student writing in notebook

Important FAFSA Deadlines to Know

The Free Application for Federal Student Aid, or FAFSA®, is a form students can fill out each school year to apply for grants, work-study, or federal student loans from the government for higher education pursuits.

By not filling it out, or missing the FAFSA deadline, students may not receive financial aid that could help them pay for college. Many states and individual schools also use the FAFSA to help determine if a student qualifies for aid. Therefore, it’s helpful to fill out your FAFSA as early as possible and not miss the important application deadlines, as there is a limited amount of aid available.

What is the FAFSA?

The FAFSA is the application for federal student aid from the US government. The type of federal student aid awarded is determined based on income, usually the income of the student’s parents, if they are considered a dependent student. If a student is considered independent, then they are not required to submit their parent’s financial information. Federal financial aid includes student loans, grants, scholarships, and work-study jobs. It’s important when applying to schools to consider all of the costs involved.

Related: Independent vs Dependent Student: Which One Are You?

Students can estimate their financial aid online ahead of time, which can help inform decisions about where to attend school. If you are already in school, remember that the FAFSA must be filled out every year, since income and tax information might have changed.

In general, the eligibility requirements for federal aid state that for most programs, students:

•  Must demonstrate financial need (though there is some non-need based aid, such as unsubsidized student loans) and,

•  Must be a US citizen or an eligible noncitizen, and

•  Be enrolled in an qualifying degree or certificate program at your college or career school

For further detail, take a look at the basic eligibility requirements on the Student Aid website .

The FAFSA form will need information about the student, their family, and their financial situation. This includes things like Social Security numbers, driver’s license numbers, and federal tax information or tax returns for either the student or their parents (depending on whether or not they are a dependent student). Plus, this includes information on bank account balances such as savings, investments, and other financial information.

FAFSA Open Date and Deadline

School year FAFSA open date FAFSA Deadline
2021-22 Oct. 1, 2020 June 30, 2022

File Your FAFSA for Next Year Close to October 1

Generally, it makes sense to submit the FAFSA promptly after the October 1st application release. Some aid is awarded on a first-come, first-served basis, so submitting it early could potentially help students improve their chance of receiving some federal aid. In addition, since some schools determine funding on a first-come-first-serve basis, filling it out early will help ensure you get the funding you need.

It will also help you get what you need well in advance, so you’re not scrambling at the last minute.

File Your FAFSA for Last Year by June 30

Students must file the FAFSA no later than June 30th for the previous school year. So, for the academic year 2021-22, you must file by June 30th, 2022. While the federal deadline for submitting the FAFSA is after the end of the school year, it may be possible for some aid to be applied retroactively or be applied to summer courses. While this is the federal government’s deadline, it’s essential to submit the application well before then since students generally need funding to pay for the school year.

Again, individual states and institutions have different deadlines for awarding financial aid to students. Waiting too long may put you in a sticky financial situation if you don’t receive the funding you need to start school.

State and institutional FAFSA deadlines

So, when is FAFSA due? Below you will find the federal, state, and institutional FAFSA deadlines.

Institutional FAFSA Deadlines

Students typically have around 21 months to file the FAFSA, but individual schools may have their own earlier deadlines. So if you are applying to many different colleges, check each school’s FAFSA deadline and apply by the earliest one.

These priority deadlines mean you need to get your FAFSA application in by the school’s date to be considered for the possible aid. While filling out your FAFSA, you can include every school you consider, even if you haven’t been accepted to college yet.

State FAFSA Deadlines

Individual state deadlines can be found from the US Department of Education. Some states have strict cutoffs, while others are just best-practice suggestions—so check carefully.

States may have limited funds to offer as well.

Federal FAFSA Deadline

So, when is FAFSA due?

Again, the FAFSA becomes available almost a full year in advance of the year that aid is awarded. When is the deadline for FAFSA? While the final deadline for FAFSA submission is June 30, the FAFSA becomes available on October 1. That’s earlier than most individual college deadlines for application.

