May
13
2024
Corporate Social Responsibility (CSR), Explained
What is corporate social responsibility — and does it matter for your investment strategies? Read on to learn more.
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May
10
2024
What Is Flight to Quality?
Flight to quality, also known as flight to safety, is when investors shift their assets away from riskier investments — like stocks — into conservative securities – like bonds. This reaction often occurs during turbulent times in the economy or financial markets, and investors want to put their money into relatively safe assets.
Because flight to quality is a term that’s often thrown around in the financial media, investors need to know what it is and how it can potentially impact an investment portfolio. A flight to quality is a short-term trading strategy that might not be ideal for long-term investors. But it’s still important for investors to know how the broader trend may affect the financial markets.
What Causes Flight to Quality?
Economic uncertainty is why investors look to reorient their portfolios away from volatile investments to conservative ones. Moments of economic uncertainty that spook investors can arise for various reasons, including geopolitical conflict, a sudden collapse of a financial institution, or signs of an imminent recession.
A flight to quality usually refers to a widespread phenomenon where investors shift their portfolio asset allocation. This large-scale change in risk sentiment can generally be seen in declines in stock market indices and government bond yields, as investors sell risky stocks to put money into more stable bonds.
Though a flight to quality usually refers to a herd-like behavior of most investors during economic uncertainty, individual investors can make a similar move at any time, depending on their risk tolerance and specific financial situation.
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💡 Quick Tip: How to manage potential risk factors in a self-directed investment account? Doing your research and employing strategies like dollar-cost averaging and diversification may help mitigate financial risk when trading stocks.
What Are the Effects of Flight to Quality?
During periods of flight to quality, investors tend to trade higher-risk investments for lower-risk ones. This shift commonly results in a decrease in the price of high-risk assets and boosts the price of lower-risk securities.
As mentioned above, investors can see one effect of a flight to quality in the price of major stock market indices and bond yields, as the market shifts money from the risky stocks to safer bonds.
But a flight to quality doesn’t mean that investors will necessarily shift out of one asset (stocks) into another (bonds). For example, investors worried about the economy might sell growth stocks in favor of more reliable value or blue-chip stocks, pushing the price of the growth stocks down and boosting the price of the blue chips.
💡 Recommended: Value vs. Growth Stocks
A flight to quality may also shift investment from emerging market stocks to domestic stocks or from corporate bonds to government bonds.
In addition to moving funds from stocks to bonds or other assets, investors may also move money into cash and cash-equivalent investments, like money market funds, certificates of deposit, and Treasury bills, during periods of economic uncertainty.
Real-World Example of Flight to Quality
A flight to quality occurred during the early stages of the COVID-19 pandemic and related economic shutdowns in 2020. Investors scrambled to figure out their portfolio positions in the face of an unprecedented global event, selling stocks and putting money into relatively safe assets.
The S&P 500 Index fell nearly 34% from a high on Feb. 19, 2020, to a low on Mar. 23, 2020, as investors sold off equities. But investors didn’t rush to put this money into high-grade corporate and government bonds, as many would have thought in a regular flight to quality. A record $109 billion flowed out of fixed-income mutual funds and exchange-traded funds (ETFs) during a single week in March 2020. Instead, investors moved capital into cash and cash-like assets during this volatile period in a desire for liquidity.
💡 Quick Tip: How do you decide if a certain trading platform or app is right for you? Ideally, the investment platform you choose offers the features that you need for your investment goals or strategy, e.g., an easy-to-use interface, data analysis, educational tools.
The Takeaway
A widespread flight to quality that creates volatility in the financial markets can be scary for many investors. When you see decreases in a portfolio or 401(k), it can be tempting to follow the broader market trends and shift your asset allocation to safer investments. However, this is not always the best choice, especially for investors trying to build long-term wealth.
Flights to quality have happened in the past (such as during the early stages of the pandemic in 2020), and will, in all likelihood, happen again. But even if you don’t get caught up in it, it’s good to know what’s happening in the markets, and why.
Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).
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INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.
For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.
¹Claw Promotion: Probability of Member receiving $1,000 is a probability of 0.026%; If you don’t make a selection in 45 days, you’ll no longer qualify for the promo. Customer must fund their account with a minimum of $50.00 to qualify. Probability percentage is subject to decrease. See full terms and conditions.
SOIN-Q224-1871599-V1
May
10
2024
Guide to Minimum Deposits
When you open a new checking or savings account, some financial institutions require you to make a minimum opening deposit, which might be anywhere from $25 to $100. In some cases, you may also need to meet certain ongoing minimum balance requirements to avoid fees or qualify for a certain annual percentage yield (APY).
Fortunately, there are banks, credit unions, and other financial institutions that don’t require a minimum deposit so you can stash and spend your money even if you’re low on cash. Here are key things to know about minimum deposit and balance requirements for bank accounts.
What Is a Minimum Deposit?
A minimum deposit is the lowest amount of money you need to open a new bank account with a bank or credit union. It can also refer to the minimum balance you must maintain in order to receive certain perks or avoid fees.
Minimum deposits vary depending on the type of account and the financial institution. Some banks do not request a minimum deposit to open a basic checking or savings account, while others require between $25 and $100. Generally, higher minimum deposits are associated with premium services and higher APYs.
If you’re in the market for a bank account, it’s a good idea to check with the bank or credit union to determine whether an initial deposit is required, your options for depositing the funds, and if there are any ongoing balance requirements.
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Types of Minimum Balance Requirements
When researching checking and savings accounts, keep in mind that there are typically two types of minimum balance requirements. Let’s clarify those terms, since they can sometimes be used interchangeably and cause confusion.
Minimum Opening Deposits
A minimum opening deposit is the amount of money required to activate a new account, such as a checking, savings, or money market account, or a certificate of deposit (CD). Generally, a money market account or CD will come with a higher opening deposit than a basic savings or checking account.
You can usually make a minimum opening deposit by transferring money from an account at another bank or from an account you already have at that same bank. You can also usually make an opening deposit using a check, money order, or debit card. Keep in mind you are not limited to making the minimum opening deposit — you can typically open a bank account with more than the required minimum.
There are some financial institutions that offer accounts with no minimum opening deposits. However, it’s important to read the fine print. In some cases, these accounts may require you to make a deposit within a certain timeframe (such as 60 days) in order to keep the account open.
Minimum Monthly Balance
A minimum monthly balance is the amount of money that must be maintained in the account each month to enjoy certain benefits or avoid fees. These minimums can range anywhere from $100 to $2,500, depending on the institution and type of account. If you opt for an account with a balance minimum, you may be able to set up alerts on your bank’s app to let you know when your funds are slipping below a certain threshold.
Minimum balance requirements can vary in their specifics, but typically fall into one of these three categories.
• Minimum daily balance: This requirement means you need to maintain a minimum amount of money in your account each day to avoid fees or qualify for certain benefits, like earning interest.
• Average minimum balance: Banks calculate this by adding up the balances in your account at the end of each day over a statement period, then dividing that total by the number of days in the period.
• Minimum combined balance: This involves averaging the total amount of money you have across multiple accounts, such as a checking and a savings account, each month. This combined average must meet the minimum balance requirement to avoid fees or earn benefits.
How Do Minimum Deposits Work?
Minimum deposits work by setting a threshold that must be met to open or maintain a bank account. The minimum opening deposit is required to open a new account, while the minimum monthly balance must be maintained each month (or day) to avoid fees or earn a higher interest rate. It’s important to note that the minimum opening deposit is a one-time requirement, while the minimum monthly balance must be maintained on an ongoing basis.
In addition, some accounts may require a minimum monthly deposit (such as direct deposit of your paycheck) to qualify for certain account benefits, such as earning a higher APY or avoiding a monthly fee.
Real World Example of a Minimum Deposit
Let’s say you decide to open a savings account online at XYZ bank. The bank has a $50 minimum deposit to open the account and to start earning interest, so you transfer $50 into the account from an account you have at another bank.
