Apr
24
2026
A donut with red and green frosting, with more of the donut covered by the red frosting, a symbol of the debt-to-equity ratio.

Debt-to-Equity (D/E) Ratio: Formula and Interpretation

By | Growing Wealth, Investing | No Comments

The debt-to-equity or D/E ratio compares a company’s total liabilities (what it owes) to its shareholder equity. The result gives investors a snapshot of how much a company relies on borrowed money, a.k.a. leverage, versus its own capital.

The D/E ratio is one of the most widely used financial metrics for evaluating how a company finances its operations — and how risky that financing structure might be.

A high D/E ratio could indicate that a company is overleveraged, making it riskier for investors. Also, consider that the cost of capital is higher now, given today’s higher interest-rate environment.

On the other hand, a low D/E ratio could indicate underutilization of debt for growth opportunities and tax benefits.

Debt-to-equity ratios can vary by industry. It’s important for investors to use the D/E ratio to make direct comparisons, or to measure a company’s use of debt over time.

Key Points

•   The debt-to-equity ratio (D/E) is a financial metric that compares a company’s total liabilities to its shareholder equity, indicating its reliance on debt for financing.

•   Calculating the D/E ratio involves dividing total liabilities by shareholder equity, with the resulting figure helping investors assess potential risks associated with a company’s financial structure.

•   A high D/E ratio may suggest a company is overleveraged, making it riskier for investors, while a low ratio could indicate underutilization of debt for growth opportunities.

•   Different industries have varying acceptable D/E ratios, with capital-intensive sectors often operating with higher ratios due to their borrowing needs for growth.

•   The D/E ratio is just one of many indicators investors should consider, as it should be contextualized within industry standards and accompanied by a broader analysis of a company’s financial health.

What Is the Debt-to-Equity (D/E) Ratio?

The debt-to-equity ratio is one of several metrics that investors can use to evaluate individual stocks. At its simplest, the debt-to-equity ratio is a quick way to assess a company’s total liabilities vs. total shareholder equity, to gauge the company’s reliance on debt.

In other words, the D/E ratio compares a company’s equity — how much value is locked up in its shares — to its debts. What are liabilities? The most common types of debt are loans and accounts payable.

Among other things, knowing the D/E ratio can help investors gauge a company’s ability to cover what it owes. For example, if a company were to liquidate its assets, would it be able to cover its liabilities? How much money would be left over for shareholders?

The D/E ratio also indicates potential profitability to investors, because after a company makes its principal and interest payments, the remaining profits can be retained by shareholders as dividends or buybacks.

If a company is overleveraged and can’t cover its debts, if the company goes under, its shares could end up worthless.

Understanding Financial Leverage

To understand the debt-to-equity ratio, it’s important to understand the concept of leverage. A business has two options when it comes to paying for operating costs: It can either use equity (e.g., issuing shares, reinvesting profits), or it can use debt (leverage) and borrow money through the use of loans, bonds, or credit.

All together, these are referred to as a company’s capital structure: how it funds operations.

Debt can be a powerful aid for company growth, but it also introduces risk. It allows companies to:

•   Expand operations (buy equipment, inventory, or other assets)

•   Invest in research or technology

•   Acquire competitors

•   Smooth out cash flow during downturns

But leverage cuts both ways. While it can amplify returns when things go well, it also magnifies losses when they don’t. A company with high leverage must consistently generate enough cash to pay interest on its debts, repay the principal, and maintain operations.

Types of Debt

While it’s potentially risky to use leverage — a company might have to declare bankruptcy if it can’t pay its debt — borrowed funds can also help a company grow beyond the limitation of its equity at critical junctures.

Not all debt is considered equally risky, however, and investors may want to consider a company’s long-term versus short-term liabilities when investing, either through an online stock broker or a traditional one. Generally speaking, short-term liabilities (e.g. accounts payable, wages, etc.) that would be paid within a year are considered less risky.

A company’s ability to cover its long-term obligations is more uncertain, and is subject to a variety of factors including interest rates (more on that below).

The Debt-to-Equity (D/E) Ratio Formula

Calculating the debt-to-equity ratio is fairly straightforward. It helps to know how to read a balance sheet, which is filed with the Securities and Exchange Commission (SEC). The balance sheet has the numbers you need.

To calculate the D/E ratio, take the company’s total liabilities and divide that by shareholder equity. Here’s what the debt to equity ratio formula looks like:

D/E = Total Liabilities / Shareholder Equity

How to Calculate D/E: Step by Step

In order to calculate the debt-to-equity ratio, you need to understand both components.

Total Liabilities

This component includes a company’s current and long-term liabilities. Current liabilities are the debts that a company will typically pay off within the year, including accounts payable. Long-term liabilities are debts whose maturity extends longer than a year. Think mortgages on buildings or long-term leases.

Understanding the mix matters. A company heavily reliant on short-term debt may face more immediate pressure than one with long-term obligations.

Equity

The equity component includes two portions: shareholder equity and retained earnings. Shareholder equity is the money investors have paid in exchange for shares of the company stock.

Retained earnings are profits that the company holds onto that aren’t paid out in the form of dividends to shareholders.

Excel Formula for Debt-to-Equity Ratio

Using excel or another spreadsheet to calculate the D/E is relatively straightforward. First, using the company balance sheet, pull the total debt amount and the total shareholder equity amount, and enter these numbers into adjacent cells (e.g. E2 and E3).

Then, in cell E4 enter the formula “=E2/E3”, and this will give you the D/E ratio. This makes it easy to compare multiple companies side by side.

Real World Example of a D/E Calculation

To look at a simple example of a debt to equity formula, consider a company with total liabilities worth $100 million dollars and equity worth $85 million. Divide $100 million by $85 million and you’ll see that the company’s debt-to-equity ratio would be about 1.18. In other words, for every dollar of equity the company has $1.18 in debt.

When using a real-world debt-to-equity ratio formula, you’ll probably be able to find figures for both total liabilities and shareholder equity on a company’s balance sheet. Publicly traded companies will usually share their balance sheet along with their regular filings with the SEC.

Remember that arriving at this ratio is just that: a single number that reveals a certain aspect of a company’s potential performance, but doesn’t tell the whole story. It’s essential to compare a company’s D/E ratio to that of other companies in its industry.

In addition, there are many other ways to assess a company’s fundamentals and performance to help trade stocks online — by using fundamental analysis and technical indicators. Experienced investors rarely rely on one measure to evaluate a stock.

Interpreting the D/E Ratio

Once you’ve calculated a debt-to-equity ratio, it’s important to view it as part of a large context about the company’s fundamentals. While a D/E ratio of 1.0 may indicate a balance of debt to equity, it varies by company and industry.

High vs. Low D/E Ratios

A high D/E ratio indicates heavier reliance on debt, which can make a company more vulnerable during downturns. A company with a higher D/E ratio may deliver higher returns, but with greater risk exposure.

A lower D/E Indicates more conservative financing, which is lower risk, but it may suggest missed opportunities for growth.

Short-Term vs. Long-term Debt Considerations

If a company, such as a manufacturer, requires a lot of capital to operate, it may need to take on debt to finance its operations. A company like this may have a debt equity ratio of about 2.0 or more.

Other companies that might have higher ratios include those that face little competition and have strong market positions, and regulated companies, like utilities, that investors consider relatively low risk.

Companies that don’t need a lot of debt to operate may have debt-to-equity ratios below 1.0. For example, the service industry requires relatively little capital.

Modifying the Debt-to-Equity Ratio

As noted above, it’s also important to know which type of liabilities you’re concerned about — longer-term debt vs. short-term debt — so that you plug the right numbers into the formula. Analysts can dig deeper into the D/E ratio by comparing these numbers.

For example, if you have two companies, each with $2.5 million in shareholder equity, and $2.5 million in debt, their D/E ratios would be the same: 1.0.

But let’s say Company A has $2 million in long-term liabilities, and $500,000 in short-term liabilities, whereas Company B has $1.5 million in long-term debt and $1 million in short term debt. The long-term D/E ratio for Company A would be 0.8 vs. 0.6 for company B.

The numbers aren’t that far apart — but the higher amount of long-term debt for Company B is concerning, given the expense of covering long-term debt payments.

Recommended: How to Use Fundamental Analysis

What the D/E Ratio Tells Investors

A debt-to-equity-ratio that’s high compared to others in a company’s given industry may indicate that that company is overleveraged and in a precarious position. Given the cost of capital, servicing high levels of debt means that there’s less cash to invest in operations, or reallocate to shareholders via dividends.

Also, debt should be a concern for most investors because common stock shareholders are the last to be repaid if a company defaults on its debts.

