You can expect to pay anywhere from $2,000 to $9,000 for a shower remodel, according to the home improvement site Angi. The average cost in mid-2025 is $7,000, but when you think of how often you take a shower, that expense may amortize pretty quickly.
Here’s a closer look at the specific costs involved, some ways to save money on a shower remodel, plus how to get started.
Key Points
• The average cost for a shower remodel is around $7,000, ranging from $2,000 to $9,000.
• Factors influencing cost include shower size, type, fixtures, and finishes.
• Maintaining the existing layout and drywall can significantly reduce remodeling costs.
• Prefabricated shower units and DIY work can also help save money on the project.
• Home improvement loans are available to finance shower remodeling projects.
The Process to Remodel a Shower
The first decision you’ll need to make is whether you’re going to hire a professional or do the remodel yourself. If you have experience with home remodeling, you could potentially save a lot of money by taking on the job, since labor can make up as much as 75% of your total remodel costs. However, if this is your first remodel, you could end up spending a lot more fixing your mistakes.
Once you determine if you’re going to hire a professional or not, you’ll need to come up with shower remodel ideas, including the color scheme, shape, shower type (full or shower-tub combo), fixtures you’re going to get, lights, fans or radios you’ll install, and any doors you’ll replace.
If you aren’t sure how to design your new shower, you can ask your contractor for help or hire a designer, but this will add to your costs.
Once you have an idea of what you want to do, your contractor will come up with a plan for your shower remodel and give you an estimate for materials and labor. You can work with them to see if there are cheaper alternatives, like shopping for materials online or choosing less expensive fixtures and finishes.
If you’re going the DIY route, you’ll have to shop around for the materials and pick them up. You’ll also need tools, such as a safety mask and goggles, tape measure, spackle knife, power drill, extension cord, hammer, and stud finder, just to name a few.
An easy way to DIY a shower remodel is to shop for a complete shower system that includes coordinating fixtures. After removing the existing shower walls, flooring, and fixtures, the new materials can be installed. You might choose an all-in-one shower surround, or a shower pan (the base) with tiled walls.
Typically, it can cost from $2,000 to $10,100 to remodel a shower, with the average cost coming in around $7,000. Your actual costs will depend on how large the shower is, what kinds of fixtures you’re installing, and the finishes you’re using. Here’s a look at some of the factors that affect the cost of a shower remodel.
Shower Type
A walk-in shower adds a high-end look to a bathroom and is easy to get in and out of. With this option, there’s a lot of wiggle room on budget — you could spend as little as $600 or as much as $12,000 depending on the materials you choose.
You might be able to spend less if you go with a prefabricated shower, which comes with the entire shower surround and fixtures. You can find prefabricated shower inserts in a variety of styles and price points.
A tub-and-shower combination is one of the most popular choices, since they use up less space than having a separate shower and bathtub. You can also customize the look with your tile and fixture choices. On average, a tub-and-shower combo runs from $350 to several thousand dollars.
The costs involved in remodeling a shower can add up quickly, so budgeting wisely is important. And once you get into the project, there is always the potential for unwanted — and expensive — surprises. Fortunately, there are ways to keep costs in check while still ending up with a clean, updated look. Here are some to consider.
• Maintaining the layout If you use the current layout, you won’t need to make changes to the plumbing and electrical. This cuts costs, as well as the chance for costly surprises.
• Keeping the same drywall If the drywall behind your shower is in good shape, you may be able to avoid tearing it out and starting fresh. If there is some damage, your contractor may be able to simply replace those sections rather than tear the entire wall out.
• Saving your tub If your bathtub is in decent shape, you might simply give your shower a face-lift by changing the surrounding tile and shower fixtures and reglazing the tub to match.
• Buying a prefab shower These units can cost significantly less than a custom build and are now available in a range of designs that look luxurious and don’t scream “prefab.”
If you’re eager to remodel your shower but don’t have funds to cover the cost up front, you may be able to finance the project using a home improvement loan.
A home improvement loan is essentially a personal loan used to pay for home upgrades and renovations. These loans are available through banks, online lenders, and credit unions, and are typically unsecured (meaning you don’t have to provide collateral). Once approved, you receive a lump sum of cash up front you can then use to cover the cost of remodeling your shower. You repay the loan (plus interest) in regular installments over the term of the loan, which typically runs up to seven years.
Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.
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FAQ
How much should it cost to renovate a shower?
The average cost of renovating a shower as of mid-2025 is $7,000, but there’s a wide range of prices depending on the specifics. It could be between $2,000 and $9,000.
Can you remodel a bathroom for $5,000?
It is possible to remodel a bathroom for $5,000, but you will likely be working on mainly cosmetic changes vs. buying new fixtures, choosing top-of-the-line options, and moving plumbing lines.