It’s generally recommended that students fill out the FAFSA as soon as possible after October 1 for next school year’s aid, to avoid missing out on available funds. For instance, for the 2021 to 2020 school year, the FAFSA became available October 1, 2019, though the final deadline to submit is June 30, 2021, at the end of the academic year it applies to.

But because some federal student aid programs have limited funds, the US Department of Education recommends applying as soon as you can. Plus, there are often earlier school and state deadlines to worry about first.

Taking The Next Steps After Submitting the FAFSA

So what happens after you hit “submit” on your FAFSA?

•  First, students receive a Student Aid Report (SAR) which summarizes the data and information submitted. This generally arrives anytime from three days to three weeks after the FAFSA is completed.

•  Check if the information is correct (and if not, make corrections online if needed). The SAR will not state how much financial aid students will receive, nor will it detail the income or tax information submitted. Instead, if a school was listed on the FAFSA form and the student has been accepted, or you are currently enrolled in school, the school will calculate your aid and send you an electronic or paper aid offer (sometimes called an award letter) telling you the amount of aid you’re eligible for at that school.

•  Wait for aid acceptance. Timing of the aid offer depends on the school and can be as soon as the winter before the next academic year, or as late as the summer before the fall semester starts. It all depends on when the application was submitted and how the school schedules it out.

Receiving financial aid can be a great relief when it comes to paying for higher education. But keep in mind that federal aid can come in the form of grants, work-study, and student loans. And Direct Loans are the most common federal student loans available for students looking for financial aid.

Students who don’t qualify for enough financial aid via FAFSA and are still looking for ways to finance their education could look into scholarships, grants, or even private student loans.

For example, SoFi makes the process simple—so paying for school is stress-free. Plus, SoFi has flexible repayment options to help you find the loan that fits your budget. Private student loans lack the same borrower protections as federal loans, so this method of financial aid should be considered as an option only after other sources of funding have been evaluated.

The Takeaway

Completing the FAFSA application is the first step in a student’s journey to apply for federal aid (including federal student loans, scholarships, grants, and work-study). The FAFSA form is generally released on October 1st of the year before the aid year and closes on July 30th of the school year. For the 2021-2022 school year, the FAFSA application opened on October 1, 2020 and will close on June 30, 2022.

If students need additional sources of financing for student aid, they may consider private student loans to fill in the gaps. SoFi offers competitive rates to qualifying borrowers and there are absolutely no fees.

Learn more about SoFi private student loans today.


SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

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 or products 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.

SOSL18239

Read more

What is a Direct Stock Purchase Plan (DSPP)?

A direct stock purchase plan (DSPP) is a plan that allows investors to purchase stock in a company without a broker and get it directly from the company instead.

The benefits include that there are oftentimes no brokerage fees. Meanwhile, discounts to the share prices may be available for larger purchases. With shares purchased through a DSPP, investors have the same profit and loss opportunities, access to dividends, as well as stockholder voting rights.

This common investment strategy can also work for people who want to focus on a select number of quality stocks, long term. It might also help people who want to have a direct method of ownership, without an intermediary. Some investors also appreciate that some DSPP programs offer dividends reinvestment plans.

Conversely, this may not be the preferred method for investors who value portfolio diversification, because not all stocks offer DSPPs. Companies also often put maximum limits on how much an individual investor can purchase. And when selling DSPP stocks, multiple types of fees can sometimes be charged.

Here’s a closer look at direct stock purchase plans.

Direct Stock Purchase Plan, Explained

When you buy vegetables from a grocery store, you know farmers grow the vegetables, then a distributor might buy from the farmer and sell the vegetables to grocery stores, The stores then sell those vegetables to the consumer. This is comparable to investors using a broker to buy shares of stock, because a middleman is involved.

But you can sometimes purchase food directly from growers, perhaps at a farmer’s market. This direct form of purchasing can be comparable to participating in a direct stock purchase plan.

