May
31
2023
candlestick stock chart

Important Candlestick Patterns to Know

By | Growing Wealth, invest, Investing, Terminology | Comments Off on Important Candlestick Patterns to Know

Candlestick charts are one of many popular tools used for technical stock analysis. They are also called Japanese candlestick charts or patterns, because they were first invented in Japan in the 1700s to track the prices of rice. Today, candlestick patterns reveal patterns in stock prices.

They are also one of multiple types of charts that traders use to analyze stock prices, and there are some general patterns that are helpful to know and understand if you’re participating in the markets.

What Is a Candlestick Pattern?

A candlestick pattern is a sequence of price changes that can be identified as a formation on a chart. Each candlestick in a chart represents stock price increases or decreases within a specified time frame. Watching out for particular candlestick patterns in charts is a popular day trading strategy, and one that involves trying to predict whether a stock will go up or down in value, and make trades based on those predictions.

Again, this is a form of technical analysis, as opposed to fundamental stock analysis, which is different.

Candlestick patterns are also useful for specifically timing entry and exit points for trades. Based on how stock price movements have repeatedly occurred in the past following a pattern, traders can decide whether to put faith in them moving in a similar way again. The reason these patterns form is that human perceptions, actions, and reactions to stock price movements repeat.

Past events are not predictions of the future — no candlestick pattern is perfect, and it’s important to remember that there are always risks when trading stocks. But they can be useful guidelines and one more piece of information for those looking to make informed trading decisions.

Reading Single Candlesticks

Even a single candlestick chart can provide valuable insight into where stock prices may head. Each candlestick is composed of four parts:

•   The top “wick” or shadow of a candlestick marks the highest price the stock traded within the specified time period.

•   The bottom wick marks the lowest price the stock traded. If a candlestick wick is long, this means the highest or lowest trading price is significantly different from the opening or closing price. A shorter wick means the high or low trade was close to the opening or closing price. The difference between the top and bottom of the candlestick wicks is called the range.

•   In a red candlestick, the top of the thicker body of the candlestick, called the “real body,” marks the opening price of the stock within the specified time period, and the bottom marks the closing price. Red candlesticks mean the price has decreased.

•   In a green candlestick, the bottom marks the opening price, and the top marks the closing price. Green candlesticks show that the price has increased.

Candlesticks can represent different time frames. One popular time frame is a single day, so each candlestick on a chart will show the price change of one day. A one-month chart would have approximately 30 candlesticks.

Trending Candles vs Non-Trending Candles

If a candle continues an ongoing price trend, this is called a trending candle. Candles that go against the trend are non-trending candles.

Candles that don’t have an upper or lower wick can also show that there is a strong trend, support, or resistance in either direction. This means the opening or closing price was close to the high or low trade. And vice versa — a long wick can be an indicator that high or low prices aren’t holding.

Doji Candles

When a candle’s opening and closing price are almost the same, this forms a doji candle, which looks like a black cross or plus sign. The wicks of doji candles can vary in length.

A doji can either be a sign of a reversal or a continuation. It shows equal forces from buyers and sellers, with no gain in either direction.

Long Shadow Candles

Candles with a long wick or shadow can be a strong indicator. A candle with a long upper shadow can indicate a continuation of a bullish trend or reversal towards one, while long lower shadows can indicate a bearish trend or reversal.

Types of Candlestick Patterns

Candlestick patterns are used to help predict stock price action. There are dozens of candlestick patterns that some traders use to help recognize trading opportunities and better time their entries and exits, but there are four distinct ways to define potential outcomes of candlestick patterns:

1.    Bullish candlestick patterns show that a stock’s price is dominated by buyers and the price is likely to increase.

2.    Bearish patterns show that the stock is dominated by sellers, and the price is likely to decrease.

3.    Reversal candlestick patterns predict that the price trend of a stock is going to reverse.

4.    Continuation patterns predict that the price will continue to head in the direction it’s currently going.

It’s important to remember that some patterns are a signal not to trade. Knowing when not to buy or sell is just as important as knowing when to take action.

Bullish Candlestick Patterns

A bullish candlestick pattern can either be an indication of a continued bullish trend, or it could be a reversal from a bearish trend. There are a number of popular bullish candlestick patterns, each of which can tell a trader something different.

