Financial Topics Archives

May

2025

How to Use Social Media for Investing Tips: The Smart Way

By Austin Kilham | Growing Wealth, invest, Investing | Comments Off

Social media has become an important news source for many people, including investors looking for ideas to guide their strategy. That said, social media users must be careful when sifting through the vast quantities of information on the web to make sure they’re relying on legitimate sources.

There are a variety of social media platforms that investors use for information. While there are potential benefits to using social media to invest, there are also plenty of pitfalls.

Key Points

• Social media may provide timely updates and expert insights, enhancing investment research.

• Following companies and informed experts can improve research and decision-making.

• Tech tools on social media platforms help aggregate and analyze data, but caution is needed.

• Avoiding impulsive decisions and verifying sources is essential for informed investing.

• Thorough research and a long-term strategy are crucial for aligning with financial goals.

Why Understanding How to Use Social Media For Investing Is Important

In 2013, the Securities and Exchange Commission (SEC) allowed companies to start using social media platforms like Facebook and Twitter (now X) to communicate information to investors. As long as companies tell investors which website to check, they can use social media to announce information like company metrics that may influence stock price. Individuals interested in investing in a particular company may want to follow that company directly to stay abreast of breaking news.

Social media can also be an important place to gather information from analysts and financial bloggers who post their thoughts about stocks and news events or upcoming IPOs. Since these folks are typically reacting to news, following them may be a way to stay on top of popular investment trends.

Recently, social media has entered the investment space in a new way with the rise of meme stocks. Meme stocks are companies that experience increased volume in trades due to hype on social media. Perhaps the original, and most famous, meme stock is GameStop.

Retail investors encouraged each other to buy shares of the company over the subreddit message board r/wallstreetbets to force a short squeeze among hedge fund investors betting against the stock. Together these retail investors drove the share price up nearly 8,000% by late January 2021 to $86.88 a share.

Because investor sentiment, rather than company fundamentals, often fuels meme stock price increases, they can be extremely volatile. While meme stock investing can be exciting, it can also expose investors to large amounts of risk.

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How to Use Social Media When Investing

Individuals aren’t the only ones using social media to guide their investing decisions. It’s likely that most institutional investors are also using social media as part of their regular workflow. If you want to use social media as a way to inform your investment decisions, there are a few strategies to consider.

1. Follow Companies in Which You Invest (or Want to Invest)

Directly following a company’s social media accounts ensures the information you receive is timely and accurate.

2. Follow Informed Experts

Follow news sources, journalists, and analysts who cover the companies and sectors, such as health care or electric vehicles, in which you’re interested. Consider people who have large followings, a good clue that they provide information that is useful to a broad range of investors.

3. Use Tech Tools

Some brokerages offer social media tools such as social sentiment trackers that aggregate and analyze information that’s posted on social media sites. For example, some firms use software to compile information from Tweets, blog posts, and messages.

Others offer in-house social media platforms that allow investors to communicate with each other to discuss trading ideas. Or they may offer crowd-sourced research and analysis, using a website or app to gather ideas and opinions from the public at large. For example, analysts, investors, and academics might weigh in with their thoughts on earnings estimates.

It’s important for investors to beware that these tools can be inaccurate or misleading. Data gathered from social media may be old, or contain hidden agendas. Read all disclosures offered by social sentiment tools to understand how they collect data and any risks or conflicts of interest.

Recommended: Understanding Market Sentiment

Social Media Investing Mistakes to Avoid

While social media can be a helpful tool for investors, it also has several pitfalls that investors should understand.

1. Impulsive Decisions

Information driven by social media, such as discussion boards or buy/sell indicators based on social sentiment can drive investors toward emotional investing, especially when information appears in real time. Impulsive investments carry additional risks. Trading securities without proper due diligence can lead you to buy stocks as prices are peaking, or sell as prices tumble, locking in losses and missing out on potential rebounds. Avoid allowing social media to feed the tendency to time the market.

2. Failing to Do Your Own Research

Think of information you get from social media as a jumping-off point, something that sparks your interest and leads you to do more research.

For example, if someone posts about how great they think a stock is, take a look at the company’s financials yourself. Look at past and present earnings reports to understand trends. You can find out this and other information on a company’s quarterly report. Look at the annual report as well. It will let you know about any risks the company foresees in its future. In addition, look at what a number of analysts are predicting the company’s earnings will be in the future.

