InvestLL Archives

Oct

2025

Black glasses rest on a background split between vibrant magenta and teal to help the user learn about flexible spending accounts.

What Is a Flexible Spending Account?

By Bonnie Gibbs Vengrow | Budgeting & Goals, Building Your Career, Life & Career | No Comments

Table of Contents

What Is an FSA?
How Do You Fund an FSA?
What Items Qualify for FSA Reimbursement?
Are There Any FSA Limits?
Does an FSA Roll Over Each Year?
How Can You Use Up Your FSA?
Flexible Savings Account (FSA) vs. Health Savings Account (HSA)
The Takeaway
FAQ

Whether you’re purchasing a new pair of eyeglasses, stocking up on over-the-counter medications, or paying for your child’s daycare, there may be certain expenses your health insurance plan doesn’t cover.

In those cases, having a flexible spending account, or FSA, could help you save money. This special savings account lets you set aside pretax dollars to pay for eligible out-of-pocket healthcare expenses, which in turn can lower your taxable income.

Let’s take a look at how these accounts work.

Key Points

• A Flexible Spending Account (FSA) is a tax-advantaged account that allows you to set aside pre-tax dollars for eligible medical expenses.

• There are annual contribution limits for FSAs, which are set by the IRS and can vary each year.

• Funds in an FSA generally must be used within the plan year, or you may lose them, though some plans offer a grace period or carryover option.

• FSAs can be used for a wide range of medical expenses, including copayments, deductibles, prescription medications, and over-the-counter drugs (with a doctor’s note).

• FSAs are typically offered through employers, and both employees and employers can contribute to the account.

What Is an FSA?

An FSA is an employer-sponsored savings account you can use to pay for certain health care and dependent costs. It’s commonly included as part of a benefits package, so if you purchased a plan on the Health Insurance Marketplace, or have Medicaid or Medicare, you may no longer qualify for a FSA.

There are three types of FSA accounts:

• Health care FSAs, which can be used to pay for eligible medical and dental expenses.

• Dependent care FSAs, which can be used to pay for eligible child and adult care expenses, such as preschool, summer camp, and home health care.

• Limited expense health care FSA, which can be used to pay for dental and vision expenses. This type of account is available to those who have a high-deductible health plan with a health savings account.

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How Do You Fund an FSA?

If you opt into an FSA, you’ll need to decide on how much to regularly contribute throughout the year. Those contribution amounts will be automatically deducted from your paychecks and placed into the account. Whatever money you put into an FSA isn’t taxed, which means you can keep more of what you earn.

Your employer may also throw some money into your FSA account, but they are under no legal obligation to do so.

You can use your FSA throughout the year to either reimburse yourself or to help pay for eligible expenses for you, your spouse, and your dependents (more on that in a minute). Typically, you’ll be required to submit a claim through your employer and include proof of the expense (usually a receipt), along with a statement that says that your regular health insurance does not cover that cost.

Some employers offer an FSA debit card or checkbook, which you can use to pay for qualifying medical purchases without having to file a reimbursement claim through your employer.

💡 Quick Tip: When you have questions about what you can and can’t afford, a spending tracker app can show you the answer. With no guilt trip or hourly fee.

What Items Qualify for FSA Reimbursement?

The IRS decides which expenses qualify for FSA reimbursement, and the list is extensive. Here’s a look at some of what’s included — you can see the full list on the IRS’ website.

• Health plan co-payments and deductibles (but not insurance premiums)

• Prescription eyeglasses or contact lenses

• Dental and vision expenses

• Prescription medications

• Over-the-counter medicines

• First aid supplies

• Menstrual care items

• Birth control

• Sunscreen

• Home health care items, like thermometers, crutches, and medical alert devices

• Medical diagnostic products, like cholesterol monitors, home EKG devices, and home blood pressure monitors

• Home health care

• Day care

• Summer camp

Are There Any FSA Limits?

For 2025, health care FSA and limited health care FSA contributions are limited to $3,300 per year, per employer. Your spouse can also contribute $3,300 to their FSA account, as well.

Meanwhile, dependent care FSA contributions will be increased to $7,500 per household, or $3,750 if you’re married and filing separately, on January 1, 2026.

Does an FSA Roll Over Each Year?

In general, you’ll need to use the money in an FSA within a plan year. Any unspent money will be lost. However, the IRS has changed the use-it-or-lose-it rule to allow a little more flexibility.

Now, your employer may be able to offer you a couple of options to use up any unspent money in an FSA:

• A “grace period” of no more than 2½ extra months to spend whatever is left in your account

• Rolling over up to $660 from 2025 to use in the 2026 plan.

Note that your employer may be able to offer one of these options, but not both.

One way to avoid scrambling to spend down your FSA before the end of the year or the grace period is to plan ahead. Calculate all deductibles, copayments, coinsurance, prescription drugs, and other possible costs for the coming year, and only contribute what you think you’ll actually need.

How Can You Use Up Your FSA?

You can consider some of these strategies to get the most out of your FSA:

• Buy non-prescription items. Certain items are FSA-eligible without needing a prescription (but save your receipt for the paperwork!). These items may include first-aid kits, bandages, thermometers, blood pressure monitors, ice packs, and heating pads.

• Get your glasses (or contacts). You may be able to use your FSA to cover the cost of prescription eyeglasses, contact lenses, and sunglasses as well as reading glasses. Contact lens solution and eye drops may also be covered.

• Keep family planning in mind. FSA-eligible items can include condoms, pregnancy tests, baby monitors, and fertility kits. If you have a prescription for them, female contraceptives may also be covered.

• Don’t forget your dentist. Unfortunately, toothpaste and cosmetic procedures are not covered by your FSA, but dental checkups and associated costs might be. These could include copays, deductibles, cleanings, fillings, X-rays, and even braces. Mouthguards and cleaning solutions for your retainers and dentures may be FSA-eligible as well.

💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

Flexible Savings Account (FSA) vs. Health Savings Account (HSA)

When it comes to managing healthcare costs, another popular option is a health savings account (HSA). Both FSAs and HSAs offer tax advantages, but they differ in terms of eligibility, contribution limits, and how the funds can be used.