Not only that, companies with a high debt-to-equity ratio may have a hard time working with other lenders, partners, or even suppliers, who may be afraid they won’t be paid back.

In some cases, creditors limit the debt-to-equity ratio a company can have as part of their lending agreement. Such an agreement prevents the borrower from taking on too much new debt, which could limit the original creditor’s ability to collect.

It is possible that the debt-to-equity ratio may be considered too low, which is an indicator that a company is relying too heavily on its own equity to fund operations. In that case, investors may worry that the company isn’t taking advantage of potential growth opportunities.

Ultimately, businesses must strike an appropriate balance within their industry between financing with debt and financing with equity.

What Does It Mean for a D/E Ratio to Be Negative?

A negative D/E ratio can be serious as it indicates negative shareholder equity, and that the company’s liabilities exceed its assets. So, what does this mean for investors?

Negative D/E ratios indicate to investors that the company is a higher investment risk and that the company is not financially stable. Therefore, investing in such a company may result in a loss for investors.

Average D/E Ratios by Industry

Typical debt-to-equity ratios vary by industry, because different industries operate with very different capital needs.

Capital-Intensive Industries (Utilities, Manufacturing)

Industries like utilities or manufacturing can be more capital intensive because they rely on expensive infrastructure and thus may rely on borrowing to cover the cost of assets.

The depository industry (banks and lenders) may have high debt-to-equity ratios. Because banks borrow funds to loan money to consumers, financial institutions usually have higher debt-to-equity ratios than other industries.

Other industries with high debt-to-equity ratios include:

•   Non-depository credit institutions

•   Insurance providers

•   Hotels, rooming houses, camps, and other lodging places

•   Air transportation

•   Railroad transportation

Service and Tech Sectors

By contract, service and tech sectors tend to have lower capital requirements, and thus lower D/E ratios.

•   Software

•   Internet, digital content

•   Gaming

•   Chemicals

•   Energy (e.g., oil and gas production)

•   Healthcare, medical supplies

Effect of Debt-to-Equity Ratio on Stock Price

The debt-to-equity ratio can clue investors in on how stock prices may move. As a measure of leverage, debt-to-equity can show how aggressively a company is using debt to fund its growth.

The interest rates on business loans can be relatively low, and are tax deductible. That makes debt an attractive way to fund business, especially compared to the potential returns from the stock market, which can be volatile. And sometimes an aggressive strategy can pay off.

For example, if a company takes on a lot of debt and then grows very quickly, its earnings could rise quickly as well. If earnings outstrip the cost of the debt, which includes interest payments, a company’s shareholders can benefit and stock prices may go up.

The opposite may also be true. A highly leveraged company could have high business risk. If earnings don’t outpace the debt’s cost, then shareholders may lose and stock prices may fall.

Having to make high debt payments can leave companies with less cash on hand to pay for growth, which can also hurt the company and shareholders. And a high debt-to-equity ratio can limit a company’s access to borrowing, which could limit its ability to grow.

Debt-to-Equity (D/E) Ratio vs Gearing Ratio

The debt-to-equity ratio belongs to a family of ratios known as gearing ratios that investors can use to help them evaluate an organization’s use of leverage. These ratios are collectively known as gearing ratios.

Here’s a quick look at other gearing ratios you may encounter:

D/E Ratio vs. Equity Ratio

This ratio compares a company’s equity to its assets, showing how much of the company’s assets are funded by equity. The formula here is:

Equity ratio = Equity / Assets

D/E Ratio vs. Debt Ratio

This looks at the total liabilities of a company in comparison to its total assets. On the surface, this may sound like the debt ratio formula is the same as the debt-to-equity ratio formula. However, the total debt ratio formula includes short-term assets and liabilities as part of the equation, which the debt-to-equity ratio discounts.

Also, this ratio looks specifically at how much of a company’s assets are financed with debt.

Debt Ratio = Total Debt / Total Assets

Recommended: Calculating Return on Equity

Why Companies Monitor Their D/E Ratios

Businesses pay as much attention to debt-to-equity as individual investors. For example, if a company wants to take on new credit, they would likely want their debt-to-equity ratio to be favorable.

Banks and other lenders keep tabs on what healthy debt-to-equity ratios look like in a given industry. A debt-to-equity ratio that seems too high, especially compared to a company’s peers, might signal to potential lenders that the company isn’t in a good position to repay the debt.

Publicly traded companies that are in the midst of repurchasing stock may also want to control their debt-to-equity ratio. That’s because share buybacks are usually counted as risk, since they reduce the value of stockholder equity. As a result the equity side of the equation looks smaller and the debt side appears bigger.

While acceptable D/E ratios vary by industry, investors can still benefit from understanding how the debt-to-equity ratio plays a role in assessing the company’s risk.

Many companies borrow money to maintain business operations — making it a typical practice for many businesses. For companies with steady and consistent cash flow, repaying debt happens rapidly. Also, because they repay debt quickly, these businesses will likely have solid credit, which allows them to borrow inexpensively from lenders.

Therefore, even if such companies have high debt-to-equity ratios, it doesn’t necessarily mean they are risky. For example, companies in the utility industry must borrow large sums of cash to purchase costly assets to maintain business operations. However, since they have high cash flows, paying off debt happens quickly and does not pose a huge risk to the company.

On the other hand, companies with low debt-to-equity ratios aren’t always a safe bet, either. For example, a company may not borrow any funds to support business operations, not because it doesn’t need to but because it doesn’t have enough capital to repay it promptly. This may mean that the company doesn’t have the potential for much growth.

Analyzing IPOs Using the D/E Ratio

Many startups make high use of leverage to grow, and even plan to use the proceeds of an initial public offering, or IPO, to pay down their debt.

Of course, the results of their IPO will determine their debt-to-equity ratio, as investors put a value on the company’s equity, and thus their ability to offset debt.

So in the case of IPO investing, it’s important for investors to consider a company’s debt, and read the prospectus carefully, when deciding whether they want to buy IPO stock.

The Limitations of Debt-to-Equity Ratios

Debt-to-equity ratio is just one piece of the puzzle when it comes to evaluating stocks. Whether the ratio is high or low is not the bottom line of whether one should invest in a company. A deeper dive into a company’s financial structure can paint a fuller picture.

A company’s accounting policies can change the calculation of its debt-to-equity. For example, preferred stock is sometimes included as equity, but it has certain properties that can also make it seem a lot like debt. Specifically, preferred stock, with dividend payments included as part of the stock agreement, can cause the stock to take on some characteristics of debt, since the company has to pay dividends in the future.

If preferred stock appears on the debt side of the equation, a company’s debt-to-equity ratio may look riskier. If it’s included on the equity side, the ratio can look more favorable.

In some cases, companies can manipulate assets and liabilities to produce debt-to-equity ratios that are more favorable.

Additionally, investors may want to keep an eye on interest rates. If they’re low, it can make sense for companies to borrow more, which can inflate the debt-to-equity ratio, but may not actually be an indicator of bad tidings.

Finally, the debt-to-equity ratio does not take into account when a debt is due. A debt due in the near term could have an outsized effect on the debt-to-equity ratio.

As a result of temporary imbalances like these, investors may want to compare debt-to-equity ratios from various time periods to get an idea of a company’s ongoing capital structure, or whether fluctuations are signaling more noteworthy movement within the company.

The Takeaway

Investors can use the debt-to-equity (D/E) ratio to help determine potential risk before they buy a stock. As an individual investor you may choose to take an active or passive approach to investing. The approach investors choose may depend on their goals and personal preferences.

Investors who want to take a more hands-on approach to investing, choosing individual stocks, may take a look at the debt-to-equity ratio to help determine whether a company is a risky bet.

Invest in what matters most to you with SoFi Active Invest. In a self-directed account provided by SoFi Securities, you can trade stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, options, and more — all while paying $0 commission on every trade. Other fees may apply. Whether you want to trade after-hours or manage your portfolio using real-time stock insights and analyst ratings, you can invest your way in SoFi's easy-to-use mobile app.


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

FAQ

What is considered a moderate debt-to-equity ratio?

A D/E ratio of 1.0 simply means that a company’s debt and equity are in equal proportion; but that isn’t a reliable indicator of the company’s health. To know whether the D/E ratio is acceptable for a given company, you have to consider the industry, competitors, as well as other aspects of the business.

How do you interpret debt-to-equity ratio?

Taking a broader view of a company and understanding the industry it’s in and how it operates can help to correctly interpret its D/E ratio. For example, utility companies might be required to use more leverage to purchase assets to maintain business operations. But utility companies have steady inflows of cash, and for that reason having a higher D/E may not spell higher risk.

What is considered a debt-to-equity ratio that’s not aligned with industry averages?