You may also want to consider broader economic indicators or market measures, such as the Fear & Greed Index.

3. Trusting Bots

Bots are programs — not humans — built to engage on social media. It’s not always clear what their agenda is, and they certainly don’t have your best interests in mind. There are several signs that an account could be a bot, including:

• No profile picture

• Strange numbers or characters in the account name

• Posting at irregular hours

• Repetitive, formulaic language

• Repeated posting on the same subject

The Takeaway

Social media has become an important way to gather investment information. But learning to recognize reliable sources is critical to finding accurate and useful information to create a strategy, whether you’re investing in stocks, bonds, options, or other financial securities.

What’s more, investors must understand the behavioral biases that social media investing can trigger, namely the temptation to time the market. To avoid this pitfall, create and follow a long-term financial plan. Use social media to research stocks and funds that fit your plan, including your time horizon and tolerance for risk.

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FAQ

Which social media platforms can I use for investing?

Investing and financial content is pervasive on many platforms, including TikTok, X, Facebook, YouTube, and more.

What are some good practices to follow in regards to social media investing?

Some rules of thumb could include following the companies in which you invest (or may want to invest in), following credentialed, informed experts (not just influencers), and using different tech tools that may be offered by brokerages.

What common social media investing mistakes should I try to avoid?

Some common mistakes investors make include making emotional or impulsive decisions based on their social media feeds, forgoing due diligence or research, and trusting bots or bad actors posting on various social media platforms.

Photo credit: iStock/GOCMEN

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

SOIN-Q225-080

May

2025

What Are Treasury Inflation-Protected Securities (TIPS)?

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

Treasury Inflation-Protected Securities, or TIPS, are one way to hedge against inflation in a portfolio. Inflation, or a sustained period of rising consumer prices, can take a bite out of investor portfolios as the prices of goods and services increase.

These government-issued securities are inflation-protected bonds that adjust in tandem with shifts in consumer prices to maintain value. Investing in TIPS bonds could make sense for investors who are seeking protection against inflation or who want to increase their conservative asset allocation.

Key Points

• Treasury Inflation-Protected Securities (TIPS) are U.S. Treasury bonds designed to protect against inflation.

• The principal adjusts with inflation or deflation, ensuring at least the original face value at maturity.

• Interest is paid semi-annually at a fixed rate on the adjusted principal, providing a real rate of return.

• TIPS are backed by the U.S. government, offering stability and minimal credit risk.

• TIPS can be purchased directly from the Treasury, through brokers, or via ETFs.

What Are TIPS?

TIPS are inflation-protected bonds that pay interest out to investors twice annually, at a fixed rate applied to the adjusted principal of the bond. This principal can increase with inflation or decrease with deflation, which is a sustained period of falling prices. When the bond matures, you’re paid out the original principal or the adjusted principal — whichever is greater.

Understanding Treasury Inflation-Protected Securities starts with understanding a little about how bonds work.

When you invest in a bond, whether it’s issued by a government, corporation, or municipality, you’re essentially lending the issuer your money. In return, the bond issuer agrees to pay that money back to you at a specified date, along with interest. For that reason, bonds are often a popular option for those seeking fixed-income investments.

Here are some key TIPS basics to know:

• TIPS bonds are issued in terms of 5, 10, and 30 years

• Interest rates are determined at auction

• Minimum investment is $100

• TIPS are issued electronically

• You can hold TIPS bonds until maturity or sell them ahead of the maturity date on the secondary market

Treasury Inflation-Protected Securities are different from other types of government-issued bonds. With I Bonds, for example, interest accrues over the life of the bond and is paid out when the bond is redeemed. Interest earned is not based on any adjustments to the bond principal — hence, no inflationary protection.

How Treasury Inflation-Protected Securities (TIPS) Work

Understanding how TIPS work is really about understanding the relationship they have with inflation and deflation.

Inflation refers to an increase in the price of goods and services over time. The federal government measures inflation using price indexes, including the Consumer Price Index (CPI). The federal government measures inflation using the Consumer Price Index, which measures the average change in prices over time for a basket of consumer goods and services. That includes things like food, gas, and energy or utility services.

Deflation is essentially the opposite of inflation, in which consumer prices for goods and services drop over time.

This can happen in a recession, but deflation can also be triggered when there’s a significant imbalance between supply and demand for goods and services. Both inflation and deflation can be detrimental to investors if they have trickle-down effects that impact the way consumers spend and borrow money.

