InvestLL Archives

Feb

2025

What Is a Bear Call Spread? How It Works

Bear Call Spread, Explained

By Samuel Becker | Growing Wealth, invest, Investing, Terminology | 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.

A bear call spread is one of four basic vertical options spreads that traders put to regular use. This strategy aims to generate income in bearish or neutral markets with limited upside potential while carrying defined risks.

Traders use a bear call spread strategy to seek potential profit on a decrease in value of the option’s underlying asset. Hence, the “bear” in the strategy’s name.

As such, a trader would typically use a bear call spread when they believe the underlying asset’s value is likely to fall.

Key Points

• A bear call spread involves selling a short call with a lower strike price and buying a long call with a higher strike price, both expiring simultaneously.

• A bear call spread can generate a net premium, be profitable if the underlying asset’s value declines, and come with limited maximum profit or loss.

• The performance of the strategy is influenced by stock price changes, volatility, and time until expiration.

• The strategy is best used when anticipating a decline in the underlying asset’s value, requiring careful market analysis.

• Consider risk management, early assignment risk, and the speculative nature of options trading.

What Is a Bear Call Spread?

A bear call spread is an options trading strategy that investors may use to potentially profit from a declining (or neutral) stock price and time decay, while also limiting the risk of loss.

With this strategy, a trader creates a spread by buying and selling two call options at the same time, attached to the same underlying asset, with the same expiration date. The key difference between the two call options is their strike price.

One call option is a long call option strategy, involving purchasing a call with a higher strike price, and the other is a short call strategy (similar to shorting a stock), involving selling a call with a lower strike price than the long call.

The bear call spread strategy benefits from the stock price staying below the lower strike price of the sold call. By selling a call option at a lower strike price and buying another at a higher strike price, the investor hopes to collect a premium for the bearish short call, while limiting potential losses through the bullish long call.

How Does a Bear Call Spread Work?

A bear call spread consists of two key positions: buying a long call and selling a short call. When the trader simultaneously purchases a long call and sells a short call (with a lower strike price), it creates a credit in the trader’s account, since the long call the trader is buying is less expensive than the short call the trader is selling. As noted above, the short call generates income for the trader by providing a premium, and the long call helps limit the trader’s potential loss.

Max Profit of a Bear Call Spread

Setting up these two call positions creates a spread, and the trader benefits when the underlying asset’s value declines. The maximum potential profit is capped at the net premium received from the sale and purchase of the call options. The investor may see the max potential profit if the stock price remains below the strike price of the sold call at expiration.

However, if the stock price rises above the strike price of the sold call, the trader may incur losses. The premium from selling the call can reduce these losses, but they could still be substantial if the strike prices move significantly higher.

Max Loss of a Bear Call Spread

If the underlying asset’s value increases, the spread can result in a loss for the trader, since the buyer of the call option may then choose to exercise the option. However, the maximum potential loss is capped at the difference between the strike prices of the two options, minus the premium received. The long call option limits loss by offsetting the risk of the short call being exercised.

Example of a Bear Call Spread Strategy

As an example, a bear call spread could involve a trader selling a short call option on a stock, which expires in one month, with a strike price of $10, for a premium of $2. The trader also buys a call option with the same expiration and a strike price of $12 for a premium of $1.

By selling the short call, they’ve received a net premium of $1. Option contracts typically control 100 shares, providing a total credit of $100. The trader has two calls with the same expiration date, but two different strike prices.

Let’s say a month goes by, and the trader’s bearish instincts have proven correct. The stock’s price declines and their call options expire below the $10 strike price of the short call. They keep the net premium of $100 and walk away with a profit.

In a downside scenario, suppose the stock climbs to $13 on expiration day. The trader closes out both contracts for a net loss of $2 per share, or $200 for each set of contracts, resulting in a $200 total loss for the strategy. This is offset by the $100 received upfront, so their net loss is just $100.

Finally, let’s analyze the break-even point. Break-even occurs at the strike price of the short call, plus the net premium received. In our example, this is the $10 lower strike, plus $1 of net premium, or $11.

Factors That Impact Bear Call Spreads

Several factors influence the outcome of a bear call spread strategy. These include the underlying asset’s price movements, market volatility, and the passage of time. Price movements influence the cost of options contracts. Market volatility impacts the extrinsic value of the contracts. The passage of time determines time decay, also known as theta.

Stock Price Change

Movement in stock price can affect a bear call significantly. This strategy benefits from a neutral to bearish market trend. When stocks rise, there is a greater chance of loss. The difference in strike prices caps both the potential profit and loss, which can therefore reduce profitability. A wider gap between the strikes can result in a lower net premium, and create higher risk exposure for the trader.

Stock Price Volatility

Volatility plays a moderate role in a bear call spread’s performance. The strategy’s maximum profit and loss are mainly influenced by the strike prices and the premiums received, rather than large price swings. That said, higher volatility generally leads to higher premiums, which can increase the income generated upfront. This also comes with a higher risk of the stock price moving beyond the strike prices, which could potentially lead to losses.

