Mar
16
2025

What Is an Annuity and How Does It Work?

By | Growing Wealth, invest, Investing, Terminology | Comments Off on What Is an Annuity and How Does It Work?

An annuity is a contract with an insurance company where the buyer typically pays a lump sum premium to purchase the annuity, with the promise of a steady stream of income when they retire.

That said, annuity terms and conditions vary widely. In some cases, the individual might pay premiums over time in order to purchase the annuity. Some annuities make fixed payments; some are variable. Some annuities also offer an investment component.

Annuities come with a number of pros and cons. The upside is the potential for guaranteed lifetime income. The downside is that these contracts can be immensely complex, and often come with hidden fees and terms.

Key Points

•   Annuities are a type of insurance contract that investors can purchase with a lump sum premium, or with a series of premium payments.

•   In exchange for this cash investment, annuities are designed to provide retirees with guaranteed income for a period of time, or for a person’s lifetime.

•   Annuity features vary widely, and it’s important to understand the terms governing payouts, payout periods, death benefit, and more.

•   The addition of certain conditions, like inflation protection, can add to the cost of an annuity, so it’s important to know what you’re paying for.

How Does an Annuity Work?

When purchasing an annuity, the account holder begins making premium payments, either over time or as a lump sum. The years of paying into an annuity are known as the accumulation phase. Sometimes, the payments can be made from an IRA or 401(k).

The money paid into the annuity account may be invested into the stock market or mutual funds, or it might earn a fixed interest rate over time.

Money paid into the annuity typically can’t be withdrawn for a certain amount of time, called the surrender period.

After the accumulation phase is over, the company begins making regular income payments to the annuity owner. This is known as the distribution phase, or amortization period, when the annuitant (the annuity holder) can withdraw funds from the annuity.

The annuitant can choose the length and start date of the distribution phase. For example, you might choose to receive payments for 10 years, or perhaps you prefer guaranteed payments for the rest of your life. Terms and fees depend on the structure of the distribution phase.

In many cases, withdrawals can only begin after the surrender period, and when the annuity holder is at least 59 ½. Before age 59 ½ the withdrawal would be considered an early withdrawal, and subject to a penalty (in addition to taxes).

Types of Annuities

The main annuity categories are fixed, variable, and indexed, but within those types there are various options and subcategories. The most important thing to remember about these contracts is that the terms and conditions vary widely; be sure to ask questions and fully understand what you’re buying.

Fixed Annuities

The principal paid into a fixed annuity earns a fixed amount of interest, usually around 5%. Although the interest is typically not as high as the returns one might get from investing in the stock market, this type of annuity provides predictable and guaranteed payments.

Variable Annuities

This type of annuity lets buyers invest in different types of securities, usually mutual funds that hold stocks and bonds. Although this can result in a higher payout if the securities do well, it also comes with the risk of losing money. Some variable annuities do come with a guarantee that investors will at least get back the money they put in.

Indexed Annuities

An indexed annuity is pegged to a particular index, such as the S&P 500 stock market index. How the index performs will determine how much the annuity pays out. Usually, indexed annuities cap earnings in order to ensure that investors don’t lose money.

For example, they might cap annual earnings at 6% even if the index performed better than that. But then in a bad year, they would pay out 0% earnings rather than taking a loss, and investors would still receive their base payment amount.

Immediate Annuities

With immediate annuities, investors begin receiving regular payments within a year of purchasing the annuity, depending on the terms of the surrender period. Immediate annuities can be expensive, but they offer retirees a way to plan for a more immediate income stream.

Deferred-Income Annuities

This type of annuity, also called a longevity annuity, is for people who are concerned they might outlive their retirement savings. Investors must wait until around age 80 to begin receiving payments, but they are guaranteed payments until they die.

The monthly payouts for deferred-income annuities can be higher than for immediate annuities, but risk is involved. If the investor dies before starting to receive payments, heirs may not receive the money in the annuity account.

Married couples might opt for a joint-life version, which has lower monthly payouts but continues payments for as long as either spouse lives.

Equity-Indexed Annuities

Equity-indexed annuities offer a combination income strategy. Investors receive a fixed minimum amount of income, in addition to a variable amount that’s pegged to a market index. These products provide some guaranteed income, and thus a certain protection against downside risk, but can be expensive.

Fixed-Period Annuities

Fixed period annuities allow buyers to receive payments for a specific number of years.

Retirement Annuities

With retirement annuities, investors pay into the account while still working. Once they retire, they begin receiving payments.

Direct-Sold Annuities

These annuities have no sales commission or surrender charge, making them less expensive than other types of annuities.

Pros of Annuities

There are several reasons people choose to pay into annuities as part of their retirement plan. The upsides of annuities include:

•   Guaranteed and predictable payments: Depending on the annuity, a guaranteed minimum income benefit (GMIB) can be set for a specific number of years or for the buyer’s lifetime. Payments may even be made to a buyer’s spouse or other beneficiary in case of death.

•   Tax-deferred growth: Interest earned on annuity deposits is not taxed immediately. Annuity owners generally don’t pay taxes on their principal investment; they pay income taxes on the earnings portion in the year they receive payments, similar to withdrawals from a 401(k) or IRA.

•   Low involvement: Once the annuity is purchased, the annuity company uses an annuity formula to figure out how much each payment should be and to keep track of account balances. All the investor has to do is pay into the account during the accumulation phase.

