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Q: What Does It Mean to 'Buy Low, Sell High'?

'Buy low, sell high' is an investment philosophy that advocates buying stocks or other securities at a lower price than you can later sell them. This is the opposite of buying high and selling low, which effectively results in investors selling stocks at a loss.

Q: Is buying low and selling high a good strategy?

Buying low and selling high is generally a good strategy as it allows you to take advantage of price movements in the market. However, there is no guarantee that this strategy will always be successful, and you may end up losing money if the market conditions are not favorable.

Sep

2024

Understanding the Buy Low, Sell High Strategy

Buy Low, Sell High Strategy: An Investor’s Guide

By Rebecca Lake | Growing Wealth, invest, Investing | Comments Off

When it comes to investing, there are certain rules of thumb that investors are often encouraged to follow. One of the most-repeated adages in investing is to try and “buy low, sell high.”

Buying low and selling high simply means purchasing securities at one price, then selling them later at a higher price. This bit of investing wisdom offers a relatively straightforward take on how to realize profits in the market. But figuring out how to buy low and sell high — and make this strategy work — is a bit more complicated. Timing the market is not a perfect science, and understanding that implementing a buy low, sell high strategy is more complicated than it sounds is critical to investor success.

Key Points

• Buy low, sell high is an investment strategy that involves purchasing securities at a lower price and selling them later at a higher price.

• Timing the market and implementing this strategy can be challenging, as market movements are unpredictable.

• Understanding stock market cycles and trends can help determine when to buy low and sell high.

• Technical indicators and moving averages can assist in identifying pricing trends and points of resistance.

• Investor biases and herd mentality can impact decision-making, so it’s important to make rational choices based on research and analysis.

What Does It Mean to “Buy Low, Sell High”?

“Buy low, sell high” is an investment philosophy that advocates buying stocks or other securities at one price, and then selling them later when they’ve (hopefully) gained value. This is the opposite of buying high and selling low, which effectively results in investors selling stocks at a loss.

When investors buy low and sell high, they may do so to maximize profits. For example, a day trader may purchase shares of XYZ stock at $10 in the morning, then turn around and sell them for $30 per share in the afternoon if the stock’s price increases. The result is a $20 profit per share, less trading fees or commissions. Of course, a price increase of that magnitude within a single day is highly unlikely.

Likewise, a buy and hold investor may purchase stocks, exchange-traded funds (ETFs), or mutual funds and hold onto them for years or even decades. The payoff comes if they sell those securities later for more than what they paid for them.

Recommended: How to Know When to Sell a Stock

4 Tips on How to Buy Low and Sell High

The following tips may help investors develop a buy low, sell high strategy (or avoid the buy high, sell low trap).

1. Investing with the Business Cycle

Understanding stock market cycles and their correlation to the business cycle can help when determining how to buy low and sell high.

The business cycle is the rise and fall in economic activity that an economy experiences over time. If the business cycle is in an expansion phase and the economy is growing, for instance, then stock prices may be on the upswing as well. On the other hand, if it’s become apparent that economic growth has peaked, that could be a signal for stock price drops to come as an economy slows or enters into a recession.

But like most strategies that aim to buy low and sell high, investing with the business cycle can be challenging.

It’s also important to remember that security prices typically don’t move in a straight line up or down in lockstep with a specific phase of the business cycle. Instead, most securities experience a level of volatility, where prices move up or down (or both) in the short term before reverting to the mean.

2. Look at Stock Pricing Trends

Investors who want to buy low may find it helpful to pay attention to pricing trends or technical indicators. Tracking trends for individual securities, for a particular stock market sector, or the market as a whole can help investors get a sense of what kind of momentum is driving prices.

For instance, an investor wondering how low a stock price can go can look at technical indicator trends to identify significant pricing dips or rises in the stock’s history. This could, potentially, help determine when a stock or security has reached its bottom, opening the door for buying opportunities. Conversely, investors may also use trends to evaluate when a stock has likely reached its high point, indicating that it’s prime time to sell.

3. Use Moving Averages

Moving averages are a commonly used indicator for technical analysis. A moving average represents the average price of a security over a set time period. So to find a simple moving average, for example, an investor would choose a time period to measure. Then they’d add up the stock’s closing price each day for that time period and divide it by the number of days.

The moving average formula can help compare stock pricing and determine points of resistance. In other words, they can tell investors where stock prices have topped out or bottomed out over time. Moving averages can smooth out occasional pricing blips that temporarily push stock prices up or down.

Comparing one moving average to another, such as the 50-day moving average to the 200-day moving average, can also help investors to spot sustainable up or down pricing trends. All this can help when deciding when to buy low or sell high.

4. Beware of Investor Bias

An investor bias is a pattern of behavior that influences reactions to a changing market. For example, noise trading happens when an investor makes a trade without considering the state of the market or timing. The investor may follow pricing trends but make trades without considering whether the time is right to buy or sell.

Investors who give in to biases may find themselves following a herd mentality when it comes to making trades. If news of a pending interest rate hike sparks fear in the markets, investors may start panic selling in droves. This can, in turn, cause stock prices to drop. On the other hand, irrational exuberance for a specific stock or type of security can push prices up, causing an unsustainable market bubble.

Investors who can refrain from being influenced by the crowd stand a better chance of making rational decisions about when to buy or when to sell to either maximize profits or minimize losses.

Pros and Cons of Buy Low, Sell High

A buy low, sell high strategy can work for investors, but while it’s a worthy goal, the implementation can be difficult. Investors who are too focused on timing the stock market can run into difficulties.

Benefits of Buy Low, Sell High

Buying low and selling high can yield these advantages to investors.

• Potential bargain-buying opportunities. If investor sentiment is causing fear and panic to take over the market and push stock prices down, that could open a door for buy low, sell high investors as they buy the dip. Individuals who ignore market panic could purchase stocks and other securities at a discount, only to benefit later once the market rebounds and prices begin to rise again.

• Potential for high returns. An investor skilled at spotting trendings and reading the market cycle could reap sizable profits using a buy low, sell high strategy. The wider the gap between a stock’s purchase and sale price, the higher the profit margin.

• Beat the market. A buy low, sell high approach could also help investors to beat the market if their portfolio performs better than expected. This might be preferable for active traders who forgo a passive or indexing approach to investing.

Disadvantages of Buy Low, Sell High

Attempting to buy low and sell high also holds some risks for investors.