Many blue-chip stocks tend to offer DSPPs. For example, let’s say Company X offers a plan that allows investors to buy $500 or more worth of company stock directly from it, up to $250,000 a year, with some service and transaction fees.

With a DSPP, investors directly purchase shares sometimes at a small discount. Discounts can range from 1% to 10% to encourage investors to buy more shares.

Briefly returning to our vegetable analogy, buyers can sometimes get a better price from a farmer’s market, because the distributors and grocery stores may mark up their prices to cover their own costs. But many brokerage accounts now waive fees and commissions entirely for many investors, the difference is smaller than it used to be.

Recommended: What is a Brokerage Account?

How To Invest in a DSPP

Armed with information about how to buy directly from companies, investors may want to explore what specific opportunities exist. Perhaps they already have a publicly traded company in mind. In that case, they can go to that company’s investor relations website to see if that company offers this type of investment opportunity.

They can also search on the Internet broadly to see which direct stock purchase plans are available. A service like Computershare provides a listing of companies that sell stocks through a DSPP.

More specifically, if someone wants to buy stocks in this way, they typically open an account and make deposits into it. Usually, these deposits are automatically made monthly through an ACH funds transfer from the investor’s bank account. In some cases you can write checks as well.

Then, that dollar amount is applied toward purchasing shares in that company’s stock, which can include fractional shares. For example, let’s say that one share of a company’s stock currently costs $20. If an investor sets up an ACH withdrawal of $50 monthly, then, each month they have purchased 2.5 shares of that company’s stock.

One of the benefits of investing through a direct stock purchase plan is the ability to incrementally invest in an inexpensive way. This might make it a good choice for some first-time investors with smaller amounts of money to invest, with initial deposits ranging from $100 to $500. In some cases, initial deposit minimums can be waived if you purchase a certain dollar value of stock every month.

What to Consider Before Buying DSPPs

When Internet investing was new, people typically needed to pay significant fees to brokers to buy stock—so, in that era, direct stock purchase plans could be real money-savers for investors. Over time, though, fees for online investing have lessened, making this less distinctive of a benefit.

Plus, many DSPPs charge initial setup fees, and may have other investment fees, including ones for each purchase transaction or sale. Although they may be small, these fees can build up over time. And it may be challenging to re-sell shares without the use of a broker, which makes this investment strategy more of a long-term one.

Plus, any time a share is purchased, some degree of stock volatility comes along with it—how much depends upon what is happening with that specific company and the overall levels of turbulence in the market.

Here’s something else to consider: When owning stock in just one company, or only a couple of them, portfolios aren’t diversified. When you diversify your investment assets, it helps to spread out the degree of risk—that’s because, if one stock’s value decreases, others may rise to balance out that portfolio.

The Takeaway

At a high level, direct stock purchase plans are when individual investors can directly purchase shares of that company’s stock without the need for broker involvement. The benefits of DSPPs include often offering company shares at a discount, as well as helping investors who want just a smaller number of well-established stocks.

The downside of DSPPs is that a limited number of companies offer them, which means that an investor who invests solely through DSPPs may not have the best portfolio diversification. Plus, with brokerage commissions and fees rapidly shrinking, in many cases to zero, DSPPs have become a less essential way of cutting down trading costs.

When it’s time to start investing online, that’s also the time when people need to choose their broker. With the SoFi Invest®️ online investing app, people can invest with ease, no matter what level of investment experience exists.

If you’re looking to start investing in stocks, the Active Investing platform lets investors choose from an array of stocks, ETFs or fractional shares. For a limited time, opening an account gives you the opportunity to win up to $1,000 in the stock of your choice. All you have to do is sign up, play the claw game, and find out how much you won.

Download the SoFi Invest mobile app today.


SoFi Invest®
The information provided is not meant to provide investment or financial advice. 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 pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
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.
Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.
SOIN20017

Read more
woman writing on charts

How Can Investors Receive Compounding Returns?