•   No investment limits or required minimum distributions: Unlike an IRA or 401(k), there is no limit to the amount of money that can be invested into an annuity. Further, there is no specific age at which investors must begin taking payments (i.e., no required minimum distributions).

•   Option to bolster other retirement savings: For those closer to retirement, an annuity may be a good option if they’ve maxed out their other retirement savings options and are concerned about having enough money for living expenses.

Cons of Annuities

Like any type of investment, annuities come with downsides:

•   Lower potential returns: The interest earned by annuities is generally lower compared to what investors would earn in the stock market or bonds.

•   Penalty for early withdrawals: Once money is invested in an annuity, there can be restrictions on withdrawals. For example, an early withdrawal before age 59 ½ might incur taxes/penalties. Be sure to understand the withdrawal terms of the annuity you own, as well as state regulations.

•   Fees: Annuities can have fees of 3% or more each year. There may also be administrative fees, and fees if the investor wants to change the terms of the contract. It’s important before buying an annuity to know the fees included and to compare the costs with other types of retirement accounts.

•   Death benefit terms: If investors die before they start receiving payments, they miss out on that income. Some annuities include a death benefit (where money invested in the annuity is passed to a beneficiary), but others do not. There may be a fee for passing the money on.

•   Potential to lose savings in certain circumstances: If the insurance company that sold the annuity goes out of business, the investor will most likely lose their savings. It’s important for investors to research the issuer and make sure it is credible.

•   You pay for inflation adjustments: Annuity payments usually don’t account for inflation, but it’s possible to pay for an inflation adjustment for your payouts.

•   Risk: Variable annuities in particular are risky. Buyers could lose a significant amount, or even all of the money they put into them.

•   Complexity: With so many choices, buying annuities can be confusing. The contracts can be dozens of pages long, requiring close scrutiny before purchasing.

What Are Annuity Riders?

When investors buy an annuity, there are extra benefits, called riders, that they can purchase for an additional fee. Optional riders include:

•   Lifetime income rider: With this rider, buyers are guaranteed to keep getting monthly payments even if their annuity account balance runs out. Some choose to buy this rider with variable annuities because there’s a chance that investments won’t grow a significant amount and they’ll run out of money before they die.

•   COLA rider: As mentioned above, annuities don’t usually account for inflation and increased costs of living. With this rider, payouts start lower and then increase over time to keep up with rising costs.

•   Impaired risk rider: Annuity owners receive higher payments if they become seriously ill, since the illness may shorten their lifespan.

•   Death benefit rider: An annuity owner’s heirs receive any remaining money from the account after the owner’s death.

How to Buy Annuities

Annuities can be purchased from insurance companies, banks, brokerage firms, and mutual fund companies. As mentioned, it’s important to look into the seller’s history and credibility, as annuities are a long-term contract.

The buyer can find all information about the annuity, terms, and fees in the annuity contract. If there are investment options, they will be explained in a mutual fund prospectus.

Some of the fees to be aware of when investing in annuities include:

•   Rider fees: If you choose to buy one of the benefits listed above, there will be extra fees.

•   Administrative fees: There may be one-time or ongoing fees associated with an annuity account. The fees may be automatically deducted from the account, so contract holders don’t notice them, but it’s important to know what they are before sealing the deal.

•   Surrender charges: An annuity owner who wants to withdraw money from an account before the date specified in the contract will face a surrender charge.

•   Penalties: Owners who want to withdraw money before age 59 ½ will be charged a 10% penalty by the IRS (in addition to the usual income tax due on the income from the annuity).

•   Mortality and expense risk charge: Generally annuity account holders are charged about 1.25% per year for the risk that the insurance company is taking on by agreeing to the annuity contract.

•   Fund expenses: If there are additional fees associated with mutual fund investments, annuity owners will have to pay these as well.

•   Commissions: Insurance agents are paid a commission when they sell an annuity. Commissions may be up to 10%.

The Takeaway

No matter what stage of life you’re in, it’s not too early or too late to build an investment portfolio. Younger investors may not be ready to buy into an annuity, but they can still start saving for retirement. For those who are considering an annuity as a retirement investment, it’s important to weigh both the pros and cons — as well as the opportunity cost of putting money into an annuity versus other investments.

Ready to invest for your retirement? It’s easy to get started when you open a traditional or Roth IRA with SoFi. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

Easily manage your retirement savings with a SoFi IRA.

🛈 SoFi does not offer annuities to its members, though SoFi Invest offers investments that may provide income through dividends.

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

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

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

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

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

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.

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-Q125-047

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Mar
14
2025
What Are Securities in Finance? How Security Trading Works

What Are Securities in Finance? How Securities Trading Works

By | Growing Wealth, invest, Investing | Comments Off on What Are Securities in Finance? How Securities Trading Works

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

A security can refer to a number of different types of assets, including stocks, bonds, Treasury notes, derivatives, and more. Securities are fungible and can be traded via public as well as private markets.

The three main types of securities, broadly speaking, include: equity securities, where the investor owns a share in an organization; debt securities, where the investor loans capital and earns interest, and derivatives, which are contracts based on the value of an underlying asset.

Securities trading is regulated by the Securities and Exchange Commission, or SEC.