When inflation or deflation occurs, inflation-protected bonds can provide a measure of stability with regard to investment returns. Here’s how it works:

• You purchase one or more Treasury Inflation-Protected Securities

• You then earn a fixed interest rate on the TIPS bond you own

• When inflation increases, the bond principal increases

• When deflation occurs, the bond principal decreases

• Once the bond matures, you receive the greater of the adjusted principal or the original principal

This last part is what protects you from negative impacts associated with either inflation or deflation. You’ll never receive less than the face value of the bond, since the principal adjusts to counteract changes in consumer prices.

Are TIPS a Good Investment?

Investing in inflation-protected bonds could make sense if you’re interested in creating some insulation against the impacts of inflation in your portfolio. For example, say you invest $1,000 into a 10-year TIPS bond that offers a 2% coupon rate. The coupon rate represents the yield or income you can expect to receive from the bond while you hold it.

Now, assume that inflation rises to 3% over the next year. This would put the bond’s face value at $1,030, with an annual interest payment of $20.60. If you were looking at a period of deflation instead, then the bond’s face value and interest payments would decline. But the principal would adjust to reflect that to minimize the risk of a negative return.

Pros of Investing in TIPS

What TIPS offer that more traditional bonds don’t is a real rate of return versus a nominal rate of return. In other words, the interest you earn with Treasury Inflation Protected Securities reflects the bond’s actual return once inflation is factored in. As mentioned, I Bonds don’t offer that; you’re just getting whatever interest is earned on the bond over time.

Since these are government bonds, there tends to be little credit risk, which refers to the possibility that a bond issuer might default and not pay anything back to investors. With TIPS bonds, you’re going to at least get the face value of the bond back if nothing else. And compared to stocks, bonds are generally a far less risky investment.

If the adjusted principal is higher than the original principal, then you benefit from an increase in inflation. Since it’s typically more common for an economy to experience periods of inflation rather than deflation, TIPS can be an attractive diversification option if you’re looking for a more conservative investment.

Cons of Investing in TIPS

There are some potential downsides to keep in mind when investing with TIPS. For example, they’re more sensitive to interest rate fluctuations than other types of bonds. If you were to sell a Treasury Inflation-Protected Security before it matures, you could risk losing money, depending on the interest rate environment.

You may also find less value from holding TIPS in your portfolio if inflation doesn’t materialize. When you redeem your bonds at maturity you will get back the original principal and you’ll still benefit from interest earned. But the subsequent potential increases in the principal that TIPS can offer during periods of inflation is a large part of their appeal.

It’s also important to consider where taxes fit in. Both interest payments and increases in principal from inflation are subject to federal tax, though they are exempt from state and local tax. The better your TIPS bonds perform, the more you might owe in taxes at the end of the year.

How to Invest in Treasury Inflation-Protected Securities

If you’re interested in adding TIPS to your portfolio, there are three ways you can do it.

1. Purchase TIPS bonds directly from the U.S. Treasury. You can do this online through the TreasuryDirect website. You’d need to open an account first but once you do so, you can submit a noncompetitive bid for inflation-protected bonds. The TreasuryDirect system will prompt you on how to do this.

2. Purchase TIPS through a banker, broker, or dealer. With this type of arrangement, the banker, broker, or dealer submits a bid for you. You can either specify what type of yield you’re looking for, which is a competitive bid, or accept whatever is available, which is a noncompetitive bid.

3. Invest in securities that hold TIPS, i.e. exchange-traded funds or mutual funds. There’s no such thing as a TIP stock but you could purchase a TIPS ETF if you’d like to own a basket of Treasury Inflation-Protected Securities. You might choose this option if you don’t want to purchase individual bonds and hold them until maturity.

When comparing different types of investments that are available with ETFs or mutual funds, pay attention to:

• Underlying holdings

• Fund turnover ratio

• Expense ratios

Also consider the fund’s overall performance, particularly during periods of inflation or deflation. Past history is not an exact predictor of future performance but it may shed some light on how a TIPS ETF has reacted to rising or falling prices previously.

The Takeaway

Treasury Inflation-Protected Securities may help shield your portfolio against some of the negative impacts of inflation. Investors who are worried about their purchasing power shrinking over time may find TIPS appealing.