XYZ bank also requires you to maintain a monthly minimum balance of $250 to avoid a $3 service fee. You’re not a fan of fees, so you keep tabs on your account and make sure you always have at least $250 in the account. To help, you set up an automatic alert on your banking app to let you know when the account dips below $250 so you can top up the account and avoid fees.
What Happens If You Don’t Maintain a Minimum?
If you fail to maintain the minimum monthly balance required by your bank, you may be charged a fee, lose any interest you were set to earn that month, or forgo other perks. The specific consequences vary depending on the financial institution and the type of account.
The Takeaway
Minimum deposits are an important aspect of managing a bank account. When you open a new checking or savings account, you may need to make a certain initial deposit to activate the account. You may also be required to keep the balance in the account above a certain threshold in order to avoid a monthly service fee or earn a certain interest rate.
It’s important to be aware of the minimum deposit requirements for your bank account. This helps ensure that you get all the perks of your bank account, while avoiding any unexpected costs.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
FAQ
What is a minimum opening balance and how much is it?
A minimum opening balance is the initial deposit required to open a bank account. This amount varies depending on the bank and the type of account. For example, some banks may require as little as $25 to open a basic savings account, while others may require several hundred dollars for a checking account that earns interest.
What is a minimum monthly deposit and how much is it?
A minimum monthly deposit is the amount of money you must deposit into your bank account each month to avoid fees or earn certain perks, like a higher interest rate. This requirement varies by bank and account type. Some banks may not have a minimum monthly deposit requirement, while others may require a certain amount, such as $500 or $1,000, to be deposited each month to avoid fees.
What bank has no minimum balance?
Several banks and credit unions offer accounts with no minimum balance requirement. These banks include Ally, NBKC, SoFi, Discover, Connexus Credit Union, Ally, Capital One, and Chime.
Why do banks require an initial deposit?
Banks require an initial deposit to open an account for several reasons. First, it helps ensure that the account is legitimate and that the customer is serious about opening and maintaining the account. Second, it helps cover the costs associated with opening the account, such as processing paperwork and issuing a debit card. Finally, it helps the bank establish a relationship with the customer, which can lead to additional business in the future.
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Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet
Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.
Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.
Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.
See additional details at https://www.sofi.com/legal/banking-rate-sheet.
SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. 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.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
SOBK-Q224-1874405-V1
Read moreMay
08
2024
7 Ways to Secure a Lower Interest Rate Mortgage
Obtaining a mortgage with a reduced interest rate is a crucial objective for many prospective homeowners. Getting a good interest rate can save borrowers thousands of dollars over the course of a loan and have a big impact on your financial health.
It takes research and preparation to navigate the complicated world of mortgage rates, but making the effort can pay off with lower monthly payments and significant long-term savings.
What Is the Best Way to Get a Lower Mortgage Rate?
Although there’s no one-size-fits-all approach that will help homebuyers qualify for a mortgage at a reduced mortgage rate, there are a few crucial steps one can take. These include carefully tending your credit score and diligently comparing lenders and financing choices.
This may be especially daunting to first-time homebuyers, but borrowers who learn how to lower their mortgage interest rate can better their chances of long-term financial stability and successful homeownership.
💡 Quick Tip: SoFi’s award-winning mortgage loan experience means a simple application — we even offer an on-time close guarantee. We’ve made $7.5 billion in home loans so we know a thing or two about what makes homebuyers happy.‡
First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.
Questions? Call (888)-541-0398.
Pros and Cons of a Lower Mortgage Rate as a Home Buyer
As a prospective homeowner, getting a reduced mortgage rate could offer many benefits, though there are a few potential challenges as well.
Pros:
• Decreased monthly payments: A lower interest rate usually results in a lower monthly mortgage payment, giving you more money for investments or other expenses.