Although volatility does affect the strategy, it tends to perform best in environments with moderate or low volatility. Stable market conditions can allow the stock to stay within the expected range, which may increase the likelihood of the options expiring worthless and enabling the trader to keep the full premium as profit.

Time

Time decay plays an important role in the potential profitability of bear call spreads. As expiration approaches, the time value of the short call (i.e. lower strike) erodes more rapidly than the long call (i.e. higher strike), which benefits the position. This can work in the trader’s favor so long as the stock price remains below the short call strike, potentially turning a profit as both options lose value over time.

Benefits and Risks of a Bear Call Spread

Following are some of the potential benefits and risks associated with bear call spreads that investors should consider before using this strategy.

thumb_up

Pros:

• Flexibility

• Capped potential losses

• Relative simplicity

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Cons:

• Capped potential gains

• Limited potential use

• The strategy could backfire

Benefits of a Bear Call Spread

There are some advantages to bear call spreads, which is why some traders use them to attempt to manage risk and pursue potential gains.

• Flexibility: Depending on the specific calls sold and purchased, traders can see a profit under a variety of scenarios, such as when the underlying asset’s value remains the same, or when it declines.

• Capped potential losses: There’s a maximum that a trader can lose, which also means profits are also capped. These types of strategies are used not only to seek profits, but to also limit risk.

• Relative simplicity: Bear call spreads are more straightforward than other advanced options trading strategies.

Risks of a Bear Call Spread

Bear call spreads can have their disadvantages.

• Capped potential gains: Like other vertical spread strategies, potential gains are capped — in this case, at the initial net premium credited to the account.

• Limited potential use: The strategy is most effective in neutral to bearish markets, typically with moderate to low volatility.

• The strategy could backfire: The risk is that the underlying asset sees a dramatic rise in value, rather than a fall in value as the trader predicted, resulting in significant losses on the short position. This could mean that the trader would need to sell the underlying asset at the strike price of the short call, which may lead to a loss.

Bear Call Spread Considerations and Tips

There are a few other things worth keeping in mind when it comes to the bear call spread strategy.

• There’s an early assignment risk: Since options can be exercised at any time, traders with short option positions should remember that they’re putting themselves at risk of early assignment — meaning they may be required to sell the underlying asset at the lower strike price if assigned.

• The strategy can be used in variations: A bear call spread is only one of several vertical options spreads that traders can put to use. Depending on market conditions, it could be wise to use a bullish strategy instead.

• Options trading comes with risk: It’s critical to remember that options trading is speculative. There are no guarantees, and the risk of loss is real. No matter how good any trader thinks they are at predicting the market, the risk of loss is significant. It’s important for investors to calculate the risk-reward ratio before choosing their speculative tools.

The Takeaway

A bear call spread is one of many options trading strategies a trader may employ in trying to protect themselves from losses and try to benefit from gains when they foresee a moderate decline in the underlying asset. But as with all strategies, it’s not foolproof, and there is a risk that the price of the asset might rise causing the strategy to backfire.

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FAQ

How do you close a bear call credit spread?

If the stock price is moving against the position, such as the stock rising and nearing the short strike price, a trader may close the position early to limit potential losses by.

On the other hand, if the stock price stays below the short strike and both options expire worthless, the trader can simply let the position run its course, keeping the premium as profit. The decision to close often depends on the stock’s movement and how much risk the trader is willing to take.

How do you set up a bear call spread?

In order to set up a bear call spread, a trader sells a call option with a lower strike price and buys a call option with a higher strike price, both with the same underlying asset and expiration date. These two positions create the spread.

Photo credit: iStock/PeopleImages

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.

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.

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.

SOIN-Q125-093

Feb

2025

401(k) Withdrawal Rules to Know

By LeeMarie Kennedy | Growing Wealth, invest, Investing, Preparing for Retirement | Comments Off

If you’re enrolled in a 401(k) plan and you need to get your hands on some money, you may have wondered, when can you withdraw from a 401(k)?

It’s a common question, and there are some important rules to be aware of, as well as tax implications and possible penalties. Read on to find out about the rules for withdrawing from a 401(k).

Key Points

• Withdrawals from a 401(k) can be made penalty-free starting at age 59 1/2.

• Aside from some possible exceptions, early withdrawals before 59 1/2 face a 10% penalty and are taxable.

• The rule of 55 permits penalty-free withdrawals at 55 or older for those who separate from their employer at 55 or older.

• Hardship withdrawals without penalty are available for urgent financial needs for those who qualify, but the withdrawals are subject to income taxes.

• Some 401(k) plans allow for 401(k) loans, which must be repaid in full with interest within five years.

What Are The Rules For Withdrawing From a 401(k)?

Because 401(k) plans are retirement savings plans, there are restrictions on when investors can make withdrawals. Typically, plan participants can withdraw money from their 401(k) without penalty when they reach the age of 59 ½. These are called qualified distributions. But if an individual takes out funds before that age, they may face penalties.

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At What Age Can You Withdraw From a 401(k) Without Penalty?

There are certain circumstances in which people can take an early withdrawal from their 401(k) without penalty before age 59 ½.

