Free margin is equity in a trader’s account not reserved for margin or open positions, and which is available to be used to open new trades. Free margin is also the amount your existing holdings can move against you before you face a margin call.
Changes in market values can impact this important margin balance when trading foreign exchange (“forex” or FX) and other derivative instruments. For investors, this can be an important concept to understand.
What Is Free Margin?
Free margin is the equity in a forex trading account that is not invested in open positions. It is also known as “usable margin” since you can open new positions with your free margin balance.
Margin works differently in forex versus with trading stocks. Margin in stock trading means you trade with borrowed funds and owe interest on the loan. Margin in forex is simply a deposit set aside to cover the potential for very large losses when you trade large amounts of currency.
Free margin in forex tells you how much wiggle room you have on your current holdings before you get hit with a margin call. A margin call can occur when your account’s margin level dips below 100%. You can also face a stop out call when your margin percentage declines below 50%.
Free margin also indicates how much you can withdraw from your account if you have no hedged positions.
💡 Quick Tip: Are self-directed brokerage accounts cost efficient? They can be, because they offer the convenience of being able to buy stocks online without using a traditional full-service broker (and the typical broker fees).
How Does Free Margin Work?
In general, margin can be categorized as “used” or “free.”
Used margin is the total amount of all the required margin from all your open positions. Free margin is the difference between equity and used margin — the available margin not taken up by current positions. You can use free margin to open new positions in the forex market.
Within the forex market, free margin is a constantly changing balance. The prices of currency pairs move throughout the day, so the free margin on your account will also fluctuate. Traders must constantly monitor their margin levels during the trading day. The forex market trades 24 hours a day for five and half days a week, so changes can also happen in the overnight hours.
Let’s say you have a forex trading account with 100:1 leverage. Your margin deposit is $100. That means you can trade an amount up to $10,000. Now say you take a $20 position at 100:1 leverage. Your position size controls $2,000 of currency value. That $20 position is locked by your broker. The remaining $80 is your free margin. You can use up to that amount to trade more currency pairs in the FX market.
If the market moves to your benefit, your portfolio’s equity increases. You will have more free margin available as your holdings move in your favor. Free margin declines when the market moves against you, though.
Free Margin vs Used Margin
There are some key differences to know between free margin and used margin:
Free Margin
Used Margin
The amount of margin available to open new positions
The amount held in reserve for existing positions
Also known as usable margin
An aggregate of all the required margin from open positions
The difference between equity and used margin
Equity minus free margin
Margin vs Free Margin
Similarly, there are some differences to understand between margin and free margin:
Margin
Free Margin
A good faith deposit with a broker when trading forex
The amount existing positions can move against the trader before the broker issues a margin call
Collateral to protect the broker from excessive losses by the trader
Total margin minus used margin
The amount of money reserved when you open a new position
When free margin is zero or negative, new positions cannot be opened
Free Margin in Forex
Free margin is important to understand in forex trading. Volatility in your balances can be high due to the amount of leverage employed. Some traders have leverage ratios up to 500:1, while risk-averse traders can simply trade with only their margin. Trading with only your margin means you are not using leverage.
Free margin in forex tells a trader how much more money they can use to open new positions. It is also a risk management indicator, in that it can be seen as a kind of buffer amount before a margin call or forced liquidation is issued.
💡 Quick Tip: One of the advantages of using a margin account, if you qualify, is that a margin loan gives you the ability to buy more securities. Be sure to understand the terms of the margin account, though, as buying on margin includes the risk of bigger losses.
The Takeaway
Free margin in forex is the equity in a trader’s account that is not reserved in margin for open positions. It is considered the margin available to use for new trades and the amount your current positions can move against you before you get a margin call or automated stop out.
Free margin is an important term to know when trading in the forex market. Forex, with its often high degree of leverage and wide trading hours, can be more complicated than trading stocks and exchange-traded funds (ETFs).
Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).
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FAQ
Can you withdraw free margin?
Yes. Free margin in forex is the amount available to withdraw from your trading account if you have no hedged positions. If you have hedged positions, the amount you can withdraw is your equity minus margin hedges.
Is margin money free?
Margin in forex is your good faith deposit. It is considered collateral you post to trade on leverage. It does not cost you anything since you do not pay interest on that amount or on the amount of assets you control when trading with leverage. Margin is broken down into “used” or “free.” If you have open positions, then not all your margin is free.
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SoFi Invest® INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below:
Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit 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.
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.
*Borrow at 10%. 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. Claw Promotion: Customer must fund their Active Invest account with at least $25 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.
Theta, in relation to options, describes the rate in change in an option’s value. Options have two sources of value: intrinsic value and time value. From the moment an options contract is created, the time value component decays. This rate of change in value with respect to time is known as theta.
Understanding theta is crucial if you are going to trade options. Several factors, including an option’s moneyness and the time to expiration, will impact theta. Here are the basic concepts that you should know about.
How Does Theta Work?
Holding all other factors equal, options tend to decline in value over time as they approach their expiration date. The intuition behind this relationship is simple: once an option expires, it can no longer be exercised, and thus it no longer has any value.
This rate of change in value of an option is referred to as theta. Usually displayed as a negative dollar amount, an option’s theta value represents how much an option’s price decreases per day as it matures.
One way to think of theta in options trading is an analogy of an ice cube sitting on a countertop. As the ice cube sits on the warm countertop, it gradually melts away, and the melting becomes more rapid as time passes. Similarly, an option’s time value always decreases, with the decrease becoming more rapid the closer an option is to expiring.