But don’t discount the value of investing in stocks and other securities as well. Building a diversified portfolio that takes into consideration an investor’s personal risk tolerance, as well as financial goals and time horizons, is a popular strategy.

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

About the author

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.

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

SOIN-Q225-059

May

2025

Numbers and stock quotes appear on a computer screen in multiple colors.

History of the S&P 500

By David Wolinsky | Growing Wealth, invest, Investing | Comments Off

It can be daunting to sit down and try to learn even just the basics about the stock market. Rather than trying to absorb everything in one go or jumping immediately into the minutiae of the market’s alphabet soup (NASDAQ, NYSE, DJIA, etc.), newcomers wanting to be better informed about the topic may start with a good look at the S&P 500.

An index that tracks the stock of roughly 500 of the largest public companies in the U.S., the S&P 500 is a leading indicator of the market’s overall performance. For further context, review SoFi’s guide on how stock exchanges work in general.

Key Points

• The S&P 500 was introduced in 1957, evolving from earlier indexes and initially representing over 90% of the total U.S. market value.

• Key milestones include the 2008 market crash, where the S&P 500 closed at 903.25, down 38.49%, and a 46.59% surge in 1933.

• The S&P 500 serves as a leading indicator of the U.S. economy’s financial health, reflecting the performance of 500 large-cap companies across various industries.

• Some S&P 500 companies have an international presence, with headquarters or incorporation in other countries, adding a global dimension to the index.

• The S&P 500 is used in investment strategies, allowing investors to gauge market trends and diversify portfolios through mutual funds or ETFs.

Who is Standard & Poor’s?

Standard & Poor’s is a financial services company specializing in conducting research and analysis that helps investors recognize opportunities and make better, more informed decisions.

The company’s roots date back to 1860 with the publication of a book of financial information on the U.S. railroad industry, which is only worth mentioning and being aware of in the 21st century as an indication of how steeped the company is in its mission to help provide transparency into the world of investing.

A History of the S&P 500: 1957 – Now

The S&P 500 was first introduced in 1957, the result of ongoing and gradual expansions to S&P’s previous, comparatively more limited stock indexes—like 1926’s roll-out of a daily round-up of 90 stocks.

Its emergence in 1957, according to S&P’s official history, was made possible by “an electronic calculation method developed by Boston-based Melpar, Inc., which allowed S&P to perform index calculations much more efficiently than before.” And while S&P reportedly could have tracked every stock on the New York Stock Exchange, it was decided to instead limit its scope to stocks that account for over 90% of total US market value. When it began, the S&P 500 consisted of 425 industrial companies, 25 railroad companies, and 50 utility companies.

A big reason why the S&P 500 is today widely considered by many investors to be perhaps the single best overall indicator of how large US stocks are performing is because of, as the name suggests, how comprehensive this index is.

The S&P 500 comprises 500 large-cap stocks (meaning a company valued at being worth more than $10 billion) representing the leading industries of the US economy, including everything from healthcare and information technology to utilities and many more. The S&P 500 tracks both the liquidity and also the risk associated with those companies.

Altogether, the S&P 500 gives an overview of how larger companies are performing, and as a result how many investor portfolios are performing as well. Through mutual funds or exchange-traded funds, it’s possible to participate as an investor in these large companies. SoFi’s financial planners can advise interested investors on what might make sense for your situation.

While on paper the S&P 500 is by a great measure more comprehensive than the Dow Jones Industrial Average (which measures the stock performance of only 30 large companies listed on stock exchanges), it should also be noted that a handful of the S&P 500 either are incorporated in or have headquarters located in other countries, like manufacturer Trane Technologies (Ireland) or oil and gas company TechnipFMC (England).

In other words, while the S&P 500 can give a solid overview of how large American companies are performing, it’s also an international index. To learn more about index investing and building a portfolio bigger than what might be right in your backyard, this overview on index investing is worth a look.

S&P 500 Earnings History

A quick look at the S&P 500 price history’s biggest milestones only further bolsters its potential usefulness as a market indicator for investment decisions.

To start with the bummer news and get it out of the way first, consider some of the lowest performances tracked and posted by the S&P 500: The stock market crash of 2008, for example, saw the market close at 903.25, with a point loss of 565.10 and overall being down 38.49%. The stock market crash of 1931, part of the Great Depression, was even worse, with Standard & Poor’s clocking a closing level of 8.12, a point loss of 7.22 and the market being down 47.07%.