How much does it cost for a new walk-in shower?
As of mid-2025, a basic prefabricated walk-in shower cost an average of $1,850, including installation. A custom-built shower, however, could cost an average of $8,000.
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In 2025, student loan debt remains a major obstacle to financial wellness for millions of American workers. While education is often viewed as the gateway to opportunity, the rising costs of higher education have left many employees burdened by debt throughout their careers.
With ongoing legislative changes, program delays, and economic uncertainty, navigating the student debt landscape has become increasingly complex. For HR professionals, this presents both a challenge and opportunity —- the challenge of creating benefits to address employee concerns about student debt, along with the opportunity to build a more engaged, loyal, and financially resilient workforce.
Here’s a look at the latest developments in student lending — and how HR can play a role in supporting and empowering employees burdened by education debt.
Key Points
• Student loan debt significantly hinders financial wellness, impacting millions of American workers.
• Collection activities on defaulted loans have resumed, affecting over five million borrowers.
• Legal uncertainty surrounds repayment plans such as SAVE, PAYE, and ICR.
• Employers can offer direct student loan repayment assistance and 401(k) matching to improve employee financial health.
• Financial education and counseling services help employees understand and manage repayment options effectively.
Key Challenges Employees May Be Facing
Despite federal efforts to ease the burden of student loans, 2025 has ushered in a new set of uncertainties. Here are some of the most recent changes in federal loan repayment that may be impacting the financial health of your employees.
Resumption of Collection Activities
The Department of Education (ED) resumed collections on defaulted students on May 5, 2025, after a roughly five-year hiatus. The action affects over five million borrowers who are now in default, with an additional four million in late-stage delinquency. Consequently, nearly 10 million borrowers could soon be in default, representing almost 25% of the entire federal student loan portfolio.
The ED has restarted collections through the Treasury Offset Program (TOP), which allows for the offset of income tax refunds and certain federal and state payments. If borrowers continue to miss payments going into the summer, Federal Student Aid will place them in administrative wage garnishment. This means up to 15% of their disposable income can be withheld from their paycheck and sent to their loan holder.
Legal Uncertainty Surrounding Repayment Plans
The Saving on a Valuable Education (SAVE) plan, designed to lower monthly payments and eventually forgive remaining balances, is currently on ice due to a court ruling that blocks its implementation. The roughly eight million borrowers who signed up for SAVE are now in an interest-free forbearance, and the future of the plan remains uncertain. The same court ruling also paused the forgiveness feature of the Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) Plans.
A final resolution on these programs may come from the Supreme Court or through Congressional action.
Potential Changes to PSLF
The Public Service Loan Forgiveness (PSLF) program, which promises debt forgiveness for nonprofit and government workers after 120 qualifying payments, is facing renewed scrutiny. An executive order signed by President Trump seeks to limit which employees can qualify for loan forgiveness by changing what counts as public service. If these changes are implemented, some nonprofit organizations could lose their eligibility for the PSLF program.
Supporting Employees With Student Debt
HR departments have a unique opportunity to support employees in their financial journeys. While traditional benefits such as health insurance and retirement savings remain important, today’s workforce increasingly values financial wellness programs that address immediate concerns — chief among them, student loan debt.
Helping employees navigate their student debt repayment journey can lead to meaningful organizational benefits, including:
1. Reduced Financial Stress
According to SoFi at Work’s Workplace Financial Well-Being 2024 survey, employees spend nearly 14 hours a week stressing about finances, over half that time (8.2 hours) during working hours. Perhaps not surprisingly, one in three employees say financial issues impact their ability to focus at work, and nearly 25% say the stress reduces their productivity and confidence on the job.
Employer efforts to alleviate financial stress can lead to increased productivity, reduced absences, and improved overall employee well-being. When workers aren’t preoccupied with looming payments or default risks, they can bring more focus and energy to their roles.
Improve Loyalty and Retention
By actively addressing the student debt crisis and offering support, company leaders can foster a culture of support and empathy within the organization. This can create a positive work environment where employees feel valued and supported in their financial journey. Those employees may feel less inclined to look for a different employer, increasing your organization’s retention rates.
Employees may also be more engaged and connected to their work when they feel their employer takes their financial wellness seriously.
Increased Financial Literacy
HR can also play an educational role, helping to demystify the often-confusing world of student loans. By providing clear, accurate information — through webinars, one-on-one counseling, or curated resources — benefits teams can empower employees to make informed decisions about repayment strategies, consolidation, and forgiveness options.
That can be especially valuable for borrowers with loans in default. For example, if they’re considering enrollment in an income-driven repayment (IDR) plan, you may provide access to a student debt consultant who can help them compare the various options and choose a workable repayment plan.