Under the Age of 55

If a 401(k) plan participant is under the age of 55 and still employed at the company that sponsors their plan, they have two options for withdrawing from their 401(k) penalty-free:

1. Taking out a 401(k) loan.

2. Taking out a 401(k) hardship withdrawal.

If they’re no longer employed at the company that sponsors their 401(k), individuals might choose to roll their funds into a new employer’s 401(k) plan or do an IRA rollover.

Between Ages 55–59 1/2

The IRS provision known as the rule of 55 allows account holders to take withdrawals from their 401(k) without penalty if they’re age 55 or older and leave or lose their job at age 55 or older. However, they must still pay taxes on the money they withdraw.

There are a few guidelines to consider regarding the rule of 55:

• A 401(k) plan must permit early withdrawals before age 59 ½ for individuals to take advantage of the rule of 55.

• The withdrawals must be from the 401(k) the person was contributing to at the time they left their job, and not a previous employer’s 401(k).

• The rest of the funds must remain in the 401(k) until the individual reaches age 59 ½.

• If someone rolls their 401(k) plan into an individual retirement account (IRA) such as a traditional IRA, the rule of 55 no longer applies.

After Age 73

In addition to penalties for withdrawing funds too soon, you may also face penalties if you take money out of a retirement plan too late. When you turn 73 (as long as you turned 72 after December 31, 2022), you must withdraw a certain amount of money every year, known as a required minimum distribution (RMD). If you don’t, you’ll face a penalty of up to 25% of that distribution.

The RMD amount you need to take is based on a specific IRS calculation that generally involves dividing the account balance of your 401(k) at the end of the prior year with your “life expectancy factor,” which you can find more about on the IRS website.

Withdrawing 401(k) Funds When Already Retired

If a 401(k) plan holder is retired and still has funds in their 401(k) account, they can withdraw them penalty-free at age 59 ½. The same age rules apply to retirees who rolled their 401(k) funds into an IRA.

Withdrawing 401(k) Funds While Still Employed

If a 401(k) plan holder is still employed, they can access the funds from a 401(k) account with a previous employer once they turn 59 ½. However, they may not have access to their 401(k) funds at the company where they currently work.

401(k) Hardship Withdrawals

Under certain circumstances, some 401(k) plans allow for hardship distributions. If your plan does, the criteria for eligibility should appear in the plan documents.

Hardship distributions are typically offered penalty-free in the case of an “immediate and heavy financial need,” and the amount withdrawn cannot be more than what’s necessary to meet that need. The IRS has designated certain situations that can qualify for hardship distributions, including:

• Medical expenses for the employee or their spouse, children, or beneficiary

• Cost related to purchasing a principal residence (aside from mortgage payments)

• Tuition and related educational expenses

• Preventing eviction or foreclosure on a primary residence

• Funeral costs for the employee or their spouse, children, or beneficiary

• Certain repair expenses for damage to the employee’s principal residence

Hardship distributions are typically subject to income taxes.

Taking Out a 401(k) Loan

Some retirement plans allow participants to take loans from their 401(k). The amount an individual can borrow from an eligible plan is capped at 50% of their vested account balance or $50,000 — whichever is less.

The borrower has to pay the money back plus interest, usually within five years. As long as they repay the money on time, they won’t have to pay taxes or penalties on a 401(k) loan. However, if a borrower can’t repay the loan, that’s considered a loan default and they will owe taxes and a 10% penalty on the outstanding balance if they are under age 59 ½.

IRA Rollover Bridge Loan

If you need money for a short period of time and you also happen to be doing an IRA rollover, you may be able to use that money as a loan — provided that you follow the 60-day rule. In short, the 60-day rollover rule requires that all funds withdrawn from a retirement plan be deposited into a new retirement plan within 60 days of distribution, Thus, within that 60-day window, you could potentially use the money you’re rolling over as a “bridge” loan.

401(k) Withdrawals vs Loans

While it’s generally wise to keep your retirement funds in your 401(k) for as long as possible to keep saving for your future, withdrawals and loans are possible if you need money. If you find yourself considering a 401(k) withdrawal vs. a loan, be sure to weigh the choices carefully. You’ll need to repay a loan plus interest within five years, and with an early withdrawal, you’ll either need to qualify for a hardship withdrawal and then pay income taxes on the withdrawal, or if you’re age 55, you may be able to take advantage of the rule of 55.

Cashing Out a 401(k)

Cashing out a 401(k) occurs when a participant liquidates their account. While it might sound appealing, particularly if an individual needs money right now and has no other options, cashing out a 401(k) has drawbacks. For example, if they are younger than 59 ½, the cashed-out funds will be subject to income taxes and an additional 10% penalty. That means a significant portion of their 401(k) withdrawal might be paid in taxes.

Rolling Over a 401(k)

If you’re leaving your job you may choose to roll over your 401(k) to continue saving for retirement.

This strategy allows you to roll the money into an IRA that you open and manage yourself by choosing investments — which may be things like stocks, mutual funds, and exchange-traded funds (ETFs) — and you won’t have to pay taxes or early withdrawal penalties.

With an IRA rollover, you might have a wider range of investment options than with an employer-sponsored plan (think of it as a kind of self-directed investing), and your money has a chance to potentially continue to grow tax-deferred.

