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Sep

2022

How to Roll Over Your 401(k)

By AJ Smith | Budgeting & Goals, Building Your Career, Growing Wealth, invest, Investing, Life & Career | No Comments

It’s pretty easy to rollover your old 401(k) retirement savings to an IRA, a new 401(k), or another option — yet millions of workers either forget to rollover their hard-won retirement savings, or they lose track of the accounts.

According to a 2021 study by Capitalize, some 24 million 401(k) accounts seem to be forgotten or “lost”, with an average balance of about $55,000 in these dormant accounts.

Given that a 401(k) rollover just takes a couple of hours and, these days, minimal paperwork, it makes sense to know the basics so you can rescue your 401(k), roll it over to a new account, and add to your future financial security.

How Does Rolling Over Your 401(k) Work?

Many people wonder how to rollover a 401(k) when they leave their jobs. First, you need to know the difference between a transfer and a rollover.

A transfer is when you move funds between two identical types of retirement accounts. For example, if a person moves money from an old 401(k) to a new 401(k), a traditional IRA to another traditional IRA, or from an old Roth IRA to a new Roth IRA — that’s a transfer. It’s the most direct way to move funds from one tax-advantaged account to another.

A rollover is when you move money between two different types of retirement accounts. For example: You might rollover a 401(k) to an IRA.

💡 Recommended: What Is an IRA and How Does It Work?

Bear in mind, rollover accounts can be different, but must have the same tax treatment. You can’t rollover a tax-deferred traditional 401(k) to a Roth IRA without doing some kind of Roth conversion.

Steps to Roll Over Your 401(k)

Here are the basic steps, with more detail to follow:

1. Decide whether you want to roll it over to an IRA (a common option); transfer the funds to another employer’s 401(k); or set up an account like a self-directed IRA.

2. Set up the rollover account. Remember that rollovers have to be apples to apples in terms of tax treatment: a tax-deferred 401(k) to a traditional IRA; a Roth 401(k) to a Roth IRA.

3. Contact your former employer or 401(k) plan sponsor to initiate the rollover. (Depending on which rollover option you choose, the process or paperwork may be slightly different.)

4. Generally, the funds are sent to you in a check although they can be wired to a rollover IRA at a new institution, for example. Either way, you have 60 days to deposit the funds in another tax-deferred account, or you will owe taxes on the money and possibly a penalty.

Benefits of Rolling Over Your 401(k)

Once you understand how to roll over a 401(k), it’s easy to understand what the advantages are. First and foremost, by doing a rollover, you ensure that you are in charge of your retirement funds (which is important, after years of investing in your 401(k)).

Other pros include:

• Your investment account costs will likely be lower once you do a rollover, because leaving your savings in your old 401(k) when you’re no longer an employee means you may pay higher account management fees. Fees matter, and can substantially reduce your savings over time.

• You may have more investment choices. Typically, when you do a rollover from a 401(k) to an IRA at a new institution, your investment options increase which might improve portfolio returns and could further reduce fees.

• If you don’t want a self-directed portfolio, where you choose the investments in your rollover, you may be able to choose a robo-advisor or automated portfolio so there’s less for you to manage.

• If you have more than one 401(k) from various jobs, you can consolidate them as part of the rollover process.

Disadvantages of Rolling Over a 401(k)

Since you want to avoid retirement mistakes, it’s also important to consider some of the reasons why a rollover may not be the best idea.

• First, if you have a lot of appreciated company stock, you may be able to pay a lower tax rate on the gains if you transfer the stock to a brokerage account.

• While a rollover account at a different institution may provide more investment options, if you keep your 401(k) where it is, you may be able to buy investments at the cheaper institutional rate.

• If you do a rollover, you may lose some of the federal legal protections that come with 401(k) plans. For example, the money in your 401(k) is typically protected from creditors or collections, whereas the money in an IRA is shielded by state laws, which can vary.

• In some cases, your employer may allow you to withdraw funds from your 401(k) without paying the usual 10% penalty, if you are 55 or older when you leave your job.

Pros and Cons of Doing a 401(k) Rollover

Pros	Cons
Potentially lower investment fees, which can impact savings over time.	If you have company stock in your 401(k), it might save on taxes if you transfer the stock to a brokerage rather than doing a rollover.
More investment choices; more control over your portfolio.	Investment options may cost less in a 401(k) vs. an IRA.
The option to switch to a robo advisor if you prefer an automated approach.	Keeping your 401(k) may offer legal protection from creditors or collections.
Ability to consolidate accounts.	Keeping your money in your 401(k) could give you penalty-free access before age 59 ½ vs. an IRA.

When Is a Good Time to Roll Over a 401(k)?

Once you know how to roll over a 401(k), and you’ve decided that’s your next step, doing it as soon as you leave your job is likely the best time. But you can generally do a rollover any time. It’s your money. If you decide to do the rollover five years after leaving your job, that’s a better time than never.

That said, if you have a low balance in your 401(k) account — for example, less than $5,000 — your employer might require you to do a rollover. And if you have a balance lower than $1,000, your employer may have the right to cash it out. Be sure to check the exact terms with your employer.

In most instances, you have 60 days from the date you receive an IRA or 401(k) distribution to then roll it over into a new qualified plan. If you wait longer than 60 days to deposit the money, it will trigger tax consequences, and possibly a penalty. One rollover per year is allowed under the rules.

5 Things You Can Do With Your Old 401(k)

If you’re still asking yourself, But how do I rollover my 401(k)?, here are five possible choices that might make sense when deciding how to handle your old account.

Option 1: Leave Your 401(k) Where It Is

Is it ever a good idea to let sleeping 401(k)s lie? Sometimes, yes.

For instance, maybe your old job was with a super-hip, savvy startup that chose a stellar plan with multiple investment options and low administration fees that stayed in place even after you left your job. This is rare! But the point is: If you’re happy with your portfolio mix and you have a substantial amount of cash stashed in there already, it might behoove you to leave your 401(k) where it is.