A D/E ratio of about 1.0 to 2.0 is considered acceptable, depending on other factors like the industry the company is in. But a D/E ratio above 2.0 — i.e., more than $2 of debt for every dollar of equity — could be a red flag. Again, context is everything and the D/E ratio is only one indicator of a company’s health.

Can a company have too little debt?

It depends on the company and the industry. When a company has a low D/E ratio, and lower use of leverage, that means it finances its operation more through equity than by borrowing. That could indicate a conservative business model, and relative stability — or it could indicate the company isn’t seeking new, efficient ways to grow.

Where do I find the numbers to calculate the D/E ratio?

By reading a company’s balance sheet, which is filed with the SEC, you can find the total liabilities as well as shareholder equity.

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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.

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Apr
23
2026
A young woman sits at a desktop computer, learning how to use a stochastic oscillator as she places trades.

Stochastic Oscillator Explained

By | Financial Independence, Growing Wealth, invest, Investing | Comments Off on Stochastic Oscillator Explained

The stochastic oscillator is a momentum indicator that traders use to compare a specific closing price of a security to a range of its prices over a defined period, usually 14 days.

Traders typically use a stochastic oscillator to determine whether a given security is overbought or oversold, in order to anticipate reversals. A stochastic oscillator uses a range of 0 to 100. When levels are above 80, it may indicate an asset is overbought; when the indicator is below 20, it may be oversold. When the price rises above or below those levels, a reversal may be in store.

To avoid the possibility of false signals, traders often use the sto indicator with another type of trend analysis.

Key Points

•   The stochastic oscillator is a momentum indicator that’s used to anticipate reversals by determining if a security is overbought or oversold.

•   The indicator is range-bound from 0 to 100, with levels above 80 typically indicating an overbought asset and levels below 20 suggesting an oversold asset.

•   The oscillator consists of a “fast” line (%K, representing current price) and a “slow” line (%D, a three-period moving average of %K).

•   Trade signals are generated when the fast %K line crosses above or below the slow %D line, especially when both are in the overbought or oversold regions.

•   While the oscillator provides clear entry and exit signals, it should be used with other trend analysis to mitigate the risk of false signals.

What Is a Stochastic Oscillator?

Let’s consider two main types of analysis that investors and traders commonly use when trading stocks: fundamental analysis and technical analysis.

•   Fundamental analysis incorporates earnings data, in addition to economic and market news, to predict how an asset’s price might move.

•   Technical analysis, by contrast, relies on various sets of data and indicators, such as price and volume, to identify patterns and trends.

The stochastic oscillator is a key tool in securities trading and self-directed investing, because it uses support and resistance levels to gauge the momentum behind a certain price trend, and from there the potential for a reversal.

This tool plots one line, the %K line (which indicates the current price) against the %D line, which is a three-day moving average of the price. Although the two lines mirror each other to a degree, the %D line essentially smoothes out any volatility in the %K line in order to help traders evaluate the strength of the trend line.

Thus the stochastic oscillator, or sto indicator, is an indicator used in trading to assess trend strength.

History of the Stochastic Oscillator

The stochastic oscillator was created in the 1950s by George Lane, a securities trader, educator, author, and technical analyst. His famous observation about momentum and price informed his development of the stochastic oscillator: “Stochastics measures the momentum of price. If you visualize a rocket going up in the air, before it can turn down, it must slow down. Momentum always changes direction before price.”

The stochastic oscillator is now a common technical indicator that investors use to evaluate a variety of assets in many online investing platforms and price chart services.

How Does a Stochastic Oscillator Work?

The stochastic oscillator is a range-bound indicator, from 0 to 100. It has two moving lines that oscillate between and around two horizontal lines that indicate the oversold and overbought levels: 20 at the lower range and 80 at the upper range.

As noted above, the primary “fast” moving line is called the %K and reflects the security’s current value, while the other “slow” line is a three-period moving average of the %K line.

The full stochastic oscillator is a line customized by the user when they seek to buy stocks online (or with a regular broker) that may combine the traits of the slow and fast stochastics.

Slow vs Fast Stochastics

A signal is generated when the “fast” %K line diverges above the “slow” line or vice versa. The two horizontal lines are often pre-set at 20 and 80, indicating oversold and overbought levels, respectively, but can be modified to other levels, to reduce the risk of entering trades on false or premature signals.

The price is considered “overbought” when the two moving lines rise above the upper horizontal line and “oversold” when they fall below the lower horizontal line. The overbought line indicates price action that exceeds the top 20% (or 30%) of the recent price range over a defined period — typically 14-interval period. Conversely, the oversold line represents price levels that fit into the bottom 20% of the recent price range.

The stochastic oscillator is a form of stock technical analysis that traders can use to help identify potential trade entries and exits. When both stochastics are above the ‘overbought’ line (typically 80) and the fast %K line crosses below the slow %D line, this may signify a time to exit a long position or initiate a short position.

Conversely, when both stochastics are below the oversold line (typically 20), and the %K line crosses above the %D line, this could signify a time to exit a short position or initiate a new long position.

The stochastic oscillator is especially useful among commonly day-traded assets such as low-float stocks that have limited amounts of shares and are more volatile.

However useful these indicators are for determining entry and exit points, most traders use them in connection with other tools. While a stochastic oscillator is useful for implementing an overall strategy, it does not help identify overall market sentiment or broad market trends.

It is only when the trend or sideways trading range is well established that traders can safely and reliably use the stochastic oscillator to look for long entries in oversold conditions and shorts entries in overbought conditions.

What Is the Formula for a Stochastic Oscillator?

Below is the calculation for a standard 14-period stochastic indicator, but the time period can be adjusted for any time frame.

Calculation for %K:

%K = [(C – L14) / H14 -L14)] x 100

Key:

C = Latest closing price
L14 = Lowest low over the period
H14 = Highest high over the period

%K is sometimes referred to as the “fast stochastic”, whereas the “slow” stochastic indicator is defined as %D = 3-period moving of %K.

The general idea for this oscillator is that in an uptrending market prices will close near the indicator’s high, and in a downtrending market prices will close near the low. Trade signals are generated when the “fast” %K line crosses above or below the three-period moving average, or “slow” %D.

Pros of the Stochastic Oscillator

There are several benefits to using the stochastic oscillator when evaluating investments.

Clear Entry/Exit Signals

The oscillator generates visual signals when it exceeds upper or lower price boundaries, which can help a trader determine when it’s time to buy or when to sell stocks.

Frequent Signals

For active traders who rely on intraday charts such as the 5-, 10-, or 15-minute time frames, the stochastic oscillator generates signals more often as price action oscillates in smaller ranges.

Clarity

The oscillator’s fluctuating lines ranging from 0 to 100 are fairly clear for investors who know how to use them.

Available on Most Trading Platforms

The stochastic oscillator is a ubiquitous technical indicator found in many trading platforms, online brokerages, and technical chart services with similar configurations.

Recommended: How to Open a Brokerage Account

Cons of the Stochastic Oscillator

Despite its benefits, the stochastic oscillator is not a perfect tool.

Potential False Signals

Depending on the time periods chosen, traders may identify a sharp oscillation as a buy or sell signal, especially if it goes against the trend. This is more common during periods of market volatility.

Doesn’t Capture the Trend

The stochastic oscillator may calculate the strength or weakness of price action in the market, not the overall trend or direction for the security.

How to Trade With the Stochastic Oscillator

Some traders find the stochastic oscillator indicator useful to identify trade entry and exit points, and help decide whether they’re bullish on a stock. The stochastic oscillator does this by comparing a particular closing price based on the user’s selected time frame to a range of the security’s highest and lowest prices over a certain period of time.

Traders can reduce the sensitivity of the oscillator to market fluctuations by adjusting the time frame and range of prices. The oscillator tends to trend around a mean price level because it relies on recent price history, but it also adjusts (with lag) when prices break out of price ranges.

The Takeaway

The stochastic oscillator is a popular technical tool, which can help investors find trading opportunities. After identifying the direction of a security’s trend, the stochastic oscillator can help determine when the security is overbought or oversold, thus identifying lower-risk trade-entry points.

While technical indicators are not trading strategies on their own, they are useful tools when properly incorporated into an overall trading strategy.

Invest in what matters most to you with SoFi Active Invest. In a self-directed account provided by SoFi Securities, you can trade stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, options, and more — all while paying $0 commission on every trade. Other fees may apply. Whether you want to trade after-hours or manage your portfolio using real-time stock insights and analyst ratings, you can invest your way in SoFi's easy-to-use mobile app.


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

FAQ

What does a stochastic oscillator tell you?

By using this tool to track a security’s price movements, the stochastic oscillator may help traders spot pivotal price points that could signal a trend reversal.