Both types of accounts:

• Offer some tax advantages

• Can be used to pay for co-payments, deductibles, and eligible medical expenses

• Can be funded through employee-payroll deductions, employer contributions, or individual deductions

• Have a maximum contribution amount. In 2025, people with individual coverage can contribute up to $4,300 per year, while those with family coverage can set aside up to $8,550 per year.

That said, there are some key differences between HSAs and FSAs:

• You must be enrolled in a high deductible health plan in order to qualify for an HSA.

• HSAs do not have a use-it-or-lose-it rule. Once you put money in the account, it’s yours.

• If you quit or are fired from your job, your HSA can go with you. This happens even if your employer contributed money to the account.

• If you’re 55 or older, you can contribute an additional $1,000 to your HSA as a catch-up contribution — similar to the catch-up contributions allowed with an IRA.

• If you withdraw money from your HSA for a non-qualified expense before the age of 65, you’ll pay taxes on it plus a 20% penalty.

• If you withdraw money from your HSA for any type of expense after age 65, you don’t pay a penalty. However, the withdrawal will be taxed like regular income.

Recommended: Benefits of Health Savings Accounts

The Takeaway

Flexible spending accounts are offered by employers and can be a useful tool for paying for health care or dependent-related expenses. Notably, you fund the account with pretax dollars taken from your paycheck, which can lower your taxable income and help you save money.

You typically need to spend your FSA money within a plan year, though your employer may give you the option to either roll over a portion of the balance into the next year or use it during a grace period. There are also guidelines around what you can spend the FSA funds on and how much you can contribute to your account.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

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FAQ

How does a flexible spending account work?

A flexible spending account (FSA) lets you set aside pretax money from your paycheck to cover eligible medical, dental, vision, or dependent care expenses. Because contributions reduce your taxable income, you save on taxes.

What is the difference between an FSA and an HSA?

The main difference between an FSA and an HSA is ownership and eligibility. FSAs are employer-owned and require you to spend funds within the plan year, while HSAs are individually owned, available only with high-deductible health plans, and allow funds to roll over and grow tax-free year after year.

Can I withdraw money from my flexible spending account?

Yes, you can withdraw money from your flexible spending account (FSA) to pay for eligible medical expenses such as copays, prescriptions, and medical supplies. However, withdrawals must be for qualified expenses.

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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

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

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SORL-Q425-005

Oct

2025

What Are Index Options?

By Brian Nibley | Growing Wealth, invest, Investing | Comments Off

Editor's Note: Options are not suitable for all investors. Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Please see the Characteristics and Risks of Standardized Options.

Table of Contents

What Is An Index Call Option?
What Is An Index Put Option?
Differences Between Index Options and Stock Options
What Are Options Trading Levels?
What Happens to Index Options On Expiry?
How to Trade Index Options
Frequently Asked Questions

While stock options derive their value from the performance of a single stock, index options are derivatives of an index containing multiple securities. Indexes can have a narrow focus on a specific market sector, or may track a broader mix of equities. They’re listed on option exchanges and regulated by the Securities and Exchange Commission (SEC) in the U.S.

Like stock options, the prices of index options fluctuate according to factors like the value of the underlying securities, volatility, time left until expiration, strike price, and interest rates. Unlike stock options, which are typically American-style and settled with the physical delivery of stocks, index options are typically European-style and settled in cash.

Key Points

• Index options are derivatives based on market indexes, typically cash-settled and European-style.

• Index options are typically cash-settled and can only be exercised at expiration, unlike stock options which are often exercised early and settled with shares.

• Authorization from a brokerage is required to trade index options, and understanding risks is crucial.

• Index options offer broad market exposure, with trading hours and settlement methods differing from stock options.

• Trading levels range from simple covered calls and protective puts to high-risk naked options, each with specific requirements.

What Is An Index Call Option?

An index call option is a financial derivative that reflects a bullish view on the underlying index. They provide the buyer the right to receive cash if the index rises above the strike price on expiration. An investor who buys an index call option typically believes that the index will rise in value. If the index increases in value, the call option’s premium may also increase before expiration.

Before trading index options, it may be a good idea to make sure you have a solid understanding of what it means to trade options in a broader sense. It can be a complex, technical segment of the financial market.

💡 Quick Tip: In order to profit from purchasing a stock, the price has to rise. But an options account offers more flexibility, and an options trader might gain if the price rises or falls. This is a high-risk strategy, and investors can lose money if the trade moves in the wrong direction.

What Is An Index Put Option?

An index put option is a contract that reflects a bearish outlook. An investor who buys this derivative typically expects that its underlying index will decline in value during the life of the contract.

Differences Between Index Options and Stock Options

In addition to the fact that index options are based on the value of an underlying index as opposed to a stock, there are several other key differences between trading index options and stock options.

Trading Hours

Broad-based index options typically stop trading at 4:15pm ET during regular trading hours, with certain contracts on indexes eligible to continue trading from 4:15pm to 5:00pm ET. Some index options offer global trading hours from 8:15am-9:15am ET the following day.

When significant news drops after the market closes, it may affect the prices of narrow-based index options and stock options. Broad-based indexes may be less likely to be affected, as they typically reflect a more diversified mix of sectors within the index.

Recommended: When Is the Stock Market Closed?

Settlement Date and Style

While stock options use the American-style of exercise, which allows holders to exercise at any point leading up to expiration, most index options have European-style exercise, which allows exercise only at expiration (with some exceptions). That means the trader can’t exercise the index option until the expiration date. However, traders can still close out their index option positions by buying or selling them throughout the life of the contract.

As for settlement date, most stock index options usually stop trading on the Thursday before the third Friday of the month, with the settlement value typically determined based on Friday morning prices and processed that same day. Stock options, by contrast, have their last trading day on the third Friday of the month, with settlement typically processed the following business day.

Settlement Method

When settling stock options, the underlying stock typically changes hands upon the exercise of the contract. However, traders of index options typically settle their contracts in cash.

That’s because of the large number of securities involved. For example, an investor exercising a call option based on the S&P 500 would theoretically have to buy shares of all the stocks in that index.

What Are Options Trading Levels?

Some options trading strategies are more straightforward and may involve relatively lower investment risk compared to others. But there are ways to use options that can get rather complicated and may carry substantial risk. These strategies can typically be used with index options, though they may be subject to different expiration rules and brokerage approval standards. Some basic strategies (like buying puts) are widely accessible, while more complex trades involving spreads or uncovered positions also exist.