Morning Star: The Morning Star is a three-candlestick pattern indicating a reversal towards a bullish trend, so named because it gives traders hope of a reversal during a bearish trend. The first candle is long-bodied and red. The second candle opens lower and has a short body, it can be either red or green but its body doesn’t overlap with the body of the first candle. The third candle is green and closes at or above the center of the first candle body.

Morning Star Doji: This three-candlestick pattern tends to be a reversal from a bearish trend. The first candle has a long body showing a downtrend. The second candle opens at a lower price and trades within a narrow price range, then the third candle reverses in a bullish direction, closing at or above the center of the first candle body.

Bullish Engulfing: In this two-candle pattern, the first candle is bearish and the second is bullish. The body of the first candle fits completely within the body of the second candle, “engulfing” it. Although both candles are important, the higher the high of the second candle’s body, the stronger the indication of a reversal.

Three Line Strike: A four-candlestick bullish pattern that consists of three red candles followed by a long green candle. The red candles all fit inside the body of the green candle.

Hammer: This single-candle pattern can occur during or at the end of a bearish trend. The hammer candle looks like a hammer, with a short red candle body and a long lower shadow. This indicates that the low of the day is significantly lower than the close of the day, which can be a sign that the bearish trend is ending. However, it’s important for traders to wait and see if the reversal happens, because sometimes the hammer occurs during a continuing downtrend.

Bullish Harami: This reversal pattern happens during a downtrend and can indicate a switch toward upward price movement. It looks like a short green candlestick that follows several red candlesticks. The green candlestick body fits within the body of the previous red candlestick.

Abandoned Baby: This reversal pattern is made up of three candles. The middle candle is a doji which gaps up from the bottom of the previous red candle. The third candle is green and gaps up from the doji. The first and third candles have relatively long bodies. It’s so named because the gaps have space between the doji candle’s wick and both wicks of the first and third candle.

Dragonfly Doji: This is a strong indicator of a reversal. In this pattern, a doji candle opens and closes at or near the highest trade of the day. The lower shadow tends to be long, but it can vary in length.

Hanging Man: This is a single candlestick pattern which can indicate a coming bullish trend. The candle has a long lower wick and a short candle body.

Piercing Line: In this two-candle pattern, the first candle is long and red, followed by a green candle that opens at a new low but closes higher than the midpoint of the first candle. This can indicate a reversal away from a bearish trend.

Candlestick Sandwich: This is a three-candle pattern which consists of a long green candle sandwiched between two long red candles. The closing prices of the two red candles are similar, creating support that indicates a coming bullish trend.

Three Green Soldiers: A three-candle pattern that looks like a staircase towards higher prices. It consists of three green candles, each of which opens at a higher price than the previous day.

Bearish Candlestick Patterns

Bearish candlestick patterns may indicate an ongoing bearish trend, or they may indicate a reversal from a bullish trend. These are some common bearish candlestick patterns.

Evening Star: This three-candle pattern is the opposite of the Morning Star, indicating that a bullish trend is reversing into a bearish one. The first candle is long and green. The second candle opens higher and has a short body. The body can be either red or green but doesn’t overlap with the body of the previous candle. This shows that buying interest is coming to an end. The third candle is red and closes at or below the center of the first candle body.

Evening Star Doji: This three-candle pattern is the opposite of the Morning Star Doji. It indicates a possible reversal towards a bearish trend. The first candle is a long green candle. The second candle is a doji or very narrow and opens at a higher price. The third candle is red and closes at or below the center point of the first candle body.

Inverted Hammer: The inverse of the hammer pattern, this is a single-candle pattern which can indicate the end of a downtrend and reversal towards a bullish price movement. This candle has a short green body and a long upper shadow, making it look like an upside down hammer.

Shooting Star: This is a single-candle pattern in which there is a green candle with a short body, very little or no lower shadow, and a long upper shadow. The shooting star can mark the top of an upcycle and signal a reversal.

Dark Cloud Cover: A three-candlestick pattern that occurs when a red candle has an opening price that’s higher than the closing price of the previous day’s candle, and a closing price below the middle of the previous one. The first candle is green. To complete the pattern, the third candle is bearish.