Which is more accurate, RSI or stochastic oscillator?

Relative strength index, or RSI, tends to be more useful for investors in trending markets, whereas stochastics tend to be more helpful or reliable in non-trending markets.

What is divergence in stochastics?

Divergences are indications of a change, and can be used by traders or investors to try and determine whether a trend is getting weaker, stronger, or continuing.

Photo credit: iStock/alvarez

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.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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.

SOIN-Q425-003

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Apr
22
2026
The word “Exchange-Traded Fund (ETF)” is revealed by paper tearing away.

What Is an ETF? ETF Trading & Investing Guide

By | Growing Wealth, invest, Investing | No Comments

An exchange-traded fund, or ETF, bundles many investments together in one package so it can be sold as shares and traded on an exchange. The purchase of one ETF provides exposure to dozens or even hundreds of different investments at once, and there are numerous types of ETFs on the market.

ETFs are generally passive investments, i.e., they don’t have active managers overseeing the fund’s portfolio. Rather, most ETFs track an index, such as the S&P 500 or the Russell 2000. Further, ETFs are a type of investment vehicle that typically allow even small and less-established investors to build diversified portfolios, and to do so at a relatively low cost. But before you start buying ETFs, it’s important to understand how they work, the risks of investing in ETFs, as well as other pros and cons.

Key Points

•   Exchange-traded funds bundle multiple investments, such as stocks, bonds, commodities, or currencies, into shares traded on exchanges throughout the day, providing diversified exposure to hundreds of securities.

•   Most ETFs operate as passive investments tracking market indexes like the S&P 500, rather than having active managers making investment decisions, aiming to match benchmark performance.

•   ETF advantages include ease of trading throughout market hours, lower annual expense ratios compared to mutual funds, built-in diversification across asset classes, and higher share liquidity.

•   ETF potential disadvantages encompass easy trading encouraging short-term decisions, management fees plus brokerage commissions increasing costs, and less exposure to a particular asset that sees rapid gains.

•   Common ETF types include index funds tracking major markets, sector funds focusing on industries, bond funds providing fixed-income exposure, and specialty funds covering commodities, real estate, or foreign markets.

What Is an ETF?

An ETF is a type of pooled investment fund that bundles together different assets, such as stocks, bonds, commodities, or currencies, and then divides the ownership of the fund into shares. Unlike mutual funds, ETFs give investors the ability to trade shares on an exchange throughout the day, similar to a stock.

Unlike investing in a single stock, however, it’s possible to buy shares of a single ETF that provides exposure to hundreds or thousands of investment securities. ETFs are often heralded for helping investors gain diversified exposure to the market for a relatively low cost.

This is important to understand: Just like a mutual fund, an ETF is the suitcase that packs investments together. For example, if you are invested in a stock ETF, you are invested in the underlying stocks. If you are invested in a bond ETF, you are invested in the underlying bonds. Thus you are exposed to the same risk levels of those specific markets.

Recommended: Active vs Passive Investing

Passive vs Active ETFs

Most ETFs are passive, which means to track a market index. Their aim is to provide an investor exposure to some particular segment of the market in an attempt to return the average for that market. If there’s a type of investment that you want broad, diversified exposure to, there’s probably an ETF for it.

Though less popular, there are also actively managed ETFs, where a person or group makes decisions about what securities to buy and sell within the fund. Generally, active funds charge a higher fee than index ETFs, which are simply designed to track an index or segment of the market.

How Do ETFs Work?

As discussed, most ETFs track a particular index that measures some segment of the market. For example, there are multiple ETFs that track the S&P 500 index. The S&P 500 index measures the performance of 500 of the biggest companies in the United States.

Therefore, if you were to purchase one share of an S&P 500 index fund, you would be invested in all 500 companies in that index, in their proportional weights.

What Is the Difference Between an ETF and a Mutual Fund?

ETFs are similar to mutual funds. Both provide access to a wide variety of investments through the purchase of just one fund. But there are also key differences between ETFs and mutual funds, as well as different risks that investors must bear in mind.

•   ETFs and mutual funds have different structures. A mutual fund is fairly straightforward: Investors use cash to buy shares, which the fund manager, in turn, uses to buy more securities. By contrast, an ETF relies on a complex system whereby shares are created and redeemed, based on underlying securities that are held in a trust.

•   ETFs trade on an open market exchange (such as the New York Stock Exchange) just as a stock does, so it is possible to buy and sell ETFs throughout the day. Mutual funds trade only once a day, after the market is closed.

•   ETF investors buy and sell ETFs with other ETF investors, not the fund itself, as you would with a mutual fund.

•   ETFs are typically “passive” investments, which means that there’s no investment manager making decisions about what should or should not be held in the fund, as with many mutual funds. Instead, passive ETFs aim to provide the same return for the benchmark index they track. For example, an ETF for environmental stocks would mimic the returns of green stocks overall.

What Are the Advantages of ETFs?

There are a number of potential benefits to holding ETFs in an investment portfolio, including:

•   Ease of trading

•   Lower fees

•   Diversification

•   Liquidity

Trading

ETFs are traded on the stock market, with prices updated by the minute, making it easy to buy and sell them throughout the day. Trades can be made through the same broker an investor trades stocks with. In addition to the ease of trading, investors are able to place special orders (such as limit orders) as they could with a stock.

Fees

ETFs often have lower annual fees (called an expense ratio), typically lower than that of mutual funds, and no sales loads. Brokerage commissions, which are the costs of buying and selling securities within a brokerage account, may apply.

Diversification

Using ETFs is one way to achieve relatively cheap and easy diversification within an investment strategy. With the click of a button, an investor can own hundreds of investments in their portfolio. ETFs can include stocks, bonds, commodities, real estate, and even hybrid funds that offer a mix of securities.

Liquidity

Thanks to the way ETFs are structured, ETF shares are considered more liquid than mutual fund shares, but that’s not necessarily guaranteed for all ETFs.

What Are the Disadvantages of ETFs

There are some potential downsides to trading ETFs, too, including:

Trading Might Be Too Easy

With pricing updated instantaneously, the ease of ETF trading can encourage investors to get out of an investment that may be designed to be long term.

Understanding ETF Costs

Even if ETFs average lower fees than mutual funds, a brokerage might still charge commissions on trades. Commission fees, plus fund management fees, can potentially make trading ETFs pricier than trading standalone stocks.

In addition, some ETFs can come with higher bid/ask spreads (depending on trading volume and liquidity), which can increase the cost of trading those funds.

Lower Yield

ETFs can be great for investors looking for exposure to a broad market, index, or sector. But for an investor with a strong conviction about a particular asset, investing in an ETF that includes that asset will only give them indirect exposure to it — and dilute the gains if it shoots up in price relative to its comparable assets or the markets as a whole.

What Are Common Types of ETFs?

The ETF market is quite varied today, but much of it reflects its roots in the equities market. The first U.S. ETF was the Standard & Poor’s Depository Receipt, known today as the SPDR. It was launched on the American Stock Exchange in 1993. Today, ETFs that cover the S&P 500 are one of the most common types of ETFs.

Since the SPDR first debuted, the universe of exchange-traded funds has greatly expanded, and ETF trading and investing has become more popular with individual investors and institutions. Although index ETFs — again, those that passively track an index — are still the most common type of fund, ETFs can be actively managed. In addition, these funds come in a range of different flavors, or styles.

Because of the way these funds are structured, ETFs come with a specific set of risk factors and costs, not all of which are obvious to investors. So, in addition to the risk of loss if a fund underperforms (i.e., general market risk), investors need to bear in mind that some ETFs might get different tax treatment; could be shut down (dozens of ETFs close each year); and the investor may pay a higher bid/ask spread to trade ETFs, as noted above.

With that in mind, ETFs can offer an inexpensive way to add diversification to your portfolio. Here are some common types of ETFs.

Index ETFs

These provide exposure to a representative sample of the stock market, often by tracking a major index. An index, like the S&P 500, is simply a measure of the average of the market it is attempting to track.

Sector ETFs

These ETFs track a sector or industry in the stock market, such as healthcare stocks or energy stocks.

Style ETFs

These track a particular investment style in the stock market, such as a company’s market capitalization (large cap, small cap, etc.) or whether it is considered a value or growth stock.

Bond ETFs

Bond ETFs provide exposure to bonds, such as treasury, corporate, municipal, international, and high-yield.

Caveats for Certain ETFs

A handful of ETFs may require special attention, as they may incur higher taxes, costs, or expose investors to other risks.

Foreign Market ETFs

These ETFs provide exposure to international markets, both by individual countries (for example, Japan) and by larger regions (such as Europe or all developed countries, except the United States). Note that ETFs invested in foreign markets are subject to risk factors in those markets, which may not be obvious to domestic investors, so be sure to do your homework.