Key Points

•   Securities is a broad term that refers to tradable financial instruments, including stocks, bonds, and derivatives.

•   Equity securities represent ownership in a company, while debt securities (bonds) function as loans, where borrowers pay interest to lenders.

•   Derivatives, such as futures and options, are higher-risk investments linked to underlying assets. These appeal mainly to experienced investors due to their complexity.

•   Trading securities typically occurs on regulated exchanges, with investors using brokerage or retirement accounts to engage in buying and selling activities.

What is a Security?

A security is a tradable type of investment that traders can buy and sell on financial exchanges or other platforms, whether investing online or through a traditional brokerage. Securities have monetary value; buyers and sellers determine their value when trading them.

Securities include different types of asset classes. In general, investors earn money by buying securities at a low price and selling them at a higher one, but there are a range of investing strategies that can include profiting when the price of a security drops, as well as other means.

Here are some common security categories.

Equity Securities

These include stocks and stock mutual funds. Typically traded on exchanges, the price of equity securities rise or fall depending on the economy, the performance of the underlying company that offers the stock (or the companies in the fund), and the sector in which that company or fund operates.

Individual stocks may also pay dividends to investors who own them.

Debt Securities

This group includes bonds and other fixed-income vehicles, where lenders borrow money from investors and pay interest via periodic payments on the investment principal (also called the yield).

Investors can buy bonds from a variety of bond issuers, including: states, local and municipal governments, companies, and banks and other financial institutions. Typically, debt securities pay investors a specific interest rate paid usually twice per year until a maturity date, when the bond expires.

Some common debt securities include:

•   Treasury bills. Issued by the U.S. government, T-Bills are considered among the safest securities.

•   Corporate bonds. These are bonds issued by companies to raise money without going to the equity markets.

•   Bond funds. These types of mutual funds allow investors to get exposure to the bond market without buying individual bonds.

Derivatives

This group of securities includes higher-risk investments like options trading and futures which offer investors a higher rate of return but at a higher level of risk.

Derivatives are based on underlying assets, and it’s the performance of those assets that drive derivative security investment returns.

For example, an investor can buy a call option based on 100 shares of ABC stock, at a specific price and at a specific time before the option contract expires. If ABC stock declines during that contract period, the call option buyer has the right to buy the stock at a reduced rate, thus locking in gains when the stock price rises again.

Derivatives allow investors to place higher-risk bets on stocks, bonds, and commodities like oil or gold, and currencies. Typically, institutional investors, such as pension funds or hedge funds, are more active in the derivative market than individual investors.

Hybrid Securities

A hybrid security combines two or more distinct investment securities into one security. For example, a convertible bond is a debt security, due to its fixed income component, but also has characteristics of a stock, since it’s convertible.

Hybrid securities sometimes act like debt securities, as when they provide investors with a floating or fixed rate of return, as bonds normally do. Hybrid securities, however, may also pay dividends like stocks and offer unique tax advantages of both stocks and bonds.

How Security Trading Works

Securities often trade on public exchanges where investors can buy or sell securities with the goal of making a financial profit.

Stocks, for example, are listed on global stock exchanges and investors can purchase them during market trading hours. Exchanges are highly regulated and expected to comply with strict fair-trading mandates. For example, U.S.-based stock exchanges like the New York Stock Exchange (NYSE) or Nasdaq must adhere to the rules and regulations laid out by Congress and enforced by the U.S. Securities and Exchange Commission (SEC).

Each country has their own rules and regulations for fair and compliant securities trading, including oversight of stocks, bonds, derivatives, and other investment vehicles. Debt instruments, like bonds, usually trade on secondary markets while stocks and derivatives are traded on stock exchanges.

There are many ways for investors to engage in security trading. A few of the most common ones include:

Brokerage Accounts

Once an investor opens a brokerage account with a credentialed investment firm, they can start trading securities.

All a stock or bond investor has to do is fill out the required forms and deposit money to fund their investments. Investors looking to invest in higher-risk derivatives like options, futures, or currencies may have to fill out additional documentation proving their credentials as educated, experienced investors. They may also have to make larger cash deposits, as trading in derivatives is more complex and has more potential for risk.

Some qualified investors with a certain type of brokerage account can engage in margin trading, meaning that they trade securities using money borrowed from the broker. This is a high-risk strategy suitable only for experienced investors; most brokerages have strict rules about who can trade on margin.

Retirement Accounts

By opening a retirement account, through work or a bank or brokerage account, investors can invest in a range of securities, including stocks, mutual and index funds, bonds and bond funds, and annuities.

The type of securities you have access to will depend on the type of retirement account that you have. Workplace plans such as 401(k)s typically have fewer investment choices (but higher limits for tax-advantaged contributions) than IRAs, or Individual Retirement Accounts.

Risks and Considerations

There is always the risk of loss when investing in securities. That said, some securities are riskier than others.

Risk vs. Reward

•   Equities, or stocks, tend to be higher risk investments. Stock markets are known to be volatile and unpredictable. That said, stocks offer the potential for returns; the average historic return of the stock market is about 9% or 10% (or 6% to 7% after inflation).

•   Bonds, by contrast, are lower risk, and provide lower but steady returns versus stocks.

•   Derivatives, like options and futures trading, can be very high risk and these strategies are meant for experienced investors.