Bearish Harami Cross: A trend-reversal pattern consisting of a series of green candlesticks followed by a doji, this pattern indicates that the uptrend may be losing momentum and preparing for a reversal.

Falling Tree: This is a five-candlestick pattern which signals a possible interruption of a bearish trend, with a continuing downtrend. The first is a long red candle, followed by three small green candles, which all stay within the range of the first candle. The last candle is another long red one. This pattern shows that bulls are unable to reverse a downtrend.

Two Black Gapping: This pattern happens when there is a new high in an uptrend, followed by two red candles that gap down. This can be a good indicator of a coming bearish trend.

Gravestone Doji: This is an inverted dragonfly pattern, in which the opening and closing price are at or near the low of the day. The upper candle shadow tends to be long, but can vary in length. It can indicate either a reversal towards a bearish trend, or an ongoing bearish trend.

Three Black Crows: In this pattern, a new high is followed by three long red candlesticks that each close with lower lows.

Reversal Patterns

The Harami Cross can indicate a reversal in either a bullish or a bearish trend. It’s a two-candlestick pattern in which the first candle opens or closes at a new high or low. The second candle is a doji which is inside the range of the previous candle’s body.

Other Patterns

These two patterns don’t fit into the bullish, bearish, reversal, or continuation categories.

Spinning Top: A short-bodied candlestick with equal top and bottom wicks that looks like a spinning top. This is an indication of indecision in the market. After the spinning top the market will likely move quickly one way or another, so if there’s a pattern prior to the top that may be an indicator of which way the spinning top will fall.

Supernova: If there’s a high volume stock with low float that experiences a price explosion, followed by a significant price drop, this is a supernova. There can be trading opportunities on the way up, and then opportunities to short sell on the way down as well.

The Takeaway

Candlestick charts are a stock analysis tool, and traders who can identify patterns within them may gain trend insights and try to predict security price movements. It can help them make a decision of when or if to buy, sell, or stand pat. There are numerous types of candlestick patterns, though it’s important to remember that patterns do not always lead to the predicted outcome.

Reading stock charts is only one small part of the investing world, and a rather complicated part, too. There are simpler, less-intensive ways to participate in the markets, too.

Ready to invest in your goals? It’s easy to get started when you open an Active Invest account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), 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.

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.

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.
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.

Probability of Member receiving $1,000 is a probability of 0.028%.

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May
31
2023

The Pros & Cons of Thematic ETFs

By | Growing Wealth, invest, Investing | Comments Off on The Pros & Cons of Thematic ETFs

Thematic ETfs are a subset of funds that allow investors to make targeted bets on a specific trend. ETF providers have used them to cover a wide range of themes in recent years, allowing investors to use them to gain exposure to themes as wide-ranging as the gig economy, renewable energy, gender equality, and even pet care.

But some market observers warn that thematic ETFs tend to be too narrow in their focus and have a history of underperforming the broader market. Here’s a deeper dive into thematic ETFs and the pros and cons of including them in an investor’s portfolio.

What’s a Thematic ETF?

ETFs, or exchange-traded funds, bundle many assets into one product, so when an investor purchases a share of an ETF, it gives them exposure to all the holdings in that fund. They’re similar to mutual funds, but ETFs are listed on an exchange so they can be bought or sold at any time of day. Thematic ETFs, then, invest in securities that focus on a single theme, concept, or industry.

Over the years, interest in thematic ETFs has increased as more retail investors have entered the stock market and gravitated towards niche sectors that represent technological or societal shifts.

This flexibility is one of the benefits of ETFs, along with the ability to diversify at a low cost. Traditional ETFs tend to be inexpensive and track some of the broadest, well-known benchmarks in the world, like the S&P 500.

In contrast, thematic ETF tend to group stocks in a much more targeted way, grouping similar companies together, for example, to give investors exposure to a more narrow subset of the overall market.

Why Invest in Thematic ETFs?

Thematic ETFs allow an investor to gain exposure to emerging technologies, like cloud computing, electric vehicles, artificial intelligence, blockchain tech, or even robotics. It’s perhaps the wide range of options that makes thematic ETFs attractive to some investors.