• Long-term savings: Depending on the loan amount and term, even a small interest rate reduction can save a significant amount of money over the course of the loan — possibly tens of thousands of dollars. Experiment with a mortgage calculator to see how the interest rate and loan term impact the total interest paid over the life of the loan.
• Building equity faster: As a result of lower interest rates, a larger portion of your monthly payment is applied toward paying off the loan, hastening the process of building equity in your house.
Cons:
• Qualification requirements: Borrowers with a strong credit rating, steady income, and a sizable down payment are frequently eligible for the lowest rates offered by lenders. Achieving these requirements may prove difficult for some buyers.
• Higher upfront costs: Securing a lower interest rate may require paying higher upfront costs, such as points or a big down payment.
• Limited availability: Some purchasers may find that the lowest advertised rates are only accessible to customers who qualify for certain loan types under particular circumstances.
• Market volatility: Interest rates can change over time for an array of economic reasons. An adjustable-rate mortgage may offer a borrower a low initial interest rate, but savings could be outweighed by rate hikes in the future.
Recommended: The Best Affordable Places to Live in the U.S.
Ways to Get a Lower Mortgage Rate
If you’re wondering how to get a lower interest rate on a mortgage, here are tactics you’ll want to take a look at:
Shop for Mortgage Rates
Finding the best loan terms for a house purchase requires doing your research on mortgage interest rates. Get quotes first from a variety of lenders, such as banks, credit unions, and online lenders. Consider whether you are eligible for a loan guaranteed by the government, such as a VA loan (from the U.S. Department of Veterans Affairs) or an FHA loan, backed by the Federal Housing Administration. Don’t accept the first mortgage deal you run across; shop around and compare rates offered by different lenders.
To evaluate rates, fees, and terms side by side, make use of online comparison tools. Never be afraid to ask a lender if they can match a competitor’s rate or give better conditions. Other considerations, like closing expenses and the caliber of the customer service, may influence your choice of mortgage, and the lowest rate that is advertised may not always be the best one. Make sure you have researched your selection and that it is in line with your long-term financial objectives.
Nurture Your Credit Score
Borrowers with better credit scores usually receive reduced rates from lenders. A better rate might result from paying your bills on time, cutting overall debt, fixing any inaccuracies on your credit report — or all three. Get a copy of your credit report from each of the big credit reporting agencies, check it for accuracy, and quickly request fixes for any inaccuracies. Next, focus on paying off current debts on time, maintaining modest credit card balances, and refraining from creating new credit lines unnecessarily.
Choose Your Loan Term Carefully
Investigate different types of mortgage loans, including fixed-rate and adjustable-rate mortgages (ARMs). Each type has a different interest rate structure and set of requirements. Shorter loan terms of 15 or 20 years usually have cheaper interest rates than 30-year mortgages, which results in significant savings over the course of the loan. They also typically have larger monthly payments.
Longer loans spread out payments over an extended period of time, which lowers the monthly payment but comes with higher overall interest charges. When choosing a loan term, take your cash flow, long-term objectives, and financial status into account. While a longer term could offer more flexibility with lower monthly payments, choosing a shorter term can help save money and allow you to pay off the mortgage sooner.
Make a Larger Down Payment
Increasing your down payment is one of the best ways to get a lower mortgage rate. For borrowers who are able to make a substantial down payment — typically 20% or more of the purchase price of the home — lenders frequently offer lower interest rates. A higher down payment shows financial responsibility and lowers the lender’s risk, which makes for a more desirable borrower. Borrowers can also eliminate private mortgage insurance (PMI) with a sizable down payment, which further reduces your monthly payment. Although stowing away a down payment takes time and discipline, there could be significant interest savings over the course of the loan.
Buy Mortgage Points
Purchasing discount points, sometimes referred to as mortgage points, can be a calculated move to obtain a cheaper mortgage rate. Each point costs 1% of the total loan amount and lowers the interest rate by a specific amount, usually 0.25% per point. Although purchasing points necessitates a one-time payment, it might provide substantial savings during the loan term. Before you purchase points, make sure you set aside cash reserves for emergencies. And ask yourself if you plan to stay in the house past the breakeven point (the point at which the monthly savings from a lower payment equal the initial cost of purchasing points).
