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Shares vs Stocks: What’s the Difference?

The distinction between shares and stocks can be a little hazy as investors often use them interchangeably when discussing the stock market. In short, shares are the unit investors invest in a company, while stock refers to the company that issues the shares.

Usually, stocks and shares refer to the same thing. However, there are times when it’s necessary to use the terms based on their correct definitions. Thus, understanding the difference between a stock and a share may provide a more nuanced look at investing.

Stock vs Share: Comparison

The differences between stocks and shares are subtle, but important to understand when you are investing.

A stock is the actual asset in which you invest, while a share is the unit of measurement for that asset. So, a stock tells you what you are investing in, and a share tells you how much of that stock you own.

Differences Between Stocks and Shares

Stocks

Shares

A stock refers to the publicly-traded company that issues shares A share is the unit of measurement of ownership in a company
Stocks can refer to the ownership of many different companies Shares usually refer to the specific ownership stake in a company
Stock is a more general term Share is a more precise term

For example, if you are interested in investing in a company called ABC, you will buy 100 shares of ABC stock. Owning 100 shares of ABC would give you a specific ownership stake in the company’s stock.

In contrast, if you said you wanted to buy 100 stocks, that would generally mean you wanted to buy shares of 100 different companies.

What Are Stocks?

Stocks, also called equities, are a type of security that gives investors a stake in a publicly traded company. A publicly traded company trades on a stock exchange, like the New York Stock Exchange or Nasdaq.

When you buy stock, you buy a share or fractional shares of a publicly traded company. You essentially own a small piece of the company, hoping to get a return on your investment.

💡 Recommended: How Do Fractional Shares Work?

Companies typically issue stock to raise capital. Usually, the goal is to grow the business or launch a new product, but the company could also use the money to pay off debts or for another purpose.

Why Should I Buy Stocks?

Generally, people buy stocks with the hope that the company they invest in will earn money, and as a result, the investor will earn a return. There are two ways to earn money through stock ownership: dividends and capital appreciation.

Dividends are payouts made by a company to its shareholders. When a company is profitable, it can choose to share some of its profits with its shareholders through dividend payments. Typically, companies pay dividends on a specified schedule, although they can pay them at any time.

The second way to earn money is through capital appreciation, which is when a stock’s price increases above the purchase price. However, capital appreciation doesn’t lock in your gains; you don’t realize your profits until you sell your stock.

When you sell stock and realize a profit, you must pay capital gains taxes on the windfall.

Types of Stocks

There are two main types of stocks that investors can buy and sell.

•   Common stock: The type of stock most people invest in, common stockholders have voting rights and may receive dividends.

•   Preferred stock: Investors of this type of stock usually don’t have voting rights, but they often receive dividends before common stockholders. Preferred stock also gives investors a higher claim to assets than common stockholders if the company is liquidated.

💡 Want to know more? Here’s a breakdown of preferred stock vs common stock.

How Are Stocks Categorized?

Beyond common and preferred stocks, investors can buy and sell many different types of stocks. Usually, investors break down the various categories of stocks based on investing styles and company size, among other factors.

By Different Styles of Investing

Investors may divide up stocks of different companies into value and growth stocks.

Growth stocks have the potential for high earnings that may outpace the market. Growth stocks don’t usually pay dividends, so investors looking at these stocks hope to make money through capital gains when they sell their shares after the price increases.

Growth stocks are often tech, biotech, and some consumer discretionary companies. As the name suggests, consumer discretionary companies sell goods or services that consumers don’t consider essential.

Value stocks, in contrast, are stocks that investors consider to be trading below a price that accurately reflects the company’s strength. Value stocks usually have a lower price-to-earnings ratio.

Value investors are hoping to buy a stock when its price is low relative to its earnings, holding it until the market corrects and the stock price goes up to the point that better reflects the company’s underlying value.

💡 Recommended: Value vs. Growth Stocks

By Market Cap

Market capitalization, often referred to as market cap, is a common way to categorize stocks. Market cap is a measure of a company’s value. Below is a breakdown of market cap categories:

•   Micro-Cap: $50 million to $300 million

•   Small-Cap: $300 million to $2 billion

•   Mid-Cap: $2 billion to $10 billion

•   Large-Cap: $10 billion or higher

•   Mega-Cap: $200 billion or higher

Generally speaking, companies with larger market capitalizations are older, more established, and have greater international exposure — so a higher percentage of a large-cap company’s revenue comes from overseas.

Meanwhile, smaller-cap stocks tend to be newer, less established, and more domestically oriented. Smaller-cap companies can be riskier but also offer more growth potential.

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What Are Shares?

A share is a piece of the company an investor can own. A share is a unit of ownership (e.g., you own 10 shares), whereas stock is a measurement of equity (e.g., you own 10% of the company).

Think of shares as a small portion of a company. So, if a company were a pie, a share would be a slice of said pie: the more slices, the more shares.

Shares play a role when calculating a company’s market cap. To find the market cap of a publicly traded company, you multiply the stock’s price by the number of outstanding shares, which is the number of shares currently owned by shareholders. This can also be referred to as shares outstanding, and the exact number can fluctuate over time.

Changes in the number of shares available can occur for various reasons. For example, if a company decides to release more shares to the public, the number of shares would increase.

Additionally you can own shares in a variety of assets other than stocks, like mutual funds, exchange-traded funds (ETFs), limited partnerships (LPs), and real estate investment trusts (REIT).

Types of Shares

Like with stock, investors may own different types of shares.

•   Ordinary shares are the same as common stock. Holders of ordinary shares are entitled to vote on corporate matters and may receive dividends.

•   Preference shares are the same as preferred stock. Holders of preference shares usually receive dividends before common stock dividends are issued. If the company enters bankruptcy, shareholders of preference shares may be paid from company assets before common stockholders.

•   Deferred shares are shares usually issued to company founders and executives where they are the last in line to be paid in bankruptcy proceedings, following preferred and common stockholders.