• Timing the market is imperfect. There’s no way to time the market and which way stock prices will go at any given moment with 100% accuracy. So there’s still some risk for investors who jump the gun on when to buy or sell if stocks have yet to reach their respective lowest or highest points.

• Being left out of the market. Investors who want to buy low and sell high would not want to buy securities when the market is up. That practice, however, could lead to substantial time out of the market entirely, especially during bull markets.

• Biases can influence decision-making. Investment biases and herd mentality can wreak havoc in a portfolio if an investor allows it. Instead of buying low and selling at a profit later, investors may find themselves in a buy high, sell low cycle where they lose money on investments.

• Pricing doesn’t tell the whole story. While tracking stock pricing trends and moving averages can be useful, they don’t offer a complete picture of what drives pricing changes. For that reason, it’s important for investors also to consider other factors, such as consumer sentiment, the possibility of a merger, or geopolitical events, influencing stock prices.

Alternatives to Buy Low, Sell High

Buying low and selling high is not a foolproof way to match or beat the market’s performance. It’s easy to make mistakes and lose money when attempting to time the market unless, of course, you possess a crystal ball or psychic abilities.

There are, however, other ways to invest without trying to time the market. Take dollar-cost averaging, for example. This strategy involves staying invested in the market continuously through its changing cycles. Instead of trying to time when to buy or sell, investors continue making new investments. Over time, the highs and lows in stock pricing tend to average out.

A dividend reinvestment plan (DRIP) is another option. Investors who own dividend-paying stocks may have the opportunity to enroll in a DRIP. Instead of receiving dividend payouts as cash, they’re reinvesting into additional shares of the same stock. Similar to dollar-cost averaging, this approach could make it easier to ride out the ups and downs of the market over time and eliminate the stress of deciding when to buy or sell.

Investing with SoFi

A buy low, sell high investment strategy is fairly simple, in that it involves buying a security at one price, and selling it after, or if, it appreciates. Obviously, there’s no guarantee that any asset will appreciate, so it’s possible investors could lose money – but they could also see positive returns, too.

Further, the strategy can be challenging to implement. Executing a buy low, sell high plan successfully means researching and doing due diligence to understand how the market works.

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).

For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.

FAQ

Is buying low and selling high a good strategy?

Buying low and selling high can generally be a good strategy as it allows you to take advantage of price movements in the market. However, there is no guarantee that this strategy will always be successful, and you may end up losing money if the market conditions are not favorable.

Is it illegal to buy low and sell high?

There is no law against buying low and selling high. Most investors make money by buying a security at a low price and then selling it later at a higher price.

Why do you sell high and buy low?

Many investors sell high and buy low because they want to take advantage of market conditions to realize a positive return. When the market is high, investors may sell an investment they purchased at a lower price to make a profit.

Photo credit: iStock/katleho Seisa

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Sep

2024

14 Reasons Why It’s So Hard to Save Money Today

By Anna Davies | Budgeting & Goals, Family Finances, money | Comments Off

There are many factors that make it hard to save money today, from the high price of groceries to the high interest rates on credit cards. Inflation. If you’re feeling a pinch, you’re not alone. It’s difficult to afford daily expenses and to save for financial goals, like having an emergency fund.

When it comes to covering a $400 unexpected expense, 37% of adults said they would have to borrow, sell something or not be able to cover the expense, according to a 2023 survey from the Federal Reserve. And emergencies can be more expensive than that $400 figure.

Beyond emergency funds, saving for other goals, like the down payment on a house or one’s retirement, are also feeling as if they are hard to achieve. These are worthwhile goals that build wealth. But how do you begin saving when everything is so expensive?

Read on to learn 14 reasons why you’re likely having trouble saving money, plus tips for how to start stashing away more cash.

Key Points

• High inflation and rising costs for essentials groceries make saving more challenging.

• Many adults struggle to cover unexpected expenses without resorting to credit.

• Debt, especially from high-interest credit cards, significantly hinders the ability to save.

• Lack of budgeting contributes to poor financial management and savings shortfalls.

• Social pressures and lifestyle inflation can lead to increased spending, further impeding savings efforts.

Challenges of Saving Money in Today’s Economy

Here are some of the most common reasons why you may find it hard to save money.

1. Not Focusing on Paying Down Debt

Having debt is one of the reasons many people have difficulty saving money. The urge to pay it off vs. save is strong. That’s especially true if you’re carrying revolving debt, like debt from credit cards. Interest rates on these types of accounts can change, which may mean that you’re owing even more money in interest than you may have thought. Right now, the range of interest rates on credit cards is around 13% to 27%.

American household debt hit a record high of $17.69 trillion in early 2024, according to the Federal Reserve. This debt includes student loan debt, credit card debt, mortgage debt, and personal loan debt. Some of this debt can be low-interest, like many mortgages, which also help a person build equity.

The kind of debt that typically prevents a person from saving is high-interest credit card debt. Paying that down by consolidating debt with a low- or no-interest card or by taking out a lower-interest personal loan can be good solutions.

2. Budgeting is a Non-Factor

Budgeting can sound intimidating, but assigning a dollar to all aspects of your cash flow can ensure that you don’t lose track of money. Recently, the average household earned $74,580 before taxes, according to U.S. Census data. Of that money, necessary expenditures — housing, food, health insurance — ate up the majority of the money, leaving little in free cash flow.

This “free cash flow” isn’t free, of course. It’s money to be put toward paying down debt, building an emergency fund, as well as paying for extras, like vacations and nights out. Knowing exactly how much you have and tracking your spending can help you put some money into savings. Try one of the popular budgets, like the envelope system or the 50/30/20 rule (which has you put 50% of after-tax money toward needs, 30% toward wants, and 20% toward saving), to take control of your cash.

3. Trying to Impress Friends With Money

Maybe friends invite you to a pricier-than-expected restaurant and you go along, only to split the painfully expensive check. That’s an example of FOMO (Fear of Missing Out) spending, which is an update on “Keeping up with the Joneses). Or perhaps you get a bonus and blow it on a status wristwatch to feel as if you fit in with your big-spender pals.

If you feel like you’re always spending money with friends, consider ways to potentially minimize that outflow of cash. Hikes, potlucks, and checking out local events can all be ways to cut down on these costs. They are relatively easy ways to save money. Or you might go back to that budget you created (see #1) and make sure you stick to it when it comes to splurge-y spending.

