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A debilitating sickness or injury can be life-changing and make it challenging or impossible to pay back student loans. Because of this, borrowers who are considered “totally and permanently disabled” may qualify to have their student loans discharged through a federal forgiveness program known as Total and Permanent Disability Discharge.

Since this is a federal program, it only applies to federal student debt and not private student loans. Here’s what to know about student loan disability discharge, what disabilities qualify for student loan forgiveness, and who is eligible for the program.

Disability Discharge of Student Loans

Student loan disability discharge relieves borrowers of their student loan responsibilities in the event of total and permanent disability. Receiving a Total and Permanent Disability (TPD) Discharge from the U.S. Department of Education means that a qualifying borrower does not need to pay back federal student loans or complete a TEACH Grant service obligation.

Can Student Loans Be Forgiven Due to Disability?

Federal student loans can be forgiven due to disability. Borrowers interested in a disability discharge need to apply for the program and provide documentation to show that they are considered “totally and permanently disabled.” The Department of Education will review the application to determine if an applicant qualifies.

In some instances, the Department of Education may receive information from the Social Security Administration (SSA) or the U.S. Department of Veterans Affairs (VA) that an individual may qualify for a disability discharge of student loans. In these cases, the Department of Education may contact a borrower to provide information about requesting a TPD discharge.

Again, the student loan disability discharge program only applies to federal loans, such as Direct Loans, FFEL Program Loans, or Perkins Loans. This program doesn’t apply to private student loans.


💡 Quick Tip: Get flexible terms and competitive rates when you refinance your student loan with SoFi.

What Is Student Loan Total and Permanent Disability Discharge?

A Total and Permanent Disability Discharge means that a qualifying borrower will not be required to pay back federal student loans or complete a TEACH Grant service obligation.

Loans included in the program are those issued by the William D. Ford Federal Direct Loan Program (Direct Loans, also known as Stafford Loans), the Federal Family Education Loan Program (FFEL), and the Federal Perkins Loans. Borrowers in a TEACH Grant service program may also be relieved from having to complete whatever service obligation remains in their program.

Applying for Student Loan Disability Discharge

If you would like to apply for a disability discharge of student loans, the first step is to fill out a TPD discharge application. The U.S. Department of Education works with Nelnet, a service provider, to process the applications. All correspondence will come from Nelnet, not the DoED.

You’ll also need to gather together documentation showing that you meet the Department of Education’s requirements for being “totally and completely disabled.” There are three ways to provide the necessary documentation:

1. Through the VA

If you are a veteran, you can work with the U.S. Department of Veteran Affairs (VA) to provide the documentation needed to prove that you are permanently disabled from a service-related injury.

2. Through the Social Security Administration

If you are already receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits, you can use documentation from the Social Security Administration (SSA).

3. Through a Physician

You also can have a physician (an MD or DO) certify that you are unable to earn money in any substantial way due to a physical or mental impairment. If you want to take this route, you’ll need to complete your application within 90 days of the physician signing your TPD. Here are the current official qualifications:

•   The impairment could result in death.

•   The impairment has lasted for a continuous period of at least 60 months.

•   The impairment can be expected to last for a continuous period of at least 60 months.

What Happens if I’m Approved for Student Loan Disability Discharge?

It depends on whether you were approved for a disability discharge through the VA, the SSA, or your physician.

If you provided documentation from the VA, the following will happen upon approval:

•   You’ll be notified of the discharge

•   Your loan holders will be instructed to return any loan payments received on or after the effective date of the disability determination

Recommended: Examining How Student Loan Deferment Works

If you provide documentation from the Social Security Administration or from your physician, there will be an additional step if you qualify: You’ll be notified that you are subject to a three-year monitoring period. Your loans or TEACH work obligation could be reinstated if you don’t meet certain requirements at any time.

During the monitoring period, your obligations may be reinstated in the event that:

•   Your annual earnings from employment exceed the poverty guideline amount for a family of two in your state, regardless of your actual family size.

•   You receive a new federal student loan under the Direct Loan Program or a new TEACH Grant.

•   You receive another payment of a Direct Loan or a TEACH Grant that was first disbursed before your discharge was approved, and the new disbursement has not been returned to the loan holder within 120 days of the disbursement date.

•   You receive a notice from the SSA stating that you are no longer disabled.

It’s important to understand that the DOE and Nelnet will monitor your ability to earn an income during this time. Your loans will resume in the event that you can earn an income above the poverty line, you receive new federal loans, or the SSA determines that you’re no longer disabled.