•   Non-voting shares, as the name suggests, do not confer voting rights to the shareholder. Non-voting shares may have different dividend rights and rights to company assets in the event of liquidation compared to holders of voting shares.

Stock Splits Definition

A stock split is a decision made by the board of directors of a company to adjust the price of their stock without changing the company’s overall value. It is one of the ways how the number of a company’s outstanding shares can change.

A company usually initiates a stock split when its stock price gets too high. For example, if a company’s stock is trading at over $1,000, it can be difficult for some investors to purchase and limits the availability of buyers.

To remedy this problem, a company will issue new shares through a stock split, lowering the price of each share but maintaining its market cap. A 10-for-1 stock split, for instance, would exchange 1 share worth $1,000 into 10 shares, each worth $100. Your total investment value remains the same, but the number of shares you own increases.

Other Options in Investing

Trading company stocks or shares isn’t the only option for investing. One alternative is to invest in shares of a mutual fund, a managed investment fund that pools money from several different investors. The money is then invested in various securities, including stocks and bonds.

Another option for investors is exchange-traded funds (ETFs). Like mutual funds, ETFs are baskets of securities packaged into a single investment vehicle. But unlike mutual funds, investors can trade shares of ETFs all day in the stock market.

One significant benefit that mutual funds and ETFs offer is portfolio diversification. A mutual fund and ETF can either be actively managed by a financial professional or passively managed, which means the fund tracks an index like the S&P 500.

Another way besides stocks or shares to get exposure in the market is through options trading. Options are contracts giving the purchaser the right — but not always the obligation — to buy or sell a security, like stock or (ETF), at a fixed price within a specific period of time.

The Takeaway

The main difference between stocks and shares is that a share represents a unit of ownership in a company, while stocks refer to the ownership of one or more companies. However, most people use these terms interchangeably in regular conversion. But knowing the distinction between the two terms can help you better understand the stock market and investing.

When you’re ready to jump into the stock market and start trading stocks online, consider SoFi Invest®. SoFi’s online brokerage account allows users to buy and sell company stocks, ETFs, and fractional shares with no commissions. For a limited time, funding an account gives you the opportunity to win up to $1,000 in the stock of your choice. All you have to do is open and fund a SoFi Invest account.

Learn more about SoFi Invest.


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Guide to Choosing a Rewards Credit Card

A rewards credit card allows cardholders to earn incentives for purchases they already make. While the potential rewards credit card benefits are apparent, maximizing these benefits requires determining which rewards credit card is best for you. That’s because different rewards credit cards offer different types of rewards and have varying criteria for how to earn them.

Read on to learn more about how these cards work and how to choose a rewards credit card that suits your spending habits.

Recommended: Can You Buy Crypto With a Credit Card

What Is a Rewards Credit Card?

A rewards credit card offers cardholders bonuses based on their spending. Bonuses can come in many forms, including airline miles, cash back, or points.

The benefits of a rewards credit card will vary based on the card type. For instance, one cash back credit card may offer a flat percentage back on all purchases, while another may offer higher rates in certain categories, such as gas or groceries, and a lower rate across other areas. Meanwhile, another rewards credit card could offer cardholders one or two points for every dollar they spend using the card, which they could then redeem for airline tickets or hotel stays.

Recommended: What is the Average Credit Card Limit

How Rewards Credit Cards Work

Rewards credit cards operate similarly to how credit cards work traditionally, with the bonus of rewards earned based on spending. These cards offer access to a revolving line of credit that cardholders can use to make payments. Cardholders can use the card to make purchases as long as they stay under their credit limit. Anytime the cardholder makes a payment on the card, their revolving credit is restored for the amount of their payment.

Where rewards credit cards differ from other types of credit cards is that a portion of each purchase will go toward the card’s designated bonus, whether that’s cash back rewards or points to use for a hotel stay. Card issuers pay out rewards on a specific term, such as by billing period, on a monthly cycle, or based on spending. Once the rewards hit the user’s account, they can redeem them.

There are a number of ways that cardholders can redeem the credit card rewards they earn. This could include as a statement credit, for merchandise or gift cards, for stays at hotels and resorts, toward airline tickets, as a direct deposit to a bank account, or in the form of a check mailed to the cardholder.

Recommended: When Are Credit Card Payments Due

Types of Credit Card Rewards Programs

Rewards credit cards break down into six broad categories based on the earning and redemption processes.

Cash Back

With cash back rewards cards, users get a percentage of “cash back” on every purchase made with their card. Cash back rewards rates are typically around 1% to 2% of every purchase, but some cards may offer higher returns based on the spending category. For example, SoFi’s credit card is offering 3% cash back for the year.

Cardholders can redeem cash back rewards in several ways, including as:

•   A credit against the card’s balance

•   Gift cards from select retailers

•   Donations to charity

•   A check sent by mail or direct deposit

Travel Rewards

Credit card issuers also offer general travel cards, where cardholders can earn points or miles through their spending that they can then put toward all manner of travel expenses. This could include everything from car rentals to hotels to flights, effectively allowing the cardholder to use credit card rewards to travel for less.

Typically, general travel cards offer points or miles on any purchase, often at a rate of 1 or 2 miles or points per dollar spent. However, general travel rewards cards may offer 2x or 3x points on specific spending categories, such as dining out or travel.

With general travel cards, users can typically redeem points through the issuer’s booking platform or transfer the value to a partner. Unlike co-branded cards that may restrict where cardholders can redeem their points, general travel cards usually allow redemption at a variety of airlines or hotels.

Points

Credit cards that offer rewards points can provide access to a variety of rewards, including options for cash back or travel redemption. Generally, a base rate of 1 point per dollar spent is offered.

However, the value of points can vary depending on the card issuer and how the cardholder redeems their points. Reward point cards could be redeemed for gift cards, travel, donations, or cash, depending on the issuer.

Gas

Gas cards help users save money on filling up the tank. Typically, these cards only offer rewards or redemptions for purchasing gas at a gas station. A cardholder could redeem their rewards as a statement credit or a discount at the pump.