One of the most straightforward ways to assist employees is by contributing directly to their student loan payments. Under current law, employers can offer up to $5,250 annually in tax-free student loan repayment assistance through 2025. This benefit can be structured as a monthly subsidy, annual lump sum, or performance-based incentive.
Direct repayment support not only helps employees chip away at principal faster but also signals a strong commitment from employers. When paired with financial counseling or other resources, this benefit can have a highly positive impact on employee morale and financial health.
401(k) Student Loan Match
An innovative employer benefit gaining traction is matching employees’ student loan payments with contributions to their retirement accounts. Thanks to changes under the SECURE 2.0 Act that went into effect in 2024, employers can make 401(k) matching contributions based on employees’ qualified student loan payments.
This addresses the common dilemma many young workers face: choosing between paying off debt and saving for retirement. By offering both, employers can help workers build long-term financial security without sacrificing immediate obligations. It’s a win-win that encourages both debt reduction and future planning.
In addition to monetary support, HR can offer programs that build financial literacy and empower smarter decision-making. Partnering with financial wellness platforms or nonprofit organizations, employers can provide workshops, online tools, and access to certified counselors.
• Navigate forgiveness programs (e.g., PSLF and forgiveness through IDR plans)
• Avoid default and wage garnishment
• Strategize for long-term financial goals alongside debt repayment
The Takeaway
As we navigate the evolving landscape of student debt in 2025, one truth is clear: employers have a powerful role to play in supporting the financial wellness of their teams. For employees burdened by uncertainty, resuming payments, and potential wage garnishments, HR support can be the difference between ongoing stress and a path to stability.
By offering thoughtful benefits — ranging from financial education to direct loan repayment and retirement matching — company leaders can foster a workplace where employees feel valued and supported.
SoFi can help. We’re experts in the student lending space. SoFi at Work offers student loan information, refinancing, and repayment platforms, along with a range of other benefits tools that can help you build a successful and loyal workforce.
Photo credit: iStock/filadendron
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Money managers can help individuals set financial goals, plot and implement investment strategies, and more. You may not think you need one, either, but an experienced, trustworthy, and savvy guide can be a tremendous help when trying to wrangle your finances. Amid the sea of financial professionals are money managers, who can take a hands-on approach with an investment portfolio.
Before hiring a money manager, however, it’s important to understand what they do, how they get paid, and how they may differ from other financial professionals.
Key Points
• Money managers provide personalized investment advice and manage portfolios, buying and selling securities based on market conditions.
• They have a fiduciary duty to act in clients’ best interests, ensuring accurate and beneficial advice.
• Benefits include expert guidance, time savings, and avoiding costly investment mistakes through professional management.
• Drawbacks include fees, potential conflicts of interest, and the cost of services, which can range from 1% to 2% of the portfolio.
• Fee structures vary, including management fees, hourly rates, fixed fees, and performance-based fees, with considerations for choosing a manager.
What Is a Money Manager?
Money managers are also known as portfolio, asset, or investment managers. They are people or companies that provide individualized advice about building a portfolio. They buy and sell securities on behalf of their clients, provide updates, and make suggestions for changes as market conditions shift. Clients include individuals and institutional investors like universities and nonprofit organizations.
Money managers have a fiduciary duty to their clients: They are obligated by law to put their clients’ best interests first. This may seem like a no-brainer, but it is not necessarily true of all financial professionals.
Investment advice must advance a client’s goals, not because it is more profitable for the advisor. For example, a money manager could not suggest a particular investment to a client just because the manager would receive higher compensation.
Fiduciary rules mean that advice must be as accurate as possible based on the information that is available. A fiduciary (from the Latin “fidere,” meaning “to trust”) is to take into account cost and efficiency when making investments on behalf of clients, and alert clients to any potential conflicts of interest.
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What Makes Money Managers Different?
As you search for someone who can help you invest, you may encounter any number of titles, from asset manager to financial advisor, wealth manager to registered investment advisor. To make matters more confusing, “financial planner” covers a broad range of possible professions. They could be investment advisors, brokers, insurance agents, or accountants.
A potential client can check the registration status and background of a professional or firm on Investor.gov, the SEC’s Investment Adviser Public Disclosure website, FINRA’s BrokerCheck, and/or individual state securities regulators.
Here’s a look at some of the most common financial professionals you may encounter and what may make money managers different.
Registered Investment Advisors
Registered investment advisors, as the name suggests, provide investment advice to clients. They must register with the Securities and Exchange Commission or a state authority, and they have a fiduciary duty to hold a client’s interests above their own. They can manage client portfolios, making trades and offering advice on investment strategies.
Registering as an investment advisor means disclosing investment styles and strategies, total assets under management, and fee structure. RIAs must also disclose past disciplinary action and conflicts of interest.