Other than that, you probably want to make sure you’re in charge of your money — not your former employer.

Also, besides any additional fees you might end up paying, racking up multiple 401(k)s as you change jobs could lead to a more complicated withdrawal schedule at retirement.

Option 2: Roll Over Your 401(k) Into an IRA

If your new job doesn’t offer a 401(k) or other company-sponsored account like a 403(b), don’t worry: You still have options that’ll keep you from bearing a heavy tax burden. Namely, you can roll your 401(k) into an IRA, or Individual Retirement Account.

The entire procedure essentially boils down to three steps:

1. Open a new IRA that will accept rollover funds.

2. Contact the company that currently holds your 401(k) funds and fill out their transfer forms using the account information of your newly opened IRA. You should receive essential information about your benefits when you leave your current position. If you’ve lost track of that information, you can contact the plan sponsor or the company HR department.

3. Once your money is transferred, you can reinvest the money as you see fit. Or you can hire an advisor to help you set up your new portfolio. It also may be possible to resume making deposits/contributions to your rollover IRA.

Option 3: Roll Over Your 401(k) to Your New Job

If your new job offers a 401(k) or similar plan, rolling your old 401(k) funds into your shiny, new 401(k) account may be both the simplest and best option — and the one least likely to lead to a tax headache.

That said, how you go about the rollover has a pretty major impact on how much effort and paperwork is involved, which is why it’s important to understand the difference between direct and indirect transfers.

How to Roll Over Your 401(k): Direct vs Indirect Transfers

Here are the two main options you’ll have if you’re moving your 401(k) funds from one company-sponsored retirement account to another.

A direct transfer, or direct rollover, is exactly what it sounds like: The money moves directly from your old account to the new one. In other words, you never have access to the money, which means you don’t have to worry about any tax withholdings or other liabilities.

Depending on your account custodian(s), this transfer may all be done digitally via ACH transfer, or you may receive a paper check made payable to the new account. Either way, this is considered the simplest option, and one that keeps your retirement fund intact and growing with the least possible interruption.

Another viable, but slightly more complex, option, is to do an indirect transfer or rollover, in which you cash out the account with the express intent of immediately reinvesting it into another retirement fund, whether that’s your new company’s 401(k) or an IRA (see above).

But here’s the tricky part: Since you’ll actually have the cash in hand, the government requires your account custodian to withhold a mandatory 20% tax. And although you’ll get that 20% back in the form of a tax exemption later, you do have to make up the 20% out of pocket and deposit the full amount into your new retirement account within 60 days.

For example, say you have $50,000 in your old 401(k). If you elected to do an indirect transfer, your custodian would cut you a check for only $40,000, thanks to the mandatory 20% tax withholding.

But in order to avoid fees and penalties, you’d still need to deposit the full $50,000 into your new retirement account, including $10,000 out of your own pocket. In addition, if you retain any funds from the rollover, they may be subject to an additional 10% penalty for early withdrawal.

Option 4: Cashing Out Your 401(k)

One recent review of 401(k) accounts found that 21% of Americans who left their jobs during the pandemic also cashed out their 401(k) accounts. Generally speaking, withdrawing these retirement funds is not a good idea, and here’s why.

Because a 401(k) is an investment account designed specifically for retirement, and comes with certain tax benefits — e.g. you don’t pay any tax on the money you contribute to your 401(k) — the account is also subject to strict rules regarding when you can actually access the money, and the tax you’d owe when you did.

Specifically, if you take out or borrow money from your 401(k) before age 59 ½, you’ll likely be subject to an additional 10% tax penalty on the full amount of your withdrawal — and that’s on top of the regular income taxes you’ll also be obligated to pay on the money.

Depending on your income tax bracket, that means an early withdrawal from your 401(k) could really cost you, not to mention possibly leaving you without a nest egg to help secure your future.

This is why most financial professionals generally recommend one of the next two options: rolling your account over into a new 401(k), or an IRA if your new job doesn’t offer a 401(k) plan.

Option 5: Rolling Your 401(k) Over to a Self-Directed IRA

A self-directed IRA, sometimes called a SDIRA, is an unusual type of retirement account — and it’s not widely available. That’s because these types of accounts aren’t just for traditional securities, but for alternative investments normally not permitted in traditional IRAs: i.e. real estate, collectibles (like art and jewelry), commodities, precious metals, and more.

These accounts are considered self-directed because, first, they are only available through certain financial firms that will custody SDIRA accounts, not manage them. Second, SDIRA custodians can’t give financial advice, so all the due diligence and asset management falls to the investor.

While you can consider doing a rollover to a SDIRA, be sure that setting up such an account makes sense for your current holdings, or whether a traditional IRA or Roth might do just as well.

The Takeaway

It’s not difficult to rollover your 401(k), and doing so can offer you a number of advantages. First of all, when you leave a job you may lose certain benefits and terms that applied to your 401(k) while you were an employee. Once you move on, you may pay more in account fees, and you will likely lose the ability to keep contributing to your account.

Rolling over your 401(k) — to a new employer’s plan, or to an IRA — gives you more control over your retirement funds, and could also give you more investment choices.

There are some instances where you may not want to do a rollover, for instance when you own a lot of your old company’s stock, so be sure to think through your options.

If you know that moving your 401(k) money over to an IRA is the right thing, SoFi makes it super easy. Once you open an investment account with SoFi Invest and set up a traditional or Roth IRA account, you can transfer the funds from your old 401(k) and either keep the same (or similar investments), or choose new ones.

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.

FAQ

How can you roll over a 401(k)?

It’s fairly easy to roll over a 401(k). First decide where you want to open your rollover account (usually an IRA), then contact your old plan’s administrator, or your former HR department. They typically issue a check that can be sent directly to you or to the rollover account at a new institution.

What options are available for rolling over a 401(k)?