Hotel or Airline

Hotel and airline-branded credit cards reward users when they spend with a particular company. For instance, booking nights at the same hotel brand could earn a cardholder points, bumping up their status, or give them access to room upgrades or a free night’s stay.

Similarly, airline credit cards reward users for traveling on their airline. They also can include opportunities for status upgrades, and being a loyal airline traveler could lead to receiving perks like lounge access in the airport or free bag check.

Retail

Retail credit cards is a broad designation that encompasses any credit card reward tied to a specific retailer or store. Rewards vary based on the card issuer and the store. However, they could include point-of-sale discounts with every purchase or the chance to earn points to use toward discounts and gift cards at the store.

Factors to Consider When Comparing Rewards Credit Cards

There’s a wide range of reward programs to take advantage of, and the policies of these programs vary from credit card issuer to issuer. This is why it’s important to take the time to compare rewards credit cards. Before applying for any rewards card, it’s worth looking at each of the following factors.

Annual Fees

Some rewards credit cards include an annual fee. This fee could be as low as $50, while other cards’ annual fees may range closer to $700 a year.

It’s important to consider whether the rewards you earn from the card will offset the cost of a card’s annual. Depending on how often someone uses the card, and how frequently they redeem rewards, they could determine that the fee is worth it.

Additionally, it’s worth looking into whether the card offers a lucrative opening bonus offer that essentially cancels out the annual fee, at least for the first year.

Recommended: How to Avoid Interest On a Credit Card

Interest Rates

Interest rate, or annual percentage rate (APR), is the amount of interest a person will pay on the money they borrow from the credit card issuer. If the credit card holder carries a balance month to month, they may owe interest charges on their outstanding balance.

Currently, the average APR is around 17%, though APRs on rewards cards tend to be on the higher end. A high APR on a credit card could translate to steep interest charges if the cardholder carries a balance. As such, keep an eye on the interest rate when comparing cards.

Recommended: What is a Charge Card

Tiered vs. Fixed Rewards

Tiered vs. fixed refers to the way the card structures its rewards, which is another important consideration to keep in mind.

With tiered rewards, a credit card offers different points or values based on the category of purchase. For example, a travel card may offer more points for a travel-related purchase as opposed to groceries.

Fixed rewards, on the other hand, offer the same rate for every purchase. An example of this is a cash back rewards card that gives cardholders 2% cash back on every purchase, no matter the spending category.

The type of rewards structure that’s right for you will depend on your spending habits. If you know you spend mostly in one category, you could find that a tiered rewards card that prioritizes that category is the right fit. But if your spending doesn’t align with the highest rewards categories, fixed rewards may pay off more.

Cashback Rewards Caps

When researching cash back rewards cards, keep an eye on the fine print around rewards caps. Some cards may cap redemption after a certain amount of spending.

For example, it may offer 3% cash back on purchases up to a certain dollar value, then only offer 1% once the cardholder hits that amount.

If you’re between two cards, the one with the higher cap — or better yet, no cap at all — could help you determine which one will win out.

Guide to Choosing the Best Rewards Credit Card for You

Rewards credit cards sound exciting, but with a little research, the question, “which rewards credit card is best for me?” inevitably comes up. While no two cardholders are the same, many can approach the search for the perfect card by asking the same questions.

Recommended: Tips for Using a Credit Card Responsibly

Analyzing Your Spending Habits

Where or what a person spends the most on will directly impact which rewards card is the best fit for them.
Here’s an example of how that would play out in the decision between credit card miles or cash back rewards. If someone prioritizes travel and lives near an airport that’s a central hub for one particular airline, they may choose to get an airline credit card that rewards their travel spending with airline miles for future flights.

However, if someone travels very little, they may benefit more from earning cash back on their everyday spending rather than airline miles.

To figure out where you spend the most, look at your credit card and bank statements from the last quarter. Whichever spending category comes up the most may be the best fit for a rewards card. On the other hand, if there are no clear patterns, a standard cash back card may be the right fit.

Checking Your Credit Score

Checking credit score may give credit card applicants a healthy dose of reality. Most rewards credit cards require a good or excellent credit score, which means a score of 670 or above. Those with a credit score lower than 670 may not be able to qualify for a rewards credit card.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score

Pros and Cons of Rewards Credit Cards

Credit card rewards may sound too good to be true, and in some ways, they are. Here are some rewards credit card benefits and drawbacks:

Pros of Rewards Credit Cards Cons of Rewards Credit Cards
Rewards for everyday spending Often charge annual fees
Opportunity to earn more in certain categories, depending on the card Tend to have a higher APR
May come with additional perks like travel insurance or free credit monitoring Generally require a high credit score to qualify

Making the Most of Your Rewards Card

Ready to reward regular spending? Keep these final tips in mind make the most of your rewards credit card:

•   Spend within your means. It may feel tempting to overspend when every purchase means more points, but overspending can lead to debt, interest charges, and even a negative impact on credit score.

•   Aim to snag the bonus. Most rewards credit cards offer an introductory bonus when the cardholder hits a certain spending threshold within a specified period. Plan purchases strategically to hit this bonus.

•   Plan card opening around large purchases. Planning a wedding, buying a house, or making a large purchase? It may be the perfect time to open a new card, as a few large charges could mean hitting the bonus.

•   Use rewards wisely. Rewards are only really redeemed when they’re spent. Take time to read up on the fine print around redemption, as there’s often a strategy associated with getting the best value out of card rewards. That may mean redeeming them for a gift card of the highest conversion rate or booking travel through the card issuer’s platform to make miles stretch further.

The Takeaway

Rewards credit card benefits can make them very enticing for many credit card holders. However, consider a card with benefits that “pay” for themselves, meaning the benefits fit within the cardholder’s lifestyle and suit their existing spending habits. A card with a high annual fee and rarely used benefits likely isn’t worth someone’s time or money.