To help ensure investors are aware of the risks associated with various strategies, brokerages have something called options trading levels. Brokerages have enacted these levels to try to deter new investors from trading options they may not fully understand and experience significant losses in a short period.

If a brokerage determines that an investor faces a lower risk of seeing significant losses, and has the level of experience needed to manage risk, they can assign that investor a higher options trading level. Higher options levels open up a user’s account to additional investment strategies, which may enable them to trade different types of options.

Most brokerages offer four or five trading levels. Reaching all but the highest level usually requires completing a basic questionnaire to assess an investor’s knowledge.

Options Trading Level 1

This is the lowest level and typically allows a user to trade the simplest options only, such as covered calls and protective puts. A covered call is when an investor writes an out-of-the-money call option on stocks they own, and a protective put is when an investor buys put options on stocks already held.

These strategies require the trader to hold shares of the underlying stock, which may make these trades less risky than many others. There is also only one option leg to worry about, which can make executing the trade much simpler in practice.

Options Trading Level 2

Level 2 typically grants the right to buy calls and puts. The difference between level 2 and level 1 is that traders at level 2 can take directional positions. Most new traders are typically approved to start at this level.

Options Trading Level 3

At level 3, more complex strategies may become available. This level usually includes approval and margin to trade debit spreads. Though relatively complicated to execute, debit spreads may limit risk since the trader’s maximum loss is usually capped at the cash paid to buy the necessary options.

Options Trading Level 4

Level 4 may include permission to trade credit spreads, and is sometimes included in level 3 (in which case the brokerage would have only 4 levels). A credit spread functions similarly to a debit spread, although the trader receives a net premium upfront.

Calculating potential losses can be more complicated at this level. It is here that novice traders may inadvertently take on tremendous risk.

Options Trading Level 5

Level 5 involves the highest risk and may permit traders to write call options and put options without owning shares of the underlying stock. These trades expose investors to potentially unlimited losses and may be suitable only for very experienced options traders.

The most important requirement of level 5 is that an investor maintains sufficient margin in their account. That way, if an options trade moves against the investor, the broker can use the margin account to help cover potential losses.

Recommended: What Are Naked Options?

What Happens to Index Options On Expiry?

Most index options have a European-style exercise, although some index option series may differ. This means traders can only execute them at expiration. Investors may want to research which type of settlement their index options have before making a trade.

Upon expiration, the Options Clearing Corporation (OCC) may assign the option to one or more Clearing Members who have short positions in the same options. The Clearing Members may assign the option to one of their customers.

The index option writer is then responsible for paying any cash settlement amount. Settlement usually takes place on the next business day after expiration.

💡 Quick Tip: Before opening any investment account, consider what level of risk you are comfortable with. If you’re not sure, start with more conservative investments, and then adjust your portfolio as you learn more.

How to Trade Index Options

Trading index options may be one type of investment to consider as part of a broader diversified portfolio. For the most part, trading index options works like trading any other option. The big difference is that the underlying security will be an index, rather than a stock.

Here are a few basic steps that investors can consider when starting to trade index options.

• Request authorization from your brokerage for options trading

• Review how option chains are reflected in your brokerage account

• Study different option trading strategies and consider those that align with your level of expertise

• Before trading, develop a strategy for managing risk and closing out positions, if needed.

• Place a trade through your brokerage platform’s options account and monitor your trades.

The Takeaway

Index options are similar to stock options in that they are both financial derivatives. They are rooted in indexes, though, which typically reflect a segment or sector. Trading options and index options is a more complex strategy involving higher risk, and may not suit every investor’s risk tolerance.

Index investing with index options could appeal to investors looking to hedge their portfolios with alternative or derivative-based investments.

SoFi’s options trading platform offers qualified investors the flexibility to pursue income generation, manage risk, and use advanced trading strategies. Investors may buy put and call options or sell covered calls and cash-secured puts to speculate on the price movements of stocks, all through a simple, intuitive interface.

With SoFi Invest® online options trading, there are no contract fees and no commissions. Plus, SoFi offers educational support — including in-app coaching resources, real-time pricing, and other tools to help you make informed decisions, based on your tolerance for risk.

Explore SoFi’s user-friendly options trading platform.

Frequently Asked Questions

What are examples of index options?

Examples of index options include contracts based on the S&P 500 (SPX), Nasdaq-100 (NDX), and Russell 2000 (RUT). These index options let traders take positions on overall market segments rather than individual stocks. Index options are typically cash-settled and European-style, meaning they may only be exercised at expiration.

What is the difference between stock options and index options?

Stock options are tied to individual companies and often involve share delivery. Index options, on the other hand, track a broader market index and are usually cash-settled. Most stock options are American-style, whereas index options are commonly European-style, meaning they can only be exercised at expiration.

What is the risk of index options?

Index options carry risks, including the potential for significant losses. Sudden shifts in economic conditions can affect their value, given that they track broad market movements. Strategies like selling uncovered options can involve high risk and aren’t suitable for all investors.

What are S&P 500 index options?

S&P 500 index options (SPX) are contracts based on the S&P 500. They’re cash-settled, European-style, and commonly used to hedge or speculate on overall market performance. SPX options are popular for their liquidity and broad market exposure.

Photo credit: iStock/kate_sept2004

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Before an investor begins trading options they should familiarize themselves with the Characteristics and Risks of Standardized Options . Tax considerations with options transactions are unique, investors should consult with their tax advisor to understand the impact to their taxes.

Utilizing a margin loan is generally considered more appropriate for experienced investors as there are additional costs and risks associated. It is possible to lose more than your initial investment when using margin. Please see SoFi.com/wealth/assets/documents/brokerage-margin-disclosure-statement.pdf for detailed disclosure information.

Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.

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.

S&P 500 Index: The S&P 500 Index is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S. It is not an investment product, but a measure of U.S. equity performance. Historical performance of the S&P 500 Index does not guarantee similar results in the future. The historical return of the S&P 500 Index shown does not include the reinvestment of dividends or account for investment fees, expenses, or taxes, which would reduce actual returns.
Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. This and other important information are contained in the Fund’s prospectus. For a current prospectus, please click the Prospectus link on the Fund’s respective page. The prospectus should be read carefully prior to investing.
Alternative investments, including funds that invest in alternative investments, are risky and may not be suitable for all investors. Alternative investments often employ leveraging and other speculative practices that increase an investor's risk of loss to include complete loss of investment, often charge high fees, and can be highly illiquid and volatile. Alternative investments may lack diversification, involve complex tax structures and have delays in reporting important tax information. Registered and unregistered alternative investments are not subject to the same regulatory requirements as mutual funds.
Please note that Interval Funds are illiquid instruments, hence the ability to trade on your timeline may be restricted. Investors should review the fee schedule for Interval Funds via the prospectus.

