May
30
2025
An up-close image of the hand of a woman who is holding a pen and using a calculator to work on her 401(k) plan.

What Is an Expense Ratio?

By | Growing Wealth, invest, Investing, Terminology | Comments Off on What Is an Expense Ratio?

An expense ratio is the annual fee that mutual funds and exchange-traded funds (ETFs) charge investors, to cover operating costs. The fee is deducted from your investment, reducing your returns each year — which is one reason why expense ratios have been shrinking.

Typically, investors may look for funds that offer lower expense ratios, as high expense ratios can take a substantial bite out of long-term returns, affecting investors’ financial plans. Here’s a look at how expense ratios are calculated, what they encompass, and other factors worth considering when choosing a mutual fund or ETF to invest in.

Key Points

•   Expense ratios are annual fees charged by funds to cover operating costs, calculated as total fund costs divided by assets under management.

•   Lower expense ratios benefit long-term returns, as higher fees can significantly reduce overall investment growth over time.

•   Management, custodial, and marketing fees are often included in expense ratios, but loads and redemption fees are charged separately.

•   Actively managed funds have higher expense ratios due to frequent trading and manager intervention, while passively managed funds are more cost-effective.

•   When evaluating funds, consider how they fit into your financial plan, investment objectives, and the components of the expense ratio.

How Expense Ratios Are Calculated

Though individual investors typically won’t find themselves in a situation where they need to calculate an expense ratio, it’s helpful to know how it’s done. To calculate expense ratios, funds use the following equation:

Expense Ratio = Total Fund Costs/Total Fund Assets Under Management

For example, if a fund holds $500 million in assets under management, and it costs $5 million to maintain the fund each year, the expense ratio would be:

$5 million/$500 million = 0.01

Expressed as a percentage, this translates into an expense ratio of 1%, meaning you would pay $10 for every $1,000 you have invested in this fund.

As you research funds you may come across two terms: gross expense ratio and net expense ratio. Both have to do with the waivers and reimbursements funds may use to attract new investors.

•   The gross expense ratio is the figure investors are charged without accounting for fee waivers or reimbursements.

•   The net expense ratio takes waivers and reimbursements into account, so it should be a lower amount.

Recommended: How Taxes, Fees, and Other Expenses Impact Your Investments

How Expense Ratios Are Charged

A fund’s expense ratio is expressed as a percentage of an individual’s investment in a fund. For example, if a fund has an expense ratio of 0.60%, an investor will pay $6.00 for every $1,000 they have invested in the fund.

The cost of an expense ratio is automatically deducted from an investor’s returns. In fact, when an investor looks at the daily net asset value of an ETF or a mutual fund, the expense ratio is already baked into the number that they see.

The Components of an Expense Ratio

The fees that make up the operating costs of a mutual fund or ETF can vary. Generally speaking, the investment fees included in an expense ratio will include the following:

Management Fees

The management fee is the amount paid to the person/s managing the money in the investment fund — they make decisions about which investments to buy and sell and when to execute trades. Management fees can vary depending on how much activity is required of these managers to maintain the fund.

Custodial Fees

Custodial fees cover the cost of safekeeping services, the process by which a fund or other service holds securities on an investor’s behalf, guarding the securities from being lost or stolen.

Marketing Fees

Also known as 12b-1 fees, marketing fees are used to pay for the advertising of the fund, some shareholder services, and even employee bonuses on occasion. FINRA caps these fees at 1% of your assets in the fund.

Other Investment Fees

Investors may be forced to pay other investment fees when they buy and sell mutual funds and ETFs, including commissions on trades to a broker. The cost of buying and selling securities inside the fund is not included as part of the expense ratio. Additional costs that are not considered operating expenses include loads, a fee mutual funds charge when investors purchase shares. Contingent deferred sales charges and redemption fees, which investors pay when they sell some mutual fund shares, are also paid separately from the expense ratio.

How to Research Expense Ratios

Luckily, you do not have to spend your time calculating expense ratios on your own. The Securities and Exchange Commission (SEC) requires that funds publish their expense ratios in a public document known as a prospectus. The prospectus reports information important to mutual fund and ETF investors, including investment objectives and who the fund managers are.

Online brokers often allow you to look up expense ratios for individual investment funds, and they may even offer tools that allow you to compare ratios across funds.

Average Expense Ratios

Expense ratios vary by fund depending on what investment strategy it’s using. Passively managed funds that frequently track an index, such as the S&P 500 index, and require little intervention from managers, tend to have lower expense ratios. ETFs are usually passively managed, as are some mutual funds. Other mutual funds may be actively managed, requiring a heavier touch from managers, which can jack up the expense ratio.

Expense ratios have been falling for decades, according to the most recent Morningstar Annual U.S. Fund Fee study, released in May 2025. In fact, that report notes that in 2024, the average expense ratio “paid by fund investors was less than half of what it was two decades ago.”


💡 Quick Tip: How to manage potential risk factors in a self directed investment account? Doing your research and employing strategies like dollar-cost averaging and diversification may help mitigate financial risk when trading stocks.

What’s a Good Expense Ratio?

When considering expense ratios across mutual funds and ETFs, it’s helpful to use average expense ratios as a benchmark to get an idea of whether a specific expense ratio is “good.”

Investors may want to target funds with expense ratios that are below average. The lower the expense ratio, the less expensive it is to invest in the fund, meaning more profits would go to the investor vs. the fund.

That said, some investors may prefer to invest in actively managed funds, which typically charge higher fees than passive or index funds.

Looking Beyond Expense Ratios

When comparing mutual funds and ETFs, an investor might choose to consider other factors in addition to expense ratios.

It can be a good idea to consider how a particular fund will fit in their overall financial plan. For example, individuals looking to build a diversified portfolio may want to target a fund that tracks a broad index like the Nasdaq or S&P 500. Or, investors with portfolios heavily weighted in domestic stocks may be on the hunt for funds that include more international stocks.

And it’s also a good idea to know the key differences between mutual funds and ETFs. ETFs, for example, are generally designed to be more tax efficient than mutual funds, which can also have a big impact on an investor’s ultimate return. ETFs are generally lower in cost than mutual funds as well.