If a cash back credit card seems like the right fit, consider applying for the SoFi Credit Card. SoFi cardholders earn 2% unlimited cash back rewards when redeemed to save, invest, or pay down eligible SoFi debt. Cardholders earn 1% cash back rewards when redeemed for a statement credit.1 For a limited time, new credit card holders who also sign up for a SoFi Checking and Savings with direct deposit can start earning 3% cash back rewards on all eligible credit card purchases for 365 days*. Offer ends 12/31/22.

FAQ

What are the benefits of having a rewards credit card?

The main rewards credit card benefit is earning rewards — whether points, miles, or cash back — from everyday spending. Rewards credit cards can also offer additional perks, such as free credit monitoring, travel insurance, and purchase protection.

Are credit card rewards taxable?

In most cases, credit card rewards are not taxable, as they’re considered rebates or discounts. However, if a credit card reward is given without the user doing any spending to earn it, then those rewards may be considered taxable income.

What credit score do I need to get a rewards credit card?

Most rewards credit cards require a good or excellent credit score in order to qualify. This is typically 670 or higher.

What can I do with credit card rewards?

You can redeem credit card rewards for cash, statement credits, hotel and airline bookings, store discounts, or gift cards. Ultimately, what you’re able to do with your credit card rewards will depend on the type of card you have.


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New and existing Checking and Savings members who have not previously enrolled in direct deposit with SoFi are eligible to earn a cash bonus when they set up direct deposits of at least $1,000 over a consecutive 25-day period. Cash bonus will be based on the total amount of direct deposit. The Program will be available through 3/31/23. Full terms at sofi.com/banking. SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC.

SoFi members with direct deposit can earn up to 3.75% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 2.50% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 12/16/2022. Additional information can be found at http://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.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s
website
.

The SoFi Credit Card is issued by The Bank of Missouri (TBOM) (“Issuer”) 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.
1See Rewards Details at SoFi.com/card/rewards.
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Guide to Buying Stocks With a Credit Card

Guide to Buying Stocks With a Credit Card

It is (sometimes) possible to buy stocks with a credit card, but it’s rarely a good idea for most people. Most brokerages do not allow you to directly fund your account with a credit card, and even if you find a brokerage that does, the fees associated with buying stocks with a credit card can outweigh any advantages.

Before you buy stocks with a credit card, make sure you understand the risks as well as the benefits. Investing in the stock market always comes with a degree of risk. If your investments lose money, you may not be able to pay off your credit card statement, which will mean that you’ll have to pay additional interest.

Using Your Credit Card to Buy Stocks

Most brokerages do not allow you to use your credit card to buy stocks. For example, SoFi’s online trading platform does not permit you to fund your account with a credit card. Brokerages generally don’t allow you to buy stocks with a credit card to help comply with the federal regulations governing financial products, such as stocks.

However, while you can’t purchase stocks directly with a credit card, there are still ways you can use your credit card to fund your purchase of stocks. This includes using cash back rewards to fund investments as well as taking out cash advances. Another option is to use a credit card that allows you to transfer funds to a checking account, which you can then move over to your brokerage account.

Recommended: Tips for Using a Credit Card Responsibly

Benefits of Buying Stocks With a Credit Card

You generally aren’t able to buy shares of stock with a credit card, and even if you find a workaround to do so, the risks mostly outweigh the potential benefits.

Perhaps the main benefit if you’re investing with credit card rewards is that it can offer a way to put the rewards you get from your everyday purchases toward your financial future. While there’s no guarantee of success in investing, it’s possible the rewards points or cash you invest could grow in the stock market.

Risks of Buying Stocks With a Credit Card

Just like buying crypto with a credit card, buying stocks with a credit card comes with considerable risk. If you attempt to do so, take note of the following potential downsides:

•   Investments in the stock market may lose value. If this happens, you may have a hard time paying off your monthly credit card statement in full.

•   There are fees associated with buying stocks with a credit card. If you can find a brokerage that allows the purchase of stocks with a credit card, you’ll generally pay a fee to do so. Additionally, if you opt for a cash advance to use to buy stocks, you’ll also run into fees, not to mention a higher interest rate. There’s always a chance your investment returns won’t offset these costs.

•   High credit utilization could affect your credit score. Making stock purchases with your credit card, taking out sizable cash advances, or racking up spending in order to earn rewards could all drive up your credit utilization, a major factor in determining your credit score. Having a high credit utilization — meaning the percentage of your total credit you’re using — could cause your credit score drop.

•   You could get scammed. If you’re getting offers to buy certain shares with your credit card, there’s a chance it’s a scam. Do your own research before making any moves, and be wary before providing any personal information.

Recommended: Can You Buy Crypto With a Credit Card

Factors to Consider Before Buying Stocks With a Credit Card

There are a variety of different factors that you should keep in mind before buying stocks with a credit card.

Investment Fees

If you do find a brokerage that allows you to buy stocks with a credit card, they will likely charge a credit card convenience fee. This fee, which helps the brokerage to offset their costs for credit card processing, usually runs around 3% of the total price of your investment. Starting 3% in the hole makes it very difficult to make profitable investments.

Recommended: What is a Charge Card

Cash Advance Fees

If your brokerage does not support buying stocks with a credit card, you might consider taking out a cash advance from your credit card. Then, you could use the cash to fund your brokerage account.

However, this transfer will often involve a cash advance fee, which typically will run anywhere from 3% to 5% of the amount transferred. Additionally, interest on cash advances starts to accrue immediately, which is different than how credit cards work usually, and often at a higher rate than the standard purchase APR.

Transfer Fees

Another way to use your credit card to purchase stocks is by making a balance transfer. You can transfer funds from your credit card to your checking account, and then move that money again to your brokerage account. In addition to the hassle of moving money around, you’ll likely pay a balance transfer fee, which is often 3% or 5%. Plus, interest will start accruing on balance transfers right away unless you have a 0% APR introductory offer.

Interest

If you’re not able to pay your credit card statement in full (because your investments have decreased in value), your credit card company will charge you interest. With many credit card interest rates often approaching or even exceeding 20% APR, this will very likely swallow up any profits from your short-term investments.