SOIN-Q325-017

Oct

2025

How to Invest and Profit During Inflation

How to Invest During Inflation

By Brian O'Connell | Growing Wealth, invest, Investing | Comments Off

Table of Contents

What Is Inflation and How Does It Affect Your Investments?
How Are Investors Responding to Inflation in 2025?
Which Investments Might Perform Well During Inflation?
What to Consider Investing in During Inflation
General Strategies for Investing in an Inflationary Environment
FAQ

While inflation is commonly associated with the rising cost of consumer goods, inflation also impacts investments like stocks, bonds, real estate, and more.

Just as inflation can reduce a consumer’s purchasing power overall, inflation can also impact the performance of different asset classes — particularly fixed-income assets such as bonds and cash — potentially reducing portfolio returns. It’s important for investors to understand how to invest during inflation, and which assets can provide a buffer against inflationary conditions.

After all, inflation doesn’t have to spell bad news for investors. SoFi’s 2025 investor survey reveals that despite inflation concerns this year, most investors are holding steady or increasing their investment contributions.

Key Points

• Inflation affects purchasing power, and it can also take a toll on stocks, bonds, and other asset classes, impacting consumers and investors.

• Inflation can impact the performance of some stocks and bond yields, making it advisable to reconsider some investment choices during inflationary periods.

• During bouts of inflation, investors may want to consider inflation resistant assets, such as stocks of companies that can raise prices, commodities, TIPS, and I bonds.

• Inflation doesn’t affect all sectors of the economy in the same way, so investors must consider a range of options when adjusting their portfolios.

• Long-term investment plans may not need to be drastically changed due to temporary inflation spikes.

What Is Inflation and How Does It Affect Your Investments?

Inflation is defined as a steady rise in prices. When economic growth occurs, consumers and businesses have more money and tend to spend it. When cash flows through the economy, demand for goods and services grows, leading many companies to raise prices.

To some degree, inflation is a natural outcome of a growing economy. Historically, economic booms have come with an annual inflation rate of about 1% to 2%, a range that reflects solid consumer sentiment in a growing economy.

An inflation rate of 3%, 4%, 5% or more is associated with an overheated economy.

Conversely, prices fall when demand slides and supply is abundant; the inflation rate tumbles as economic growth wanes.

Key Measures of Inflation

The main barometer of inflation in the United States is the Consumer Price Index (CPI). The CPI encompasses the retail price of goods and services in common sectors such as housing, health care, transportation, food and beverage, and education, among other economic sectors.

The Federal Reserve uses a similar index, the Personal Consumption Expenditures Price Index (PCE), in its inflation-related measurements. Economists and investors track inflation on both a monthly and an annual basis.

Because investors may have less money to put into the markets when prices rise and their budgets become tighter, inflation may impact the people’s decision to buy stocks online or through a brokerage. Overall, it means there may be less liquidity in the markets. The relationship between investing and inflation may further be affected as interest rates are increased to combat rising prices, potentially affecting business profitability.

Recommended: Stock Market Basics

How Are Investors Responding to Inflation in 2025?

When facing a period of rising prices, deciding how to invest during inflation is top of mind for many investors. But as the 2025 SoFi Investor Insights Survey shows, many investors plan to stay the course. In fact, nearly two-thirds (65%) of respondents said they feel either optimistic or content about their investments over the past year.

A Steady Approach

Despite inflation concerns, most investors are holding steady or increasing their contributions. In fact, even given the potential impact of inflation, only 19% of investors wanted to invest less, while the remaining 82% planned to invest more or maintain their current strategy, including popular investments in 2025.

Donut chart: 46% left investments alone, 36% invested more, and 19% invested less due to inflation.
Source: SoFi 2025 Investor Insights Survey

This speaks to a mindset that can be beneficial when deciding how to invest during inflation or any time, but especially after you start an investing portfolio: It’s important to stick to your strategy — which is based on your financial goals and circumstances — and not make impulsive changes to your investments when there’s a temporary shift in the economy.

Which Investments Might Perform Well During Inflation?

Investing during inflation can be tricky, and it can be helpful to have a defensive investment strategy. It’s important to know that inflation impacts both stock and bond markets, but in different ways.

Inflation and the Stock Market

Inflation can have an indirect impact on stocks, partially reflecting consumer purchasing power. As prices rise, retail investors may have less money to put into the stock market, reducing market growth.

Also, when inflation rises, that puts pressure on investors’ stock market returns to keep up with the inflation rate. For instance, consider a stock portfolio that earns 5% before inflation. If inflation rises at a 6.0% rate, hypothetically, the portfolio may actually lose 1.0% on an inflation-adjusted basis, which can make it difficult to find high inflation investments.

Perhaps more importantly, high inflation may cause the Federal Reserve to raise interest rates to cool down the economy. Higher interest rates also make stock market investments less attractive to investors, as they can get higher returns in lower-risk assets like bonds.

However, some stocks and other assets can perform well in periods of rising prices, which can be a hedge against inflation. When inflation hits the consumer economy, companies often boost the prices of their goods and services to keep profits rolling, as their cost of doing business rises at the same time. In some cases, rising prices contribute to higher revenues, which may help boost a company’s stock price.

That said, rising inflation may raise the risk of an economic slowdown or recession. That scenario doesn’t bode well for strong stock market performance, as uncertainty about the overall economy tends to curb market growth.

Recommended: How Do Interest Rates Impact Stocks?

Inflation and the Bond Market

Inflation may be a drag on bond market performance, as well. Most bonds offer a fixed rate of return, paid in the form of interest or coupon payments. As fixed-income securities offer stable, but fixed, investment returns, rising inflation can eat at those returns, further reducing the purchasing power of bond market investors.

Additionally, the Federal Reserve’s response to inflation — higher interest rates — can lower the price of bonds because there is an inverse relationship between bond yields and bond prices. So, bond investors and bond funds may experience losses because of high interest rates.

