Investing Archives

Dec

2025

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IRA Rollover Rules 2025: 60-Day & One-Per-Year Rules Explained

By Pam O’Brien | Growing Wealth, Investing, Preparing for Retirement | No Comments

Table of Contents

What is an IRA Rollover?
Direct vs. Indirect Rollovers: What’s the Difference?
The 60-Day Rollover Rule Explained
The One-Rollover-Per-Year Rule Explained
What Are the Rules for a Roth IRA Rollover?
IRA Rollovers and Taxes
Compatibility Rules When Rolling Funds to an IRA
Common Rollover Mistakes to Avoid
Your Rollover IRA: How to Optimize and Manage It
FAQ

If you’re leaving your job, there are numerous things you must attend to before you clock out for the last time, such as rolling over the retirement account you have with the company you’re leaving. It can be easy to overlook, but critical to your financial plan or strategy — which is why it can be a good idea to have a basic idea of how to execute an IRA rollover or transfer.

Further, once you separate from your employer, you will have a few options to choose from when deciding what to do with your retirement savings, including doing an IRA rollover. Read on to learn more about IRA rollovers and the IRA rollover rules.

Key Points

• An IRA rollover involves moving funds from a qualified plan, like a 401(k) or 403(b), to an IRA.

• Direct rollovers transfer funds without tax withholding, while indirect rollovers require making up for withheld taxes within 60 days.

• IRA-to-IRA rollovers are limited to once every 12 months, with exceptions for trustee-to-trustee transfers and conversions to a Roth IRA.

• Taxes are not withheld in direct rollovers to an IRA or another retirement account.

• Indirect IRA rollovers typically involve 20% tax withholding if the distribution is made to the account holder.

What is an IRA Rollover?

An IRA rollover is the movement of funds from a qualified plan, like a 401(k) or 403(b), to an IRA. This scenario could come up when changing jobs or when switching accounts for reasons such as wanting lower fees and more investment options.

There are several factors to be aware of regarding what an IRA rollover is and how it works.

People generally roll their funds over so that their retirement money doesn’t lose its tax-deferred status. But, there may be other situations in which it’s also advantageous. Let’s say you leave your job and want to withdraw the money from your 401(k) so you can use it to pay some bills. In this case, you’d be taxed on the money and also receive a penalty for withdrawing funds before age 59 ½.

However, if you roll your money over instead of withdrawing it, you don’t have to pay taxes or penalties for an early withdrawal. Plus, you can keep saving for retirement.

When you roll funds over to a new IRA, following IRA rollover rules can help ensure you do everything legally, don’t have to pay taxes, and don’t pay penalties for any mistakes.

Direct vs. Indirect Rollovers: What’s the Difference?

You can choose between two types of rollovers and it’s important to know the differences between each.

Some people may prefer a direct rollover to an indirect rollover, because the process is typically simpler and more efficient. With a direct rollover, you aren’t taxed on the money. With an indirect rollover, you are taxed, and if you’re under 59 ½ years old, you have to pay a 10% withdrawal penalty, unless you follow specific IRA rollover rules.

It can be wise to consult with a tax professional to understand the implications of an indirect rollover prior to making this election.

Keep in mind that a transfer is different from a rollover: A transfer is the movement of money between the same types of accounts, while a rollover is the movement of money from two different kinds of accounts, like a 401(k) into a traditional IRA.

What Is a Direct Rollover?

First, you may choose a direct rollover, which is the moving of funds directly from a qualified retirement plan to your IRA, without ever touching the money. Your original company may move these funds electronically or by sending a check to your IRA provider. With a direct rollover you don’t have to pay taxes or early distribution penalties since your funds move directly from one tax-sheltered account to another.

What Is an Indirect Rollover?

The second option is an indirect rollover. In this case, you withdraw money from your original retirement account by requesting a check made out to your name, then deposit it into your new IRA later.

Some people choose an indirect rollover because they need the money to accomplish short-term plans, or they haven’t decided what they want to do with the money upon leaving their job. Other times, it’s because they simply don’t know their options.

The 60-Day Rollover Rule Explained

If you choose to do an indirect IRA rollover, you have 60 days to deposit the funds into a rollover IRA account, along with the amount your employer withheld in taxes. That’s because IRS rules require you to make up the taxes that were withheld with outside funds. Otherwise, you will be taxed on the withholding as income.

If you deposit the full amount — the amount you received plus the withheld taxes — you will report a tax credit of the withheld amount. The withholding will not be returned to you, but rather settled up when you file that year’s taxes.

The One-Rollover-Per-Year Rule Explained

You can only do an IRA-to-IRA rollover once every 12 months, although there are some exceptions. You’ll want to familiarize yourself with this information to follow the IRA rollover rules.

If you’re rolling funds over from an IRA, you can only complete a rollover once every 12 months. There are exceptions, such as trustee-to-trustee transfers and rollovers from a traditional IRA to a Roth IRA, which are commonly referred to as conversions.

And, most notably, the one-year rule does not apply to IRA rollovers from an employer-sponsored retirement plan like a 401(k).

What Are the Rules for a Roth IRA Rollover?

A Roth IRA is different from a traditional IRA, particularly in terms of tax treatment, and thus, has different rules concerning rollovers.

Roth Conversions vs. Roth-to-Roth Rollovers

First, you should know that there is such a thing as a Roth IRA conversion, which involves taking pre-tax money or funds from a traditional IRA, and moving it into a Roth IRA. Effectively, that means you’re taking taxable IRA funds and moving them into a tax-free Roth account. This could have tax implications, however, since the amount converted is added to your taxable income for the year.

A Roth-to-Roth rollover, on the other hand, means you’re simply rolling over Roth IRA funds into another Roth IRA. Or, a Roth 401(k) can be rolled into a Roth IRA. This shouldn’t trigger a taxable event.

The 5-year Rule for Roth Conversions

There is a “five-year rule” that comes into play during Roth conversions. The rule stipulates that when you take pre-tax money from, say, a traditional IRA and convert it into a Roth IRA (which has post-tax money in it), there’s a five-year period during which you can’t take any withdrawals, or you could be subject to a 10% early withdrawal penalty. That five-year clock starts at the beginning of the year you convert, not the exact date.

IRA Rollovers and Taxes

Taxes will not be withheld if you do a direct rollover of your retirement account to an IRA or another retirement account. However, if you take out an IRA distribution, it’s typically subject to 20% withholding. If you miss the 60-day rollover deadline for an indirect rollover, you could trigger a taxable event, as it could be considered a taxable distribution.

