Dec
12
2025
Guide to Investing in Your 30s

Guide to Investing in Your 30s

By | Growing Wealth, invest, Investing | Comments Off on Guide to Investing in Your 30s

Turning 30 can bring a shift in the way you approach your finances. Investing in your 30s can look very different from the way you invest in your 20s or 40s, based on your goals, strategies, and needs.

At this stage in life you may be working on paying off the remainder of your student loan debt while focusing on saving. Your financial priorities may revolve around buying a home and starting a family. At the same time, you may be hoping to add investing for retirement into the mix (or increase the amount you’re already investing) as you approach your peak earning years.

Finding ways to make these goals and needs fit together is what financial planning in your 30s is all about. Knowing how to invest your money as a 30-something can help you start building wealth for the decades to come.

Key Points

•   In your 30s, set specific, measurable, and actionable financial goals, such as contributing 10% of income to a 401(k) and aiming for a net worth of two times your annual salary by 40.

•   Embracing a balanced level of risk that you feel comfortable with, is one tip for investing in your 30s. The longer you have to invest, generally the more risk you may be able to take.

•   Diversifying investment portfolios across different assets such as stocks, bonds, and cash, for example, can help spread out risk.

•   Leverage tax-advantaged accounts like 401(k)s and IRAs for retirement savings, and taxable accounts for flexibility and additional contributions.

•   Prioritize building an emergency fund, achieving short-term goals, and paying off debt, while also saving for the future.

5 Tips for Investing in Your 30s

1. Define Your Investment Goals

Setting clear financial goals in your 30s or at any age is critical. Your goals are your end points, the things that you’re saving for.

So as you consider how to invest in your 30s, think about the result you’re hoping to achieve. Focus on goals that are specific, easy to measure, and actionable.

For example, your goals for investing as a 30-something may include:

•  Contributing 10% of your income to your 401(k) plan each year

•  Maxing out annual contributions to an Individual Retirement Account (IRA)

•  Saving three times your salary for retirement by age 40

•  Achieving a net worth of two times your annual salary by age 40

These goals work because you can define them using real numbers. Say for example, you make $50,000 a year. To meet each of these goals, you’d need to:

•  Contribute $5,000 to your 401(k)

•  Save $7,000 in an IRA in 2025 and $7,500 in 2026

•  Have $150,000 in retirement savings by age 40

•  Grow your net worth to $100,000 by age 40

Setting goals this way may require you to be a little more aggressive in your financial approach. But having hard numbers to work with can help motivate you to move forward.

2. Know Your Tolerance for Risk

If there’s one important rule to remember about investing in your 30s, it’s that time is on your side.

When retirement is still several decades away, you typically have time to recover from the inevitable bouts of market volatility that you’re likely to experience. The market moves in cycles; sometimes it’s up, others it’s down. But the longer you have to invest, the more risk you can generally afford to take.

The best investments for 30 somethings are the ones that allow you to achieve your goals while taking on a level of risk with which you feel comfortable. That being said, here’s another investing rule to remember: the greater the investment risk, the greater the potential rewards.

Stocks, for example, are riskier than bonds, but of the two, stocks are likely to produce better returns over time. If you’re not sure how to choose your first stock, you may have heard that it’s easiest to buy what you know. But there’s more to investing in stocks than just that. When comparing the best stocks to buy in your 30s, think about things like:

•  How profitable a particular company is and its overall financial health

•  Whether you want to invest in a stock for capital appreciation (i.e. growth) or income (i.e. dividends)

•  How much you’ll need to invest in a particular stock

•  Whether you’re interested in short-term trading or using a buy-and-hold strategy

Past history isn’t an indicator of future performance, so don’t focus on returns alone when choosing stocks. Instead, consider what you want to get from your investments and how each type of investment can help you achieve that.


💡 Quick Tip: When people talk about investment risk, they mean the risk of losing money. Some investments are higher risk, some are lower. Be sure to bear this in mind when investing online.

3. Diversify, Diversify, Diversify

Investing in your 30s can mean taking risk but you don’t necessarily want to have 100% of your portfolio committed to just a handful of stocks. A diversified portfolio with multiple investments can help spread out the risk associated with each investment.

So why does portfolio diversification matter? It’s simple. A portfolio that’s diversified is better able to balance risk. Say, for example, you have 80% of your investments dedicated to stocks and the remaining 20% split between bonds and cash. If stocks experience increased volatility, your lower-risk investments could help smooth out losses.

Or say you want to allocate 90% of your portfolio to stocks. Rather than investing in just a few stocks, you could spread out risk by investing and picking one or more low-cost exchange-traded funds (ETFs) instead.

ETFs are similar to mutual funds, but they trade on an exchange like a stock. That means you get the benefit of liquidity and flexibility of a stock along with the exposure to a diversified collection of different assets. Your diversified portfolio might include an index ETF that tracks the performance of the S&P 500, an ETF that’s focused on growth stocks, a couple of bond ETFs, and some individual stocks.

This type of strategy allows you to be aggressive with your investments in your 30s without putting all of your eggs in one basket, so to speak. That can help with growing wealth without inviting more risk into your portfolio than you’re prepared to handle.


💡 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.

4. Leverage Tax-Advantaged and Taxable Accounts

Asset allocation, or what you decide to invest in, matters for building a diversified portfolio. But asset location is just as important.

Asset location refers to where you keep your investments. This includes tax-advantaged accounts and taxable accounts. Tax-advantaged accounts offer tax benefits to investors, such as tax-deferred growth and/or deductions for contributions. Examples of tax-advantaged accounts include:

•  Workplace retirement plans, such as a 401(k)

•  Traditional and Roth IRAs

•  IRA CDs

•  Health Savings Accounts (HSAs)

•  Flexible Spending Accounts (FSAs)

•  529 College Savings Accounts

If you’re interested in investing for retirement in your 30s, your workplace plan might be the best place to start. You can defer money from your paychecks into your retirement account and may benefit from an employer-matching contribution if your company offers one. That’s free money to help you build wealth for the future.

You could also open an IRA to supplement your 401(k) or in place of one if you don’t have a plan at work. Traditional IRAs can offer a deduction for contributions while Roth IRAs allow for tax-free distributions in retirement. When opening an IRA, think about whether getting a tax break now versus in retirement would be more valuable to you.

If you’re not earning a lot in your 30s but expect to be in a higher tax bracket when you retire, then a Roth IRA could make sense. But if you’re earning more now, then you may prefer the option to deduct what you save in a traditional IRA.