What to Consider Investing in During Inflation

Investors can take several steps to help protect their portfolios during periods of high inflation. Choosing how to invest during inflation is like selecting investments at any other time — you’ll need to evaluate the asset itself and how it fits into your overall portfolio strategy both now and in the future.

1. Real Estate and REITs

In some cases, investing in certain types of real property assets and real estate investment trusts (REITs) can be useful during inflationary periods, because this alternative asset class tends to move in the opposite direction of stocks (which may suffer during inflation).

REITs and some types of real estate tend to see higher prices at these times, and thus pay higher dividends or income to investors. REITs are required to pay 90% of their income as dividends.

2. Stocks in Companies With Pricing Power

Investors might consider stocks where the underlying company can boost prices in times of rising inflation. Retail stocks, like big box stores or discount retailers with a global brand and a massive customer base, can be potential investments during high inflation periods. In that scenario, the retailer could raise prices and not only cover the cost of rising inflation but also continue to earn profits in a high inflation period.

Think of a consumer goods manufacturer that already has a healthy portion of the market for certain everyday items, and doesn’t need excess capital as it’s already well-invested in its own business. Companies with low capital needs tend to do better in inflationary periods, as they don’t have to invest more cash into the business to keep up with competitors — they already have a solid market position and the means to produce and market their products.

During periods of inflation, popular investing trends may reflect increased interest in retail or consumer staple stocks.

3. Commodities

Investing in precious metals, oil and gas, and other commodities may also be considered for and an option for inflation hedges. The price growth of many commodities contributes to high inflation. So investors may see returns by investing in commodities during high inflationary periods.

Take the price of oil, natural gas, and gasoline. Businesses and consumers rely highly on oil and gas and will likely keep filling up the tank and heating their homes, even if they have to pay higher prices. That helps make oil — and other commodities — an asset worth considering when inflation is on the move.

4. Treasury Inflation-Protected Securities (TIPS)

Treasury Inflation-Protected Securities (TIPS) can be an option to hedge against inflation. By design, TIPS are like most bonds that pay investors a fixed rate twice annually. They’re also protected against inflation as the principal amount of the securities is adjusted for inflation.

5. I Bonds

During periods of high inflation, investors may consider investing in Series I Savings Bonds, commonly known as I Bonds. I Bonds are indexed to inflation like TIPS, but the interest rate paid to investors is adjustable. With an I bond, investors earn both a fixed interest rate and a rate that changes with inflation. The U.S. Treasury sets the inflation-adjusted interest rate on I Bonds twice a year.

General Strategies for Investing in an Inflationary Environment

Aside from considering some of the above investments when investing for inflation, there are some strategies that may also be beneficial to consider.

Stay Focused on Your Long-Term, Diversified Plan

While there are some investing strategies that are exclusively focused on short-term results, most investors plan to invest for the long term — an approach that allows for greater stability over time.

An important tenet of long-term investing is to “buy and hold” investments so they have a chance to grow over the target period of time, weathering the markets’ ups and downs. This approach enables investors to maintain a plan that’s based on their financial values, and which matches their circumstances and helps them reach their goals. It also helps investors avoid making needless changes out of fear or other market reactions.

Another component of a long-term investment strategy is to employ the principles of diversification, which means holding a range of different asset types in your portfolio, in order to help manage risk factors.

Consider Dollar-Cost Averaging to Manage Volatility

Dollar-cost averaging is a strategy that helps manage price volatility, which can be a factor during an inflationary period. With DCA, you pick the securities you want to invest in, and the dollar amount you want to invest on a regular basis (e.g., weekly, monthly, etc.). Typically, people invest the same amount each time, to end up buying more when prices are lower — and less when they’re higher.

Over time, however, the average cost of investments tends to be lower, which may yield potential returns.

Using the DCA method may keep your investment strategy on track — and investors may be less likely to react impulsively or emotionally in response to certain events or headlines, which can increase the risk of loss.

The Takeaway

Investors may want to proceed with caution when inflation rises. It may be tempting to readjust your portfolio because prices are rising. Periods of high inflation usually wane, so throwing a long-term investment plan out the window just because inflation is moving upward may knock you off course to meet your long-term financial goals.

Invest in what matters most to you with SoFi Active Invest. In a self-directed account provided by SoFi Securities, you can trade stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, options, and more — all while paying $0 commission on every trade. Other fees may apply. Whether you want to trade after-hours or manage your portfolio using real-time stock insights and analyst ratings, you can invest your way in SoFi's easy-to-use mobile app.

Invest with as little as $5 with a SoFi Active Investing account.

FAQ

Which investments tend to perform poorly during inflation?

Inflation erodes the value of cash, and as such it can impact a range of securities, including long-term fixed-rate bonds, certain types of stocks, and cash as well as low-interest cash accounts.

Are investors making impulsive decisions in 2025?

The tendency to make impulsive choices can occur at any time. According to SoFi’s 2025 investor survey, however, it does seem that the majority of investors are staying the course.

Is gold a good hedge against inflation?

Some investors believe that gold can be a way to hedge against inflation, because gold has intrinsic (i.e., tangible) value, a limited supply, and the price of gold has been known to rise when inflation-wary investors put more money into this precious metal. That said, the price of gold can fluctuate, and there is always a risk with any investment.

Should I stop investing when inflation is high?

Historically, many long-term investors maintain their established strategy during periods of high inflation. Some investors may consider defensive positions, such as rotating into inflation-protected assets or consumer staples, depending on their risk tolerance.

How can interest rate changes by the Fed affect my investments?

When the Federal Reserve raises or lowers interest rates, that can impact stocks and bonds in different ways. When the Fed lowers rates, that lowers the cost of loans, which can boost company performance and stock prices. Bonds with lower yields may be less appealing. When the Fed raises rates, that increases borrowing costs, which can put a damper on stocks, but raise bond yields.

Photo credit: iStock/pondsaksit

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SOIN-Q325-064

Oct

2025

Covered Calls: The Basics of Covered Call Strategy

By Samuel Becker | Growing Wealth, invest, Investing | Comments Off

Table of Contents

What Is a Covered Call?
What’s the Difference Between a Call and a Covered Call?
Example of a Covered Call
When and Why Should You Do a Covered Call?
Pros and Cons of Covered Calls
FAQ

With most things in life, it helps to be covered — by a coworker, an insurance policy, or a roof over your head. In investing, it can also be helpful to have coverage through specific strategies. A covered call is an options trading strategy that involves selling call options on stocks you already own, with the goal of potentially generating income.