4. Not Earning Enough Money

It’s important that the money you earn be able to cover all your expenses. And sometimes, when your expenses increase unexpectedly, your paycheck doesn’t stretch as far as you need. Making and sticking to a budget can help you understand how much you’re spending each month, and can clue you into increases.

For example, say your rent renews 10% above what you were paying last year or your auto insurance increases. That money needs to come from somewhere. You might consider the benefits of a side hustle. Maybe you can sell the jewelry you make on Etsy, get a weekend job at a nearby cafe, or drive a ride-share from time to time.

5. Not Having an Emergency Fund

Saving for emergencies is important for many reasons, one of which is to have an emergency fund. An emergency fund is what it sounds like: Cash that can cover an emergency, which can be anything from a blown tire to a trip to the vet to covering expenses if you were unexpectedly let go from your job. Having an emergency fund relatively liquid and easy to access in a high-yield savings account (rather than in investments) means you can tap into it relatively quickly if you were to need it.

Most financial experts advise having three to six months’ worth of basic living expenses in an emergency fund. Set up regular transfers from your checking account to fund that; even $25 a week or a month is a start. Consider putting a windfall, like a tax refund, there as well.

6. Shopping Too Much

Shopping too much doesn’t mean always filling your online cart or always having packages at the doorstep. It could just mean that you’re not being strategic about how much you’re paying. For example, buying groceries every day at a nearby gourmet grocery could be much more expensive over time than doing a weekly or bi-weekly shopping trip to a warehouse club.

Making lists, tracking items over time, and making sure you get the best price by using coupons and cash back offers are all ways that can help you save money and even have fun while doing so.

7. Inflation in Housing, Education and More

Sky-high housing prices. Rising tuition costs. And interest rates that are increasing. Inflation can make everything more expensive. This can make it challenging to figure out how much to save, especially if you’re saving for a house or putting aside money for tuition. Inflation can also make smaller things, like grocery runs, more expensive too. Overall, rising prices can make it feel difficult to save money, let alone keep your checking account where you want it to be.

Take a deep breath and remind yourself of the cyclical nature of the economy. America has had recessions, a Great Depression, and plenty of inflation before. Persevere and be money motivated: Do your best to control spending and save, if possible, 10% of your take-home earnings towards your future goals.

8. Paying for Items We Don’t Use

How much stuff do you own? Probably way more than you regularly use. And it’s not only physical stuff. Unused digital subscriptions and wasted food…all of it adds up to spending money on things we don’t need.

One quick way to get that money back: Go through your last month of bank account payments and note any money you spent on subscriptions. Chances are, there are at least one or two you either don’t use or use so rarely you can let them go without missing them. For instance, check out how many streaming channels you are paying for. It could save you hundreds of dollars a year if you lose one or two.

9. Saving Money is Not Our Priority

If you wait until the end of the month to put aside whatever you have left, chances are there’s no money left. That’s why prioritizing saving is so important. Learning to save can be a skill, and employing smart strategies can help you make sure that you keep that skill strong.

For example, you can automatically transfer money from your paycheck into savings, so you don’t see it sitting there and aren’t tempted to spend it. Budgeting apps can also be helpful to curb spending so you have more money to save.

10. Cost of Living is Rising

We’ve touched on inflation hitting the large things we’re saving for, and the small things we buy every day. Inflation is notable across so many spending categories: The World Economic Forum found that food prices increased worldwide by nearly 10% from January to April 2022 — the largest 12-month rise since 1982. This past year, they rose just 1%, but rising less swiftly of course is very different from seeing costs move lower.

There are various ways to manage this. One way to get a quick cash infusion is to sell things you have but no longer need or use. This might be gently used clothing, a laptop that’s sitting unused, or that mountain bike that is gathering dust. You can try a garage sale, Nextdoor, Craigslist, or local Facebook groups, or (if it’s something small) eBay or Etsy.

11. Spending Too Money On Social Activities

All too often, hanging out comes with a price tag. After dinner, or a show, or drinks you’ve depleted your bank account. Setting up a budget for socializing can help you spend money wisely. You might check out the restaurant in your neighborhood you’ve been dying to try when they have a reasonably priced prix fixe menu; that way, you’d still have space to save. Thinking of cheap activities and researching free things going on in your community (music, fairs, and more) can help you go out without the steep price tag.

12. Lifestyle Creep

If you’re not familiar with the expression, lifestyle creep is when increased income leads to increased spending. As your pay goes up, you may feel justified in moving up to a rental home with more amenities. You may be more likely to go to more expensive hotels when traveling and join pricey gyms. Lifestyle creep can make it tough to pay down debt, boost savings, and build wealth.

Upgrading your leisure habits when you make more money isn’t a bad thing — but it can be something to be conscious of, especially if you feel like you aren’t saving enough. This may be a good moment to pick and choose your perks. If you are moving to a more expensive apartment, say, maybe you skip that quick vacation you were thinking of taking. Or you could come up with fun ways to save money, like monthly challenges. For instance, don’t buy any fancy lattes for a month and put the money in savings. You may be surprised by how much you save.

13. Not Thinking Ahead

One big reason it’s so hard to save money is that we are so rooted in the present. It’s a real challenge to imagine our toddler needing college tuition money or ourselves being old enough to retire. It can be easier just to put those thoughts to one side for a while.

But when that happens, the opportunity for compound interest is lost. For instance, if Person A were to save $1,000 a month from age 25 to 65, accruing 6% interest, they would have more than $2+ million in the bank at age 65. If Person B saved the same $1,000 a month from age 35 onward until they turned 65, they would have about $1,000,000, or half as much!

By budgeting, planning ahead, and saving, you can have financial discipline and enjoy these kinds of results. It’s important to remind yourself to take care of tomorrow as well as today.

14. Spending Money is Easy

Whether you’re out and about or scrolling through your phone, opportunities to spend money are everywhere. You see a delicious poke bowl while running errands, or you’re looking at your friend’s baby on Instagram, and there are those vitamins everyone is talking about. Ka-ching.

It’s definitely a challenge to grow your money mindset and be able to ignore all of these temptations and focus on longer-term financial goals. Namely, saving for “out of sight, out of mind” future needs. Here’s where your budget can once again be helpful. By having a small stash of cash for fun, on-the-fly expenditures, you can treat yourself (something we all need now and then) without blowing your budget. You will likely be a more mindful and careful consumer if you know, say, that you have $25 this week for a reward.