Let’s say there is a stock ABC with a price of $80. The theta for an options contract expiring in three months with a strike price of $85 might be -$0.05. That means you can expect to lose five cents per day due to time decay, or theta. That doesn’t necessarily mean that the security’s price will go down each day, since it will also be affected by up and down movements of the underlying stock price itself.
In this scenario, not all options of stock ABC will have the same theta value of -$0.05. An option with the same strike price of $85 but a year until expiration will usually have a lower theta than one expiring next month.
💡 Quick Tip: Options can be a cost-efficient way to place certain trades, because you typically purchase options contracts, not the underlying security. That said, options trading can be risky, and best done by those who are not entirely new to investing.
What Is a Negative Theta in Options?
Because theta represents the amount of money an option contact loses every day, it is customarily represented as a negative number. A theta value of -$0.15 for a particular option means that particular option will lose 15 cents of time value each day.
But because the time value loss of an option (theta) isn’t linear, you shouldn’t expect it to lose exactly 15 cents of time value every day. Theta will increase as the option expiration date gets closer. This is very important to know if you’re attempting to time the market, since it will help you understand when the best time is to make your move.
Understanding Options Theta Decay
There are many different strategies for trading options, and theta affects them differently. Since theta is a negative number, it works against buyers of options. But if you are selling an option (like in a covered call or other option strategy), theta works in your favor.
When you are selling an option contract, you are hoping that the option will decrease in value or expire worthless. So a high theta value works for an option seller since it represents the amount of money the contract will lose each day.
💡 Quick Tip: When you’re actively investing in stocks, it’s important to ask what types of fees you might have to pay. For example, brokers may charge a flat fee for trading stocks, or require some commission for every trade. Taking the time to manage investment costs can be beneficial over the long term.
Calculating Theta
Calculating theta, or any of the other Greeks, requires using advanced mathematical formulas, and depends on the particular pricing model you choose. Options investors typically calculate theta on a daily or weekly basis.
Generally theta will be smaller for options that are far away from their expiration date and larger as you get closer to expiration. You can use this knowledge to determine your best plan depending on your time horizon for investing.
The Takeaway
Whether you’re trading basic options or more complicated options spreads, it is important to understand theta. It represents how much value your option will lose as time moves closer to its maturity, holding other factors constant. One needs to be especially careful to take note of theta when trading out-of-the-money options.
Qualified investors who are ready to try their hand at options trading, despite the risks involved, might consider checking out SoFi’s options trading platform. The platform’s user-friendly design allows investors to trade through the mobile app or web platform, and get important metrics like breakeven percentage, maximum profit/loss, and more with the click of a button.
Plus, SoFi offers educational resources — including a step-by-step in-app guide — to help you learn more about options trading. Trading options involves high-risk strategies, and should be undertaken by experienced investors.
For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.
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SoFi Invest® INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below:
Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit 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.
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.
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. Claw Promotion: Customer must fund their Active Invest account with at least $25 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.
If you received a bonus and you’re wondering what to do with the bonus money, you’re not alone. Investing your bonus money in a tax-advantaged retirement account like a 401(k) has some tangible advantages. Not only will the extra cash help your nest egg to grow, you could also see some potential tax benefits.
Of course, we live in a world of competing financial priorities. You could also pay down debt, spend the money on something you need, save for a near-term goal — or splurge! The array of choices can be exciting — but if a secure future is your top goal, it’s important to consider a 401(k) bonus deferral.
Here are a few strategies to think about before you make a move.
Receiving a Bonus Check
First, a practical reminder. When you get a bonus check, it may not be in the amount that you expected. This is because bonuses are subject to income tax withholding. Knowing how your bonus is taxed can help you understand how much you’ll end up with so you can determine what to do with the money that’s left, such as making a 401(k) bonus contribution. The IRS considers bonuses as supplemental wages rather than regular wages.
Ultimately, your employer decides how to treat tax withholding from your bonus. Employers may withhold 22% of your bonus to go toward federal income taxes. But some employers may add your whole bonus to your regular paycheck, and then tax the larger amount at normal income tax rates. If your bonus puts you in a higher tax bracket for that pay period, you may pay more than you expected in taxes.
Also, your bonus may come lumped in with your paycheck (not as a separate payout), which can be confusing.
Whatever the final amount is, or how it arrives, be sure to set aside the full amount while you weigh your options — otherwise you might be tempted to spend it.
💡 Quick Tip: Want to lower your taxable income? Start saving for retirement with a traditional IRA. The money you save each year is tax deductible (and you don’t owe any taxes until you withdraw the funds, usually in retirement).
What to Do With Bonus Money
There’s nothing wrong with spending some of your hard-earned bonus from your compensation. One rule of thumb is to set a percentage of every windfall (e.g. 10% or 20%) — whether a bonus or a birthday check — to spend, and save the rest.
To get the most out of a bonus, though, many people opt for a 401k bonus deferral and put some or all of it into their 401(k) account. The amount of your bonus you decide to put in depends on how much you’ve already contributed, and whether it makes sense from a tax perspective to make a 401(k) bonus contribution.