Lock in Your Mortgage Rate
Once you’ve found a good rate and gone through the mortgage preapproval process, locking in your rate is a crucial step in protecting against potential rate increases during the closing process. When a rate is locked in, the lender agrees to guarantee the agreed-upon interest rate for a predetermined amount of time — usually 30 to 60 days — while the loan application is being processed. This guarantees that the rate won’t change during this time, even if market rates rise. If rates drop, though, one might not be able to benefit from the lower rates unless the lender has a float-down option.
Refinance Your Mortgage
If mortgage rates drop significantly (or your financial profile improves markedly) after you purchase your home, refinancing your mortgage can cut monthly payments and total loan costs. But it’s crucial to take into account refinancing charges, like appraisal and closing costs, and balance these against the possible savings from a lower rate. Homebuyers should think about long-term financial objectives and how refinancing fits within their total budget. Working with a reliable lender and thoroughly weighing options can help one decide if refinancing is the best course of action.
Get matched with a local
real estate agent and earn up to
$9,500‡ cash back when you close.
Pair up with a local real estate agent through HomeStory and unlock up to
$9,500 cash back at closing.‡ Average cash back received is $1,700.
💡 Quick Tip: Have you improved your credit score since you made your home purchase? Home loan refinancing with SoFi could get you a competitive interest rate with lower payments.
Searching for Mortgage Rate Tips
Start by keeping an eye on market developments and learning how the economy affects mortgage rates. To be eligible for reduced rates, carefully manage your credit score. You can also get reasonable rates and better conditions by shopping around and comparing offers from different lenders. To optimize savings, think about the advantages of increasing your down payment, buying discount points, and selecting the ideal loan term. Lock in a cheaper rate while the market is favorable.
Recommended: Home Loan Help Center
The Takeaway
Prospective homeowners can improve their chances of obtaining a favorable rate and ultimately save a large amount of money over the course of their loan by raising their credit score, shopping around for the best rates, and negotiating with lenders. Market conditions, lender competition, and your individual financial situation will factor into your mortgage terms. Greater financial stability can be achieved from taking proactive measures to achieve a cheaper mortgage rate, whether through buying discount points or increasing the down payment.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
FAQ
Can you ask your mortgage company to lower your interest rate?
Yes, you can negotiate with your mortgage company to potentially lower your interest rate before you sign on for a loan. After you have a mortgage, you could ask your lender about a mortgage recast or a refinance.
What makes mortgage interest rates go down?
Mortgage interest rates can decrease due to factors such as economic downturns, changes in federal monetary policy, and market competition among lenders.
Can you negotiate a lower interest rate on a mortgage?
Yes, you can use variables like your creditworthiness, the state of the market, and lender competition to negotiate a lower interest rate on a mortgage.
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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
‡SoFi On-Time Close Guarantee: If all conditions of the Guarantee are met, and your loan does not close on or before the closing date on your purchase contract accepted by SoFi, and the delay is due to SoFi, SoFi will give you a credit toward closing costs or additional expenses caused by the delay in closing of up to $10,000.^ The following terms and conditions apply. This Guarantee is available only for loan applications submitted after 04/01/2024. Please discuss terms of this Guarantee with your loan officer. The mortgage must be a purchase transaction that is approved and funded by SoFi. This Guarantee does not apply to loans to purchase bank-owned properties or short-sale transactions. To qualify for the Guarantee, you must: (1) Sign up for access to SoFi’s online portal and upload all requested documents, (2) Submit documents requested by SoFi within 5 business days of the initial request and all additional doc requests within 2 business days (3) Submit an executed purchase contract on an eligible property with the closing date at least 25 calendar days from the receipt of executed Intent to Proceed and receipt of credit card deposit for an appraisal (30 days for VA loans; 40 days for Jumbo loans), (4) Lock your loan rate and satisfy all loan requirements and conditions at least 5 business days prior to your closing date as confirmed with your loan officer, and (5) Pay for and schedule an appraisal within 48 hours of the appraiser first contacting you by phone or email. This Guarantee will not be paid if any delays to closing are attributable to: a) the borrower(s), a third party, the seller or any other factors outside of SoFi control; b) if the information provided by the borrower(s) on the loan application could not be verified or was inaccurate or insufficient; c) attempting to fulfill federal/state regulatory requirements and/or agency guidelines; d) or the closing date is missed due to acts of God outside the control of SoFi. SoFi may change or terminate this offer at any time without notice to you. *To redeem the Guarantee if conditions met, see documentation provided by loan officer.
