Mar
23
2023
Conservative Investing Explained
Conservative investing describes a strategy that avoids risky investments. Blue chip stocks and other established investments are considered conservative.
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Student Loan Consolidation and Refinancing
Mar
23
2023
How to Stop Living Paycheck to Paycheck
It isn’t an easy thing to stop the cycle of living paycheck to paycheck. If it were, two-thirds of Americans wouldn’t be struggling to make ends meet every month.
And yet, according to a December 2022 survey by PYMNTS.com and LendingClub, about 64% of respondents reported they were living paycheck to paycheck at the end of last year.
What can you do if you want to beat those odds and get ahead of your bills? Read on for some steps that may help you achieve financial breathing room.
Ways to Stop Living Paycheck to Paycheck
Maybe it’s inflation eating up your paycheck these days. Or maybe it’s just… life.
Either way, there are likely adjustments you can make — both big and small — to get yourself to a better place financially. Here are a few basics to consider if you’re wondering how to stop living paycheck to paycheck:
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Set a Budget
Admit it: You knew the b-word was coming.
Making a budget is the best way we know of to get a better handle on your spending and saving. It can show you where your hard-earned money is going every month — and help you nudge it in a different direction if you don’t like what you see.
Yes, it involves sitting down and doing math. But thanks to spending apps that can help you set up budget categories and monitor your money movements all in one place, the process isn’t nearly as tedious as it used to be.
You’ll probably have to tweak your budget from time to time — to deal with quarterly or seasonal bills, for example, or if costs go up. And if you’re a freelancer or seasonal worker, it can be tough to budget on a fluctuating income. But creating a comprehensive and realistic budget you can stick to through thick and thin can help you make your paycheck go further.
Focus on the Essentials
As you determine your personal budgeting categories, you’ll also be setting spending priorities. That starts with focusing on the essentials. Unless you’re still living with your parents rent-free, it can be a good idea to figure out the amount you’ll need for food, utilities, shelter, and transportation before anything else.
After that, you can play around a bit with what’s most important to you — your “needs” vs. “wants.” You may have to let go of a few things (sorry, Netflix) when you run out of money to spend.
No matter what happens, you’ll have a roof over your head and something to eat. The lights, heat, and water in your home will keep working. And you can get where you need to go.
Prepare for the Unexpected
If you’re worried that an unexpected bill could come along at any time and take a huge bite out of your finances, you aren’t alone. About 56% of Americans are unable to cover a $1,000 surprise bill with their savings, according to a 2022 survey by Bankrate.
Financial advisors typically recommend keeping at least three to six months’ worth of expenses stashed away in an emergency fund. If that amount is too daunting, you can start with a much smaller amount. Anything you can put away will help if you suddenly have to pay a medical, home, or car repair bill.
Get Out of Debt
If debt payments (credit cards, student loans, etc.) are a big part of your monthly budget, you may want to rethink your debt payoff strategy.
To truly dump your debt burden — and reclaim the money you’re paying in interest every month so you can save it or use it for other things — it can help to have a debt reduction plan. There are many options to choose from, including these popular strategies:
• The snowball method: With this strategy you put any extra money you can toward paying off your smallest debt — while making the minimum payment on the others. When that balance is paid off, you can move on to the next smallest bill, and so on — slowly eliminating all your debts.
• The avalanche method: The avalanche method focuses on high-interest debt. With this strategy, you would put any extra you can toward the credit card or loan with the highest interest rate. When that bill is paid off, you move on to the bill with the next highest interest rate, and so on.
If you’re using credit cards just to keep your head above water, you could end up drowning in debt — especially as interest rates are rising. Try to budget with your credit card wisely, instead of thinking of it as a life raft. Charge only what you can afford to pay off each month.
Increase Your Income
If your main income stream just isn’t enough — and a pay raise isn’t coming anytime soon — you may want to consider your options for earning extra cash.
That might mean taking on a side hustle (something you can do when you’re not at your regular job), selling stuff you don’t use any more, or maybe renting out a room in your home. Whatever you choose, try to make it fun (or at least bearable), so you aren’t tempted to give up. And make sure the hours, effort, and money you put into the side gig (for supplies, uniforms, etc.) are worth it and you’re really getting ahead.
Recommended: Best Paying Online Side Jobs for Teachers
Increase Your Down Payment
A 20% down payment usually isn’t required to finance a home purchase, and most buyers put down less. (With a SoFi home loan, for example, first-time buyers may qualify for a 3% down payment.)
Your Realtor® and your lender can help you decide how much your down payment should be. But if you can scrape together more, you’ll borrow less, which means you can have lower monthly payments. You’ll also have more equity sooner, and you’ll pay back less interest over the life of the loan.
More Tips to Budget and Save Money
OK, now that we’ve covered the basics, let’s drill down to some other lifestyle changes that can help you spend less and save more:
See the Benefits of Owning Less
It’s tough to say no to buying new, or better, or more — especially when you can make online purchases with just a couple of clicks and use a credit card to pay. But embracing financial minimalism and the mantra that “less is more” can help you change your spending behavior.
