Aug
08
2024
What Are Premium Checking Accounts?

What Is a Premium Checking Account?

By | Budgeting & Goals, Financial Independence, money | Comments Off on What Is a Premium Checking Account?

Checking accounts are one of the hubs of most people’s financial lives, and there are many options available. If you’re curious about premium checking accounts, which typically offer many extra perks, you’re in the right place.

In this guide, you’ll learn about some of the pros of premium checking accounts, such as higher interest rates and ATM-fee reimbursements. You’ll also find out about the potential downsides, like the need to maintain a high balance. Read on for details, so you can decide if a premium checking account is right for you.

Key Points

•   Premium checking accounts offer benefits such as higher interest rates, waived fees, and dedicated customer service, appealing to those who maintain high balances.

•   These accounts usually require account holders to meet minimum balance requirements, often ranging from $10,000 to $15,000, to avoid fees or earn interest.

•   Potential downsides include lower interest rates compared to savings accounts and tiered benefits that necessitate maintaining even higher balances for maximum rewards.

•   Many financial institutions allow customers to meet balance requirements across multiple accounts, facilitating easier qualification for premium checking accounts.

•   Evaluating whether a premium checking account aligns with individual financial goals is crucial, as alternatives like high-yield savings accounts may provide similar benefits without high balance demands.

What Does Premium Checking Mean?

What is a premium checking account? It’s a type of checking account in which account holders are rewarded for meeting high balance requirements or paying higher monthly fees. These rewards may include higher interest rates, fee-free ATMs, free checks, and more.

In some cases, a bank may offer you these perks if you open multiple types of accounts at the same institution — an example would be having both premium checking and savings accounts at a bank. Another common model for premium checking accounts is that the more you keep on deposit, the more incentives you may receive.

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What Are the Benefits of a Premium Checking Account?

Those who qualify for a premium checking account may be rewarded with the following benefits:

•   Lower fees for other financial products within the same financial institution

•   Dedicated customer service

•   Higher APYs, or annual percentage yields

•   Free or low-cost wire transfers

•   ATM fee reimbursements

•   Free checks.

These can be attractive ways to encourage customer loyalty, as many financial institutions work to find new ways to enhance their clients’ experience.

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Pros and Cons of a Premium Bank Account

Opening a premium bank account might be valuable if you can take advantage of all the benefits offered. That being said, there are some downsides, too. Meeting certain requirements can make this type of account inaccessible to some. Let’s take a closer look at the benefits and the downsides.

Pros

Here are the potential upsides of premium checking accounts:

•   Higher APYs: Premium checking accounts typically come with higher APYs compared to basic checking accounts (which may not accrue any interest at all). That enhanced interest rate means your money earns more money.

•   Waived or lowered fees: In most cases, premium checking accounts will waive fees such as those for out-of-network ATMs, money orders, cashier’s checks, and wire transfers. Depending on the bank and what other accounts you have with them, you may even get lowered or waived fees on exchange rates for ATM withdrawals outside the U.S.

•   Discounted rates on other financial products: It’ll depend on your relationship with the bank (and what other accounts you have in addition to a premium checking account), you could receive lower rates for personal loans or mortgages compared to other customers.

•   Higher transaction limits: You may be able to make larger daily ATM withdrawals, transfers, or debit card purchases.

Cons

Next, consider the possible downsides of a premium checking account:

•   Rates may not be as high as you think: Although you could receive a higher interest rate compared to other types of checking accounts, it may not be as high as what you could get with savings or money market accounts.

•   More stringent requirements: You’ll typically need to maintain a higher minimum balance in your account in order to avoid monthly maintenance fees or to earn interest. For instance, many banks require anywhere from $10,000 to $15,000 or more in your premium checking account. The good news is that the balance requirements may be the total across all your accounts with the same financial institution.

•   Benefits may be tiered: While it varies from bank to bank, you may have to “level up” to an even higher minimum balance to access the best interest rates and other perks.

How Can I Qualify for a Premium Checking Account?

In most cases, all you need to do is to have a minimum amount on deposit in order to open a premium checking account. Some may even require you to open other financial products or allow you to meet the minimum deposit requirements across a number of qualifying accounts.

Some major banks, like Chase and Bank of America, will allow you to meet minimum deposit requirements across different accounts as long as they’re linked.

Recommended: How to Automate Your Personal Finances

Additional Features of a Premium Checking Account

You may want to consider whether having that much money in a checking account is a worthwhile move for you. Consider the following points:

•   Is earning interest a priority for you? If you’re after a checking account that earns a higher amount in interest, a premium checking account may be for you. Keep in mind though that if you may not earn as much as you think you will. For instance, if a bank currently offers a 0.04% APY, on a $50,000 balance, you’re only earning $20 per year or so (how often interest compounds will make somewhat of a difference).