Broker-dealers
A broker-dealer is an individual or company licensed to buy and sell securities. Brokers act as middlemen, buying and selling stocks and other securities for other people. When they are buying for their own accounts they are functioning as dealers.
Stockbrokers usually work at brokerage firms and earn their money by charging a fee for transactions they make.
Brokers register with the Financial Industry Regulatory Authority, an industry group. FINRA has enforced a “suitability” rule for them, meaning they needed to have reasonable grounds to believe that a recommended transaction or investment strategy involving a security or securities was suitable for the customer.
Now the SEC is enforcing a new rule, Regulation Best Interest, that establishes a “best interest” standard for broker-dealers. It requires them to stop referring to themselves as advisors if they aren’t working under a fiduciary standard.
Certified Financial Planners
Financial professionals who carry the CFP® credential have gone through the rigorous training and experience requirements required by the CFP® board. They must also pass a six-hour exam.
They have a fiduciary duty to their clients but can offer services that don’t require regulation. They can help with general financial planning, such as putting together a retirement plan or a debt reduction plan. They may make recommendations about asset allocation, investment accounts, and tax planning.
Money Managers
Money managers may offer a combination of the services mentioned above. They chiefly manage people’s investment portfolios, but they may also offer other forms of financial planning. They likely give investment advice, which means they must be registered as an RIA.
Fiduciary?
Offer advice?
Area of focus
Money Managers
Yes
Yes
Portfolio management
Certified Financial Planners
Yes
Yes
Financial planning (retirement, etc.)
Broker-dealers
Sometimes
Sometimes
Facilitating transactions
Registered Investment Advisors
Yes
Yes
Investment advice
Pros and Cons of Hiring a Money Manager
HIring a money manager, like any other financial professional, can have its pros and cons.
Pros of Having a Money Manager
The advantages of having a money manager are rather obvious: You get expertise and experience in helping you make financial decisions. This can save you a ton of resources — such as time — when trying to decide your next moves. It could, potentially, save you money, too, in saving missteps that need to be rectified (rebalancing your portfolio, for instance). In short, though, the pros of hiring a professional are that you have a professional guiding hand helping you out.
At the end of the day, a money manager is theoretically better at managing money than the average person.
Cons of Having a Money Manager
Likely the biggest drawback, in most people’s minds, to hiring a money manager is that you need to pay for their service. Some people may also like to make their own decisions as it relates to their money, and have trouble handing over the reins, so to speak. There’s also the chance that a money manager has a conflict of interest or is not acting in your best interests — something to be aware of when looking to make the right hire.
How Do Money Managers Get Paid?
Money managers typically charge a management fee equal to a percentage of a client’s portfolio each year. On average, advisors charge between 1% and 2% of clients’ assets under management. But there are a lot of variables to consider.
A manager’s fees may be assessed quarterly, which could mean the amount you pay at the end of the year may be a bit more or less than if you were to pay annually.
An asset manager’s fees may also decrease depending on the size of an account. For example, fees on very large accounts may be smaller so that single clients don’t end up paying exorbitant amounts.
Asset managers and other financial advisors may also charge an hourly rate, especially if they are doing any consulting or working on a special project. They may also charge fixed fees for certain services. Some advisors and managers may earn a commission when purchases or trades are made. And there may be performance-based fees if a portfolio performs beyond an established benchmark.
Fee-only advisors earn their money only from the fees they charge clients. They do not earn commissions. This fact makes them distinct from fee-based advisors, who may earn money from fees and commissions.
💡 Quick Tip: When you’re actively investing in stocks, it’s important to ask what types of fees you might have to pay. For example, brokers may charge a flat fee for trading stocks, or require some commission for every trade. Taking the time to manage investment costs can be beneficial over the long term.
Should You Hire a Money Manager?
Managing your money can take a lot of time and effort, especially if you have multiple investment accounts or you’re juggling a lot of assets.
Money managers typically have many advantages when it comes to choosing investments. Not only are they trained to make investment decisions but they typically have access to a lot of information — including analytical data, research reports, financial statements, and sophisticated modeling software — that the average person doesn’t have. So they may be better equipped to make informed decisions.
For investors who have struggled to understand how to best put their money to work in order to meet financial goals, a money manager may be able to help. A large portfolio isn’t necessary. Even those who are just starting out may be able to benefit from working with one.
Even if you’re just starting to invest, it may be worth it to look into hiring one.
3 Tips on Choosing a Money Manager
You can review some money management tips, but additionally, here are a few things to keep in mind when choosing a money manager.
1. Know What You’re Looking For
Before hiring a money manager, figure out what type of financial help you need. If you’re just starting out, you may want to hire someone who can help you put together a long-term financial plan, for example.