Budgeting is a great way to focus on needs vs. wants, and tracking your spending with an app, or even going old-school and writing down every penny you spend in a notebook, can help you set priorities.
Sit Down and Do the Math
It’s easier to get where you want to be if you know where you are. So it can be helpful to pull out all the paperwork when you’re creating your household budget. That means sitting down with purchase receipts, bank and credit card statements, payroll info, etc., to figure out how much you’re spending every month, what you’re spending it on, and how much you actually have to spend.
Look for Things to Cut
This is the painful part. If you really want to stop living paycheck to paycheck, there’s a good chance you’re going to have to get rid of some of the things you love.
That might mean cutting back on concert or theater tickets (or just choosing cheaper seats). You might have to back off on the morning trips to Starbucks. Or cancel app subscription services. The good news is, you get to pick your priorities — as long as those things track with what you realistically have and want to spend each month.
Embrace a No-Spend Period
It’d be pretty difficult to not spend any money at all for a year — or even a week. (Although some people are trying as part of the “no-spend challenge” trend.)
But by challenging yourself to only spend on things you absolutely have to have for a pre-set period of time, you can really get a feel for what’s important to you. And of course, you save money.
You can go big or small. You can challenge yourself for a year, or a month, or a week. You can try to go without buying anything new, or limit yourself in a specific category: no spending on clothes, shoes, or jewelry; no movies (at the theater or streaming); or no eating at restaurants, for example. And you can post your progress on Twitter or Instagram — if that helps push you to keep going — or you can keep it all private in your diary.
Put Your Savings into a Separate Account
It may seem super convenient to put all your money into a checking account. But that can also make that money super easy to spend.
Funneling some of your funds into a separate savings account can help you keep your hands off your cash as you set up your emergency fund or save for other short- and long-term goals. And if you put the money into a high-yield online savings account, you typically can earn a higher interest rate than you would with a traditional checking account.
Don’t Be Afraid to Consider Drastic Changes
Some people need to make only a few minor changes to pull out of the paycheck-to-paycheck cycle. Others may need to get more radical. If you can’t get your spending under control, for example, you may need to cut up your credit cards. If you can’t afford your car payments or gas, it might make sense to take the bus or carpool to work. Or you may have to make some uncomfortable budget cuts — like going without cable or shopping at less expensive clothing stores.
When you’re thinking about what moves might help you get ahead, consider crunching the numbers first to see if the change really makes financial sense. Then, try to stay motivated by thinking about what you can do with the money you’ll save.
Avoid Lifestyle Creep
Is part of your problem caused by “lifestyle creep”? That’s when your personal cost of living increases, but so slowly you might not have noticed until you were scrambling to pay your bills.
Maybe you got a raise and thought you could afford to spend a bit more on the things you want. Or maybe your friends are earning more money than they used to — and keeping up socially is hurting you financially.
If you’re overshooting your budget every month and can’t figure out why, it may be time to reexamine your priorities and focus on the larger goals (saving for a house or college for your kids) that could slip away if you can’t get a handle on your spending.
Set Financial Goals
When you’re just winging it financially from month to month and year to year, it can be much harder to live within your means. Setting short- and long-term goals — whether it’s to reduce your debt, build your emergency fund, or save for a new car or home — can motivate you to stay on track.
When you’re setting your goals:
• Think about what you hope to accomplish and how it would make your life better. (Be specific.)
• Give yourself a timeline. (Be realistic.)
• Try to make your goals measurable. (Baby steps are OK!)
Be Patient and Stay Positive
Getting your finances on track can be a little like dieting. You’re bound to slip up from time to time. And getting to your goals may take longer than you planned.
You may even be tempted to give up completely.
But if you stick with your plan, you can improve your financial health — and feel better about yourself and your future.
Recommended: Ways to Reward Yourself Without Breaking Your Budget
Track Your Spending with an Eye Toward Saving
If your goal is to save more, you’ll have to spend less. And one way to get the ball rolling is to track your spending for at least 30 days to see where your money is going.
Once you spot the things you can change, you can start cutting back on current and future spending, and catch up on old debts. Then you can move more and more money to savings — and get closer and closer to your goals.
It may help to choose a budget strategy that focuses on saving, such as the 70-20-10 budget rule, which divides after-tax income into three basic categories: 70% to monthly spending, 20% to savings and debt repayment, and 10% to donations (or to more saving and investing).
The Takeaway
Living paycheck to paycheck is like treading water: You may not be drowning in debt (yet), but you also aren’t getting any closer to your goals.
Instead of waiting for someone or something to come and help (Publishers Clearinghouse? Powerball®? Your Great Aunt Martha?), you can take a deep breath, get a better grip on your budget, and do what it takes to save yourself.
SoFi has some great tools available to help you through the process, including a money tracker app that can help you set goals, track your spending, monitor your credit score, and link all your accounts on one mobile dashboard. With SoFi, you can see how you’re doing all in one place and all for free.