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.
¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
‡Up to $9,500 cash back: HomeStory Rewards is offered by HomeStory Real Estate Services, a licensed real estate broker. HomeStory Real Estate Services is not affiliated with SoFi Bank, N.A. (SoFi). SoFi is not responsible for the program provided by HomeStory Real Estate Services. Obtaining a mortgage from SoFi is optional and not required to participate in the program offered by HomeStory Real Estate Services. The borrower may arrange for financing with any lender. Rebate amount based on home sale price, see table for details.
Qualifying for the reward requires using a real estate agent that participates in HomeStory’s broker to broker agreement to complete the real estate buy and/or sell transaction. You retain the right to negotiate buyer and or seller representation agreements. Upon successful close of the transaction, the Real Estate Agent pays a fee to HomeStory Real Estate Services. All Agents have been independently vetted by HomeStory to meet performance expectations required to participate in the program. If you are currently working with a REALTOR®, please disregard this notice. It is not our intention to solicit the offerings of other REALTORS®. A reward is not available where prohibited by state law, including Alaska, Iowa, Louisiana and Missouri. A reduced agent commission may be available for sellers in lieu of the reward in Mississippi, New Jersey, Oklahoma, and Oregon and should be discussed with the agent upon enrollment. No reward will be available for buyers in Mississippi, Oklahoma, and Oregon. A commission credit may be available for buyers in lieu of the reward in New Jersey and must be discussed with the agent upon enrollment and included in a Buyer Agency Agreement with Rebate Provision. Rewards in Kansas and Tennessee are required to be delivered by gift card.
HomeStory will issue the reward using the payment option you select and will be sent to the client enrolled in the program within 45 days of HomeStory Real Estate Services receipt of settlement statements and any other documentation reasonably required to calculate the applicable reward amount. Real estate agent fees and commissions still apply. Short sale transactions do not qualify for the reward. Depending on state regulations highlighted above, reward amount is based on sale price of the home purchased and/or sold and cannot exceed $9,500 per buy or sell transaction. Employer-sponsored relocations may preclude participation in the reward program offering. SoFi is not responsible for the reward.
SoFi Bank, N.A. (NMLS #696891) does not perform any activity that is or could be construed as unlicensed real estate activity, and SoFi is not licensed as a real estate broker. Agents of SoFi are not authorized to perform real estate activity.
If your property is currently listed with a REALTOR®, please disregard this notice. It is not our intention to solicit the offerings of other REALTORS®.
Reward is valid for 18 months from date of enrollment. After 18 months, you must re-enroll to be eligible for a reward.
SoFi loans subject to credit approval. Offer subject to change or cancellation without notice.
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Qualifying for the reward requires using a real estate agent that participates in HomeStory’s broker to broker agreement to complete the real estate buy and/or sell transaction. You retain the right to negotiate buyer and or seller representation agreements. Upon successful close of the transaction, the Real Estate Agent pays a fee to HomeStory Real Estate Services. All Agents have been independently vetted by HomeStory to meet performance expectations required to participate in the program. If you are currently working with a REALTOR®, please disregard this notice. It is not our intention to solicit the offerings of other REALTORS®. A reward is not available where prohibited by state law, including Alaska, Iowa, Louisiana and Missouri. A reduced agent commission may be available for sellers in lieu of the reward in Mississippi, New Jersey, Oklahoma, and Oregon and should be discussed with the agent upon enrollment. No reward will be available for buyers in Mississippi, Oklahoma, and Oregon. A commission credit may be available for buyers in lieu of the reward in New Jersey and must be discussed with the agent upon enrollment and included in a Buyer Agency Agreement with Rebate Provision. Rewards in Kansas and Tennessee are required to be delivered by gift card.