When choosing securities for an investment portfolio, it’s important to take into account the risk/reward profile of your investments, as well as whether your asset allocation reflects your risk tolerance. For example, if your portfolio is heavily weighted to stocks, that is likely to increase your risk exposure.

Types of Investments

Because many investors are less experienced at managing a portfolio for the long term, there are certain types of investments that can help investors to manage risk. This is especially true for those who are investing for retirement, and want to protect their savings while maximizing any potential growth. For example:

•   Target-date funds are a type of mutual fund that are geared to be long-term investments, held until a target retirement date is reached. So a 2045 fund is designed to provide a balanced portfolio of securities for investors with a target retirement date in roughly 20 years.

  The fund’s allocation of securities starts out more aggressive (tilted toward stocks), and automatically adjusts over time to become more conservative (tilted toward fixed income) to protect investors’ savings as they near retirement.

•   Robo-advisors are automated portfolios that investors can select based on their personal goals, time horizon, and risk tolerance — the difference being that investors don’t select the securities in these portfolios. A robo portfolio is generally a pre-set mix of ETFs, and the allocation (or mix of securities) is determined by a sophisticated algorithm.

  Because investors can’t change the securities themselves, this helps to prevent impulsive choices, and may mitigate risk over time.

Get Started With Securities Trading

To start trading securities, investors can set up a brokerage account or retirement account, and begin investing as they see fit.

Again, it’s best to start with the end in mind: Decide your investment goals, choose the amount you want to invest, do your due diligence in terms of researching various investment choices (bearing in mind risk levels and fees).

Once the account is funded, the investor can purchase a wide variety of securities in order to create an investment portfolio. Sometimes retirement account investment options can be more limited than a full-service brokerage account.

The Takeaway

There are many different types of securities that investors can purchase as part of their portfolio. Choosing which securities to invest in will depend on several factors, including your financial goals, current financial picture, and risk tolerance.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

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

FAQ

What are the four main types of securities?

The four types of securities are: equity securities (such as stocks), debt securities (bonds and Treasuries), derivatives (higher-risk investments like options), and hybrid securities (such as convertible bonds).

What is a securities investment?

A securities investment is an investment in a security such as stocks, bonds, or derivatives. A security is a tradable type of investment that investors can buy and sell.

What’s the difference between securities and shares?

Stocks, also known as equity shares, are a type of security. The term “securities” refers to a range of different investments, one of which is stocks, or shares in a company.

Are securities an asset?

Yes, securities are a type of financial asset because they hold monetary value.

What are Treasury securities?

Treasuries are debt securities — e.g., bills, bonds, and notes — issued by the U.S. government. Treasuries are considered low risk because the U.S. has never defaulted on its debts.

Photo credit: iStock/paulaphoto

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.

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.

Utilizing a margin loan is generally considered more appropriate for experienced investors as there are additional costs and risks associated. It is possible to lose more than your initial investment when using margin. Please see SoFi.com/wealth/assets/documents/brokerage-margin-disclosure-statement.pdf for detailed disclosure information.

Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Before an investor begins trading options they should familiarize themselves with the Characteristics and Risks of Standardized Options . Tax considerations with options transactions are unique, investors should consult with their tax advisor to understand the impact to their taxes.

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.

SOIN-Q125-076

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Mar
14
2025
woman on laptop on couch

Participating Preferred Stock, Explained

By | Growing Wealth, invest, Investing | Comments Off on Participating Preferred Stock, Explained

You may have heard mention of preferred shareholders or preferred stocks in investment circles. And you may have wondered: How do I get preferred stocks? Preferred stocks are available to individual investors. That being said, there is a type of preferred stocks that may be out of reach to most, and that’s participating preferred stocks.

Here’s a look at what participating preferred stock is, as well as when one might have the option to own participating preferred stock and what the benefits of participating preferred stock are.

Key Points

•   Participating preferred stock combines features of common stock and bonds.

•   Provides fixed dividends and priority in liquidation, plus potential extra dividends.

•   Attracts private equity investors and venture capitalists.

•   Average investors usually cannot access participating preferred stock.

•   Offers additional financial benefits in liquidity events, enhancing investor appeal.

What Is Preferred Stock?

Preferred stock shares characteristics of both common stocks and bonds. Preferred stocks allow investors to own shares in a given company and also receive a set schedule of dividends (much like bond interest payments).

Because the payout is predictable and expected, there isn’t the same potential for price fluctuations as with common stocks – and thus there’s less potential for volatility. But, the shares may rise in value over time.

Recommended: Preferred Stock vs. Common Stock

How Preferred Stocks Work

Shares of preferred stock tend to pay a fixed rate of dividend. Preferred stocks have dividend preference; they’re paid to shareholders before dividends are paid out to common shareholders.

These dividends may or may not be cumulative. If they are, all unpaid preferred stock dividends must be paid out prior to common stock shareholders receiving a dividend.

For example, if a company has not made dividend payments to cumulative preferred stock shareholders for the previous two years, they must make two years’ worth of back payments and the current year’s dividend payments to preferred shareholders before common stock shareholders are paid any dividend at all.

Because of the fixed nature of the dividend, the investments themselves tend to behave more like how a bond works. When an investment pays a fixed and predictable rate of interest, they tend to trade in a smaller and more predictable bandwidth. Compare that to stocks, whose future income stream and total return on investment are less predictable, which lends itself to plenty of price disagreement in the short-term.