FAQ
What is the 70-20-10 rule for money?
The 70-20-10 rule is a budgeting strategy that focuses on both spending and saving.
What is considered not living paycheck to paycheck?
If you aren’t living paycheck to paycheck, you’re living comfortably within or below your means, you’re putting savings away for future goals, and you have an emergency account set up so unexpected bills don’t send you spiraling.
What’s the best way to stop living paycheck to paycheck?
A good first step toward ending the paycheck-to-paycheck cycle is to find out where your money is going every month, and to set up a budget that prioritizes smart spending and saving.
Photo credit: iStock/jacoblund
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Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
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.
SORL0223008
Mar
23
2023
How to Calculate Return on Equity
A common way to invest money is by buying stocks. But with so many choices of stocks to consider, investors may find themselves comparing one option to another — yet still feeling uncertain about what’s the best decision.
So, what’s the best way to compare a variety of stock buying options? One commonly used method is a ratio called the return on equity, also known as the “return on net worth.” By knowing how to calculate return on equity, you’ll have a helpful metric to turn to when determining how stocks stack up.
The Return on Equity Formula
The formula for return on equity is a fairly straightforward calculation that can provide a key comparative metric to investors. Here it is:
Return on Equity = Net Income/Average Shareholder Equity
The ratio helps to determine how well a particular company is managing contributions from their stockholders. The higher the number, the more efficiently the company’s management is likely generating growth from the money invested.
Investors can then compare the result for one company to the ratio of another company, and so forth.
How to Use the ROE Formula
Calculating return on equity requires two pieces of information: net income and shareholder equity. Once this information is at hand, divide net income by the shareholder’s equity — and the result is the return on investment ratio.
So, how can you find those numbers?
Net income, also called “net earnings” or the company’s “bottom line,” is a figure that’s included on a company’s income statement, also called a P&L statement or profit and loss statement.
Publicly traded companies are legally required to distribute income statements in their annual financial reports to shareholders. Many companies may choose to also include financial statements on their websites and may otherwise distribute this information. So, when calculating return on investment, the net income figure can usually be found through one of these methods.
Reverse Engineering Net Income
Net income is calculated by taking the amount of a company’s sales and then subtracting what’s called the “cost of goods sold” from the figure.
Cost of goods sold, in turn, is calculated by determining the direct costs of making products, which includes the cost of materials used and direct labor costs. It does not include indirect costs, such as marketing.
Subtract the costs of goods sold from the sales total — and then also subtract operating expenses, administrative expenses, taxes, depreciation, and so forth. What’s left is a company’s net income.
Reverse Engineering Stockholder Equity
This can also be called “shareholder equity.” Information can be found on a company’s balance sheet, and the formula for shareholders’ equity is as follows: total assets minus total liabilities = SE. In other words, it’s what a company owns minus what it owes.
As another way to look at this, if all of a company’s assets (buildings, equipment, investments, and so forth) were liquidated into cash and all debts were paid off, what remained would be shareholder equity.
How to Use Return on Equity Ratios to Invest
Here’s an example of how you can make use of return on equity ratios when investing. If a company has $5 million in net income, with shareholder equity of $15 million, then return on equity can be calculated in this way: $5,000,000/$15,000,000 = 33.3%.
Using this figure as a benchmark, an investor can then compare the desirability of buying stocks from this company versus those available from another company.
When calculating the ROE ratio, an investor gains visibility into a moment in time. Investors may choose to do that before buying or selling shares — or they may track the performance of a stock over a period of time. Some investors like to see the return on equity calculation rise by 10% or more each year, as a reflection of the S&P performance.
In general, when ROE rises, it means the company is generating profit without needing as much capital — meaning without needing as much influx of cash. It demonstrates that the company is efficiently using the capital invested in the business by shareholders. When the ratio goes down, it is generally a sign of a problem.
This, however, is not universally true. There are times when return on equity artificially goes up. This can happen if a company buys back shares of its own stock or if the company has a significant amount of debt. So, although ROE is a key metric for investors to use when deciding if a particular stock is a worthwhile investment for them, it’s not a stand-alone metric.
Here are a few additional factors to consider. Because some industries as a whole typically have higher ROE ratios than others, comparisons between companies are more meaningful when done between two companies of the same industry.
Plus, in general, the more risks taken in investment choices, the higher the potential for return, as well as for loss. So, some investors with a higher tolerance for risk may choose to buy shares of stock in companies that don’t look as desirable if they have reason to believe that there is enough potential for significant financial rewards.
What Else to Consider with ROE
When buying shares of stock, an investor is buying ownership shares of the company. So, when the company does well, the stockholders typically benefit. When all goes south, the stockholders usually lose out.
This means that, when an investor knows a reasonable amount of information about the company and the industry it’s in, as well as its financial structure, better investment choices can typically be made. Other factors that influence the investor during the decision-making process include the economy, customer profiles of a business, and more.
To glean these types of insights, savvy investors often look at financial reports and figures, in addition to return on equity, when choosing how and where to invest.