Commodity ETFs

Commodity ETFs track the price of a commodity, such as a precious metal (like gold), oil, or another basic good. Commodity ETFs are governed by a special set of tax rules, so be sure to understand the implications.

Real Estate ETFs

Real estate ETFs provide exposure to real estate markets, often through what are called Real Estate Investment Trusts (REITS). Dividends from REITs also receive a different tax treatment, even when held within the wrapper of a fund.

Other Types of ETFs

In addition, there are inverse ETFs, currency ETFs, ETFs for alternative investments, and actively managed ETFs. (While most ETFs are passive and track an index, there are a growing number of managed ETFs.) These instruments are typically more complicated than your standard stock or bond ETF, and are not intended for long-term “buy and hold” strategies. They may lose value rapidly, so do your due diligence.

What Is ETF Trading?

ETF trading is the buying and selling of ETFs. To trade ETFs, it helps to understand how stocks are traded because ETF trades are similar to stock trades in some ways, but not in others.

Stocks trade in a marketplace called an “exchange,” open during weekday business hours, and so do ETFs. It is possible to buy and sell ETFs as rarely or as frequently as you could a stock. You’ll be able to buy ETFs through whomever you buy or sell stocks from, typically a brokerage.

That said, many investors will not want to trade ETFs frequently. The bid-ask spread (the difference between the highest price a buyer is willing to pay and the lowest price a seller will accept) can add to the cost of every trade.

A simple ETF trading strategy is to buy and hold ETFs for the purpose of long-term growth. Whether you choose a buy and hold strategy or decide to trade more often, the ease of trading ETFs makes it possible to build a broad, diversified portfolio that’s easy to update and change.

Risks of Trading ETFs

As noted in the discussion about common types of ETFs, it bears repeating that some ETFs can expose investors to more risk — but all exchange-traded funds come with some degree of risk. For example, investing in one of the most common types of ETFs, an S&P 500 ETF which tracks that index, still comes with the same risk of loss as that part of the market.

If large-cap U.S. stocks suddenly lose 30%, the ETF will also likely drop significantly. This caveat applies to other asset classes and sectors as well.

3 Steps to Invest in ETFs

If you want to start investing in ETFs, there are a few simple steps to consider.

1. Do Your Research

1.   Are you looking to get exposure to an entire index like the S&P 500? Or a sector like technology that may have a different set of prospects for growth and returns than the market as a whole? Those decisions will help narrow your search.

2. Choose an ETF

2.   For any given market, sector, or theme you want exposure to, there is likely to be more than one ETF available. One consideration for investors is the fees involved with each ETF.

3. Find a Broker

3.   If you’re already trading stocks, you’ll already have an investment broker that can execute your ETF trades. If you don’t have a broker, finding one should be relatively painless, as there are many options on the market. Once your account is funded, you can start trading stocks and ETFs.

How to Build an ETF Portfolio

Are you willing to take on more investment risk to see more growth? Would you prefer less risk, even if it means potentially lower returns? How will you handle market volatility? Understanding your personal risk tolerance can help you choose ETFs for your portfolio that round out your asset allocation.

For example, if you decide that you would like to invest in a traditional mix of stocks and bonds at a ratio of 70% to 30%, you could buy one or several stock ETFs to gain exposure to the stock market with 70% of your money and some ETFs to fulfill your 30% exposure to the bond market.

The risk factors of equity and bond ETFs are relatively easy to anticipate, but if you venture into foreign stock ETFs, emerging markets, or gold and other commodities, it’s wise to consider the additional risk factors and tax implications of those markets and asset classes.

Once you’ve determined your desired allocation strategy and purchased the appropriate ETFs, you may want to take a hands-on approach when managing your portfolio throughout the year. This could mean rebalancing your portfolio once a year, or utilizing a more active approach.

The Takeaway

ETFs bundle different investments together, offering exposure to a host of different underlying securities in one package. There’s likely an ETF out there for every type of investor, whether you’re looking at a particular market, sector, or theme. ETFs offer the bundling of a mutual fund, with the trading ease of stocks, although the total costs and tax treatment of ETFs require some vigilance on the part of investors.

Though a DIY approach to investing using ETFs is doable, many investors prefer to have the help of a professional who can provide guidance throughout the investment process.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest®. You can trade stocks, ETFs, or options through self-directed investing with SoFi Securities, or simply automate your investments with a robo advisor from SoFi Wealth. You'll gain access to alternative investments and upcoming IPOs, and can plan for retirement with a tax-advantaged IRA. With SoFi, you can manage all your investments, all in one place.

Take a step toward reaching your financial goals with SoFi Invest.

FAQ

What are the differences between an ETF and mutual fund?

Some of the main differences between ETFs and mutual funds include fund structure, the fact that ETFs trade on open market exchanges, investors buy and sell ETFs with other investors (rather than the fund itself), and that ETFs tend to be passive, rather than active, vehicles.

What are some of the advantages of investing in ETFs?

Some potential advantages of investing in ETFs include relatively high liquidity and ease of trading, built-in diversification, and generally, lower costs. There can be downsides, too, that investors should consider as well.

Are ETFs active or passive investments?

ETFs are usually a type of passive investment vehicle, meaning that they’re not actively managed, but rather, tend to track an index. There are, however, actively-managed ETFs on the market for investors who are interested.

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 read and carefully consider the information contained in the prospectus, which contains the Mutual Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or SoFi's customer service at: 1.855.456.7634. 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 risks. 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 have tax implications.

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, but cannot guarantee profit nor 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.
Before investing, carefully consider the investment objectives, risks, charges, and expenses detailed in a Fund’s prospectus. This document contains important information and must be read carefully prior to investing; you can find the current prospectus by clicking the link on the Fund’s respective page.
Alternative investments are highly risky and may not be suitable for all investors. These investments often involve leveraging, speculative practices, and the potential for complete loss of investment. They typically charge high fees, lack diversification, and can be highly illiquid and volatile. Be aware that both registered and unregistered alternative investments, including Interval Funds, are not subject to the same regulatory requirements as mutual funds, and their illiquid nature may restrict your ability to trade on your timeline. Always review the specific fee schedule for Interval Funds within their prospectus.

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.

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.

SOIN-Q226-003

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Apr
21
2026
Four women stand in a cheerful, modern office space, having a meeting about private company investments.

How to Invest in Private Companies

By | Growing Wealth, invest, Investing | Comments Off on How to Invest in Private Companies

Private company investing can be challenging, especially for retail investors, because shares of privately held companies are not available to trade on public exchanges.

Typically, investing directly in private companies, i.e., by angel investing or private equity, is reserved for qualified or accredited investors who meet specific financial criteria.

But due to the growing interest in private company investing, more investors can now access these companies through certain platforms, as well as types of mutual funds and exchange-traded funds (ETFs).

This expansion of private capital markets may well continue. According to estimates from Deloitte, funds allocated to private capital through various channels — which include private companies and other assets not available on public exchanges — could grow from about $80 billion in 2025 to $2.4 trillion in 2030.

Investors need to bear in mind, however, that investing in private companies is less liquid, less well-regulated, and less transparent than investing in public securities, which trade on public exchanges and are required to file certain documents with the Securities and Exchange Commission (SEC). This makes private-company investing higher risk, and it requires more due diligence.

Key Points

•   Investing in private companies means acquiring equity in companies that do not trade on public stock markets

•   These investments are highly illiquid, with capital potentially locked up for years.

•   Private company investing is also considered high risk due to less regulatory oversight and transparency compared with public companies.

•   Retail investors can access private companies through various means, including certain mutual funds and ETFs, early-stage angel investing, venture capital firms, and more.

•   More direct private investments, like angel investing and private equity, are typically reserved for “accredited investors” who meet specific requirements.

Recent Growth in Private Markets

Thanks to an expansion of funding opportunities for private companies, which typically can’t access investment capital through channels that public companies do, private markets have been expanding.

Consider that there are more than 17,000 private businesses that have annual revenues greater than $100 million in the U.S., according to Morgan Stanley. Meanwhile, there are fewer than 4,060 public companies of a similar size.

This speaks to the greater access to capital, which is also enabling private companies to remain private longer, delaying the need for an acquisition or initial public offering (IPO).

What Does It Mean to Invest in Private Companies

A privately held company is owned by either a small number of shareholders or employees and does not trade its shares on the stock market. Thus investors can’t buy stocks online or through a traditional brokerage. Instead, company shares are owned, traded, or exchanged in private.

This gives company stakeholders more control over the organization — but they also bear more responsibility for the company’s performance. When you invest in private markets, ownership is typically concentrated among founders, early employees, institutional investors, and sometimes a small group of outside backers.