There are several options for rolling over a 401(k), including transferring your savings to a traditional IRA, or to the 401(k) at your new job. You can also leave the account where it is, although this may incur additional fees. It’s generally not advisable to cash out a 401(k), as replacing that retirement money could be challenging.

Does SoFi allow you to roll over your 401(k)?

Yes, you can rollover funds from a 401(k) to a rollover IRA with SoFi.

To initiate the rollover, set up an account with SoFi Invest, and contact your 401(k) plan administrator or the HR department of your previous employer.

Aug

2022

Institutional vs Retail Investors: What’s the Difference?

By Nina Semczuk | Growing Wealth, invest, Investing, Terminology | Comments Off

Much of the trading on Wall Street is done by institutional investors: companies or organizations that invest large sums of money on the behalf of other people. Retail, or individual investors, make up a smaller percentage of capital market investments.

In other words, the main difference between institutional vs. retail investors is size: The first category is dominated by professional financial institutions or large organizations that trade investments in large quantities (in a municipal pension fund, for example). Retail investors are made up largely of non-professional individuals (e.g. someone who trades on their own through a brokerage account).

While size and scale are two of the primary differences between institutional vs. retail investors, they each have their own advantages and disadvantages. Retail investors are afforded certain legal protections; institutional investors can have the upside in terms of research and access to capital.

Who Is Considered a Retail Investor?

Any non-professional individual buying and selling securities such as stocks or mutual funds and exchange traded funds (ETFs) — through an online or traditional brokerage or other type of account — is considered a retail investor.

The parent who invests in their child’s 529 college savings plan, or the employee who contributes to their 401(k) are both retail investors.

So in this case the term “retail” generally refers to an individual trading on their own behalf, not on behalf of a larger pool of investors. Retail here references the purchase and selling of investments in relatively small quantities.

Who Is Classified as an Institutional Investor?

By comparison, institutional investors make investment decisions on behalf of large pools of individual investors or shareholders. In general, institutional investors trade in large quantities, such as 10,000 shares or more at a time.

The professionals who do this large-scale type of investing typically have access to investments not available to retail investors (such as special classes of shares that come with different cost structures). By virtue of their being part of a larger institution, this type of investor usually has a larger pool of capital to buy, trade, and sell with.

Institutional investors are responsible for most of the trading that happens on the market. Examples of institutional investors include commercial banks, pension funds, mutual funds, hedge funds, endowments, insurance companies, and real estate investment trusts (REIT).

What Are the Differences Between Institutional Investors vs Retail Investors?

The main differences between institutional and retail investors include:

• Institutional investors invest on behalf of a large number of constituents (e.g. a municipal pension fund); retail investors are individuals who invest for themselves (e.g. an IRA).

• Size (large institutions vs. individuals) and scale of investments.

• Institutional investors typically have access to professional research and industry resources.

• Retail investors are protected by certain regulations that don’t apply to institutional investors.

Institutional Investors	Retail Investors
Professionals and large companies	Non-professional individuals
Invest in large quantities	Invest in small quantities
Invest on behalf of others	Invest for themselves
Access to industry-level sources, research	DIY
Access to preferred share classes and pricing	Access to retail shares and pricing

What Are the Similarities Between Institutional Investors vs Retail Investors?

There are very few similarities between institutional vs. retail investors except that both parties tend to seek returns while minimizing risk factors where possible.

Retail vs. Institutional Investor

Do Institutional or Retail Investors Get the Highest Returns?

There are no crystal balls on Wall Street, as they say, so there’s no guaranteed way to predict whether institutional investors always get higher returns vs. retail investors.

That said, some institutional investors may have the edge in that they have access to industry-level research as well as powerful technology and computer algorithms that enable them to make faster trades and more profitable calculations.

Does that mean institutional investors always come out ahead? In fact, retail investors who have a longer horizon also have a chance at substantial returns over time, although there are no guarantees on either side.

How Many Retail Investors Are There?

In the U.S., it’s fairly common to be a retail investor. About 58% of Americans say they own stock, according to a 2022 Gallup poll, meaning they own individual stocks, stock mutual funds, or they hold stock in a self-directed 401(k) or IRA.

Examples of retail investors include people who manage their retirement accounts online (e.g., an IRA) and those who trade stocks as a hobby.

Because individual investors are generally thought to be more prone to emotional behavior than their professional counterparts (and typically don’t have access to the resources and research of larger institutions), they may be exposed to higher levels of risk. Thus the Security Exchange Commission (SEC) provides certain protections to retail investors.

For example, the 2019 Regulation Best Interest rule states that broker-dealers are required to act in the best interest of a retail customer when making a recommendation of a securities transaction or investment strategy. This federal rule is intended to ensure that broker-dealers aren’t allowed to prioritize their own financial interests at the expense of the customer.

Another protection provided to retail investors is that investment advisors and broker-dealers must provide a relationship summary that covers services, fees, costs, conflicts of interest, legal standards of conduct, and more to new clients.

Types of Institutional Investors

The most common institutional investors are listed below.

1. Commercial Banks

Commercial banks are the “main street” banks many people are familiar with, such as Wells Fargo, Citibank, JP Morgan Chase, Bank of America, TD Bank, and countless others. Along with providing retail banking services, such as savings accounts and checking accounts, large banks are also institutional investors.

These large corporations have entire teams dedicated to investing in different markets: e.g. global markets, bond markets, socially responsible investing, and so on.

2. Endowment Funds

Typically connected with universities and higher education, endowment funds are often created to help sustain these nonprofit organizations. Churches, hospitals, nonprofits, and universities generally have endowment funds, whose funds often derive from donations.

Endowment funds generally come with certain restrictions, and have an investment policy that dictates an investment strategy for the manager to follow. This might include stipulations about how aggressive to be when trying to meet return goals, and what types of investments are allowed (some endowment funds avoid controversial holdings like alcohol, firearms, tobacco, and so on).

Another component is how withdrawals work; often, the principal amount invested stays intact while investment income is used for operational or new constructions.