Experienced investors will often take their time reviewing documents of companies that interest them, such as the financial reports that the Securities and Exchange Commission (SEC) requires public companies to file. These need to be filed quarterly, and they can provide insights into the companies’ financial performances.
Here is an overview of important information that can be found in the different types of financial documents:
• Income statement: This document provides an overview of a company’s revenue (cash coming in), expenses of significance (cash going out), and the bottom line (the difference between what’s coming in and what’s going out). Consider what trends exist.
• Balance sheet: Look at the company’s debt (how much they owe). Is the amount going up or down? In what ways? Consider what can be learned about the company’s financial performance from this review.
• Cash flow statement: What did the company actually get paid in a particular quarter? This is different from what’s owed (accounts receivable) and instead focuses on when the cash arrives to the company. Does the company have steady cash flow?
Investors typically look at a company’s after-tax income (its “earnings”), which can be found in quarterly and annual financial statements. In addition to looking at the company’s current earnings, it can make sense to review its history to see how much earnings have fluctuated and whether there’s a pattern to these fluctuations. Overall, good earnings indicate a company is profitable and may be a good investment to consider.
Another figure to consider reviewing is a company’s operating margins (also known as its “return on sales”). This indicates how much a company actually makes for each dollar of its sales. This calculation involves taking the company’s operating profit and dividing it by net sales. Higher margins are typically better and may indicate good financial management.
Now, here are other financial ratios to consider, besides the return on equity ratio:
• Price-to-earnings ratio: This allows investors to compare stock prices between companies offering shares. To calculate this ratio, take the market price of a share of stock and divide that number by the amount of earnings that a company is paying per share. This ratio allows investors to see how many years a company may need to generate enough value for a stock buy-back.
• Price-to-sales ratio: This can be a good metric to use when reviewing a company that hasn’t made much of a profit yet — or one that’s made no profit at all, so far. To calculate this, take the value of the company’s outstanding stock in dollars and divide that number by the company’s revenue. The resulting figure, ideally, should be as close to one as possible. If the number is even lower, this is an outstanding sign.
• Earnings per share: This metric helps investors to know how much money they might receive if the company liquidates. So, if this number is consistently going up, this may entice more people to buy shares because this at least suggests they’d get more for their investment dollars if liquidation happened.
Earnings per share can be calculated by taking the company’s net income and subtracting a certain type of dividends (preferred stock), and then taking that figure and dividing it by the number of outstanding common stock shares. Preferred stocks don’t have voting rights attached to them like common stocks do, but they receive a preferential status when earnings are paid out.
• Debt-to-equity: Investors use this metric to try to determine the degree that a company is using debt to pay for its operations. To calculate this figure, take the company’s total liabilities and then divide that number by the total shareholder equity. A high ratio indicates that the company is borrowing to a significant degree.
• Debt-to-asset ratio: Investors may decide to compare debts to assets of a company — and then compare the resulting ratio with other similar companies to determine how significant a debt load a company has. It may be wise to calculate this within the context of a particular industry.
What Is a Good Rate of Return?
First, consider that, when cash is kept under the mattress at home, the rate of return is zero percent. And, when factoring in inflation, this means the person is actually losing money over time. Keeping money in a checking account can amount to virtually the same thing.
There is no guaranteed return on investment in stocks. That’s because of variations in the market, varying degrees of risk taken by investors, and so forth. There are, however, historical precedents that indicate how stock ownership over the long haul can often allow the investor to weather economic fluctuations for an ultimately positive result. And, when looking at the average annual return on investments for stocks since 1926, that number has been 10%.
A topic mentioned in this post is risk tolerance. This is the amount of risk that a particular investor is comfortable taking — here’s a quiz to help investors determine their risk tolerances. By knowing your risk tolerance, you’ll have a better idea of what’s a “good” rate of return based on the level of risk you’re taking, knowing that higher risk can net higher returns.
Things to consider when determining how much risk to take include:
• Financial factors: How much could a person afford to lose without it having a negative impact on their financial security? When people are young, they typically have much more time to recover from a big market loss, so they may decide it’s okay to be more aggressive. People closer to retirement age, though, may decide to be more protective of their assets. It’s important to review current financial obligations, from mortgage payments to college tuition, to make an informed decision, as well.
• Emotional risk: Some people feel energized when taking risks while others feel stressed. A person’s emotional responses to risk taking can play a key role in their risk tolerance when investing.
The Takeaway
Even the most experienced investors can become frustrated when choosing which stocks to buy. By knowing how to calculate return on equity, investors can have a comparative metric to turn to that can help them evaluate and compare different companies.
To use return on equity effectively, however, you’ll need to know where to find the revenant numbers and what to look out for. Also remember the ROE isn’t the only metric to consider — you’ll also want to take into consideration information found in financial documents, other financial ratios, your own risks tolerance, and more.
And if you’re feeling overwhelmed, consider an online investing platform like SoFi’s to make your investing experience easier. SoFi members can benefit from personalized advice, access to SoFi events, and much more.