This structure allows companies to focus on their long-term strategy — but it also means fewer protections and less transparency for investors.

For individuals, the appeal is straightforward: access to companies at an early stage, before they become household names. But that opportunity comes with tradeoffs — particularly around risk, liquidity, and access to information.

Public vs. Private Companies: Key Differences

The distinction between public and private companies is important to understand.

Public companies are required to disclose detailed financial information, adhere to strict accounting standards, and answer to regulators like the U.S. Securities and Exchange Commission (SEC). Shares of public companies are priced by the market, which creates transparency and liquidity.

Private companies, by contrast, operate largely without this sort of public accountability. Financial disclosures aren’t always required, valuations aren’t typically driven by the markets, and shares may not change hands for years at a time, impacting liquidity.

Thus, investors in private companies are effectively trading transparency and regulatory oversight for the possibility of higher growth, which comes at the price of much higher risk to the investor, who may be weighing safe investments in today’s market as well.

How Private Companies Operate

Private companies range from small family-owned businesses to global giants. They may be organized as sole proprietorships, partnerships, or LLCs. A chief factor these companies share in common, though, is they can operate outside of normal industry regulations and oversight.

That means, on the one hand management teams can focus on building the business without the pressure of market demand or regulatory strictures. On the other, investors get significantly less data. Financial statements, if shared at all, can be selective and unaudited.

This opacity makes private company valuation more art than science. Without a public share price, investors rely on funding rounds, comparable company analysis, and internal projections to estimate what a business is worth.

Private Companies and Liquidity

In addition, because private companies aren’t publicly traded, investments in these firms can be highly illiquid.

Capital may be locked up for a period of years before a company is sold or goes public. These days, that period may be longer, according to a Morningstar analysis. Because private companies are attracting more investor capital, some are taking longer to go public, with the median age increasing from about 7 years in 2014 to roughly 11 years in 2025.

This increases the risk exposure for investors, who may lose the opportunity to invest elsewhere — and who may not see the ultimate return they had expected.

The Lifecycle of a Private Company (Startup to IPO)

Most private companies follow a well-worn path:

•   Seed stage – Founders raise capital to test an idea.

•   Early growth (Series A/B) – The business gains traction and begins to scale.

•   Late stage (Series C and beyond) – Expansion accelerates, often with large institutional backing.

•   Exit – IPO, acquisition, or secondary sale.

For investors, the earlier the entry point, the higher the potential upside — but also the higher the risk. The dream scenario is backing a “unicorn”: a private company valued at over $1 billion. In reality, only a tiny fraction of startups reach that level.

And, as noted above, investors interested in self-directed investing may be able to find new vehicles that allow private company investment.

Alternative investments,
now for the rest of us.

Explore trading funds that include commodities, private credit, real estate, venture capital, and more.

5 Ways to Invest in Private Companies

There are several ways to invest in private companies, though not all of them will be available to every investor. While investing online typically provides access to a range of conventional securities, investors interested in private markets must consider other channels — and an analysis by Deloitte suggests that retail investors are taking advantage of new investment opportunities.

1. Angel Investing and Venture Capital

Early-stage investing, often called angel investing, involves making an investment in a fledgling company in exchange for ownership of that company. This tends to be the riskiest stage to invest in, as companies at this stage are small, young, and typically unproven.

In addition, angel investors typically put up their own capital, and may provide mentorship to a startup as well. Nonetheless, the risk of loss is high, as most startups fail. For this reason, angel investors must be accredited investors.

An accredited investor is an individual or entity that meets certain criteria, and can thus invest in hedge funds, private equity, and more.

Understanding private equity vs venture capital is important. VC investors typically work for big firms that specialize in private company investing. They don’t invest their own money, but rather the money of those who have put their money at the disposal of the VC company.

In that sense, VC firms aren’t like angel investors; they enter the picture later, once the company has a longer track record.

2. Equity Crowdfunding

Equity crowdfunding is one avenue that can allow everyday investors to access private markets. Platforms like StartEngine and Republic operate under Regulation Crowdfunding (Reg CF), allowing non-accredited investors to invest relatively small amounts in early-stage companies.

While this democratizes access, it doesn’t eliminate risk. Many of these companies are extremely early-stage, and the likelihood of loss remains high.

3. Pre-IPO Investing Platforms

A newer category of platforms gives eligible investors access to companies just before they go public through an initial public offering. This is appealing to investors who hope to take advantage of any post-IPO spikes in share value. There are a few ways to buy pre-IPO stock.

There are certain platforms that allow investors to make investments in pre-IPO companies. Those platforms tend to work in one of a few ways, usually by offering investors access to specialized brokers who work with private equity firms, or by directly connecting investors with companies, allowing them to make direct purchases of stock.

Minimums, eligibility requirements, and liquidity constraints still apply.

Recommended: What Is the IPO Process?

4. Private Equity Funds

Investors can also get involved in private company investing through private equity funds. Private equity firms invest in private companies, in hopes that the equity they acquire will one day be much more valuable.

Private equity firms invest in more mature private businesses, often taking controlling stakes and actively managing operations to increase value. Major players operate large funds that acquire, restructure, and eventually sell companies.

These funds are typically limited to institutional and high-net-worth investors, with high minimum investments and long lock-up periods, and as such are typically not accessible for most ordinary investors.

5. Indirect Investing via Public Funds

For most retail investors, the most practical route into private markets is indirect exposure through publicly traded securities. These options have expanded, thanks to rule changes that allow mutual funds and ETFs to invest up to 15% of a fund’s assets in securities that are deemed illiquid (these can include private companies and funds).

In addition, retail investors can consider:

•   Publicly traded private equity firms

•   Venture capital-focused ETFs

•   Mutual funds with allocations to private companies

In some cases, it’s possible that private investors might also obtain shares sold on the secondary market, via a platform that specializes in brokering sales between interested investors and those selling, say, equity-compensation shares from a private company employer.

While this strategy doesn’t offer direct investment, it can provide diversification, liquidity, and regulatory oversight — making it a more accessible entry point for many investors who don’t have access to private markets through other channels.

Do You Need to Be an Accredited Investor?

Yes, certain private investments require you to be an accredited investor or meet certain specifications to qualify for a certain type of private investment.

Requirements for Accredited Investors

For individuals to qualify as accredited investors, according to the SEC, they need to have a net worth of more than $1 million (excluding their primary residence), and income of more than $200,000 individually, or $300,000 with a spouse or partner, for the prior two years.

There are also professional criteria which may be met, which includes being an investment professional in good standing and holding certain licenses. There are a few other potential qualifications, but those are the most broad.

Benefits and Risks of Private Market Investing

There are pros and cons to investing in private companies that investors should be aware of.

Potential Rewards: High Growth and Diversification

Because private companies are often smaller businesses, they may offer investors an opportunity to get more involved behind the scenes. This might mean that an investor could play a role in operational decisions and have a more integrated relationship with the business than they could if they were investing in a large, public company.

In an ideal scenario, if you invested in a private company, you’d get in earlier than you would when a company goes public. This could translate to a larger or more valuable equity stake, bigger long-term gains, or possibly a more influential role. But that depends on numerous factors as the company evolves, and there are no guarantees.

Like most alternative investments, private investments can also add diversification to a portfolio, as their performance may not be highly correlated with public markets.

In some cases, investing in a private company might mean that you can set up an exit provision for your investment — meaning you could set conditions so that your investment will be repaid at an agreed-upon rate of return by a certain date.

Key Risks: Illiquidity and Volatility

One of the biggest risks involved in investing in a private company is that you’ll have less access to information about company fundamentals than you would with a public company.

Not only is it more challenging to obtain data in order to understand how the company performance compares to the rest of the industry (so company valuation is opaque), private companies are also not held to the same standards as publicly traded ones.

For example, because of SEC oversight, public companies are held to rigorous transparency and accounting standards. In contrast, private companies generally are not. From an investor’s standpoint, this means that you may sometimes be in the dark about how the business is doing.

And even though there may be an opportunity to set up an exit provision as an investor in a private company, unless you make such a provision, it could be a huge challenge to get out of your investment.

How to Evaluate a Private Company

Just like investing in public stock exchanges, there are some steps that investors may want to follow as a sort of best-practices approach to investing in private companies.

Due Diligence: What to Look For

Doing sufficient research is essential when investing in a private company. As noted, this may be difficult as there’s going to be less available information about private companies versus public ones. You also won’t be able to research charts and look at stock performance to get a sense of what a company’s future holds.