At one point or another, we’ve all heard or read advice that strongly suggested we begin investing. Those conversations likely highlighted the magic of compound interest and stressed the importance of getting started as quickly as possible.

How do investors receive compounding returns? Here’s a closer look at the practice and steps on how to achieve it.

What Are Compounding Returns?

Compound returns, also known as compound interest, are the earnings you continuously receive from contributions you’ve already made to an investment.

Compound interest can be achieved by any type of asset class that earns interest or produces returns on both the initial amount–what’s known as the principal–as well as any profits or returns that are generated after the initial investment. Essentially, the money you put to work is doing additional work automatically for you.

How Does Compounding Interest Work?

A great way to become comfortable with the concept of compound interest is to play around with an online compound interest calculator . When looked at on a graph, you’ll see the rate of growth increase and the graph start to shift vertically. That’s when compound returns start to get exciting.

You’ll notice, though, that this does not happen right away. Compound interest depends on the rate of return, essentially how much the investment gains or losses over time, but the most powerful effects could take decades. This is why people are often encouraged to start investing as young as possible, even with small amounts. The longer that money is invested, the more compounding it can do.

Compound returns can be compared to a snowball that’s rolling downhill. At the beginning the snowball may be small and rolling slowly. But as the snowball starts to collect snow, it gets bigger.

Compound interest is a long game. Time can allow the proverbial snowball to grow bigger, roll faster, and amass more profits through the years.

Recommended: A Beginner’s Guide to Investing in Your 20s

The Value of Compounding Returns

Here’s a hypothetical example that captures the idea of compound returns. However, it isn’t necessarily realistic, because it only speculates an investor making profits. In reality, an investor could also experience losses.

An investor buys a stock that costs $1,000. That’s the investment’s “principal.” In the first year, say they earn a 10% return. The stock is now worth $1,100. Things start to get interesting in the second year, when the stock increases in value another 10%, bringing the stock’s value to $1,210.

That’s $110 in profit earned in the second year, compared to $100 in the first year. This happened even though they did not add any additional money to the investment, and they earned the same rate of return. The investment had simply grown over the previous year, creating a larger base from which to earn more.

If the investor were to earn a 10% rate of return the third year, the profit would be even greater than in the previous two years. Working off a larger base—now $1,210—a 10% return will yield a profit of $121.

However, investments that hold stocks may experience volatility. Take the example from above. Three consecutive years of precise 10% returns is highly unlikely. In fact, it’s also possible for investors to lose money on their investments, which is the case in almost any asset class. While helpful for understanding the concept of compound returns, it’s not necessarily reflective of the real-world experience.

How to Get Compound Interest

With compound interest, the reinvestment of interest may be done automatically or manually.

Here are some examples of investment types that can earn compound returns.

Stocks: There are two ways to make money on a stock. The first is through price appreciation, and the second is through dividend payments. When the value of a stock grows over time, an investor sees the potential to earn compound interest if those profits are reinvested. With cash dividend payments, compound returns are not automatic, as they are paid out in cash but an investor can add the payouts back in in order to potentially earn additional returns.

Mutual funds: Mutual funds are pools of stocks, bonds, or other investment types. For example, a mutual fund could invest in the U.S. stock market. Over time, the goal is that the mutual fund grows as the underlying investments grow. Many mutual funds give the option of automatic dividend reinvestment plans. This way, the investor can earn compound returns in both ways, on the price appreciation and the dividend payments.

Exchange-traded funds (ETFs): Similar to mutual funds, ETFs are pools of investments, like stocks. As the value of the ETF grows over time, returns will compound. Depending on which bank or institution where the ETF is purchased, it may or may not be possible to automatically reinvest dividends.

Recommended: Benefits of ETFs

Yield-generating savings accounts: Some savings accounts pay interest on cash balances. With these accounts, it is possible to earn interest on top of interest earned in previous months, therefore earning compounding returns.

With all investments, a good return on investment is not guaranteed, even profits aren’t. Plus, investments that tend to earn a higher potential return may also come with higher risk.