You might also consider taxable accounts for investing in your 30s. With a taxable brokerage account, you don’t get any tax breaks, and you’ll owe capital gains tax on any investments you sell at a profit. But there are no contribution limits on taxable accounts as there are with 401(k)s and IRAs, so you can contribute as much as you like. And if you need money for a shorter-term goal, such as a down payment on a house, a taxable investment account doesn’t have restrictions on how much money you can withdraw and when you can withdraw it, unlike retirement accounts. So your money is easier to access.

5. Prioritize Other Financial Goals

Retirement is one of the most important financial goals to think about, but planning for it doesn’t have to sideline your other goals. Financial planning in your 30s should be more comprehensive than that, factoring in things like:

•  Buying a home

•  Marriage and children

•  Saving for emergencies

•  Saving for short-term goals

•  Paying off debt

As you build out your financial plan, consider how you want to prioritize each of your goals. After all, you only have so much income to spread across them, so think about which ones need to be funded first.

That might mean creating an emergency fund, then working on shorter-term goals while also setting aside money for your child’s college education and contributing to your 401(k). And if you’re still paying off student loans or other debts, that may take priority over something like saving for college.

Looking at the bigger financial picture can help with balancing investing alongside your other goals.

The Takeaway

Your 30s are a great time to start investing and it’s important to remember that it doesn’t have to be complicated or overwhelming. Taking even small steps toward getting your money in order can help improve your financial security, both now and in the future.

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


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

FAQ

What is the best way to invest money in your 30s?

Some of the options to invest money in your 30s include participating in your employer’s 401(k) and contributing enough to get the employer match, if possible; opening an IRA and maxing out the contribution limit of $7,000 for those under age 50 in 2025, and $7,500 for those under age 50 in 2026; and diversifying your investments across different asset classes and sectors to help spread out the risk.

What is $1,000 a month invested for 30 years?

It depends how the money is invested and the rate of return on the investment. If you invest $1,000 a month for 30 years in an index fund that tracks the S&P 500, for example — where the average annual inflation-adjusted return is about 7% — you would have about $1.2 million. However, if your investment has a lower rate of return of, say, 4%, you would have about $700,000 after 30 years.

Is 30 too late to start investing?

No, 30 is not too late to start investing. In fact, it’s a good time to start. The earlier you begin investing, the more time your money has to grow. If you start at age 30 and retire at age 65, for instance, your money will potentially have 35 years to compound and grow. That stretch of years also helps you ride out ups and downs in the stock market.

About the author

Rebecca Lake

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.

Photo credit: iStock/katleho Seisa

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

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

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

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

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

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

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

S&P 500 Index: The S&P 500 Index is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S. It is not an investment product, but a measure of U.S. equity performance. Historical performance of the S&P 500 Index does not guarantee similar results in the future. The historical return of the S&P 500 Index shown does not include the reinvestment of dividends or account for investment fees, expenses, or taxes, which would reduce actual returns.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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CN-Q425-3236452-58

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Dec
11
2025
dollar sign made of trees

Capital Gains Tax Rates and Rules for 2025 and 2026

By | Growing Wealth, invest, Investing | No Comments

What Is Capital Gains Tax?

Capital gains are the profits investors may see from selling investments and other assets, like stocks, bonds, properties, vehicles, and so on. Capital gains tax doesn’t apply when you own these assets — it only applies when you profit from selling them, and the gain has to be reported to the IRS.

Short-term capital gains (from assets you’ve held for a year or less) are taxed at a higher marginal income tax rate. Long-term capital gains, which apply to assets you’ve held for more than a year, are taxed at the lower capital gains rate.

Other factors can affect an investor’s tax rate on gains, including: which asset you’re selling, your annual income, as well as your filing status. Capital gains tax rates typically change every year. Here, we’ll cover 2025 capital gains tax rates (for returns filed in 2026), and 2026 rates (for returns filed in 2027). Investment gains may also be subject to state and local taxes, as well.

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Key Points

•   Capital gains tax is levied on the profit (capital gains) you make from selling investments or assets like stocks and properties.

•   Gains are classified as either short-term (from assets held for one year or less) or long-term (from assets held for more than a year).

•   Short-term gains are taxed at a higher marginal income tax rate compared to the lower long-term capital gains rate.

•   Investments held within tax-advantaged retirement accounts, such as an IRA or 401(k), are generally not subject to capital gains tax as the money grows, though withdrawals may be subject to income tax.

•   Holding an investment for more than a year to qualify for the long-term rate, and utilizing strategies like tax-loss harvesting (selling investments at a loss to offset capital gains) can help lower your overall capital gains tax liability.

Capital Gains Tax Rates Today

Capital gains and losses result from selling assets. Capital gains occur when the asset is sold for more than its purchase price. A capital loss is when an investor sells an asset for less than its original value.

How long you hold an investment before selling it can make a big difference in how much you pay in taxes.

When you profit from an asset after owning it for a year or less, it’s considered a short-term capital gain. If you profit from it after owning it for at least a year, it’s a long-term capital gain.

Capital gains tax applies to investments that are sold when you’re investing online or through a traditional taxable brokerage; again, appreciated assets are not taxed until they’re sold. Gains may also be subject to state and local tax.

With a tax-deferred retirement account, such as an IRA or 401(k), you don’t pay any capital gains; you do owe income tax on withdrawals, however.

Other Capital Gains Tax Rules

Certain investments are subject to capital gains even if you don’t sell those securities. For example, a dividend-paying stock can produce a taxable gain because dividends are a type of income.

Taxes on qualified dividends are paid at long-term capital gains rates. Taxes on ordinary dividends are taxed at the marginal income tax rate, the same as short-term gains. Because the long-term capital gains tax rate is lower than the marginal income tax rate, qualified dividends are generally preferred vs. ordinary dividends.

Again, if divided-paying investments are held in a tax-advantaged account, those dividends are also tax deferred.

Capital Gains Tax Rates for Tax Year 2025

Long-term capital gains taxes for an individual are simpler and lower than for married couples. These rates apply to gains from an asset sold after one year, and fall into three brackets: 0%, 15%, and 20%.

Long-Term Capital Gains Rates, 2025

The following table shows the long-term capital-gains tax rates, by income bracket and filing status, for the 2025 tax year, according to the IRS.