•   How often do you use ATMs? Many premium checking accounts offer more ATM transactions and even waive fees for third-party ATM fees. For those who use ATMs frequently, especially out-of-network ATMs, this perk may not be worth it.

•   Do these perks sync up with your financial goals? Premium checking can be part of a deeper relationship with your bank (often called relationship banking) that offers holistic support for your finances. This includes benefits like discounted rates on other financial products — say, a home loan. If you’re willing to keep all your finances at one bank, a premium checking account might be a good fit and open other doors for you.

Are Premium Checking Accounts Worth It?

To decide if a premium checking account is right for you, consider these points:

•   It can be a smart idea to compare premium accounts to standard checking accounts. You may be able to get many of the same benefits, such as free checks or equivalent interest rates, without stashing as much cash as premium accounts require.

•   Getting a high-yield savings account could be a good option if you want to earn a higher interest rate but can’t meet the large minimum balance criteria required of premium checking accounts.

•   If you want to keep all your banking (including investments and loans, for instance) with the same financial institution and can maintain a high balance across your qualifying accounts, premium checking could be well worth it. This is especially true if you’ll use all the perks like free checks and ATM reimbursements.

By thinking about your financial goals and how you like to bank, you may decide that premium checking is the right move for you.

The Takeaway

Premium checking accounts can be a valuable option for some bank customers. If you can maintain the high balance and can use the rewards offered, it may be a good fit.

For others, a high-yield checking without the high minimum requirements might be a better option. It’s up to you to decide what fits your financial style best.

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


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 3.80% APY on SoFi Checking and Savings.

FAQ

Is a premium checking account worth it?

A premium checking account may be worth it depending on whether you can afford to meet the higher than usual minimum balance amount and whether you’ll be able to take advantage of all the perks. If you can, it may be a good fit.

What are the benefits of a premium bank account?

Some of the key benefits of a premium bank account is a higher interest rate, waived out-of-network ATM fees, discounted rates on loan products, and overdraft protection. Some may even offer free financial and investing advice.

What does a premium bank account mean?

A premium bank account is a type of account offering extra perks once you meet a minimum balance requirement.

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SoFi members with Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. 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 during a 30-day Evaluation Period (as defined below).

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 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, 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 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY 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, 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 members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Eligible Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Eligible Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
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.


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.

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08
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Overweight Stock, Explained

By | Growing Wealth, invest, Investing, Terminology | Comments Off on Overweight Stock, Explained

When a financial analyst rates a stock as overweight, it means that the analyst believes an overweight stock will likely outperform other stocks in its industry over the next six to 12 months. Conversely, if they describe a stock as underweight, they believe that it will perform poorly in the future.

It may be helpful to think of these terms as pointers: as if an industry specialist were saying, “You might want to overweight Stock X in your portfolio” or “maybe you should under-weight Stock Y.” These ratings are typically the result of factors in the news or pertaining to a specific company’s prospects. But the terms “overweight” and “underweight” also refer to a stock’s weighting in a relevant index or benchmark.

Key Points

•   An overweight stock rating indicates that analysts expect the stock to outperform its industry peers within the next six to twelve months.

•   The terms overweight and underweight also refer to a stock’s proportion in an investment portfolio, guiding investors on how much to hold.

•   Different market indexes apply unique weighting systems, influencing how stocks are rated as overweight or underweight based on market capitalization or stock price.

•   Investors should be cautious, as an overweight stock may not always lead to significant gains and could lead to portfolio imbalance if not managed properly.

•   The context of both the market and individual portfolios is crucial when interpreting overweight ratings, emphasizing the need for careful investment decisions.

What Is an Overweight Stock?

As noted, an overweight stock is one that analysts believe will outperform others in its sector or market segment in the near future. Similarly, overweight stock is a moniker that may also describe a specific security’s weighting in a portfolio, and one that analysts think investors should buy more of – so, its meaning can be contextual in certain situations.

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Types of Ratings and Where They Came From

To understand stock ratings related to weight, it’s important to know that market indexes assign a weight to the investments they track to be sure that the index accurately reflects the performance of that market sector.

For example, the S&P 500® tracks 500 large-cap U.S. companies. The companies in the index — called the constituents — are weighted by market capitalization. A company’s market cap is calculated by multiplying the current share price by the total number of outstanding shares.

Companies in that index are weighted based on the proportion of the overall index their market cap represents. Other indexes may use a different weighting system. The Dow Jones Industrial Average, for example, tracks 30 blue chip companies and weights them based on stock price. Companies with a higher share price are given more weight than those with lower prices.

Because of these different weighting systems, it’s important to understand that an overweight to a particular stock with regards to one index may not be the same when it comes to another.

Overweight Stocks

When an analyst rates Stock X as overweight, it’s generally a positive sign. First, they believe Stock X is likely to outperform its benchmark index, or even the market as a whole, depending on market conditions, so investors should consider holding more of the stock.