Compatibility Rules When Rolling Funds to an IRA

Unfortunately, you don’t always have the ability to transfer funds directly from one type of retirement account to another. You can roll over from certain types to others, but not every kind of account is compatible with every other account. For example: You can roll funds from a Roth 401(k) into a Roth IRA, but not into a traditional IRA; and you can roll funds from a traditional IRA into a SIMPLE IRA, but only after two years.

Common Rollover Mistakes to Avoid

Rollovers aren’t foolproof, and there are some common mistakes to be aware of and to try and avoid.

Missing the 60-day Deadline

As noted, there’s a 60-day deadline that comes into play if you elect for an indirect rollover. That means you’ve asked that your IRA assets be paid directly to you, typically by check, so that you can deposit them in a new IRA. You’d have 60 days to do so — otherwise, the IRS counts it as a distribution, since you took the money out of your retirement account, and didn’t put it back in. As such, you’d owe taxes on the distribution.

Note, however, that there are potential ways to get the IRS to waive the 60-day requirement in certain situations.

Violating the One-Rollover-Per-Year Rule

It’s also possible to violate the one-rollover-per-year rule. According to the rule, you can make a single indirect IRA rollover per 12-month period, no matter how many IRAs you have. This applies to traditional IRAs, SEP, SIMPLE, and Roth IRAs.

There are some exceptions, though, such as rollovers from traditional to Roth IRAs, and trustee-to-trustee transfers to another IRA (during which you, the account holder, never actually has custody of the IRA funds).

Not Accounting for Tax Withholding

It’s possible that during an IRA rollover, your plan administrator or company that manages your old IRA may withhold 20% for federal income tax purposes (accounting for a potential distribution) in accordance with IRS rules. Effectively, this means that only 80% of your IRA funds are transferred, which may cause issues. It can be helpful to remember that this can happen, and not to panic or freak out if you think some of your money has gone missing. Instead, contact your plan administrator.

Your Rollover IRA: How to Optimize and Manage It

If you don’t already have an IRA provider, choose the one you want to use to open your new IRA. You can look for a provider that gives you the kind of investment options and resources you want while keeping the fees low to help you save as much as possible for retirement.

An online broker might be right for you if you plan to manage your investments yourself. Another option is a robo-advisor, which can provide help managing your money for lower fees than a human advisor would. But then again you might feel most comfortable with a person helping to manage your account. Ultimately, the choice of a provider is up to you and what’s best for your needs and situation.

Prepare for your retirement with an individual retirement account (IRA). It’s easy to get started when you open a traditional or Roth IRA with SoFi. Whether you prefer a hands-on self-directed IRA through SoFi Securities or an automated robo IRA with SoFi Wealth, you can build a portfolio to help support your long-term goals while gaining access to tax-advantaged savings strategies.

Help build your nest egg with a SoFi IRA.

FAQ

What happens if you miss the 60-day rollover deadline?

Missing the 60-day rollover deadline effectively means you’ve taken a withdrawal, which could trigger a taxable event.

Does a direct transfer from one IRA to another count as a rollover?

Technically, a direct transfer from one IRA to another does not count as a rollover because the accounts are the same type. A rollover is when you move funds from one type of account, such as a 401(k), to a different type of account, such as an IRA…

How many times can I rollover my IRA?

There’s no limit to the number of times you can execute a direct IRA-to-IRA rollover, but you cannot do more than one indirect rollover within a calendar year.

Can I roll over part of my IRA?

Yes, you can roll over part of your IRA, or a portion of the funds in it. You don’t necessarily need to move your entire account, though you’ll need to request a “partial” rollover.

Can I roll an IRA into a SEP IRA?

Yes, it’s possible to roll a traditional IRA into a SEP IRA. You cannot, however, roll a Roth IRA into a SEP IRA.

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

SOIN-Q425-048

Dec

2025

A man consults his smartphone while working on a computer.

What Is Spoofing in Trading? How It Works and Its Consequences

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

Table of Contents

What Is Spoofing?
What’s the Point of Spoofing?
Is Spoofing Illegal?
Example of Spoofing
Consequences of Spoofing
How to Protect Against Spoofing
FAQ

In the financial space, the term “spoofing” refers to an illegal form of stock market and exchange trickery that is often used to change asset prices. Given that the stock markets are a wild place, and everyone is trying to gain an advantage, spoofing is one way in which some traders bend the rules to try and gain an advantage.

Spoofing is also something that traders and investors should be aware of. This tactic is sometimes used to change asset prices – whether stocks, bonds, or other types of assets.

Key Points

• Spoofing is an illegal trading tactic where traders place and cancel orders to manipulate asset prices, influencing market supply and demand dynamics.

• Traders often use algorithms to execute high volumes of fake orders, creating a false perception of demand that can inflate or deflate security prices.

• The practice of spoofing is a criminal offense in the U.S., established under the Dodd-Frank Act, with serious penalties for those caught engaging in it.

• Significant fines have been imposed on both institutions and individual traders for spoofing, highlighting the risks of detection and legal consequences.

• Investors should remain vigilant against spoofing, as it can distort market activity and impact trading strategies, particularly for active traders and day traders.

What Is Spoofing?

Spoofing is when traders place market orders — either buying or selling securities — and then cancel them before the order is ever fulfilled. In a sense, it’s the practice of initiating fake orders, with no intention of ever seeing them executed.

Spoofing means that someone or something is effectively spamming the markets with orders, in an attempt to move security prices.

What’s the Point of Spoofing?

Because stock market prices are determined by supply and demand — for instance, the more demand there is for Stock A, the higher Stock A’s price is likely to go, and vice versa — they can be manipulated to gain an advantage. That’s where spoofing comes in.

By using bots or an algorithm to make a high number of trades and then cancel them before they go through, it’s possible for spoofers to manipulate security prices. For a trader looking to buy or sell a certain security, those valuations may be moved enough to increase the profitability of a trade.

Spamming the markets with orders creates the illusion that demand for a security is either up or down, which is then reflected in the security’s price. Because it would require an awful lot of “spoofed” orders to move valuations, spoofers might rely on an algorithm to place and cancel orders for them, rather than handle it manually. For that reason, spoofing is typically associated with high-frequency trading (HFT).

Is Spoofing Illegal?