Capital Gains Tax Rate Single Married, Filing Jointly Married, Filing Separately Head of Household
0% Up to $48,350 Up to $96,700 Up to $48,350 Up to $64,750
15% $48,351 to $533,400 $96,701 to $600,050 $48,351 to $300,000 $64,751 – $566,700
20% Over $533,401 Over $600,051 Over $300,001 Over $566,701

Long-Term Capital Gains Tax Rates, 2026

The following table shows the long-term capital gains tax rates for the 2026 tax year by income and filing status, according to the IRS.

Capital Gains Tax Rate Single Married, Filing Jointly Married, Filing Separately Head of Household
0% Up to $49,450 Up to $98,900 Up to $49,450 Up to $66,200
15% $49,451 to $545,500 $98,901 to $613,700 $49,451 to $306,850 $66,201 to $579,600
20% Over $545,500 Over $613,700 Over $306,850 Over $579,600

Recommended: Stock Market Basics

Short-Term Capital Gains Tax Rates for Tax Year 2025

The short-term capital gains are taxed as regular income at the “marginal rate,” so the rates are based on the federal income tax bracket you’re in.

The Internal Revenue Service (IRS) changes these numbers every year to adjust for inflation. You may learn your tax bracket by going to the IRS website, or asking your accountant.

2025 Short-Term Capital Gains Tax Rates

Here’s a table that shows the federal income tax brackets for the 2025 tax year, which are used for short-term gains, for tax returns that are usually filed in 2026, according to the IRS.

Marginal Rate Single filers Married, filing jointly Head of household Married, filing separately
10% $0 to $11,925 $0 to $23,850 Up to $17,000 $0 to $11,925
12% $11,926 to $48,475 $23,851 to $96,950 $17,001 to $64,850 $11,926 to $48,475
22% $48,476 to $103,350 $96,951 to $206,700 $64,851 to $103,350 $48,476 to $103,350
24% $103,351 to $197,300 $206,701 to $394,600 $103,351 to $197,300 $103,351 to $197,300
32% $197,301 to $250,525 $394,601 to $501,050 $197,301 to $250,500 $197,301 to $250,525
35% $250,526 to $626,350 $501,051 to $751,600 $250,501 to $626,350 $250,526 to $375,800
37% Over $626,350 Over $751,600 Over $626,350 Over $375,800

Short-Term Capital Gains Tax Rates for Tax Year 2026

This table shows the federal marginal income tax rates for tax year 2026, which apply to short-term capital gains (for tax returns that are usually filed in 2027).

Marginal Rate Single filers Income Married, filing jointly Head of household Married, filing separately
10% $0 to $12,400 $0 to $24,800 $0 to $17,700 $0 to $12,400
12% $12,401 to $50,400 $24,801 to $100,800 $17,701 to $67,450 $12,401 to $50,400
22% $50,401 to $105,700 $100,801 to $211,400 $67,451 to $105,700 $50,401 to $105,700
24% $105,701 to $201,775 $211,401 to $403,550 $105,701 to $201,750 $105,701 to $201,775
32% $201,776 to $256,225 $403,551 to $512,450 $201,751 to $256,200 $201,776 to $256,225
35% $256,226 to $640,600 $512,451 to $768,700 $256,201 to $640,600 $256,226 to $384,350
37% Over $640,600 Over $768,700 Over $640,600 Over $384,350

Tips for Lowering Capital Gains Taxes

Hanging onto an investment for more than a year can lower your capital gains taxes significantly.

Capital gains taxes also don’t apply to tax-advantaged accounts like 401(k) plans, 529 college savings accounts, or when you open an IRA. So selling investments within these accounts won’t generate capital gains taxes.

Instead, traditional 401(k)s and IRAs are taxed when you take distributions, while qualified distributions for Roth IRAs and 529 plans are tax-free.

Single homeowners also get a tax exclusion on the first $250,000 in profit they make from the sale of their primary residence, which they need to have lived in for at least two of the past five years. The limit is $500,000 for a married couple filing jointly.

Tax-Loss Harvesting

Tax-loss harvesting is another way to potentially save money on capital gains. Tax-loss harvesting is the strategy of selling some investments at a loss to offset the tax on profits from another investment.

Using short-term losses to offset short-term gains is a way to take advantage of tax-loss harvesting — because, as discussed above, short-term gains are taxed at higher rates. IRS rules also dictate that short-term or long-term losses must be used to offset gains of the same type, unless the losses exceed the gains from the same type.

Investors can also apply losses from investments of as much as $3,000 to offset ordinary income. And because tax losses don’t expire, if only a portion of losses was used to offset income in one year, the investor can “save” those losses to offset taxes in another year. This is known as a tax-loss carryforward.

Understanding the Wash-Sale Rule

While it may be useful in some cases to sell securities in order to harvest losses, it’s important to know about something called the wash-sale rule.

Per the IRS, the wash-sale rule states that if an investor sells an investment for a loss, then buys the same or a “substantially identical” asset within 30 days before or after the sale, they cannot use the original loss to offset capital gains or ordinary income and claim the tax benefit.

The wash-sale rule sounds straightforward, but the details are complicated. If you plan to sell securities at a loss in order to claim the tax benefit, you may want to consult a professional.

Recommended: Is Automated Tax-Loss Harvesting a Good Idea?

How US Capital Gains Taxes Compare

Generally, capital gains tax rates affect the wealthiest taxpayers, who typically make a bigger chunk of their income from profitable investments.

Here’s a closer look at how capital gains taxes compare with other taxes, including those in other countries.

Compared to Other Taxes

The highest long-term capital gains taxes rate of 20% is lower than the highest marginal rate of 37%.

Proponents of the lower long-term capital gains tax rate say the discrepancy exists to encourage investments.

Comparison to Capital Gains Taxes in Other Countries

In 2025, the Tax Foundation listed the capital gains taxes of the 35 different European Organization for Economic Cooperation and Development (OECD) countries. The U.S. maximum rate of 20% is roughly midway on the spectrum of comparable capital gains taxes.

In comparison, Denmark had the highest top capital gains tax at a rate of 42%. Norway was second-highest at 37.8%. The Netherlands were third on the list, at 36%. In addition, the following European countries all levied higher capital gains taxes than the U.S. (listed in order from the highest to lowest rate): Finland, France, Ireland, Sweden, Spain, Latvia, Austria, Germany, Italy, Czech Republic, and Iceland.

Comparing Historical Capital Gains Tax Rates

Because short-term capital gains tax rates are the same as those for wages and salaries, they adjust when ordinary income tax rates change. As for long-term capital gains tax, Americans today are paying rates that are relatively low historically. Today’s maximum long-term capital gains tax rate of 20% started in 2013.