Bear in mind that an “overweight stock” rating doesn’t necessarily mean that stock is a juggernaut. In a down market, being overweight could simply mean the company might not lose as much ground as its peers, or it might grow less slowly than its peers.

Underweight Stocks

When an analyst rates Stock Y as underweight, the analyst believes that Stock Y is likely to underperform its benchmark, and investors should consider holding less of this stock.

Equal Weight Stocks

When an analyst gives an equal weight rating to a stock, that simply means it’s in line with the overall benchmark. Again, when considering these ratings it’s important to keep in mind the overall context of the market, and what these ratings mean to analysts.

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Example of an Overweight Stock

A very simple example of an overweight stock could be when a stock, Stock X, is selling for $50, but experts and analysts think it’s undervalued and should trade for $75, it could be overweight.

Further, an overweight stock rating can be taken in two ways: First, that the stock will outperform its benchmark index and second that investors may want to take advantage of the increase in price.

When an analyst indicates their belief that a stock will appreciate, they may also state a potential time frame and price target for the stock. So, if Stock X is trading at $75 per share, and the company releases new earnings data that’s positive, an analyst might rate the stock as overweight, with a price target of $100 per share in the coming year.

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The Downside of Weighting Stocks

One critique of this rating system is that no analyst, of course, can recommend how many shares investors should buy. It’s simply not possible for analysts to know whether Investor A’s portfolio might benefit from an additional 100 shares of Stock X, while Investor B might want to buy 1,000 shares of Stock X.

As a result, it’s incumbent on individual investor’s themselves to keep an eye on how relevant an overweight stock rating might be for their specific allocation. Buying more of Stock X could, in theory, create an imbalance and reduce a portfolio’s overall diversification. So while an overweight stock might be a good thing, an overweight portfolio usually is not.

How Can Investors Interpret Overweight Stocks?

At first glance, the terms overweight and underweight may seem more or less synonymous with “buy” and “sell” — in that case, why don’t analysts use these more straightforward terms?

In fact, the terms overweight and underweight do have a slightly different connotation than simply to buy or sell a security. Rather, the terms suggest a recommendation that a portfolio hold more or less of a particular position than an index or other benchmarks would suggest.

It may mean acquiring more, or selling some, of a particular investment. But it wouldn’t necessarily mean buying something new or selling all of a position. For example, if your portfolio has an allocation to tech stocks, and an analyst recommends overweighting one of those stocks, you may want to buy more of that company. Or you may not need more growth in your tech holdings, so you might look for an overweight stock.

Also, analysts aren’t always comfortable giving specific directions to buy or sell certain securities. The terms overweight and underweight are more like offering guidance: “Here’s what I think of Stock X or Stock Y. I’ll let the investor take it from here.”

In many cases an overweight or underweight recommendation might not be very useful for investors. For example, if an analyst recommends an overweight to a certain commodity but an investor’s portfolio doesn’t hold any commodities, this information may not have much bearing on their situation.

Can a Portfolio Be Considered Overweight?

Overweight can refer to a portfolio that holds more of a stock or other investments than it theoretically should. For individual investors, this might mean that more of a portfolio is allocated to stock than the investor intended.

For example, say an investor has a portfolio allocation in which 70% of its allocation is held in stock and 30% is held in bonds. If the stock market goes up, the proportion of the portfolio held in stock may grow beyond the 70% mark. At that point, the portfolio may be described as overweight in stocks, and an investor may want to rebalance to bring it in line with their initial allocation plan.

It may come as no surprise that the opposite of an overweight allocation is an underweight allocation. For example, if the stock allocation in the portfolio above fell below 70%, that allocation could be described as underweight in stocks.

The term can also apply in a narrower sense. For example, a stock portfolio could hold too much stock in one company, sector, or geographical region. In each case the holding could be described as overweight.

Professional fund managers may also use overweight to describe portfolios they work with that are off track with their index, including mutual funds, exchange-traded funds, and index funds. From time to time, a fund may get out of line with its benchmark index by holding more or less of an investment that index tracks.

For example, say an index fund is built to track the S&P 500. To track the index, fund managers will usually attempt to hold every stock in the index. Additionally, they will try to match the proportion of each individual company their fund holds to the index as well. So if stock A represents 5% of the original index, the fund will also hold 5% of stock A.

Some funds have a little bit of wiggle room in terms of how far they can stray from the index. Some might be allowed to hold more or less stocks if they think the stocks will outperform or underperform. When they hold more than the index, the managers are taking an overweight position. And when they hold less than the index, the managers are taking an underweight position.

The Takeaway

Overweight stocks are those that may be undervalued by the market. When an analyst gives a stock an overweight rating, broadly speaking it could be a good thing. If the analyst is correct, and the stock is indeed poised to perform better than its benchmark — maybe even better than the market as a whole — investors may want to buy that stock.