But the basic vehicle of an ETF can also have some big advantages for investors. That is, ETFs have a built-in degree of diversification, which can help many investors get an out-of-the-box element of risk mitigation in their portfolios — though ETFs are far from a risk-free or safe investment. ETFs are also relatively easy to trade, and can be purchased or sold on the stock market similar to shares of a company.

With that in mind, there are still pros and cons to thematic ETFs for investors to consider.

Pros of Investing In Thematic ETFs

There can be benefits to investing in thematic ETFs:

•   Buying a thematic ETF can make it convenient to invest in a specific sector or trend an investor is interested in. For instance, instead of buying a number of companies in a niche space that appears to be growing, an investor can simply buy an ETF.

•   Thematic ETFs can capture interesting societal or technological trends, giving investors quick access to a group of companies representing such changes.

Cons of Investing In Thematic ETFs

However, there can be downsides of thematic ETFs too:

•   Thematic ETFs can be very narrow and small in assets. And many may be relatively new to the market, meaning they don’t have much of a track record. This makes it more likely that they could close as well.

•   Part of the reason many of these thematic ETFs end up performing poorly is because sometimes by the time the ETF hits the market, the theme has already experienced its 15 minutes of fame.

•   There’s evidence that thematic ETFs tend to underperform the broader market.

•   Costs for thematic ETFs may also be higher, so investors might pay higher fees.

How to Choose a Thematic ETF

It can be very helpful to users to read the ETF prospectuses to make sure they understand the products they are putting money into. Investors can also do more research into the specific companies the ETF is invested in.

Timely themes, which might tap into current market movements, often start out strong but may drop off (and fast). Typically, the ETF that lands on the market first can have a big first-mover advantage — and end up being the go-to ETF for that theme.

Investors often consider the costs of the fund and what kinds of returns it’s had. Past performance is not necessarily a good predictor of future returns, but it may still provide a sense of its volatility.

The Takeaway

Thematic ETFs move away from the original tenets of index investing, which focused on providing very broad exposure to an asset class or sector. Instead, thematic funds instead allow investors to wager on niche, trendy market sectors. They’ve been popular because they allow for very targeted wagers on technological or societal trends people see around them.

They do have risks, though. Trends can lose steam, for instance, and these funds also tend to be more expensive than traditional ETFs and have a history of underperforming the broader market. They can, however, make for an additional option for investors building a portfolio.

Ready to invest in your goals? It’s easy to get started when you open an Active Invest account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), 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.

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.

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.
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.

Probability of Member receiving $1,000 is a probability of 0.028%.

SOIN0523035

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May
31
2023
25 Things to Know When Renting Out an Airbnb

25 Things to Know When Renting Out an Airbnb

By | Budgeting & Goals, Financial Independence, money | Comments Off on 25 Things to Know When Renting Out an Airbnb

Renting out part, or all, of your home on a rental platform can be a lucrative sideline. Just keep in mind that it can take an investment of time, effort, and money to create and maintain a welcoming space for guests. And, the plan could potentially backfire if you side-step some key legal and insurance steps.

To help ensure your venture is a success, here are some things you may want to consider before you start renting on Airbnb or a similar site.

1. Understanding Local Rental Laws

Before listing your home on a home-sharing site, it’s a good idea to research and make sure you fully understand local laws regarding renting out your home.

Laws that govern home shares vary around the country. In some cities, for instance, it’s illegal to rent a home as an Airbnb unless it’s your primary residence. In others, hosts can only rent out a portion of their home, and must be present during the guests’ stay. Laws about short-term rentals are also constantly changing.

If you own a condo or belong to a HOA, there may be other legal hoops to jump through, since you will likely need to get permission before opening your doors.

2. Checking With Your Landlord (if You’re Renting)

Looking to rent out a room in your home you rent? It can be wise to first carefully read through your own rental agreement.

Leases and agreements can contain language barring renters from subletting the home outright or without the express consent of the landlord. If you’re unsure even after reading the fine print, you may want to have a conversation about it with your landlord.

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3. Talking to Your Neighbors

While neighbors can’t tell you what you can and can’t do on your own property, they can make things difficult for you.

Prior to renting out your home, you may want to do the neighborly thing and pop in or give them a call to let them know what you are planning and do your best to ease any of their concerns. Who knows — they might even end up keeping an eye on the property for you while you’re away.