The Takeaway

The first step to earning compound interest is to open an account to invest in. Whether it’s a brokerage account or automated investing service, these are simply accounts. Once money is deposited in the account, it can be used to buy investments such as stocks, mutual funds, and ETFs.

There are lots of options. You can consider opening an account at an online investment platform like SoFi Invest®. Keeping fees as low as possible is important for new investors so that more of their money is working and earning compound returns with incurring costs. SoFi Invest makes this possible with zero-commission trading.

Get started earning compound returns with SoFi Invest.



SoFi Invest®
The information provided is not meant to provide investment or financial advice. 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 pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
SoFi Money®
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC .
Neither SoFi nor its affiliates is a bank. SoFi Money Debit Card issued by The Bancorp Bank. SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
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.
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.
SOIN20109

Read more
Beginners Guide to Understanding Support and Resistance

Beginners Guide to Understanding Support and Resistance

What Is Support and Resistance?

Support and resistance are price levels that traders look at when they’re applying technical analysis to their investing.

“Support” is where the price of an asset tends to stop falling and “resistance” is where the price tends to stop climbing.

While support and resistance levels are rarely the sole indicators used to determine when to buy or sell, they can provide helpful clues to estimating when a price trend may pause or reverse.

Here’s a closer look at technical analysis, support and resistance levels, as well as how investors can use them.

Technical Analysis 101

Technical analysis is a type of trading method that uses price patterns to forecast future movement. It differs from fundamental analysis, which is based on using a company’s financials, like its earnings and revenue. Professional technical analysts are called Chartered Market Technicians or CMTs.

A general rule of thumb in investing is that past performance never guarantees future results. However, technical analysts believe that because of market psychology and sentiments like fear and greed, history tends to repeat itself. So for instance, if an asset falls a certain amount, buyers tend to swoop in.

In addition to price levels and their historical patterns, technical analysts may look at volume, oscillators – such as the Stochastic Oscillator, and momentum.

Another aspect of technical analysis is that it can be self-fulfilling. If many investors and traders believe a certain price is important, they may use stop-loss orders at certain levels. That, in turn, makes it likely those points will trigger a reversal or pause in an asset’s direction.

Recommended: Technical Analysis for Stocks: The Basics

How Do You Identify Support and Resistance Indicators?

As discussed, the support level is typically a price point at which investors or traders expect a downward price trend to pause or reverse. A resistance level is the price point at which an upward price trend is expected to pause or reverse.

Here are some different ways in which support and resistance levels can be determined.

1. Round Numbers

Round numbers like $100, $500 or $10,000 can be levels at which investors, traders and analysts believe a price trend will hit support or resistance.

For instance, in a hypothetical example in the stock market, a company’s shares may climb steadily and struggle to surpass the $100 level. This may be driven more by market sentiment, as the market doesn’t believe the stock can consistently trade above that $100 level.

There could also be a more fundamental reason, such as the $100 level pushing the valuation–something like the stock’s price-to-earnings ratio–to a level the market believes is too expensive.

2. Buy and Sell Orders

Technical analysts may come up with support and resistance points by studying where buy and sell orders are congregated. In other words, they’re determining support and resistance levels by the volume of trades.

Investors, traders and analysts may have access to actual buy or sell order books. They could study price targets that bank research analysts set. They may also scour sources like social-media platforms to get a sense of where investors believe the stock may find a floor or hit a ceiling.

For instance, with Bitcoin, the chatter on a social-media platform like Reddit or Twitter may indicate the $30,000 level is where the cryptocurrency may find a bottom. Those in the market may use that to believe that’s a “support” level for Bitcoin.

3. Historical Highs and Lows

A previous high or low for an asset may be deemed a level at which there’s support or resistance.

For instance, let’s say Company Y stock had months ago climbed to hit a price level but then reversed. If Company Y stock nears that level again, investors may believe that’s a resistance point where the shares may struggle again.