For comparison, the high point for long-term capital gains tax was in the 1970s, when the maximum rate was at 35%.

Going back in time, in the 1920s the maximum rate was around 12%. From the early 1940s to the late 1960s, the rate was around 25%. Maximum rates were also pretty high, at around 28%, in the late 1980s and 1990s. Then, between 2004 and 2012, they dropped to 15%.

The Takeaway

Capital gains taxes are the levies you pay from making money on investments. The IRS updates the tax rates every year to adjust for inflation.

It’s important for investors to know that capital gains tax rates can differ significantly based on whether they’ve held an investment for a year or less (for short-term gains), or more than a year (for long-term gains). An investor’s income level also determines how much they pay in capital gains taxes.

An accountant or financial advisor can suggest ways to lower your capital gains taxes as well as help you set financial goals.

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


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

FAQ

Why is capital gains tax important?

When investors decide how long to hold investments, it’s a complex decision. Given that long-term capital gains rates are more favorable, some investors may want to hold onto their profitable investments for at least a year to get the lower rate.

Can you pay zero capital gains tax?

If you meet certain income criteria, yes. The lowest capital gains rate of 0% applies if your taxable income for tax year 2025 is equal to or less than $94,050 (married filing jointly); $47,025 (single, married filing separately, qualifying surviving spouse); and $63,000 for head of household. For tax year 2026, the 0% rate applies if your taxable income is equal to or less than $98,900 (married, filing jointly); $49,450 (single, married filing separately, qualifying surviving spouse); $66,200 (head of household).

Can capital losses reduce personal income tax?

In some cases yes: If your capital losses for a given year exceed your capital gains, you can deduct up to $3,000 in losses from your ordinary income (married, filing jointly; $1,500 if you’re married, filing separately). Losses can be applied to future capital gains or to income, in what’s known as a tax-loss carryforward.

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.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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.

This article is not intended to be legal advice. Please consult an attorney for advice.

SOIN-Q425-056

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Dec
09
2025
A pair of hands uses a packing tape dispenser to seal a carton, two of many common moving expenses.

Common Moving Costs: What You Need to Know

By | Budgeting & Goals, Debt Payoff, personal_loan | No Comments

Almost 26 million Americans moved in 2024, which amounts to 7.5% of the country’s population. As you may know, a move can be expensive. Current estimates reveal that a local move for the contents of a three-bedroom home costs approximately $1,250 to $2,200, while a long-distance move is easily twice that, averaging $4,890 according to Moving.com. What’s more, amid the chaos of purging and packing, it’s easy to forget some of the additional moving-related costs you might face.

To help you get organized and budget appropriately, read on for the full story.

Key Points

•   Moving costs can run from hundreds to thousands of dollars and can require careful budgeting.

•   Transportation costs can cover renting a truck or hiring movers to shift belongings, as well as your own movement to your new home.

•   The cost of moving services will depend on distance, amount of possessions, and time of year.

•   Packing materials needed can include cartons and bubble wrap; you may be able to rent versus buy supplies or recycle materials to save money.

•   Ways to fund a move include using savings, taking out a personal loan, or investigating employer-sponsored programs.

Average Moving Costs in the U.S.

The average cost of moving can vary tremendously depending on such factors as how much property you have, what kind of things you are moving (do you have delicate artwork, a piano?), how far you are moving, when you move, and the cost of living in the areas you are moving to and from.

Cost of Moving Locally

That said, the average cost of a local move for the contents of a 3-bedroom home is currently between $1,200 and $2,200. A local move is typically defined as being less than 100 miles and able to be completed in a single day.

Cost of a Long-Distance Move

A long-distance move, on the other hand, requires multiple days and covers more than 100 miles. A cross-country move certainly falls into this category, as does a move from, say, Seattle to Chicago. Due to the distance and time involved, this kind of move can be considerably more expensive, with some averages in 2025 coming in at just under $5,000.

Understanding Moving Expenses

While it may not be as fun as, say, budgeting for a wedding, figuring out costs for moving can be similarly complex. There can be numerous aspects to wrangle, from purchasing the proper packing supplies to deciding whether to DIY your move or hire professionals to understanding insurance needs. Consider the following.

Types of Moving Expenses

Here are some of the costs you are likely to incur when moving:

•   Transportation, or actually moving your possessions from point A to point B

•   Moving services, meaning having professionals load, transport, and unload your belongings

•   Packing, which usually involves cartons and bubble wrap (or you might pay to have movers pack delicate or valuable items or, if time is tight or young children are part of the household, to take care of it all for you)

•   Insurance to cover the value of your belongings as they are transported

•   Rent and security deposits. The location you’re moving to may require a security deposit and first month’s rent in advance.

•   Cleaning fees. You may have to pay to have your former and new residences cleaned.

•   Lodging. As you travel from your former home to your new place, you may have to stay a number of nights in a hotel or motel. Some people need to bridge the gap between homes with a short-term rental as well.

•   Storage. You might have to put some items in storage, depending on the timing and specifics of your move.

•   New furniture and appliances. Often, when people move, they discover they need to buy new pieces, whether that means window shades, a fridge, rugs, or a dining table.

Factors That Affect Moving Costs

There are numerous variables when you move, but here are a few key ones to consider:

•   How far you are moving. A move across town will involve less time, effort, and expense than a move across the country (or overseas).

•   How much you are moving. If you are a recent college graduate with just a few pieces of furniture, your move is likely to cost less than, say, a family of four packing up their whole home (basement and attic including) and relocating.

•   Time of year. Summer tends to be the busy season, with students leaving school and finding new places to settle and families wanting to get to their new house before the school year starts. This increased demand can increase prices.

•   Services needed. If you are going to pack the contents of your studio apartment and have a friend with a van to help you move, you’ll likely spend considerably less than you will if you are a family of four who wants movers to pack and transport all your furniture and other items 2,000 miles.

•   Storage. If you have to store all your possessions for a couple of weeks before you can have access to your new place, those costs can add up.

•   Access to locations. Someone whose move involves a single-level home with an ample driveway will likely have a shorter move than someone who lives in a 20th-floor apartment on a crowded city block. And shorter moves are less expensive than longer ones.

Cost of Hiring Professional Movers

Next, take a closer look at one of the biggest expenses of moving: the cost of hiring a professional team to get you to your new home.

