better the odds are that your holdings will be selected.

Information is “written” into the new block, and the investor’s holdings are used to validate it. Since coins already have “baked in” data from the blockchain, they can be used as validators. Then, for allowing those holdings to be used as validators, the network rewards the staker.

How Crypto Staking Works

How to Stake Crypto

To start crypto staking, an investor needs to decide where and what they want to stake. Here are five simple steps to get started.

Step 1: Choose a crypto or coin to stake

To begin staking cryptocurrency independently, a user would have to decide which coin they want to stake and buy their cryptocurrency of choice.

Step 2: Learn the minimum staking requirements

ETH, for example, requires a minimum of 32 ETH (worth about $47,000 at the time of writing) for users to begin staking.

Step 3: Download the software wallet for the desired coin

Choose and download a crypto wallet in which to store your coins for staking. That may mean going directly to the specific crypto’s main website and downloading its corresponding wallet.

Step 4: Figure out what hardware to use

To stake crypto, users need a constant, uninterrupted internet connection. A standard desktop computer will likely do the job, although a Raspberry Pi might save on electrical costs.

Step 5: Begin staking

Once the hardware has been chosen and the software wallet downloaded, a user can get started staking cryptocurrency.

Tip:The native tokens of the Tezos network can be staked automatically when a user holds those coins in a wallet hosted by Coinbase, for example.

For those holding the appropriate crypto in an exchange-hosted crypto wallet, the exchange handles all the staking on the backend, and users simply have to hold the crypto in their wallets.

Crypto Staking: Advantages and Disadvantages

Here are some pros and cons of staking crypto.

Advantages

• Less energy-intensive. PoS networks use much less energy than PoW platforms. Each mining machine requires a constant supply of electricity and consumes much more power than a regular computer. But you can also run validator nodes on an average computer.

• Easier to earn rewards. Crypto staking and mining rewards can be much different. Almost anyone can stake a small amount of crypto on a crypto exchange and earn some kind of yield. To become a miner, however, often requires a much bigger commitment. First, you’d need to acquire the proper computer, which can be costly; then you’d need to learn to use it, which can be time-consuming.

• No special equipment required. Anyone can become a validator using a regular computer, assuming they have enough money and can keep the node running constantly. By contrast, mining requires specialized hardware.

Disadvantages

• Questionable security. PoS is relatively new compared to PoW. Developers and users have had less time to test it, and its security capabilities are not totally proven. While a high hash rate provides a wall of encrypted energy to protect PoW networks, it’s not clear exactly how PoS networks are similarly secured. In theory, an adversary with the right amount of resources could take control of a PoS network rather easily.

• Potential for takeover. PoS networks can be controlled by those who hold the most tokens. While attacking a PoW network would involve acquiring large amounts of computing power, attacking a PoS network requires only one thing: money. Moreover, PoS coins are pre-mined, meaning that the entire supply is created at once by a few people. Users need to trust that the core developers didn’t keep many coins for themselves, or that an outside third-party won’t acquire enough coins to take control of the network. Further, it is common knowledge in the industry that founders of crypto projects regularly give many pre-mined coins to insiders.

• Increased centralization. The creator(s) of blockchain technology intended for blockchains to be decentralized. But in some cases, PoS networks can wind up becoming more centralized because becoming a validator can be more expensive than becoming a miner. Ethereum (ETH), for example, plans to change from PoW to PoS. To become an ETH validator would require 32 ETH, or about $51,000 as of July 2022. Many centralized exchanges have chosen to become validators of PoS coins to share staking rewards with their customers.

Crypto Staking Advantages	Crypto Staking Disadvantages
Low energy usage	Uncertain security
Easier to earn rewards	Potential for takeover
No special hardware needed	Increased centralization

Popular Crypto Staking Coins

Just a few years ago, the entire concept of proof-of-stake consensus was still relatively new, and options for staking coins were few and far between.

A growing number of projects are utilizing PoS and some exchanges are making it easier than ever for users to earn crypto by staking their coins.