The Takeaway

Expense ratios seem small, but they can have a big impact on investor returns. For example, if an individual invested $1,000 in an ETF with a 6% annual return and a 0.20% expense ratio, and continued making a $1,000 investment each year for the next 30 years, they would earn $81,756.91, and spend $3,044.76 on the fund’s expenses.

But expense ratios are only one of many factors to consider when choosing a mutual fund or ETF. Fundamentally your investment choices have to fit into your larger financial plan. But cost should always be a concern.

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

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

FAQ

What is an expense ratio?

An expense ratio in investing is an annual fee that many funds, such as mutual funds or ETFs, charge investors to cover operating and management expenses and costs.

How are expense ratios calculated?

Expense ratios, funds generally use a formula that divides total fund costs by the total fund assets under management.

What expenses does an expense ratio pay for?

Funds typically have many types of expenses and fees, and an expense ratio can wrap together management fees, custodial fees, marketing fees, and commissions together into a single annual charge for investors.

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.

Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.

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.

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.
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.

Fund Fees
If you invest in Exchange Traded Funds (ETFs) through SoFi Invest (either by buying them yourself or via investing in SoFi Invest’s automated investments, formerly SoFi Wealth), these funds will have their own management fees. These fees are not paid directly by you, but rather by the fund itself. these fees do reduce the fund’s returns. Check out each fund’s prospectus for details. SoFi Invest does not receive sales commissions, 12b-1 fees, or other fees from ETFs for investing such funds on behalf of advisory clients, though if SoFi Invest creates its own funds, it could earn management fees there.
SoFi Invest may waive all, or part of any of these fees, permanently or for a period of time, at its sole discretion for any reason. Fees are subject to change at any time. The current fee schedule will always be available in your Account Documents section of SoFi Invest.

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


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

SOIN-Q225-113

Read more
May
30
2025
What Is Crowdfunding? Definition & Examples

What Is Crowdfunding? Definition & Examples

By | Growing Wealth, invest, Investing | Comments Off on What Is Crowdfunding? Definition & Examples

Crowdfunding helps businesses and entrepreneurs raise capital for new ventures by pooling together small amounts of money from many investors. Crowdfunding is usually accomplished via an online platform that provides access to a wider network, but typically charges fees and may impose other terms.

While crowdfunding has a reputation for being business-focused, today many people use crowdfunding to help them accomplish a range of goals, from creating arts projects to paying medical bills.

Unlike angel or venture capital investors, crowdfunders can include private investors, institutional investors, friends, family, and even strangers.

Crowdfunding is an alternate take on traditional methods of financing a business through equity or debt. Crowdfunding offers some advantages to business owners who may not qualify for traditional loans or would prefer to avoid them. Crowdfunding does come with some downsides, and crowdfunding websites can be tricky.

Key Points

•   Crowfunding enables individuals or small businesses to raise small amounts of capital from a large pool of investors.

•   Unlike angel or VC investments, crowdfunding tends to be conducted via online platforms, many of which charge high fees.

•   Crowdfunders may include private investors, family, friends, or even strangers.

•   Crowdfunding is associated with startups, but these days many people use crowdfunding for a range of goals, even paying medical bills.

•   Crowdfunding platforms impose different terms; it’s important to understand the requirements in order to obtain the funds you raise.

What Is Crowdfunding?

Crowdfunding is more or less exactly what it sounds like: funding that comes from a crowd of people. Note, though, that regulators like the Securities and Exchange Commission (SEC) have their own definition of crowdfunding — but for our purposes, a broad definition will do.

Generally, crowdfunding for business is subject to federal securities laws. That means any efforts to raise capital through the crowd require SEC registration.


💡 Quick Tip: How do you decide if a certain trading platform or app is right for you? Ideally, the investment platform you choose offers the features that you need for your investment goals or strategy, e.g., an easy-to-use interface, data analysis, educational tools.

History of Crowdfunding

The concept of raising capital as a collective effort is not a new one.

For example, Ireland launched several loan funds in the 1700s and 1800s to help less-advantaged people gain access to credit. A group of wealthier citizens pooled their money together to provide the funding for those loans.

More recently, online crowdfunding began at the start of this century. In 2003, ArtistShare became the first crowdfunding website, allowing people to collectively fund the efforts of artists. At the time, the platform used the term “fan-funding” rather than crowdfunding to describe its mission.

In 2006, entrepreneur Michael Sullivan coined the term “crowdfunding,” using it to describe an ultimately failed video-blog project for which he was seeking backers.

Crowdfunding began to move into the mainstream in 2008, with the launch of Indiegogo, quickly followed by Kickstarter and GoFundMe. Many other crowdfunding platforms have since emerged, and these websites allow supporters to help people build projects or businesses, but they do not receive equity in return.

In 2012, President Barack Obama signed into law the Jumpstart Our Business Startups (JOBS) Act, which included a provision allowing equity crowdfunding. This permitted early-stage businesses to sell securities to raise funds via online platforms. The SEC followed up with the adoption of Regulation Crowdfunding to oversee the crowdfunding provisions included in the JOBS Act.

It’s important to bear in mind that crowdfunding was never meant solely for entrepreneurs. Historically speaking, across cultures, various types of group funding mechanisms have long existed. Even today, digital crowdfunding campaigns aim to help individuals with a range of financial needs, including charitable causes, personal emergencies, arts projects, as well as social or political organizations.

How Does Crowdfunding Work?

In general, crowdfunding works by allowing multiple people to contribute money to a common cause. To launch a campaign, an entrepreneur, artist, or other individual or entity will set up an account on an online crowdfunding platform.

Instead of presenting their product or service and their business plan to professional investors like venture capital firms, they’ll share it with the public and appeal for funds from them. The entrepreneurs will typically select a time period during which the investors can put money into the campaign to help it achieve its crowdfunding goal.

Crowdfunding is not a loan, in the traditional sense. The entrepreneur does not get the money they need to launch or scale their business from a lender. Instead, they tap into capital markets sourced from a group of people, which can include people they know as well as strangers.