2. Check Credentials
An online check with one or more of the aforementioned official websites will show how long an advisor has been registered, where they have worked, and what licenses they hold.
3. Interview
After narrowing the search, it’s a good idea to speak to a few candidates to get an idea of how they communicate, how they typically work with clients, and how they are compensated. If an advisor is cagey about answering the latter question, that’s a red flag.
The Takeaway
With so many titles and options, from financial planner to broker and money manager, it might be hard to choose a guide to handle your finances. A money manager is a strategist who specializes in managing investment portfolios and has a fiduciary duty to clients.
There are a slew of different types of advisors, planners, and managers in the financial world, so it’s important to know the differences. It’s also important to keep in mind that hiring a money manager can have pros and cons. Bringing in professional help may not be the best route for everyone.
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FAQ
What is the difference between a money manager and a financial advisor?
A money manager is a sort of subset of financial advisors, often with more specialized services offered to clients. The differences likely lie in the specific services and expertise offered.
Is it worth it to use a money manager?
If you value expertise and a guiding hand in the market, hiring a money manager may be worth it to you. Be aware, though, that there are costs to hiring a money manager, and the costs may not always outweigh the benefits for everyone.
Is it better to have a financial advisor or a financial planner?
Depending on your individual circumstances, goals, and needs, whether a financial advisor or planner is better will vary. Each may offer different services, so know what you’re looking for before hiring either.
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If you’re curious about investing but have yet to start, you’re not alone. Taking the plunge may be the hardest part.
The world of investing is broad, and at times, it can feel complicated. As much as you may read and research, it’s natural to end up with unanswered questions about investing. For answers, you can scour the internet for articles, but it can be hard to know where to go and whom to trust. Read on to get some answers to your broad investing questions.
Key Points
• You can start investing with as little as $10 or $100, using free accounts with no minimums or fees.
• Build an emergency fund of 3 to 6 months’ expenses before investing to avoid debt from unexpected costs.
• Diversify a $10,000 investment with low-cost index funds, ETFs, or mutual funds, and consider 401(k)s or IRAs.
• ETFs trade daily like stocks and often have lower costs, while mutual funds trade once daily.
• 401(k)s reduce taxable income and offer employer matches, while IRAs provide tax benefits and investment flexibility.
Getting Started With Investing
To begin your investment journey, you need to understand basic information about the process. That can help you feel secure and comfortable enough to take the first concrete step. For instance, you’re probably wondering about such things as, how much money do I need to invest? And which basic investments are right for me?”
6 Investing Questions to Ask Yourself
As you begin your investment journey, the following six questions about investing may help you figure out how much to invest as well as investment options you may want to look into.
1. What’s a Good Amount of Money to Start Investing?
Great news: Investing in your future is no longer an activity reserved for the wealthy. You can get started easily with active investing, even without much in your pocket.
When you’re an investor starting with a small amount, say $10 or $100, it may be a good idea to look for banks or online stock trading platforms that offer free accounts, low account and investment minimums, and no trading costs.
By starting early, and choosing certain types of investments, such as bonds or bond funds, which may allow to take advantage of the power of compounding returns.
That said, before you start investing, it may be worth setting up a secure emergency fund before you start investing. An emergency fund is often held in cash separate from your checking account, preferably in an accessible, FDIC-insured savings account.
It’s recommended to save between three to six month’s worth of expenses before investing. (One exception? Take advantage of your company’s 401(k) match, if you have one.)
2. I Only have $30 In My Bank Account — Can I Invest?
First, do you have an emergency fund?
Falling within $30 of a zero-dollar bank account at the end of the month may mean there’s not enough extra for unexpected emergencies and incidentals.
What happens if you get hit with an unforeseen medical bill? Or your car breaks down? It’s helpful to have a cash cushion to weather any storms — and avoid going into credit card debt to cover unexpected costs.
You might consider spending some time building up your cash reserves. As mentioned above, three months of expenses is a good start. But you may want to increase this amount to six months or more.
And once you’ve secured a minimum of three months’ expenses in an emergency fund, it may be time to consider your next money moves.
A great next step is to determine if your employer offers a 401(k) match. Even if you’re only able to invest 1% of your salary, your employer may match with an additional 1% — an immediate 100% return on your investment.
Don’t have a 401(k)? In that case, it may be wise to avoid wasting precious resources on the fees and costs of investing when you’re starting with small amounts, like $30. Instead, work on that emergency fund.
3. What Are My Investment Options With $10,000?
With that amount of money, it can be wise to consider a diversified investment strategy.
Diversification is the practice of allocating money to many different investment types. Big picture, this means investing in multiple different asset classes like stocks, bonds, cash, and real estate. Next, an investor might consider diversifying within each category. With stocks, investors might consider companies within different industries and countries of origin.