What Is Student Loan Refinancing?

If you don’t qualify for a TPD discharge, there are other options for lowering student loan costs. You can contact your loan servicer to find out if you’re eligible for deferment or forbearance — or to see if you’re eligible for an income-driven payment plan. You may be able to extend your loan term to lower your monthly payments (though you’ll end up paying more in interest over the life of the loan.)

Refinancing your student loans can also help you lower your repayment costs. Some lenders, like SoFi, can refinance both federal and private loans.

Because you’re using a new loan to pay off an existing loan, it’s also possible to change the terms of the loan, such as securing a lower interest rate or shortening the loan term (both of which mean saving interest over the life of the loan). You could also lengthen the loan term (which, again, can lower your monthly payments, but potentially result in paying more interest over the life of the loan).

Keep in mind that if you refinance federal loans, you’ll lose access to federal benefits and protections, including eligibility for TPD, income-driven repayment, or other federal loan programs such as deferment or forbearance. If you think you might want to pursue a disability discharge or other federal loan programs in the future, refinancing your federal loans may not be a good choice for you. If you have private loans, however, it may be worth exploring.

Refinancing Student Loans With SoFi

Refinancing could save you money over the life of the loan, especially if you can qualify for a lower interest rate. But it’s important to understand that refinancing is done with a private company, and therefore, the new loan is a private loan without access to federal benefits and protections, such as a TPD discharge.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

What disabilities qualify for student loan forgiveness?

To receive federal loan forgiveness under the Total and Permanent Disability Discharge program, you must have a mental or physical disability that severely limits your ability to work now and in the future. You’ll need to provide documentation of this total and permanent disability through the VA, the SSA, or a healthcare provider.

Can you get student loan forgiveness if you become disabled?

A borrower can apply for a student loan disability discharge only if they become totally and permanently disabled. An individual who qualifies for a TPD discharge is not required to pay back their student loan or complete their TEACH Grant service obligation.

Do you have to pay back student loans if you are on disability?

If a person is receiving SSDI or SSI benefits from the Social Security Administration and their next disability review is not for another five to seven years, then a person is considered totally and permanently disabled and eligible to apply for a TPD discharge. A three-year monitoring period follows a TPD discharge that is based on documentation from either the SSA or a doctor.

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Student Loan Refinancing
If you are a federal student loan borrower you should take time now to prepare for your payments to restart, including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. (You may pay more interest over the life of the loan if you refinance with an extended term.) Please note that once you refinance federal student loans, you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans, such as the SAVE Plan, or extended repayment plans.

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.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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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A soft pull personal loan means that the lender only requires a soft credit check for preapprove or approval, which won’t impact your credit score. With a soft pull, a lender is able to look at information in your credit report without leaving a negative mark. It differs from a hard credit pull, which does have an impact on your score.

Read on for a closer look at what soft pull personal loans are and what skipping a hard pull means for borrowers.

What Is a Soft Credit Inquiry?

A soft credit inquiry (or pull) is a type of credit check that isn’t tied to a formal credit application and does not impact your credit score. It occurs when a creditor, employer, landlord, or other authorized individual looks over your credit report to see how you manage your debt. When you access your own credit report, it’s also considered a soft credit check.

A soft credit check can take place without your consent, or even your knowledge. If you’ve ever received a prequalified credit card offer in the mail, the company making that offer did a soft pull on your credit to prescreen you for the card.

If you apply to prequalify for a loan, the lender will also do a soft credit pull. If you like the rate and terms in your offer, you can then decide to officially apply for that loan, which will require a hard credit pull.

Other instances of a soft credit check can include renting an apartment or applying for a job. Getting a look at how you manage your money can prove reliability and bring peace of mind to an employer, landlord, or creditor.

How Soft Credit Checks Work

During a soft credit check, a lender or other third party reviews your credit report to gather specific information about your creditworthiness. Unlike a hard credit check, which requires your explicit consent and can impact your credit score, a soft pull is typically used for informational purposes or prequalification.

For example, let’s say you’re shopping around for personal loan offers and want to check your rate. Lenders may perform a soft pull to assess your creditworthiness and determine if you meet their initial criteria. This initial evaluation helps lenders provide you with personalized loan offers without affecting your credit score.