If it sounds like spoofing is essentially cheating the system, that’s because it is. In the United States, spoofing is illegal, and is a criminal offense. Spoofing was made illegal as a part of the Dodd-Frank Act, which was signed into law in 2010. Specifically, spoofing is described as a “disruptive practice” in the legislation, straight from the U.S. Commodity Futures Trading Commission (CFTC), which is the independent agency responsible for overseeing and policing spoofing on the markets:

Dodd-Frank section 747 amends section 4c(a) of the CEA to make it unlawful for any person to engage in any trading, practice, or conduct on or subject to the rules of a registered entity that —

(A) violates bids or offers;

(B) demonstrates intentional or reckless disregard for the orderly execution of transactions during the closing period; or

(C) is, is of the character of, or is commonly known to the trade as ‘spoofing’ (bidding or offering with the intent to cancel the bid or offer before execution).

Additionally, there are laws and rules related to spoofing under rules from the Securities and Exchange Commission (SEC), and the Financial Industry Regulatory Authority (FINRA), too.

Example of Spoofing

A hypothetical spoofing scenario isn’t too difficult to dream up. For instance, let’s say Mike, a trader, has 100,000 shares of Firm Y stock, and he wants to sell it. Mike uses an algorithm to place hundreds of “buy” orders for Firm Y shares — an algorithm that will also cancel those orders before they’re executed, so that no money is actually spent.

The influx of orders is read by the market as an increase in demand for Firm Y stock, and the price starts to increase. Mike then sells his 100,000 shares at an inflated price — an artificially inflated price, since Mike effectively manipulated the market to increase his profits.

Consequences of Spoofing

Because spoofing is a relatively easy way to manipulate markets and potentially increase profits, it’s also a fairly common practice for some traders and firms, despite being against the law. That transgression can cost spoofers if and when they’re caught.

For example, one financial institution was fined nearly $1 billion by the SEC during the fall of 2020 after the company was caught conducting spoofing activity in the precious metals market.

But it’s not just the big players that can be on the receiving end of a smack down by the authorities. During August of 2020, an individual day trader was caught manipulating the markets through spoofing activity — actions that netted the trader roughly $140,000 in profits. The trader was ultimately ordered by the CFTC to pay a fine of more than $200,000.

Despite the cases that make headlines, it’s generally hard to identify and catch spoofers. With so many orders being placed and executed at once (especially with algorithmic or computer aid) it’s difficult to identify fake market orders in real time.

How to Protect Against Spoofing

There are a number of parties that are constantly and consistently trying to gain an edge in the markets, be it through spoofing or other means. For investors, it’s worth keeping that in mind while sticking to an investing strategy that works for you, rather than investing with your emotions or getting caught up in the news cycle.

In a time when a single social media post or errant comment on TV can send stock prices soaring or into the gutter, it’s critical for investors to understand what’s driving market activity.

Test your understanding of what you just read.

The Takeaway

Spoofing is meant to gain advantage in the markets, but as such it’s illegal and penalties can be steep. Beyond the spoofers trying to manipulate the market, spoofing has the potential to affect all investors.

If spoofers are manipulating prices for their own gain, that can cause traders and investors to react, not realizing what is going on behind the scenes. While this is more of an issue for active investors or day traders, it’s something to be aware of.

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.

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FAQ

What does spoofing mean in the stock market?

In the financial space, the term “spoofing” refers to an illegal form of stock market and exchange trickery that may be used to alter asset prices. Spoofing is one way in which some traders bend the rules to try and gain an advantage.

Is spoofing legal?

In the United States, spoofing is illegal, and is a criminal offense. Spoofing was made illegal as a part of the Dodd-Frank Act in 2010, and is policed by the Commodity Futures Trading Commission (CFTC).

How can you protect yourself from spoofing?

There’s no foolproof way to protect yourself and your portfolio from spoofing, so it may be best to stick to your investing strategy and try not to get caught up in market hype. Further, you can keep an eye out for unusual market movements, use limit orders, and even reporting suspicious activity to the SEC.

Photo credit: iStock/visualspace

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

SOIN-Q425-071

Dec

2025

A bulletin board on a stand displays the words, Welcome to Chicago.

What Is the Chicago Board Options Exchange (CBOE)?

By Ashley Kilroy | Growing Wealth, invest, Investing, Terminology | Comments Off

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

Table of Contents

What Is the CBOE Options Exchange?
History of the Chicago Board of Options Exchange
Understanding What the CBOE Options Exchange Does
CBOE Products
CBOE and Volatility
FAQ

The Chicago Board Options Exchange (CBOE), is now known as CBOE Global Markets, and it is one of the world’s largest exchanges for trading options contracts, a type of derivative.

Like other global trading companies, CBOE is poised to offer extended trading hours in 2026.

CBOE also operates a range of exchanges and trading platforms for various securities (e.g., equities, futures, digital assets). The CBOE also originated one of the most popular volatility indices in the world, the VIX, a.k.a. the fear index.

While you may already be familiar with the New York Stock Exchange and Nasdaq, those are only two of the exchanges investors use to trade securities. Here’s where the CBOE fits in.

Key Points

• The Chicago Board Options Exchange (CBOE), now CBOE Global Markets, is the world’s largest exchange for trading options contracts and other derivatives.

• CBOE operates a variety of exchanges and trading platforms for different securities, including equities, futures, and digital assets.

• The organization originated the CBOE Volatility Index (VIX), which is one of the most popular volatility indices, also known as the “fear index.”

• Options contracts traded on CBOE are financial derivatives that derive their value from an underlying asset.

• CBOE has a history of innovating tradable products, and plans to offer extended trading hours of almost 24 hours per day, five days a week, starting in 2026.

What Is the CBOE Options Exchange?

CBOE, or CBOE Global Markets, Inc., is a global exchange operator founded in 1973 and headquartered in Chicago. Investors may turn to CBOE to buy and sell both derivatives and equities. In addition, the holding company facilitates trading various securities across an array of exchanges and trading platforms.

What Does CBOE Stand For?

Originally known as the Chicago Board Options Exchange, the organization incorporated as a holding company in 2010, making the options exchange its core asset. The company changed its name to CBOE Global Markets in 2017.

The organization also includes several subsidiaries, such as The Options Institute (an educational resource), Hanweck Associates LLC (a real-time analytics company), and The Options Clearing Corporation or OCC (a central clearinghouse for listed options).

The group has global branches in Canada, England, the Netherlands, Hong Kong, Singapore, Australia, Japan, and the Philippines.

CBOE is also a public company with its stock (CBOE) traded on the CBOE exchange, which investors can find when they buy stocks online.

What Are Options Contracts?

Options are considered derivative investments, as they derive their value from underlying assets. Each option is a contract that can be bought and sold on an exchange (similar to the underlying assets they’re associated with). One option contract generally represents 100 shares of the underlying stock or other security.