In that sense, without publicly filed documents, it’s incumbent on the investor to take a more investigative approach, focusing on some key areas that may provide indicators about company performance and market competition:

•   The founding team and their track record

•   Market size and competitive landscape

•   Revenue model and potential growth trajectory

•   Capital structure and existing investors

Managing Your Private Investments

As with any investment — public, or private — investors will want to keep an eye on their holdings.

Tracking Performance and Updates

Monitoring your investment in a private company is not going to be the same as monitoring the stocks you manage in your portfolio. You won’t be able to go on a financial news website and look at the day’s share prices.

Instead, you’ll likely need to stay on top of status reports and financial statements that are often provided to private investors in order to learn how business is operating.

Investors may also have to rely on qualitative judgment — assessing the company’s vision, leadership, and overall business capabilities.

Exit Strategies: How Do You Get Your Money Back?

When an investor “exits” an investment in a private company, it means that they’re able to sell their shares or equity and effectively cash out. If an investor bought in at an early stage and the company increased in value over the years, the investor might see significant gains. But there are no guarantees.

For many private investors, the time to exit is when a company ultimately goes public. But there may be other times that are more favorable to investors—for example, an acquisition or a secondary market sale — depending on the company.

In some cases, as noted above, an exit strategy may be part of the initial investment.

What Are Common Myths About Investing in Private Companies?

As with any type of investment, private companies can be the subject of hype. The most common is the get-rich-quick myth: That private capital markets abound with opportunities to invest in the next big thing.

In reality the failure rate of many private companies is quite high. About two-thirds of businesses don’t last a decade after they’re established, according to the Bureau of Labor Statistics.

Some further misconceptions about private investing include that it’s only for the ultra-rich, that every investment may offer high returns (along with high risks), and that profits will come quickly. An investment may take years to ultimately pay off — if it does at all.

Is Private Market Investing Right for You?

Once you know more about private markets, there are still some questions to consider.

Assessing Your Risk Tolerance

Are you okay with taking on a significant degree of risk? Private company investing, with its lack of transparency and oversight, comes with more risk exposure. Evaluate how much risk you can handle financially, as well as your personal tolerance for risk,

Aligning Investments with Personal Goals

Consider how your investments in private markets align with your overall investing goals. It’s important to remember that private markets are not only higher risk but also less liquid. Any capital you invest could be tied up for a longer period of time than it would be with more conventional investments, which may impact your goals.

The Takeaway

Investing in private companies entails buying or acquiring equity in companies that are not publicly traded, meaning you can’t buy shares on the public stock exchanges. Because this is a higher risk type of investing, there is a possibility of bigger gains, but the potential downside of these companies is significant.

Private markets are not regulated by the SEC in the same way that conventional markets are, with less stringent reporting rules, for example.

Investing in private companies is not for everyone, and there may be stipulations involved that prevent some investors from doing it. If you’re interested, it may be best to speak with a financial professional before making any moves.

Ready to expand your portfolio's growth potential? Alternative investments, traditionally available to high-net-worth individuals, are accessible to everyday investors on SoFi's easy-to-use platform. Investments in commodities, real estate, venture capital, and more are now within reach. Alternative investments can be high risk, so it's important to consider your portfolio goals and risk tolerance to determine if they're right for you.


Invest in alts to take your portfolio beyond stocks and bonds.

FAQ

Can I buy stock in a private company if I’m not accredited?

It’s unlikely that you can obtain shares in a private company without meeting the criteria for an accredited investor. That said, there are other avenues available, including publicly traded private equity firms, and certain types of ETFs and mutual funds.

Is investing in private companies safe?

Investing in private companies is a high-risk endeavor. Public companies are held to a level of transparency and accountability that helps to make the risks associated with those companies more visible. Private companies don’t have to share key information, therefore investors may find it hard to know what they’re getting into.

What is the minimum amount needed to invest in a private company?

There isn’t a limit to how much capital needed to invest in private companies, but to be an accredited investor, there are income and net worth limits that may apply.

How is interest in private market investing changing?

Thanks to the evolution of new investment opportunities, private market investing is showing new growth in 2025 and 2026. Artificial intelligence is one source of investor interest, and the use of private credit is fueling overall expansion.

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.

Before investing, carefully consider the investment objectives, risks, charges, and expenses detailed in a Fund’s prospectus. This document contains important information and must be read carefully prior to investing; you can find the current prospectus by clicking the link on the Fund’s respective page.
Alternative investments are highly risky and may not be suitable for all investors. These investments often involve leveraging, speculative practices, and the potential for complete loss of investment. They typically charge high fees, lack diversification, and can be highly illiquid and volatile. Be aware that both registered and unregistered alternative investments, including Interval Funds, are not subject to the same regulatory requirements as mutual funds, and their illiquid nature may restrict your ability to trade on your timeline. Always review the specific fee schedule for Interval Funds within their prospectus.

Investing in an Initial Public Offering (IPO) involves substantial risk, including the risk of losing principal. Key risks include, but are not limited to, unproven management, significant company debt, and lack of operating history. For a comprehensive discussion of these risks, please refer to SoFi Securities' IPO Risk Disclosure Statement. This is not a recommendation. Investors must carefully read the offering prospectus to determine if an offering is consistent with their objectives, risk tolerance, and financial situation. New offerings often have high demand and limited shares. Many investors may receive no shares, and any allocations may be significantly smaller than the shares requested in their initial offer (Indication of Interest). For more information on the allocation process, please visit IPO Allocation Procedures.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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.

Mutual Funds (MFs): Investors should read and carefully consider the information contained in the prospectus, which contains the Mutual Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or SoFi's customer service at: 1.855.456.7634. 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 risks. 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 have tax implications.

Investment Risk: Diversification can help reduce some investment risk, but cannot guarantee profit nor fully protect in a down market.

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-Q126-022

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Apr
21
2026
An investor takes notes about private equity vs venture capital, sitting at his desk with a laptop and phone.

Private Equity vs. Venture Capital: Key Differences Explained

By | Growing Wealth, invest, Investing | Comments Off on Private Equity vs. Venture Capital: Key Differences Explained

Private equity and venture capital refer to different ways that investors can provide companies with private funding, at different stages, often in exchange for an equity stake. Generally speaking, venture capital, or VC, focuses on growth-oriented startups; private equity (PE) is used to help mature companies expand, execute a turnaround, or restructure.

Technically, venture capital is considered a subset of private equity funding strategies, as both rely on privately held funds. But PE indicates a higher level of investment in fewer companies; VC firms or individuals typically invest smaller amounts in multiple startups.

Until fairly recently, only accredited investors could access private equity funds, but thanks to new rules and standards being discussed within the federal government and the Securities and Exchange Commission (SEC) since 2025, it’s easier for retail investors and those who don’t meet the accreditation requirements to access new private equity vehicles, e.g., retail private funds.

Key Points

•   Private equity (PE) and venture capital (VC) are two ways that individuals, funds, or companies invest in other companies in exchange for equity.

•   PE firms often invest in a small number of entities, or even just one company at a time, usually a mature company.

•   Venture capital investors generally invest in multiple startups at once.

•   PE and VC are both considered high-risk strategies, but VC investing tends to be higher risk owing to the high failure rate of many startups.

•   While many PE and VC funds are privately held, there are some regulatory changes that may enable retail investors to access private equity and VC funds.

What Is Private Equity (PE)?

Private equity refers to investing in companies that are generally not publicly traded. Unlike investing in public securities (such as by purchasing index funds or investing in stocks of companies listed on a public stock exchange), PE firms pool money from many investors, and invest in privately held companies in exchange for a share of ownership.

While you might not think of private companies as having shares of stock in the same way that publicly traded companies do, most incorporated companies do have stock. A small company might only have a hundred or even fewer shares, all owned by the initial founders of the company.

A private company that is more established, on the other hand, might have hundreds of thousands or even millions of shares owned by a wide variety of people. The stock of private companies might be owned by the founders, employees or other private equity investors.

While public company shares can be traded through online investing, or a traditional brokerage, private company shares are exchanged privately.

What Is Venture Capital (VC)?

Venture capital is a subset of PE investing. VC refers to investors and money that is invested into early-stage companies in the hope that they will grow rapidly, and generate an above-average return on investment — often via an acquisition or by going public. VC investing usually refers to direct financing, but the investment can also happen through managerial or technical expertise.

Venture capital funds are often invested through a series of investing rounds. Initially there is an angel investor round or “seed” round, and then VC funding is conducted in series A, B, C (and further) rounds. In each round, companies receive funding from VC investors in exchange for a percentage of the company’s stock, at an agreed-upon valuation.

Generally, the earlier the round of VC investment, the lower the valuation. This allows the earliest investors to potentially have the highest return on investment if the company has a profitable exit, since they also carry the largest amount of risk.

Venture capital and private equity are examples of alternative investments because they fall outside the realm of conventional securities.