Contributing to a 401(k)
The contribution limit for 401(k) plans in 2024 is $23,000; for those 50 and older you can add another $7,500, for a total of $30,500. The contribution limit for 401(k) plans in 2023 is $22,500; for those 50 and older you can add another $7,500, for a total of $30,000. If you haven’t reached the limit yet, allocating some of your bonus into your retirement plan can be a great way to boost your retirement savings.
In the case where you’ve already maxed out your 401(k) contributions, your bonus can also allow you to invest in an IRA or a non-retirement (i.e. taxable) brokerage account.
In 2024, the contribution limit for traditional IRAs and Roth IRAs is $7,000; with an additional $1,000 if you’re 50 or older. In 2023, the contribution limit for traditional IRAs and Roth IRAs is $6,500; with an additional $1,000 if you’re 50 or older. But if your income is over $161,000 (for single filers) or over $240,000 (for married filing jointly) in 2024, you aren’t eligible to contribute to a Roth. For 2023, you can’t contribute to a Roth if your income is over $153,000 (for single filers) or over $228,000 (for married filing jointly). And while a traditional IRA doesn’t have income limits, the picture changes if you’re covered by a workplace plan like a 401(k).
If you’re covered by a workplace retirement plan and your income is too high for a Roth, you likely wouldn’t be eligible to open a traditional, tax-deductible IRA either. You could however open a nondeductible IRA. To understand the difference, you may want to consult with a professional.
Contributing to a Taxable Account
Of course, when you’re weighing what to do with bonus money, you don’t want to leave out this important option: Opening a taxable account.
While employer-sponsored retirement accounts typically have some restrictions on what you can invest in, taxable brokerage accounts allow you to invest in a wider range of investments.
So if your 401(k) is maxed out, and an IRA isn’t an option for you, you can use your bonus to invest in stocks, bonds, exchange-traded funds (ETFs), mutual funds, and more in a taxable account.
Deferred Compensation
You also may be able to save some of your bonus from taxes by deferring compensation. This is when an employee’s compensation is withheld for distribution at a later date in order to provide future tax benefits.
In this scenario, you could set aside some of your compensation or bonus to be paid in the future. When you defer income, you still need to pay taxes later, at the time you receive your deferred income.
💡 Quick Tip: Did you know that opening a brokerage account typically doesn’t come with any setup costs? Often, the only requirement to open a brokerage account — aside from providing personal details — is making an initial deposit.
Your Bonus and 401(k) Tax Breaks
Wondering what to do with a bonus? It’s a smart question to ask. In order to maximize the value of your bonus, you want to make sure you reduce your taxes where you can.
One method that’s frequently used to reduce income taxes on a bonus is adding some of it into a tax-deferred retirement account like a 401(k) or traditional IRA. The amount of money you put into these accounts typically reduces your taxable income in the year that you deposit it.
Here’s how it works. The amount you contribute to a 401(k) or traditional IRA is tax deductible, meaning you can deduct the amount you save from your taxable income, often lowering your tax bill. (The same is not true for a Roth IRA or a Roth 401(k), where you make contributions on an after-tax basis.)
The annual contribution limits for each of these retirement accounts noted above may vary from year to year. Depending on the size of your bonus and how much you’ve already contributed to your retirement account for a particular year, you may be able to either put some or all of your bonus in a tax-deferred retirement account.
It’s important to keep track of how much you have already contributed to your retirement accounts because you don’t want to put in too much of your bonus and exceed the contribution limit. In the case where you have reached the contribution limit, you can put some of your bonus into other tax deferred accounts including a traditional IRA or a Roth IRA.
Investing your bonus may help increase its value over the long-run. As your money potentially grows in value over time, it can be used in many ways: You can stow part of it away for retirement, as an emergency fund, a down payment for a home, to pay outstanding debts, or another financial goal.
While it can be helpful to have some of your bonus in cash, your money is typically better in a savings or investment account where it has the potential to work for you. If you start investing your bonus each year in either a tax-deferred retirement account or non-retirement account, this could help you save for the future.
Investing for Retirement With SoFi
The yearly question of what to do with a bonus is a common one. Just having that windfall allows for many financial opportunities, such as saving for immediate needs — or purchasing things you need now. But it may be wisest to use your bonus to boost your retirement nest egg — for the simple reason that you may stand to gain more financially down the road, while also potentially enjoying tax benefits in the present.
The fact is, most people don’t max out their 401(k) contributions each year, so if you’re in that boat it might make sense to take some or all of your bonus and max it out. If you have maxed out your 401(k), you still have options to save for the future via traditional or Roth IRAs, deferred compensation, or investing in a taxable account.
Keeping in mind the tax implications of where you invest can also help you allocate this extra money where it fits best with your plan.
Ready to invest for your retirement? It’s easy to get started when you open a traditional or Roth IRA with SoFi. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).
Help grow your nest egg with a SoFi IRA.
FAQ
Is it good to put your bonus into a 401(k)?
The short answer is yes. It might be wise to put some or all of your bonus in your 401(k), depending on how much you’ve contributed to your workplace account already. You want to make sure you don’t exceed the 401(k) contribution limit.
How can I avoid paying tax on my bonus?
Your bonus will be taxed, but you can lower the amount of your taxable income by depositing some or all of it in a tax-deferred retirement account such as a 401(k) or IRA. However, this does not mean you will avoid paying taxes completely. Once you withdraw the money from these accounts in retirement, it will be subject to ordinary income tax.
Can I put all of my bonus into a 401(k)?