With crowdfunding, anyone can invest, but there are limits on the amount that can be invested in Regulation Crowdfunding during a 12-month period. These limits reflect their net worth and income.

Here’s a brief look at how crowdfunding works:

•   If either your annual income or net worth is less than $107,000 you can invest up to the greater of either $2,200 or 5% of the lesser of your annual income or net worth during any 12-month period.

•   If both your annual income and net worth are equal to or more than $107,000 you can invest up to 10% of your income or net worth, whichever is less but not more than $107,000 during any 12-month period.

If you’re an accredited investor, there are no limits on how much you can invest. An accredited investor has earned income of at least $200,000 ($300,000 for married couples) in each of the two prior years and a net worth of over $1 million. Individuals who hold certain financial professional certifications can also get accredited investor status.

Crowdfunding vs IPO

It’s important to note that crowdfunding is not the same as launching an Initial Public Offering (IPO). IPOs involve taking a company public and offering shares to investors through a new stock issuance. This is another way businesses can raise capital.

The IPO process begins with getting an accurate business valuation. Once a company goes public, an IPO lock-up period prevents insiders who already own shares from selling them for a certain time period. This period may last anywhere from 90 to 180 days. When it’s over, investors can buy and sell shares of the company on public exchanges.

For businesses, an IPO could be an effective way to raise capital if there’s sufficient demand among investors who are interested in buying stock at IPO price. Meanwhile, IPO investing may be attractive to investors who are interested in getting on the ground floor of start-ups and early-stage companies.

How Many Types of Crowdfunding Are There?

There are different types of crowdfunding you can use to raise capital for your business. Each one works differently, though entrepreneurs may choose to use one or all of them for business fundraising. Here’s a closer look at how the various types of crowdfunding work.

Rewards-Based Crowdfunding

Rewards-based crowdfunding allows you to raise capital from the crowd in exchange for some type of reward. For example, say you’re launching a start-up that produces eco-friendly water bottles. In exchange for funding your campaign, you may choose to offer your backers samples of your product.

This type of crowdfunding can be helpful for testing the waters, so to speak, to gauge interest in your product. If your campaign succeeds, that could be a sign that there’s sufficient consumer interest in your offerings. But if your efforts to raise capital fizzle, it could mean your idea needs some tweaking.

Donation-Based Crowdfunding

Donation-based crowdfunding allows you to raise funds on a donation basis, with no rewards offered.

With this type of crowdfunding, you’re asking people to give money to your cause, e.g., rebuilding your home after a natural disaster or paying down medical bills. Succeeding with this type of crowdfunding campaign may depend less on the product or service you’re trying to launch than on the story behind your business.

Equity Crowdfunding

Equity crowdfunding allows you to raise capital for your business by offering unlisted shares or equity in your business to investors. This is the type of crowdfunding that falls under the Regulation Crowdfunding heading.

Equity crowdfunding can be better than rewards-based or donation-based crowdfunding if you need to raise large amounts of money for your business. The tradeoff, however, is that you have to be sure that you’re observing SEC regulations for launching this type of campaign, and you’ll need to spend time carefully determining the value of your business.

Peer-to-Peer Lending

Peer-to-peer (P2P) lending is another type of crowdfunding that allows businesses to raise capital through pooled loans. With this kind of crowdfunding, you borrow money from a group of investors. You then pay that money back over time with interest.

Getting a peer-to-peer loan may be preferable if you’d rather not give up equity shares in the business or deal with regulatory issues. And a P2P loan may be easier to qualify for compared to traditional business loans.

There is, however, the cost to consider. If you have a lower credit score, you could end up with a higher interest rate which would make this type of loan more expensive.

Pros and Cons of Crowdfunding

Relying on different crowdfunding methods can benefit businesses in a number of ways. Companies may lean toward crowdfunding in lieu of other financing methods, including debt financing with loans, or equity financing through angel investors or venture capitalists. There are, however, some potential drawbacks associated with crowdfunding for business. Here’s a quick rundown of how both sides compare.

Crowdfunding Pros

•   Raise capital without trading equity. Venture capital and angel investments require businesses to trade equity or ownership shares for capital. Depending on the types of crowdfunding you’re using, you may not have to give up any ownership to get the capital you need.

•   Increased visibility. Launching a crowdfunding campaign online through a funding platform and/or social media could help attract attention from investors and potential clients or customers alike, increasing brand awareness.

•   Get funding when you can’t qualify for loans. If you’re having trouble getting approved for a business loan or start-up loan, crowdfunding could help you access the capital you need without having to meet a lender’s strict standards.

Crowdfunding Cons

•   Requires time and effort. Launching a successful crowdfunding campaign means doing your research to understand who your campaign is likely to reach and what kind of response it’s likely to get. In that sense, it can seem more complicated than filling out a loan application.

•   No guarantees. Using crowdfunding to raise capital for your business is risky because there’s no guarantee that your campaign will attract the type or number of investors you need. It’s possible that you may put in a lot of work to promote a campaign only to come up short with funding.

•   Fees. Crowdfunding platforms typically charge fees — for example, a percentage of the money raised — to launch and run a campaign. The fees can vary from platform to platform but it’s important to factor the costs in if you’re considering this fundraising method.

•   Scams. Owing to the proliferation of crowdfunding platforms, some scammers have found ways to defraud potential investors.

💡 Quick Tip: Newbie investors may be tempted to buy into the market based on recent news headlines or other types of hype. That’s rarely a good idea. Making good investment choices shouldn’t stem from strong emotions, but a solid strategy.

How to Decide If Crowdfunding Is Right for Your Business

If you look at some of the most successful crowdfunding examples, you’ll see that it’s possible for companies to raise large amounts of capital this way. Some of the most successful crowdfunding campaigns, in terms of outpacing their original funding goals, include numerous crypto- and blockchain-related projects, entertainment (such as movies, video games, and even novels), wind farms, solar-powered cars and more.