Here is a list of common proof-of-stake coins, along with annual average yield, expressed as a percentage of the amount of cryptocurrency staked.

1. Ethereum (ETH)

Ethereum (ETH) has become one of the most popular cryptocurrencies on the market—although it is not exactly a cryptocurrency itself. Staking Ethereum on your own will require a minimum of 32 ETH. Rewards vary, but it’s expected that the rate of return on Ethereum staking is 5-17% per year.

2. EOS

EOS is similar to Ethereum in that it’s used to support decentralized programs. EOS tokens are native to the EOS blockchain, and like other cryptos, can be staked to earn rewards. The expected rate of return for EOS staking is about 3%.

3. Tezos (XTZ)

Like EOS and Ethereum, Tezos (XTZ) is an open-source blockchain network with its own native currency, with a symbol of XTZ. And it, too, can be staked on certain platforms and networks. The current expected rate of return for Tezos staking is around 6%.

4. Polkadot (DOT)

Polkadot is a newer cryptocurrency, created in August 2020. Polkadot hopes to provide interoperability and is designed to support “parachains,” or different blockchains created by different developers.

The Kraken crypto exchange supports staking for DOT.

DOT staking yields about 15% annually.

Investors would do well to remember that while these above yields may sound high when compared to traditional financial markets, the risk is also quite high, as the coins could quickly lose value.

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Where to Stake Crypto

There are numerous platforms that allow users to start staking coins, and quickly.

There are big-name platforms that most crypto investors are probably familiar with, including Coinbase and Kraken, which allow users to stake coins. On exchanges like these, investors must opt in to staking in order to benefit from rewards.

Enterprising stakers could also look at “staking-as-a-service” providers—which specialize in staking, rather than exchanging. Examples of those platforms include MyContainer, Stake Capital, and Staked.

It’s important to note that each of these platforms will have different offerings, rules, and fees. It’s worth the time spent researching a few to make sure your goals align with a certain platform before you jump in.

Is Crypto Staking Profitable?

Anyone can earn crypto by staking cryptocurrency. But unless someone is sitting on a huge stash of proof-of-stake coins, they’re not likely to get rich from staking.

Staking rewards are similar to stock dividend payouts, in that both are a form of passive income. They don’t require a user to do anything other than holding the right assets in the right place for a given length of time. The longer a user stakes their coins, the greater profit potential there will be in general, thanks to compound interest.

But unlike dividends, there are a few variables particular to proof-of-stake coins that influence how much of a staking reward users are likely to receive. Users would do well to research these factors and more when searching for the most profitable staking coins:

• How big the block reward is

• The size of the staking pool

• The amount of supply locked

Additionally, the fiat currency value of the coin being staked must also be taken into account. Assuming this value remains steady or rises, staking could potentially be profitable. But if the price of the coin falls, profits could diminish quickly.

The Takeaway

Staking is a way to use your crypto holdings or coins to earn additional rewards. It can be helpful to think of it as along the lines of generating interest on cash savings, or earning dividends on stock holdings.

Essentially, coin holders allow their crypto to be used as a part of the blockchain validation process, and are rewarded by the network for the use of their assets. For crypto investors, staking can open up another potential avenue to generating returns.

SoFi Invest®
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit 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.

Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments. Limitations apply to trading certain crypto assets and may not be available to residents of all states.

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.

SOIN21134

Terms and conditions apply. Earn a bonus (as described below) when you open a new SoFi Digital Assets LLC account and buy at least $50 worth of any cryptocurrency within 7 days. The offer only applies to new crypto accounts, is limited to one per person, and expires on December 31, 2023. Once conditions are met and the account is opened, you will receive your bonus within 7 days. SoFi reserves the right to change or terminate the offer at any time without notice.

First Trade Amount		Bonus Payout
Low	High	Bonus Payout
$50	$99.99	$10
$100	$499.99	$15
$500	$4,999.99	$50
$5,000+		$100