Possibly. You can put all of your bonus in your 401(k) if you haven’t reached the contribution limit for that particular year, and if you won’t surpass it by adding all of your bonus. For 2023, the contribution limit for a 401(k) is $22,500 if you’re younger than 50 years old; those 50 and over can contribute an additional $7,500 for a total of $30,000. In 2024, the contribution limit for a 401(k) is $23,000 if you’re under age 50, and those 50 and up can contribute an additional $7,500 for a total of $30,500.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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.
SoFi Invest® INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below:
Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit 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.
Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.
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 email customer service at [email protected]. Please read the prospectus carefully prior to investing.
Shares of ETFs must be bought and sold at market price, which can vary significantly from the Fund’s net asset value (NAV). Investment returns are subject to market volatility and shares may be worth more or less their original value when redeemed. The diversification of an ETF will not protect against loss. An ETF may not achieve its stated investment objective. Rebalancing and other activities within the fund may be subject to tax consequences.
While most investors are familiar with stocks, bonds, and cash, there is a world of investment opportunities beyond these assets.
Alternative investments are those outside of traditional assets. While they can be higher risk, alternatives can offer various potential upsides for investors, such as portfolio diversification, higher returns compared to stock and bonds, and the opportunity to earn passive income.
Key Points
• Alternative investments include assets other than stocks, bonds, and cash, such as collectibles, commodities, derivatives, real estate, private equity, venture capital, hedge funds, and more.
• Alternative investments may provide portfolio diversification, as they often have a low correlation with traditional asset classes.
• Alternative investments have the potential to generate higher risk-adjusted returns compared with traditional assets, though this also comes with higher risk.
• Alternative investments tend to be illiquid, not as transparent as other assets, and may include the risk of total loss.
• You can invest in alternative investments through mutual funds, ETFs, interval funds, REITs, MLPs, or by working with an experienced asset manager.
What Are Alternative Investments?
Alternative investments — commonly known as alts — are those that are different from conventional stock, bond, and cash categories. Alts include a wide variety of securities as well as tangible assets such as commodities, foreign currencies, real estate, art and collectibles, venture capital, derivative contracts, and more.
“It’s best to think about alternatives in one of two buckets: alternative asset classes and alternative strategies,” says Brian Walsh, CFP® and Head of Advice & Planning at SoFi. “These are essentially ways to get exposure to more of the investable universe than what is otherwise available through owning stocks or bonds.”
The name “alternative” doesn’t imply these investments live on the fringes of the financial world. They are literally alternatives to, or supplemental to, conventional assets.
Alts typically have a lower correlation with traditional asset classes, meaning they tend to move independently of them, and thus they may provide investors with portfolio diversification. They also have the potential to generate higher returns when compared to stocks and bonds, and some are structured to provide passive income to investors. But alts typically include higher-risk assets and strategies, which can be illiquid and harder to track, owing to a lack of transparency.
Alts used to be accessible mainly to high net-worth and accredited investors, but now they’re available to a range of investors, thanks to the emergence of vehicles such as mutual funds and ETFs that include various alternative assets and strategies.
💡 Quick Tip: While investing directly in alternative assets often requires high minimum amounts, investing in alts through a mutual fund or ETF generally involves a low minimum requirement, making them accessible to retail investors.
Alternative investments, now for the rest of us.
Start trading funds that include commodities, private credit, real estate, venture capital, and more.
10 Types of Alternative Investments
The following list encompasses some common types of alternative investments and alternative strategies available to investors today.
1. Real Estate
• Summary: You can invest in real estate by owning rental property, investing in commercial real estate, industrial real estate, healthcare facilities, and more. Investors can also buy into Real Estate Investment Trusts, or REITs.
• Pros and cons: Although real estate tends to hold its value over time, there are no guarantees. Different properties can be vulnerable to a host of factors including business trends, land values, interest rate risk, and more.
• Summary: Commodities are raw materials that include agricultural products (e.g. grain, meat), precious metals such as gold, silver, copper, energy (including renewables), and more. Generally, investors participate in commodity trading using futures contracts, index funds, mutual funds, or ETFs.
• Pros and cons: Some investors consider commodities a good hedge against inflation and they have the potential to deliver a profit. However, commodities can suffer from any number of unexpected risk factors, from weather conditions to supply chain breakdowns and more.
• Summary: Private equity (PE) firms invest capital in companies that aren’t publicly traded, often with the aim of taking over the company. Because PE is a high-stakes endeavor, these opportunities are generally available to high net-worth and accredited investors. Now, however, retail investors can gain exposure through vehicles such as interval funds.
• Pros and cons: Private equity is considered a high-risk investment, but if a private company goes public or gets acquired, these investments may perform well. The risk with private equity investments is that these are often focused on distressed companies, with a complex track record, and sometimes startups (see Venture Capital below).
• Summary: VC investing is a way of putting money into startups with the hope of later gains, though there is no guarantee of a return. Investors can buy a slice of startup companies through equity crowdfunding platforms (which differ from traditional crowdfunding in that investors own equity in the company) and interval funds.
• Pros and cons: Venture capital investing is considered a subset of Private Equity, as noted above. It can be risky because if the startup fails, investors may lose all of their money. On the other hand, if a startup does well, investors may see a significant profit.
• Summary: Private credit involves direct loans made to companies from non-bank entities. Private credit can be a more expensive way to borrow, but it can be faster for the companies needing capital, and for investors it offers the potential for steady interest payments.