Information Provided for a Soft Pull

A soft credit pull generally provides a snapshot or a modified version of your credit report. Exactly what a third party will see depends on the purpose of the soft pull. A creditor will likely be able to see:

•  Your overall credit history

•  Your current debts and payment behavior

•  The length of your credit history

•  The types of credit accounts you have

Do Soft Pulls Affect Your Credit Score?

No, soft credit inquiries do not impact your credit score. They are not visible to other creditors, and they do not leave any trace on your credit report. Soft pulls are considered “soft” because they are only visible to you when you review your own credit report.

If you want to view the soft inquiries on your credit reports, you can request a free copy of your report from each major credit bureau (Experian, Equifax and TransUnion) at AnnualCreditReport.com. Keep in mind that each report could have different inquiries. A soft inquiry is only added to the credit report that was checked.

Soft Pull vs Hard Pull

Whether you’re shopping around for a personal loan or looking for a new apartment, it’s important to understand the difference between soft vs, hard credit inquiries. Here’s a quick summary of how the two compare.

Soft Pull	Hard Pull
Your permission is not required	Your permission is required
No impact on credit score	May lower credit score temporarily
Only visible to you on credit report	Visible to other creditors
Used for informational purposes or prequalification	Used for credit application or loan approval

The key difference between soft vs. hard credit inquiries is that soft inquiries don’t have any impact on your credit scores. Hard inquiries, by contrast, may remain in your credit reports for about two years and can impact your credit scores.

The impact of hard inquiry, however, is typically small, as well as temporary. As long as no additional negative information is added to your credit report, your credit scores will typically rebound within a few months.

While multiple hard inquiries in a short time frame can do more significant damage to your scores, scoring models will typically combine multiple inquiries that occur within one or two months to avoid unfairly penalizing people who are rate shopping.

What to Know About Personal Loans With Soft Credit Pulls

Some personal loan lenders look at your credit report using a soft pull, allowing them to prequalify you while letting you know your approved interest rate. This can be beneficial for both sides — the lender gets information about your creditworthiness while you get important information that can help you make borrowing decisions.

While prequalification for a personal loan with a soft pull isn’t a guarantee you’ll get approved for a loan, it can give you a good idea of the loan amount, rate, and terms you may be able to qualify for. If you choose to then apply for the loan, the lender will then do a hard credit pull.

Some lenders advertise that they will only do a soft pull, even when you apply for the loan. But you’ll want to approach these lenders with caution. If a lender doesn’t require a hard credit check, they will often make up for the increased risk involved by charging exorbitant interest rates and fees.

Be Aware of Predatory Loans

If you’re looking at soft pull personal loans, it’s important to be aware of predatory loans that may take advantage of individuals with limited credit history or poor credit.

Predatory loans, such as payday loans, often target individuals who may have difficulty obtaining traditional loans. However, these loans often come with high-interest rates, excessive fees, and unfavorable terms. When looking at this type of loan, you’ll want to be sure to research reputable lenders and read reviews to ensure you’re working with a legitimate and trustworthy institution.

Also be sure to read the loan agreement carefully and make sure you fully understand all the terms before proceeding.

Common Soft Inquiries

Soft inquiries are commonly used in various scenarios, including:

•  Prequalification for credit cards or loans

•  Employment background checks

•  Rental applications

•  Insurance quotes

•  Credit monitoring services

•  Checking your own credit

Compare Personal Loan Offers With SoFi

A personal loan is a flexible kind of financing that you can use the funds to cover virtually any type of expense, including home renovations, credit card consolidation, medical costs, a wedding, and more.

If you’re interested in exploring your loan options without triggering a hard credit pull, SoFi can help. SoFi personal loans offer competitive, fixed rates and a variety of terms, and checking your rate won’t affect your credit score. Plus, it only takes just one minute.

See if a personal loan from SoFi is right for you.

FAQ

Do personal loans do hard or soft credit inquiries?

Personal loans can involve both hard and soft credit inquiries. When you apply for a personal loan, the lender may perform a hard credit inquiry, which can temporarily lower your credit score. However, some lenders also offer prequalification or preapproval processes that involve soft credit inquiries. These soft pulls do not impact your credit score and provide lenders with a basic overview of your creditworthiness.

Do lenders see less of your credit history with a soft pull?

With a soft inquiry, a lender or creditor will typically see a modified version of your credit report. They likely won’t be able to see information like your account numbers but will see things like your payment history and if you have any accounts in collections.

Can a soft credit pull affect your credit score negatively?