Preferred stockholders do not typically enjoy voting rights at shareholder meetings. But, preferred stock shareholders are paid out before common shareholders in a liquidity event.

Key Features of Participating Preferred Stocks

Participating preferred stocks tend to have some key features that may make them more attractive to some investors than other stocks. Here are some examples:

•   Priority in dividend rights: Holders may receive dividends before common stockholders.

•   Liquidation priority and preferrence: If a company goes out of business or is otherwise liquidated, preferred stockholders will get their initial investment back first.

•   Conversion rights: Holders may also have the ability or option to convert their shares into common stock, adding a bit of versatility to the mix.

However, it’s important to keep in mind that each individual company can and does change or define the specifics related to its stock. Nothing is necessarily guaranteed.

Participating Preferred Stocks

Participating preferred stock takes on all of the above features, but they may receive some bonus benefits, such as an additional dividend payment. This additional payment may be triggered when certain conditions are met, often involving the common stock. For example, an additional dividend may be paid out in the event that the dividend paid to common shareholders exceeds a certain level.

Upon liquidation, participating preferred shareholders may receive additional benefits, usually in excess of what was initially stated. For example, they may have the right to get back the value of the stock’s purchasing price. Or, participating preferred shareholders may have access to some pro-rata cut of the liquidation proceeds that would otherwise go to common stock shareholders.

Non-participating preferred stocks do not get additional consideration for dividends or benefits during a liquidation event.

For those with access, participating preferred stock is an enticing investment. That said, the average individual investor may not have the chance to invest in participating preferred stock. This type of stock is typically offered as an incentive for private equity investors or venture capital firms to invest in private companies.

The Takeaway

Preferred stock offers some benefits that common stock does not — such as a regular dividend schedule and the potential to increase in value without threat of volatility. Participating preferred stock offers investors even more potential benefits, including additional dividends and the opportunity to participate in liquidity events.

However, participating preferred stocks are generally an option only for private equity investors or venture capitalists.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

¹Opening and funding an Active Invest account gives you the opportunity to get up to $3,000 in the stock of your choice.

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.

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

SOIN-Q125-024

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Mar
13
2025
woman at pharmacy

Investing in the Pharmaceutical Industry

By | Growing Wealth, invest, Investing | Comments Off on Investing in the Pharmaceutical Industry

With some $1.6 trillion in global sales, the pharmaceutical industry is a steadily growing sector, thanks to the rise of personalized medicine, increases in chronic diseases, and an aging population worldwide. As such, investing in the pharmaceutical industry offers investors a range of potential opportunities.

But, as with any sector, pharmaceutical stocks come with specific risks — intense competition, lengthy drug approval processes, potential drug failures, and more. Investors would be wise to research each company before they buy stock.

Key Points

•   The pharmaceutical industry, both in the U.S. and globally, is large and varied.

•   The pharmaceutical market in the U.S. alone is predicted to grow at a CAGR of 5.72% between 2025 and 2030.

•   Despite opportunities for investors, there are numerous risks in this sector, including intense competition and long approvals for drug treatments.

•   Owing to the highly scientific and technical nature of pharmaceuticals, investors must do their due diligence when investing in any stock.

An Intro to the Pharmaceutical Industry

Pharmaceutical companies research, develop, make, and sell medications, including preventive medicines, treatments, and vaccines. Two segments of therapeutics make up the industry: pharmaceuticals and biologics.

It’s also important to know the difference between pharmaceutical stocks and biotech stocks, whether you’re investing online or through a traditional brokerage.

Pharmaceutical drugs are typically made from synthetic or plant-based chemicals.

Patents and Exclusivity

When drugs are first approved, they generally have a patent or market exclusivity, meaning that only the pharma company that developed them can manufacture and sell the drugs.

Once the patent or exclusivity ends, other companies can create generic forms of the drug and begin to compete with the pharma company. The generic drugs are chemical copies of the original drug but sell at lower prices, making it hard for the original pharma company to compete. This can lead to its stock losing value.

Understanding Biologics

Biologics are products such as vaccines, gene therapies, and medications for blood disorders, that are large, protein-based molecules made out of living cells. Biologics are more complex to manufacture, which is one reason they’re more expensive.

They also have tighter restrictions on distribution than pharmaceuticals do. These factors make it more challenging for companies to enter this space and for competitors to succeed. If competitors do create a similar product, it is called a biosimilar.

Unlike generics, biosimilars aren’t interchangeable, so biologics don’t have the same stock drop-off that pharmaceuticals do.

It takes about 10 years and an average of $1.3 billion to $2.8 billion to bring a new drug to market, but in special circumstances, the FDA can expedite approval.

Recommended: Stock Market Basics

Why Invest in Pharmaceuticals?

With pharmaceuticals, whether investors are looking for high growth potential, long-term value, or stable dividends, they can find a pharma stock that will fit the bill.

Factors Impacting Industry Growth

The population of older adults is growing. About 10,000 Americans turn 65 every day, according to the AARP. And by 2030, the country will have more residents 65 and older than children, the Census Bureau has projected. This means more people are likely to need health care and pharmaceutical treatments, which in turn is expected to help pharma stocks grow.

U.S. health spending is projected to reach nearly $6.8 trillion by 2030, according to the Centers for Medicare & Medicaid Services.