The Takeaway

While it may be possible to withdraw money from a 401(k), certain factors like age and hardship distribution eligibility determine whether you can make a withdrawal without incurring taxes and penalties. You might also consider a 401(k) loan, but you’ll need to repay the money you borrow plus interest within five years.

If you are leaving or changing your job, you could opt to roll over your 401(k) into an IRA to continue saving for retirement. With a rollover, you won’t pay penalties or taxes.

Review your options carefully to decide the best course for your situation.

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FAQ

Can you take out 401(k) funds if you only need the money short term?

It’s possible to take out 401(k) funds if you only need the money short term. For example, you could take out a 401(k) loan if your plan allows it. There are limits on how much you can take out, however, and you need to repay the amount you borrow plus interest within five years. Just be sure you can repay the loan so it doesn’t go into default.

How long does it take to cash out a 401(k) after leaving a job?

The length of time it takes to cash out a 401(k) after leaving a job depends on your employer and the company that administers your 401(k) plan. The process generally takes anywhere from a few days to a few weeks.

What are other alternatives to taking an early 401(k) withdrawal?

One alternative to taking an early 401(k) withdrawal is to take out a 401(k) loan instead. You will need to repay the amount you borrow plus interest within five years. As long as you do that, you won’t owe taxes on the money you borrow with a 401(k) loan.

At what age can I withdraw from my 401(k) without penalty?

You can withdraw from your 401(k) without penalty at age 59 ½. However, if you are 55 or older, and you leave or lose your job in the same calendar year that you’re 55 or older, you may be able to take out money without taxes or penalties if your 401(k) plan allows it. This is thanks to a provision called the rule of 55.

When can I access my 401(k) funds if I’m already retired?

If you are already retired, you can access your 401(k) funds anytime you like as long as you are at least 59 ½ years old. Just remember that you will owe income tax on the money you withdraw, so plan accordingly.

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.

Brokerage and Active investing products offered through SoFi Securities LLC, member FINRA(www.finra.org)/SIPC(www.sipc.org). For all 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.

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.

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.

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

SOIN-Q125-058

Feb

2025

How to Negotiate Your Signing Bonus

By Inyoung Hwang | Building Your Career, Growing Wealth, invest, Investing, Life & Career | No Comments

Although many people believe that the negotiation process ends once they have accepted a job offer, that’s often not the case. One of the most critical aspects of the negotiation process is negotiating your signing bonus. A signing bonus is a monetary incentive that an employer agrees to pay you. This bonus is meant to entice you to accept the job offer, and is typically negotiable.

It can be beneficial to know the nuances of negotiating a signing bonus to get the most out of your job hunt. If you are offered a signing bonus, be sure to negotiate it to get the most money possible. And even if your initial job offer doesn’t include a signing bonus, it might be worth asking for one.

Understanding Why Companies Offer a Hiring Bonus

Employers aren’t obligated to offer job candidates a hiring bonus, which is sometimes called a signing bonus or sign-on bonus. However, companies may choose to extend this one-time financial benefit to attract new talent, especially in a competitive hiring landscape.

This one-time signing bonus can help an employer close the gap between a candidate’s desired pay and what the company can offer. Additionally, the hiring bonus may compensate a new hire for any benefits the candidate might otherwise miss out on by changing jobs or forgoing other job offers.

Companies may also use a sign-on bonus to incentivize an employee to stay with a company for a certain period of time. If an employee quits within an agreed-upon time after accepting the position, they may be required to pay back the bonus.

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How Signing Bonuses Work

If you’re being considered for a job, the hiring company can include a signing bonus as part of the job offer. You can then decide whether to accept the bonus and the position, attempt to negotiate for a larger sign-on bonus, or walk away from the offer altogether.

Should you accept the offer, the hiring bonus can be paid out to you as a lump sum or as employee stock options. If the company pays the bonus as a lump cash sum, they may pay it out with a first paycheck, or after a specified period, like 90 days.

Like any other bonuses, salary, or wages you receive, a signing bonus is taxable. So you’ll have to report that money on your tax return when you file. If the signing bonus is paid with regular pay, it’s taxed as ordinary income. If it isn’t, then the sign-on bonus is taxed as supplemental wages. For 2024, the supplemental wage tax rate is 22%, which increases to 37% if your bonus exceeds $1 million.

Additionally, bonuses, whether they’re paid when starting a new job or as a year-end bonus, may also be subject to Social Security and Medicare tax as well as state income tax. Employers withhold these taxes and pay them to the IRS for you. So when you get your bonus, you’re getting the net amount, less taxes withheld.

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Average Signing Bonus

The average signing bonus can vary greatly depending on the company, position, and location. In general, signing bonuses may range from $10,000 to more than $50,000 for management and executive positions, while entry and mid-level position hiring bonuses are usually less than $10,000.

But again, there’s no guarantee that you’ll be offered a signing bonus, or that they’ll be pervasive in your given industry.

What Industries Offer the Highest Hiring Bonuses?

The industries that offer the highest hiring bonuses tend to be in the financial and technology sectors.