No. Soft inquiries are not visible to other lenders and do not leave a trace on your credit report. They are used for informational purposes or prequalification and do not have any direct impact on your creditworthiness. Only hard credit inquiries, which occur when you apply for credit or a loan, may temporarily lower your credit score by a few points.

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Photo credit: iStock/Hispanolistic
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.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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For many people, personal loans can be the difference between affording something they need — like major home repairs — and having to forego the purchase. But personal loans aren’t without fees. Lenders always charge interest on loans, and in many cases, something called an origination fee.

But what is an origination fee on a personal loan, and how does it work? We’ll dive in below.

What Are Personal Loan Origination Fees?

Personal loan origination fees are an upfront, one-time charge by the lender that covers the costs of processing the loan, including the application, underwriting, and funding.

Typically, lenders charge origination fees as a percentage of the total loan amount. It’s usually 1% to 6%, but origination fees may go as high as 8% or even 10% of the loan amount. In some instances, a lender may charge a flat fee instead.

Not every personal loan has an origination fee, and lenders may differ in how they require consumers to pay it, if it’s included.

Recommended: Should I Get a $5,000 Personal Loan?

How Do Personal Loan Origination Fees Work?

If a lender charges an origination fee for a personal installment loan, it’s usually a percentage of the loan amount, somewhere between 1% on the low end and 10% on the high end. For example, if you take out a personal loan for $15,000 and there’s a 5% origination fee, you’ll pay $750 in fees.

Lenders typically subtract this fee from the total loan amount. In our example, that means they’d offer you a loan for $15,000, subtract $750 from the amount, and give you $14,250. But you’d still have to repay $15,000, plus interest. If you truly need the full $15,000, it’s a good idea to request more than $15K to ensure that you have enough funds after the origination fee is deducted.

In this case, the personal loan origination fee would be reflected in the APR calculation. That’s why experts often suggest comparing loans by their APRs. The APR, which represents the annual cost of a loan (not just the interest rate) will give you a true picture of what you’ll pay over the life of the loan.

Learn more about interest vs. APRs before comparing loans.

Note: While subtracting the fee from your loan amount is common, some lenders may require an out-of-pocket payment or add it to your loan total. Asking a lender how they charge the origination fee is a good idea when shopping for loans.

How Much Are Personal Loan Origination Fees Usually?

Personal loan origination fees typically vary between 1% and 10% of the total loan amount. Depending on how much you’re borrowing, this fee can get extraordinarily high.

For example, if you borrow $100,000 with an 8% origination fee, that’s an extra $8K you’re paying on top of the loan amount and interest.

Recommended: What to Know Before You Borrow Money Online

How Are Origination Fees Calculated?

Lenders may advertise a set origination fee or a percentage range. If it’s the latter, how exactly do they determine the percentage you’ll pay?

Unsurprisingly, lenders primarily consider your credit score and debt-to-income (DTI) ratio. The stronger your credit score and the lower your DTI ratio, the lower origination fees you might be offered. Lenders that don’t charge origination fees at all may have strict requirements that only borrowers with good or excellent credit can meet.

Lenders may also consider the length and size of the loan. Having a cosigner with good credit can help reduce your fees. In addition, lenders may ask your reason for borrowing or use other information from your application when setting your fees.

How to Find a Personal Loan Without an Origination Fee

Not every lender charges origination fees. At SoFi, our personal loans have no origination fees and no prepayment penalties.

To find lenders that don’t charge origination fees, do a simple search online. Many personal finance sites rank the best personal loans without origination fees. Just remember to compare personal loan APRs, as some personal loans without origination fees may cost more in the long run because of higher interest rates.

Also keep in mind: Lenders that don’t charge origination fees may have stricter personal loan credit score requirements to qualify.

Recommended: Guide to Large Personal Loans

When Is an Origination Fee a Dealbreaker?

If you can qualify for a personal loan without an origination fee, that’s often the more affordable path. However, it’s wise to compare the loan APRs, which represent your total annual costs. A loan with no origination fee but a higher interest rate may wind up costing you more in the long run; comparing APRs can help you figure it out.

Similarly, if you qualify for a handful of personal loans with varying fees, you may not necessarily want to go with the lowest fee. Compare APRs to discover the true cost of each loan.

At SoFi, we offer competitive personal loan interest rates and no origination fees to keep your costs down. We encourage everyone to do their due diligence and research multiple loans, but we’re proud of what we offer: same-day funding, flexible loan terms and amounts, and unemployment protection. You can even check your personal loan rate in as little as 60 seconds.