4. Being Prepared to Pay Taxes

Sure, renting your home on Airbnb may bring in a nice source of passive income. Like all income, however, this may be subject to state and federal taxes.

Generally, if you rent all or part of your home for more than 14 days in a year, you will need to pay taxes on the income. Vacation rental host sites typically send a Form 1099-K to hosts who had more than 200 reservations, earned over $20,000 in a year, or had taxes withheld from their payouts.

5. Considering All the Expenses Involved in Renting

While it may be more fun to think about the extra income that could result from your home rental, it can also be important to think about all the expenses involved.

For example, you may have to purchase items to get the space ready, along with any amenities you will offer guests (like toiletries or coffee), and cleaning supplies (or, pay for a cleaning service), and more.

You may want to make a list of all your potential expenses and consider how it will affect your potential profits.

💡 Quick Tip: If you’re creating a budget, try the 50/30/20 budget rule. Allocate 50% of your after-tax income to the “needs” of life, like living expenses and debt. Spend 30% on wants, and then save the remaining 20% towards saving for your long-term goals.

6. Finding a House Manager if You’d Rather Not do all the Work

Does managing your listing, bookings, and maintaining your rental property sound like a lot? You might consider hiring a manager to do it for you.

There are a number of property management companies around the country. that specialize in managing short-term home rentals.

These agencies will handle everything from writing (or boosting the exposure of) your listing to communicating with guests to cleaning and taking care of repairs. Some charge a commission (i.e., a percentage of bookings), while others charge a flat monthly service fee.

7. Making Space for Guests

Prior to accepting your first guests, it’s a good idea to make sure you have room for them — and that typically means more than just a clean, freshly made bed.

You may also want to offer some empty drawers so that guests can unpack their clothing, and possibly also a free shelf in the bathroom for their toiletries.

8. Putting Away Valuables

While it’s nice to think that everyone is trustworthy, that may not always be the case. It can be a good idea to safely stow away any valuables when you are opening your home to people you don’t know.

You can do this by getting a heavy-duty safe. Or, you might want to lock off one room of the home as an “owner’s closet” that guests cannot access.

9. Checking With Your Insurance Company

Airbnb offers its hosts its own insurance known as Host Protection . Though this covers a wide array of potential issues, including bodily injury to guests and any damage to the property, it may not cover everything. Plus, different home-rental platforms may offer different levels of insurance coverage.

It can be a good idea to also check in with your own homeowners or renters insurance to see what type of coverage these policies offer.

10. Writing a Detailed Description

Ready to list? When it’s time to write a description of your home, it’s a good idea to make your listing as detailed as possible, and even include the flaws of your home. A home need not be perfect to list on Airbnb. However, the company suggests that honesty is the best policy.

It can be a good idea to tell guests exactly what they’ll find when they arrive, as well as highlight your home’s special features, such as the location or unique amenities of your space. For more ways to make your listing stand out, you may want to check out Airbnb’s writing tips .

11. Taking High Quality Photos

Before taking photos of your space, you may want to spend some time arranging everything as if you were getting ready to welcome your first guest. This can help showcase your space to its best advantage, and also help set your guests’ expectations before they book.

It’s also a good idea to shoot in landscape format (photos in search results are typically displayed in landscape, so vertical photos won’t showcase your space as well), shoot in the middle of the day when there is plenty of light, and to highlight any unique features or amenities.

12. Creating an Information Binder

It can be helpful to make a packet of information for your guests which includes key information, such as the Wi-Fi password, your contact number, and house rules (such as check-out time and anything that guests need to take care of before they leave).

You may also want to include instructions on how to work on anything quirky, such as the television or coffee maker, as well as local entertainment and restaurant options.

13. Offering A Few Extra Amenities

There are millions of listings on Airbnb. If you’re hoping that your rental will make financial freedom a reality, you’ll want it to stand out from the crowd.

Throwing in some extras can help encourage guests to choose your home over others. Are you near a popular beach? You may want to consider keeping some beach chairs and sand toys stored in the garage for guests to use.

Simple add-ons, like the use of your bicycles or a parking tag, may not cost you much (or anything) to offer, yet significantly increase the popularity of your listing — along with your earnings.

14. Making a Decision about Pets or No Pets

Before you list your property it’s a good idea to decide if you want your home to be a space for pets or not.