One way to diversify is with a portfolio of low-cost index funds, whether index mutual funds or exchange-traded funds (ETFs). For example, you could buy an S&P 500 index fund that invests in 500 leading companies in the United States across many industries. This way, you may eliminate the risk of investing in only one company or in one industry.
Once you’ve established a diversified strategy with the majority of your funds, you might consider buying a few individual stocks. Bear in mind that stock-picking is hard work and requires hours of research — and a ton of luck. Therefore, you may not want to use more than $500 (5% of your $10,000) on individual stocks.
4. Are ETFs or Mutual Funds Better For Beginner Investors?
ETFs vs. mutual funds are similar in that they each bundle together some other type of investment, such as stocks are bonds.
They also have some important differences. ETFs trade throughout the day, like a stock. Mutual funds trade once per day.
Here’s an important question: What is the strategy being used to invest within the fund? Funds, both mutual funds and ETFs, come in two varieties: actively managed and index. (Currently, many ETFs are indexed, though there are actively-managed ETFs.)
An actively-managed fund typically has higher costs, while an index fund aims to invest in the market using a passive strategy, usually at a low cost. (Not sure of the cost? Look for a fund’s annual fee, called an expense ratio.)
They’re called index funds because they track an index that aims to measure market performance. For example, the S&P 500 is an index designed for the sole purpose of tracking U.S. stock market performance.
But, it is possible to buy an index fund that mimics the S&P 500 — and this can be done via either an ETF or an index mutual fund.
Considering that it’s possible to buy ETFs and index mutual funds that accomplish the same exact thing, you may want to consider the following: 1) Which do you have access to and 2) Which option is lower-cost?
For example, if you only have access to index mutual funds in your 401(k), that may be the direction to go in.
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5. Should I Open a Traditional IRA or a 401(k)?
If your employer offers a 401(k) and contributes matching funds, it likely makes sense to join the plan. A 401(k) allows you to make contributions that may reduce your taxable income. You can have the contributions automatically deducted from your paycheck, which makes it easy. And if you leave your job, you can roll over the IRA to another plan.
In addition to your 401(k), which has certain contribution limits, you can absolutely consider opening another investment account like a traditional IRA.
However, the annual contribution limit to an IRA account in both 2024 and 2025 is $7,000, or $8,000 for those 50 and older. Also, as an active participant in your 401(k), your ability to deduct contributions to a traditional, tax-deductible IRA depends on your income level and filing status.
If you are already covered by a workplace retirement plan, the IRS allows you to deduct the full amount in 2024, only if you earn $77,000 or less as a single person and $123,000 or less if you file taxes jointly. In 2025, you may deduct the full amount if you earn $79,000 or less (if single) and $126,000 or less (if filing jointly).
You could also consider a Roth IRA, which has different taxation and rules for use than a traditional IRA. Unlike a traditional 401(k) and IRA, Roth IRA contributions are not tax-deductible. Although you don’t get a tax break now, you won’t pay taxes on it when you pull the money out in retirement.
If neither of these options work, you can always open up a brokerage account with an online trading platform. Just because these accounts do not have “special” tax treatment like retirement-specific accounts does not mean that they cannot be used to save and invest for the long term. You’ve got lots of options.
💡 Quick Tip: Did you know that you must choose the investments in your IRA? Once you open a new IRA and start saving, you get to decide which mutual funds, ETFs, or other investments you want — it’s totally up to you.
6. Do I Need a Financial Advisor?
A financial advisor can help you create a financial plan for your future while also meeting your current obligations, like your mortgage and bills. If you’re worried about making a mistake with your money, and you think using a financial advisor would make you feel more confident about investing, getting financial advice may be worth it for you.
Financial advisors do charge fees. They may charge you a flat fee, or they may make commissions on investments they suggest to you. It’s important to find out what their fees are and how the fee process is structured.
If you decide to enlist the help of a financial advisor, proceed carefully to make sure you find the right professional to work with.
Automated Investing
Another option you may want to consider is a robo advisor or automated investing. This is an algorithm-driven digital platform that provides basic financial guidance and portfolio options based on such factors as your goals and risk tolerance.
Because most automated portfolios are built with low-cost index or exchange-traded funds (ETFs), these services are considered efficient and low cost compared with using a human advisor.
Robo portfolios often involve an annual fee, perhaps 0.25% to 1% of the account balance.
The Takeaway
Investors likely have a lot of questions, and it’s understandable. The financial world is often confusing and can be intimidating, and hopefully, you’ll take away a bit more clarity about some of the basics. However, as your investing journey unfolds, you’ll have more, increasingly complicated questions. Don’t be afraid to ask for advice or guidance, and keep beefing up your investing knowledge.