Because investors trade option contracts, not the underlying security itself, buying or selling an options contract may enable investors to benefit from price changes in the underlying asset without actually owning it. But trading options is a complex endeavor.

First, an options contract generally costs less than the underlying asset, so trading options can offer investors leverage that may result in potentially amplified gains, depending on how the market moves — or amplified losses. For this reason, options are considered high-risk investments and they’re typically suited to experienced investors.

Recommended: A Beginner’s Guide to Options Trading

History of the Chicago Board of Options Exchange

Founded in 1973, CBOE represented the first U.S. market for traders who want to buy and sell exchange-listed options, in addition to investing in stocks. This was a significant step for the options market, helping it become what it is today.

In 1975, the CBOE introduced automated price reporting and trading along with the Options Clearing Corporation (OCC).

Other developments followed in the market as well. For example, CBOE added put options in 1977. And by 1983, the market began creating options on broad-based indices using the S&P 100 (OEX) and the S&P 500 (SPX).

How the CBOE Evolved

In 1993, CBOE created its own market volatility index called the CBOE Volatility Index (VIX).

In 2015, it formed The Options Institute. With this, CBOE had an educational branch to provide investors with information about options. The Options Institute schedules monthly classes and events to help with outreach, and it offers online tools such as an options calculator and a trade maximizer.

From 1990 on, CBOE began creating unique trading products. Notable innovations include LEAPS (Long-Term Equity Anticipation Securities) launched in 1990; Flexible Exchange (FLEX) options in 1993; week-long options contracts known as Weeklys in 2005; and an electronic S&P options contract called SPXPM in 2011.

Understanding What the CBOE Options Exchange Does

The CBOE Options Exchange serves as a trading platform, similar to the New York Stock Exchange (NYSE) or Nasdaq. It has a history of creating its own tradable products, including options contracts, futures, and more. CBOE also has acquired market models or created new markets in the past, such as the first pan-European multilateral trading facility (MTF) and the institutional foreign exchange (FX) market.

The CBOE’s specialization in options is essential, but it’s also complicated. Options contracts don’t work the same as stocks or exchange-traded funds (ETFs). They’re financial derivatives tied to an underlying asset, like a stock, but they have a set expiration date dictating when investors must settle or exercise the contract. That’s where the OCC comes in.

The OCC settles these financial trades by taking the place of a guarantor. Essentially, as a clearinghouse, the OCC acts as an intermediary for buyers and sellers. It functions based on foundational risk management and clears transactions. Under the Security and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), it provides clearing and settlement services for various trading options. It also acts in a central counterparty capacity for securities lending transactions.

Recommended: An Introduction to Stock Options

CBOE Products

CBOE offers a variety of tradable products across multiple markets, including many that it created.

For example, CBOE offers a range of put and call options on thousands of publicly traded stocks, ETFs, and exchange-traded notes (ETNs). Investors may use these tradable products for specific strategies, like hedging. Or, they might use them to gain income by selling cash-secured puts or covered calls.

These options strategies give investors flexibility in terms of how much added yield they want and gives them the ability to adjust their stock exposures.

Investors have the CBOE options marketplace and other alternative venues, including the electronic communication network (ECN), the FX market, and the MTF.

CBOE and Volatility

The CBOE’s Volatility Index (VIX), sometimes called the fear index, is a gauge of market volatility in U.S. equities. It also tracks the metric on a global scale and for the S&P 500. That opens up an opportunity for many traders. Traders, both international and global, use the VIX Index to get a foothold in the large U.S. market or global equities, whether it’s trading or simply exposing themselves to it.

In late 2021, CBOE Global Markets extended global trading hours (GTH) for its VIX options and S&P 500 Index options (SPX) to almost 24 hours per business day, five days a week. They did this with the intention to give further access to global participants to trade U.S. index options products exclusive to CBOE. These products are based on both the SPX and VIX indices.

This move allowed CBOE to meet growth in investor demand. These investors want to manage their risk more efficiently, and the extended hours could help them to do so. With it, they can react in real-time to global macroeconomics events and adjust their positions accordingly.

Essentially, they can track popular market sentiment and choose the best stocks according to the VIX’s movements.

The Takeaway

CBOE, or CBOE Global Markets, Inc., is more than just a hub of global exchanges. CBOE facilitates the trading of various securities across an array of equity and derivatives trading platforms. In addition, CBOE offers educational training and product innovations.

Like other global exchanges, CBOE will offer extended trading hours in 2026, ranging from 23 hours to 24 hours per day, five days a week.

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

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

Explore SoFi’s user-friendly options trading platform.

FAQ

What does CBOE do?

CBOE is the biggest options exchange worldwide. It offers options contracts on equities, indexes, interest rates, and more. CBOE is also known for creating the so-called fear index, or VIX — a widely used measure of market volatility.

Is the CBOE only for options trading?

No. While CBOE is known primarily for its roles as an options trading platform, it also operates four equity exchanges, as well as other trading platforms like the CBOE Futures Exchange (CFE), for trading this type of derivative.

What are derivatives?

The term derivatives is used to describe four main types of investments that are tied to underlying investments: futures, options, swaps, and forwards. Each of these types of derivatives can be used to trade an underlying asset such as stocks, foreign currencies, commodities, and more, without owning the underlying security.

Photo credit: iStock/USGirl

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

SOIN-Q425-078

Dec

2025

A man in a plaid shirt sits in front of his computer, resting his chin on his hand, as he reviews investment options.

10 Ways to Invest $1000 in 2026

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

Table of Contents

A Look-Ahead for Investing in 2026
1. Getting Into the Stock Market With Index Funds
2. Investing in ETFs
3. Creating an Emergency Fund
4. Securing the Future With Retirement Funds
5. Stepping Into Tech With Robo Advisors
6. Paying Down High-Interest Debts
7. Investing in Stocks
8. Exploring Passive Income Opportunities
9. Investing in Your Child’s Education With a 529 Plan
10. Consider Bonds and T-Bills
Making Your Investments Work Harder
FAQ

If you’re looking for ways to invest $1,000, there are numerous options available, including stocks, bonds, Treasurys, and more. But how do you get started? And which option — or options — may be right for you?

While it’s impossible to predict how the market will perform in 2026, many investors have taken note of the economic and market conditions in 2025, e.g., increased interest in tech stocks, a slower real estate market, the impact of tariffs on global markets, and so on. Inevitably, these trends are likely to change, but understanding the different market dynamics can be valuable.