HomeStory will issue the reward using the payment option you select and will be sent to the client enrolled in the program within 45 days of HomeStory Real Estate Services receipt of settlement statements and any other documentation reasonably required to calculate the applicable reward amount. Real estate agent fees and commissions still apply. Short sale transactions do not qualify for the reward. Depending on state regulations highlighted above, reward amount is based on sale price of the home purchased and/or sold and cannot exceed $9,500 per buy or sell transaction. Employer-sponsored relocations may preclude participation in the reward program offering. SoFi is not responsible for the reward.
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If your property is currently listed with a REALTOR®, please disregard this notice. It is not our intention to solicit the offerings of other REALTORS®.
Reward is valid for 18 months from date of enrollment. After 18 months, you must re-enroll to be eligible for a reward.
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Read moreMay
07
2024
What Is Impact Investing?
Impact investing is a strategy that seeks to create both financial return and positive social or environmental impact. Impact investments can be made in both publicly traded companies and private companies or funds, and can take the form of equity, debt, or other assets.
In recent years, many investors have become increasingly aware of potential adverse societal effects to which their investments may contribute. These can include effects on health, the environment, and human rights. As such, large firms and foundations have increasingly decided to put capital to work to minimize these negative effects. For investors, it helps to be aware of the growing trend of impact investing to determine whether it is a suitable wealth-building strategy for a portfolio.
How Does Impact Investing Work?
Impact investing is typically, but not always done by large institutional investors and private foundations, though individual investors can do it as well. These organizations invest in various areas, including affordable housing, clean water, and renewable energy. Impact investments in these areas can benefit both developed and emerging markets.
The term “impact investing” is relatively new, but the concept of investing for both financial return and social good is not. Impact investing began in the early 1900s, as numerous philanthropists created private foundations to support their causes.
The concept of impact investing has expanded to include a broader range of investors and investment vehicles. Impact investing may be practiced by individuals, foundations, endowments, pension funds, and other institutional investors.
The growth of impact investing has been fueled by several factors, including the rise of social media and the increasing availability of data and analytics. Impact investing is also being driven by the growing awareness of businesses and investors’ role in solving social and environmental problems. Individual investors can take this new knowledge and consider index funds that focus on various causes.
Characteristics of Impact Investments
As outlined by Global Impact Investing Network (GIIN), the following are considered characteristics of credible impact investments:
• Investor intentionality: An investor must intend to make a measurable positive impact with their investment. This requires a certain level of transparency about both financial and impact goals. The investor’s intent is one of the main differentiators between traditional investments and impact investments.
• Utilize data: Impact investments must use data and evidence to make informed decisions to achieve measurable benefits.
• Manage impact performance: Specific financial returns and impact goals must be established and managed.
• Contribute to the growth of the industry: The goal of impact investments is to further social, economic, or environmental causes. Impact investing toward these goals must be intentional and measured, not just guesswork.
Impact Investing vs Socially Responsible Investing
Impact investing is often associated with “socially responsible investing” (SRI). Both SRI and impact investing seek to generate positive social or environmental impact, but they differ in some ways.
SRI typically focuses on actively avoiding investments in companies involved in activities that are considered harmful to society, such as the manufacture of tobacco products or the production of weapons. SRI also typically focuses on promoting corporate policies considered socially responsible, such as environmental sustainability or gender diversity.
In contrast, impact investing focuses on making investments in companies or projects that are specifically designed to generate positive social or environmental impact.