Invest in what matters most to you with SoFi Active Invest. In a self-directed account provided by SoFi Securities, you can trade stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, options, and more — all while paying $0 commission on every trade. Other fees may apply. Whether you want to trade after-hours or manage your portfolio using real-time stock insights and analyst ratings, you can invest your way in SoFi's easy-to-use mobile app.
Opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.¹
FAQ
What are good questions to ask about investing?
As a beginning investor, it’s important to ask some good basic questions, including: How much can I afford to invest, how much risk am I comfortable taking, and what types of investments are right for me? You’ll also want to consider your goals (for instance, are you investing for retirement), your age, and how long you plan to invest your money.
What are the benefits of investing?
Investing can help you put your money to work for you and potentially make it grow so you can reach your financial goals. Investing can be a way to save for retirement, build wealth, and outpace inflation. In addition, some investments, like 401(k)s and IRAs, can also help you save on taxes.
How do beginners learn to invest?
One good way for beginners to learn to invest is to open a 401(k) if their employer offers one, especially if the employer matches a portion of their contributions. With a 401(k), you’ll choose investment options based on what your employer offers. This can help you learn the basics, such as figuring out your risk tolerance and what types of funds are right for you, and diversifying your investments so that you have a mix of different assets, such as stocks and bonds.
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.
For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.
S&P 500 Index: The S&P 500 Index is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S. It is not an investment product, but a measure of U.S. equity performance. Historical performance of the S&P 500 Index does not guarantee similar results in the future. The historical return of the S&P 500 Index shown does not include the reinvestment of dividends or account for investment fees, expenses, or taxes, which would reduce actual returns.
Mutual Funds (MFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or clicking the prospectus link on the fund's respective page at sofi.com. You may also contact customer service at: 1.855.456.7634. Please read the prospectus carefully prior to investing.Mutual Funds must be bought and sold at NAV (Net Asset Value); unless otherwise noted in the prospectus, trades are only done once per day after the markets close. Investment returns are subject to risk, include the risk of loss. Shares may be worth more or less their original value when redeemed. The diversification of a mutual fund will not protect against loss. A mutual fund may not achieve its stated investment objective. Rebalancing and other activities within the fund may be subject to tax consequences.
Exchange Traded Funds (ETFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or by emailing customer service at [email protected]. Please read the prospectus carefully prior to investing.
Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.
Fund Fees
If you invest in Exchange Traded Funds (ETFs) through SoFi Invest (either by buying them yourself or via investing in SoFi Invest’s automated investments, formerly SoFi Wealth), these funds will have their own management fees. These fees are not paid directly by you, but rather by the fund itself. these fees do reduce the fund’s returns. Check out each fund’s prospectus for details. SoFi Invest does not receive sales commissions, 12b-1 fees, or other fees from ETFs for investing such funds on behalf of advisory clients, though if SoFi Invest creates its own funds, it could earn management fees there.
SoFi Invest may waive all, or part of any of these fees, permanently or for a period of time, at its sole discretion for any reason. Fees are subject to change at any time. The current fee schedule will always be available in your Account Documents section of SoFi Invest.
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.
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A Minsky moment is an economic term describing a period of optimism that ends with a market crash. It describes the point at which a market boom marked by speculative trading and increasing debt suddenly gives way to a freefall marked by plunging market sentiment, asset values, and economic activity.
It is named for American economist Hyman Minsky, who studied the characteristics of financial crises, and whose “financial instability hypothesis” offered reasons why financial markets were and would be inherently unstable. Minsky died in 1996, and the phrase “Minsky moment” was coined in 1998, when a portfolio manager used it in reference to the 1997 Asian debt crisis, which was widely blamed on currency speculators.
Key Points
• A Minsky moment describes the shift from market optimism to a sudden financial crash.
• The three phases leading to a Minsky moment are hedge, speculative, and Ponzi borrowing.
• In the Ponzi phase, high-risk lending and borrowing rely on asset growth to cover debts.
• A crisis occurs when asset values drop and liquidity decreases, leading to market instability.
• The 2008 subprime mortgage crisis is a classic example of a Minsky moment in action.
How Does a Minsky Moment Happen?
A Minsky Moment refers to something sudden, though the economist maintained that it doesn’t arise all at once. He identified three stages by which a market builds up to the convoluted speculation and complete instability that finally undoes even the longest bull markets.
1. The Hedge Phase: This often comes in the wake of a market collapse. In this phase, both banks and borrowers are cautious. Banks only lend to borrowers with income to cover the principal of the loan and interest payments; and borrowers are wary of taking on more debt than they’re highly confident they can repay entirely.