The Takeaway

Yes, it can be hard to save money due to rising costs, high interest rates, FOMO, lifestyle creep, and other forces. But if you focus on saving money, you’ll find more and more ways to maximize the money you do have. One of the ways to do so is to look for a banking partner with low (or no) fees and high interest rates.

Take a look at what SoFi offers.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

FAQ

What are the challenges of saving money?

An increased cost of living, lack of a budget, and other factors can make it hard to save. Add in temptations to spend, social pressure, and the fact that a purchase can momentarily lift your spirits, and you have plenty of reasons why saving can be challenging. The good news: A few behavioral tweaks (such as finding a budget you can really follow) can help you save money and make the most of every dollar.

Do millionaires struggle to save money?

Yes. Studies and surveys have found that even high earners live paycheck to paycheck. Fortunately, there are always ways to save, regardless of the size of your bank account. The same rules of budgeting, setting up automatic transfers into savings, and being a smart consumer can help anyone.

How do you stay motivated when it’s so hard to save money?

Motivation varies. Some people find it motivating to see their credit card balance go down, other people like to see their retirement account balance grow, and still others like to mix it up and give themselves a different saving challenge each month. The trick is finding a strategy that works for you.

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As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

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

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Sep

2024

Guide to Block Trades

By Colin Dodds | Growing Wealth, invest, Investing | Comments Off

Block trades are big under-the-radar trades, generally carried out in private. Because of their size, block trades have the potential to move the markets. For that reason they’re conducted by special groups known as block houses. And while they’re considered legal, block trades are not regulated by the SEC.

As a retail investor, you likely won’t have anything to do with block trades, but it’s a good idea to know what they are, how they work, and how they can affect the overall market.

Key Points

• Block trades are large-volume purchases or sales of financial assets, often conducted by institutional investors.

• Block trades can move the market for a security and are executed through block trade facilities, dark pools, or block houses.

• Block trades are used to avoid market disruption and can be broken down into smaller trades to conceal their size.

• Retail investors may find it difficult to detect block trades, but they can provide insights into short-term market movements and sentiment.

• Block trades are legal and not regulated by the SEC, but they can be perceived as unfair by retail investors.

What Are Block Trades?

A block trade is a single purchase or sale of a large volume of financial assets. A block, as defined by the New York Stock Exchange’s Rule 127.10, is a minimum of 10,000 shares of stock. For bonds, a block trade usually involves at least $200,000 worth of a given fixed-income security.

Though 10,000 shares is the operative figure, the number of shares involved in most block trades is far higher. Individuals typically don’t execute block trades. Rather, they most often come from institutional investors, such as mutual funds, hedge funds, or other large-scale investors.

Why Do Block Trades Exist?

Block trades are often so large that they can move the market for a given security. If a pension fund manager, for example, plans to sell one million shares of a particular stock without sparking a broader market selloff, selling all those shares on a public market will take some time.

During that process, the value of the shares the manager is selling will likely go down — the market sees a drop in demand, and values decrease accordingly. Sometimes, the manager will sell even more slowly. But that creates the risk that other traders will identify the institution or the fund behind the sale. Then, those investors might short the stock to take advantage.

Those same risks exist for a fund manager who is buying large blocks of a given security on a public market. The purchase itself can drive up the price, again, as the market sees an increase in demand. And if the trade attracts attention, other traders may front-run the manager’s purchases.

How Block Trades Are Executed

Many large institutions conduct their block trades through block trade facilities, dark pools, or block houses, in an effort to avoid influencing the market. Most of those institutions typically have expertise in both initiating and executing very large trades, without having a major — and costly — effect on the price of a given security.

Every one of these non-public exchange services operates according to its own rules when it comes to block trades, but what they have in common is relationships with hedge funds and others that can buy and sell large blocks of securities. By connecting these large buyers and sellers, blockhouses and dark pools offer the ability to make often enormous trades without roiling the markets.

Investment banks and large brokerages often have a division known as a block house. These block houses run dark pools, which are called such because the public can’t see the trades they’re making until at least a day after they’ve been executed.

Dark pools have been growing in popularity. In 2020, there were more than 50 dark pools registered with the Securities and Exchange Commission (SEC) in the United States. At the end of 2023, dark pools executed about 15% of all U.S. equity trades.

Smaller Trades Are Used to Hide Block Trades

To help institutional traders conceal their block trades and keep the market from shifting, blockhouses may use a series of maneuvers to conceal the size of the trade being executed. At their most basic, these strategies involve breaking up the block into smaller trades. But they can be quite sophisticated, such as “iceberg orders,” in which the block house will break block orders into a large number of limit orders.

By using an automated program to make the smaller limit orders, they can hide the actual number of orders at any given time. That’s where the “iceberg” in the name comes from — the limit orders that other traders can see are just the tip of the iceberg.

Taken together, these networks of traders who make block trades are often referred to as the Upstairs Market, because their trades occur off the trading floor.

Pros and Cons of Block Trades

As with most things in the investment field and markets, block trades have their pros and cons. Read on to see a rundown of each.

Pros of Block Trades

The most obvious advantage of block trades is that they allow for large trades to commence without warping the market. Again, since large trades can have an effect on market values, block trades, done under the radar, can avoid causing undue volatility.

Block trades can be used to conceal information, too, which can also be a “pro” in the eyes of the involved parties. If Company A stock is moving in a block trade for a specific reason, traders outside of the block trade wouldn’t know about it.

Block trades are also not regulated by the SEC, meaning there are fewer hoops to jump through.

Cons of Block Trades

While masking a large, market-changing trade may be a good thing for those involved with the trade, it isn’t necessarily a positive thing for everyone else in the market. As such, block trades can veil market movements which may be perceived as unfair by retail investors, who are trading none the wiser.

Block trades can be hard to detect, too, as mentioned. Since they’re designed to be obscure to the greater market, it can be difficult to tell when a block trade is actually occuring.

Block trades are also not regulated by the SEC — it’s a pro, and a con. The SEC doesn’t regulate them, but rather the individual stock exchanges. That may not sit well with some investors.

Block Trade Example

An example of a block trade could be as follows: A large investment bank wants to sell one million shares of Company A stock. If they were to do so all at once, Company A’s stock would drop — if they do it somewhat slowly, the rest of the market may see what’s going on, and sell their shares in Company A, too. That would cause the value of Company A stock to fall before the investment bank is able to sell all of its shares.