How to Trade Using Support and Resistance Levels

There are roughly four types of investors who may be using trade and resistance levels:

1.   Investors who are long and waiting to buy at a support level,

2.   Investors who are shorting a stock or asset and may close their position,

3.   Investors on the sidelines and want to buy at a support price,

4.   Investors on the sidelines and simply monitoring to learn more about the stock.

One common way investors and traders utilize support and resistance levels is through stop-loss orders. Stop-loss orders are in general popular when it comes to technical analysis trading. They involve placing an order with an investor’s brokerage account to buy or sell once an asset reaches a specific price.

Recommended: How to Open a Brokerage Account

Stop-loss orders are a way for investors to manage their portfolio without having to monitor their holdings every day.

For example, let’s say an investor believes $1,000 is a level of resistance for Company Z stock. They could set a stop-loss order to sell the stock at $1,000, which the brokerage firm will automatically execute once the shares hit that price.

The Takeaway

Support and resistance levels are price points at which investors and traders in a market expect trends to reverse or take a pause. Individuals can think about support and resistance levels as the potential floors and ceilings for price moves in an asset.

While there’s no guarantee support and resistance levels come true, it can be a helpful way to try to time the market or have specific price points to monitor. They may also use these prices to gauge whether the velocity of a price movement will slow down, pick up or reverse course.

Investors can track support and resistance levels and employ technical analysis by monitoring their holdings through a SoFi Invest® brokerage account. The Active Investing platform allows users to buy and sell company stocks, exchange-traded funds (ETFs) and fractional shares with zero commissions. SoFi Invest users also get access to certified financial planners who can provide investing advice for no additional costs.

Start investing on SoFi Invest now.

Photo credit: iStock/Jay Yuno


SoFi Invest®
The information provided is not meant to provide investment or financial advice. 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 pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
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.
SOIN20294

Read more
Earn Interest on Crypto: Savings Account vs. Wallet

Earn Interest on Crypto: Savings Account vs. Wallet

A bitcoin savings account gives holders the ability to earn interest on crypto. But how do they work?

Interest from Bitcoin and other cryptocurrencies can be earned in a number of ways. In the current era of zero or even negative interest rates, many investors have ventured outside the traditional financial system in search of a positive yielding returns. A crypto interest account can for some individuals be the solution for rock-bottom yields.

But the crypto investing ecosystem is still young. Bitcoin was created in 2009, making the technology only twelve years old as of 2021. Platforms that offer a type of bitcoin savings account are newer still.

For this reason, investors would do well to first learn crypto basics and conduct their own due diligence when looking to earn interest on crypto. The ways to go about earning that yield range from high-risk and questionable to lower-risk and reasonable. Choosing one method over another could mean the difference between earning a stable yield and losing 100% of the savings offered.

Bitcoin Savings Account vs. Cold Wallet

When it comes to long-term crypto holdings, investors can choose between several options. Two of the best options might be a bitcoin savings account or a cold storage crypto wallet. Each of these come with their pros and cons.

The main benefit of a cold storage wallet would be security. The term “cold storage” refers to funds that have been taken offline where hackers and thieves can’t access them. Bitcoin can be stored in this manner for extended periods of time. Cold storage is thought to be among the safest methods possible to store crypto.

Recommended: Cold Wallet vs. Hot Wallet

The main benefit of a bitcoin savings account would be earning a steady return on those savings. While coins in cold storage might be safe, they won’t be earning anything beyond their potential increase in value. Using one of the potential methods to earn interest on crypto ensures that the coin gets put to work generating passive income for an investor rather than sitting idle indefinitely.

Of course, offering up crypto savings in exchange for interest comes with some kind of risk. The risk varies depending on the method, but in situations like these investors have to assume that the organization they entrust their money to will safeguard it completely.

As we’ll see, this may not always be the case.

Four Ways to Earn Interest on Crypto

What kind of crypto interest account is best? It depends on a user’s preference, technical know-how, and risk tolerance.