• Pros and cons: Private credit funds tend to see greater inflows when the stock market is underperforming, and they usually pay higher rates than conventional fixed income instruments. The risk here is that most PC funds offer only quarterly redemptions — so they’re quite illiquid — and they can be vulnerable to defaults.
• Summary: Works or art and other types of collectibles (e.g., wine, jewelry, antiques, cars, rare books) can personally appeal to investors, and may grow in value over time. It’s also possible to invest in fractional shares of art, or in shares of an art-focused fund.
• Pros and cons: Investing in art or collectibles may provide a hedge against inflation or other market factors. That said, the price of upkeep, insurance, and maintenance can be considerable. And while some pieces may gain value over time, art and collectibles can also be subject to changing trends and tastes. Fraud is another risk to consider.
7. Hedge Funds
• Summary: Hedge funds offer investors access to alternative strategies, like arbitrage, leveraged trades, short-selling, and more. Hedge funds aren’t as heavily regulated as other types of funds, so they’re able to make riskier investments and lean into aggressive strategies, with the goal of delivering outsized returns.
• Pros and cons: While hedge funds sometimes deliver a significant profit, they charge high fees and investment minimums that often put them beyond the reach of mainstreet investors. Today, retail investors may be able to access mutual funds, ETFs, funds of funds, or other vehicles that employ similar alternative strategies.
8. Farmland/Timberland
• Summary: Like many types of real estate, farmland and timberland tend to hold their value over time, as long as they remain productive. This type of property can be similar to commodities in that there is potential profit in the products that come from the land (e.g. produce and timber).
• Pros and cons: Owners of farmland can lease out the land to earn income, which can be profitable for investors. The potential downside of investing in farmland and timberland are the environmental and weather-related risks that can impact both the value of the land and its productivity.
9. Infrastructure
• Summary: Infrastructure refers to the physical structures that economies depend on: roads and highways, bridges and tunnels, energy pipelines, and more. Municipal bonds are one way to invest in infrastructure, as are some types of REITs (real estate investment trusts).
• Pros and cons: As a non-cyclical type of asset, infrastructure investments may offer the benefit of less exposure to market risk factors, steady cash flows, and low variable costs. The risks of infrastructure investments include political and environmental factors that can impact or delay the execution of a project.
10. Foreign Currencies
• Summary: Foreign currencies are an example of an alternative investment that can be highly liquid, and thus easier to trade.
• Pros and cons: Currency trading is known for its volatility, and currency traders often make leveraged trades, assuming a high degree of risk. Retail investors may find it potentially less risky to invest via mutual funds, ETFs, foreign bond funds, and even certain types of CDs (certificates of deposit), although the underlying volatility of most currencies will influence the performance of these investments as well.
💡 Quick Tip: Newbie investors may be tempted to buy into the market based on recent news headlines or other types of hype. That’s rarely a good idea. Making good choices shouldn’t stem from strong emotions, but a solid investment strategy.
How Alternative Investments Work
As noted, many investors seek alternative investments because they are not typically correlated with conventional markets. Thus, investing in alternative assets may provide portfolio diversification, potentially reducing the risk of loss during a market downturn, and possibly adding to long-term gains.
Alts, and funds that focus on alternative investments, may also be structured to pay out regular dividends so that investors can earn passive income.
Owing to the nature of most alternative assets and alternative strategies, investors must also consider additional risk factors here.
The lack of liquidity for most alts means that determining the fair market value of these assets can be quite challenging. Often there is little by way of public data available regarding price changes or asset appreciation or depreciation, making it difficult to assess historical performance.
“It’s absolutely critical to look at any investment product, including alternative investments, in the context of your overall strategy,” mentions Brian Walsh. “Your goals, time horizon, and comfort risk should drive how all of your money is invested. Alternative investments could be a small part of how that money is invested, but it shouldn’t override that overall strategy.”
Advantages and Disadvantages of Alternative Investments
In sum, alternative investments are certainly worth considering given their potential advantages, but it’s important to keep in mind the possible disadvantages to make the best choices in light of your own goals and risk tolerance.
Advantages
• May offer the potential for higher risk-adjusted returns.
• Are typically not correlated with traditional stock and bond markets, so they may help diversify a portfolio and mitigate risk.
• May have the potential to deliver passive income.
• Some alts may hedge against inflation or interest rate fluctuations.
• May appeal to an individual’s personal interests: e.g., art, wine, memorabilia.
Disadvantages
• Are often higher risk, or can be subject to greater volatility.
• Can be less liquid than traditional investments due to limited availability of buyers and lack of a convenient market.
• Often limited to high net-worth and accredited investors.
• May have higher minimum investment requirements and higher upfront fees.
• May have less available public data and transparency about performance, making it difficult to determine an asset’s value.
While often available in less conventional investment vehicles, alternative investments are also available through traditional financial structures that may be accessible to any investor. Here are some of the different ways alternative investments may be structured.
ETFs
An exchange-traded fund, or ETF, is an investment vehicle that enables investors to buy a group of stocks, bonds, commodities, or other securities in one bundle, thus promoting investment diversification and efficiency. They’re widely available, usually through major investment fund companies.
Interval Funds
These closed-end funds are not traded on the secondary market and have limitations on redemptions (among other risks and restrictions). But because the funds are highly illiquid and have infrequent redemptions, fund managers may use alternative investments to pursue higher yields.