To avoid that, the investment bank uses a block house, which breaks the large trade up into smaller trades, which are then traded through different brokerages. The single large trade now appears to be many smaller ones, masking its original origin.

Are Block Trades Legal?

Block trades are legal, but within stock market history they exist in something of a gray area. As mentioned, “blocks” are defined by rules from the New York Stock Exchange. But regulators like the SEC have not issued a legal definition of their own.

Further, while they can move markets, block trades are not considered market manipulation. They’re simply a method used by large investors to adjust their asset allocation with the least market disruption and stock volatility possible.

How Block Trades Impact Individual Investors

Institutional investors wouldn’t go to such lengths to conceal their block trades unless the information offered by a block trade was valuable. A block trade can offer clues about the short-term future movement and liquidity of a given security. Or it can indicate that market sentiment is shifting.

For retail (aka individual) investors, it can also be hard to know what a block trade indicates. A large trade that looks like the turning of the tide for a popular stock may just be a giant mutual fund making a minor adjustment.

But it is possible for retail investors to find information about block trades. There are a host of digital tools, some offered by mainstream online brokerages, that function like block trade indicators. This might be useful for trading stocks online.

Many of these tools use Nasdaq Quotation Dissemination Service (NQDS), Level 2 data. This subscription service offers investors access to the NASDAQ order book in real time. Its data feed includes price quotes from the market makers who are registered to trade every NASDAQ and OTC Bulletin Board security, and is popular among investors who trade using market depth and market momentum.

Even access to tools like that doesn’t mean it’ll be easy to find block trades, though. Some blockhouses design their strategies, such as the aforementioned “iceberg orders,” to make them hard to detect on Level 2. But when combined with software filters, investors have a better chance of glimpsing these major trades before they show up later on the consolidated tape, which records all trades through blockhouses and dark pools — though often well after those trades have been fully executed.

These software tools vary widely in both sophistication and cost, but may be worth considering, depending on how serious of a trader you are. At the very least, using software to scan for block trades is a way to keep track of what large institutional investors and fund managers are buying and selling. Active traders may use the information to spot new trends.

The Takeaway

Block trades are large movements of securities, typically done under-the-radar, involving 10,000 or so shares, and around $200,000 in value. It can be difficult for individual investors to detect block trades — which, again, are giant position shifts by institutional investors — on their own.

But these trades have some benefits for individual investors. The mutual funds and exchange-traded funds (ETFs) that most investors have in their brokerage accounts, IRAs, 401(k)s and 529 plans may take advantage of the lower trading costs and volatility-dampening benefits of block trades, and pass along those savings to their shareholders.

For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.

Photo credit: iStock/marchmeena29

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

SOIN-Q324-031

Sep

2024

What Is a Recession?

By Rebecca Lake | Financial Independence, Growing Wealth, Investing | No Comments

A recession is a period of general economic contraction. Recessions are typically accompanied by falling stock markets, a rise in unemployment, a drop in income and consumer spending, and increased business failures.

Recessions tend to have a wide-ranging economic impact, affecting businesses, jobs, everyday individuals, and investment returns. But defining what, exactly, a recession is, and the long-term repercussions they may have on personal financial situations is tricky.

Different Recession Definitions

A recession is often defined as a drop in gross domestic product (GDP) — which represents the total value of goods and services produced in the country — for at least two quarters in a row. However, this is not an official definition of a recession, and instead, is just a shorthand that some economists and investors use when analyzing the economy.

Recessions are officially defined and declared by the Business Cycle Dating Committee at the National Bureau of Economic Research (NBER). So, when GDP dropped two straight quarters in 2022 (Q1 and Q2), the NBER didn’t declare a recession because other indicators, such as unemployment, didn’t necessarily align with a recessionary environment.

Consumers and workers may believe that the economy is in a recession when unemployment or inflation rises, even though economic output may still be growing. That can affect all sorts of things, including the stock market, and put a damper on investors’ hopes as they trade stocks and other securities.

NBER’s Definition

The NBER defines a recession as a significant and widespread decline in economic activity that lasts a few months. The economists at the NBER use a wide range of economic indicators to determine the peaks and troughs of economic activity. The NBER chooses to define a recession in terms of monthly indicators, including:

• Employment. Job growth or job loss can be used to gauge the likelihood of a recession, and serve as a litmus test of sorts for which way the economy is moving.

• Personal income. Personal income can play a direct role in influencing recessionary environments. When consumers have more personal income to spend, that can fuel a growing economy. But when personal income declines or purchasing power declines because of rising interest rates, that can be a recession indicator.

• Industrial production. Industrial production is a measure of manufacturing activity. If manufacturing begins to slow down, that could suggest slumping demand in the economy and, in turn, a shrinking economy.

These indicators are then viewed against the backdrop of quarterly gross domestic product growth to determine if a recession is in progress. Therefore, the NBER doesn’t follow the commonly accepted rule of two consecutive quarters of negative GDP growth, as that alone isn’t considered a reliable indicator of recessionary movements in the economy.

Additionally, the NBER is a backward-looking organization, declaring a recession after one has already begun and announcing the trough of economic activity after it has already bottomed.

Julius Shiskin Definition

The shorthand of using two negative quarters of GDP growth can be traced back to a definition of a recession that first originated in the 1970s with Julius Shiskin, once commissioner of the Bureau of Labor Statistics. Shiskin defined recession as meaning:

• Two consecutive quarters of negative gross national product (GNP) growth

• 1.5% decline in real GNP

• 15% decline in non-farm payroll employment

• Unemployment reaching at least 6%

• Six months or more of job losses in more than 75% of industries

• Six months or more of decline in industrial production

It’s important to note that Shiskin’s recession definition used GNP, whereas modern definitions of recession use GDP instead. GNP, or gross national product, measures the value of goods and services produced by a country both domestically and internationally. Gross domestic product only measures the value of goods and services produced within the country itself.

How Often Do Recessions Occur?

Economic recessions are a normal part of the business cycle. According to the NBER, the U.S. experienced 33 recessions prior to the coronavirus pandemic. The first documented recession occurred in 1857, and the most recent was caused by the Covid-19 pandemic, which started in February 2020 and ended in April 2020.

Since World War II, a recession has occurred, on average, every six years, though the actual timing can and has varied.