Read on to learn about different ways to invest $1,000 — or any other amount — how they work, and the pros and cons of each one to help you make an informed decision to help reach your financial goals.

Key Points

• Align investments with financial goals, investment timeline, and risk tolerance.

• Investing in an emergency fund can help cover unexpected costs.

• A 529 plan is a tax-advantaged savings account that families can invest in to save for education expenses.

• ETFs tend to offer ease of trading, lower fees, and potential tax efficiency.

• Contributing to tax-advantaged IRAs could help build retirement savings.

A Look-Ahead for Investing in 2026

There’s a reason this classic investing mantra has stood the test of time: “Past performance is no guarantee of future returns.” Will the trends of 2025 — interest in artificial intelligence, worries about interest rates — persist in the year to come? It’s hard to say, and there’s no guarantee.

A better approach for investors who are curious about ways to invest in 2026 and beyond is not to focus on short-term trends, but rather use those markers as information about investor behavior and markets in general.

Getting to know those basics can help you make choices in light of your own goals and financial circumstances, as will the following 10 suggestions.

1. Getting Into the Stock Market With Index Funds

Investors who want to ease into the stock market may want to consider index funds. Investing in index funds is a passive investing strategy that may be less risky than buying individual stocks or securities. Index funds follow a market index and track it to mirror its performance.

Why S&P 500 Index Funds Might Make Sense

S&P 500 index funds track the S&P 500 index. These funds give investors exposure to the stock performance of about 500 of the leading companies on the market.

When you buy shares of an index fund, your money is basically invested in the many companies that make up the index. This helps provide some diversification to an investor’s portfolio.

Index fund investing has some advantages, such as ease of management and relatively low entry costs in some cases. However, investing in S&P 500 index funds does have risks. In the event of a broad market downturn, for instance, your portfolio could take a significant hit, depending on its specific makeup.

The Long-Term Benefits of Tracking the Market

Broad index funds track the performance of the market over time, which tends to go up based on historical data. As for the S&P 500, it has grown over time — but not without some hiccups along the way. The S&P 500 has averaged about 10% annually over time — or about 7% a year when adjusted for inflation.

2. Investing in ETFs

Exchange-traded funds, or ETFs, are another potential option for investors looking at how to invest $1,000. ETFs offer a way to gain broad exposure to a potentially wide variety of different types of investments, such as different sectors or asset classes.

How ETFs Offer Accessibility to Beginners

Purchasing shares of an ETF works much like purchasing shares of an individual company’s stock. Investors can find them on online investment platforms and as investment options for many retirement accounts, for example.

However, like other types of investment vehicles, ETFs have pros and cons, and it’s important to weigh the potential benefits and drawbacks. As for the advantages, ETFs can be easy to trade, offer a degree of built-in diversification, tend to have lower fees, and may be more tax-efficient than some other assets like mutual funds.

Disadvantages of ETFs may include lack of exposure to certain industries or asset types, or conversely, ready access to ETFs that might be based on highly complex and high risk assets or strategies. It’s important to research investments thoroughly before putting money in them, including ETFs. ETFs may also not precisely match the performance of the index they’re tracking — or might on some occasions go more widely offtrack.

Comparing Popular ETF Options

Interested investors can explore broad index-focused ETFs, or any number of others. There are ETFs for bonds, real estate, oil, other commodities, and even currency, among other types.

For example, say an investor wants exposure to gold mining stocks. But researching all of the different mining companies out there, examining their plans, management, profitability, and more could be overwhelming. Such an investor may want to consider ETFs that include some gold mining stocks instead.

3. Creating an Emergency Fund

Having an emergency fund is important. When unexpected expenses or situations pop up, as they inevitably do, an emergency fund can help cover those costs.

For instance, a person might need surgery and end up with a big medical bill they weren’t planning on. Or perhaps they get laid off from your job. The money in an emergency fund can help you cover the bills.

How Big Your Fund Should Be

Most financial professionals advise having three to six months’ worth of expenses in an emergency fund. It’s possible to start by investing $100, $1,000, or even $50 to get started, and commit to adding more of a cushion over time. It’s also possible to automate deposits, which can help you save.

4. Securing the Future With Retirement Funds

A tax-advantaged retirement account is designed to help people save for the future. Investors could consider opening an IRA or enrolling in an employer-sponsored account like a 401(k). There are also certain types of accounts, like SEP and SIMPLE IRAs, that are designed to help small business owners and people who are self-employed save for the future.

The Advantage of IRAs

There are different kinds of individual retirement accounts, including traditional and Roth IRAs. Both types of IRAs are tax-advantaged, but there are differences between them. With a traditional IRA, an individual contributes pre-tax dollars. These contributions are generally tax deductible because they lower taxable income. The money in the account grows tax deferred, and the individual pay taxes on withdrawals in retirement.

Contributions to a Roth IRA are made with after-tax dollars and are typically not tax deductible. The money grows in the account tax-free and withdrawals in retirement are also tax-free — as long as the account has been open for at least five years.

Maximizing 401(k) Matches

Maxing out a 401(k) retirement plan can be another option for investors to consider. Some employers match employee contributions to 401(k) accounts up to a certain amount. This employer match is essentially free money. Investors who have $1,000 to invest may want to consider putting it in a 401(k), if they have access to one, especially if doing so could help them get their employer’s match.

5. Stepping Into Tech With Robo Advisors

Robo advisors are not robots, but rather sophisticated computer algorithms that pick investments for investors and help them manage those investments. Using this kind of technology may be appealing to some investors because it takes much of the guesswork, calculation, and research out of the investing process — while still offering high-quality professional guidance.

Simplifying Investments With Technology

Generally, an online robo advisor will ask an investor some questions about their investment goals, risk tolerance, and desired retirement age (or the time until they’ll need the money for another goal). Then, based on those answers, the platform generates a portfolio, and the amount of money the investor would like to invest will be allocated accordingly.

There are typically several different pre-set portfolios robo advisors recommend to investors, ranging from conservative risk, to moderate risk, to aggressive risk.These portfolios usually provide a mix of assets that align with an investor’s tolerance for risk, which is determined by the answers given to the robo advisor’s questions.

For example, conventional wisdom says that younger investors may take more risk because they have more time to make up for potential losses. On the other hand, older investors who are closer to retirement are generally advised to be more conservative, since steep losses could compromise their retirement plans.

Disadvantages of Automated Portfolios

It’s important to understand the potential downsides of using a robo advisor. For example, there may be limited personalization and flexibility, which could be a turn-off for investors who want to take a more active hand in their portfolio.