However, during competitive labor markets, signing bonuses may be offered in various industries that usually don’t offer a bonus. For instance, following the Covid-19 pandemic and subsequent labor shortage, industries like healthcare, warehousing, and food and beverage offered substantial hiring bonuses to attract potential employees.

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Pros & Cons of Signing Bonuses

Receiving a sign-on bonus could make a job offer more attractive. But before you sign on the dotted line, it’s helpful to consider the advantages and potential disadvantages of accepting a bonus.

Signing Bonus Pros

A signing bonus could help make up a salary shortfall. If you went into salary negotiations with one number in mind, but the company offered something different, a sign-on bonus could make the compensation package more attractive. While the bonus won’t carry on past your first year of employment, it could give you a nice initial bump in pay that might persuade you to accept the position.

You may be able to use a signing bonus as leverage in job negotiations. When multiple companies make job offers, you could use a signing bonus as a bargaining chip. For instance, if Company A represents your dream employer but Company B is offering a larger bonus, you might be able to use that to persuade Company A to match or beat their offer.

A sign-on bonus could make up for benefits package gaps. Things like sick pay, vacation pay, holiday pay, insurance, and a retirement plan can all enhance an employee benefits package. But if the company you’re interviewing with doesn’t offer as many benefits as you’re hoping to get, a large sign-on bonus could make those shortcomings easier to bear.

Signing Bonus Cons

Since sign bonuses are taxable as supplemental wages, you might see a temporary bump in your tax liability for the year. You may want to talk to a tax professional about how you could balance that out with 401(k) or IRA contributions, deductions for student loan interest payments, and other tax breaks.

Additionally, changing jobs might mean having to repay the bonus, depending on your contract. Employers can include a clause in your job offer that states if you leave the company within a specific time frame after hiring, you’d have to pay back your sign-on bonus. If you have to pay back a bonus and don’t have cash on hand to do so, that could lead to debt if you have to get a loan to cover the amount owed.

This might cause you to get stuck in a job you don’t love. If your employer requires you to pay back a signing bonus and six months into the job, you realize you hate it, you could be caught in a tough spot financially. Unless you have money to repay the bonus, you might have to tough it out with your employer a little longer until you can change jobs without any repayment obligation.

Reasons to Negotiate a Signing Bonus

There are several reasons it can be beneficial to negotiate a signing bonus rather than just accept whatever the employer offers.

For one, a signing bonus can help offset the costs of relocating for a new job. Additionally, a signing bonus can help you maintain your current standard of living while you transition to a new city or state. Finally, a signing bonus can allow you to negotiate for other perks and benefits, such as a higher salary, stock options, or a more generous vacation policy.

When Is a Hiring Bonus Negotiated?

A hiring bonus is typically negotiated during the job offer stage after the employer has extended a job offer to the candidate. You don’t want to get ahead of yourself and ask for a hiring bonus immediately because that could hurt your chances of getting one. You generally want to wait for the hiring manager to start the conversation.

After receiving your official job offer with your projected salary and benefits, you will be able to gauge your potential bonus opportunity; one rule of thumb is that a hiring bonus is about 10% of your annual salary. And if the hiring manager offers you a bonus initially, you might have an advantage in negotiating for a better one.

Tips on How to Ask for a Signing Bonus

If an employer doesn’t offer a sign-on bonus, you don’t have to assume it’s off the table. It’s at least worth it to make the request since the worst that can happen is they say no.

Here are some tips on how to ask for a signing bonus:

1. Know Your Value to the Company

Before asking for more money, either with a bonus or your regular salary, get clear on what value you can bring to the company. In other words, be prepared to sell the company on why you deserve a signing bonus.

2. Choose a Specific Amount

Having a set number in mind when asking for a bonus can make negotiating easier. Do some research to learn what competitor companies are offering new hires with your skill set and experience. Then use those numbers to determine what size bonus it makes sense to ask for.

3. Make Your Case

Signing bonuses are gaining steam in industries such as technology, engineering, and nursing, where there is more competition for the best job candidates. You are also sometimes in a better position to ask for a signing bonus if the company did not meet the salary you requested when interviewing — a signing bonus is an opportunity to recoup some of that difference. Regardless, it never hurts to consider asking for more money.

Just be sure to do your research first. For instance, perhaps discreetly ask your contacts whether the company might be open to offering a signing bonus, and be sure to do some research online or within your network to see how your job offer stacks up.

4. Split the Difference With Your Salary

One way to potentially have your cake and eat it, too, when it comes to signing bonuses is to use your salary to offset it. Specifically, instead of asking for a large bonus, you could ask for a smaller one while also asking for a bump in pay.

An employer may be more open to paying you an additional $2,000 a year to keep you on the payroll, for instance, versus handing out a $20,000 bonus upfront when there’s no guarantee you might stick around after the first year.

5. Get it in Writing

If a signing bonus wasn’t part of your original job offer, and you’ve negotiated for one, ensure you receive an updated contract with the bonus included.

The agreement should spell out the amount of the bonus, how it will be paid (separate check or part of your regular paycheck), and the terms of the bonus. The contract should note how long you must stay employed at the company to retain your bonus (typically one year).