U.S. Recessions Since World War II
Start of Recession	End of Recession	Number of Months
November 1948	October 1949	11
July 1953	May 1954	10
August 1957	April 1958	8
April 1960	February 1961	10
December 1969	November 1970	11
November 1973	March 1975	16
January 1980	July 1980	6
July 1981	November 1982	16
July 1990	March 1991	8
March 2001	November 2001	8
December 2007	June 2009	18
February 2020	April 2020	2
Source: NBER

How Long Do Recessions Last?

According to the NBER, the shortest recession occurred following the onset of the Covid-19 pandemic and lasted two months, while the longest went from 1873 to 1879, lasting 65 months. The Great Recession lasted 18 months between December 2007 and June 2009 and was the longest recession since World War II.

If you consider the other 12 recessions following World War II, they have lasted, on average, about ten months.
Periods of economic expansion tend to last longer than periods of recession. From 1945 to 2020, the average expansion lasted 64 months, while the average recession lasted ten months.

Between the 1850s and World War II, economic expansions lasted an average of 26 months, while recessions lasted an average of 21 months.

The Great Recession between 2007 and 2009 was the most severe economic drawdown since the Great Depression of the 1930s. This recession was considered particularly damaging due to its duration, unemployment levels that peaked at around 10%, and the widespread impact on the housing market.

6 Common Causes of Recessions

The causes of recessions can vary greatly. Generally speaking, recessions happen when something causes a loss of confidence among businesses and consumers.

The mechanics behind a typical recession work like this: consumers lose confidence and stop spending, driving down demand for goods and services. As a result, the economy shifts from growth to contraction. This can, in turn, lead to job losses, a slowdown in borrowing, and a continued decline in consumer spending.

Here are some common characteristics of recessions:

1. High Interest Rates

High interest rates make borrowing money more expensive, limiting the amount of money available to spend and invest. In the past, the Federal Reserve has raised interest rates to protect the value of the dollar or prevent the economy from overheating, which has, at times, resulted in a recession.

For example, the 1970s saw a period of stagnant growth and inflation that came to be known as “stagflation.” To fight it, the Fed raised interest rates throughout the decade, which created the recessions between 1980 and 1982.

2. Falling Housing Prices

If housing demand falls, so does the value of people’s homes. Homeowners may no longer be able to tap their house’s equity. As a result, homeowners may have less money in their pockets to spend, reducing consumption in the economy.

3. Stock Market Crash

A stock market crash occurs when a stock market index drops severely. If it falls by at least 20%, it enters what is known as a “bear market.” Stock market crashes can result in a recession since individual investors’ net worth declines, causing them to reduce spending because of a negative wealth effect. It can also cut into confidence among businesses, causing them to spend and hire less.

As stock prices drop, businesses may also face less access to capital and may produce less. They may have to lay off workers, whose ability to spend is curtailed. As this pattern continues, the economy may contract into recession.

4. Reduction in Real Wages

Real wages describe how much income an individual makes when adjusted for inflation. In other words, it represents how far consumer income can go in terms of the goods and services it can purchase.

When real wages shrink, a recession can begin. Consumers can lose confidence when they realize their income isn’t keeping up with inflation, leading to less spending and economic slowdown.

5. Bursting Bubbles

Asset bubbles are to blame for some of the most significant recessions in U.S. history, including the stock market bubble in the 1920s, the tech bubble in the 1990s, and the housing bubble in the 2000s.

An asset bubble occurs when the price of an asset, such as stock, bonds, commodities, and real estate, quickly rises without actual value in the asset to justify the rise.

As prices rise, new investors jump in, hoping to take advantage of the rapidly growing market. Yet, when the bubble bursts — for example, if demand runs out — the market can collapse, eventually leading to recession.

6. Deflation

Deflation is a widespread drop in prices, which an oversupply of goods and services can cause. This oversupply can result in consumers and businesses saving money rather than spending it. This is because consumers and businesses would rather wait to purchase goods and services that may be lower in price in the future. As demand falls and people spend less, a recession can follow due to the contraction in consumption and economic activity.

How Do Recessions Affect You?

Businesses may have fewer customers when the economy begins to slow down because consumers have less real income to spend. So they institute layoffs as a cost-cutting measure, which means unemployment rates rise.

As more people lose their jobs, they have less to spend on discretionary items, which means fewer sales and lower revenue for businesses. Individuals who can keep their jobs may choose to save their money rather than spend it, leading to less revenue for businesses.

Investors may see the value of their portfolios shrink if a recession triggers stock market volatility. Homeowners may also see a decline in their home’s equity if home values drop because of a recession.

When consumer spending declines, corporate earnings start to shrink. If a business doesn’t have enough resources to weather the storm, it may have to file for bankruptcy.

Recommended: How to Invest During a Recession

Governments and central banks will often do what they can to head off recession through monetary or fiscal stimulus to boost employment and spending.

Central banks, like the Federal Reserve, can provide monetary policy stimulus. The Fed can lower interest rates, which reduces the cost of borrowing. As more people borrow, there’s more money in circulation and more incentive to spend and invest.

Fiscal stimulus can come from tax breaks or incentives that increase outputs and incomes in the short term. Governments may put together stimulus packages to boost economic growth, as the U.S. government did in 2009 and in 2020.

For example, stock market volatility increased wildly amid fears of the coronavirus pandemic and its economic fallout. To ward off recession, the U.S. government put together trillions in Covid-19 stimulus packages that included direct payments to citizens, suspended student loan payments, a boost to unemployment benefits, and a lending program for businesses and state and local governments.

Recessions vs Depressions and Bear Markets

Though recessions, depressions, and bear markets may all feel or seem similar, there are some differences investors should be aware of.

Recessions vs Depressions

When a recession occurs, it could stir up uneasy feelings that perhaps the economy will enter a depression. However, there are significant differences between recessions and depression. While recessions are a normal part of the business cycle that last less than a year, depressions are a severe decline in economic output that can last for years. Consider that the Great Recession lasted 18 months, while the Great Depression lasted about ten years.

Recessions vs Bear Markets

A recession is also different from a bear market, even though many think the two events go hand-in-hand.

A bear market begins when the stock market drops 20% from its recent high. If you look at the benchmark S&P 500 index, there have been 14 bear markets since 1945.

Yet, not all bear markets result in recession. During 1987’s infamous Black Monday stock market crash, the S&P 500 lost 34%, and the resulting bear market lasted four months. However, the economy did not dissolve into recession.
That’s happened three other times since 1947. Bear markets have lasted 14 months on average since World War II, and the most significant decline since then was the bear market of 2007–2009.