But the necessary caveat is that it all depends on context — the context of the market, and the context of an investor’s portfolio overall. You don’t want to buy a stock that could throw your allocation off, and make your portfolio overweight in a way that’s not ideal.

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

FAQ

Is overweight stock good?

An overweight stock can be good for investors looking for a relative deal, but it may not be a good thing if the investor already owns shares of the stock.

What is the difference between overweight and outperform stocks?

Outperform stocks and overweight stocks are similar, and the terms are often used interchangeably. But generally, “outperform” may describe a stock that’s undervalued or expected to offer solid returns in the future, but perhaps perform not quite as well as an “overweight” stock.

What is the difference between buy and overweight?

On an analysts’ rating system, “buy” and “overweight” stocks are rated differently, with “buy” being a higher rating – though both ratings are positive.

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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.

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The Essentials of Stock Float and Its Impact on Investing

By | Growing Wealth, Investing | No Comments

Whether you’re a veteran or a rookie when it comes to the stock market, you likely have come across the term “stock float.” And regardless of your experience, the question, “What is a stock float?” may have you stumped.

Finding out the answer can play a major role in your investing future. Read on to learn about stock float.

Key Points

•   Stock float represents the number of shares available for public trading, excluding locked-in and restricted shares, which affects how easily investors can buy or sell a stock.

•   Lower stock float generally leads to higher volatility, as increased demand can significantly impact stock prices, while higher float stocks tend to be more stable.

•   Investors can analyze stock float by calculating the difference between outstanding shares and restricted shares, which helps them assess a stock’s liquidity and potential price movements.

•   Low-float stocks can be attractive to day traders due to their potential for rapid price changes but come with increased risks, including market manipulation and liquidity issues.

•   Understanding stock float dynamics aids investors in making informed decisions, as it influences trading strategies and the overall market behavior of stocks.

Unpacking the Concept of Stock Float

So, what is a stock float exactly? Floating stock is the number of shares available for trade of a particular stock. The number of floating shares is referred to as the stock float or simply “the float.” Stock float is important because it indicates how many shares of a stock can be bought and traded by investors in general.

To calculate the amount of floating stock available, subtract the number of locked-in shares and restricted stock from a firm’s total outstanding shares.

Restricted stock generally refers to shares that cannot be traded without special exception from the Securities and Exchange Commission (SEC). One such example of this is stocks that are restricted by the SEC from sale during a lock-up period after an initial public offering, where certain shareholders (such as employees and major investors) are not allowed to sell their stock for that given period. This may be done in an attempt to stabilize the price of the stock.

No matter the reason, if there are shares that are not available for trade in the market, then they will not be tallied in the final float count.


💡 Quick Tip: All investments come with some degree of risk — and some are riskier than others. Before investing online, decide on your investment goals and how much risk you want to take.

How Stock Float Influences Market Dynamics

Stock float is something investors find helpful because it indicates the ownership structure of a company. Also, the lower the stock float, the more volatile the stock may be. If there is more demand from investors than available stock to buy, that could send the price of the stock up. And if demand for the stock drops, the stock’s price could fall.

The Significance of Stock Float in Investing

Investors find stock float useful because it tells them how many shares of stock are available to be publicly bought and sold. It also offers an indication of a stock’s volatility, as noted above. A stock float that’s low could push up the price of the stock if there is great demand for it.

Analyzing the Impact of Float on Stock Performance

Stock float can indicate to investors how many shares of stock are available to buy and sell, and thus, how volatile a stock may be. Stocks with a higher float tend to be less volatile, while those with a lower float tend to have higher volatility.

Stock float is just one metric or tool investors can use to analyze a stock and how it might potentially perform.

Stock Float Compared: Authorized, Outstanding, and Floating Shares

Authorized shares are the most shares of stock that a company can issue. Outstanding shares are the number of shares the company actually has issued. A company does not have to issue all of its authorized shares.

Floating shares refers to the number of a company’s shares that can be bought and sold. Stock float is calculated by subtracting a company’s restricted shares from their outstanding shares. If a company has 100 million outstanding shares, with 15 million of them locked in, this company’s float would be 85 million.

This means that 85 million shares of this company’s stock are available for trade on the open market. These are the shares that you could hypothetically purchase with a broker, brokerage account, or other trading platforms that have access to the major stock exchanges.

Identifying and Interpreting the Float of a Stock

Identifying the float of a stock requires a fairly simple calculation. You can find a stock’s float by subtracting any restricted shares of the stock from the outstanding shares.

Typically, you can also look at a company’s balance sheet to find the number of outstanding shares and floating shares.

Interpreting What the Float Tells You About a Stock

The float of a stock tells you how many shares of that stock are available for buying or selling. Low float stocks (those with fewer shares available to buy and sell) tend to be more volatile, as discussed earlier, because there are fewer shares available for trading.

The Implications of Low vs High Stock Float

When considering low float stocks and high float stocks, the following are some things investors might want to keep in mind.