•   The Micro, a 3D printer that raised $3.4 million in 11 minutes, easily surpassing its original $50,000 fundraising goal

•   Reading Rainbow, which raised over $5 million and broke the Kickstarter record for having the most backers of any project

•   Pono, which met its $800,000 goal within a day of campaign launch and went on to raise more than $6 million

•   Pebble smartwatch, which with more than $10 million raised is the most funded Kickstarter campaign of all time

Whether crowdfunding, an IPO, or some other source of capital is right for your business depends on how much capital you need to raise, whether you’re interested in or able to qualify for loans, and what types of crowdfunding you’re interested in. Weighing the pros and cons and comparing crowdfunding to other types of equity and debt financing can help you decide what may work best for your business.

The Takeaway

Crowdfunding involves raising capital for a business, the arts, or other ventures by soliciting a large number of small investors. Crowdfunding can also have appeal for investors as well, though it’s important to understand how SEC regulations work. It has pros and cons for both entrepreneurs and investors.

If you’re interested in funding up-and-coming companies without having to observe net worth and income requirements, you can consider a number of different avenues.

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

Do you have to pay back crowdfunding money?

Generally no. People contribute money to the business or cause, without the expectation of being repaid. In the case of debt-based crowdfunding, where the capital supplied is structured more like a loan, those funds would be repaid according to the terms investors agreed to.

What are four kinds of crowdfunding?

There are generally four common types of crowdfunding. Donation-based crowdfunding is when people donate money without expecting anything in return (reward-based means backers get a product or service in exchange for capital). Equity crowdfunding allows investors to get shares in the enterprise. Debt-based crowdfunding is like a collective loan, which has to be repaid with interest.

What is the downside of crowdfunding?

One downside of crowdfunding is that, while it can be easy to set up a campaign, it takes a lot of effort and energy to promote it, sustain it, and get enough attention that your crowdfunding campaign takes off. Crowdfunding can also include substantial fees — and there’s always the risk that your endeavor won’t raise enough money.

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/oatawa

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.

Investing in an Initial Public Offering (IPO) involves substantial risk, including the risk of loss. Further, there are a variety of risk factors to consider when investing in an IPO, including but not limited to, unproven management, significant debt, and lack of operating history. For a comprehensive discussion of these risks please refer to SoFi Securities’ IPO Risk Disclosure Statement. This should not be considered a recommendation to participate in IPOs and investors should carefully read the offering prospectus to determine whether an offering is consistent with their investment objectives, risk tolerance, and financial situation. New offerings generally have high demand and there are a limited number of shares available for distribution to participants. Many customers may not be allocated shares and share allocations may be significantly smaller than the shares requested in the customer’s initial offer (Indication of Interest). For more information on the allocation process please visit IPO Allocation Procedures.

Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.

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

SOIN-Q225-100

Read more
May
30
2025
Why is the U.S. Dollar the World's Reserve Currency?

How the Dollar Became the World’s Reserve Currency

By | Growing Wealth, invest, Investing | Comments Off on How the Dollar Became the World’s Reserve Currency

The U.S. dollar bears a lot of responsibility when it comes to global finance: It’s the currency kept on hand by central banks and other major financial institutions around the world to make transactions and investments, and to repay debts overseas. The U.S. dollar is also the currency in which the world prices and trades vital commodities like gold and oil. And buyers and sellers in every country have to keep large amounts of U.S. dollars on hand to pay for them.

Historians disagree on exactly when the dollar became the reserve currency of the world. Some say the change took place right after the First World War, others say it happened closer to 1929, at the outset of the Great Depression. But all are in agreement that as the Second World War drew toward a conclusion in 1944, the U.S. dollar had unseated the British pound as the world’s undisputed reserve currency.

Key Points

•   The U.S. dollar became the world’s reserve currency due to the U.S. economy’s strength, the British pound’s decline, and the Bretton Woods agreement.

•   World War II significantly weakened the British economy, leading to the dollar’s dominance and the establishment of fixed exchange rates.

•   The Bretton Woods agreement in 1944 pegged the U.S. dollar to gold and required other countries to maintain fixed exchange rates with the dollar.

•   Today, the U.S. dollar dominates global trade, with 59% of non-U.S. bank reserves held in dollars, and is seen as a safe investment.

•   Factors sustaining the dollar’s status include the U.S. economy’s stability, low yields on Treasuries, and its widespread use in global transactions.

The Pound vs the Dollar

The U.S. dollar as we know it didn’t actually exist until 1913, under the Federal Reserve Act of 1913, which created the Federal Reserve System.

The new central bank was created to set monetary policy and stabilize the U.S. currency, which had been issued based on bank notes issued by a number of individual banks.

At that point, the British pound was the world’s reserve currency. Though the U.S. economy was the largest in the world when World War I started in 1914, Britain remained at the center of the world’s trade, and most international transactions took place in British pounds. Like most countries’ currencies at the time, the British pound was backed by gold.

World War I changed all of that. The fighting was so ferocious, so widespread, and so costly that many countries had to deviate from that gold standard just to pay their armies.

Great Britain took the Pound off the gold standard in 1919, and the pound plummeted — which was catastrophic for international merchants and banks that traded primarily in pounds. Some scholars maintain that that was when the dollar became the world’s reserve currency.

Other historians maintain that global trade, especially international debt offerings, were denominated equally in dollars and Pounds until 1929. They even point to data that shows the British Pound was regaining ground on the dollar as the currency of choice for international trade up until 1939. Then World War II began.


💡 Quick Tip: If you’re opening a brokerage account for the first time, consider starting with an amount of money you’re prepared to lose. Investing always includes the risk of loss, and until you’ve gained some experience, it’s probably wise to start small.

World War II and Bretton Woods

Although Germany didn’t surrender to the Allied nations until 1945, the outcome of World War ll was clear by the middle of 1944. In July of 1944, more than 700 delegates from 44 countries met in Bretton Woods, New Hampshire, to negotiate and come to an agreement on the kind of economy that would emerge from the ashes.