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Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
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Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.
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.
SOIN0323017
Mar
23
2023
Are Online Savings Accounts Safe?
The whole goal of savings accounts is to offer a secure place to keep your cash, so it’s good to know that, yes, online savings accounts are generally very safe. There are many features that keep them that way, from typically being insured by the Federal Deposit Insurance Corporation (FDIC) to the latest security technology.
That can be reassuring news since online savings accounts can offer many perks to account holders. The annual percentage yields (APYs) offered by online banks tends to be considerably higher than that of traditional banks, and these accounts can also offer tremendous convenience, such as being able to move money around with a minimal number of clicks on an app or website.
Nothing is completely risk-free, but your hard-earned cash should be as secure in an online savings account as it would be in a traditional savings account. Learn more here, including:
• What is an online savings account?
• How do online banks keep savings secure?
• How does the government protect online savings accounts?
• What can account holders do to help keep their online savings accounts safe?
What Is an Online Savings Account?
You may already think of a traditional savings account as being “online” — especially if, like an increasing number of Americans, you prefer to use your computer or a mobile app to do most of your banking instead of heading to the local branch.
Thanks to the popularity of direct deposits and ATMs, many savers seldom see bank tellers anymore, but the banks and their employees are still there to do business.
True online-only financial institutions don’t offer in-person access. They don’t have physical branches, so customers manage all their transactions with a computer, a mobile app, or at an ATM.
Savers can still deposit checks, check their account balance, transfer money, and more. If they have a problem, they handle that online as well or make a phone call to customer service.
Because online banks vs. traditional banks generally have lower overhead costs since they don’t operate brick-and-mortar locations, they tend to pass their savings on to their customers. That means their clients are charged low or no fees, and they may earn interest rates that’s higher than a traditional savings account.
Consider that as of March 2023, traditional savings accounts were offering an average APY of 0.23%, while a number of online banks were offering more than 3% or even 4%.
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How Do Online Banks Keep Savings Secure?
The digital world can be a dangerous place, with hackers and identity thieves constantly looking for new ways to get their hands on others’ hard-earned savings. Both traditional and online-only financial institutions regularly update the methods they use to protect their customers’ accounts.
You may be able to find a list of those security measures on a bank’s website, or you can ask before you open an account. Precautions you might want to look for include:
Secret Socket Layer (SSL) Encryption
Encryption is an Internet safety protocol that creates a secure connection when you log in to a site on your computer or with an app.
Basically, your data is scrambled and can be read (or decrypted) only by the intended recipient.
Tip: To be sure a site is using SSL encryption, you can look for a padlock and “https://” at the start of the web address.
Two-Factor or Multi-Factor Authentication
Two-factor (2FA) authentication adds an additional verification step to a normal log-in procedure. With single-factor authentication, you enter your username or email and a password, and then you’re done.
With 2FA, you must provide an additional verification credential before you can gain access to your account. For example, a financial site might text or email a one-time-only verification code to your smartphone (or another device you’ve pre-registered), and you must use that code within a limited amount of time to gain access to the account.
Firewalls
Like authentication, a firewall serves as a gatekeeper; it monitors the data coming in and out of a company’s computers and can block unauthorized access from certain websites or IP addresses.
Communication Policies
Your financial institution probably has a policy against asking customers to provide personal information (Social Security numbers, usernames, passwords, PINs, etc.) through unsolicited emails.
This can help customers spot requests that are actually bank fraud efforts and/or phishing scams that use personal information to gain access to financial accounts.
Alerts or Notifications
Some banks may offer different types of alerts that let customers know when there’s unusual activity on an account. (If there’s been a large ATM withdrawal, for example, or the balance drops below a certain amount.) You usually can set up text or email alerts through your account profile or account settings. If you receive a ping that several hundred dollars has been swept out of your account versus your typical $60 withdrawal, you can take steps to protect your account.
Automatic Logouts
If you forget to logout of your online account when you finish your business, your financial institution will probably do it for you. Many sites automatically log out users after a period of inactivity. This can help keep prying eyes from viewing your private information.
Limited Login Attempts
If at first you don’t succeed in logging into your account, you may get a warning from the site that you’ll have a limited number of times to get it right. After that, your account will be locked for a certain amount of time.
This security measure is designed to protect against “brute-force attacks,” when hackers try a variety of password combinations to break into a customer’s account. If this happens to you, the site will likely advise you to wait 24 hours before trying again.
Recommended: What Is a High-Yield Savings Account?
Does the Government Protect Online Savings?
It’s not just financial institutions themselves that are safeguarding online savings accounts. The government helps lower savings account risk in a couple of different ways.
The Electronic Funds Transfer Act
If your debit card is lost or stolen, the Electronic Funds Transfer Act (EFTA) limits your liability for any unauthorized activity in your account.
The limits are based on how quickly you notify your financial institution, so you’ll have no liability if you notify your bank before any fraudulent transactions are made.
• You’ll be responsible for just $50 if you report it within two business days.