As you might guess, the cost of hiring movers can range widely depending on location, distance of the move, and how much you’re moving. Here are some general figures to be aware of, as noted above:

•  For a local move (meaning 100 miles or less), costs typically range from $1,200 to $2,200.

•  For a long-distance move (more than 100 miles), costs are usually considerably higher, ranging from $2,200 to several thousand, with an average of $4,890.

There can be additional fees to consider: extra insurance for valuable items, the cost of packing and moving supplies, the fee for professional packing of items, and special services for moving items like, say, a piano or a pool table. You may also want to calculate how much tipping your movers might cost; omitting that expense could be a budgeting mistake. Recommendations typically say between 10% and 20% of the cost of your move is appropriate.

DIY Moving: Budgeting and Expenses

Thinking of doing your own move? Consider these aspects:

Comparing Truck Rentals and Portable Containers

The cost of renting a truck or van will require funding. As you might guess, the bigger the truck and the longer you use it, the more costly it will be. According to Angi.com, renting a truck costs about $1,000 on average in the U.S.

Keep in mind that you need to resolve what happens to a truck that you might drive a long distance to complete your move. Can you drop it off at a location near your new home, or will you have to pay a fee for its return to its home base?

Packing Materials and Equipment Rental

You’ll also need to budget for packing materials. Online packing calculators can help you determine your needs and the cost, but estimates say that for a small-to-medium home (a two-bedroom apartment or house), you’ll likely need to spend at least a couple hundred dollars on cartons, not including such supplies as bubble wrap ($29 for 300 feet) and tape ($7 per 55-yard roll). Don’t forget some sturdy markers to help you label what’s inside each box.

You might rent reusable boxes (typically plastic ones) to use for your move. Another item that can be wise to rent is wardrobe boxes, which allow you to move clothing that’s hanging in your closet into these boxes for easy transportation.

Moving blankets are another expense. These can cost $20 and up a pop if you purchase them. You may be able to rent them from a moving company to use for your DIY move.

Recommended: Personal Loan Calculator

Extra Moving Costs to Think About

As you get ready to move, don’t overlook these costs (some of which were mentioned above):

Storage Fees

Storage costs for any items that need to be held securely before they can be moved into your new home. You might easily pay between $100 and $300 a month (or much more in a city) for this service. You also might need to pay insurance fees to protect your items.

Moving Insurance

Moving insurance protects your possessions if they are lost or damaged. The cost can vary from a few hundred to a few thousand dollars; it’s typically 1% of the total estimated cost of your move. Some of the features impacting the cost of moving insurance include the value of your items, how much coverage you want, how large (or small) a deductible you opt for, and how far your move is.

Packing and Moving Supplies

In addition to the packing and moving supplies mentioned above, such as cartons, tape, and blankets, don’t forget about dollies and hand trucks to get boxes from one location to another. You might also need special crates for artwork and equipment to wrap and move musical instruments.

Travel Expenses

It can be easy to overlook your own travel expenses as your household furnishings get loaded onto a moving van to travel to a new destination. You may be in a situation in which you fly cross-country but need to ship your car (the average cost of shipping a car is $1,150). Or maybe you’ll drive vs. ship your car, triggering gas, lodging, and road food costs.

And, while not technically a travel expense, you might need temporary housing at your destination or to pay a security deposit if you rent a home. These costs can add up, meaning you may have to dip into savings or perhaps take out a personal loan (sometimes called a relocation loan) to cover your costs.

Tips for Reducing Moving Expenses

Here are some ways you can bring down your moving costs (some were already referenced above):

Downsize and Declutter

Downsize as much as you can before moving. The less you have, the faster and cheaper your move can be. Also, when you declutter, you might be able to get cash for your gently used unwanted items. There are many places where you can sell your stuff, in person or online.

Reuse Boxes and Packing Materials

Here’s a packing and moving tip that can help you save a bundle: Find affordable or free moving materials. Options can include getting free cartons and other supplies from friends and family, sourcing boxes from local retailers, or renting things like plastic containers, wardrobes, and moving blankets vs. purchasing them.

Consider Timing

Did you know when you move can impact the cost? If possible, schedule your move to avoid the busy, pricey summer high season. Moving in fall or winter, when demand is lower, can help you save money.

Recommended: Get Your Personal Loan Approved

The Takeaway

Moving is a major financial commitment, but it doesn’t have to break the bank. When planning a move, first decide whether you’re going to DIY or hire pros. Then make a list of other expenses: packing supplies, transportation and travel expenses, and other potential costs. You may need to tap your savings or take out a personal loan to afford these charges.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.


SoFi’s Personal Loan was named a NerdWallet 2026 winner for Best Personal Loan for Large Loan Amounts.

FAQ

What financing options are available to cover moving costs?

When moving, you can fund your expenses with savings, take out a personal loan (also called a moving or relocation loan), or see if your employer offers any assistance. It can be wise to avoid high-interest credit cards.

What’s the difference between a DIY move and a full-service move?

When undertaking a DIY move, you are typically responsible for renting or borrowing a van, getting packing materials and packing items, and loading and unloading your possessions. With a full-service move, professional movers can help pack, if you like, as well as load, transport, and unload items. A DIY move may be cheaper, but it’s typically much more time-consuming and you could put yourself and your items at more risk.

How are moving costs calculated?

Moving costs are based on several factors, such as how much and what sort of property you’re moving, how far you are moving, whether you need help packing, what time of year you are moving, and what the prevailing cost of living is like in the areas involved.

Are moving costs tax-deductible?

For most Americans, moving costs are typically not tax-deductible. For those in the military, some unreimbursed expenses may be deductible.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


*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.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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.

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Dec
09
2025
A hand stacks a series of small wooden blocks painted with arrows or percent symbols in a stairstep-shaped pile.

What Are the Conforming Loan Limits for 2026?

By | Financial Independence, Home Ownership, mortgage | Comments Off on What Are the Conforming Loan Limits for 2026?

A 3.6% increase in the conforming loan limits for 2026 raised the baseline loan limit for a single unit to $832,750 in most counties in the United States.

The adjustment is a result of a change in the average price of a home nationwide from the third quarter of 2024 to the third quarter of 2025. Home prices increased an average of 3.6%, and the baseline conforming loan limit kept pace.

Conforming loans may be cheaper than nonconforming loans like jumbo mortgages, but jumbo loans have their place.

Key Points

•   For 2026, the conforming loan limit for one-unit properties in most of the U.S. is set at $832,750.

•   In high-cost areas, the limit for a one-unit property reaches $1,249,125, while in parts of Hawaii it reaches $1,299,500.