Advantages and Risks of Low-Float Stocks

The benefits of low-float stocks apply mainly to day traders who hope to earn big profits in a short period of time. Each trade of a low-float stock could have a big impact on the value of the stock. For example, if there’s good news about a company whose stock float is low, demand for the stock may rise, and the stock’s price could go up.

Conversely, if news about the company is bad, demand for the stock could plummet, along with the stock’s price. This leads to a greater level of risk for investors.

The Stability and Volatility Factor in High-Float Stocks

High-float stocks tend to be less volatile because there are more shares available for public trading. That makes them more stable overall because there are more shares of the stock in circulation. The price of high-float stocks tends to be more stable than low-float stocks.


💡 Quick Tip: Are self-directed brokerage accounts cost efficient? They can be, because they offer the convenience of being able to buy stocks online without using a traditional full-service broker (and the typical broker fees).

The Investor’s Guide to Low-Float Stocks

Trading low-float stocks can be one strategy day traders use. Here’s what to know about evaluating and trading these stocks.

Best Practices for Trading Low-Float Stocks

Trading low-float stocks involves risks. Because there are few shares available, it may be difficult to buy them when an investor wants them and also to sell them in time to make a profit — this is referred to as a lack of liquidity.

One way traders might handle this is to look for stocks with low float and high volume, which is the number of shares of stock being traded daily. The more shares being traded, the lower the chances might be that an investor will have to deal with lack of liquidity.

Strategies for Evaluating Low-Float Stock Potential

Traders can use technical analysis and look at indicators like candlestick charts and moving averages to help evaluate a low-float stock. This typically requires some knowledge and experience as an investor.

Other methods of evaluating a low-float stock include:

Low-float stocks with a high relative volume. Relative volume is a way to help gauge a stock’s liquidity. It indicates a stock’s volume currently compared to other times in the company’s history. A stock with low liquidity might be difficult for an investor to sell.

News about the company. Both good and bad news about a company can affect a low-float stock’s value. It could quickly go up or down.

Float percentage. This refers to the percentage of total shares of stock available for trading. Most traders look for a percentage between 10% and 25%.

Insights Into Stock Float and Market Manipulation

Stocks with a low float may be more vulnerable to market manipulation. When a stock has fewer shares available for trading, it could easily be affected by comments on social media, for instance. There are also schemes such as a “pump and dump” in which unscrupulous investors buy up many of the shares of a low-float stock, which could affect the price dramatically. They might then dump the stock.

Day trading is risky and can result in investors losing significant amounts (although they could potentially make significant gains). And low-float stocks can be susceptible to practices like market manipulation. Those with a low tolerance for risk may find that low-float stocks are not the best investment for them.

Deep Dive: Case Study and Example of Floating Stock

One recent example of a low-float stock is General Electric (GE). In early fall 2023, there were 1.088 billion outstanding shares of GE stock. Of this number, approximately 76% of shares were not available for public trading. The float in this case was 260 million shares. Consequently, GE’s stock price is considered fairly volatile.

Practical Tips for Trading and Investing in Floating Stocks

Low-float stocks can be highly volatile and their price can go up and down in minutes or even seconds. This volatility could eliminate a significant chunk of an investor’s portfolio. Of course, low-float stocks could also present substantial profit opportunities with potentially big gains. But they are risky.

Low-float stocks are typically appealing to those who are hoping to make larger gains in a short amount of time, such as day traders.

To successfully trade low-float stocks, investors should look at technical indicators and also follow the news. Watching the market every day is critical since the prices of these stocks can change so quickly.

Whether you’re investing in low-float stocks or any stock, remember that diversifying your portfolio is important and can help mitigate risk and potentially increase your returns, studies show.

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


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

FAQ

Is a Low-Float Stock Good for Day Trading?

A low-float stock could potentially lead to big profits for day traders if the stock is in high demand. However, these stocks can be very risky since they are volatile. If demand drops, a trader could lose large sums.

How Does a Stock’s Float Affect Its Liquidity?

Stocks with a higher float have more liquidity, which can make it easier for investors to buy and sell them. Low-float stocks have less liquidity, which could make it more challenging to buy or sell them.


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.

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.

SoFi Invest®

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

SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.
For a full listing of the fees associated with Sofi Invest please view our fee schedule.

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08
2024
Understanding Bond Valuation

What Is Bond Valuation?

By | Growing Wealth, invest, Investing, Terminology | Comments Off on What Is Bond Valuation?

Bond valuation is a way of determining the fair value of a bond. Bond valuation involves calculating the present value of the bond’s future coupon payments, its cash flow, and the bond’s value at maturity (or par value), to determine its current fair value or price. The price of a bond is what investors are willing to pay for it on the secondary market.