Pharmaceutical stocks don’t always follow the same trends as other stocks because demand is inelastic: i.e., people need medication no matter what is going on in the market. This doesn’t mean that pharma stocks always perform better than the broader market, simply that this sector doesn’t move in sync with other stocks. Thus, investing in pharmaceutical stocks may provide some diversification.

This means that some pharmaceutical companies may see steady revenue, even when the rest of the stock market is down. Larger companies have fairly consistent income streams, while smaller companies that show promise get funding from investors and sometimes get acquired by larger companies.

A few other reasons pharmaceutical stocks look promising as a long-term investment:

•   The health care sector is expanding in countries outside the United States.

•   The government has been spending more on health care research.

•   New types of therapies, such as gene therapy, are getting more sophisticated. Some of these are very expensive.

How to Choose Pharmaceutical Stocks

Billions of dollars are invested in medical research and drugs each year. But not every company becomes a success. As with any stocks, investors will want to research pharma stocks before buying. Here are a few key factors to look at when evaluating stocks.

Growth Prospects

By looking at a company’s earnings and revenue, one can see how much it’s been growing and whether growth is slowing down. Investors can also analyze each company’s pipeline to learn which drugs are close to being approved.

Pharma companies have to go through certain steps to develop, test, and get drugs approved. They often make pipelines available to the public, so investors can see which drugs are in the early stages of development, preclinical testing, going through clinical trials in humans, or getting FDA approval or other necessary regulatory approvals.

Drugs may get approval for treatment of certain diseases or for specific demographics, but the makers can then apply for approval for additional uses. If they get the expanded approval, this can lead to growth for the company.

Investors can follow different pharmaceutical companies to see when they have the potential to grow and become successful. If a pharma company has patents that are close to expiring, for instance, this may slow down growth, as competitors can create generic forms of the same drugs.

The process companies go through to develop and bring drugs to market is generally as follows:

•   Drug discovery: During this phase, drugs and the diseases they can potentially treat are discovered and developed.

•   Preclinical trials: Potential drugs get tested in test tubes or on live animals at this early phase.

•   Clinical trials: Small human trials help determine a safe dosage and how humans react to it. Then, groups of 100 or more people test the drug to discover short-term side effects and optimal dosage. Finally, groups of hundreds or thousands of people test the drug to determine efficacy and safety.

   When drugs reach the clinical trial stage, this could be a good time for investors to keep an eye on them. If a drug makes it through trials, the company has potential for significant growth. But if the drug fails during testing, the stock is unlikely to do well.

•   Regulatory approval: In the United States, the Food and Drug Administration’s Center for Drug Evaluation and Research assesses and approves new drugs. In the E.U., approval is completed by the European Medicines Agency.

Types of FDA Application

There are different types of pharmaceutical FDA applications, some of which give companies more potential for stock growth than others. The application types are:

•   Investigational new drug application: This is the first application step that companies must go through.

•   New drug application: This is an application to market and sell a new drug. Companies filing this application have the most potential for stock growth because they are introducing a new product to market.

•   Abbreviated new drug application: Companies developing a generic form of an existing drug go through this application.

•   Therapeutic biologics application: This is required under the PHS Act for biologics.

•   Over-the-counter drug application: This is for companies looking to sell over-the-counter drugs, which are categorized as being safe to distribute without a prescription.

Dividends

Not all pharmaceutical companies pay dividends, but some of them do provide consistent payouts to investors. Dividends provide a stream of income, or can be reinvested.

Qualitative and Quantitative Metrics

The same rules apply to pharmaceutical stocks as to any other stock when it comes to evaluation. Investors should look at a company’s valuation, revenues, growth, leadership team, product pipeline, and other key metrics to decide whether to invest. Stock valuation ratios, such as price-to-earnings ratio and price-to-earnings-growth ratio, are very useful when comparing different stocks within the same industry.

However, some pharmaceutical companies are not yet profitable if they are in the drug development and trial phases. In this case, investors can look at the rate of cash burn: how much money the company is spending each quarter to develop a drug. It’s very expensive to develop a drug, so if a company is burning through cash and doesn’t have much left to work with, this might not bode well for the stock.

Another useful metric to look at is the price-to-sales ratio. This compares a company’s sales to the price of its stock. If the company doesn’t have sales yet, investors can make predictions about what those sales figures might look like.

Trends and Developments

Over time, trends in the types of diseases being targeted and the types of therapies being developed change. Investors can look into stocks in popular areas of treatment to find stocks with growth potential.

For instance, many drugs are in development to treat breast cancer and non-small-cell lung cancer. Treatments that are bringing in significant revenue globally include oncologics, antidiabetics, respiratory therapies, and autoimmune disease drugs.

Additional lucrative treatment areas include antibiotics, anticoagulants, pain, and mental health drugs.

Risks of Investing in Pharmaceutical Stocks

As with any type of investment, pharma stocks come with some risks. Some of the main risks to be aware of are:

•   Clinical failure: Many drugs don’t make it through the phases of clinical trials. If a drug has made it to the final stage, it’s more likely to succeed, but even at this phase, drugs can fail.

•   Inability to obtain approval: Just because a drug does well in trials doesn’t mean it will be approved by regulatory agencies.