This is a personal decision, but you may want to consider whether or not your space is well-suited for pets (a light suede couch, for example, might not last very long). If you do decide to make your home pet-friendly, you could add in an additional fee for cleaning.

15. Learning How to Price a Property Right

You may think your home looks and feels like a million bucks, but that doesn’t mean travelers will pay a premium.

To understand how to price an Airbnb listing correctly, it’s a good idea to comb through comparable listings in your area to get a sense of what other people are charging.

You can also use a free calculator like airDNA . You just need to input all your data, including home size, if it’s pet-friendly, location, etc., to get a recommended price for your listing.

Recommended: How to Invest in Single-Family Rental Homes

💡 Quick Tip: An emergency fund or rainy day fund is an important financial safety net. Aim to have at least three to six months’ worth of basic living expenses saved in case you get a major unexpected bill or lose income.

16. Deciding How You Want to “Screen” Guests

It is against Airbnb’s nondiscrimination policy to decline a booking based on “race, color, ethnicity, national origin, religion, sexual orientation, gender identity, or marital status” or impose different standards for specific guests.

What hosts can screen for are people who may not be a good fit for their property by being as descriptive as possible in their listing. If your home is not a good fit for children, you may want to make that clear in your listing.

Do you want to limit the noise after specific hours to respect neighbors? You may want to be specific about that in your listing so you bring in the type of customer you are hoping to attract.

17. Learning About Enhanced Cleaning Standards

Airbnb, along with other rental platforms, now require hosts to use an enhanced five-step cleaning protocol to help curb the spread of Covid-19.

The protocol includes special measures, such as using disinfectants approved by your local regulatory agencies for use against Covid-19 on all high-touch surfaces (and letting them stand for the amount of time specified on the label) and washing all dishes and laundry at the highest heat setting possible.

18. Thinking About Turnover Time

Before you rent all or part of your home on a rental platform you will want to think about not only when you want to rent your home out, but also how long it will take you to get it properly cleaned (using the five-step protocol) and ready for the next guests.

Will you need 24 hours between guests or can you get the home ready in just a couple of hours? This will determine exactly what dates you are able to accept guests, as well as what check-in time you want to put in your listing.

19. Testing Your Rental With Friends

When you’re getting close to listing your space, you may want to try testing out the system with a few friends.

Inviting people you know and trust to rent your space (free of charge or for a low fee) won’t do much to get that extra income stream flowing, but it can help you work out the kinks, as well as garner you some (hopefully positive!) reviews.

Friends can also tell you honestly what you might do differently or change to improve the rental experience. This way, you’ll feel confident once people you don’t know arrive.

20. Being Ready for Bookings Right Away

With millions of users all over the world, it may be a good idea to go into listing your property believing you’ll receive guests right away.

While this may not happen, it’s better to be prepared for visitors, than wait to see how your listing performs before readying your space for guests.

21. Looking At Your Reviews

After guests depart they may leave you a review of their stay. It’s a good idea to not only look at the reviews but to take them to heart. Reviews can make or break Airbnb rentals.

While it can be tough to digest criticism of your home, if guests complain about something that can be easily fixed, it can be in your best interest to fix it.

Reading positive reviews can be a good way to see your rental from an outsider’s perspective and make changes to improve your listing.

22. Accepting the Fact You Can’t Please Everyone

Sometimes, people are just difficult, or nitpicky, or just aren’t the right match for your listing and will leave a nasty review that feels unwarranted.

If you see a review that falls into that camp, it can be wise to just forget it and move on. This can often be a better approach than starting a fight in the comment section, which may only end up making you look bad to potential future guests.

23. Working Toward Superhost Status

Becoming an Airbnb superhost can increase your earnings by giving your more visibility and letting guests know that they can expect the best when staying with you.

Superhosts are featured in search results and get a Superhost badge on their profiles and listings to help them stand out. After each year as a Superhost, they’ll get a $100 travel coupon.

To become a Superhost, hosts must complete at least 10 stays in the past year (or 100 nights over at least three completed stays), have a 4.8 or higher average overall rating, respond to 90% of new messages within 24 hours, and cancel bookings less than 1% of the time.

Recommended: Is It Smart to Buy an Investment Property While Renting?