Here’s a breakdown of how a covered call strategy works, when to consider it, and how it may — or may not — perform depending on market positions.

Key Points

• A covered call strategy involves selling call options on owned assets to try to generate income, with limited upside if the stock’s price surges.

• Using covered calls may provide additional income from stock holdings through the premiums received.

• Premiums from covered calls may offer limited protection against stock price declines, which could help offset potential losses.

• Capped gains risk occurs if the stock price rises sharply above the call option’s strike price.

• Employing covered calls restricts the ability to sell stocks freely, as the call option must be honored if exercised.

What Is a Covered Call?

A covered call is an options trading strategy used to generate income by selling call options on a security an investor already owns. This strategy can be beneficial to the investor if they expect the stock’s price to experience limited movement or remain neutral, though it may limit potential gains if the stock rises sharply above the strike price.

Call Options Recap

A call is a type of option that gives purchasers the right, but not the obligation, to buy shares of an underlying asset or stock at a specific, prearranged price, called the strike price. A call is in contrast to a put option, which gives buyers the right, but not the obligation, to sell the underlying asset at the strike price.

An investor who purchases a call option holds a long position in the option — that is, they anticipate that the underlying stock may appreciate. For example, an investor who anticipates a stock’s price increase might buy shares, hold them, wait for appreciation, and — assuming they do appreciate — sell them to potentially realize a gain.

Call options allow options buyers to pursue a similar strategy without buying the underlying shares. Instead, a premium is paid for the right to buy the shares at the strike price, allowing buyers to profit if the market price rises above the strike price.

Call option writers (or sellers), on the other hand, typically sell call options when they anticipate that the price of the underlying asset will decline, allowing them to keep the premium, or price paid for the option, when the option expires worthless.

What’s the Difference Between a Call and a Covered Call?

The main difference between a regular call and a covered call is that a covered call is “covered” by an options seller who holds the underlying asset. That is, if an investor sells call options on Company X stock, it would be “covered” if they already own an equivalent number of shares in Company X stock. Conversely, if an investor does not own any Company X stock and sells a call option, they’re executing what’s known as a “naked” option, which carries a much higher risk because losses can theoretically be unlimited if the stock rises sharply.

In a covered call, the seller’s maximum profit is limited to the premium plus any stock appreciation up to the call’s strike price, while the maximum loss equals the price paid for the stock minus the premium received. This same structure can be helpful to clarify gains and losses.

It’s worth noting that losses, overall, could be substantial if the price of the stock purchased falls to zero and becomes worthless, though the premium received from the call option sold may cushion the loss to a certain extent.

Example of a Covered Call

The point of selling covered calls is typically to generate income from existing stock positions. If, for example, you have 100 shares of Company X stock and were looking for ways to pursue additional income, you might consider selling covered calls to other investors.

Here’s what that might look like in practice:

Your 100 shares of Company X stock are worth $50 each or $5,000 at the current market value. To make a little extra money, you decide to sell a call option with a $10-per-share premium at a strike price of $70. Since standard options contracts typically represent 100 shares, you receive a total of $1,000 for the option.

Let’s say that Company X stock’s price only rises to $60, and the buyer doesn’t exercise the option, so it expires. In this scenario, you’ve earned a total of $1,000 by the selling covered call option, and your shares have also appreciated to a value of $6,000. So, you now have a total of $7,000.

The ideal outcome in this strategy is that your shares rise in value to near the strike price, (say, $69) but the buyer doesn’t exercise the option. In that scenario, you still own your shares (now worth $6,900) and get the $1,000 premium.

But the risk of selling covered call options is that you might forgo higher gains if the stock significantly exceeds the strike price.

So, if Company X stock rises to $90 and the call buyer executes their option, you would then be obligated to sell your 100 shares, which are now worth $9,000 on the open market. You would still get the $1,000 premium, plus the value of the shares at the predetermined strike price of $70 (or $7,000) — bringing the total trade value to $8,000. Effectively, you’ve turned a holding valued at $5,000 into $8,000, though doing so caps your upside and forfeits potential gains beyond the strike price.

On the other hand, had the covered call never been initiated, your shares could be worth $9,000. This illustrates the trade-off involved in selling covered calls: capped upside in exchange for income.

Recommended: How to Sell Options for Premium

When and Why Should You Do a Covered Call?

There is no single correct time to use a covered call strategy — it depends on weighing potential risks and evaluating the market environment.

Some investors may choose to write covered calls when the market is expected to climb moderately — or at least stay neutral. Since market outcomes are uncertain, investors should be ready and willing to sell their holdings at the agreed strike price.

As for why an investor might use covered calls? The goal is often to generate income from existing stock holdings. Another potential reason to use covered calls, for some investors, is to offset some risk using the premium received.

Pros and Cons of Covered Calls

Using a covered call strategy could serve specific purposes for income generation or risk management. But there are pros and cons to consider.

Covered Call Pros

The benefits of utilizing covered calls include the potential to receive added income and offset downside risk.

• Investors can potentially pad their income by keeping the premiums they earn from selling the options contracts. Depending on how often they sell covered calls, this can lead to recurring income opportunities.

• Investors can determine an adequate selling price for the stocks that they own. If the option is exercised, an investor can potentially realize a profit from the sale (as well as the premium).

• The premium the investor receives for the sold call can potentially help offset a potential decline in a stock’s price. This provides limited downside protection, though losses can still occur.

Covered Call Cons

There are also a few drawbacks to using a covered call strategy:

• Investors could miss out on potential profits if a stock’s price rises, and continues to rise, above the strike price. This is an inherent trade-off of the strategy. There is also the risk that the option is exercised and the investor must sell a stock — although, investors should typically only consider covered calls for assets that they’re prepared to sell.

• An investor may be unable to sell their stocks on the market if they’ve written a call option on the shares. This limits the investor’s flexibility to respond to price movements.

• Investors need to keep in mind that covered call gains may be subject to capital gains taxes.

The Takeaway

A covered call may be attractive to some investors as it’s a way to potentially generate additional income from a stock position. That said, as with all trading strategies, outcomes may vary based on market conditions and timing. There are no guarantees, and the strategy involves trade-offs between income potential and capped gains.