When an investor buys a bond from the issuing company or institution, they typically buy it at its face value. But when an investor purchases a bond on the open market, they need to know its current value. Because a bond’s face value and interest payments are fixed, the valuation process helps investors decide what rate of return would make that bond worth the cost.

Key Points

•   Bond valuation is the process of determining a bond’s fair value by calculating the present value of future coupon payments and its value at maturity.

•   Investors must consider the bond’s current price, which may differ from its face value, as it reflects market conditions and the issuing company’s creditworthiness.

•   The valuation involves discounting the bond’s future cash flows using a realistic discount rate, which is essential due to the time value of money.

•   Changes in interest rates significantly affect bond pricing; rising rates usually decrease bond prices, while falling rates can increase them.

•   Investing in bonds can diversify a portfolio, as they tend to be less risky than stocks and provide a predictable income stream through fixed payments.

How Bond Valuation Works

First, it’s important to remember that bonds are generally long-term investments, where the par value or face value is fixed and so are the coupon payments (the bond’s rate of return over time) — but interest rates are not, and that impacts the present or fair value of a bond at any given moment.

To determine the present or fair value of a bond, the investor must calculate the current value of the bond’s future payments using a discount rate, as well as the bond’s value at maturity to make sure the bond you’re buying is worth it.

Some terms to know when calculating bond valuation:

•   Coupon rate/Cash flow: The coupon rate refers to the interest payments the investor receives; usually it’s a fixed percentage of the bond’s face value and typically investors get annual or semi-annual payments. For example, a $1,000 bond with a 10-year term and a 3% annual coupon would pay the investor $30 per year for 10 years ($1,000 x 0.03 = $30 per year).

•   Maturity: This is when the bond’s principal is scheduled to be repaid to the bondholder (i.e. in one year, five years, 10 years, and so on). When a bond reaches maturity, the corporation or government that issued the bond must repay the full amount of the face value (in this example, $1,000).

•   Current price: The current price is different from the bond’s face value or par value, which is fixed: i.e. a $1,000 bond is a $1,000 bond. The current price is what people mean when they talk about bond valuation: What is the bond currently worth, today?

The face value is not necessarily the amount you pay to purchase the bond, since you might buy a bond at a price above or below par value. A bond that trades at a price below its face value is called a discount bond. A bond price above par value is called a premium bond.

💡 Quick Tip: Are self-directed brokerage accounts cost efficient? They can be, because they offer the convenience of being able to buy stocks online without using a traditional full-service broker (and the typical broker fees).

Get up to $1,000 in stock when you fund a new Active Invest account.*

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*Customer must fund their Active Invest account with at least $50 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.

How to Calculate Bond Valuation

Bond valuation can seem like a daunting task to new investors, but it is not that onerous once you break it down into steps. This process helps investors know how to calculate bond valuation.

Bond Valuation Formula

The bond valuation formula uses a discounting process for all future cash flows to determine the present fair value of the bond, sometimes called the theoretical fair value of the bond (since it’s calculated using certain assumptions).

bond valuation formula

The following steps explain each part of the formula and how to calculate a bond’s price.

Step 1: Determine the cash flow and remaining payments.

A bond’s cash flow is determined by calculating the coupon rate multiplied by the face value. A $1,000 corporate bond with a 3.0% coupon has an annual cash flow of $30. If it’s a 10-year bond that has five years left until maturity, there would be five coupon payments remaining.

Payment 1 = $30; Payment 2 = $30; and so on.

The final payment would include the face value: $1,000 + $30 = $1,030.

This is important because the closer the bond is to maturity, the higher its value may be.

Step 2: Determine a realistic discount rate.

The coupon payments are based on future values and thus the bond’s cash flow must be discounted back to the present (thanks to the time value of money theory, a future dollar is worth less than a dollar in the present).

To determine a discount rate, you can check the current rates for 10-year corporate bonds. For this example, let’s go with 2.5% (or 0.025, when expressed as a decimal).

Step 3: Calculate the present value of the remaining payments.

Calculate the present value of future cash flows including the principal repayment at maturity. In other words, divide the yearly coupon payment by (1 + r)t, where r equals the discount rate and t is the remaining payment number.

$30 / (1 + .025)1 = $29.26

$30 / (1 + .025)2 = 28.55

$30 / (1 + .025)3 = 27.85

$30 / (1 + .025)4 = 27.17

$1030 / (1 + .025)5 = 1,004.87

Step 4: Sum all future cash flows.

Sum all future cash flows to arrive at the present market value of the bond : $1,117.70

Understanding Bond Pricing

In this example, the price of the bond is $1,117.70, or $117.70 above par. A bond’s face or par value will often differ from its market value — and in this case its current fair value (market value) is higher. There are a number of factors that come into play, including the company’s credit rating, the time to maturity (the closer the bond is to maturity the closer the price comes to its face value), and of course changes to interest rates.