How to Maximize Your Signing Bonus

After receiving a signing bonus, the next question should be: What do I do with the extra money?

There are several ways you can put a signing bonus to work. For example, if you have credit card debt, your best move might be to pay that off. This could be especially helpful if you have credit cards with high-interest rates.

You could also use a sign-on bonus to eliminate some or all of your remaining student loan debt. But if you’d rather save your bonus, you might refinance your loans and use the bonus money to grow your emergency fund. Having three to six months’ worth of living expenses saved up could be helpful in case you lose your job or get hit with an unexpected bill.

Recommended: Don’t know how much to save for unexpected expenses? Try our intuitive emergency fund calculator.

You might also consider longer-term savings goals, such as buying a car or putting money down on a home. Keeping your money in a savings account that earns a high-interest rate can help you grow your money until you’re ready to use it.

Using Your Bonus for Retirement

If you are caught up with your credit card payments and already have an emergency fund, you might consider investing your bonus for the long-term.

This could be a wise financial move considering that a $5,000 signing bonus isn’t as lucrative as negotiating a $2,000 increase in your annual salary. If you can’t negotiate the higher salary, you can at least use your bonus to invest. Investing can be an excellent way to build wealth over time.

For example, you might use part of the money to open a traditional or Roth IRA. This can help you get a head start on saving for retirement and supplement any money you’re already saving in your employer’s 401(k). And you can also enjoy tax advantages by saving your bonus money in these accounts.

💡 Recommended: Should I Put My Bonus Into My 401(k)?

Test your understanding of what you just read.

The Takeaway

There’s a lot to think about when you’re looking for a new job. You want to make sure you find a position you love that will compensate you fairly. So adding another step in the job search process may seem overwhelming. However, asking for and negotiating a signing bonus using the tips above is critical to help you get hired with the bonus you deserve.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

What is a signing bonus?

A signing bonus, also known as a hiring bonus or a sign-on bonus, is a bonus given to employees when they are hired. A company will pay a signing bonus to help entice the employee to accept the job offer.

How can you negotiate your signing bonus?

To negotiate a signing bonus, you should be clear about what you are asking for, be reasonable in your request, and have a backup plan if your initial request is not met. It is also important to remember that the company you are negotiating with likely has a budget for signing bonuses, so be mindful of that when making your request.

What is the average signing bonus?

The average signing bonus depends on several factors, including the company, position, and location. In general, the average hiring bonus for managers and executives may range from $10,000 to more than $50,000. For lower-level employees, a signing bonus may be less than $10,000.

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.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

SOBK-Q224-1912283-V1

Feb

2025

What Are Margin Rates?

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

A margin rate is the interest rate that applies when investors trade on margin. Margin rates can vary from one brokerage to the next, and there are different factors that affect the rates brokerages charge. Many brokerages use a tiered rate schedule based on the amount of the margin loan.

Trading on margin can increase an investor’s purchasing power and potentially, their returns. Margin trading simply means investing with money borrowed from a brokerage in order to buy more shares than you might otherwise be able. While trading on margin may benefit investors by providing them with additional capital, it can also be riskier than regular online stock trading. Before opening a margin account, it helps to understand the basic margin rate definition.

Key Points

• Margin rates represent the interest charged on borrowed funds used for trading securities and can vary between different brokerages based on several factors.

• A margin account allows investors to purchase securities with borrowed money, enabling them to increase their buying power but also introducing additional risks.

• Factors influencing margin rates include the broker call rate, demand for margin loans, inflation, and the account balance maintained by the investor.

• Margin rates accrue daily and are charged monthly, meaning that the longer an investor holds a margin loan, the more interest they will pay.

• Understanding margin rates and their implications is crucial for investors, as these rates directly impact the profitability of margin trading strategies.

Understanding Margin Rates

A margin rate is an interest rate or premium that applies to margin trading accounts with a brokerage.

It helps to start with an overview of how margin accounts work to understand margin rates. Margin accounts allow investors to purchase securities using borrowed money. Investors may use margin to trade options, individual stocks, or other securities. Under Federal Reserve Board Regulation T, brokerage firms must cap the amount investors can borrow up to 50% of the securities’ purchase price. This is called the initial margin.

Investors must also meet maintenance margin requirements in their margin account. Specifically, an investor’s equity can’t fall below 25% of the current market value of the securities held in the account.

If an investor fails to meet maintenance margin guidelines, they may be subject to a margin call. A margin call is when the brokerage requires the investor to deposit more money into their margin account in order to make additional trades.

Brokerage firms charge margin rates, the same way a bank might charge interest on a mortgage or a business loan. Interest is a form of risk management, in the event that a borrower defaults.

💡 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.

How Margin Rates Work

Margin rates represent the cost of borrowing for an investor for an outstanding margin loan. Each brokerage can set the margin rate differently, it typically reflects the current broker call rate or call money rate. This is the rate that the bank charges the broker for the money used to fund investors’ margin loans.

Brokerages can establish a base rate, then add or subtract percentage points from that margin rate based on the margin balance. The higher the balance in a margin account, the lower the likely margin rate. So the more you borrow from the brokerage, the less you’ll pay in interest for it, as a percentage of the balance.