•   Staying within these limits enables buyers to secure lower-cost mortgages.

•   Loans within these limits can be acquired by Fannie Mae and Freddie Mac.

•   This arrangement reduces risk for lenders and lowers costs for consumers.

Conforming Loan Limits for 2026

The conforming loan limits set by the Federal Housing Finance Agency can vary based on area and the number of units in the property.

In most counties, that number increased to $832,750 in 2026 for a one-unit property. In most high-cost areas, the limit is $1,249,125 for a one-unit property.

In general, here’s how the baseline conforming loan limits break down for 2026.

Maximum baseline loan limit for 2026

Units Many counties in the contiguous states, District of Columbia, and Puerto Rico Alaska, portions of Hawaii, Guam, and the U.S. Virgin Islands
1 $832,750 $1,249,125
2 $1,066,250 $1,599,375
3 $1,288,800 $1,933,200
4 $1,601,750 $2,402,625

Recommended: The Cost of Living by State

Why Care About Conforming Loan Limits?

Staying under a conforming loan limit means you’ll most likely obtain a lower-cost mortgage. Mortgages that “conform” to the limits can be acquired by Fannie Mae and Freddie Mac, government-sponsored enterprises.

Because these mortgages can be bought by the agencies and then sold to investors on the secondary mortgage market, they represent a lower risk to the lender and a lower cost to the consumer.

If you need to finance more than the conforming limit, you’ll need to look at jumbo mortgage loans.

Getting a jumbo loan involves clearing more hurdles than a conforming loan. The rate will usually be similar to conforming loan rates, but sometimes it can be lower. How jumbo can a loan be for a primary residence, second home, or investment property? It’s up to each lender.

Government-backed mortgages are also nonconforming loans, and although they serve certain homebuyers, they also may be more expensive than conforming conventional loans because they usually come with additional fees.

Recommended: How to Get a Mortgage Loan

Notable Counties Above the Standard Loan Limits

Loan limits are higher in counties where the average home price is above 115% of the local median home value. The loan ceiling is 150% of the baseline value.

For 2026, the high-cost-area loan limit increased from $1,209,750 to $1,249,125 on a one-unit property. Alaska, portions of Hawaii, Guam, and the U.S. Virgin Islands also have a baseline loan limit of $1,249,125. Two counties in Hawaii, Kalawao and Maui, have a still higher limit of $1,299,500.

The following is a chart of counties (and some cities) in high-cost areas with an increased baseline loan limit. The increased amount for high-cost areas maxes out at $1,249,125 in select areas.

State County 2025 limit for a single unit 2026 limit for a single unit % change year over year
Alaska All $1,209,750 $1,249,125 3%
California Los Angeles County, San Benito, Santa Clara, Alameda, Contra Costa, Marin, Orange, San Francisco, San Mateo $1,209,750 $1,249,125 3%
California Napa $1,017,750 $1,017,750 0%
California Monterey $970,600 $994,750 .025%
California San Diego $1,077,550 $1,104,000 .025%
California Santa Barbara $913,100 $941,850 .031%
California Santa Cruz $1,178,750 $1,249,125 .06%
California San Luis Obispo $967,150 $1,000,500 .034%
California Sonoma $897,000 $897,000 0%
California Ventura $1,017,750 $1,035,000 .017%
California Yolo $806,500 $832,750 .033%
Colorado Eagle $1,209,750 $1,249,125 3%
Colorado Garfield, Pitkin $1,209,750 $1,209,750 0%
Colorado Lake $806,500 $1,092,500 35%
Colorado San Miguel $994,750 $994,750 0%
Colorado Boulder $862,500 $879,750 2%
Colorado Adams, Arapahoe, Bloomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, Park $833,750 $862,500 3%
Colorado Grand $874,000 $883,200 1%
Colorado Moffatt $806,500 $1,089,050 35%
Colorado Summit $1,067,200 $1,092,500 2%
Colorado Routt $1,012,000 $1,089,500 8%
Connecticut Greater Bridgeport Planning Region $851,000 $977,500 15%
Connecticut Western Connecticut Planning Region $806,500 $977,500 21%
Connecticut Naugatuck Valley Planning Region $806,500 $851,000 6%
Florida Monroe $967,150 $990,150 2%
Guam All $1,209,750 $1,249,125 3%
Hawaii Hawaii, Honolulu, Kauai $1,209,750 $1,249,125 3%
Hawaii Kalawao, Maui $1,209,750 $1,299,500 3%
Idaho Teton $1,209,750 $1,249,125 3%
Maryland Calvert $1,209,750 $1,209,750 0%
Maryland Charles, Frederick, Montgomery, Prince George’s County $1,209,750 $1,249,125 3%
Massachusetts Dukes, Nantucket $1,209,750 $1,249,125 3%
Massachusetts Essex, Middlesex, Norfolk, Plymouth, Suffolk $914,250 $962,550 5%
New Hampshire Rockingham, Strafford $914,250 $962,550 5%
New Jersey Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Sussex, Union $1,209,750 $1,209,750 0%
New York Bronx, Kings, Nassau, New York, Putnam, Queens, Richmond, Rockland, Suffolk, Westchester $1,209,750 $1,209,750 0%
Pennsylvania Pike $1,209,750 $1,209,750 0%
Tennessee Hickman $806,500 $1,209,250 5%
Tennessee Macon, Maury, Robertson, Rutherford, Smith, Sumner, Trousdale, Williamson, Wilson $989,000 $1,209,250 0%
Utah Summit, Wasatch $1,149,825 $1,150,000 0%
Utah Wayne $997,050 $997,050 0%
Virgin Islands All $1,209,750 $1,249,125 3%
Virginia Arlington, Clarke, Culpeper, Fairfax, Fauquier, Loudoun, Prince William, Rappahannock, Spotsylvania, Stafford, Warren, Alexandria City, Fairfax City, Falls Church City, Fredericksburg City, Manassas City, Manassas Park City $1,209,750 $1,249,125 3%
Virginia Madison $1,209,750 $1,209,750 0%
Washington King, Pierce, Snohomish $1,037,300 $1,063,750 3%
Washington D.C. District of Columbia $1,209,750 $1,249,125 3%
West Virginia Jefferson County $1,209,750 $1,249,125 3%
Wyoming Teton $1,209,750 $1,249,125 3%

Will Conforming Loan Limits Rise or Fall?

The baseline conforming loan limit is adjusted each year to reflect the change in the average home value and local housing trends in the United States.