There isn’t just one kind of official bitcoin savings account. The term loosely refers to any number of ways that holders can earn interest on their bitcoin or other cryptocurrency holdings.

Here are a few of those methods.

1. Crypto Staking

Staking isn’t technically a bitcoin savings account, but it does provide a return for crypto assets in a similar way.

Coins that use a proof-of-stake protocol work differently than those that utilize proof-of-work (like bitcoin). We won’t go into great detail about consensus mechanisms here, but proof-of-stake involves token holders “staking” their coins for a chance at winning the next block reward. Staking can be an involved, technical process, or it can be as easy as keeping coins in the right wallet on an exchange.

Some exchanges have everything set up on the backend so that all a user has to do to earn staking rewards is hold coins in their hot wallet. Typically, staked coins have to be locked up for a period of time, but some exchanges have worked things out to allow users to move their coins at any time while still earning regular rewards. This method obviously requires learning how a crypto exchange works first.

Keep in mind that staking rewards will be denominated in the token of choice, meaning if that token goes down in price, so too will any rewards.

Recommended: A Guide to Crypto Staking

Buy crypto in minutes!

Safely trade BTC, ETH, DOGE, ADA, +24 more coins.


2. DeFi Protocols

One of the riskier types of cryptocurrency savings accounts might be decentralized finance (DeFi) protocols.

Some DeFi projects automate the borrowing and lending process. This means that smart contracts govern the loans.

Borrowers like this because they can get a loan with no credit approval necessary. Lenders like it because they can get high yields when lending out capital. Searching for yield in this manner is sometimes referred to as “yield farming.”

While the system can be great for everyone when it works, it can also be catastrophic when it fails. There have been several reports of DeFi protocols either having programming bugs in them or being outright frauds from the beginning. In either case, investors can lose everything and have no recourse.

DeFi platforms typically don’t have to follow any cryptocurrency regulations, making them a sort of “wild west” kind of environment for investors.

3. Exchange Wallets

Some exchanges reward users for holding stablecoins in their exchange wallets. Dollar-pegged stablecoins like USDC and DAI might be eligible for these kinds of rewards.

The interest earned is typically as low as 0.2% or as high as 2%. The upside to this kind of arrangement is that it might not require investors to do anything out of the ordinary. Simply buying stablecoins and holding them in the appropriate wallet could do the trick.

The potential downsides are that the interest earned could be very small (although still greater than fiat currency held in a bank) and not all exchanges will offer this feature.

4. Third-Party Savings Apps

A number of centralized cryptocurrency savings accounts have sprung up in recent years. These are organizations that facilitate the borrowing and lending of crypto assets. Users typically earn a high yield, although not as high as DeFi protocols.

An upside of these apps might be that they offer a good balance between risk and reward. They also tend to be user-friendly and have good customer service, making them ideal for beginners.

The drawbacks might be that these kinds of accounts come with the same third-party risk as anything else. Depositing coins requires entrusting your crypto to those who hold it, and there may or may not be an insurance fund for when things go wrong.

The processes of these organizations are not always transparent, either. It can be unclear how exactly they provide depositors with yield or what kind of risk is being taken.

The Takeaway

In an era of ultra-low interest rates, some investors have turned to the cryptocurrency market to earn additional yield. While the crypto universe isn’t appropriate for all yield hungry investors, some measures like crypto staking, DeFi and savings apps may provide a solution.

With SoFi Invest, investors can buy cryptocurrencies like Bitcoin, Ethereum, Cardano, Uniswap and Chainlink 24/7: weekends, holidays, middle of the night. Furthermore, on the mobile app, investors can trade cryptocurrencies alongside the company stocks, exchange-traded funds (ETFs) and fractional shares that they already own.

Learn more about the different types of cryptocurrency and open a SoFi Invest® account today.

Photo credit: iStock/Delmaine Donson


SoFi Invest®
The information provided is not meant to provide investment or financial advice. 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 pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
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.
SOIN0521230

Read more
TLS 1.2 Encrypted
Equal Housing Lender