Typically, there is also a lack of human input, so an investor may not be able to speak with someone at their brokerage as easily as they might like. And finally, robo advisors generally have fees and costs investors should be aware of, though they are typically much less than those of a financial advisor.

6. Paying Down High-Interest Debts

Paying down debt may not seem like an “investment” in the traditional sense. However, an individual could think of it as an investment in their financial future since wiping out debt could free up money that might otherwise go toward interest payments. They could then invest or save that money instead.

There are a lot of different strategies to pay down debt, but the process can start with some simple steps: Create a budget, set goals, and stick to them.

In terms of specific methods, one common debt-payoff strategy is the snowball method, which involves paying debt with the lowest overall balance first, and then moving on to the next lowest debt and so on.

With the avalanche method, an individual focuses on paying off the debt with the highest interest rate first, and then moves to the debt with the next highest rate.

7. Investing in Stocks

Stocks are shares of ownership in a company. An investor interested in buying stocks could do research and find a company that they believe will appreciate in value over time and then buy shares of that stock through a brokerage account. However, while stocks may potentially offer a bigger return on investment than some other assets, such as certain bonds, they can also be highly volatile and involve more risk.

Fractional Shares

Because of their risk and volatility, stocks may be best for those with a diversified portfolio who are willing to take on more risk. Another option is something called fractional shares. A fractional share is less than one whole equity share of stock. For example, it might be 0.42 of a share of a stock.

Fractional shares allow access to stocks that might otherwise be out of reach because of their expense. For beginning investors, they could be a way to invest small amounts of money into part of a share of stock. If a stock is $100 a share, for instance, an investor could potentially buy 0.50 of a share for $50, hypothetically.

There are some disadvantages of fractional shares to be aware of. Among other drawbacks, fractional shares may incur higher transaction fees. Also, some fractional shares might be less liquid than full shares of stock, making them more difficult or time consuming to sell. Investors should carefully consider the pros and cons of fractional shares before investing.

8. Exploring Passive Income Opportunities

Passive income is income that typically comes from a source that requires less time and effort than most regular jobs do. It could be a side hustle, renting out something a person owns like their car or bike, or starting a blog or YouTube channel. Some passive income opportunities may require a little capital to get off the ground; even so, many can be started for $1,000 or less.

Getting Started With Passive Ventures

There are dozens of ways to put money to work and start a passive income venture. In addition to the passive income ventures mentioned above, alternatives include publishing an ebook, selling homemade artwork or clothing online, or creating an online course around something that teaches a skill, like photography.

Some of these options will require a little start-up cash, but they could end up bringing in some extra money.

Low-Investment Ideas for Passive Earnings

Some other potential ways to earn passive income is through certain investments with $1,000. For example, if an individual owns stocks or ETFs that pay dividends, those dividends are considered passive income. Or, if they own property, they could use their $1,000 to spruce it up and then rent it out and possibly earn passive income that way.

Just remember, investing involves risk, as does starting a new business venture. There are no guarantees that it will be successful.

9. Investing in Your Child’s Education With a 529 Plan

For those with children, investing in a 529 college savings plan can be a way to help pay for their education, especially as school costs continue to rise. Think of it as investing in their future.

The Basics of 529 Plans

A 529 plan is a tax-advantaged savings account that allows families to save for education expenses. Contributions to the account grow tax-free, and as long as the money is withdrawn for qualified education expenses like tuition, books, and room and board, the withdrawals are also tax-free.

529 plans aren’t just for college. They can be used to help pay for some K-12 expenses and also for trade schools.

Long-Term Benefits for Your Family

529 plans can be used to ease the financial burden of school and/or college, and they offer tax-free growth. With the rising costs of schooling, saving and investing for tuition early on can be helpful.

Beneficiaries of 529 plans (aka your children) can even withdraw up to $10,000 tax-free (this is a lifetime amount) to help repay their student loans later on, thanks to the SECURE Act. And any unused 529 funds can be used to fund a Roth IRA for the student.

10. Consider Bonds and T-Bills

When deciding how to invest $1,000, individuals may want to explore lower-risk investments, such as savings bonds and T-bills.

The Stability of Government Bonds

Savings bonds are issued by the federal government, and they are generally considered to be one of the least-risky investment options. Individuals are essentially guaranteed to get back the amount they invested in them. They buy these bonds for their face value and the bonds pay interest over a specific period of time. When the bonds mature, the individual gets their principal back.

A Treasury bill is a short-term debt obligation — similar to a loan — issued by the U.S. government. T-bills typically mature in one year or less, and at that point a person gets back the amount they invested plus interest.

Making Your Investments Work Harder

Choosing how to invest requires some research and careful consideration. And monitoring investments regularly could help an individual make sure they are satisfied with them. If an investment option isn’t working, they can always make a change.

When to Pivot Your Investment Strategy

Reasons to pivot or change an investment strategy include a change in financial goals (maybe an individual wants to start saving for a house, for instance), a change in financial situation (perhaps job loss — or landing a new job with a higher salary), or a major life event (like getting married or having a baby). These can all be times for an individual to reevaluate strategy and decide whether they need to switch it up to meet their new priorities.

It might also be time to pivot to a new strategy if there are changes in the market or investments aren’t performing the way an investor hoped they would.

A person’s appetite for risk and/or investment timeline may change as well. For example, as they get closer to retirement, they may want to be more conservative with their investments and pivot to lower-risk options.

The Takeaway

There are many different ways to invest $1,000, including investing in the market, contributing to a retirement account, or launching a passive income strategy. An individual could consider different options to help determine what works best for their current financial situation and priorities.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest®. You can trade stocks, ETFs, or options through self-directed investing with SoFi Securities, or simply automate your investments with a robo advisor from SoFi Wealth. You'll gain access to alternative investments and upcoming IPOs, and can plan for retirement with a tax-advantaged IRA. With SoFi, you can manage all your investments, all in one place.

Take a step toward reaching your financial goals with SoFi Invest.

FAQ

What is the safest investment with the highest return?

There is no single safe investment with a guaranteed highest return. An investor should consider their own personal risk tolerance, investing timeline, and goals when choosing an investment. However, generally speaking, lower-risk investment options could include savings bonds and T-bills that are backed by the federal government, give an investor back the principal they invested, and pay interest.

Where should I put $1,000 right now?

Where to put $1,000 right now is up to you and depends on your personal situation, investing timeline, risk tolerance, and financial goals. However, some options to potentially consider include starting an emergency fund if you don’t yet have one, putting the money in a retirement account like a 401(k) or IRA to save for your future, or investing in a 529 plan for your child’s education.