The Bretton Woods conference lasted three weeks, and established the U.S. dollar as the currency par excellence for the world. Attendees agreed upon the Bretton Woods system, which established a number of key global economic points:

•   The U.S. agreed that the dollar would be backed by gold, which was priced at $35 an ounce when the agreement took effect.

•   The countries who signed the agreement promised that their central banks would establish fixed exchange rates between their own currencies and the U.S. dollar. If their currency weakened, their central bank would buy up the currency until its value stabilized relative to the dollar.

On the other hand, if the country’s currency grew too strong compared with the dollar, their central bank would issue more currency until the price fell and the relationship with the dollar returned to normal.

•   Those countries also promised not to lower their currencies to goose trade. But it allowed them to take steps to increase or decrease the value of their currencies for other reasons, like stabilizing their economy, or to help with post-war rebuilding.



💡 Quick Tip: Newbie investors may be tempted to buy into the market based on recent news headlines or other types of hype. That’s rarely a good idea. Making good choices shouldn’t stem from strong emotions, but a solid investment strategy.

The Dollar Since Bretton Woods

By 1971, the gold owned by the U.S. government had reached a limit at which it could no longer cover the number of dollars in circulation. That’s when President Richard M. Nixon took the step of reducing the U.S. dollar’s comparative value to gold. This led to the collapse of the Bretton Woods system in 1973.

After the system fell, the countries took a wide range of approaches to how they valued their currency, and what policies their central banks would pursue. But the end of the system led to the creation of the foreign exchange or forex market, now the biggest and most active financial market in the world, with a daily trading volume of $6.6 trillion.

While the U.S. dollar — now considered a fiat currency — goes up and down in relation to other currencies every day, it is still the world’s reserve currency, with 59% of all non-U.S. bank reserves denominated in dollars, according to the International Monetary Fund (IMF).

The dollar retains its prominence not because of an international agreement, but because of a broad consensus about the size, strength and stability of the U.S. economy relative to other options. Globally, investors still see U.S. Treasury securities as an extremely safe bet, as is evidenced by their low yields.

The Takeaway

Most of the world’s trade happens in U.S. dollars. But it hasn’t always been that way. And while it’s been preeminent for about a century, the dollar’s status has changed over time. For investors interested in understanding the world’s currencies, the dollar’s rise to prominence has implications for the U.S. economy, as well as many other world economies.

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

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

FAQ

What was the world’s reserve currency before the dollar?

The British pound was the world’s reserve currency before the dollar, and World War I was the catalyst that led to the change from the pound to the dollar.

What is the gold standard?

The gold standard is the idea that one dollar is backed by gold, or one dollar’s worth of gold. The dollar is no longer on the gold standard, and is now considered a fiat currency.

Why does the dollar remain the world’s reserve currency?

The dollar remains the world’s reserve currency largely because of a broad consensus about the size, strength and stability of the U.S. economy relative to other options.

Photo credit: iStock/fizkes

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.


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

SOIN-Q225-112

Read more
May
30
2025
Understanding the Gold Silver Ratio

Understanding the Gold/Silver Ratio

By | Financial Independence, Growing Wealth, invest, Investing | Comments Off on Understanding the Gold/Silver Ratio

The gold-to-silver ratio, also known as the silver-to-gold ratio or “mint ratio,” is a metric that indicates the amount of silver required to buy an ounce of gold. For example, if the gold-silver ratio is 40:1, then it would take 40 ounces of silver to buy one ounce of gold.

This ratio fluctuates daily as the spot price of an ounce of gold and silver changes. This ratio is used by investors determining whether and how they want to invest in precious metals. It’s a measurement that’s been around for thousands of years. Understanding the two assets’ price relationship allows investors, governments, and manufacturers to compare and trade gold and silver in real-time.

Key Points

•   The gold-to-silver ratio indicates the amount of silver needed to buy an ounce of gold.

•   The ratio helps investors assess the relative value of gold and silver.

•   A higher ratio suggests silver may be undervalued.

•   A lower ratio suggests gold may be undervalued.

•   The ratio fluctuates daily based on spot prices.

How Is the Gold-Silver Ratio Calculated?

IInvestors calculate the gold-silver ratio by dividing the price of one ounce of gold by the price of one ounce of silver: e.g., how many ounces of silver equal one ounce of gold. For example, if one ounce of silver is $20 and one ounce of gold is $1,600, then the gold-silver ratio would be 80:1. And note, too, that the ratio is actually swapped when expressed as integers (for example, 80:1 expresses the silver-to-gold ratio, rather than the gold-to-silver ratio). That is, however, the common way it’s expressed.

Unlike other physical items, precious metals are weighed by the troy ounce, an historic unit of measurement dating back to the Middle Ages equaling roughly 31.1 grams.

By comparison, the standard ounce equals about 28.35 grams. The price of one troy ounce of gold and silver fluctuates daily based on the spot price or current price at which the metal is trading.

Whereas most precious metals and commodities have futures contracts traded on the market, the spot price uses real-time price data. Premiums, or additional seller fees added to the price by metal retailers and merchants do not factor into the spot price or the gold-silver ratio.


💡 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.

What Is the Historical Gold-Silver Ratio?

Today, the gold-silver ratio fluctuates daily. Before the 20th century, however, governments set the ratio between the two metals as part of their monetary policy, with many relying on a bi-metallic standard. The U.S. government set a gold-silver ratio of 15:1 with the Coinage Act of 1792, and adjusted the standard to 16:1 in 1834.

During the 20th century, nations started to migrate away from the bi-metallic currency standard and for some off the gold standard entirely to fiat currencies. This created more volatility in the metal prices.

Since then, gold and silver prices have traded independently of one another as alternative assets in the free market, resulting in a fluctuating gold-silver ratio.

When the United States abandoned the gold standard in 1971, the gold-silver ratio was 20.54:1. In 1985, it reached 51.68:1 and hasn’t fallen below that level since. It has climbed steadily upward since 2011, reaching an average of around 100 as of May 2025.

Within each year, however, there is significant day-to-day volatility. The ratio hit a record high of 124:1 in March 2020.