The conforming loan limit has increased steadily for the past 10 years and has never declined. From 2006 to 2016, for example, the conforming loan limit remained at $417,000, despite declining home values across the country. If home values continue to rise, the conforming loan limit will also rise.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Questions? Call (888)-541-0398.

Conforming Loan Limits Over the Past 10 Years

The 3.6% increase in loan limits for 2026 is lower than the previous year’s increase of 5.2% and far lower than the 18% increase of 2022, which was the largest jump in the past 40 years. But it still represents an average increase of $26,250 over the past year alone.

Conforming loan limit

Year Amount
2026 $832,750
2025 $806,500
2024 $806,500
2023 $726,200
2022 $647,200
2021 $548,250
2020 $510,400
2019 $484,350
2018 $453,100
2017 $424,100
2016 $417,000
2015 $417,000

The Takeaway

Conforming loan limits help to keep costs low for homebuyers. This means competitive pricing on mortgages, no matter what the housing market looks like each year.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

Is a conforming loan a good thing?

Yes, generally speaking, staying under a conforming loan limit means you’ll most likely obtain a lower-cost mortgage.

Is a conforming loan the same as a conventional loan?

A conforming loan and a conventional loan are not the same thing, although many conventional loans are also conforming loans. A conventional loan is one that is not backed by a government agency such as the Federal Housing Administration. It might come from a private lender such as a bank. A conforming loan is one in which the underlying terms and conditions adhere to the funding criteria, including loan amount limits, spelled out by Freddie Mac and Fannie Mae. Conventional loans can be conforming. Those that do not follow the conforming loan limits are considered “jumbo” loans.

Photo credit: iStock/marchmeena29

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.


*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
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.
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. ¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency. Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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Dec
08
2025
What is Altcoin Season? Why Does It Happen?

Understanding Altcoin Season: Trends, Triggers, and Strategies

By | Growing Wealth, invest, Investing | Comments Off on Understanding Altcoin Season: Trends, Triggers, and Strategies

Altcoin season is a term used to describe a period in the cryptocurrency markets during which altcoins, or a significant percentage of them, rally and see their prices increase.

Altcoin itself is a sort of catch-all term that refers to cryptocurrencies aside from Bitcoin; they’re “alternate” coins, in other words. Since Bitcoin is the biggest and most popular crypto on the market, almost all other cryptos are seemingly in a classification of their own: Altcoins.

Key Points

•   Altcoin season is a market period when altcoins outperform Bitcoin.

•   The Altcoin Season Index measures top altcoins’ performance, with 75-100% outperformance signaling an altcoin season.

•   Bitcoin’s price stabilization after a major rally can precede an altcoin season.

•   New narratives and retail investor interest, reflected in social media, can trigger altcoin seasons.

•   Managing risk and avoiding FOMO are crucial strategies during altcoin seasons.

🛈 While SoFi members may be able to buy, sell, and hold a selection of cryptocurrencies, such as Bitcoin, Solana, and Ethereum, other cryptocurrencies mentioned may not be offered by SoFi.

What Is Altcoin Season?

Altcoin season is a stretch in which altcoin appreciation outperforms Bitcoin, or a significant number of altcoins simultaneously see their prices increase. Or, put another way, altcoin season happens when there’s steady outperformance of tokens and coins that aren’t Bitcoin. They could last weeks, or even months.

How Altcoin Season Differs from Bitcoin Cycles

Cryptocurrencies tend to experience market cycles, similar to those seen in the broader economy and even in the stock market. That means that prices, productivity, or other metrics experience periods of expansion (value growth) or contraction (value decline). The same happens in the crypto markets.

Altcoin season, then, can happen when Bitcoin reaches the bottom of one of those cycles, effectively paving the way for altcoins to experience a period of expansion or growth.

However, there’s no guarantee that every runup in Bitcoin will turn into a downturn later, or that altcoins will start outperforming the original crypto. In fact, it’s not uncommon for all cryptos to rise together, as excitement about the sector grows. As such, there can be pros and cons to owning crypto.

The Role of Bitcoin Dominance in Market Trends

Bitcoin is the oldest and largest cryptocurrency. So, it tends to set the tone for the markets, and can move the currents and momentum within them, so to speak. When there is a big movement or change with Bitcoin, that is generally reflected in the markets, and that filters down to altcoins, which include different types of cryptocurrencies.

So, following a Bitcoin rally, it’s possible altcoins could also rally (though not guaranteed). They could both then see a staggered cooling period.

Why Do Altcoins Often Follow Bitcoin’s Price Movements?

There are a few different theories for why altcoin season happens, and why altcoins tend to follow Bitcoin’s price movements. Here are some of the most common.

Expectations of Future Growth

After a large runup of Bitcoin, crypto-holder’s projected growth in the price of other crypto assets might change.

Crypto is
back at SoFi.

SoFi Crypto is the first and only national chartered bank where retail customers can buy, sell, and hold 25+ cryptocurrencies.

The Altcoin Season Index: Your #1 Indicator

Remember this: You can’t determine altcoin season just by looking at the price of altcoins, Bitcoin, or any other cryptocurrency in isolation. Perhaps the best gauge is the Altcoin Season Index.

How This Key Indicator Works

The Altcoin Season Index is a crypto market indicator, similar to many other market-focused metrics out there, that helps market participants get a sense of whether or not altcoins are outperforming or seeing more appreciation than Bitcoin at any given time. It is, in other words, a tool to measure the prevailing winds of the crypto market.

The Index itself looks at the top altcoins on the market (with the exception of crypto’s stablecoins), measures their collective performance over a period of the previous 90 days, and produces an index score that reports the percentage of altcoins (altcoins tracked by the Index) that are or have performed better than Bitcoin during the tracking period.

How to Read the Index’s Signals

As noted, the Index produces a percentage that helps market participants gauge whether they’re witnessing an “altcoin season” play out. Depending on the percentage, or the signal, produced, the crypto market could be said to be either in a “Bitcoin season,” neutral, or in an “altcoin season.”

Specifically, here’s how those percentages break down:

•  0-25%: This means that less than a quarter of tracked altcoins are outperforming Bitcoin, putting the market in a “Bitcoin season.”

•  26-74%: A solid amount of altcoins are outperforming Bitcoin, but not an overwhelming amount. This is a “neutral” market.

•  75-100%: This indicates that the vast majority of altcoins are outperforming Bitcoin; the market is experiencing an “altcoin season.”