3. Pension Funds

Pension funds generally come in two flavors:

• Defined contribution plans, such as 401(k)s or 403(b)s, where employees contribute what they can to these tax-deferred accounts.

• Defined benefit plans, or pensions, where retirees get a fixed income amount, regardless of how the fund does.

Employers that offer defined benefit pensions are becoming less common in the U.S. Where they do exist, they’re often linked to labor unions or the public sector: e.g. a teachers union or auto workers union may offer a pension.

Public pension funds follow the laws defined by state constitutions. Private pension plans are subject to the Employee Retirement Income Security Act of 1974 (ERISA); this act defines the legal rights of plan participants.

As for how a pension invests, it depends. ERISA does not define how private plans must invest, other than requiring that the plan sponsors must be fiduciaries, meaning they put the financial interest of the account holders first.

4. Mutual Funds

As defined by the Securities and Exchange Committee (SEC), mutual funds are companies that pool money from many investors and invest in securities such as bonds, stocks, and short-term debt. Mutual funds are thus considered institutional investors, and are known for offering diversification, professional management, affordability, and liquidity.

Typical mutual fund offerings include money market funds, bond funds, stock funds, index funds, actively managed funds, and target date funds.

The last category here is often designed for retail investors who are planning for retirement. The asset mix of these target date funds, sometimes known as target funds or lifecycle funds, shifts over time to become more conservative as the investor’s target retirement date approaches.

5. Hedge Funds

Like mutual funds, hedge funds pool money from investors and place it into securities and other investments. The difference between these two types of funds is that hedge funds are considered private equity funds, are considered high risk vehicles, and aren’t as regulated as mutual funds.

Because hedge funds use strategies and investments that chase higher returns, they also carry a greater risk of losses — similar to high-risk stocks. In general, hedge funds also have higher fees and higher minimum investment requirements. So, they tend to be more popular with wealthier investors and other institutional investors. (In some cases, they’re only available to accredited investors).

6. Insurance Companies

Perhaps surprisingly, insurance companies can also be institutional investors. They might offer products such as various types of annuities (fixed, variable, indexed), as well as other life insurance products which are invested on behalf of the investor, e.g. whole life or universal life insurance policies.

Getting Started as a Retail Investor

Institutional investors may be larger, more powerful, and run by professionals — whereas retail investors are individuals who aren’t trained investment experts — but it’s important to remember that these two camps can and do overlap. Institutional investors that run pension funds, mutual funds, and insurance companies, for example, serve retail investors by investing their money for retirement and other long-term goals.

If you’re ready to start investing as a retail investor, it’s easy when you set up an online brokerage account with SoFi Invest.

You can invest in stocks, ETFs, IPO shares, fractional shares, and more. For folks who’d like to discuss their financial goals or questions, SoFi members can connect at no cost with financial advisors.

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.

FAQ

What are the different types of investors?

Institutional investors are big companies with teams of professional investment managers who invest other people’s money. Retail investors are individuals who typically manage their own investment (e.g. for retirement or college savings).

What percentage of the stock market is made up of institutional investors?

The vast majority of stock market investors are institutional investors. Because they trade on a bigger scale than retail investors, institutional trades can impact the markets.

Are institutional or retail investment strategies better?

Institutional investors have access to more research and technology compared with retail investors. Thus their strategies may be considered more sophisticated. But it’s hard to compare outcomes, as both groups are exposed to different levels of risk.

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.

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

Claw Promotion: Customer must fund their Active Invest account with at least $25 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.

SOIN0822022

Aug

2022

Guide to Writing Put Options

By Mike Zaccardi, CMT, CFA | Growing Wealth, invest, Investing | Comments Off

Puts, or put options, are contracts between a buyer – known as the holder of an option – and a seller – known as the writer of an option – that gives the buyer the right to sell an asset, like a stock or exchange-traded fund (ETF), at a specific price within a specified time period. The seller of the put option is obligated to buy the asset at the strike price if the buyer exercises their option to sell.

Writing a put option is also known as selling a put option. When you sell a put option, you agree to buy the underlying asset at a specified price if the option buyer, also known as the option holder, exercises their right to sell the asset. The premium you receive for writing the put option is your maximum possible profit.

Generally, traders who buy put options have a bearish view of a security, meaning they expect the underlying asset’s price to decline. In contrast, the put option writer has a neutral to bullish outlook of a security. The put writer should be willing to take the risk of having to buy the asset if it falls below the strike price in exchange for the premium paid by the put option holder.

Writing put options is just one of numerous trading strategies investors use to build wealth, speculate, or hedge positions. While there is potential to generate income by writing put options, it can also be a risky way to enhance a portfolio’s return. Only investors with the knowledge of how to write put options and risk tolerance to take on this strategy should do so.

Writing Put Options

When writing a put option contract, the seller will initiate a trade order known as sell to open.

As mentioned above, the put option writer is selling a contract that gives the holder the right to sell a security at a strike price within a specified time frame. The put option writer will receive a premium from the holder for selling this option. If the price of the security falls below the strike price before the expiration date, the writer may be obligated to buy the security from the holder at the strike price.

There are two main reasons to write a put option contract: to earn income from the premium or to hedge a position.

A naked, or “uncovered,” put option is an option that is issued and sold without the writer setting aside any cash to meet the obligation of the option when it reaches expiration. This increases the writer’s risk.

Maximum Profit/Loss

The most a put option writer can profit from selling the option is the premium received at the start of the trade. Many traders take advantage of this profit as a way to generate regular income by writing put options for assets that they expect will not fall below the strike price.

However, this strategy can be risky because there can be significant losses if the asset’s price falls below the strike price. For example, if a stock’s price plummets because a company announces bankruptcy, the put option writer may be obligated to buy the stock when it’s trading near $0. The maximum loss will be equal to the strike price minus the premium.