• You’ll be responsible for $500 if you report the loss after two business days but within 60 business days.
But the EFTA isn’t just about fraudulent debit card use. If someone manages to hack directly into your savings account and takes your money, you generally won’t be liable as long as you report the unauthorized activity within 60 days.
After 60 days, everything changes. Whether the thief used your physical card or a computer to get your money, if you didn’t report the unauthorized transactions within the 60-day timeline, you could be facing unlimited liability. So it’s important to monitor your account and move quickly if you see anything that troubles you.
The Federal Deposit Insurance Corporation (FDIC)
Online banks, just like traditional banks, are eligible for FDIC coverage in the very rare event of a bank failure. Many online banks have FDIC insurance of $250,000 per depositor, per ownership category, per bank. The FDIC is an independent agency of the U.S. government and was created to protect the money Americans deposit in banks and savings associations. It currently insures 4,708 different financial institutions.
So your money is safer in a bank account with FDIC coverage, whether it’s online-only or has multiple locations in your neighborhood. To confirm the financial institution you are considering offers FDIC insured accounts, you can ask a representative, check their website, or visit the FDIC’s online tool BankFind to confirm.
How Can Account Holders Protect Themselves?
As an account holder, you can have a significant role in protecting your savings. Here are some preventive steps you can take to keep your online savings account secure:
Making Protection a Priority
While you’re shopping around for savings accounts with the best interest rates and lowest fees, keep in mind that safety is also key.
And when you sign up for an account, remember to take advantage of what’s offered by enabling security features like two-factor authentication and fraud detection notifications.
Recommended: What Is a Bank Reserve?
Not Getting Passive with Passwords
To keep your account secure, change your password often. Try to select a password that is as strong as possible, with a mix of numbers, symbols, and upper- and lowercase letters. Avoid using predictable combinations like “Qwerty123” or ones that involve your birthdate or pet’s name.
To keep your account secure, change your password often.
Make it long (as many characters as you can). Don’t share it with anyone or keep it taped to your computer.
And try not to use the same password for everything you do online. If your password is compromised in a breach, it can make every account for which you use it more vulnerable.
Keeping Anti-Virus Software Updated
If you don’t already have anti-virus and anti-malware programs installed on your computer, you may be able to find a free or trial version online. You also can purchase security software at a local electronics store or buy it and download it.
A full protection package can monitor your computer and other devices, and could include features such as a password manager, a virtual private network (VPN), and some type of identity theft protection.
If you already have protection on your device, be sure it’s turned on and update it regularly, so your computer recognizes every new threat that’s out there.
Avoid Using Public Wi-Fi
Try not to use public Wi-Fi when you’re logged in to financial accounts, shopping online, or sending personal information. If you’re using a shared computer at work or at the library, don’t give the browser permission to save your password, and be sure you log off when you’re finished. You also may want to consider changing the settings on your mobile devices so they don’t automatically connect to the nearest Wi-Fi network.
If you must access online accounts through Wi-Fi hotspots, consider using a VPN app, which can encrypt the traffic between your computer and the Internet even when you’re using an unsecured network. (Carefully research the app you choose to be sure it’s a trustworthy brand, and review the permissions the app requests before agreeing to the terms.)
Staying Vigilant
It may seem unnecessary to monitor your savings on a regular basis — especially if you’re mostly depositing money into the account and almost never taking money out.
But by monitoring your bank account and keeping an eye on your balance, you might spot a problem before the bank does. And that could save you some major headaches if an identity thief decides to drain your funds.
Don’t reply to calls, texts, or emails that request personal information, even if your financial institution’s logo is on the email. It may be a phishing scam. The thief is hoping their targets will fall for the bait and hand over details that could be used to access your account and take your money.
If you get a call, say you’ll call back, hang up, and call the phone number on your savings account statement or the financial institution’s website to report your concerns. If it’s an email or text, check online for alerts on your account or call to get more information.
What SoFi Checking and Savings Can Offer
Online savings accounts can generally offer better interest rates, lower fees, and other benefits to account holders. They also typically are very secure as well.
But that said, not all accounts are not created equal, so it can pay to shop for the perks you want. For example, with a SoFi Checking and Savings online bank account, account holders can save, spend, and earn interest all in one, FDIC-insured place. In addition to that convenience, you’ll earn a competitive APY and pay no account fees, which can help your money grow faster.
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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Mar
23
2023
The Importance of Saving Money
Whether from parents, friends, or financial advisors, you have probably heard plenty of people say that you should be saving money. But did you ever stop and consider why exactly saving money is so important?
Saving money is truly a smart move: It can help you achieve your financial aspirations, prepare for the future, and weather unexpected events. It can even help you earn money without doing anything at all. When you look at it in a big-picture way, saving can relieve a lot of money stress from your life.
Granted, there are vacations to be taken, loans to be paid off, and all kinds of other uses for cash that could leave you without any to stash in savings. But by making saving a priority, you can really enhance your financial standing.
Here, you’ll learn more about this topic, including:
• The reasons why saving money is important
• How to start saving (as painlessly as possible)
• Where to store the cash you save.