In contrast, and maybe not a surprise, when the United States pulled out of the Great Depression in 1933 stands among some of the biggest high points in this country’s earnings history: That year, the S&P clocked the market surge ahead by 46.59%, closing at 10.10 and a point increase of 3.21. More recently, March 13, 2020 saw the market close at a record closing level of 2,711.02, representing a 230.38 point change and a 9.29% jump.

As of early 2025, the S&P 500 has hovered around record highs. It peaked in February 2025, at nearly 6,145. But by early April, it had fallen under 5,000. However, as of the beginning of May 2025, it was back above 5,600.

Overall, if there’s anything that can make eyes gloss over more than alphabet soup it’s a wall of numbers. All these figures really mean is that the S&P 500 is regarded as one of the leading authorities in gauging how the U.S. is doing financially.

The Takeaway

The S&P 500 is perhaps the most widely used and cited market index, comprising 500 companies from various industries. It can be used as a barometer of the market’s overall health, and was initially rolled out in the late 1950s by Standard & Poor’s. As of 2025, it’s near all-time highs, too — though that doesn’t mean it can’t see a significant downturn soon.

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 does “S&P” stand for?

“S&P,” as in the “S&P 500,” stands for Standard & Poor’s, which is a financial services company that conducts market research and analysis.

How old is the S&P 500?

The S&P 500 was first introduced in 1957, and was the eventual result of the expansion of other market indexes. When it initially rolled out, it contained 425 industrial companies, 25 railroad companies, and 50 utility companies.

What is the S&P 500’s all-time high?

The S&P 500 reached an all-time high in February 2025, peaking at nearly 6,145, as of May 1, 2025.

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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.

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.

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SOIN-Q225-084

May

2025

How to Write a Letter of Explanation for a Mortgage

By Anna Davies | Family Finances, Home Ownership, mortgage | Comments Off

Buying a house can be a fraught process, and when the market is hot, the days between offer and closing can feel endless, especially if the mortgage underwriter asks you to write a letter of explanation.

But there’s no need to panic or assume that your mortgage application will fail. The lender is simply seeking clarification about any potential red flags in your financial documents or credit history.

Key Points

• A letter of explanation gives borrowers the chance to address concerns mortgage lenders may have about their financial background.

• A letter of explanation might clarify uneven income, credit report issues, employment gaps, or recent significant financial transactions.

• Ensure that your letter of explanation is concise, factual, honest, and supported by documentation.

• A well-crafted letter of explanation can reassure lenders about your financial stability and improve your odds of mortgage approval.

What’s a Letter of Explanation?

A letter of explanation for a mortgage explains details of your financial situation that may need further clarification. Because a mortgage is a large loan, lenders need to know that the borrower is capable of shouldering the mortgage.

Lenders also know that life can’t be boiled down to a spreadsheet, and that it’s not unusual for a mortgage application to include things like a late credit payment or a period of job loss.

To do due diligence, the mortgage underwriter will ask you to explain the situation in a brief letter, which will be added to your mortgage application. Additional documentation and paperwork may be required.

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Why Do I Need to Provide a Letter of Explanation?

Common issues that could trigger a request for a letter of explanation include:

• Questions about your income if you don’t have W-2s or are self-employed

• Negative items on your credit report

• Employment gaps

• Your living situation if you don’t pay any rent or mortgage

• A property income or loss you claim

• Credit lines opened after you’ve put in your mortgage application

• Large deposits to, and sometimes withdrawals from, your bank account

Must I Explain a Large Deposit?

If there’s a big or unexplained deposit to your bank account, your lender may want to know where the money came from — and whether that money needs to be paid back.

A lender may also question any uneven income streams, or ask about any deposits that don’t line up with your W-2s or your tax returns.

If you received cash from, say, a parent to help with a down payment or closing costs, you may also need a gift letter signed by the giver and recipient stating that the money was a gift, not a loan. Your lender may have a template for a gift letter.

Keep in mind that your lender may be more likely to scrutinize any large deposits or withdrawals that were made within the last 60 days.

Letter of Explanation Template

A letter of explanation is not an autobiography or an admission that you did anything wrong. It’s simply a statement of the reason for any discrepancy or issue, along with any documentation, to back up your current financial picture.