Recommended: 7 Investment Opportunities in 2023

Why Does the Gold-to-Silver Ratio Matter?

The gold-silver ratio can be useful to both traders and consumers of precious metals.

Traders

Investors focused on commodities or hard assets keep a close eye on the gold-silver ratio. When the gold-silver ratio is higher than expected, this signals to analysts and traders that silver’s price may be undervalued relative to gold. Conversely, an extremely low number could indicate that gold is undervalued.

Movement in the ratio may also shed light on the current demand or market sentiment toward either metal. A tightening of the ratio may indicate higher silver demand or lower gold demand. Investors in precious metals may compare this ratio to the current supply and demand of each asset to determine whether the fundamentals warrant the price change or if the ratio reflects heightened price speculation.

Consumers

For manufacturers purchasing precious metals such as gold and silver en masse to produce electronics and various consumer goods, the gold-silver ratio may help determine whether or not it’s a good time to buy more metal quantities or buy a futures contract that could offer a more favorable price.

This is a common strategy among various industries that rely heavily on imported materials to produce goods. Companies often hire in-house traders, analysts, or outside consultants to determine price forecasts of required commodities and will buy when the market is favorable and hedge when the outlook is less optimistic.


💡 Quick Tip: Distributing your money across a range of assets — also known as diversification — can be beneficial for long-term investors. When you put your eggs in many baskets, it may be beneficial if a single asset class goes down.

Can You Trade the Gold-Silver Ratio?

The gold-silver ratio is used in investing and trading to determine when one metal is undervalued or overvalued and thus a good value investment. However, like any other security, commodities carry some risks for investors.

Sometimes precious metals are extremely volatile and experience wild price swings, and sometimes gold and silver experience long periods of minimal price movement and volatility compared to other types of investments such as equities, commodities, and cryptocurrency. In fact many investors consider precious metals a store of wealth and allocate to it as part of their investors’ long-term investment portfolios.

The Takeaway

The gold-silver ratio helps investors understand the price of an ounce of gold versus the price of silver. Measuring one asset against another is one way to determine an asset’s value, and understanding the ratio, and the direction it’s moving, can help you make decisions about any precious metals allocations within your portfolio.

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

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

FAQ

What is the gold-silver ratio?

The gold-silver ratio is a metric that indicates the amount of silver required to buy an ounce of gold. For example, if the gold-silver ratio is 40:1, then it would take 40 ounces of silver to buy one ounce of gold.

How is the gold-silver ratio calculated?

The gold-silver ratio is calculated by dividing the price of one ounce gold by the price of one ounce of silver. For example, if one ounce of silver is $20 and one ounce of gold is $1,600, then the ratio would be 80:1

How is the gold-silver ratio used by investors?

The gold-silver ratio can signal to analysts or traders that precious metal prices may be over or undervalued. It may also be an indicator of market sentiment.

Photo credit: iStock/fizkes

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.

Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.

An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. This and other important information are contained in the Fund’s prospectus. For a current prospectus, please click the Prospectus link on the Fund’s respective page. The prospectus should be read carefully prior to investing.
Alternative investments, including funds that invest in alternative investments, are risky and may not be suitable for all investors. Alternative investments often employ leveraging and other speculative practices that increase an investor's risk of loss to include complete loss of investment, often charge high fees, and can be highly illiquid and volatile. Alternative investments may lack diversification, involve complex tax structures and have delays in reporting important tax information. Registered and unregistered alternative investments are not subject to the same regulatory requirements as mutual funds.
Please note that Interval Funds are illiquid instruments, hence the ability to trade on your timeline may be restricted. Investors should review the fee schedule for Interval Funds via the prospectus.

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


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

SOIN-Q225-111

Read more
May
30
2025

SoFi Investor Insights Survey 2023: 85% of Investors Plan to Change How They Invest in 2023

By | Growing Wealth, invest, Investing | Comments Off on SoFi Investor Insights Survey 2023: 85% of Investors Plan to Change How They Invest in 2023

This article is part of a series based on an Investor Insights Survey regularly conducted by SoFi to gauge investor sentiment and their outlook for the year. The survey for this article was conducted in 2022. For the latest survey, see the SoFi Investor Insights Survey for 2025.

The Investor Insights Survey series offers insights into how investors have responded over time to changes in the economy and how investors themselves are changing, from the types of assets they’re choosing, to the investing habits they’re developing, to how they manage investing stress.

Keep in mind that while investors’ outlook may change year-to-year, a long-term investing strategy with a diversified portfolio may allow you to ride out short-term setbacks in the market. It’s important to remember that investing decisions should always align with your own personal goals, time horizon, and tolerance for risk.

We don’t need to tell you that 2022 has been a challenging year for investors — what with interest rates soaring, the stock market plummeting, and the onset of another crypto winter.

What you might be surprised to know: There’s some good news here. In a recent survey, we asked 1,000 investors how they managed their portfolios in 2022, how they’re feeling about the market, and what their predictions are for 2023*.

While you might expect some anxiety or pessimism (and there was some), investors overall remain positive after a difficult year. Here’s what they had to say about stocks, crypto, how they coped with investing stress — and more.

Note: We rounded percentages to the nearest whole number, so some data sets may not add up exactly to 100%.

*This Investor Insights Survey was completed on October 5, 2022 and was conducted using a general U.S. population data set of 1,000 adults age 18 and older. Survey did not include known SoFi members or a SoFi member data set.

Key survey facts and findings

2022 SoFi Investing Survey

Before we dig into the details, here are some of the standout results.

•  93% of survey respondents continued to invest, despite the current market conditions.

•  Men were more likely to invest than women, and invest more money as well.

•  78% of crypto investors are generally optimistic that values will rebound.

•  And remarkably: 1 in four (25%) of investors had no regrets about 2022

Last highlight: How did investors cope with stress in 2022? Hobbies!

In general, investors stayed the course in 2022.

While the market hasn’t been kind to investors over the past year, it certainly hasn’t stopped many of them from investing. 93% of our respondents kept invested in 2022.