Increase your buying power with a margin loan from SoFi.

Borrow against your current investments at just 4.75% to 9.50%* and start margin trading.

*For full margin details, see terms.

Factors That Affect Margin Rate

There are a variety of factors that can determine what a brokerage charges for margin rates.

Broker Call Rate

This is the rate that brokerages pay to borrow the money used to fund margin loans. The higher this rate is, the higher the base margin rate may be.

Supply and Demand

Increased demand for margin loans could result in brokerages charging higher margin rates, both to manage risk on those loans and to reap higher profits.

Inflation and Monetary Policy

Margin rates reflect broader interest rates. If banks begin charging brokers higher interest rates, they’ll pass those on to investors.

Account Balance

Maintaining a higher balance on margin could result in a lower margin rate if the brokerage discounts rates for clients who invest more.

How Can Margin Rates Affect You?

Margin rates can determine your total net profit when trading securities on margin.

Assume, for example, that you open a margin account. You want to purchase $10,000 worth of securities of which $5,000 is borrowed money. You take out a margin loan to purchase the stocks. Those same stocks increase in value, so your $10,000 investment ($5,000 of your own money + $5,000 margin) is now worth $15,000.

You sell the stocks and repay the $5,000 you initially borrowed. You also pay $500 in interest to the brokerage for the margin loan. Once you subtract your initial $5,000 investment, the total net profit to you is $4,500.

Now, how do margin rates affect you if your investment doesn’t pan out? Going back to the previous example, say those stocks drop in value to $6,000 rather than increasing. You sell them for that amount, then pay back the $5,000 you borrowed on margin. You also have to pay $500 in interest. If you subtract those amounts from your initial $5,000 investment, you’re now left with only $500.

Understanding margin rates — and the risks involved in margin trading — can help you decide if it’s an investment strategy worth pursuing, based on your risk tolerance and goals.

When Is Margin Rate Charged?

Margin rates are accrued daily and charged on a monthly basis. So as soon as you purchase securities on margin, the margin rate applies and begins accruing. The total amount of margin interest paid depends on how much you borrow from the brokerage, the margin rate and how long it takes you to pay the loan back.

Generally speaking, traders use margins for short-term trading purposes. Though there’s no set end date for margin loans, the longer you take to pay them off, the more interest you’ll pay in total.

How Is Margin Rate Calculated?

Unlike other loans, margin loans typically do not have a set end date. Interest charges accrue monthly. To find the annual interest rate on a margin loan, you’d multiply the margin rate by the principal amount. To find the daily rate, you’d divide that amount by 360 days.

So assume that you have a $100,000 margin loan with a 6.825% margin rate, which is a common margin rate figure at top brokerages. Your yearly interest charges would add up to $6,825. If you divide that by 360, your daily interest charge breaks down to $18.96. If you were to pay your margin loan off in 10 days, you’d pay a total of $189.60 in interest.

Determining how much you’ll pay for a margin loan is relatively easy if you know the margin rates that apply and have an idea of how long it’ll take you to pay it back. At the very least, you can figure out the daily interest charge and use that as a guide for calculating your total profits on a margin trade.

💡 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).

Test your understanding of what you just read.

The Takeaway

Margin rates refer to the interest rate traders or investors pay on their margin balance – the amount of money they’ve borrowed from a broker to execute traders and buy investments. Margin rates help determine how much traders will pay to use margin, and can help inform investing decisions.

Margin trading is a more advanced investing strategy that requires some consideration of risk and an understanding of market trends. If you’re just getting started with online stock trading and investing, then you may want to get a feel for how stocks work first before opening a margin account.

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.

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

Are margin rates yearly? Daily?

Margin rates are accrued on a daily basis, and charged by brokerages on a monthly basis. So, every day that a trader has a margin balance, they’re accruing interest in conjunction with their margin rate.

What does margin rate tell you?

The margin rate tells investors how much they’ll pay to borrow money from their brokerage if they trade on margin – or, in other words, it informs them of how much it costs to use margin.

About the author

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.

You may also be interested in:

Margin Trading: What It Is and How It Works

Margin Account: What It Is and How It Works

What You Need to Know About Margin Balance

About the author

Rebecca Lake

Photo credit: iStock/Drazen

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

SOIN1023006

Feb

2025

Shares vs Stocks: What’s the Difference?

By Inyoung Hwang | Growing Wealth, Investing, Terminology | No Comments

The difference between the terms stock and shares is a simple one. An investor buys shares of stock in a company. The stock represents the company, and is sold in units called shares.

Thus, an investor can own a certain number of shares of a company’s stock: e.g., they might own 100 shares of Company A. But it’s incorrect to say an investor owns 100 stocks in Company A. If an investor owns 100 stocks, that would mean they own shares of stock in 100 different companies.

Key Points

• The terms “shares” and “stock” are often used in tandem, but they refer to different aspects of an equity investment.

• A stock is a broad term for the asset, while a share is the unit of ownership.

• Owning 100 shares implies you have 100 units of one company’s stock, while owning 100 stocks means you have stakes in 100 different companies.