Explore SoFi’s user-friendly options trading platform.

FAQ

Are covered calls free money?

Covered calls are not “free money.” They may generate income if the option expires worthless, but they can also limit upside potential if the stock’s value increases significantly or the option is exercised when the price rises toward the strike.

Are covered calls profitable?

Covered calls may be profitable, but results depend on the performance of the underlying stock and the terms of the option contract. If the option expires unexercised, the seller keeps the premium and the stock. The strategy tends to work best in neutral to moderately bullish markets, and profitability can depend on strike selection and timing.

What happens when you let a covered call expire?

If a covered call expires without being exercised, nothing happens: the option just expires worthless. The seller keeps the premium received, which can be a benefit of the strategy. Because an option is only that — an option to execute a trade at a predetermined price for a select period of time — the option holder’s reluctance to execute during the time period means that the option will expire worthless.

Can you make a living selling covered calls?

Living strictly off income from covered calls may be theoretically possible, but it would likely require a large portfolio to make it work. There are other factors to consider, too, like potential capital gains taxes and the fact that the market won’t always be in a favorable environment for the strategy to work.

Photo credit: iStock/millann

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SOIN-Q225-076

Oct

2025

Is Inflation a Good or Bad Thing for Consumers?

By Rebecca Lake | Growing Wealth, invest, Investing | Comments Off

Table of Contents

What Is Inflation?
Is Inflation Good or Bad?
Who Benefits From Inflation?
Who Does Inflation Hurt the Most?
How to Invest During Times of Inflation
FAQ

There are two sides to inflation for consumers: The rising cost of goods and services means that the basic cost of living rises for most people. But a certain amount of inflation can spur production and economic growth.

Deciding whether inflation is good or bad therefore depends on how various factors might play out in different economic sectors.

Key Points

• Inflation has a dual impact on consumers, affecting economic growth and wages while raising living costs and causing instability.

• Moderate inflation can boost employment and sustain economic expansion by encouraging spending and investment.

• Excessive inflation pressures household budgets, increases costs, and reduces purchasing power, potentially leading to higher unemployment and lower investment returns.

• Core inflation, excluding food and energy, provides a stable measure for long-term economic analysis and trend tracking.

• Strategies to help protect investments during inflation may include TIPS, real estate ETFs, REITs, dollar-cost averaging, and portfolio diversification.

What Is Inflation?

Inflation is an economic trend in which prices for goods and services rise over time. The Federal Reserve (the Fed) uses different price indexes to track inflation and determine how to shape monetary policy.

Generally speaking, the Fed targets a 2% annual inflation rate as measured by pricing indexes, including the Consumer Price Index. Rising demand for goods and services can trigger inflation when there’s an imbalance in supply. This is known as demand-pull inflation.

Cost-push inflation occurs when the price of commodities rises, pushing up the price of goods or services that rely on those commodities.

Asking whether inflation is bad isn’t the right lens for this economic factor. Inflation can have both pros and cons for consumers and investors. Understanding the potential effects of inflation can help increase the positives while decreasing the negatives.

Is Inflation Good or Bad?

Answering the question of whether inflation is good or bad means understanding why inflation matters so much. The Federal Reserve takes an interest in inflation because it relates to broader economic and monetary policy.

Some level of inflation in an economy is normal, and an indication that the economy is continuing to grow. Inflation rates have, historically, seen the most change during or right after recessions.

The Fed believes that its 2% target inflation rate encourages price stability and maximum employment.

Broadly speaking, high inflation can make it difficult for households to afford basic necessities, such as food and shelter. When inflation is too low, that can lead to economic weakening. If inflation trends too low for an extended period of time, consumers may come to expect that to continue, which can create a cycle of low inflation rates.

That may sound good, as lower inflation means prices are not increasing over time for goods and services. So consumers may not struggle to afford the things they need to maintain their standard of living. But prolonged low inflation can impact interest rate policy.

The Federal Reserve uses interest rate cuts and hikes as a tool to help keep the economy on an even keel. For example, if the economy is in danger of overheating because it’s growing too rapidly, or inflation is increasing too quickly, the Fed may raise rates to encourage a pullback in borrowing and spending.

Conversely, when the economy is in a downturn, the Fed may cut rates to try to promote spending and borrowing. If borrowing money is cheaper, more people will do it in order to finance purchases, or so goes the logic.

When both inflation and interest rates are low, that may not leave much room for further rate cuts in an economic crisis, which may spur higher employment rates. If prices for goods and services continue to decline, that could lead to a period of deflation or even a recession.

So, is inflation good or bad? The answer is that it can be a little of both. How deeply inflation affects consumers or investors, and who it affects most, depends on what’s behind rising prices, how long inflation lasts, and how the Fed manages interest rates.

What Is Core Inflation?

Core inflation measures the rising cost of goods and services in the economy, but excludes food and energy costs. Food and energy prices are notoriously volatile, even though demand for these staples tends to remain steady.

Both food and energy prices are partly driven by the price of commodities, which also tend to fluctuate, owing to speculation in the commodities markets. So the short-term price changes in these two markets make it difficult to include them in a long-term reading of inflationary trends: hence the core inflation metric.

The Consumer Price Index and the core personal consumption expenditures index (PCE) are the two main ways to measure underlying inflation that’s long term.

Who Benefits From Inflation?

The Federal Reserve believes some inflation is good and even necessary to maintain a healthy economy. The key is keeping inflation rates at acceptable levels, such as the 2% annual inflation rate target. Staying within this proverbial Goldilocks zone can result in numerous positive impacts for consumers and the economy in general.

Pros of Inflation

Sustainable inflation can yield these benefits:

• Higher employment rates

• Continued economic growth

• Potential for higher wages if employers offer cost-of-living pay raises

• Cost-of-living adjustments for those receiving Social Security retirement benefits

The danger, of course, is that inflation escalates too rapidly, requiring the Federal Reserve to raise interest rates as a result. This increases the overall cost of borrowing for consumers and businesses.

Who Is Inflation Good For?