24. Deciding If Airbnb Is the Only Platform for You

After deciding to list on Airbnb, it’s then time to decide if that’s enough. There are, after all, a number of other home rental platforms to choose from, including Vrbo, Booking.com , and Flipkey . It’s up to you how many different listings you’re willing to maintain.

25. Keeping Your Calendar Up to Date

Once you list your home on Airbnb (or any other rental platform), it can be wise to keep your rental calendar as up-to-date as possible. This way, guests don’t accidentally book a stay when you have your in-laws visiting or when you otherwise want to use your own space.

If a date looks to be free to a potential guest but you forgot to mark it as unavailable, it can become a frustrating experience for both parties.

The Takeaway

If you have an extra room, or your home is vacant for several months out of the year, you may be tempted to list it on a home rental site.

But before you start posting photos on Airbnb, there are several things you may want to think through — from legal and insurance issues to the time and expense involved in getting (and keeping) your space ready for guests.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.20% APY on SoFi Checking and Savings.

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As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.20% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

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

Interest rates are variable and subject to change at any time. These rates are current as of 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://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.

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

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What Determines a Stock Price?

By | Growing Wealth, invest, Investing, Terminology | Comments Off on What Determines a Stock Price?

Stock share prices go up and down throughout each trading day, and on a basic level, share prices for stocks traded on public stock exchanges are determined through supply and demand. Demand is determined by expectations and emotions.

What this means is if there is less supply of a stock, there may be more demand for it since it’s more rare. In that situation, the price of the stock will rise. Conversely, if there is more supply and less demand, the stock price will decrease. If either of these trends continues for a lengthened period of time, it can lead to a bull or bear market in which there’s an ongoing trend of increasing or decreasing prices.

7 Factors That Determine Stock Price

Beyond the basic principles of supply and demand, there are other factors that contribute to changes in stock prices. Those include investor behavior, the news cycle and earnings data, and more.

Investor Behavior

A current stock price is based on a prediction of the future success of a company. Hypothetically, if investors have reason to believe that a company will be successful in the future, they will invest in the company, causing the price of shares to increase. Similarly, if the outlook for a company is negative, investors may sell off the shares they own, causing the price to decrease.

Basically, if a few million people think that Company X is going to be successful in the near future and that shares of Company X will see price appreciation, that will lead them to buy the stock and its price will increase.

Emotions such as fear, panic, anxiety, greed, and hope can have a significant impact on investor behavior. This is the basis of the field of behavioral finance. There are a few different ways investors try to predict the future success of companies.

Company News and Data

You should know that stock price predictions can be made based on reading charts and making calculations, as well as looking at news stories, fundamental analysis like reading over company earnings and reports, and other information. News about changes in management, production, scandals, and other stories can cause share prices to quickly change.

World Events

Beyond news and outlooks specifically related to companies, outside factors can also influence investor behavior. For instance, a presidential election, a pandemic, political unrest, or signs of a recession can create panic in the market, influencing investors to sell off stock shares in order to protect from losses or put their money into safer investments.

Usually there is some up or down price movement in stock prices, and some stocks are more volatile than others. It’s rare for prices to completely stop moving or remain static. It’s also rare for prices to drastically increase or decrease suddenly, but this is what happens during a market crash.

A market crash can happen when many investors begin to sell, creating a snowball effect where more and more investors pull their money out of the stock market. At that point, the market could crash, resulting in actual losses that wouldn’t have occurred if people hadn’t sold.

Stock Buybacks

Another factor that can affect stock price is company buybacks of stocks. Companies will sometimes buy back their own stock from investors, thereby reducing the supply of shares to the public. They do this in an attempt to increase stock prices. If companies issue more shares of stock, they are then increasing the supply, which can cause the price to decrease.

Primary and Secondary Markets

When some companies first start selling stock to the public, they hold an IPO, or initial public offering. At the time of the IPO, an initial share price is set and investors can begin to buy the stock at that price. After the IPO ends, the stock gets listed on stock exchanges and the price starts to fluctuate as shares get bought and sold — and supply and demand begin to play a role in share price.

When companies don’t have an IPO, their shares get bought and sold privately, in which case share price is determined between the buyer and seller.