You’ll also want to look out for interest getting charged at a higher rate and starting to accrue immediately if you opt for a cash advance or a balance transfer.

Recommended: How to Avoid Interest On a Credit Card

Avoiding Scams When Buying Stocks With a Credit Card

Because most reputable brokerages don’t allow you to buy stocks with a credit card, there are occasionally scams that you need to be on the lookout for.

Watch out for individuals or lesser-known companies that say you can buy stocks with a credit card through them. Do your own research to make sure it is a legitimate brokerage and offer before using these other companies.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score

Does Buying Stock With Your Credit Card Affect Your Credit Score?

The act of just buying stock with your credit card won’t affect your credit score any more than any other purchase on a credit card. However, your credit score might be affected if you aren’t able to pay your monthly balance off in full. One of the best ways to improve your credit score is to always make sure that you have the financial ability and discipline to pay off your credit card statement in full, each and every month.

Additionally, your credit score could take a hit if you use too much of your available balance or even max out your credit card with your stock purchases, as this would increase your credit utilization. Also, you might see an impact on your credit if you open a new account to fund your stock purchases. This is because credit card applications trigger a hard inquiry, which will temporarily cause a dip in your score.

Alternatives to Buying Stocks With a Credit Card

As you can see, buying stocks with a credit card generally isn’t a great option — or even possible with most brokerages. If you want to start investing in stocks, you might consider these other ways to do so:

•   Cash back rewards: Then, you can take your cash back rewards that you earn and use them to invest in stocks or other investments.

•   Employer-sponsored 401(k): A great way to invest is through an employer-sponsored retirement plan like a 401(k). By using a 401(k), you’ll get to invest with pre-tax dollars and defer paying taxes until you make withdrawals in retirement.

•   Brokerage margin loans: If you’re looking to borrow money to invest, one option could be a brokerage margin loan. These allow you to borrow money directly from the brokerage, often at a lower rate than what’s offered by most credit cards. Be aware of the risk involved here though — even if your investments don’t pan out, you’ll still have to repay your loan.

The Takeaway

Very few (if any) brokerages allow you to directly buy stocks with a credit card. If you do find a brokerage that allows you to buy stocks with a credit card, note the fees involved, not to mention the risk of loss in investing and the possibility of damaging your credit score. This is why even if you do find a way to do it, it’s rarely a good idea to buy stocks with a credit card for most people.

One alternative is to get a cash back rewards credit card and then use rewards you earn to fund your stock investments. With the SoFi credit card, you can earn unlimited 2% cash back rewards that you can then use for stock purchases or other financial goals. For a limited time, new credit card holders who also sign up for a SoFi Checking and Savings with direct deposit can start earning 3% cash back rewards on all eligible credit card purchases for 365 days1. Offer ends 12/31/22.

With the SoFi credit card, you can earn cashback rewards, apply them toward your balance, redeem points into stock in a SoFi Active Invest account, and more!1

FAQ

What is credit card arbitrage?

Credit card arbitrage is usually defined as borrowing money at a low interest rate using a credit card and then investing that money, hoping to earn a higher return on investment. This is often done with cards that offer 0% introductory APRs.

What are the risks of credit card arbitrage?

The biggest risk of credit card arbitrage is that your investments will lose money, or they won’t make enough money to repay your credit card balance. This can cost you a significant amount of interest and/or credit card fees. You should also be aware that having a large balance on your credit card (even if it’s at 0% interest) can have a negative effect on your credit score.

Does buying stock with a credit card affect my tax?

Buying and selling stocks does often come with tax consequences, and you should be aware of how your investments affect your tax liability. How you buy stocks (with cash, credit card ,or in other ways) doesn’t affect the amount of taxes you might owe on your stock purchase.

Should I buy stocks with my credit card?

The way that credit cards work is that you borrow money and, if you don’t pay the full amount each month, you’re charged interest. Some brokerages may also charge credit card processing or convenience fees if they allow you to purchase stocks with a credit card. Because of the interest and fees potentially involved, it’s very difficult to come out ahead buying stocks with a credit card. Plus, there’s no guarantee of success when investing.

Is it safe to buy stocks with a credit card?

Because most reputable stockbrokers do not accept credit card payments to fund your account or buy stocks, you’ll want to be careful with any site that says that it will let you buy stocks with a credit card. Follow best practices for internet safety when trying to buy stocks with a credit card, just like you would before making any purchase online.

Do stockbrokers accept credit card payments?

Most stockbrokers do not accept credit card payments to fund your account or to buy stocks. If you want to buy stocks with a credit card, you will need to find a workaround such as taking a cash advance from your credit card and using that to fund your brokerage account. Just be sure that you understand any cash advance fees and the interest rate that come with that type of financial transaction.


Photo credit: iStock/katleho Seisa

The SoFi Credit Card is issued by The Bank of Missouri (TBOM) (“Issuer”) 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.
1See Rewards Details at SoFi.com/card/rewards.
Members earn 2 rewards points for every dollar spent on eligible purchases. If you elect to redeem points for cash deposited into your SoFi Checking or Savings account, SoFi Money® account, fractional shares or cryptocurrency in your SoFi Active Invest account, or as a payment to your SoFi Personal, Private Student, or Student Loan Refinance, your points will redeem at a rate of 1 cent per every point. If you elect to redeem points as a statement credit to your SoFi Credit Card account, your points will redeem at a rate of 0.5 cents per every point. For more details please visit the Rewards page. Brokerage and Active investing products offered through SoFi Securities LLC, member FINRA/SIPC. SoFi Securities LLC is an affiliate of SoFi Bank, N.A.
New and existing Checking and Savings members who have not previously enrolled in direct deposit with SoFi are eligible to earn a cash bonus when they set up direct deposits of at least $1,000 over a consecutive 25-day period. Cash bonus will be based on the total amount of direct deposit. The Program will be available through 3/31/23. Full terms at sofi.com/banking. SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC.

SoFi members with direct deposit can earn up to 3.75% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 2.50% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 12/16/2022. Additional information can be found at http://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.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s
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Money Market vs Capital Market: What's the Difference?