Inflation can benefit certain groups, depending on how it impacts Fed shapes monetary policy. Some of the people who can benefit from inflation include:

• Savers, if an interest rate hike results in higher rates on savings accounts, money market accounts or certificates of deposit

• Debtors, if they’re repaying loans with money that’s worth less than the money they borrowed

• Homeowners who have a low, fixed-rate mortgage

• People who hold investments that appreciate in value as inflation rises

💡 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.

Who Does Inflation Hurt the Most?

Some of the negative effects of inflation are more obvious than others. And there may be different consequences for consumers versus investors.

Cons of Inflation

In terms of what’s bad about inflation, here are some of the biggest cons:

• Higher inflation means goods and services cost more, potentially straining consumer paychecks

• Investors may see their return on investment erode if higher inflation diminishes purchasing power, or if they’re holding low-interest bonds

• Unemployment rates may climb if employers lay off staff to cope with rising overhead costs

• Rising inflation can weaken currency values

Inflation can be particularly bad if it leads to hyperinflation. This phenomenon occurs when prices for goods and services increase uncontrolled over an extended period of time. Generally, this would mean an inflation growth rate of 50% or more per month.

While hyperinflation has never happened in the United States, there are many examples from different time periods around the world: For example, Zimbabwe experienced a daily inflation rate of 98% in 2007-2008, when prices doubled every day.

Recommended: How to Protect Yourself From Inflation

Who Is Inflation Bad For?

The negative impacts of inflation can affect some more than others. In general, inflation may be bad for:

• Consumers who live on a fixed income

• People who plan to borrow money, if higher interest rates accompany the inflation

• Homeowners with an adjustable-rate mortgage

• Individuals who aren’t investing in the market as a hedge against inflation

Inflation and higher prices can be detrimental to retirees whose savings may not stretch as far, particularly when health care becomes more expensive.

If the cost of living increases but wages stagnate, that can also be problematic for workers because they end up spending more for the same things.

How to Invest During Times of Inflation

While inflation is an investment risk to consider, some investing strategies can help minimize its impact on your portfolio.

How to Protect Your Money From Inflation

The first step is to understand that inflation rates may be variable from year to year, but the upward trend in the cost of goods and services is typically a factor investors must contend with. Essentially, if inflation is historically about 2% per year, it’s ideal to look for returns above that.

For example, while savings accounts may yield more interest if the Fed raises interest rates, investing in stocks, exchange-traded funds (ETFs) or mutual funds could generate higher returns, though these investments also come with a higher degree of risk.

• Diversification. Having a diversified portfolio that includes a mix of stock and bonds and other asset classes may help mitigate the impact of inflation.

• Always be aware of investment costs and the impact of taxes and fees. Minimizing investment costs is a time-honored way to keep more of what you earn.

• Investing in Treasury-Inflation Protected Securities (TIPS). TIPS are government-issued securities designed to generate consistent returns regardless of inflationary changes.

• If prices are rising, that can increase rental property incomes. Some investors could benefit from that by investing in real estate ETFs or real estate investment trusts (REITs) if you’re seeking to not own directly property.

• Compounding interest allows you to earn interest on your interest, which is consideration for building wealth.

• Dollar-cost averaging means investing continuously, whether stock prices are low or high. When inflationary changes are part of a larger shift in the economic cycle, investors who dollar-cost average can still reap long term benefits, despite rising prices.

The Takeaway

Inflation is unavoidable, but you can take steps to help minimize the impact to your personal financial situation. Building a well-rounded portfolio of stocks, ETFs and other investments is one strategy for keeping pace with rising inflation. Being aware of how taxes and fees can impact your returns is another way to keep more of what you earn.

Opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.¹

FAQ

How is economic deflation different from inflation?

Deflation is when the cost of goods and services trends downward rather than upward (the sign of inflation). Deflation can be positive for consumers, as their money goes further, but prolonged deflation can also be a sign of a contraction.

How do homeowners benefit from inflation?

Typically tangible assets like real estate tend to increase in value over time, even in the face of inflation. Currency, on the other hand, tends to lose value.

How does the government measure inflation?

The Bureau of Labor Statistics produces the Consumer Price Index (CPI), based on the change in cost for a range of goods and services. The CPI is the most common indicator of inflation.

Photo credit: iStock/AJ_Watt

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

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

¹Probability of Member receiving $1,000 is a probability of 0.026%; If you don’t make a selection in 45 days, you’ll no longer qualify for the promo. Customer must fund their account with a minimum of $50.00 to qualify. Probability percentage is subject to decrease. See full terms and conditions.
Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.

Mutual Funds (MFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or clicking the prospectus link on the fund's respective page at sofi.com. You may also contact customer service at: 1.855.456.7634. Please read the prospectus carefully prior to investing.Mutual Funds must be bought and sold at NAV (Net Asset Value); unless otherwise noted in the prospectus, trades are only done once per day after the markets close. Investment returns are subject to risk, include the risk of loss. Shares may be worth more or less their original value when redeemed. The diversification of a mutual fund will not protect against loss. A mutual fund may not achieve its stated investment objective. Rebalancing and other activities within the fund may be subject to tax consequences.

Exchange Traded Funds (ETFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or by emailing customer service at [email protected]. Please read the prospectus carefully prior to investing.

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

Dollar Cost Averaging (DCA): Dollar cost averaging is an investment strategy that involves regularly investing a fixed amount of money, regardless of market conditions. This approach can help reduce the impact of market volatility and lower the average cost per share over time. However, it does not guarantee a profit or protect against losses in declining markets. Investors should consider their financial goals, risk tolerance, and market conditions when deciding whether to use dollar cost averaging. Past performance is not indicative of future results. You should consult with a financial advisor to determine if this strategy is appropriate for your individual circumstances.

An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. This and other important information are contained in the Fund’s prospectus. For a current prospectus, please click the Prospectus link on the Fund’s respective page. The prospectus should be read carefully prior to investing.
Alternative investments, including funds that invest in alternative investments, are risky and may not be suitable for all investors. Alternative investments often employ leveraging and other speculative practices that increase an investor's risk of loss to include complete loss of investment, often charge high fees, and can be highly illiquid and volatile. Alternative investments may lack diversification, involve complex tax structures and have delays in reporting important tax information. Registered and unregistered alternative investments are not subject to the same regulatory requirements as mutual funds.
Please note that Interval Funds are illiquid instruments, hence the ability to trade on your timeline may be restricted. Investors should review the fee schedule for Interval Funds via the prospectus.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOIN-Q325-125