Reasons Why Saving Money is Important
It can be hard to get motivated to save money just because it’s the “responsible” thing to do. But you may see the appeal once you understand the huge advantages that saving offers. Here are a few.
Peace of Mind
If money is tight, you may find yourself worrying how you will pay the rent or other critical bills if an extra unexpected expense were to suddenly come up, as they often do. After all, cars break down, and dental work can crop up. Or what if your kid discovers a passion for soccer and wants to go to a pricey summer camp.
Having savings in the bank can provide the sense of security that comes with knowing you can get through these kinds of moments without hardship. You’ll be able to have that back-up money to afford many of life’s expenses that crop up. By saving, you may also worry less about tomorrow, knowing that you have stashed away some cash. That means you can breathe a little easier.
Earn up to 4.60% APY with a high-yield savings account from SoFi.
Open a SoFi Checking and Savings account and earn up to 4.60% APY - with no minimum balance and no account fees.
Avoiding Debt
When you have money in the bank, you can make purchases, planned or not, with your money that’s in the bank. That means you can avoid using high-interest credit cards or potentially taking out a personal loan or a home equity line of credit (HELOC) to pay for things.
That can help you side-step debt, which can help save a significant amount of cash in the long run.
Expanding Your Options
Generally, the more money you have saved, the more control you can have over your life and your financial security.
If you’re unhappy with where you live, for instance, having some savings can open up the possibility of moving to a more desirable location or putting a downpayment on a new home.
If you dislike your job, having a cushion of savings might afford you the option of leaving that job even before you have another one lined up.
Money certainly does not solve all problems, but having savings can give you a little bit of breathing room and allow you to take positive steps in your life.
Having Financial Freedom
Another benefit of savings is that you are on a program that can give you financial freedom. If you stick to a plan of stashing 10% or 20% into savings, as many financial experts recommend, you can avoid always living paycheck to paycheck and have more financial freedom.
For example, with adequate savings, you might be able to take a sabbatical from work and pursue a passion project. You might have enough cash to start your own business or retire early. Or you might plan a luxe anniversary celebration somewhere tropical. Savings can enable your dreams.
Recommended: Guide to Improving Your Money Mindset
Saving for Big Purchases
Having a savings account is a great way to afford big purchases without racking up credit card debt and the high interest that goes along with it or turning to other expensive financing options.
Let’s say you want to take your kids on a Disney vacation or you really need that second car. Or maybe there’s a designer bag that you’re totally in love with. By putting money aside in a savings account and earning interest on those funds, you can be in a position to buy your wish-list item outright, rather than borrowing funds to do so.
Saving Money for Emergencies
Here’s another reason why it is important to save money: Life has its twists and turns. One minute, everything is humming along nicely, the next, your car needs $2,000 worth of repairs. Or the hot water heater conks out or you lose your job. These situations and others can put a real strain on your finances.
That’s why financial experts generally recommend building up an emergency fund of at least three to six months’ worth of living expenses to prepare for any financial surprises.
It can be hard to prioritize this, but saving for an emergency fund is important. To help make it happen, you might set up an automatic transfer from your checking into savings the day after payday. This can painlessly, seamlessly whisk money to your emergency fund so it doesn’t sit in savings, tempting you to spend it. Whether the amount is $15 or $150, just do it. Every bit helps.
Earning Interest
Savings accounts come with interest, which is the bank’s way of thanking you for keeping your money with them, where they can use it until you withdraw it.
Granted, the average savings accounts aren’t currently paying that much interest. In March of 2023, the average rate was 0.23%. However, if you look into an online savings account, you will likely find a much higher rate. Online banks, which don’t have to fund bricks-and-mortar branches, typically pass those savings along to their clients. They were paying in the 3.00% to 4.00% or even higher range as of March 2023.
That can help your savings along. If you have $5,000 in a savings account with a 4.00% annual percentage yield (APY) earning compound interest monthly, that would give you an extra $204 at the end of the year. Add $20 per month to the account and let it sit for five years, and you’ll have $7,431. Nice! That’s cash in your account for doing absolutely nothing.
Reducing Your Taxes
Here’s the part about how saving money makes you money, beyond interest you’ll earn. If you save money into certain tax-advantaged retirement vehicles, not only do you have that nest egg for later in life, but you can lower your tax liability.
By putting money into your employer’s 401(k), if available, you can lower the income on which taxes are assessed. If you are self-employed, there are various IRA (individual retirement accounts) that may allow you to put pre-tax dollars away for the future.
When you save money this way, you could even challenge yourself to put the tax savings back into a savings account. That’s a way to increase your money in the bank another notch or two.
Giving Back
Another reason why saving money is important is it can enable you to give back to others. When you have a cash cushion and aren’t living paycheck to paycheck, you have the opportunity to help those around you.
That might involve sending a few hundred dollars to a relative who has a big dental bill and is struggling to pay it. Or you might donate to a medical research cause, a disaster fund, or a local after-school program that you love. The choice is yours, but having a healthy savings account can make it possible.