Money Market vs Capital Market: What’s the Difference?

While the money market and the capital market are both aspects of the larger global financial system, they serve different goals for investors. In a nutshell, the money market is where short-term debt and lending takes place; the capital market is designed for long-term assets, such as stocks and bonds. The former is considered a safer place to park one’s money; the latter is seen as riskier but potentially more rewarding.

Understanding the difference between money market and capital market matters plays a role in understanding the market as a whole. Whether you hold assets that are part of the money market vs. capital market can influence your investment outcomes and degree of risk exposure.

Learn more here, including:

•   What is the money market and how does it work?

•   What is the capital market and how does it work?

•   How do capital markets and money markets differ?

•   How to decide whether to invest in the money market or capital market.

•   Alternatives to the capital and money markets.

What Is the Money Market?

The money market is where short-term financial instruments, i.e. securities with a holding period of one year or less, are traded. Examples of money market instruments include:

•   Bankers acceptances. Bankers acceptances are a form of payment that’s guaranteed by the bank and is commonly used to finance international transactions involving goods and services.

•   Certificates of deposit (CDs). Certificate of deposit accounts are time deposits that pay interest over a set maturity term.

•   Commercial paper. Commercial paper includes short-term, unsecured promissory notes issued by financial and non-financial corporations.

•   Treasury bills (T-bills). Treasury bills are a type of short-term debt that’s issued by the federal government. Investors who purchase T-bills can earn interest on their money over a set maturity term.

These types of money market instruments can be traded among banks, financial institutions, and brokers. Trades can take place over the counter, meaning the underlying securities are not listed on a trading exchange like the New York Stock Exchange (NYSE) or the Nasdaq.

You may be familiar with the term “money market” if you’ve ever had a money market account. These are separate from the larger money market that is part of the global economy. As far as how a money market account works goes, these bank accounts allow you to deposit money and earn interest. You may be able to write checks from the account or use a debit card to make purchases or withdrawals.

How Does the Money Market Work?

The money market effectively works as a short-term lending and borrowing system for its various participants. Those who invest in the money market benefit by either gaining access to funds or by earning interest on their investments. Treasury bills are a great example of the money market at work.

When you buy a T-bill, you’re essentially agreeing to lend the federal government your money for a certain amount of time. T-bills mature in one year or less from their issue date. The government gets the use of your money for a period of time. Once the T-bill matures, you get your money back with interest.

What Is the Capital Market?

What are capital markets? The capital market is the segment of the financial market that’s reserved for trading of long-term debt instruments. Participants in the capital market can use it to raise capital by issuing shares of stock, bonds, and other long-term securities. Those who invest in these debt instruments are also part of the capital market.

The capital market can be further segmented into the primary and secondary market. Here’s how they compare:

•   Primary market. The primary market is where new issuances of stocks and bonds are first offered to investors. An initial public offering or IPO is an example of a primary market transaction.

•   Secondary market. The secondary market is where securities that have already been issued are traded between investors. The entity that issued the stocks or bonds is not necessarily involved in this transaction.

As an investor, you can benefit from participating in the capital market by buying and selling stocks. If your stocks go up in value, you could sell them for a capital gain. You can also derive current income from stocks that pay out dividends.

Recommended: What Is an Emerging Market?

How Does the Capital Market Work?

The capital market works by allowing companies and other entities to raise capital. Publicly-traded stocks, bonds, and other securities are traded on stock exchanges. Generally speaking, the capital market is well-organized. Companies that issue stocks are interested in raising capital for the long-term, which can be used to fund growth and expansion projects or simply to meet operating needs.

In terms of the difference between capital and money market investments, it usually boils down to three things: liquidity, duration, and risk. While the money market is focused on the short-term, the capital market is a longer term play. Capital markets can deliver higher returns, though investors may assume greater risk.

Understanding the capital market is important because of how it correlates to economic movements as a whole. The capital market helps to create stability by allowing companies to raise capital, which can be used to fund expansion and create jobs.

Differences Between Money Markets and Capital Markets

When comparing the money market vs. capital market, there are several things that separate one from the other. Knowing what the key differences are can help to deepen your understanding of money markets and capital markets.

Purpose

Perhaps the most significant difference between the money market and capital market is what each one is designed to do. The money market is for short-term borrowing and lending. Businesses use the money market to meet their near-term credit needs. Funds are relatively safe, but typically won’t see tremendous growth.

The capital market is also designed to help businesses and companies meet credit needs. The emphasis, however, is on mid- to long-term needs instead. Capital markets are riskier, but they may earn greater returns over time than the money market.

Length of Securities

The money market is where you’ll find short-term securities, typically with a maturity period of one year or less, being traded. In the capital market, maturity periods are usually not fixed, meaning there’s no specified time frame. Companies can use the capital market to fund long-term goals, with or without a deadline.

Financial Instruments

As mentioned, the kind of financial instruments that are traded in the short-term money market include bankers acceptances, certificates of deposit, commercial paper, and Treasury bills. The capital market is the domain of stocks, bonds, and other long-term securities.

Nature of Market

The structure and organization of the money market is usually informal and loosely organized. Again, securities may be traded over-the-counter rather than through a stock exchange. With the capital market, trading takes place primarily through exchanges. This market is more organized and formalized overall.

Securities Risk

Risk is an important consideration when deciding on the best places to put your money. Since the money market tends to be shorter term in nature, the risk associated with the financial instruments traded there is usually lower. The capital market, on the other hand, may entail higher risk to investors.

Liquidity

Liquidity is a measure of how easy it is to convert an asset to cash. One notable difference between capital and money market investments is that the money market tends to offer greater liquidity. That means if you need to sell an investment quickly, you’ll have a better chance of converting it to cash in the money market.

Length of Credit Requirements

The money market is designed to meet the short-term credit requirements of businesses. A company that needs temporary funding for a project that’s expected to take less than a year to complete, for example, may turn to the money market. The capital market, on the other hand, is designed to cover a company’s long-term credit requirements with regard to capital access.