You can keep a letter of explanation brief. It should include:

• Your name and address

• Your lender’s name and address

• A subject line that includes your application number and name

• A brief paragraph explaining the situation

• A polite closing

• Your signed full name

It might look like this:

Date

Lender
Lender’s Address
Lender’s Phone Number

Subject Line (RE: John Doe’s Mortgage Application #1234)

Letter of explanation, naming the specific item being asked about and explaining it to the best of your abilities.

Sincerely,

Applicant’s Name
Applicant’s Address
Applicant’s Phone Number

Enc.: (Relevant documentation).

The tone of the letter should be polite and factual. Remember: Your goal is not to pull on the lender’s heartstrings; it’s to reassure them that your application is solid and you would responsibly pay back your mortgage on time.

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4 Tips for an Effective Letter of Explanation

Although being asked to write a letter of explanation may sound like being assigned homework, it’s actually a great opportunity: It means you might be able to qualify for the mortgage you want, even with an imperfect application. Here are some tips to help ensure you get an A+ on this particularly important homework assignment.

1. Keep It Simple

When you’re asked to explain yourself, it can be easy to jump into a broad-reaching narrative starting from childhood, but the best letters of explanation tend to be short and simple: They clarify the situation being asked about and reassure the lender that the “red flag” situation won’t affect the borrower’s ability to repay the loan.

2. Provide Clear Details

Generally speaking, you’ll want to specifically name whatever item you’re being asked about (late payments on a credit card account ending in 0101; an employment gap between 2/20/2020 and 9/07/2020; etc.).

Then explain. For instance, if you’re being asked about an employment gap, you might let the lender know that you were let go as a result of corporate downsizing and that you freelanced while searching for a new job.

If you’re being asked about late credit card payments, you might let the lender know that you were in the hospital at that time and thus unable to make your credit card payments, or whatever the case may be.

The key is to take responsibility for the issue and provide clear, pertinent details without being too wordy.

3. Be Honest

This may go without saying, but you definitely don’t want to lie in your letter of explanation. For one thing, doing so is likely to keep you from being approved for the mortgage — and for another, it can be considered mortgage fraud, a serious crime that can come with prison time and fines.

4. Acknowledge Responsibility, but Don’t Get Emotional

When writing a letter of explanation, you may be justifying negative items in your credit history that resulted from poor decisions — or just poor circumstances. Nobody’s perfect, and a lender simply wants to make sure you won’t default on your loan.

It can be helpful to acknowledge the ways you’ve adjusted your financial habits in response to a negative item. This helps to reassure the lender that the issue won’t have an impact on your ability to pay your mortgage.

For example, if you’re writing a letter of explanation to address late rent payments after a layoff, you might add that you’ve since saved up an emergency fund of three months of living expenses in order to avoid being financially blindsided in the future.

However, writing an emotional sob story won’t help. Remember: It’s a good idea to keep it simple, clear, honest, and as short as possible while still covering all those bases.

Getting Your Mortgage Application in Shape

Knowing what documents you need and what a mortgage lender will look at can help get your application in good shape before you file it. Your lender will scrutinize your credit history and any late payments, especially ones within the last 12 months. But there are ways to proactively tackle any issues on your credit reports.

• Check your credit reports. Knowing what your mortgage lender may see can help you assess where any weak points may be, and what information they may ask for.

• Call the creditor if you have a recent late payment. Creditors know that accidents happen and bills may be misplaced. If your account is otherwise in good standing, it’s possible that a creditor may erase the late payment.

• Focus on additional aspects of your credit. Making sure to pay bills on time and keeping your credit utilization below 30% can help build credit.

• Think twice about opening accounts. Before and after applying for a mortgage, it can be a good idea to be mindful about opening new lines of credit or charging an extensive amount on current cards. Suddenly taking on more debt on credit cards can raise a red flag to lenders, which may result in being asked to write a letter of explanation.

Understanding how a lender will see your mortgage application can give you confidence and may help you head off any potential problems.

The Takeaway

A letter of explanation may be needed when a mortgage lender needs clarity about a red flag or discrepancy that arises on your application. Knowing what to expect, having documentation ready, and answering any questions the lender may have can all be helpful in getting your home loan approved.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

What is a letter of explanation?

When you’re applying for a mortgage, if your lender has questions about something on your financial record – like a series of late payments or a period of unemployment – they may ask for more information. The letter of explanation is meant to clarify your situation and will become part of your mortgage file.

What should I write in a letter of explanation?