2. Speculative Borrowing Phase: As economic conditions improve, debts are repaid and confidence rises. Banks become willing to make loans to borrowers who can afford to pay the interest but not the principal, but the bank and the borrower don’t worry because most of these loans are for assets — stocks, real estate and so on — that are appreciating in value. The banks are also betting that interest rates won’t go up.
3. The Ponzi Phase: The third and final phase leading up to the Minsky Moment is named for the iconic fraudster Charles Ponzi. Ponzi invented a scheme that offers fake investments, and gathers new investors based on the returns earned by the original investors. It pays the first investors from new investments, and so on, until it collapses.
In Minsky’s theory, the Ponzi phase arrives when confident borrowers and lenders graduate to a new level of risk-taking and speculation: when lenders lend to borrowers without enough cash flow to cover the principal payments or the interest payments. They do so in the expectation that the underlying assets will continue rising, allowing the borrower to sell those assets at prices high enough for them to cover their debt.
The longer the growth swing in the market, the more debt investors take on. While those investments are still rising and generating returns, the borrowers can use that money to pay off the debt and the interest payments. But assets eventually go down in value, in any market, even just for a while.
At this point, the investors are relying on the growth of those assets to repay the loans they’ve taken out to buy them. Any interruption of that growth means they can’t repay the debt they’ve taken on. That’s when the lenders call in the loans. And the borrowers have to sell their assets — at any price — to repay the lenders. When there are thousands of investors doing this at the same time, the values of the underlying assets plummet.
This is the Minsky moment.
In addition to plunging prices, a Minsky moment is usually accompanied by a steep drop in market-wide liquidity. That lack of liquidity can stop the daily functioning of the economy, and it’s the part of these crises that causes central banks to intervene as a lender of last resort.
The Minsky Moment and the 2008 Subprime Mortgage Crisis
The 2008 subprime mortgage crisis offered a very clear and relatable example of this kind of escalation, as many people borrowed money to buy homes they couldn’t afford. They did so believing that the property value would go up fast enough that they could flip the house to cover their borrowing costs, while earning a tidy profit.
Minsky theorized that a lengthy economic growth cycle tends to generate an outsized increase in market speculation. But that accelerating speculation is often funded by large amounts of debt on the part of both large and small investors. And that tends to increase market instability and the likelihood of sudden, catastrophic collapse.
Accordingly, the 2008 financial crisis was marked by a sudden drop and downward momentum fueled investors selling assets to cover short-term debts. Some of those included margin calls, which are when an investor is forced to sell securities to cover the collateral needed to borrow money from a brokerage.
How to Predict the Next Minsky Moment
While Hyman Minsky provided a framework of the three escalating phases that lead up to a market collapse, there’s no way to tell how long each phase will last. Using its framework can help investors understand where they are in a broader economic cycle, but people will disagree on how much debt is too much, or the point at which speculation threatens the stability of the markets.
Most recently, market-watchers keep an eye on the high rates of corporate debt in trying to detect a coming Minsky moment. And even the International Monetary Fund has sounded warning bells over high debt levels, alongside slowing growth around the planet.
But other authorities have warned of other Minsky moments over the years that haven’t necessarily happened. It calls to mind the old joke: “The stock market has forecast nine of the last five recessions.”
The Takeaway
A Minsky moment is named after an economist who described the way that markets overheat and collapse. And the concept can help investors understand where they are in a market cycle. It’s a somewhat high-level concept, but it can be useful to know what the term references.
There’s also a framework that may help investors predict, or at least keep an eye out for, the next Minsky moment. That said, nobody knows what the future holds, so that’s important to keep in mind.
Invest in what matters most to you with SoFi Active Invest. In a self-directed account provided by SoFi Securities, you can trade stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, options, and more — all while paying $0 commission on every trade. Other fees may apply. Whether you want to trade after-hours or manage your portfolio using real-time stock insights and analyst ratings, you can invest your way in SoFi's easy-to-use mobile app.
Opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.¹
FAQ
What is a Minsky Moment named after?
A Minsky Moment is named after American economist Hyman Minsky, who studied the characteristics of financial crises, and whose “financial instability hypothesis” offered reasons why financial markets were and would be inherently unstable.
What are the three stages of a Minsky Moment?
The three stages of a Minsky Moment are the hedge phase, the speculative borrowing phase, and the Ponzi phase.
Can you predict a Minsky Moment?
Not really, as there’s no way to accurately predict how long each “phase” of Minsky’s framework will last. That framework may help investors understand the broader economic cycle, but no one has a crystal ball.
Photo credit: iStock/Rawpixel
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.
For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
¹Probability of Member receiving $1,000 is a probability of 0.026%; If you don’t make a selection in 45 days, you’ll no longer qualify for the promo. Customer must fund their account with a minimum of $50.00 to qualify. Probability percentage is subject to decrease. See full terms and conditions.
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.
Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®