So when is a personal loan origination fee a dealbreaker? If the fee makes your total cost of borrowing higher than another offer, you should consider the better loan offer.

All lenders are required to disclose their fees as part of the Truth in Lending Act. If a lender advertises no origination fees, it’s a good idea to check the fine print to see if they’ve disguised the fee with a look-alike fee, like an “administrative” or “application” fee. If a lender does this and it gives you bad vibes, go with your gut — you should always feel good about the lender you choose.

Explore SoFi Personal Loan Rates

Looking for a personal loan with no origination fees? Try a personal loan from SoFi. We don’t charge origination fees, you can get same-day funding, and our loan terms and amounts are flexible (two to seven years and $5K to $100K in loans). Check your rate online in as little as 60 seconds!

Get a personal loan without the high fees from SoFi.

FAQ

How much are personal loan origination fees typically?

Personal loan origination fees typically range between 1% and 6% of the loan amount. But depending on the lender, your credit score, and other factors, you may pay as much as 8% or 10% in personal loan origination fees.

Do private loans always have origination fees?

Many private lenders charge origination fees, but that is not always the case. Before taking out any loan with a private lender, it’s a good idea to compare origination fees and APRs.

Can origination fees be negotiated?

You can often negotiate origination fees for certain types of loans, such as mortgages. Personal loan origination fees may be negotiable, but this is less common. However, with a high enough credit score, you may be able to qualify for a personal loan without an origination fee — or at least a lower one.

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Photo credit: iStock/lechatnoir

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.

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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Figuring out how to double your money with investments often hinges on striking the right balance between risk and reward. Your personal risk tolerance and goals can influence how you invest and the returns your portfolio generates.

However, doubling your money is a reasonable goal, especially if you’re willing to wait for your money to grow. And that’s a big variable to keep in mind: Time. If you’re interested in doubling your money and growing wealth for the long-term, there are several investing strategies to consider.

Investing Strategies to Double Your Money

1. Get to Know the Rule of 72

The rule of 72 can be a helpful guideline for answering this question: How long to double your money?

If you’re not familiar with this investing rule, it’s not complicated. It uses a simple formula to estimate how long doubling your money might take, based on your annual rate of return. You divide 72 by your annual return to get the number of years you’ll need to wait for your investment to double.

So, for example, if you have an investment that generates a 5% annual return, it would take around 14.5 years to double it. On the other hand, an investment that’s generating a 12% annual return would double in about six years.

The rule of 72 doesn’t predict how an investment will perform. But it can give you an idea of how quickly (or slowly) you can double your money, based on the returns you’re getting each year. Just keep in mind that the rule’s accuracy tends to decrease as the rate of return increases, so it’s more of a guideline than a hard-and-fast rule.

💡 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.

2. Leverage Your Employer’s Retirement Plan

One way to attempt to double your money through investing may be through your workplace retirement plan. If your employer offers a matching contribution to the money you’re deferring from your paychecks, that’s essentially free money for you.

Employer matching contributions are low-hanging fruit, in that you don’t need to change your investment strategy to take advantage of them. All that’s required is contributing enough of your salary to your employer’s retirement plan to qualify for the match.

The matching formula that companies use varies, but some companies offer a dollar-for-dollar match, meaning that the money you put into a 401(k) would automatically double when you receive your match. Keep in mind that some companies use a vesting schedule, meaning that you have to work at the company for a certain period of time before you get to keep all the employer contributions.

Aside from potentially helping to double your money, investing your 401(k) or a similar qualified retirement plan can also yield tax benefits. Contributions made with pre-tax dollars are deducted from your taxable income, which could lower your annual tax bill.

3. Diversify Strategically

Diversification means spreading your money across different investments to create a portfolio that will meet your needs for both risk and return.

As a general rule of thumb, riskier investments like stocks have the potential to generate higher returns. More conservative investments, such as bonds, tend to generate lower returns but there’s less risk that you’ll lose money on the investment.

If you want to double your money, then it’s important to pay attention to diversification and what that means for your return on investment. For instance, if you’re investing heavily in stocks then you could see greater returns but you might experience deeper losses if the market takes a hit. Playing it too safe, on the other hand, could cause your portfolio to underperform.

Also, keep in mind that there are many types of investments besides stocks, mutual funds and bonds. Real estate, stock options, futures, precious metals and hedge funds are just some stock and bond alternatives you could use to build a portfolio. Understanding their risk/reward profiles can help you decide what to invest in if you’re focused on doubling your money.