What is the smartest thing to do with a lump sum of money?

What you choose to do with a lump sum of money depends on your financial goals and personal circumstances. Some potential options include using the money to pay off debt, start an emergency fund, or put into a retirement account.

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

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

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

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

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.

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.
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.

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

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

SOIN-Q425-060

Dec

2025

A person at a table with others reads graphs and charts on a tablet computer.

The Essentials of Stock Float and Its Impact on Investing

By Pam O’Brien | Growing Wealth, Investing | No Comments

Table of Contents

Unpacking the Concept of Stock Float
The Significance of Stock Float in Investing
Stock Float Compared: Authorized, Outstanding, and Floating Shares
Identifying and Interpreting the Float of a Stock
The Implications of Low vs High Stock Float
The Investor’s Guide to Low-Float Stocks
Insights Into Stock Float and Market Manipulation
Example of Floating Stock
Practical Tips for Trading and Investing in Floating Stocks
FAQ

Floating stock, or stock float, refers to the number of shares a particular stock has available to trade. Whether you’re a veteran or a rookie when it comes to the stock market, you have likely come across the term “stock float.”

Understanding stock float is important, since it can provide insight into a stock’s liquidity as well as its potential volatility and risk — all of which can help you decide if a stock might belong in your portfolio.

Key Points

• Stock float represents the number of shares available for public trading, excluding locked-in and restricted shares, which affects how easily investors can buy or sell a stock.

• Lower stock float generally leads to higher volatility, as increased demand can significantly impact stock prices, while higher float stocks tend to be more stable.

• Investors can analyze stock float by calculating the difference between outstanding shares and restricted shares, which helps them assess a stock’s liquidity and potential price movements.

• Low-float stocks can be attractive to day traders due to their potential for rapid price changes but come with increased risks, including market manipulation and liquidity issues.

• Understanding stock float dynamics aids investors in making informed decisions, as it influences trading strategies and the overall market behavior of stocks.

Unpacking the Concept of Stock Float

Floating stock is the number of shares available for trade of a particular stock. The number of floating shares is referred to as the stock float or simply “the float.” Stock float is important because it indicates how many shares of a stock can be bought and traded by investors in general.

To calculate the amount of floating stock available, subtract the number of locked-in shares and restricted stock from a firm’s total outstanding shares.

Restricted stock generally refers to shares that cannot be traded without special exception from the Securities and Exchange Commission (SEC). One such example of this is stocks that are restricted by the SEC from sale during a lock-up period after an initial public offering, where certain shareholders (such as employees and major investors) are not allowed to sell their stock for that given period. This may be done in an attempt to stabilize the price of the stock.

No matter the reason, if there are shares that are not available for trade in the market, then they will not be tallied in the final float count.

How Stock Float Influences Market Dynamics

Stock float is something investors find helpful because it indicates the ownership structure of a company. Also, the lower the stock float, the more volatile the stock may be. If there is more demand from investors than available stock to buy, that could send the price of the stock up. And if demand for the stock drops, the stock’s price could fall.

The Significance of Stock Float in Investing

Investors find stock float useful because it tells them how many shares of stock are available to be publicly bought and sold. It also offers an indication of a stock’s volatility, as noted above. A stock float that’s low could push up the price of the stock if there is great demand for it.

Analyzing the Impact of Float on Stock Performance

Stock float can indicate to investors how many shares of stock are available to buy and sell, and thus, how volatile a stock may be. Stocks with a higher float tend to be less volatile, while those with a lower float tend to have higher volatility.

Stock float is just one metric or tool investors can use to analyze a stock and how it might potentially perform.

Stock Float Compared: Authorized, Outstanding, and Floating Shares

Authorized shares are the most shares of stock that a company can issue. Outstanding shares are the number of shares the company actually has issued. A company does not have to issue all of its authorized shares.

Floating shares refers to the number of a company’s shares that can be bought and sold. Stock float is calculated by subtracting a company’s restricted shares from their outstanding shares. If a company has 100 million outstanding shares, with 15 million of them locked in, this company’s float would be 85 million.

This means that 85 million shares of this company’s stock are available for trade on the open market. These are the shares that you could hypothetically purchase with a broker, brokerage account, or other trading platforms that have access to the major stock exchanges.

Identifying and Interpreting the Float of a Stock

Identifying the float of a stock requires a fairly simple calculation. You can find a stock’s float by subtracting any restricted shares of the stock from the outstanding shares.

Typically, you can also look at a company’s balance sheet to find the number of outstanding shares and floating shares.

Interpreting What the Float Tells You About a Stock

The float of a stock tells you how many shares of that stock are available for buying or selling. Low float stocks (those with fewer shares available to buy and sell) tend to be more volatile, as discussed earlier, because there are fewer shares available for trading.

The Implications of Low vs High Stock Float

When considering low float stocks and high float stocks, the following are some things investors might want to keep in mind.

Advantages and Risks of Low-Float Stocks

The benefits of low-float stocks apply mainly to day traders who hope to earn big profits in a short period of time. Each trade of a low-float stock could have a big impact on the value of the stock. For example, if there’s good news about a company whose stock float is low, demand for the stock may rise, and the stock’s price could go up.

Conversely, if news about the company is bad, demand for the stock could plummet, along with the stock’s price. This leads to a greater level of risk for investors.

The Stability and Volatility Factor in High-Float Stocks

High-float stocks tend to be less volatile because there are more shares available for public trading. That makes them more stable overall because there are more shares of the stock in circulation. The price of high-float stocks tends to be more stable than low-float stocks.

💡 Quick Tip: Are self-directed brokerage accounts cost efficient? They can be, because they offer the convenience of being able to buy stocks online without using a traditional full-service broker (and the typical broker fees).

The Investor’s Guide to Low-Float Stocks

Trading low-float stocks can be one strategy day traders use. Here’s what to know about evaluating and trading these stocks.

Best Practices for Trading Low-Float Stocks

Trading low-float stocks involves risks. Because there are few shares available, it may be difficult to buy them when an investor wants them and also to sell them in time to make a profit — this is referred to as a lack of liquidity.

One way traders might handle this is to look for stocks with low float and high volume, which is the number of shares of stock being traded daily. The more shares being traded, the lower the chances might be that an investor will have to deal with lack of liquidity.

Strategies for Evaluating Low-Float Stock Potential

Traders can use technical analysis and look at indicators like candlestick charts and moving averages to help evaluate a low-float stock. This typically requires some knowledge and experience as an investor.