Breakeven

The breakeven point for a put option writer can be calculated by subtracting the premium from the strike price. The breakeven point is the market price where the option writer comes away even, not making a profit or experiencing a loss (not including trading commissions and fees).

Writing Puts for Income

There are many options trading strategies. As noted above, many traders will write put options to generate income when they have a neutral to bullish outlook on a specific security. Because the writer of a put option receives a premium for opening the contract, they will benefit from that guaranteed payment if the put expires unexercised or if the writer closes out their position by buying back the same put option.

For example, if you believe an asset’s price will stay above a put option’s strike price, you can write a put option to take advantage of steady to rising prices on the underlying security. By keeping the option premium, you effectively add a stream of income into your trading account, as long as the underlying asset’s price moves in your favor.

However, with this strategy, you face the risk of having to buy the underlying asset from the option holder if the price falls below the strike price before the expiration date.

💡 Recommended: How to Sell Options for Premium

Put Writing Example

Let’s say you are neutral to bullish on shares of XYZ stock, which trade at $70 per share. You execute a sell to open order on a put option expiring in three months at a strike price of $60. The premium for this put option is $5; since each option contract is for 100 shares, you collect $500 in income.

If you wrote the put option contract for income, you’re hoping the price of XYZ stock will stay above $60 through the expiration date in three months, so the option holder does not exercise the option and requires you to buy XYZ. In this ideal scenario, your maximum profit will be the $500 premium you received for selling the put option.

At the very least, you hope the stock does not fall below $55, or the breakeven point ($60 strike price minus the $5 premium). At $55, you may be obligated to buy 100 shares at the $60 strike price:

$5,500 market value – $6,000 price paid + $500 premium earned = $0 return

If XYZ stock falls to $50, the put option holder will likely exercise the option to sell the stock. In this scenario, you will be obligated to buy the stock XYZ at the $60 strike price and incur a $500 loss in this trade:

$5,000 market value – $6,000 price paid + $500 premium earned = -$500 return

However, the further the price of XYZ falls, your potential loss risk increases. In the worst-case scenario where the stock falls to $0, your maximum loss would be $5,500:

$0 market value – $6,000 price paid + $500 premium earned = -$5,500 return

Put Option Exit Strategy

In the example above, it is assumed that the option is exercised or expires worthless. However, a put option writer can also exit a trade in order to profit or mitigate losses prior to the contract’s expiration.

A put writer can exit their position anytime using a trade order known as buy to close. In this scenario, the writer of the initial put option will buy back a put option to close out a position, either to lock in a profit or prevent further losses.

Using the example above, say that after two months, shares of XYZ have increased from $70 to $85. The value put contract you sold, which still has one more month until expiration and a $60 strike price, has collapsed to $1 because of a share price rise and perhaps a drop in expected volatility. Rather than wait for expiration, you decide to buy to close your put position, buying back the put contract at $1 premium, for a total of $100 ($1 premium x 100 shares). You are no longer obligated to buy shares of XYZ in the event the stock drops below $60 during the next month, and you lock in a profit of $400:

$500 premium earned to sell to open – $100 premium paid to buy to close = $400 return

A buy to close strategy can also be used to mitigate substantial losses. For example, if stock XYZ’s price starts dropping, the value of puts with a $60 strike price and a similar expiration date will rise. Rather than wait for expiration and be obligated to buy shares of a stock you don’t want, potentially losing up to $5,500, you may exit the position at any time. If option premiums for this trade are now $8, you can pay $800 ($8 premium x 100 shares) to buy to close the trade. This will result in a loss of $300, a potentially more manageable loss than the worst-case scenario:

$500 premium earned to sell to open – $800 premium paid to buy to close = -$300 return

Finally, user-friendly options trading is here.^*

Trade options with SoFi Invest on an easy-to-use, intuitively designed online platform.

*Check out the OCC Options Disclosure Document.

The Takeaway

Writing a put option is an options strategy in which you are neutral to bullish on the underlying asset. Potential profit is limited to the premium collected at the start of the trade. The maximum loss can be substantial, however. Finally, there is the risk that you will be liable to buy the stock at the option strike price if the holder exercises the option. Because of all these moving parts, writing put options should be left to experienced traders with the tolerance to take on the risk.

Looking to try different investment opportunities? SoFi’s intuitive and approachable options trading platform is a great place to start. You can access educational resources about options for more information and insights. Plus, you have the option of placing trades from either the mobile app or web platform.

Trade options with low fees through SoFi.

FAQ

What happens when you sell a put option?

Selling a put option is the same thing as writing a put option. You profit by collecting a premium for selling the option or when the put options decline in value, which usually happens when the underlying asset price rises. A significant risk of writing a put option is that you might be required to buy shares of the underlying asset at the strike price.

How would you write a put option?

You write a put option by first executing a sell to open order. You collect a premium at the onset of the trade without owning shares of the underlying asset. This strategy can be risky, so it generally requires high-level options trading knowledge.

When would you write a put option?

If a trader believes an asset’s price will stay flat or increase over a period of time, they may choose to write a put option. If the underlying asset’s price increases, the put option’s value will decline as it nears expiration. A profitable outcome occurs when the value of the put option is zero by expiration, or if the put writer buys to close the position before expiration. The put writer will profit by keeping the premium received at the initiation of the trade.

Photo credit: iStock/insta_photos

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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.

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.
Investing in an Initial Public Offering (IPO) involves substantial risk, including the risk of loss. Further, there are a variety of risk factors to consider when investing in an IPO, including but not limited to, unproven management, significant debt, and lack of operating history. For a comprehensive discussion of these risks please refer to SoFi Securities’ IPO Risk Disclosure Statement. IPOs offered through SoFi Securities are not a recommendation and investors should carefully read the offering prospectus to determine whether an offering is consistent with their investment objectives, risk tolerance, and financial situation.

New offerings generally have high demand and there are a limited number of shares available for distribution to participants. Many customers may not be allocated shares and share allocations may be significantly smaller than the shares requested in the customer’s initial offer (Indication of Interest). For SoFi’s allocation procedures please refer to IPO Allocation Procedures.