Return on Investment

Return on investment or ROI is another important consideration when deciding where to invest. When you invest in the money market, you’re getting greater liquidity with less risk but that can translate to lower returns. The capital market can entail more risk, but you may be rewarded with higher returns.

Timeframe on Redemption

Money market investments do not require you to hold onto them for years at a time. Instead, the holding period and timeframe to redemption is likely one year or less. With capital market investments, there is typically no set time frame. You can hold onto investments for as long as they continue to meet your needs.

Relevance to Economy

The money market and capital market play an important role in the larger financial market. Without them, businesses would not be able to get the short- and long-term funding they need.

Here are some of the key differences between money markets and capital markets with regard to their economic impacts:

•   The money market allows companies to realize short-term goals.

•   Money market investments allow investors to earn returns with lower risk.

•   Capital markets help to provide economic stability and growth.

•   Investors can use the capital market to build wealth.

Money Market

Capital Market

Offers companies access to short-term funding and capital, keeping money moving through the economy. Provides stability by allowing companies access to long-term funding and capital.
Investors can use interest earned from money market investments to preserve wealth. Investors can use returns earned from capital market investments to grow wealth.
Money market investments are typically less volatile, so they’re less likely to negatively impact the financial market or the investor. Capital market investments tend to be more volatile, so they offer greater risk and reward potential.

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Deciding Which Market to Invest In

Deciding whether to invest in the money market or capital market can depend on several things, including your:

•   Investment goals and objectives

•   Risk tolerance

•   Preferred investment style

If you’re looking for investments that are highly liquid and offer a modest rate of return with minimal risk, then you may turn to the money market. On the other hand, if you’re comfortable with a greater degree of risk in exchange for the possibility of earning higher returns, you might lean toward the capital market instead.

You could, of course, diversify by investing in both the money market and capital market. Doing so can allow you to balance higher-risk investments with lower ones while creating a portfolio mix that will produce the kind of returns you seek.

Alternatives to Money and Capital Markets

Aside from the money and capital markets, there are other places you can keep money that you don’t necessarily plan to spend right away. They include the different types of deposit accounts you can open at banks and credit unions. Specifically, you may opt to keep some of your savings in a certificate of deposit account, high-yield checking account, or traditional savings account. Here’s a closer look:

Certificate of Deposits

Certificate of deposit accounts or CDs are time deposit accounts. When you put money into a CD, you typically agree to leave it there for a set time period. In exchange, the bank pays interest to you. Once the CD matures, you can withdraw your initial deposit and the interest earned or roll the entire amount into a new CD.

CDs are a safe way to invest for the short- or long-term. Maturity terms can range from 28 days or extend up to five years. The longer the CD term, the higher the interest rate the bank may pay. Withdrawing money from a CD prior to maturity will usually trigger an early withdrawal penalty, which makes them a less liquid option for saving.

Recommended: What is a Certificate of Deposit and How Does it Work?

High-Yield Checking Accounts

Checking accounts are designed to hold money that you plan to use to pay bills or make purchases. Most checking accounts don’t pay interest but there are a handful of high-yield checking accounts that do.

With these accounts, you can earn interest on your checking balance. The interest rate and APY (annual percentage yield) you earn can vary by bank. Some banks also offer rewards on purchases with high-yield checking accounts. When looking for an interest-checking account, be sure to consider any fees you might pay or minimum balance requirements you’ll need to meet.

Traditional Savings Accounts

A savings account can be another secure place to keep your money and earn interest as part of the bargain. The different types of savings accounts include regular savings accounts offered at banks, credit union savings accounts, and high-yield savings accounts from online banks.

Of those options, high-yield savings accounts at online banks typically have the highest interest rates and the lowest fees. The trade-off is that you won’t have branch banking access, which may or may not matter to you.

The Takeaway

There are lots of reasons why people do not invest their money. A lack of understanding about the difference between money market vs. capital market investments can be one of them. Once you understand that the money market typically involves short-term, lower-risk debt instruments, while the capital market likely revolves around longer-term ones with higher risk and reward, you will be on your way to better knowing how the global financial market works.

When it comes to the goal of making your money grow, consider banking with SoFi. When you open our bank account online with direct deposit, you’ll get a double boost. You’ll earn a hyper competitive APY and you won’t pay any account fees.

Better banking is here with up to 3.75% APY on SoFi Checking and Savings.

FAQ

What are the similarities between a money market and capital market?

Both the money market and the capital market are intended to make it easier for businesses and companies to gain access to capital. The main differences between money markets and capital markets are liquidity, duration, and the types of financial instruments that are traded. Both also represent ways that consumers can potentially grow their money by investing.

How is a money market and capital market interrelated?

The capital market and the money market are both part of the larger financial market. The money market works to ensure that businesses are able to reach their near-term credit needs while the capital market helps companies raise capital over longer time frames.

Why do businesses use the money markets?

Businesses use the money market to satisfy short-term credit and capital needs. Short-term debt instruments can be traded in the money market to provide businesses with funding temporarily as well as to maintain liquid cash flow.


Photo credit: iStock/AndreyPopov

SoFi members with direct deposit can earn up to 3.75% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 2.50% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 12/16/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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.
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How to Invest in Web 3.0

How to Invest in Web 3.0

Given that Web 3.0 — the next generation of the internet — will integrate a vast array of new technologies, from artificial intelligence and machine learning to decentralized finance (DeFi) and augmented reality, the opportunities for investors look robust.

The current internet infrastructure, referred to as Web 2.0, is dominated by a small handful of large tech companies. The stated goal of Web 3.0 is to put power back into the hands of users, not only big corporations. The implications for investors who become familiar with Web 3.0 innovations now could be significant.

What Is Web 3.0?

Web 3.0 is the third-generation of the internet. The term “Web 3.0” broadly refers to a group of technologies enabling the next-generation decentralized internet. This could include things like non-fungible tokens (NFTs), decentralized applications such as virtual private networks (VPNs), or privacy-focused web browsers, decentralized finance (DeFi) platforms, the metaverse, and more.