MLPs
A master limited partnership, or MLP, is a business partnership that’s publicly traded on an exchange. While an MLP may sound like a company, these partnerships have a different type of structure and are restricted to natural resources and energy-related products and sometimes real estate.
MLPs can provide the liquidity of stocks, but the tax treatment can be complex — and they are higher risk than regular equities.
Mutual Funds
A mutual fund is an investment vehicle that pools money from many investors in order to invest in different securities. Mutual funds may hold any combination of stocks, bonds, money market instruments, or cash and cash equivalents.
They may also include alternative investments, such as real estate, commodities, or investments in precious metals.
REITs
A real estate investment trust, or REIT, is a way of investing in shares of different types of real estate within a single fund. REITs invest in companies that own, operate, or finance a wide variety of real estate types.
How to Invest in Alternative Investments
As mentioned above, alternative investments used to be limited to accredited and high net-worth investors, but they’re now available to average investors through mutual funds, ETFs, and sometimes even through companies’ IRAs.
If you’re thinking about adding alternative investments to your portfolio, finding the right brokerage and/or asset manager can help you incorporate alts into your portfolio in the way that makes sense for your long-term plan. SoFi, for example, is working with knowledgeable asset managers in the alts space to provide access to mutual funds across a variety of categories.
Once you’ve identified the types of alternative assets that would suit your goals, your risk tolerance, and your plan (e.g., you might prefer commodities to owning art), you can look for the funds that would help you buy into these asset classes.
💡 Quick Tip: All investments come with some degree of risk — and some are riskier than others. Before investing online, decide on your investment goals and how much risk you want to take.
Things to Consider When Investing in Alts
Alternative investments are complex, and while the risk may be worth the potential reward for some investors, there are some additional caveats to bear in mind about these assets.
How Are Alternative Investments Taxed?
Unlike conventional asset classes, which are typically subject to capital gains tax or ordinary income tax, different alts can receive very different tax treatments, even when investing in these assets via a mutual fund or ETF. When investing in alts, it’s wise to involve a professional to help address the tax-planning side of the equation.
What Role Should Alts Play in Your Portfolio?
Remember, because alts don’t generally move in sync with traditional asset classes, they may offset certain risk factors. And while alts come with risks of their own, including volatility and lack of transparency, within the context of your portfolio as a whole, alts, and funds that invest in alts, may enhance returns. Some alternative assets can provide passive income as well as gains.
It’s important to know, however, that alternative investments are higher risk, tend to be more illiquid, and less transparent. As such, alts should typically only be one part of your portfolio to complement other assets. Some advisors, for example, recommend up to a 10% allocation for alternative investments, though this number can vary.
The Takeaway
Alternative investments have the potential for high returns and may offer portfolio diversification. The scope and variety of these investments means investors can look for one (or more) that suits their investing style and financial goals. Unlike more conventional investments, alts tend to be higher risk, more expensive, and subject to complex tax treatment.
It’s important to research and do due diligence on any alternative investment option in order to make the best purchasing decisions and reduce risk. While some alternative investments are less accessible, others can be purchased through vehicles such as mutual funds and ETFs.
Ready to expand your portfolio's growth potential? Alternative investments, traditionally available to high-net-worth individuals, are accessible to everyday investors on SoFi's easy-to-use platform. Investments in commodities, real estate, venture capital, and more are now within reach. Alternative investments can be high risk, so it's important to consider your portfolio goals and risk tolerance to determine if they're right for you.
Invest in alts to take your portfolio beyond stocks and bonds.
FAQ
Are ETFs considered alternative investments?
Generally no. For the most part, exchange-traded funds (ETFs) are passive investments — meaning they track an index — and typically that index is for a conventional asset class like stocks or bonds. That said, some ETFs track niche parts of the market, including certain types of alternative strategies, including options, long-short strategies, managed futures, real estate investment trusts (REITs), and more.
Are alternative investments worth it?
For some investors, choosing to add alts to their portfolio might be worth it because alternative assets can add diversification (which can help manage risk), and alts may enhance returns over time. But alts also come with their own set of risk factors, including the fact that some alternative assets are illiquid, and are not regulated like other financial products.
How do alternative investment funds work?
Alternative investment funds work in a range of ways. A mutual fund focused on alternative strategies, like derivatives, is likely to be actively managed and employ techniques like leverage or short selling. Before investing in an alternative fund, it’s wise to make sure you understand the underlying strategy, assets, and fees.
What are the key characteristics of alternative investments?
Alternative investments may offer portfolio diversification with low correlation to traditional assets, potentially higher returns, and may provide protection against inflation or interest rate fluctuations. However, they can be illiquid, may have redemption restrictions, and determining their real-world value can be challenging due to limited transparency and public data.
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.
SoFi Invest® INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below:
Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit 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.
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 email customer service at [email protected]. Please read the prospectus carefully prior to investing.
Shares of ETFs must be bought and sold at market price, which can vary significantly from the Fund’s net asset value (NAV). Investment returns are subject to market volatility and shares may be worth more or less their original value when redeemed. The diversification of an ETF will not protect against loss. An ETF may not achieve its stated investment objective. Rebalancing and other activities within the fund may be subject to tax consequences.