A letter of explanation clarifies an item in your financial history for a mortgage lender. Include a brief, factual explanation of how and why the issue occurred and any extenuating circumstances. For instance, you might explain an employment gap by explaining that you lost your job in a corporate reorganization and freelanced for several months while you looked for a new job. Briefly mention any steps you’ve taken in response to this issue. For instance, you might say you’ve built up a three-month emergency fund to draw on if you become unemployed again. Be clear, concise, and polite, and include your name and application number.

How long should a letter of explanation be?

There’s no set length for a letter of explanation. In general, it’s best to address the lender’s question thoroughly, but as clearly and briefly as you can. This may take only a few sentences.

Photo credit: iStock/scyther5

SoFi Mortgages
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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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.

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

SOHL-Q225-063

May

2025

Guide to Saving Money on a Disney World Vacation in 2022

Guide to Saving Money on a Disney World Vacation in 2025

By Dan Miller | Budgeting & Goals, Credit, Family Finances | Comments Off

For many people, a Disney World vacation ranks high on the travel bucket list. But Orlando’s ultimate amusement park can also be expensive, especially if you’re traveling with the whole family. While some costs are unavoidable, there are ways to save money at Disney World.

It can be challenging to get discounts on park tickets themselves, but there are a few tricks you can use to cut costs overall. Read on for the full rundown on how to save money at Disney World.

Key Points

• Travel during off-peak times to save on Disney World vacation costs.

• Choose affordable off-site hotels or Airbnbs for lodging.

• Utilize credit card rewards to offset travel expenses.

• Take advantage of a free Disney Dining Plan if available.

• Bring your own food or shop outside the park for low-cost souvenirs.

Tips for Saving Money at Disney World

For many kids and adults, a trip to Disney World is a dream vacation. Many parents look forward to the day they can take their kids to Disney just to see the looks on their faces when they walk into the Magic Kingdom.

Here are a few ways that you can save money at Disney World.

💡 Quick Tip: Banish bank fees. Open a new bank account with SoFi and you’ll pay no overdraft, minimum balance, or any monthly fees.

Take Advantage of a Free Disney Dining Plan

One of your biggest expenses at Disney World is meals. Food can be expensive in the park, since the company knows that you’re a captive audience.

You can bring your own food to Disney World, which can help you spend less on meals and snacks inside the park. However, this isn’t always easy or convenient. Occasionally, Disney runs sales where a Disney Dining Plan is included in the cost of your stay. While it may not make sense for every situation, it’s worth checking out in order to save money on food.

Travel Off-Season

The cost of Disney World park tickets is the same no matter when you go, but flights and hotel rates vary throughout the year. You may find cheaper deals if you travel in January (after New Year’s Day), the first half of May, from mid-August to just before Thanksgiving, and after Thanksgiving week until mid-December. Disney offers a “Crowd Calendar” that can help you find up-to-date information on the best times to visit their theme parks.

Another option is using credit card rewards to pay for flights and hotels. Some rewards credit cards offer a signup bonus that can help you save a significant sum on your Disney World trip.

Stay off-Site

Hotels near Disney can cost significantly less than Disney-owned properties, and some offer free shuttles. In addition, you might find more room options, such as rooms with kitchenettes or large suites that can accommodate a large family, along with “extras” like free breakfasts. For even more savings, look into Airbnbs or budget chains in nearby Kissimmee or Lake Buena Vista. Just be sure to factor in the cost of transportation to the parks when calculating how much you will save.

Stick to Your Budget

It’s a smart idea to set a budget in advance for your Disney World vacation and to create a separate travel fund. Not only can this help you save the money to afford your trip, it can also keep you from splurging too much while you’re there.

Saving money on a trip to Disney World doesn’t have to mean cutting down on the fun. Just make sure you budget appropriately and identify what is and is not important to you. This will help you stick to your budget and avoid running up a credit card balance that you can’t pay off in full when you get back (interest charges can add significantly to the cost of your Disney trip).

Choose Low-Cost Souvenirs

Like in-park food, souvenirs are another area where you’ll pay for convenience. If you have extra days in Orlando, consider shopping off-property for Disney souvenirs — like at the official Disney’s Character Warehouse store. If you’re traveling with kids, consider giving them an upfront “souvenir budget” and letting them choose how they want to spend it.

💡 Quick Tip: Want a simple way to save more everyday? When you turn on Roundups, all of your debit card purchases are automatically rounded up to the next dollar and deposited into your online savings account.