Where to Find the Live Index Data

Data related to the Altcoin Season Index can be found on a number of websites. A simple internet search should bring up plenty of places to access the live data.

3 Other Key Signs an Altcoin Season Might Be Starting

The Altcoin Season Index is a powerful tool to help crypto market participants gauge whether the market is, in fact, experiencing an Altcoin Season. But there are a few other key signs you can use to try and discern what’s happening.

Sign 1: Bitcoin’s Price Stabilizes After a Major Rally

One sign that may indicate an Altcoin Season is nigh is that Bitcoin starts to see a period of price stabilization, particularly after it rallies a bit. In the wake of the rally, Bitcoin prices may appreciate more slowly, or even fall or remain relatively stagnant. Altcoins, following the rally, could see a rally of their own, marking the beginning of an altcoin season.

Sign 2: New Narratives and Hype Cycles Emerge (e.g., DeFi, AI, GameFi)

Certain altcoins may see a period of appreciation that outperforms Bitcoin, too, if the market and news cycle is suddenly saturated with new, emerging narratives or hype cycles. These can take many forms, but may center around expanding or emerging AI or DeFI projects, among other things. Many of those projects may have their own related altcoins, which see value appreciation as a part of the hype cycle.

That enthusiasm may also spill over into other altcoins, sparking a rally.

Sign 3: Retail Interest and Social Media Buzz Explode

Similarly, there may be times when altcoin interest or hype takes flight among the general market or on social media. That can create hype cycles, and market participants may want to get in on the action as altcoins see price appreciation. Hype cycles can happen at any time, and seemingly for any reason, or sometimes no reason at all. And it can be difficult to tell if these will be brief hype bursts, or sustained, broad altcoin seasons.

What Happened in Past Altcoin Seasons?

There are examples of previous altcoin seasons, such as those that occurred during 2017, and again in 2021. Here’s a brief rundown of what happened.

2017

During 2017, there was a rapid and broad altcoin rally that was largely driven by speculative market participants, a slew of project launches, and piles of money entering the crypto markets.[1]

Specifically, regulatory changes in Japan helped fuel the frenzy, and Ethereum took off as what looked like the next Bitcoin, becoming the second-largest crypto on the market. There were also many ICOs, or initial coin offerings that year, and Bitcoin’s price also reached a high point (which it would eclipse in later years).

Ethereum, Ripple, Litecoin, and Bitcoin Cash were some of the top-performing altcoins that year, too.

2021

Similarly, 2021[2] saw another altcoin season and huge swell in interest in the crypto markets. There were several things happening, including a boom in NFTs and meme coins, much of which redirected capital and resources away from Bitcoin and into altcoins or other crypto-related projects.

This was all occurring during the pandemic, as well, which drove lots of speculative buying and selling all while the crypto ecosystem itself was becoming more sophisticated and entering the mainstream.

Some top performing altcoins in 2021 included Shiba Inu, Dogecoin, Solana, and Polygon.[3]

Lessons Learned from Historical Rallies

What sorts of takeaways are to be had from previous altcoin seasons? There can be a lot to digest, and the history of Bitcoin prices — which in of themselves have been volatile — play a role. But perhaps the overriding lessons are that the crypto markets can be and often are driven by hype and intense speculation. There can be outside events that also play a factor (such as global health emergencies and softening government stances toward crypto), but by and large, the markets can be difficult to predict and make sense of.

With all of this in mind, it can be good to keep risk in mind. Over short time periods, assets, be they crypto holdings, stocks, or precious metals, can lose value. The market is volatile, and things are always changing.

How to Approach Altcoin Season

With all of this in mind, how can crypto market participants best approach altcoin seasons, assuming they feel that one is waiting in the wings? Here are a few things to help keep you grounded.

Avoiding the FOMO (Fear of Missing Out) Trap

While altcoins may be used as a tool for transactions, or as a store of value, or even as a means of generating passive crypto income, it’s dangerous to get lured into the assumption that they could continue to appreciate. That can lead to making poor decisions due to FOMO, or the fear of missing out. Cryptocurrencies prices are historically highly volatile, and that should be taken into account during altcoin seasons, as well.

Perhaps the best thing to do in these cases is to keep your head on your shoulders, remember that you have a financial plan (or may want to create one), and that any altcoins you may be considering holding are merely one element of that.

Separating Market Hype From a Project’s Real Utility

Similarly, you may be hearing or seeing a lot of crypto hype about altcoin seasons or related to a specific crypto project. It may be helpful to try and understand where it’s coming from. You may want to ask whether there’s really a “there” there, and do some research before deciding to buy, sell, or hold altcoins whose potential promise could be unfounded or that could even turn out to be a crypto scam or rug-pull.

Volatility

The crypto market is volatile, and that volatility can occur during any “season,” not just “altcoin season.” It can be a good idea to try and keep that in mind when navigating the crypto space.

The Takeaway

Altcoin season describes a time period when altcoins steadily outperform Bitcoin. There are a few ways to try to determine altcoin season, but it remains impossible to predict. Basically, you’ll usually know it when you’re in it. And when an altcoin season does occur, it’s important to navigate it carefully. Always researching options carefully can help ensure they align with your financial goals and risk tolerance.

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FAQ

How can you tell if altcoin season has started?

There may not be a good or surefire way to determine if an altcoin season has started, at least not until some time has passed and there’s data to digest to help determine that. However, you can look for certain signs, such as a cooling Bitcoin rally, as a precursor or indicator that the altcoin market could rally.

How long do altcoin seasons usually last?

There’s really no telling for sure how long an altcoin season will last, but historically, they’ve lasted for one or two months, and perhaps a little longer.

Are all altcoins likely to rise during an altseason?

Depending on several factors, some altcoins are probably more likely to see value appreciation during an altcoin season than others.

What role does institutional investment play in altcoin seasons?

If institutional investors plow a project with a bunch of capital or make a huge investment in a particular altcoin, that could spark an altcoin season as interest rises in that altcoin, and also related ones. But there’s no guarantee that would necessarily happen.

Which indicators signal the end of an altcoin season?

One indicator that an altcoin season is near or at its end is a rally in Bitcoin prices, signalling Bitcoin may be returning to its dominant position.

Article Sources
  1. Finance Magnates. Bitcoin and Altcoins in 2017: the Year in Review.
  2. CoinMarketCap. Altcoins in 2021: The Good, the Bad, and the Dog.
  3. World Economic Forum. This is how the top cryptocurrencies performed in 2021.

Photo credit: iStock/Prostock-Studio

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