Fund Fees
If you invest in Exchange Traded Funds (ETFs) through SoFi Invest (either by buying them yourself or via investing in SoFi Invest’s automated investments, formerly SoFi Wealth), these funds will have their own management fees. These fees are not paid directly by you, but rather by the fund itself. these fees do reduce the fund’s returns. Check out each fund’s prospectus for details. SoFi Invest does not receive sales commissions, 12b-1 fees, or other fees from ETFs for investing such funds on behalf of advisory clients, though if SoFi Invest creates its own funds, it could earn management fees there.
SoFi Invest may waive all, or part of any of these fees, permanently or for a period of time, at its sole discretion for any reason. Fees are subject to change at any time. The current fee schedule will always be available in your Account Documents section of SoFi Invest.
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.
Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.
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.
Whether you just set up your 401(k) plan or you established one long ago, you may want to change the amount of your contributions — or even how they’re invested. Fortunately, it’s usually a fairly straightforward process to change 401(k) contributions.
How often can you change your 401(k) contributions? You may be able to make changes at any time, depending on your plan. After all, the point of a 401(k) plan is to help you save for your retirement. So it’s important to keep an eye on your account and your investments within the account, to make sure that you’re saving and investing according to your goals.
Learn how to maximize your 401(k), change your 401(k) contributions, and save for retirement.
Purpose of a 401(k)
A 401(k) is a retirement account that a company may offer to its employees. In some cases, enrollment in the employer’s 401(k) is automatic; in other cases it’s not. Be sure to check, so that you can take advantage of this savings opportunity.
Employees may contribute a portion of their paycheck to their 401(k) account, and employers might also contribute to each employee’s account (again, depending on the plan).
The employer’s portion is called the company’s “match” or matching funds. Typically, an employer might match up to a certain percentage of what the employee saves. One common matching plan is when a company matches 50 cents for every dollar saved, up to 6% of the employee’s total contributions. Terms vary, so it’s best to ask your Human Resources representative what the match is.
The money a participant contributes to their 401(k) plan is technically called an “elective salary deferral” because it’s optional, not required, and those deductions are not included in an employee’s taxable income. That’s why 401(k) and similar accounts (like a 403(b) and most IRAs) are often called tax-deferred accounts: You don’t pay taxes on the money you’ve saved until you withdraw the money in retirement.
This tax benefit can be significant. Every dollar you save reduces your taxable income, which may result in a lower tax bill in some cases.
💡 Quick Tip: The advantage of opening a Roth IRA and a tax-deferred account like a 401(k) or traditional IRA is that by the time you retire, you’ll have tax-free income from your Roth, and taxable income from the tax-deferred account. This can help with tax planning.
Can You Change Your 401(k) Contribution at Any Time?
While the opportunity to make changes to some employee benefits, like health insurance, are generally only offered once a year during so-called open enrollment periods, many 401(k) plans allow participants to change the amount of their 401(k) contributions at any point. According to Department of Labor guidelines, an employer must allow plan participants to change investments at least quarterly (sometimes more often, if company stock or other high-risk investments are offered by the plan).
These are some of the reasons you may want to change 401(k) contribution amounts.
The Ability to Save More
You may have gotten a raise, or experienced a change in your financial circumstances, and wish to increase the percentage of your savings. Contributions to these plans are typically expressed as a percentage of your annual salary. For example, if you earn $75,000 per year, and your contribution rate is 10%, you would save a total of $7,500 per year. If you got a raise to $80,000 and now wish to contribute 12%, you would save a total of $9,600 per year.
To Get the Match
As discussed above, some 401(k) plans offer a savings match from the employer. In most cases, the match is a set percentage of the employee’s contribution. If you started your 401(k) at a point when you couldn’t get the full match, you may want to increase your contributions to get the full employer match.
Rebalancing Your Asset Allocation
If you’ve held the account for a while, say a year or more, the original allocation of your investments — i.e. the balance between equities, cash, and fixed income investments — may have shifted. Restoring the original balance of your investments may be a priority, if your strategy and risk tolerance haven’t changed.
Changing Your Asset Allocation
You also might want to shift the asset allocation because your financial strategy has become more aggressive (i.e. tilting toward stocks) or more conservative (tilting toward cash and fixed income).
Setting Up Automatic Increases
Some plans offer participants the option of automatically increasing their contribution rate every year, typically up to a certain percentage (e.g. 15%), and not to exceed the maximum contribution levels. The IRS contribution limit for 401(k) plans for 2024 is $23,000 for participants under age 50. Those 50 and older can save an extra $7,500 in “catch-up contributions”, for a total of $30,500. For 2023, the contribution limit is $22,500 for participants under age 50. Those 50 and older can save an extra $7,500 in “catch-up contributions”, for a total of $30,000.
Setting up automatic increases allows you to save more in your 401(k) each year without having to think about it; this can be beneficial for overcoming the inertia common among some savers.
How to Change 401(k) Contributions: 3 Steps
Again, the 401(k) plan provider will be able to advise participants on how often they can make changes to their contributions, and what the process will look like. For employees unsure of who the plan provider is, the company’s human resource department can point them in the right direction.
In some cases, participants can change their contributions directly through their plan provider’s website. Generally, the process of making changes to a 401(k) looks like this:
Step 1:
The employee contacts their 401(k) provider to discuss how to change contributions for their particular 401(k) plan.
Step 2:
The employee considers how much of their paycheck they want to contribute to their 401(k) moving forward, taking their company’s 401(k) match into consideration, and ideally contributing at least that much. The employee might also change their asset allocation, depending on plan rules.
Step 3:
The participant fills out any forms (online or via paperwork) to confirm their new contribution.