•   Difficulties getting reimbursement and pricing drugs: Health insurance companies, government programs, or individuals must cover the cost of drugs, and companies aren’t always able to secure the money they need. Sometimes, companies are pressured to lower the price of drugs to make them more accessible, and this can result in financial struggles for the company.

•   Industry competition: As mentioned, when patents run out, pharma companies may struggle to keep up with competitors that develop cheaper generic versions of drugs. In addition, during the drug development phase, it’s not uncommon for multiple companies to be working on medications to treat the same illness. If one company can make it to trials or get approval first, this can put them way ahead of the competition, especially if it results in patent exclusivity.

•   Litigation and liability: In the pharmaceutical industry, lawsuits are common. Drugs can also be recalled from the market if they’re found to be unsafe.

The Takeaway

If you’re looking to start investing in the pharmaceutical industry, you might consider buying pharmaceutical ETFs. Or, you could do your due diligence and choose individual stocks, aiming for stable dividends or growth potential. Before investing, it helps to familiarize yourself with the pharmaceutical industry to better understand how to choose pharma investments, and also ensure you understand the potential risks of investing in pharmaceutical stocks.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).


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

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

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

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.
Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

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.

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-Q125-046

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Mar
12
2025
Presentation Of Chart With Pieces Of Doughnut

How to Buy Stocks: Step-by-Step Guide

By | Growing Wealth, invest, Investing, Terminology | Comments Off on How to Buy Stocks: Step-by-Step Guide

A stock is a share of ownership in a company, and theoretically anyone can buy stock in a publicly traded company assuming they have access to an investment account and can afford the share price. (Shares of private companies are not available on public stock exchanges.)

In addition to buying shares of stock directly, it’s also possible to own stock via pooled investments, such as mutual funds or exchange-traded funds (ETFs). Investors who can’t afford a full share of stock in some of the higher-priced companies can invest in a product known as fractional shares.

Because stocks represent a class of assets unto themselves, they are also referred to as equities.

Key Points

•   Generally speaking, any investor can buy or sell a stock via a public exchange.

•   Private companies may also issue shares of stock, but these are not available on public stock exchanges.

•   To buy a stock, an investor needs a brokerage account or a retirement account.

•   It’s possible to buy stocks via pooled investments like mutual funds and ETFs, or to invest in a fraction of a share of stock.

•   Stocks are also known as equities.

How to Buy Stocks in 5 Steps

Here are step-by-step instructions for becoming a stock investor, including what to know about how to buy shares in a company.

Step One: Think About What You Want to Buy

To begin, investors may want to decide whether they’re interested in buying shares of individual stocks or shares of a fund, such as an exchange-traded fund (ETF).

Individual Stocks

As noted, a stock represents a share of ownership in a publicly traded company. These days, most investors buy stocks online. Many companies offer both common and preferred stock.

•   Preferred stock does not come with voting rights, but these shares typically pay dividends, a form of profit sharing that can provide steady income to investors.

•   Common stock comes with voting rights. These shares can be more volatile, but may provide higher returns — and common stock only pays dividends after preferred stock dividends are paid.

Stocks can provide a return on investment in two ways. The first is through price appreciation, which is the value of a stock increasing over time. The second is through dividend payments to shareholders, if applicable.

Ideally, shareholders are able to reap the benefit of a company’s wealth building over time. However, it’s very difficult to predict which stocks will be successful (because it’s hard to predict which businesses will be profitable in the future).

For this reason, individual stock returns can be volatile — although individual stocks also provide the potential for higher rewards. That’s why it’s often said that individual stocks are “high risk, high reward.”

Recommended: Stock Market Basics for Beginners

Fractional Shares

As the name suggests, fractional shares of stock offer investors the chance to buy a percentage of a share of stock, rather than owning a full share. Previously, fractional shares were available only to institutional investors, but now retail investors can enjoy partial stock ownership assuming their brokerage offers these shares.

Like owning a full share, owning a fractional share allows investors to realize the same gains, losses, and even dividend payments (proportional to the fractional ownership amount).

One reason to buy fractional shares is to manage cost. Some shares of certain companies can be expensive. A share of Company A worth $1,000 might be available as a fractional share for $250 (a 0.25% share).

Funds

A fund, whether an ETF or a type of mutual fund, can be thought of as a bundle of investments. Often, these funds invest in equities, but they can also hold bonds, real estate holdings, or some combination of all. For example, it’s possible to buy a mutual fund or ETF that holds the stocks of the top 500 companies in the U.S. (or even thousands of stocks across the globe).

An important thing to understand here is that investing in a fund allows you to invest in a fund’s underlying holdings. If a fund is invested in 500 stocks, for example, the fund is absolutely an investment in the stock market.

An investment in an ETF or mutual fund that invests in a wide range of stocks is generally considered less risky than owning an individual stock. That’s because it’s more likely that a few companies might underperform — not hundreds (although there are no guarantees).

Owning an equity ETF or mutual fund is still considered to be risky, as investors are still very much involved in the stock market.

That said, broad, diversified mutual funds and ETFs can provide an easy way to gain exposure to the stock market (and other markets, as well). In investing, diversification means buying different investments.

With the purchase of just one share of some funds, it’s possible to invest across the entire U.S. or even the world in a diversified way. Depending on where investors choose to open their accounts, they may have access to ETFs or mutual funds or both.

Step Two: Determine What Type of Account to Open

One big decision is whether to open an account that is specific for retirement, or a general investing account, i.e., a brokerage account.