Impact Investing vs ESG
The main difference between impact investing and ESG (environmental, social, and governance) is that impact investing is focused on investments that are expected to generate a positive social or environmental impact. In contrast, ESG considers a range of environmental, social, and governance factors in investing decisions.
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Why Is Impact Investing Important?
While some investors may not think impact investing is important at all, others may think the exact opposite. For those investors, impact investing may be considered important for a few key reasons.
First, it allows investors to put their money into companies or projects that they believe will positively impact society or the environment. Second, impact investing can help attract more capital to social and environmental causes.
When more people invest in companies or projects that aim to make a difference, it can help to increase the amount of money and resources available to make positive change happen. Those investments, however, may not offer the best opportunities to generate returns. While there’s no way to know for sure how an investment will shake out over time, investors should familiarize themselves with the concept of opportunity costs.
Finally, impact investing can help create jobs and support businesses working to improve society or the environment. This can have a ripple effect, as these businesses often provide goods or services that benefit the community.
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Examples of Impact Investing
Impact investing is usually done by institutional investors, large asset managers, and private foundations. Some of the largest foundations and funds focused on impact investing include, but are not limited to:
• The Bill & Melinda Gates Foundation: This foundation has a $2.5 billion Strategic Investment Fund. This fund makes direct equity investments, provides low-interest loans, and utilizes other impact investing tools in promoting global health and U.S. education.
• The Ford Foundation: The foundation has committed to invest a portion of its endowment to address social problems while seeking a risk-adjusted market rate of financial return. Its mission-related investments are focused on affordable housing, financial inclusion, and other areas in the U.S. and across the Global South.
• The Reinvestment Fund: The Philadelphia-based nonprofit finances housing projects, access to health care, educational programs, and job initiatives. It operates primarily by assisting distressed towns and communities in the U.S.
Types of Impact Investments
There are various impact investment areas, including but not limited to microfinance, renewable energy, sustainable agriculture, and affordable housing.
Impact investments don’t have to be equity investments either; they come in many different investment vehicles, like bonds and alternative investments.
Evaluation Methods for Impact Investors
There are many ways to measure impact investments. The United Nations Sustainable Development Goals (SDGs) are a popular framework for measuring impact. The SDGs are a set of 17 goals that the United Nations adopted in 2015.
The SDGs include goals such as “no poverty,” “zero hunger,” and “good health and well-being.” Each SDG has a specific target to be achieved by the year 2030.
Impact investors often seek to invest in companies or projects that will help achieve one or more of the SDGs. For example, an impact investor might invest in a company working on a new technology to improve water quality, contributing to the SDG goal of ensuring access to water and sanitation for all.
Another popular framework for measuring impact is the Impact Management Project (IMP). The IMP is a global initiative that seeks to develop standards for measuring and managing impact.
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How to Start an Impact Investment Portfolio
Though foundations and institutional investors are the heart of the impact investing world, individual investors can also make investments in companies and funds that may positively impact society. Here’s how to do it.
1. Decide what type of investment you want to make, whether that’s in a stock of a company, an exchange-traded fund (ETF) with an impact investing strategy, or bonds.
2. Next, research the different companies and funds, and find a diversified selection that fits your desires.
3. Finally, make your investment with a brokerage and monitor your portfolio to ensure that your investments have a positive impact.
In order to become an impact investor, it’s wise to consider both the financial potential of an investment, as well as its social, environmental, or economic impact.
Some investors have a higher risk tolerance than others, and some might be willing to take a lower profit in order to maximize the potential positive impact of their investments.
The Takeaway
Impact investing involves making investments with aims of improving certain outcomes in the world, which may come at the expense of potential returns. There is no one-size-fits-all answer to how to balance financial return and social or environmental impact. Impact investors must make investment decisions that are aligned with their values and objectives.
Not all impact investments are created equal. Some impact investments may have a higher financial return potential than others, but may also have a lower social or environmental impact. Similarly, some impact investments may have a higher social or ecological impact but may also have a lower financial return potential. Impact investors must consider both financial return and social or environmental impact when making investment decisions.
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