That’s why it’s important to keep in mind that the stock market is not the same as the economy, though they are related. Investors react to changes in economic conditions because what’s happening in the economy can affect the companies in which investors own stock.

So, if investors think the economy is growing, they may be more willing to put money in the stock market. They will likely pull money out of the stock market if they believe it is contracting. These reactions can function as a sort of prediction of recession.

Recommended: Bear Market Investing Strategies

Is It Possible to Predict a Recession?

Economists and investors try to predict recession, but it’s difficult to do, and they often end up wrong. Economists usually frame the possibility of a recession as a probability. For example, they may say there’s a 35% chance of a recession in the next year.

There are several methods economists use to try to predict recessions. Some of the most common include analyzing economic indicators, such as employment and inflation, as well as consumer and business confidence surveys. Economists build models with these economic indicators as inputs, hoping the data will help them determine the path of economic growth. While these methods can indicate whether a recession might be on the horizon, they are far from perfect.

One issue in predicting a recession is that a lot of data analysts use to forecast the economy are backward looking indicators. These data, like the unemployment rate or GDP, present a picture of the economy as it was a month or more prior. Using this data to paint a picture of the present economy becomes difficult and adds to the complexity of predicting a recession.

However, many analysts believe the yield curve is the best indicator to help predict a recession. When the yield curve inverts, meaning that the interest rate on short-term Treasuries is higher than on long-term Treasuries, it is a warning sign that the economy is heading to a recession. An inverted yield curve has occurred before all 10 U.S. recessions since 1955. Notably, however, the yield curve inverted in 2022, and a recession did not subsequently occur (yet).

The Takeaway

Recessions are periods of economic contraction, and are usually accompanied by rising unemployment and a falling stock market – though that’s not always the case.

The possibility of a recession can be unsettling, causing you to think of economic hardships and spark fears of personal financial troubles. However, recessions are a regular part of the business cycle, so you should be prepared for one if and when it comes. When it comes to investing, this means building and maintaining a portfolio to meet long-term goals.

For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.

SoFi Invest®

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

SOIN-Q324-027

Sep

2024

9 Common Signs of Millionaires That Indicate You Are On Track to Becoming Wealthy

By Rick Orford | Budgeting & Goals, Financial Independence, relay | Comments Off

If you are like many people, you may have asked yourself at some point in life, “Will I be rich one day?” No one knows for sure what the future holds, but there are a few things you can do to increase your chances of becoming a millionaire.

One of the best ways to amass wealth is to invest in assets that will appreciate over time. But while that sounds good, finding a starting point can be challenging for some. For example, you can start your own business or work hard to climb the corporate ladder, but which is the better option? And you’ll want to invest the money you earn. But where?

Whatever you do, it’s smart to remember that it’s okay to take risks and make mistakes; learning from your experiences is a critical component of success. Above all, remember that wealth accumulation is a marathon, not a sprint. It takes patience, commitment, and perseverance to achieve financial security.

Table of Contents

What Is a Sign of Wealth
Examples of Millionaires Under 30
Signs of Wealth to Look Out For
Spiritual Signs You Will Be Rich
Pros and Cons of Having Signs of Wealth
The Takeaway

Key Points

• Early financial success, such as earning money from a young age, can set the stage for future wealth.

• Taking decisive action and managing finances proactively are common traits among those accumulating wealth.

• Outspokenness and a unique personal style often distinguish wealthy individuals in social settings.

• A strong sense of urgency and goal-oriented behavior are typical among successful wealth builders.

• Distinguishing between needs and wants is crucial for effective financial management and wealth accumulation.

What Is a Sign of Wealth?

Often, specific aspects of one’s physical appearance such as luxury cars and designer clothes are taken as a sign of being rich or wealthy. Unfortunately, these signs aren’t always reliable. For example, some people may live in an extravagant home, giving off the appearance of wealth, but it may simply mean that they can access money — perhaps through credit, savings, or even family.

Real signs of wealth are often more attitudinal, and many can be cultivated through patience and practice. Here are a few people who were early millionaires due, in large part, to their drive and focus.

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Examples of Millionaires Under 30

With the advent of the tech industry, smart investments, business ventures, or inheritances — i.e., the great wealth transfer — millionaires under 30 are becoming increasingly common. Here are three examples of millionaires who earned their fortunes before turning 30.

Mark Zuckerberg: Zuckerberg created Facebook at age 19 while attending Harvard University. The idea was to match photos with the names of other students. And in just a few short years, Zuckerberg became a self-made millionaire at age 22.

Sergey Brin: Brin is a Russian American computer scientist who, at the age of 25, co-founded Google, Inc., and became a millionaire. Google is one of the world’s most valuable companies, and today, Brin’s net worth is estimated to be upwards of $120 billion.

Alexandr Wang: Wang founded Scale AI in 2016 as a way to analyze data far faster than any human could. Today, Scale AI’s technology has been used by the U.S. Airforce and U.S. Army, as well as 300+ companies. Today, Wang’s net worth is estimated to be over $2 billion, and at age 27, he’s among the youngest self-made billionaires.

Recommended: Does Net Worth Include Home Equity?

9 Signs of Wealth to Look Out For

In the U.S. 1% of earners take home nearly 30% of the country’s income, so it’s essential to know what signs to look for when trying to identify if someone is wealthy. While there’s no one-size-fits-all definition of wealth, some cues can give you a good idea of whether you or someone you know is doing well financially. (And a net worth calculator can help you tally up your own assets.)

Here are six signs of wealth to look out for that indicate you’re on track to becoming wealthy:

1. You’re an Overachiever

It’s hard to be modest when you’re an overachiever. You know you’re good at your work and are not afraid to let everyone know. Overachievers work hard and try harder. While this may make some people uncomfortable, it comes naturally to you.

2. You Started Making Money At a Young Age

It is not uncommon to see young adults with successful careers in today’s society. While some people played with toys as a child, others learned how to make money. For example, it could mean that you had a paper route or a babysitting business.

Making money at a young age, or any age for that matter, is not always easy. But an early start in earning, tracking your money, and investing can put you on an accelerated schedule when it comes to building your wealth and becoming a millionaire.

3. You Take Action

There will be times when things happen that are out of your control. You may feel stuck and as if you have no way to change your circumstances. However, these are the times when you must take action to create the life you want to live. For example, it might mean organizing your finances to get what you want. And, sometimes you’ll have to take some risks and go for it. It can be scary, but it’s worth it to achieve your goals.