•   A brokerage account allows investors to buy and sell various securities. But again, this term may be used as a catchall for general investment accounts, which are usually taxable accounts. Investment and brokerage accounts can be used for any (legal) purpose, and there are no limitations for use (unlike with retirement accounts).

There are several differences between a brokerage account and a retirement account, with one fundamental difference being the tax treatment of assets in these accounts.

•   Retirement accounts receive special tax treatment, and are often called tax-advantaged accounts. Tax-deferred accounts typically defer taxes on investment gains until retirement. After-tax accounts allow contributions funds where the tax has been paid; then qualified withdrawals are tax free in retirement.

This unique tax treatment is why so many IRS rules surround the use of retirement accounts, including contribution limits and income limits.

To keep it simple, investors may want to open a non-retirement brokerage or investment account, especially if they’re already covered by a retirement plan through work. For a retirement account, investors could open a Roth IRA, Traditional IRA, or a SEP IRA, or Solo 401(k), if they’re self-employed.

If investors opt to go the retirement route, they may want to check with a certified tax professional to ensure they qualify.

Step Three: Decide Where to Open an Account

When it comes to deciding where to open an account, new investors have plenty of options.

Before diving into them all, it’s helpful to remember that minimizing fees is the name of the game. Why? When calculating potential returns on investment, account holders must subtract any investing-related fees from potential investment earnings. Even small fees can mean that investments have to work that much harder just to break even.

Here are some options an investor might consider:

•   A low-cost brokerage: One option is to open an account at a low-cost or discount brokerage. Depending on the firm, there may be account and trading fees (although the lowest-cost brokerages have largely eliminated these in order to be competitive with the new financial tech companies).

•   An online trading platform: Another popular option is to use an online trading platform, where investors can buy shares of stocks and ETFs right from an app. It’s also possible to buy fractional shares, which are partial shares of a stock.

•   Robo advisor platforms. These newer services offer automated investment portfolios that typically consist of low-cost equity and fixed-income ETFs. Robo advisor platforms don’t offer advice, but can help investors manage a portfolio over time.

•   A full-service brokerage firm: The third option for buying shares is to use a full-service brokerage firm. These firms tend to offer expanded services, such as a designated advisor, broker, or wealth management advisor. Naturally, these services tend to come with associated costs, which means it might not be right for an investor who wants to buy just their first few shares.

Once an investor has made a decision, the share-buying process can be relatively seamless. Most accounts can be opened entirely online.

During the application process, investors will need to provide information like their Social Security number, dates of birth, and address. Additionally, it may be required for investors to answer some questions about their current financial situation.

Step Four: Fund Your Account With Cash

The next step in buying shares is to fund the account with cash. Depending on the institution, investors may be able to set up a link to an existing checking or savings account.

Setting up an electronic funds transfer (EFT) with a current bank account will likely be the fastest way to fund the account. If an investor is unable to set up an EFT or other automatic link to their checking account, it may be possible to mail a physical check directly to the investment institution.

Another funding option is to sign up for an automated monthly transfer. In this way, money is invested regularly (without the need to remember to do so).

It may take a few days for any cash transfer to be complete.

Step Five: Place a Trade

Assuming an investor is logged into their new account (and it’s already funded with cash), it’s possible to navigate to the area of the dashboard that says either buy, sell, or trade.

Here, investors can indicate what they would like to buy and specify how many shares, using the ticker symbol (a short abbreviation for each stock or fund name).

If buying a stock or an ETF, investors also need to indicate the order type. Both stocks and ETFs trade on an exchange, like the New York Stock Exchange or the Nasdaq. On these exchanges, prices fluctuate throughout the day. Mutual funds do not trade on an open exchange and their value is calculated once per day.

There are many different types of orders. During that first share purchase, new investors may want to stick to the basics: either a market order or a limit order.

•   A market order will go through as soon as possible. The order can fill quickly, but it may not be instantaneous. Therefore, the price could change slightly from the original quote. If an investor places a market order, they may want to have a slight cash cushion to protect from any erratic changes in price. If placing a market order while the market is closed, the order is typically filled at the market’s open, at whatever the prevailing price per share is at that time.

•   A limit order, however, focuses on pricing precision. With a buy limit order or a sell limit order, investors name the parameters for the order. For example, an investor could say that they only want to purchase a stock if it falls below $70 per share. Therefore, the order is placed if the stock falls below $70 per share. This means it’s possible a limit order won’t get filled (if it doesn’t reach the investor’s pre-selected price parameters).

A limit order may be more appealing to a trader, while a long-term investor may gravitate toward a market order. The benefit of a market order is that it allows an investor to get started right away.
Another step is to review during this process is the actual share order. Once the trade is then executed, voila — the investor now officially owns the share (or shares).

The Takeaway

These days, it’s relatively easy to get started as a stock investor. You can buy shares of company stock directly on a stock exchange. It’s also possible to invest in many shares of stock at once via a mutual fund or ETF (or a robo advisor platform, which provides a low-cost automated investment portfolio).

A more recent innovation is the emergence of fractional shares, which enable investors to buy a percentage of a single share of stock.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

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

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

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

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.
Exchange Traded Funds (ETFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or by emailing customer service at [email protected]. Please read the prospectus carefully prior to investing.
Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.
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.
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-Q125-044

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