Remember that a bond’s price tends to move in the opposite direction of interest rates. If prevailing interest rates are higher than when the bond was issued, its price will generally fall. That’s because, as interest rates rise, new bonds are likely to be issued with higher coupon rates, making the new bonds more attractive. So bonds with lower coupon payments would be less attractive, and likely sell for a lower price. So, higher rates generally mean lower prices for existing bonds.

The same logic applies when interest rates are lower; the price of existing bonds tends to increase, because their higher coupons are now more attractive and investors may be willing to pay a premium for bonds with those higher interest payments.

💡 Quick Tip: Did you know that opening a brokerage account typically doesn’t come with any setup costs? Often, the only requirement to open a brokerage account — aside from providing personal details — is making an initial deposit.

Is Investing in Bonds Right for You?

Investing in bonds can help diversify a stock portfolio since stocks and bonds trade differently. In general, bonds are seen as less risky than equities since they often provide a predictable stream of income. Investors can consider bonds as an investment, and those with a lower risk tolerance might be better served with a portfolio weighted highly in bonds.

Performing proper bond valuation can be part of a solid research and due diligence process when attempting to find securities for your portfolio. Moreover, different bonds have different risk and return profiles. Some bonds — such as junk bonds and fixed-income securities offered in emerging markets — feature higher potential rates of return with greater risk. “Junk” is a term used to describe high-yield bonds. You can take on higher risk with long-duration bonds and convertible bonds. Some of the safest bonds are short-term Treasury securities.

You can also purchase bond exchange-traded funds (ETFs) and bond mutual funds that own a diversified basket of fixed-income securities.

The Takeaway

Bond valuation is the process of determining the fair value of a bond after it’s been issued. In order to price a bond, you must calculate the present value of a bond’s future interest payments using a reasonable discount rate. By adding the discounted coupon payments, and the bond’s face value, you can arrive at the theoretical fair value of the bond.

A bond can be priced at a discount to its par value or at a premium depending on market conditions and how traders view the issuing company’s prospects. Owning bonds can help diversify your portfolio. Many investors also find bonds appealing because of their steady payments (one reason that bonds are considered fixed-income assets).

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

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

Photo credit: iStock/Tempura

SoFi Invest®

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

SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.
For a full listing of the fees associated with Sofi Invest please view our fee schedule.

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

Exchange Traded Funds (ETFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or by email customer service at https://sofi.app.link/investchat. Please read the prospectus carefully prior to investing.
Shares of ETFs must be bought and sold at market price, which can vary significantly from the Fund’s net asset value (NAV). Investment returns are subject to market volatility and shares may be worth more or less their original value when redeemed. The diversification of an ETF will not protect against loss. An ETF may not achieve its stated investment objective. Rebalancing and other activities within the fund may be subject to tax consequences.
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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.


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

Claw Promotion: Customer must fund their Active Invest account with at least $50 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.

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Aug
08
2024
What Is Maintenance Margin? How Margin Maintenance Requirements Work

What Is Maintenance Margin? How Its Requirements Work

By | Growing Wealth, invest, Investing | Comments Off on What Is Maintenance Margin? How Its Requirements Work

Maintenance margin, as it relates to margin accounts and trading, refers to the necessary amount of funds an investor needs to maintain in their brokerage account in order to utilize margin. Margin accounts work differently than other trading accounts. Instead of allowing the trader to do regular trades, the margin account allows leveraged trades.

This means that the trader can buy securities including stocks, bonds, or options for more than the amount that they have in their account, paying only a deposit on the trade. They borrow the rest of the cash needed for the investment from the broker.

Key Points

•   Maintenance margin represents the minimum balance required in a trader’s margin account to avoid a margin call and continue leveraged trading.

•   The Financial Industry Regulatory Authority mandates a minimum maintenance margin of 25%, but individual brokerage firms often set higher requirements for added security.

•   Margin trading carries significant risks, as traders can incur losses exceeding their account balance, leading to margin debt owed to brokers.

•   If a trader’s account balance falls below the maintenance margin, the broker can issue a margin call, requiring additional funds or asset liquidation within a specified timeframe.

•   Understanding the distinction between maintenance margin and initial margin is crucial, as the initial margin is the upfront deposit required to open a margin account.

Maintenance Margin Definition

In margin trading, the maintenance margin is the minimum amount of funds that a trader must hold in their portfolio to avoid being issued a margin call, for as long as they are actively involved in a trade. If a trade they enter decreases in value, the trader may owe money, which is taken from their account.

Minimum margin requirements for leveraged accounts are regulated by the government. Currently the Financial Industry Regulatory Authority (FINRA) sets the maintenance margin at 25% of the total value of securities that a trader holds in their margin account.

Specific brokerage firms also maintain their own requirements. It is common for brokerage requirements to be higher than the government required amount to provide the firm with greater financial security.

Margin maintenance requirements shift based on various factors, including market liquidity and volatility. And different stocks have differing maintenance requirements: if they are more likely to be volatile, the requirements may be higher.