2022 SoFi Investing Survey

93% of respondents have invested in 2022

When it comes to the amount people have invested so far this year, men were more likely than women to invest — and invest more money when they did:

•  $0 – $499: 24%

◦  Male: 44%

◦  Female: 56%

•  $500 – $999: 23%

◦  Male: 50%

◦  Female: 49%

•  $1000 – $4999: 26%

◦  Male: 57%

◦  Female: 43%

•  $5000+: 21%

◦  Male: 68%

◦  Female: 32%

Many investors are still hoping to cash in on crypto.

It’s no secret that the crypto market has taken a beating, especially with the crash of FTX . Nonetheless, people are still holding on to their crypto investments.

45% of respondents say they have cryptocurrency in their portfolios. 65% of them even said they invested more than $500 in 2022. Most crypto investors (65%) are male and under the age of 55.

45% of respondents have cryptocurrency in their investment portfolio.

Over the past few years, cryptocurrency has become a more widely-accepted investment vehicle. Many investors have invested in crypto this year. Of these investors:

•  65% have invested $500 or more in 2022

•  Less than 3% haven’t invested any money into crypto in 2022

•  Only 7% of respondents aged 55 or older are invested in crypto

•  65% are male

And of those who invested $5000 or more in crypto in 2022, 80% are male.

While the crypto market is currently in a steep decline, most investors with cryptocurrency in their portfolios have invested at least $500 in 2022. Here’s what crypto investing looks like in 2022.

•  $0 – $499: 32%

•  $500 – $999: 23%

•  $1000 – $4999: 26%

•  $5000+: 16%

Only 3% of investors who have cryptocurrency in their portfolio haven’t invested anything into cryptocurrency this year.

78% of investors are either confident or cautiously optimistic the crypto market will bounce back

2022 SoFi Investing Survey
The crypto market remains volatile as rumors of a global recession continue to swirl. Despite this financial climate, most investors are hopeful of the future.

Of the 45% of respondents who have crypto in their portfolio:

•  78% of investors are at least “cautiously optimistic” that the crypto market will bounce back

•  Only 5% of respondents believe crypto is “dead.”

Overall, the crypto market still has plenty of believers. Whether that optimism will pay off remains to be seen.

Nearly 90% of people have invested in non-stock market-related assets.

2022 SoFi Investing Survey

Non-traditional market assets are on the rise due to stock market volatility. In fact, nearly 90% of our respondents invested money into a non-stock-market-related asset. Crypto was the most common non-traditional investment choice.

Certificate of deposits (CDs), Real estate investment trusts (REITs), and gold were the next most popular options. One respondent even told us they invested in Magic the Gathering trading cards—definitely a niche investment choice, but representative of investments that aren’t directly impacted by the stock market.

Here’s a full list of all the responses we received:

•  Certificate of deposits (CDs): 24%

•  Real estate investment trusts (REITs): 20%

•  Gold or other commodities: 20%

•  Crypto: 48%

•  Private equity funds: 22%

•  Government bonds: 19%

•  Other or none: 11%

Here’s what investors’ portfolios look like right now.

2022 SoFi Investing Survey

Nearly a third (32%) of respondents have less than $25,000 in their investment portfolio. Here’s a breakdown:

•  $0 – $24,999: 32%

•  $25,000 – $49,999: 22%

•  $50,000 – $99,999: 21%

•  $100,000 – $199,999: 12%

•  $200,000+: 14%

Most investors (nearly 75%) also invest highly into stocks. Cryptocurrency, mutual funds, and cash were the next most popular investment types.

•  Stocks: 72%

•  Cryptocurrency: 45%

•  Mutual funds: 41%

•  Cash or cash equivalents: 38%

•  Bonds: 31%

•  Exchange-traded funds (ETFs): 30%

•  Real estate: 23%

•  Index funds: 21%

•  Private equity: 14%

•  Other: 2%

Market volatility has impacted investors’ purchase and investment decisions.

Market volatility has impacted investors at all ages and stages, but it hasn’t slowed them down. Not only have many people continued to invest during these uncertain times, market volatility has inspired investors to adjust their strategies and spending.

More than a third of respondents (37%) say market volatility has caused them to make impulsive investment decisions.

2022 SoFi Investing Survey
Market volatility has caused some investors to respond emotionally, with over a third of respondents (37%) saying market volatility has caused them to make impulsive investment choices.

31% of these impulse decisions were made by investors aged 18-24. In fact, the younger you are, the more likely you are to make impulsive or emotion-driven financial decisions. Here’s the age breakdown of those who made an impulse move due to market volatility:

•  18-24: 31%

•  25-34: 23%

•  35-44: 23%

•  45-54: 17%

•  Older than 54: 7%

Of all the people who made impulsive investment decisions, 54% of our respondents say they’re happy with their choice. Specifically, only 20% of them regret them.

Maybe these rash decisions taught investors important lessons about the market. Maybe some are confident they’ll rebound.

One third of respondents (33%) had to cancel or delay plans or purchases in 2022 because of money lost on investments.

Many investors’ finances were impacted by the bear market: 33% said they had to cancel or delay plans in 2022 because they lost money on investments.

Ultimately, these mistakes prevented some investors from going on vacations, buying homes, and starting businesses. When we asked those who had to cancel or delay plans specifically which plans were impacted, here’s what they said:

•  Going on a trip: 27%

•  Making a major purchase (home, vehicle, etc.): 22%

•  Home renovations: 19%

•  Starting a business: 15%

•  Growing my family (getting married, having a baby, etc.): 10%

•  Retiring: 6%

•  Other: 2%

Over half of respondents did not make any major investment changes.

2022 SoFi Investing Survey
Market volatility still isn’t scaring investors away. Over half, or 55% of respondents held on to their assets during this year’s economic crisis.

When we asked investors how they reacted to market swings this year:

•  29% said they bought a lot of investment

•  17% said they sold a lot of investments

•  55% said they did not buy or sell investments

The investors that did sell some of their assets (45%) ultimately relinquished less than half of their portfolio. Only 7% sold 76% or more of their total investments.

Many investors have investment regrets about 2022 and are looking toward 2023.