Benefiting from Compound Interest
Another big incentive to save, as mentioned above, is the power of compound interest.
Compound interest means you earn a return not just on the amount you originally put away, but also on the interest that accumulates.
Over time, that means you can end up with much more than you started with. And the earlier you start saving, the more your money grows, since compound interest is able to work its magic over a longer time horizon.
You saw an example above that involved putting money into a savings account at a bank. Now, consider investing: A person who starts putting $100 per month towards retirement at age 25 will wind up putting $12,000 more of their money into their retirement fund by age 65 than the person who started saving $100 per month at age 35.
But because of compound interest (and assuming a 7.00% annual rate of return), the person who started at 25 will wind up with over $120,000 more at age 65 (way more than the extra $12,000 they invested). Please note that this is a hypothetical scenario and does not represent an actual investment. All investing involves risk.
How to Get Started with Saving
If you’re convinced that saving is the right move, how do you actually do it? The key is to make a budget and make sticking to it easy.
This doesn’t have to be intimidating. The key is to get familiar with what you spend, what you earn, and what your goals are.
Here are some steps you could take to help get started.
Figuring Out What You’re Saving For
Is it a long-term goal, like retirement or your kids’ college tuition? A short-term goal, like an emergency fund? Or a medium-term goal, like a wedding or home renovation? It can help to get a sense of how much you need to stash away and by when.
The point of this is twofold:
• First, you can divide the amount you need by the months left until your deadline to get a clear picture of how much you’ll need to save each month.
• Second, you will know where to put your money. If your goal is less than a couple of years away, you may want to keep your savings in an online savings account, a certificate of deposit (CD), or money market account.
These options can help you earn more interest than a standard savings account but still allow you to access your money when you need it.
If your goal is in the distant future, you might want to invest the money in a retirement account, 529 college savings plan, or brokerage account so that it has the chance to grow over time.
Sticking to a Budget
You don’t really know where your money is going unless you track it. That’s why for a month or two, you may want to take note of all your daily and monthly expenses.
Next, you’ll want to tally up your net monthly income, meaning what goes into your account after the different types of taxes and deductions are taken out.
The difference between your monthly income and your expenses (everything from rent to student loan payments to food and dining out) is what you have left over to save. If there’s not enough left over, you can work on finding ways to cut spending or increase your income. You might try following the 50/30/20 budget rule to help guide your spending and saving.
Putting Savings on Autopilot
If you’re manually putting cash away every month, it can be easy to fall behind.
For one thing, you may forget to move money into savings regularly amid your busy schedule. And, unless you protect the money in advance by transferring it to a different account, you may accidentally spend it.
One way to avoid this is to set up automated savings through your bank account or retirement plan.
If you’re putting away the amount you identified you need for your goal, you may get there without even thinking about it.
Recommended: The Different Types of Savings Accounts
Common Places to Save Your Money
Where to put your money as you save? Consider these options:
• Savings account: You could put your money in a savings account at a financial institution, like your local bank branch. However, as outlined above, you may not earn the highest possible interest.
• Online savings account or high-yield savings account: These accounts are likely to pay a much higher interest rate than a conventional savings account while offering the same convenience and security as a traditional savings account.
• CD: A CD gives you a specific rate of interest but you must agree to keep your money in the account (that is, not withdrawing any of it) for a specific term, whether months or years. Withdrawing earlier could trigger penalties.
• Investments: There are many options here, such as Treasury bills and bonds. These can earn healthy returns and are typically considered safe places to keep money.
The Takeaway
Why is it important to save money? For a variety of reasons. It can provide peace of mind, open up options that improve your quality of life, increase your wealth due to compound interest and possibly lower your tax liability, and may even allow you to retire early. Many people earn wealth through a combination of working and savvy saving.
Looking for a smart way to save? Consider opening an online bank account with SoFi. Our FDIC-insured Checking and Savings account earns a competitive APY, and charges no account fees, both of which can help your money grow faster. And with Vaults and Roundups, you can track and grow your savings, assisting you as you aim for your personal financial goals.
FAQ
What are the benefits of saving money?
There are many benefits of saving money: It helps you save for your future, cover unexpected expenses, make major purchases, and have financial freedom. What’s more, the money you save can help make you more money, thanks to compounding interest and lowering your tax bill.
What are common things to save money for?
Common things to save money for are an emergency fund, retirement, a big purchase (like a car, a vacation, or the down payment on a home), and educational expenses, among others.
What happens if you don’t save money?
If you don’t save, you may lack financial security and the ability to meet certain aspirations. For instance, you won’t have a retirement fund and would therefore have to keep working indefinitely. You wouldn’t have money for a big purchase like a car or a home or your child’s education. Plus you wouldn’t be able to handle some expenses, whether planned or unexpected, and might have to take out a loan or use credit cards, which means you are paying for the privilege to borrow funds. That takes away from your earnings.
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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.
SoFi Invest®
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below:
Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.
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.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
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