Does a Maintenance Margin Mitigate Risk?

Maintenance margin doesn’t mitigate risk for traders. Margin investing is risky because traders can lose more money than they have in their account, creating a debt with the broker, called margin debt.

When a trader opens a margin account, they must sign an agreement and deposit a certain amount into the account before they can start trading. To pay off any debt from assets that have lost value, the trader will need to deposit additional funds, deposit securities, or sell off holdings.

Therefore, margin trading isn’t recommended for beginner traders, and it’s important for traders to understand the risks and how it works before trying it out.


💡 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.

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Maintenance Margin Requirement Examples

Let’s look at an example of how maintenance margin requirements work.

Let’s say a trader wants to purchase 100 shares of Company XYZ at $40 per share. They don’t have sufficient funds to purchase the entire number of shares. The trader can use a margin account which allows them to purchase the entire amount of shares but only deposit a percentage of the total price into the trade and also pay a financing fee. This deposit amount is known as the initial margin requirement.

In this example, the initial maintenance margin requirement is 40% of the purchase price of the trade. For the trader to purchase the full 100 shares, they need to maintain a balance of 40% of the trade purchase amount in their margin account.

When Maintenance Margin Requirements Aren’t Met

If the amount in their account dips below the minimum requirement, their broker will issue a margin call notification. Generally, the trader will have between 2-5 days to either add more funds to their account or sell some of the assets they are invested in to move enough cash funds back into their account.

If the trader doesn’t sell holdings or add funds to their account to meet the margin maintenance requirement, the broker may sell the trader’s securities without notifying them, and they have the right to decide which ones they sell. They are also allowed to charge the trader commissions and even sue the trader for losses.

A margin call can also be sent out if the brokerage firm changes their requirements, which they can do at any time.

Calculating Maintenance Margin

Each brokerage firm has their own maintenance margin requirements. The formula to calculate the maintenance margin is:

Account value = (Margin Loan) / (1 – Maintenance Margin %)

This can be used to determine the stock price that will trigger a margin call.

For example, a trader opens a margin account and deposits $20,000 into it, then borrows $10,000 from the broker in a margin loan in order to purchase 200 shares of stock at a price of $100 each. The broker’s maintenance margin is 30%. Here is what the calculation would be to figure out what account balance would trigger the margin call:

($10,000 Margin Loan) / (1 – 0.30 Maintenance Margin %) = $14,285.71

That means that if the trader’s account dips below $14,285.71, or if the price of the stock falls below $71.43 ($14,285.71 / 200 shares) then the broker will issue a margin call.

Recommended: What Is Margin Interest and How to Calculate It

Maintenance Margin vs Initial Margin

When traders open a margin account, there is an initial margin amount they are required to deposit before they can start trading. This is set by FINRA, and brokers may also have their own additional requirements. The initial margin required by FINRA is currently $2,000 in cash or securities.

After a trader starts buying on margin, they must meet the maintenance margin on their account — at least 25% of the market value of the securities in their account.

The Takeaway

A maintenance margin is a monetary buffer for traders with margin accounts. The maintenance margin is a minimum balance required to execute leveraged trades. If a trader’s margin account dips below the minimum set by FINRA and the broker, the broker will issue a warning, or margin call, so that the trader can add cash to their account or sell holdings to cover the gap.

Maintenance margins do not mitigate risks for traders, and if an investor is utilizing margin as a part of their investment strategy, they should know what they’re getting into. Margin accounts have their pros and cons, but it’s important to keep the risks in mind.

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


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

FAQ

What happens if you go below maintenance margin?

Generally, if a trader or investor’s account goes below the maintenance margin, their brokerage will send them a margin call, or otherwise warn them that they need to deposit funds or sell holdings.

What does current maintenance margin mean?

Current maintenance margin refers to the literal current maintenance margin set by financial regulators or by a specific brokerage. For example, it may be 25% of the value of an investor’s total holdings.

What is the difference between maintenance margin and minimum margin?

Minimum margin refers to the minimum amount of collateral needed in a margin account to execute leveraged trades, while maintenance margin is the total capital that needs to remain in the account as the investor continues to utilize a margin account.

Who sets the maintenance margin?

FINRA currently sets the maintenance margin, which is 25%. But specific brokerage firms can set their own beyond that, and often, at a higher threshold.

Why is my maintenance margin so high?

Maintenance margin requirements can be determined by a number of factors beyond regulatory minimums, such as market conditions and volatility, and the specific types of securities an investor is trading.

What does 25% maintenance margin mean?

Twenty-five percent maintenance margin means that an investor must hold 25% of the total value of their holdings in their account. It is the minimum amount of equity that must be maintained in their margin account.

Photo credit: iStock/StockRocket

SoFi Invest®

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

SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.
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.

Claw Promotion: Customer must fund their Active Invest account with at least $50 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.



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