5 Key Differences Between PE and VC

While private equity and venture capital both refer to companies or funds that invest in privately held or startup companies in exchange for an equity stake, there are a few key differences to keep in mind.

1. Investment Stage and Company Maturity

Generally speaking, VC investors look for startup or early stage companies that need capital to grow. VC investors may have a portfolio of several companies they’ve invested in financially; in addition VCs may offer business guidance or technical backing.

By contrast, PE investors tend to put more capital into a smaller number of mature companies. Private equity investment may be used to execute a turnaround or a restructuring, for example, to help a company become profitable.

2. Ownership Stake and Control

Both PE and VC investors invest capital in different companies in exchange for equity, i.e., an ownership stake, and some degree of control over business operations. But private equity firms typically have deeper pockets, with substantial amounts of capital pooled from various high-net worth individuals and institutional investors. As a result PE firms may buy 100% ownership in a mature company.

For example, private equity firms may gain control of a public company in order to take it private and employ new business strategies that, ideally, are more profitable.

Venture capitalists typically own a smaller stake in several startups or small businesses. VCs are betting that a small business may achieve breakout success with an innovation or disruption that could lead to outsize growth.

3. Capital Injection and Use of Funds

The goal of PE investment is to turn around an existing business, with the aim of achieving a path to profitability after a period of years. PE firms typically don’t seek long-term ownership. They may use a combination of debt and cash, typically $100 million and up.

VC investors, by contrast, provide funding in exchange for an equity stake — even though there is a high risk that they won’t see a return (usually $10 million or less). Most companies that VCs invest in are at a very early or startup stage. The goal of VC investors is to get a startup to the point where it might be acquired by another established company.

4. Risk Profile and Return Expectations

Both strategies include the risk of investing funds in a particular company with the hope that the organization will be able to grow, go public, be acquired, or find another avenue to profitability. But there are no guarantees.

Generally speaking, VC investing tends to have a higher risk profile because a VC investor’s money is distributed among several hopeful startups, and the risk of losing some or all of your capital is significant. But if a startup succeeds, the potential for returns can also be quite high.

PE investing is also considered risky, but because mature companies are the target, the risk of total loss is lower than it is for many VCs. Also, if a company fails there may be assets that can be liquidated.

5. Exit Strategies

Private equity exit strategies tend to differ from VC exit strategies, which makes sense given the different goals of private equity vs. venture capital investors.

For example, VC investing is geared toward funding early stage companies with high-growth potential. Thus, VCs tend to favor acquisitions by larger companies that are aligned with the startup (and can benefit from their innovation or disruption). Going public via an IPO is another possible exit strategy, although IPOs can be complicated.

Private equity firms, by contrast, focus on rehabilitating larger, more mature companies that already have a market presence. Thus, the endgame for PE investors tends to be mergers and acquisitions, IPOs, or acquisitions by other PE firms — capitalizing on the company’s existing value.

Recommended: What Is Diversification, Why Does It Matter?

Differences Between PE and VC Investing

Private Equity Venture Capital
Invest in established companies Invest in early-stage companies and/or startups
Often purchase entire companies and work to improve their profitability Obtain a partial equity stake
Generally invest more money but focus on fewer companies Firms tend to invest in more companies, with lower amounts

What Is Private Capital?

Private capital is an umbrella term for several kinds of investments, including private equity and venture capital, as well as private real estate and private debt.

Venture capital and private equity funds allow investors to access fast-growing or restructured private companies that may have the potential for bigger returns versus some publicly traded companies.

Private debt involves investing in the debt used to finance private companies. Lastly, private real estate offers investors ownership of both equity and debt interests in various real estate properties, which can offer potential for both growth and income.

The possible advantage of private capital investments is that they are considered alternative investments, and thus may offer some diversification. For example, if steady income is your goal, you might consider fixed income securities such as bonds (or dividend-paying stocks) — or you could invest in private debt or private real estate with the same goal.

Pros and Cons of Private Investing

When you compare private equity vs. venture capital investing, there are a few pros and cons to consider.

One potential advantage of investing in private equity is that private equity firms often concentrate their money in a small number of firms. This might allow the private equity investors to concentrate their expertise in order to improve the profitability of those companies.

However, some might consider this a disadvantage, since you might lose some or most of your investment if the company is not able to turn things around.

Similarly, venture capital investors typically invest in a larger number of startups and early-stage companies. One advantage of investing in this manner is that you may see outsized returns if one company succeeds.

However, a related disadvantage is that many companies in these early stages do not succeed, potentially wiping out your entire investment.

In that sense, it’s a high-risk, high-potential-reward area of investment.

Common Myths About Private Markets

One common misconception about private equity vs. venture capital is that only high net-worth individuals can invest in these fields. While it is true that most PE and VC investors are those with access to significant amounts of capital, there are also a growing number of private equity funds that retail investors can access, such as business development companies (BDCs) and closed-end funds (CEFs).

In addition, proposed regulatory changes to investor accreditation rules may allow more individual investors to take part in investing in venture capital or private equity.

The Takeaway

Private equity and venture capital funds are two different ways that companies invest in other companies. While they share similarities, there are also some key differences. One big difference is that generally, private equity funds invest more money in fewer companies while venture capital funds often invest (relatively) smaller sums of money in many companies.

While most private equity and venture capital funds are privately held, there are some closed-end funds (CEFs) that are publicly traded and open to retail investors.

Ready to expand your portfolio's growth potential? Alternative investments, traditionally available to high-net-worth individuals, are accessible to everyday investors on SoFi's easy-to-use platform. Investments in commodities, real estate, venture capital, and more are now within reach. Alternative investments can be high risk, so it's important to consider your portfolio goals and risk tolerance to determine if they're right for you.


Invest in alts to take your portfolio beyond stocks and bonds.

FAQ

Is private equity better than venture capital?

Private equity (PE) and venture capital (VC) are two forms of investing in other companies, and when comparing the difference between VC and PE, it isn’t really the case that one is better than the other. Instead, it will depend on your own specific financial situation and/or risk tolerance. You can also consider alternative investments to both private equity and venture capital.

Which is the riskier option?

Both private equity and venture capital carry some level of risk. In one manner of speaking, venture capital is riskier, since many of the early-stage companies that they invest in will not succeed. However, most venture capital funds mitigate that risk by investing in many different companies. One successful investment may pay off the losses of tens or even hundreds of unsuccessful venture capital investments.

Are there private equity or venture capital funds available to buy?

Many private equity and venture capital firms are targeted towards investors with significant assets, i.e., accredited investors. However, there are some funds that are publicly traded and thus available to individual investors. Make sure that you do research before investing in any one particular private equity or venture capital fund.

What is the difference between private equity and angel investing?

Angel investing is when investors (often wealthy individuals) provide seed or startup capital for a new business. Angel investing is a very early stage, sometimes the very first stage of a startup’s fundraising journey. Private equity firms target mature companies with a market presence, cashflow, and other fundamentals, and use a full or partial takeover strategy to expand or restructure that company.

Photo credit: iStock/franckreporter

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.

Before investing, carefully consider the investment objectives, risks, charges, and expenses detailed in a Fund’s prospectus. This document contains important information and must be read carefully prior to investing; you can find the current prospectus by clicking the link on the Fund’s respective page.
Alternative investments are highly risky and may not be suitable for all investors. These investments often involve leveraging, speculative practices, and the potential for complete loss of investment. They typically charge high fees, lack diversification, and can be highly illiquid and volatile. Be aware that both registered and unregistered alternative investments, including Interval Funds, are not subject to the same regulatory requirements as mutual funds, and their illiquid nature may restrict your ability to trade on your timeline. Always review the specific fee schedule for Interval Funds within their prospectus.

Investing in an Initial Public Offering (IPO) involves substantial risk, including the risk of losing principal. Key risks include, but are not limited to, unproven management, significant company debt, and lack of operating history. For a comprehensive discussion of these risks, please refer to SoFi Securities' IPO Risk Disclosure Statement. This is not a recommendation. Investors must carefully read the offering prospectus to determine if an offering is consistent with their objectives, risk tolerance, and financial situation. New offerings often have high demand and limited shares. Many investors may receive no shares, and any allocations may be significantly smaller than the shares requested in their initial offer (Indication of Interest). For more information on the allocation process, please visit IPO Allocation Procedures.

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.

Mutual Funds (MFs): Investors should read and carefully consider the information contained in the prospectus, which contains the Mutual Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or SoFi's customer service at: 1.855.456.7634. 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 risks. 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 have tax implications.

Investment Risk: Diversification can help reduce some investment risk, but cannot guarantee profit nor fully protect in a down market.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOIN-Q126-003

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