Often, these steps can take just a few minutes, using your plan sponsor’s website.
Why Contribute to a 401(k)? 3 Good Reasons
Contributing to a 401(k) plan is an important way to save for retirement. The funds in a 401(k) are invested, generally in mutual funds, exchange-traded funds (ETFs), or target date funds — which can offer the potential for growth over time. Typically there are about eight to 12 investment options in most 401(k) plans.
But perhaps the three best reasons to contribute to a 401(k) plan are the opportunity to save automatically via regular payroll deductions; the potentially lower tax bill; and the ability to get “free money” from your employer match, if it’s offered.
Low-stress Saving
For many people, this type of investment is easy because you can choose how much of your salary to contribute each pay period, and deductions happen automatically. You don’t have to think about your savings, your contributions are taken directly from each paycheck, so it helps to build your nest egg over time.
Lower Taxable Income
Another benefit is the potential for savings during tax season. Since the contributions an employee makes to their 401(k) plan over the course of the year aren’t included in their taxable income, that can lower their overall taxable income. This, in turn, may result in an individual falling into a lower tax bracket and paying less income tax for that year.
And in the future, when they might likely be in a lower tax bracket due to retirement, they’ll pay lower taxes when they withdraw the money from their 401(k) account.
Note: Withdrawing money from a 401(k) account before retirement age may lead to early withdrawal penalties.
Another perk of enrolling in a 401(k) plan is the notion of “free money” from one’s employer. Some companies match a portion of their employees’ contributions — often around 50 cents to $1 for each dollar that an employee contributes.
Typically, an employer might set a maximum matching limit, such as 3% to 6% of the employee’s salary.
This matching contribution is often referred to as free money because the contribution effectively increases an employee’s income without increasing their current tax bill. It’s worth noting that an employer’s match generally vests over the course of three or four years — meaning that the employer-contributed money will accrue in the account, but an employee won’t be able to keep it if they switch jobs, unless they remain with the company for that set period of time.
Setting up Recurring Contributions
When it comes to setting up a 401(k), the process varies by workplace. Some companies offer automatic enrollment to employees, automatically reducing the employee’s wages by a certain amount and diverting that money to the employee’s 401(k) plan, unless the employee chooses not to have their wages contributed.
Or, an employee can choose to enroll, but to contribute a custom amount. This type of contribution is referred to as an elective deferral.
In companies that don’t offer automatic enrollment as an option, employees will need to work with their HR department and retirement plan provider to get their 401(k) set up.
Participants need to decide how much they want to contribute and they may need to choose their investments. They can also opt to take advantage of autopilot settings, and can roll over a 401(k) from a past job into their new one.
💡 Quick Tip: How do you decide if a certain trading platform or app is right for you? Ideally, the investment platform you choose offers the features that you need for your investment goals or strategy, e.g., an easy-to-use interface, data analysis, educational tools.
How Much to Save for Retirement
The Department of Labor (DOL) outlined a few best practices for investing in order to save for retirement.
It estimated that most Americans will need 70% to 90% of their preretirement income saved by retirement, in order to maintain their current standard of living. Doing that math can give plan participants an idea of how much they should be contributing to their 401(k).
Participants might also consider a few basic investment principles, such as diversifying retirement investments to reduce risk and improve return. These investment choices may evolve overtime depending on someone’s age, goals, and financial situation.
The DOL recommends that employees contribute all they can to their employer-sponsored 401(k) plan to take advantage of benefits like lower taxes, company contributions, and tax deferrals.
Adding Alternative Investments to a 401(k)
Some savers may find themselves interested in pursuing alternative investments when saving for retirement. An alternative investment takes place outside of the traditional markets of stocks, fixed-income, and cash. This method may appeal to those looking for portfolio diversification. Popular examples of alternative investments are private equity, venture capital, hedge funds, real estate, and commodities.
Self-directed 401(k)s allow participants to add alternate investments to their 401(k) portfolio. With a self-directed 401(k), the investor chooses a custodian such as a brokerage or investment firm to hold the amount of assets and execute the purchase or sale of investments on the participant’s behalf. If an employer offers a self-directed 401(k), the custodian will likely be the plan administrator.
The Takeaway
For employees looking to change 401(k) contributions, the process is often as simple as reaching out to your plan provider and confirming that you’re allowed to make a change at this time.
Some companies have rules around when and how often employees can make changes to their contributions. Once you have the go-ahead to make the change, and have considered what works best for your current financial situation and your future goals, it’s generally straightforward.
A company-sponsored 401(k) plan offers many benefits, but once you leave your job, many of those benefits — including the employer-matching program — no longer apply. At that point, you may want to consider doing a rollover of your previous 401(k) to an IRA, so you can remain in control of your money.
Ready to invest for your retirement? It’s easy to get started when you open a traditional or Roth IRA with SoFi. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).
Easily manage your retirement savings with a SoFi IRA.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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.
SoFi Invest® INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below:
Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit 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.
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.
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 email customer service at [email protected]. Please read the prospectus carefully prior to investing.
Shares of ETFs must be bought and sold at market price, which can vary significantly from the Fund’s net asset value (NAV). Investment returns are subject to market volatility and shares may be worth more or less their original value when redeemed. The diversification of an ETF will not protect against loss. An ETF may not achieve its stated investment objective. Rebalancing and other activities within the fund may be subject to tax consequences.