💡 Quick Tip: Distributing your money across a range of assets — also known as diversification — can be beneficial for long-term investors. When you put your eggs in many baskets, it may be beneficial if a single asset class goes down.

4. Consider Buying When Others Are Selling

The stock market is cyclical and you’re guaranteed to experience ups and downs during your investing career. How you approach the down periods can impact your ability to double your money when the market goes up again.

When the market drops, some investors start selling off stocks or other investments to avoid losses. But if you’re comfortable taking risks, the sell-off could present an opportunity to buy the dip.

If you can purchase stocks at a discount during periods of volatility when other investors are selling, you could double your money when those same stocks increase in value again. But again, making this strategy work for you comes down to knowing how much risk is acceptable to you.

5. Commit for the Long Term

There are different investment philosophies you can adopt. For example, traders regularly buy and sell investments to try and get quick wins from the market. A buy-and-hold strategy takes a different approach, but it could pay off if you’re trying to double your money.

Buy-and-hold investing involves buying an investment and holding onto it for the long-term. The idea is that during that holding period, the investment will grow in value so you can sell it at a sizable profit later.

This is a passive investment strategy that relies on patience and time to increase your portfolio’s value. The longer you have to invest, the more you can capitalize on the power of compounding gains, or gains you earn on your gains.

If you’re using a buy-and-hold strategy with a value investing strategy, you could potentially double your money or more if your investments meet your expectations. Value investing means investing in companies that you believe the market has undervalued.

This strategy takes a little work since you have to learn how to understand the difference between a stock’s market value and its intrinsic value. But if you can find one of these bargain hidden gems and hold onto it, you could reap major return rewards later when you’re ready to sell.

6. Step Up Your Investment Contributions

Another simple strategy to double your money is to invest more. Assuming your portfolio is performing the way you want and need it to to reach your goals, doubling your investment contributions could be a relatively easy way to boost your returns.

If you can’t afford to put big chunks of money into the market all at once, there are ways to increase your investments gradually. For instance, you could start building a portfolio with fractional shares and increase your contributions by a few dollars each month.

If you’re investing your 401(k) at work, you could ask your plan administrator about raising your contribution rate annually. For example, you might be able to automatically bump up salary deferrals by one or two percent each year. And if that coincides with a pay raise you may not even miss the extra money you’re contributing.

7. Focus on Tax Efficiency

Minimizing tax liability is another opportunity to stretch your investment dollars. There are different ways to do that inside your portfolio.

Investing in your retirement plan at work is an obvious one, so if you aren’t doing that yet you may want to consider getting started. Remember, the longer you have to invest, the more time your money has to grow.

If you don’t have a 401(k) or a similar plan at work, you could open a traditional or Roth Individual Retirement Account (IRA) instead. A traditional IRA allows for tax-deductible contributions, meaning you get an upfront tax break. Then, you pay ordinary income tax on that money when you withdraw it in retirement.

Roth IRAs aren’t tax-deductible, since you fund them with after-tax dollars. The upside of that, however, is that qualified withdrawals in retirement are 100% tax-free.

A taxable brokerage account is another way to invest, without being subject to annual contribution limits the way you would with a 401(k) or IRA. The difference is that you’ll pay capital gains tax on your investment growth.

Paying attention to asset location can help with maximizing tax efficiency across different investment accounts. For example, exchange-traded funds can sometimes be more tax-efficient than other types of mutual funds because they have lower turnover. That means the assets in the fund aren’t bought or sold as frequently, so there are fewer taxable events.

Keeping ETFs in a taxable account while putting less tax-efficient investments into a tax-advantaged account, such as a 401(k) or IRA, could help with doubling your money if it means reducing the taxes you pay on investment gains.

The Takeaway

Learning how to double your money can mean taking a slow route or a quicker one, but it all comes down to how much risk you’re comfortable with and how much time you have to invest. One of the keys to growing your investments is being consistent and that’s where automated investing can help.

There are numerous strategies and tactics that you can try to leverage to your advantage. But ultimately, whether you’re able to double your money will likely come down to how much you’re willing to risk, how much time you have on your side, and probably a little bit of luck.

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), and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.

Photo credit: iStock/South_agency

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SoFi Invest®
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.
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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.

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.

Claw Promotion: Customer must fund their Active Invest account with at least $10 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.

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

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