Many different types of cryptocurrencies, powered by blockchain technology, are also an integral part of Web 3.0.

💡 Recommended: Web 3.0 Guide for Beginners

4 Ways to Invest in Web 3.0

Investors wondering how to invest in web3 have a variety of options. Some of these include NFTs, virtual items inside the metaverse, and various related cryptocurrencies. These investments are not necessarily isolated categories and can often be intertwined with one another.

1. NFTs

Non-fungible tokens, or NFTs, are digital art forms that contain a unique blockchain identifier so that each NFT is one-of-a-kind, at least in theory.

NFTs could have various use cases in Web 3.0. Applications like play-to-earn games could utilize NFTs for in-game items, digital artists could create and sell their artwork without the help of an intermediary like an art gallery, and people could prove ownership of digital goods or verify their individual identities through possession of an NFT.

Note: there have been instances of NFTs being stolen or duplicated, and some NFTs have already lost 99% of their value. An NFT of Twitter founder Jack Dorsey’s first tweet, for example, recently saw its highest auction bid come in at a price of 99% less than what its owner originally paid.

2. Metaverse

The term metaverse broadly applies to a virtual universe powered by blockchain and web 3.0 technologies like AR, VR, and crypto. The idea of the metaverse is that it enables more sophisticated digital interactions, including socializing, shopping, creating, and more.

Investors could, for example, purchase plots of virtual land in a 3D virtual world like Decentraland. If more and more people go into Decentraland wanting to buy land, it could theoretically increase in value, assuming Decentraland’s creators don’t continue creating new plots of land.

There are also some items that exist inside the metaverse as NFTs. “Axies,” for example, are virtual characters owned by players of Axie Infinity. Axie Infinity is a play-to-earn crypto game. Some “Axies” have sold for high prices, as have tokens that can be earned in the game called “special love potion” (SLP).

Note: The Ronin network which runs Axie Infinity was recently hacked for $625 million dollars, making it one of the largest crypto heists in history.

3. Cryptocurrencies

Buying cryptocurrencies might be one of the most straightforward ways to invest in Web 3.0. Many of the platforms involved have their own tokens. There could be some overlap when investing in NFTs, the metaverse, and cryptocurrency.

Owning an innovative crypto like Ethereum (ETH), for example, could be seen as an investment in all three categories. This is because ETH is a cryptocurrency, most NFT marketplaces are built on the Ethereum blockchain, and some metaverse applications are also built on Ethereum.

By holding ETH, investors might gain exposure to many aspects of Web 3.0 at the same time.

In addition, buying metaverse items and NFTs can typically only be done with a cryptocurrency like ETH, a fiat-pegged crypto known as a stablecoin, or the native token of a particular blockchain network. Therefore, it might be difficult to figure out how to directly invest in Web 3.0 without first acquiring cryptocurrency, unless an investor prefers the stock market, which opens other doors for investors.

4. Stocks

Investing in shares of relevant stocks could be an easier, and somewhat less risky way to invest in Web 3.0. In this way, investors can gain exposure to the technologies that are already helping to build the Web 3.0 ecosystem.

Here are some of the most popular stocks that come to mind for investors who are considering how to invest in web 3.0.

•   Coinbase (COIN). Participating in Web 3.0 requires purchasing cryptocurrency. Coinbase is one of the largest crypto exchanges, providing services to 73 million users. They are also building an NFT marketplace.

•   Apple (APPL). Apple could turn into an infrastructure play for Web 3.0.

•   Unity Software (U). Unity Software develops 3D content for PCs, mobile devices, and augmented reality devices. The company’s platform can provide potential architecture for the metaverse, making it an attractive Web 3.0 opportunity.

•   Advanced Micro Devices (AMD). AMD is a leader in producing semiconductor chips used in central processing unit (CPU) and graphic processing unit (GPU) hardware. The company is working to create artificial intelligence (AI) and graphics chips for Web 3.0.

•   Block (SQ). Formerly known as Square, Block was created by Twitter founder Jack Dorsey. Block has integrated Bitcoin lightning payments into its CashApp payment app, demonstrating a willingness to integrate new web 3.0 technologies. The fact that Square changed its name to Block indicates that its founder sees the potential in blockchain-related endeavors.

Should You Invest in Web 3.0?

The answer to this question will depend on an investor’s goals, risk tolerance, and personal preference.

Investing in any newly emerging and mostly unproven technology can carry high risk. But if investors do their due diligence, the rewards can also be great. Investing in Bitcoin in 2012 was arguably much riskier than it is in 2022, and early Bitcoin investors saw spectacular gains (as well as outsize losses). It’s possible, though not guaranteed, that early Web 3.0 investors could also see returns.

Those looking for a safe place to park their savings for the future might want to avoid investing in Web 3.0. Those seeking speculative opportunities, on the other hand, might see Web 3.0 as an attractive bet.

💡 Need help determining your risk tolerance? Check out our explainer on what risk tolerance is.

The Takeaway

For those wondering how to invest in Web 3.0, there are innumerable answers and opportunities. Given that Web 3.0 will incorporate so many new technologies, both digital and tangible, investors can take their pick. And this brave new internet world is just getting started.

Buying related stocks and cryptocurrencies present one way investors can pursue Web 3.0 opportunities right now. All you need is an online brokerage account with SoFi Invest. You can trade stocks, ETFs, IPO shares, and dozens of different types of crypto. SoFi members also get complimentary financial advice from professionals, who can answer any questions.

Sign up for an Invest account today.


Photo credit: iStock/filadendron

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The information provided is not meant to provide investment or financial advice. Also, past performance is no guarantee of future results.
Investment decisions should be based on an individual’s specific financial needs, goals, and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC registered investment advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.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. Information related to lending products contained herein should not be construed as an offer or prequalification for any loan product offered by SoFi Bank, N.A.
Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments. Limitations apply to trading certain crypto assets and may not be available to residents of all states.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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