When faced with a difficult situation, it’s essential to remember that you always have a choice. You can choose to give up, or you can choose to fight for what you want. Only by taking action can you make progress and take a step towards achieving financial wellness. So don’t be afraid to step up and take on whatever life throws your way — you can do it!

4. You Are Outspoken

In a society where people get judged by how much money they have, it is no surprise that many go out of their way to keep up appearances. And while some may try to blend in with the wealthy crowd, a wealthy person will often stand out with his unique style or outgoing sense of humor. Wealthy people tend to feel less inhibited and are more likely to speak their minds. They may also be less concerned with the rules and more likely to take risks.

5. You Possess a Sense of Urgency

When it comes to the wealthy, there are a few telltale signs that set them apart. One of these is their sense of urgency — they don’t like wasting time and are always moving forward. This urgency allows them to set financial goals, achieve them, and maintain their wealth. It’s also one of the reasons why they may seem constantly stressed out — they’re always trying to do more.

6. You’re Focused More on Saving Than Earning

It doesn’t matter if you earn $50,000 or $250,000 a year. Unless you consistently spend less than you make, you’ll never get ahead financially. People who focus on their budget and saving their disposable income understand how to live within their means and focus on what’s most important: saving money for the future.

7. You Know the Difference Between Needs and Wants

In our materialistic society, getting caught up in the “must-have” mentality is easy. Advertisements are everywhere, and social media posts tell us we need the next latest and greatest products. It can be challenging to discern between the things we need and want.

A sign of a wealthy person is their ability to distinguish between the two. They know which items are essential for their well-being and those which would be nice to have. Advertising or peer pressure doesn’t work on rich people, and their possessions don’t rule them.

Recommended: Should I Sell My House Now or Wait?

Spiritual Signs You Will Be Rich

Are there spiritual signs that you can be a wealthy person? Some people believe steadfastly in spiritual and other signs of wealth and luck. Here are a couple of examples:

Gravitating to the Lucky Number, 8

In Chinese culture, the number 8 is considered a lucky number. Individuals who gravitate toward this number may believe it will bring them good fortune. Some people might even go as far as to change their phone number or social media handle to include the digit 8.

A Psychic Confirms Wealth is Coming

Some people consult psychics to get guidance on anything from love to health and even money. While many psychics will say they can tune into your energy and give you specific information about your future, and many people believe their predictions, you may be better off putting the money you’d pay the psychic into savings.

Pros and Cons of Having Signs of Wealth

There are very few times when it can be helpful to show off your wealth to others. Indeed, showing off can make others feel intimidated. Additionally, it can attract unwanted attention from criminals or others who want to take what you have. And having too many signs of wealth can make you a target for scams or other fraudulent schemes.

The Takeaway

If you identify with any of these habits you’re likely well on your way to building a significant amount of wealth. However, it is essential to remember that wealth accumulation is not a one-time event; it’s a way of life. It’s something you’ll need to make a habit of, if you want to succeed. For many people who work hard, stay focused, and are disciplined, it is possible.

And as you’re building your wealth, tracking your income and expenses is one of the primary ways to manage your money. SoFi’s money tracker app can help you keep track of your funds so you can make the best spending decisions and start building your very own fortune today.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

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FAQ

At what point is someone considered wealthy?

There is no magic dollar amount that indicates someone is wealthy and one person’s definition may not be the same as another’s. But in 2022, the top 1% of earners took home an average of $785,968, according to the Economic Policy Institute. Of course the amount you earn is only part of the wealth story. How much of your income (or inherited wealth) you retain is affected by your spending habits.

What are invisible signs of wealth?

People who are stealthily wealthy still might have a “tell” that gives them away. Use of private banking or wealth management services would be one example. Another might be not working but being able to maintain an expensive hobby such as riding horses or boating. Buying bespoke products, whether tailor-made clothing or custom-designed furniture, is another subtle giveaway.

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SORL-Q324-043

Buy Low, Sell High Strategy: An Investor’s Guide

What Does It Mean to “Buy Low, Sell High”?

4 Tips on How to Buy Low and Sell High

1. Investing with the Business Cycle

2. Look at Stock Pricing Trends

3. Use Moving Averages

4. Beware of Investor Bias

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Pros and Cons of Buy Low, Sell High

Benefits of Buy Low, Sell High

Disadvantages of Buy Low, Sell High

Alternatives to Buy Low, Sell High

Investing with SoFi

FAQ

Is buying low and selling high a good strategy?

Is it illegal to buy low and sell high?

Why do you sell high and buy low?

14 Reasons Why It’s So Hard to Save Money Today

Challenges of Saving Money in Today’s Economy

1. Not Focusing on Paying Down Debt

2. Budgeting is a Non-Factor

3. Trying to Impress Friends With Money

4. Not Earning Enough Money

5. Not Having an Emergency Fund

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6. Shopping Too Much

7. Inflation in Housing, Education and More

8. Paying for Items We Don’t Use

9. Saving Money is Not Our Priority

10. Cost of Living is Rising

11. Spending Too Money On Social Activities

12. Lifestyle Creep

13. Not Thinking Ahead

14. Spending Money is Easy

The Takeaway

FAQ

What are the challenges of saving money?

Do millionaires struggle to save money?

How do you stay motivated when it’s so hard to save money?

Guide to Block Trades

What Are Block Trades?

Why Do Block Trades Exist?

How Block Trades Are Executed

Smaller Trades Are Used to Hide Block Trades

Pros and Cons of Block Trades

Pros of Block Trades

Cons of Block Trades

Block Trade Example

Are Block Trades Legal?

How Block Trades Impact Individual Investors

The Takeaway

What Is a Recession?

Different Recession Definitions

NBER’s Definition

Julius Shiskin Definition

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How Often Do Recessions Occur?

How Long Do Recessions Last?

6 Common Causes of Recessions

1. High Interest Rates

2. Falling Housing Prices

3. Stock Market Crash

4. Reduction in Real Wages

5. Bursting Bubbles

6. Deflation

How Do Recessions Affect You?

Recessions vs Depressions and Bear Markets

Recessions vs Depressions

Recessions vs Bear Markets

Is It Possible to Predict a Recession?

The Takeaway

9 Common Signs of Millionaires That Indicate You Are On Track to Becoming Wealthy

What Is a Sign of Wealth?

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Examples of Millionaires Under 30

9 Signs of Wealth to Look Out For

1. You’re an Overachiever

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