*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.
SOIN0422030

Aug

2022

Share Draft Accounts: What Are They & How Do They Work?

By Rebecca Lake | Family Finances, Life & Career, money | Comments Off

A share draft account or share draft is a checking account that’s held at a credit union. That’s a simple share draft account definition.

Share draft accounts are similar to checking accounts offered by banks, in terms of how you can use them. There are, however, a few differences that set them apart.

Whether a share draft account or a checking account is right for you can depend on your preferences for managing your money. If you’re thinking of opening a share draft at your local credit, it helps to know how they work. Learn more here, including:

• What is a share draft account?

• How do these accounts work?

• What are the pros and cons of a share draft account?

• How do share draft accounts differ from typical checking accounts?

What Is a Share Draft Account?

“Share draft account” is how credit unions refer to checking accounts. This terminology reflects in part how credit unions work.

When you join a credit union, you become a member of it. You, along with the other members, have an ownership share in the credit union. That’s a key distinction between a credit union vs. bank. Share draft is used to describe checking accounts belonging to credit union members.

You’ll also see the word “share” used with other types of accounts offered at credit unions. For example, a share account is the credit union equivalent of a bank savings account. These accounts can earn interest so you can grow your money over time.

Share certificates, meanwhile, are the credit union version of certificate of deposit (CD) accounts. You deposit money into a share certificate, which then earns interest until the certificate matures. At maturity, you can withdraw the initial deposit and interest earned or roll it into a new share certificate.

How Do Share Draft Accounts Work?

Share draft accounts work by allowing you to deposit money that you can then spend or withdraw later. Each time you deposit money, you’re essentially buying shares in the credit union that holds your account.

Generally, with a share draft account you can:

• Pay bills online

• Withdraw cash at ATMs (though there may be ATM withdrawal limits)

• Make purchases online or in person using a linked debit card

• Manage accounts via online and mobile banking

• Add funds through direct deposit and/or remote deposit capture

• Write checks

• Link your debit card to mobile wallet apps

• Send money to friends and family through Zelle or another mobile payment app

• Send and receive ACH transfers or wire transfers

There may be various fees associated with these accounts, including monthly maintenance fees or overdraft fees. You may also pay ATM fees, depending on where you withdraw cash. Some share draft accounts pay dividends to credit union members as they’re declared quarterly, biannually, or annually.

Opening a share draft account is a bit different from opening a bank account. You first need to qualify for membership in a credit union.

The qualification requirements can vary by credit union. In terms of how much money to open an account, initial deposit requirements are usually on the lower side. It might be, say, $5 to $25 in many cases.

Credit unions can impose daily, weekly, and monthly limits on debit card transactions and ATM withdrawals. There may also be limits on check-writing. Customer service availability can depend on the credit union.

Recommended: What Is Monetary Policy?

Pros of Share Draft Accounts

There’s a lot to like about share draft accounts and credit unions in general. Here are some of the main advantages of share draft accounts:

• Initial deposit requirements are often low

• Minimum balance requirements may be low or nonexistent

• Some share draft accounts can earn dividends

• Banking fees may be lower

• Benefits and features tend to be similar to bank checking accounts

• Credit unions can offer numerous ways to access share draft accounts, including online and mobile banking, ATMs, and branches.

There’s one more advantage to opening a share draft account. If you’re a member of a shared branch credit union, you can access your money through a wider network of branches. Shared branch banking means that even if your accounts are held at Credit Union A, you could access them at Credit Union B, which is convenient if you’re traveling.

Cons of Share Draft Accounts

Share draft accounts may not be right for everyone. Before opening one, here are a few potential drawbacks to keep in mind:

• Membership in a credit union is required to open a share draft account

• Branch access may be limited if your credit union isn’t part of a shared branch network

• There may be limits on withdrawals or debit card transactions

• Dividend rates may be low.

Qualifying for membership in a credit union might be the biggest hurdle to joining one for some people. Credit unions can base membership on things like military affiliation, where you work or attend school, religious affiliation, or employment. The good news is that there are some credit unions that have less stringent requirements and offer membership to a wider range of people. It can be worthwhile to shop around.

How Does a Share Draft Differ From a Traditional Bank Account?

Share draft accounts are similar to checking accounts offered at traditional banks, but they aren’t identical. Here are some of the most important differences between share draft vs.checking accounts.

Fees

Banks are known for charging plenty of fees for checking accounts. Fees are a big part of how banks make a profit. Credit unions, on the other hand, are not-for-profit financial institutions. That means they generally charge their members fewer fees and they can pay higher interest rates on deposit accounts than traditional banks.

Deposit Insurance

Deposits at banks and credit unions can both be insured against institutional failure. Whether your coverage comes through the FDIC vs. NCUA depends on where you keep your accounts. Credit unions are likely insured by NCUA, or the National Credit Union Administration.

The Federal Deposit Insurance Corporation insures deposits at member banks up to $250,000 per depositor, per account ownership type, per financial institution. You may qualify for more deposit insurance if you have accounts in different ownership categories that meet FDIC requirements. This insurance reassures you that your checking account is safe.

The National Credit Union Administration insures deposits at member credit unions up to $250,000 per depositor. Member deposits held in jointly-owned accounts are insured up to $250,000 as well.

Features and Benefits

Credit unions and banks can offer a different range of features and benefits for draft accounts and checking accounts, respectively. There can be a significant difference between what is a premium checking account at a bank and what constitutes a premium share draft account at a credit union, for example. Comparing what’s included with share draft and checking accounts can help you decide which one is better for your needs.

Banking With SoFi

Deciding to open a checking account or a share draft account can help you get a better handle on your money. Both share draft accounts and checking accounts make it easy to deposit funds, pay bills, withdraw cash, or make purchases as needed.