Other methods of evaluating a low-float stock include:

• Low-float stocks with a high relative volume. Relative volume is a way to help gauge a stock’s liquidity. It indicates a stock’s volume currently compared to other times in the company’s history. A stock with low liquidity might be difficult for an investor to sell.

• News about the company. Both good and bad news about a company can affect a low-float stock’s value. It could quickly go up or down.

• Float percentage. This refers to the percentage of total shares of stock available for trading. Most traders look for a percentage between 10% and 25%.

Insights Into Stock Float and Market Manipulation

Stocks with a low float may be more vulnerable to market manipulation. When a stock has fewer shares available for trading, it could easily be affected by comments on social media, for instance. There are also schemes such as a “pump and dump” in which unscrupulous investors buy up many of the shares of a low-float stock, which could affect the price dramatically. They might then dump the stock.

Day trading is risky and can result in investors losing significant amounts (although they could potentially make significant gains). And low-float stocks can be susceptible to practices like market manipulation. Those with a low tolerance for risk may find that low-float stocks are not the best investment for them.

Example of Floating Stock

A hypothetical example could be Company X. Say that there are 1 billion outstanding shares of Company X stock. Of this number, approximately 75% of shares are not available for public trading. The float, in this case, is around 250 million shares. Consequently, Company X’s stock price may be considered fairly volatile.

Practical Tips for Trading and Investing in Floating Stocks

Low-float stocks can be highly volatile and their price can go up and down in minutes or even seconds. This volatility could eliminate a significant chunk of an investor’s portfolio. Of course, low-float stocks could also present substantial profit opportunities with potentially big gains. But they are risky.

Low-float stocks are typically appealing to those who are hoping to make larger gains in a short amount of time, such as day traders.

To successfully trade low-float stocks, investors should look at technical indicators and also follow the news. Watching the market every day is critical since the prices of these stocks can change so quickly.

Whether you’re investing in low-float stocks or any stock, remember that diversifying your portfolio is important and can help mitigate risk and potentially increase your returns, studies show.

The Takeaway

As discussed, floating stock, or stock float, refers to the number of shares available for trade of a particular stock. It’s a term generally used in the world of day-trading, and may not come into play as much for investors with a longer-term focus, or who tend to be more hands-off with their portfolios.

High and low floats can signal overall demand for a stock, which can inform investing or trading decisions. It’s important to know that day-trading is rife with risk, of course, and if you’re interested in incorporating “float” strategies into your investing strategy, it may be a good idea to discuss it with a financial professional.

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

¹Probability of Member receiving $1,000 is a probability of 0.026%; If you don’t make a selection in 45 days, you’ll no longer qualify for the promo. Customer must fund their account with a minimum of $50.00 to qualify. Probability percentage is subject to decrease. See full terms and conditions.

FAQ

Is a low-float stock good for day trading?

A low-float stock could potentially lead to big profits for day traders if the stock is in high demand. However, these stocks can be very risky since they are volatile. If demand drops, a trader could lose large sums.

How does a stock’s float affect its liquidity?

Stocks with a higher float have more liquidity, which can make it easier for investors to buy and sell them. Low-float stocks have less liquidity, which could make it more challenging to buy or sell them.

Are low-float stocks subject to market manipulation?

Stocks with a low float may be more vulnerable to market manipulation. There are also schemes such as a “pump and dump” in which unscrupulous investors buy up many of the shares of a low-float stock, which could affect the price dramatically. They might then dump the stock.

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

SOIN-Q425-017

IRA Rollover Rules 2025: 60-Day & One-Per-Year Rules Explained

What is an IRA Rollover?

Direct vs. Indirect Rollovers: What’s the Difference?

What Is a Direct Rollover?

What Is an Indirect Rollover?

The 60-Day Rollover Rule Explained

The One-Rollover-Per-Year Rule Explained

What Are the Rules for a Roth IRA Rollover?

Roth Conversions vs. Roth-to-Roth Rollovers

The 5-year Rule for Roth Conversions

IRA Rollovers and Taxes

Compatibility Rules When Rolling Funds to an IRA

Common Rollover Mistakes to Avoid

Missing the 60-day Deadline

Violating the One-Rollover-Per-Year Rule

Not Accounting for Tax Withholding

Your Rollover IRA: How to Optimize and Manage It

FAQ

What happens if you miss the 60-day rollover deadline?

Does a direct transfer from one IRA to another count as a rollover?

How many times can I rollover my IRA?

Can I roll over part of my IRA?

Can I roll an IRA into a SEP IRA?

What Is Spoofing in Trading? How It Works and Its Consequences

What Is Spoofing?

What’s the Point of Spoofing?

Is Spoofing Illegal?

Example of Spoofing

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

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Consequences of Spoofing

How to Protect Against Spoofing

The Takeaway

FAQ

What does spoofing mean in the stock market?

Is spoofing legal?

How can you protect yourself from spoofing?

What Is the Chicago Board Options Exchange (CBOE)?

What Is the CBOE Options Exchange?

What Does CBOE Stand For?

What Are Options Contracts?

History of the Chicago Board of Options Exchange

How the CBOE Evolved

Understanding What the CBOE Options Exchange Does

CBOE Products

CBOE and Volatility

The Takeaway

FAQ

What does CBOE do?

Is the CBOE only for options trading?

What are derivatives?

10 Ways to Invest $1000 in 2026

A Look-Ahead for Investing in 2026

1. Getting Into the Stock Market With Index Funds

Why S&P 500 Index Funds Might Make Sense

The Long-Term Benefits of Tracking the Market

2. Investing in ETFs

How ETFs Offer Accessibility to Beginners

Comparing Popular ETF Options

3. Creating an Emergency Fund

How Big Your Fund Should Be

4. Securing the Future With Retirement Funds

The Advantage of IRAs

Maximizing 401(k) Matches

5. Stepping Into Tech With Robo Advisors

Simplifying Investments With Technology

Disadvantages of Automated Portfolios

6. Paying Down High-Interest Debts

7. Investing in Stocks

Fractional Shares

8. Exploring Passive Income Opportunities

Getting Started With Passive Ventures

Low-Investment Ideas for Passive Earnings

9. Investing in Your Child’s Education With a 529 Plan

The Basics of 529 Plans

Long-Term Benefits for Your Family

10. Consider Bonds and T-Bills

The Stability of Government Bonds

Making Your Investments Work Harder

When to Pivot Your Investment Strategy

Student Loan
Refinancing

Personal
Loans

Online
Investments