• Ordinary shares are the same as common stock, and preference shares are the same as preferred stock.

• Common stockholders have voting rights and may receive dividends; preferred stockholders usually don’t have voting rights, but they often receive dividends before common stockholders.

Stock vs Share: Comparison

A stock is the actual asset you purchase, while a share is the unit of measurement for that asset.

So, investing in a certain stock means you’re investing in that company. A share tells you how much of that stock you own.

Differences Between Stocks and Shares

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

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

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

You could buy 10 shares of one company’s stock, 50 shares of another, 1,000 shares of another, and so on. Shares represent the percentage of ownership you have in that company.

What Are Stocks?

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

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

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

Why Should I Buy Stocks?

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

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

The second way to earn money is through capital appreciation, which is when a stock’s price increases above the purchase price. However, capital appreciation doesn’t lock in your gains; you don’t realize your profits until you sell your stock. And there is no guarantee that a stock will appreciate. Sometimes, owing to a range of factors, a stock’s price may drop, and investors may incur a loss.

If you sell stock and realize a profit, you must pay capital gains taxes on the earnings. The amount of tax you owe on your earnings depends on the type of asset, and how long you held it before selling.

Types of Stocks

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

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

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

Recommended: Preferred Stock vs. Common Stock

How Are Stocks Categorized?

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

By Different Styles of Investing

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

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

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

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

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

Recommended: Value vs. Growth Stocks

By Market Cap

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

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

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

• Mid-Cap: $2 billion to $10 billion

• Large-Cap: $10 billion or higher

• Mega-Cap: $200 billion or higher

Generally speaking, companies with larger market capitalizations are older, more established, and have greater international exposure. Meanwhile, smaller-cap stocks tend to be newer, less established, and more domestically oriented. Smaller-cap companies can be riskier but also offer more growth potential.

What Are Shares?

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

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

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

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

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

Types of Shares

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

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

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

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

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

Stock Splits Definition

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

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

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

Other Ways to Own Stock

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

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

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

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

Test your understanding of what you just read.

The Takeaway

The difference between stocks and shares is that a share represents a unit of ownership in a company, while stocks refer to the ownership of one or more companies. It’s common to use both terms when discussing equity investments. But knowing the distinction between the two terms can help you better understand the stock market and investing.

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

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.

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.

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.

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.

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

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.

SOIN-Q324-004

What Is a Bear Call Spread?

How Does a Bear Call Spread Work?

Max Profit of a Bear Call Spread

Max Loss of a Bear Call Spread

Example of a Bear Call Spread Strategy

Factors That Impact Bear Call Spreads

Stock Price Change

Stock Price Volatility

Time

Benefits and Risks of a Bear Call Spread

Pros:

Cons:

Benefits of a Bear Call Spread

Risks of a Bear Call Spread

Bear Call Spread Considerations and Tips

The Takeaway

FAQ

How do you close a bear call credit spread?

How do you set up a bear call spread?

What Are The Rules For Withdrawing From a 401(k)?

At What Age Can You Withdraw From a 401(k) Without Penalty?

Under the Age of 55

Between Ages 55–59 1/2

After Age 73

Withdrawing 401(k) Funds When Already Retired

Withdrawing 401(k) Funds While Still Employed

401(k) Hardship Withdrawals

Taking Out a 401(k) Loan

IRA Rollover Bridge Loan

401(k) Withdrawals vs Loans

Cashing Out a 401(k)

Rolling Over a 401(k)

The Takeaway

FAQ

Can you take out 401(k) funds if you only need the money short term?

How long does it take to cash out a 401(k) after leaving a job?

What are other alternatives to taking an early 401(k) withdrawal?

At what age can I withdraw from my 401(k) without penalty?

When can I access my 401(k) funds if I’m already retired?

Understanding Why Companies Offer a Hiring Bonus

How Signing Bonuses Work

Average Signing Bonus

What Industries Offer the Highest Hiring Bonuses?

Pros & Cons of Signing Bonuses

Signing Bonus Pros

Signing Bonus Cons

Get up to $1,000 in stock when you fund a new Active Invest account.*

Access stock trading, options, alternative investments, IRAs, and more. Get started in just a few minutes.

Reasons to Negotiate a Signing Bonus

When Is a Hiring Bonus Negotiated?

Tips on How to Ask for a Signing Bonus

1. Know Your Value to the Company

2. Choose a Specific Amount

3. Make Your Case

4. Split the Difference With Your Salary

5. Get it in Writing

How to Maximize Your Signing Bonus

Using Your Bonus for Retirement

The Takeaway

FAQ

What is a signing bonus?

How can you negotiate your signing bonus?

What is the average signing bonus?

Understanding Margin Rates

How Margin Rates Work

Increase your buying power with a margin loan from SoFi.

Borrow against your current investments at just 4.75% to 9.50%* and start margin trading.

Factors That Affect Margin Rate

Broker Call Rate

Supply and Demand

Inflation and Monetary Policy

Account Balance

How Can Margin Rates Affect You?

When Is Margin Rate Charged?

How Is Margin Rate Calculated?

The Takeaway

FAQ

Are margin rates yearly? Daily?

What does margin rate tell you?

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