If you’d like to manage money online, you might consider banking with SoFi, where you can get checking and savings in one convenient place. And when you open a bank account online at SoFi with direct deposit, you’ll earn a competitive APY and skip the usual fees.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.60% APY on SoFi Checking and Savings.

FAQ

What is the difference between regular share and share draft?

A share account is a savings account held at a credit union. Share accounts can earn interest in the form of dividends. Share draft accounts, however, are similar to a checking account and allow you to make draft withdrawals by writing checks, making purchases with a debit card, or withdrawing cash at ATMs.

What is the difference between a share draft and a checking account?

The difference between a share draft and a checking account is where they’re held. Share draft accounts are offered at credit unions; checking accounts are offered at banks. Share draft accounts can be NCUA-insured while checking accounts at banks have FDIC deposit insurance coverage.

Is a checking account better than a share draft?

A checking account may be preferable to a share draft account if you’d rather keep your money at a bank rather than a credit union. On the other hand, you might lean toward a share draft if you’d rather take advantage of perks that only a credit union may offer. Looking at your money management habits and preferences can help you decide whether a checking account or share draft is the better fit.

Photo credit: iStock/SDI Productions

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.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

SOBK0622003

Aug

2022

Can You Change the Due to Date of Your Bills?

Changing the Due Dates of Your Bills: Is It Possible?

By Timothy Moore | Budgeting & Goals, Family Finances, money | Comments Off

Here’s some nice news: It may be possible to change the due dates of some of your monthly bills.

This can be a huge relief to many people who find that the bulk of their bills are due at the very beginning of the month, which can make cash flow a challenge. Or, alternately, perhaps you may find it very helpful to space your payments out over the course of a month and add some breathing room to your budget.

Or maybe you have some bills that are maddeningly due a couple of days before you get paid, which can also cause money management issues. Being able to scoot that due date a couple of days into the future could be super convenient.

These adjustments to your bill-paying may indeed be possible, though not every company will allow you to change your billing due date. It can be worth investigating which ones will. How exactly? And are there any downsides to making a shift? Read on for answers, including:

• Why you might want to change your bills’ due dates

• What are the pros and cons of changing your billing due dates

• How you may be able to change a bill’s due date.

Can You Change the Due Dates on Your Bills?

You may be able to change the due dates on some — or, if you’re lucky, all — of your bills. Each company likely has its own policy, but it never hurts to reach out to customer service over the phone, in an email, through an online chat portal, or even in an old-fashioned letter. If the service provider is local, you may also be able to make the request in person. Your request may well be honored, down to exactly which day of the month your bill is due.

However, setting your own bill due dates is never guaranteed. A company has the right to reject your request, but many offer this service as a courtesy to loyal customers.

Why Might Someone Change the Due Dates of Their Bills?

So why might you want to change the payment date for some or all of your bills? There are several reasons why a person might request this service:

Aligning Better with Paydays

If your bill dates are not aligned well with your paydays, you may find that you don’t always have enough money to cover your bills when they are due. If you struggle with spending and budgeting, it could be helpful to schedule bills shortly after a payday. That way you can’t accidentally overspend money that should be earmarked for bills later that month. Scheduling your bill paying like this might help you be more responsible, spending more wisely and paying on time.

Convenience

Some people like to stagger their bill-paying throughout the month, but others may find it more convenient for all their bills to come at the same time each month. A single due date each month for all of life’s bills could certainly make them easier to track and remember.

Recommended: Splitting Bills with Roommates

Ability to Spread It Out So You Are Not Paying All at Once

While paying bills all at once — like right after payday — might make it easier for some people to stay on top of bill payments, others may prefer that their bank account is not drained on a single day, as was mentioned above.

If that’s the case, you may want to do the opposite: change bill dates so that they are spread out throughout the month. This could be especially helpful if your paychecks are irregular—say, if you are a freelancer who depends on clients paying their invoices before you have cash in the bank.

Remembering Pay Dates Will Be Easier

Regardless of when you arrange for your bill due dates to be, it will likely be easier for you to remember if you get to pick the dates. By picking an important date, like the first or last day of each month or the day after payday, it may be easier for you to remember, even without reminders in your phone or on your calendar. And if you sign up for automatic bill payment, it might be a totally seamless process.

Benefits of a Bill Date Change

So what are the pros of changing a bill due date?

• It puts you in control of your budget.

• It can make remembering due dates easier.

• It might help you avoid missed payments and late fees.

Drawbacks of a Bill Date Change

So are there cons to changing a payment date? If you are making the conscious decision to change your billing schedule, you likely have a good reason for it — meaning you probably won’t encounter any drawbacks with the bill date change itself.

However, you might find that you spend a lot of time trying to get a company to change a bill due date, only for them to say no. The wasted time and effort for something that might be declined could be a drawback itself.

Recommended: How Long Does a Direct Deposit Take?

When to Schedule New Pay Dates

So when should you schedule new bill pay dates? That depends on your own paycheck schedule and personal preferences. The Consumer Finance Protection Bureau (CFPB) offers a helpful worksheet for organizing all your current bills and due dates. Seeing them on paper may help you determine the best date(s) in your calendar month for bills to process.

Tips for Changing Pay Dates

Changing payment dates might seem intimidating, especially if you don’t like talking to customer service on the phone. But doing so may help you get better control of monthly bills like rent, utilities, subscription services, and even credit card payments. Here are a few tips for changing your bill due dates:

1. Getting organized. It may be helpful if you first make a list of all your recurring payments. When organizing your bills, you can chart out when each bill processes every month. Comparing these to your monthly payday(s) may help you determine the ideal dates for bills to process.

2. Deciding which bill dates should change. Once you have a list of all your recurring bills and ideal pay dates, you can more easily identify which bills need to change. From there, the CFPB recommends calling each company or searching their website to see if they even allow you to change bill dates.