With 2023 on the horizon, many investors are planning to adjust their strategies based on the lessons they learned this year.

People are split on how inflation makes them feel about their investment strategies in 2022:

Inflation can be a thorn in the side of investors. Our respondents were split in how they approached inflation in 2022:

•  39% of respondents said they want to invest more, despite inflation.

•  33% said inflation makes them want to leave their investments alone.

•  28% said inflation makes them want to invest less.

Of the 39% who want to invest more, Gen Z appears to be the most optimistic (27% of that subgroup are between the ages of 18 and 24).

One thing is for certain — confident investors will continue to engage with the market despite inflation.

In general, people have mixed emotions about their investments in 2022, but the most common feeling was optimism (26%).

2022 SoFi Investing Survey

There was also some variance in how respondents feel about their investments. Most were optimistic, and fewer felt stressed, disappointed, and content.

•  Optimistic: 26%

•  Stressed: 19%

•  Disappointed: 19%

•  Content: 15%

•  Excited: 14%

•  Regretful: 5%

•  Angry: 3%

Very few felt regretful or angry, which could be welcome signs of more market participation in the coming year.

While 5% of respondents feel regretful, a full 25% — or one in four investors — have zero regrets about 2022.

That said, 75% of respondents have some type of investment regret this year. And many have learned major lessons this year. Mainly, many wish they had bought more assets at lower prices.

Some of the most common investing regrets respondents expressed:

•  They should’ve bought more crypto when prices were at their lowest (18%)

•  They should’ve bought more stock when the market started to decline (16%)

•  They should’ve sold stock before the market started to decline (15%)

Not everyone was regretful about their investing activities: As noted, 25% of respondents have no regrets at all. And of those that have no regrets, 60% are 45 or older.

Here’s the breakdown of the investment regrets respondents had this year:

•  I have no regrets: 25%

•  I should have bought more crypto while prices were their lowest: 18%

•  I should have bought more stock when the market started tanking: 16%

•  I should have sold stock before the market started tanking: 15%

•  I should have sold my crypto early in the year: 10%

•  I should have bought gold: 9%

•  I should have held onto stock when the market started tanking: 7%

People use a variety of tactics to cope with the stress of market fluctuations:

We got a lot of interesting responses about how investors have dealt with the stress that came from market fluctuation.

•  41% took their mind off their portfolios by engaging in hobbies.

•  37% did their own investment research.

•  31% of them simply stopped checking their balances.

•  22% of respondents talked with their brokers for reassurance. 17% participated in online forums.

And on a positive note, 14% said the markets simply didn’t stress them out.

Nearly a third of respondents (30%) check their investment portfolios every day. And 75% check at least once a week.

Although one coping mechanism of market stress was to avoid checking balances, 30% of our respondents (65% of whom were male) check their investments every day.

Most respondents check their portfolio’s performance at least once a week. Here’s how often investors are checking their investment performance.

•  Every day: 30%

•  2 to 3 times a week: 29%

•  Once a week: 17%

•  A few times a month: 12%

•  Once a month: 7%

•  Less than once a month: 7%

Looking forward to 2023

2022 is almost over and many investors are already looking forward to next year. Let’s see how our respondents plan to adjust their strategies in 2023.

85% of respondents plan to make some changes to how they invest in 2023.

While most respondents have agreed to change their plans, 21% of them want to invest more into the market.

Here are other ways people plan to change their investment strategies next year:

•  19% plan to do more of their own investment research

•  14% plan to work with a financial advisor

•  10% plan to buy into a new type of investment

•  9% plan to change the asset allocations in their portfolio

•  6% plan to decrease how much they invest overall

•  5% plan to use a robo-advisor or automated investing

•  15% don’t plan to change anything.

If this year has taught investors anything, it’s to adapt their strategies and stay optimistic. When asked how they planned to change their strategies, here is how investors responded.

Key Takeaways

Historically, market volatility tends to even itself out, and investment values typically rebound. Investors’ attitudes and behaviors tend to mirror this pattern. While markets have been low in 2022, there are signs of recovery as the year draws to a close, and people appear to be optimistic about an upswing and plan to continue investing.

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.


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

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.

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.

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.

An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. This and other important information are contained in the Fund’s prospectus. For a current prospectus, please click the Prospectus link on the Fund’s respective page. The prospectus should be read carefully prior to investing.
Alternative investments, including funds that invest in alternative investments, are risky and may not be suitable for all investors. Alternative investments often employ leveraging and other speculative practices that increase an investor's risk of loss to include complete loss of investment, often charge high fees, and can be highly illiquid and volatile. Alternative investments may lack diversification, involve complex tax structures and have delays in reporting important tax information. Registered and unregistered alternative investments are not subject to the same regulatory requirements as mutual funds.
Please note that Interval Funds are illiquid instruments, hence the ability to trade on your timeline may be restricted. Investors should review the fee schedule for Interval Funds via the prospectus.


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

SOIN-Q424-034

Read more
Close modal

See what SoFi can do for you and your finances.

Select a product below and get your rate in just minutes.

Student Loan
Refinancing

Personal
Loans

Online
Investments

Other

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or other eligible status, be residing in the U.S., and meet SoFi's underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates reserved for the most creditworthy borrowers. If approved, your actual rate will be within the range of rates at the time of application and will depend on a variety of factors, including term of loan, evaluation of your creditworthiness, income, and other factors. If SoFi is unable to offer you a loan but matches you for a loan with a participating bank, then your rate may be outside the range of rates listed above. Rates and Terms are subject to change at any time without notice. SoFi Personal Loans can be used for any lawful personal, family, or household purposes and may not be used for post-secondary education expenses. Minimum loan amount is $5,000. The average of SoFi Personal Loans funded in 2023 was around $33K. Information current as of 2/26/24. SoFi Personal Loans originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org). See SoFi.com/legal for state-specific license details. See SoFi.com/eligibility for details and state restrictions.

✝ To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

©2026 Social Finance, LLC All rights reserved.
TLS 1.2 Encrypted
Equal Housing Lender