Buy Discounted Disney World Park Tickets

Because Disney World park tickets are usually in such high demand, there aren’t a lot of opportunities to buy them at a discount. One way to snag Disney World savings in this area is to buy discounted Disney gift cards from participating retailers (like Warehouse clubs) before you visit. You may also be able to buy Disney gift cards at Target and use your RedCard debit card to get 5% off.

The Takeaway

A Disney World vacation can be costly, especially if you’re traveling with a family. This makes it important to learn all the tips you can to save money at Disney World.

Traveling off-season, staying off-site, cashing in on credit card rewards, and getting discounted Disney gift cards can all help cut costs. It’s also a good idea to set a Disney vacation budget well in advance of your trip, then start saving up for you trip in a dedicated savings account. Choosing a bank that pays a competitive rate, and setting up a monthly automated transfer into the account, can help you reach your goal — and get packing – sooner.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

How can I spend less at Disney World?

There’s no denying that Disney World is an expensive place, but you have a couple of options if you’re trying to spend less at Disney World. One is to use your credit card points to help offset the cost. The other is to set a budget for the necessary costs that are important to you. Having a budget can help prepare you mentally to spend less.

How can I get airline miles to cover my flights to Disney World?

Airline credit cards are great for earning airline miles to help pay for flights. Look at the cost of airline tickets to Orlando from where you live, and see how many airline miles it would take to fly there. Then, look at signing up for an airline credit card to help get you the miles that you need.

When is the best time of the year to visit Disney World?

The best time to visit Disney World will depend on your schedule, priorities, and budget. Typically, Disney World will be more crowded (and hotels more expensive) during peak travel periods like summer, spring break, and holidays. Conversely, you may experience smaller crowds and lower prices if you travel in the off-season.

How can I save on souvenirs at Disney World?

To save on Disney World souvenirs, consider buying ahead of time online (and letting your kids open them throughout the trip), shopping at stores outside the parks, and using discounted Disney gift cards (available at some warehouse clubs). You might also give your kids a souvenir budget and let them choose how to spend it.

Photo credit: iStock/miniseries

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOBNK-Q225-059

How to Use Social Media for Investing Tips: The Smart Way

Why Understanding How to Use Social Media For Investing Is Important

How to Use Social Media When Investing

1. Follow Companies in Which You Invest (or Want to Invest)

2. Follow Informed Experts

3. Use Tech Tools

Social Media Investing Mistakes to Avoid

1. Impulsive Decisions

2. Failing to Do Your Own Research

3. Trusting Bots

The Takeaway

FAQ

Which social media platforms can I use for investing?

What are some good practices to follow in regards to social media investing?

What common social media investing mistakes should I try to avoid?

What Are Treasury Inflation-Protected Securities (TIPS)?

What Are TIPS?

How Treasury Inflation-Protected Securities (TIPS) Work

Are TIPS a Good Investment?

Pros of Investing in TIPS

Cons of Investing in TIPS

How to Invest in Treasury Inflation-Protected Securities

The Takeaway

History of the S&P 500

Who is Standard & Poor’s?

A History of the S&P 500: 1957 – Now

S&P 500 Earnings History

The Takeaway

FAQ

What does “S&P” stand for?

How old is the S&P 500?

What is the S&P 500’s all-time high?

How to Write a Letter of Explanation for a Mortgage

What’s a Letter of Explanation?

Why Do I Need to Provide a Letter of Explanation?

Must I Explain a Large Deposit?

Letter of Explanation Template

4 Tips for an Effective Letter of Explanation

1. Keep It Simple

2. Provide Clear Details

3. Be Honest

4. Acknowledge Responsibility, but Don’t Get Emotional

Getting Your Mortgage Application in Shape

The Takeaway

FAQ

What is a letter of explanation?

What should I write in a letter of explanation?

How long should a letter of explanation be?

Guide to Saving Money on a Disney World Vacation in 2025

Tips for Saving Money at Disney World

Take Advantage of a Free Disney Dining Plan

Travel Off-Season

Stay off-Site

Stick to Your Budget

Choose Low-Cost Souvenirs

Buy Discounted Disney World Park Tickets

The Takeaway

FAQ

How can I spend less at Disney World?

How can I get airline miles to cover my flights to Disney World?

When is the best time of the year to visit Disney World?

How can I save on souvenirs at Disney World?

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