3. Making the necessary requests. To get your due dates changed, you might be able to contact the company by phone, email, online chat, or letter — or even talk to a representative in person. The CFPB offers a useful script if you aren’t sure what to say: “I am requesting a change in my bill payment due date for my [company] bill. I would prefer to have my bill payment due date be on the __th of each month. Thank you for your assistance.”

4. Setting up autopay. If a service provider has an automatic bill pay option, it might be a good idea to schedule this. How bill pay works is that you schedule electronic payments in advance so you don’t have to manually transfer funds or write a check as your due date approaches. It can be an especially good option if you have a bank account with no-fee overdraft coverage. Because of the risk of overdrafting when you set up autopay, however, it might only make sense if you regularly keep more than enough funds in your checking account to cover monthly bills.

5. Scheduling reminders. Even if you have changed payment dates to a schedule that fits your monthly budget, it’s a good idea to schedule reminders in your phone or on your calendar ahead of the payment date. This allows you to ensure you have the funds in your account ahead of an automatic payment or reminds you to manually complete the payment (in person, in the mail, or online) if you don’t have autopay set up.

Can You Always Change Bill Dates?

Many companies will allow you to change bill dates to a schedule that makes sense for your finances. However, no company is required to do this. You may encounter some service providers that do not allow you to change bill dates.

What if You Can’t Change Your Due Date?

If you cannot change your due dates, you can still take some actions to ensure you pay all your bills on time, such as:

• Setting reminders: If you often forget to pay your bills on time but have the funds available, you may just need to schedule reminders for yourself ahead of the due date. Putting a recurring reminder in your calendar (perhaps the one on your phone) can be a wise move.

• Setting money aside until you need it: If you can’t resist the temptation to spend the money available in your checking account and often struggle with a low current or available account balance on the day that bills are due, it might be wise to move money to a separate account for paying bills. And of course, don’t touch those funds for any other sort of spending.

Banking With SoFi

Are you looking for a high-yield bank account that makes it easy to pay your bills on time each month? Consider SoFi’s online bank account. When you sign up with direct deposit, you’ll earn a competitive APY, and eligible accounts can get paycheck access up to two days early — which could help you take care of your bills on time.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.60% APY on SoFi Checking and Savings.

FAQ

How easy is it to change the due date for your bills?

Changing the due date for your bills can be as easy as making a phone call or sending an email to the service provider. However, not every company allows you to change your bill due dates. It is solely done at the company’s discretion.

Can I pay my bill before the due date?

If you are worried about missing a payment or spending too much money before a bill is due, you can make an early bill payment. Paying credit card bills early in particular may not only help you avoid late fees but also improve your credit score.

Is it better to have your bill dates close together or spread out?

The ideal schedule of your bill dates depends on your own financial situation, including your payday schedule and spending habits. Some people may prefer their bill dates to be close together (even on a single day per month) while others might benefit from having them spread out throughout the month.

Photo credit: iStock/Tatomm

How to Roll Over Your 401(k)

How Does Rolling Over Your 401(k) Work?

Steps to Roll Over Your 401(k)

Benefits of Rolling Over Your 401(k)

Disadvantages of Rolling Over a 401(k)

Pros and Cons of Doing a 401(k) Rollover

When Is a Good Time to Roll Over a 401(k)?

5 Things You Can Do With Your Old 401(k)

Option 1: Leave Your 401(k) Where It Is

Option 2: Roll Over Your 401(k) Into an IRA

Option 3: Roll Over Your 401(k) to Your New Job

How to Roll Over Your 401(k): Direct vs Indirect Transfers

Option 4: Cashing Out Your 401(k)

Option 5: Rolling Your 401(k) Over to a Self-Directed IRA

The Takeaway

FAQ

How can you roll over a 401(k)?

What options are available for rolling over a 401(k)?

Does SoFi allow you to roll over your 401(k)?

Institutional vs Retail Investors: What’s the Difference?

Who Is Considered a Retail Investor?

Who Is Classified as an Institutional Investor?

What Are the Differences Between Institutional Investors vs Retail Investors?

What Are the Similarities Between Institutional Investors vs Retail Investors?

Do Institutional or Retail Investors Get the Highest Returns?

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

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

How Many Retail Investors Are There?

Types of Institutional Investors

1. Commercial Banks

2. Endowment Funds

3. Pension Funds

4. Mutual Funds

5. Hedge Funds

6. Insurance Companies

Getting Started as a Retail Investor

FAQ

What are the different types of investors?

What percentage of the stock market is made up of institutional investors?

Are institutional or retail investment strategies better?

Guide to Writing Put Options

Writing Put Options

Maximum Profit/Loss

Breakeven

Writing Puts for Income

Put Writing Example

Put Option Exit Strategy

Finally, user-friendly options trading is here.*

Trade options with SoFi Invest on an easy-to-use, intuitively designed online platform.

The Takeaway

FAQ

What happens when you sell a put option?

How would you write a put option?

When would you write a put option?

Share Draft Accounts: What Are They & How Do They Work?

What Is a Share Draft Account?

How Do Share Draft Accounts Work?

Pros of Share Draft Accounts

Get up to $300 when you bank with SoFi.

Open a SoFi Checking and Savings Account with direct deposit and get up to a $300 cash bonus. Plus, get up to 4.60% APY on your cash!

Cons of Share Draft Accounts

How Does a Share Draft Differ From a Traditional Bank Account?

Fees

Deposit Insurance

Features and Benefits

Banking With SoFi

FAQ

What is the difference between regular share and share draft?

What is the difference between a share draft and a checking account?

Is a checking account better than a share draft?

Changing the Due Dates of Your Bills: Is It Possible?

Can You Change the Due Dates on Your Bills?

Why Might Someone Change the Due Dates of Their Bills?

Aligning Better with Paydays

Convenience

Ability to Spread It Out So You Are Not Paying All at Once

Remembering Pay Dates Will Be Easier

Benefits of a Bill Date Change

Drawbacks of a Bill Date Change

When to Schedule New Pay Dates

Finally, user-friendly options trading is here.^*

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