Stock Valuation

The valuation of a stock is made by looking at the company’s past and projected earnings, large trades made by institutional investors, overall market trends of the S&P 500, and ratios and calculations made by analysts.

Four ratios and calculations that are used to determine the valuation of a stock are price-to-earnings (P/E) ratio, price-to-book (P/B ratio), price-to-earnings-to-growth (PEG) ratio, and dividend yield. These calculations can help investors figure out whether a stock is currently under- or overvalued.

Bid and Ask Price

A share price ultimately gets determined through the bid, ask, and sale price on stock exchanges. The bid price is the maximum amount an investor will pay for shares of a stock, while the ask price is the lowest price a seller will accept. When the two prices match up, a sale is made, and that price sets the new price per share of the stock. Ultimately it gets down to what someone is willing to pay and if a stock owner is willing to sell to them at that price.

What someone is willing to pay or sell for is determined by psychological and market factors, as discussed. If a buyer thinks the stock is undervalued at the asking price, they will buy, and vice versa. Generally the difference between the bid and ask price isn’t very large, but if a stock doesn’t have a large trading volume it can be.

Companies that are a similar size or have a similar valuation can have very different share prices because the number of shares each company issues can differ greatly. Because of different market caps and numbers of liquid shares, the share price doesn’t say much about the actual value of the company, and one can’t use share prices to compare companies. However, the share price does reflect what investors currently think the stock of a company is worth.

How to Handle Changes in Stock Price

Attempting to time the market is extremely challenging, and can result in significant losses, not to mention anxiety. Once an investor sells a stock, they are then in the difficult position of trying to figure out when and whether to buy back into it at a lower price, if it even continues to decrease in value. Likewise, they could sell at what they think is the peak of the market, only to watch the price continue to rise.

Historically, the stock market has continued to rise over the long term, with plenty of ups and downs along the way. Although past trends are never a guarantee of future outcomes, it’s likely that investors with a longer time horizon, who are willing to hold onto their stocks throughout up and down cycles, will eventually see positive returns.

That said, market volatility can provide opportunities to invest when the stock market is down, or sell at higher prices, especially if they were already considering buying or selling a stock.

The Takeaway

Ultimately, supply and demand drive stock prices — which is informed by market conditions, world events, and investor behavior, among other influences. Although there is no way to look into the future to predict share prices, investors tend to look at past performance, charts, and market trends to attempt to predict price movements. In general, it’s best not to try and time the market, but to focus on building a solid long-term portfolio that will grow over time.

There are numerous investing strategies to explore, too, and some of them don’t involve investors worrying too much about stock prices in the immediate term.

Ready to invest in your goals? It’s easy to get started when you open an Active Invest account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), 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.

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.

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.

Probability of Member receiving $1,000 is a probability of 0.028%.

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2023
What Are Convertible Bonds?: Convertible bonds are a form of corporate debt that also offers the opportunity to own the company’s stock.

What Are Convertible Bonds?

By | Financial Independence, Growing Wealth, invest, Investing, Terminology | Comments Off on What Are Convertible Bonds?

Convertible bonds are a form of corporate debt that also offers the opportunity to own the company’s stock. Like regular bonds, they offer regular interest payments. But they also allow investors to convert the bonds into stock according to a fixed ratio. As such, they’re often referred to as “hybrid securities.”

Most convertible bonds give investors a choice. They can hold the bond until maturity, or convert it to stock. This structure protects investors if the price of the stock falls below the level when the convertible bond was issued, because the investor can choose to simply hold onto the bond and collect the interest.

How Do Convertible Bonds Work?

Companies will often choose to issue convertible bonds to raise capital in order to not alienate their existing shareholders. That’s because shareholders often react badly when a company issues new shares, as it can drive down the price of existing shares, often through a process called stock dilution.

Convertible bonds are also attractive to issue for companies because the coupon — or interest payments — on them tend to be lower than for regular bonds. This can be helpful for companies who are looking to borrow money more cheaply.

Every convertible bond has its own conversion ratio. For instance, a bond with a conversion ratio of 5:1 ratio would allow the holder of one bond to convert that security into five shares of the company’s common stock.

Every convertible bond also comes with its own conversion price, which is set when the conversion ratio is decided. That information can be found in the bond indenture of convertible bonds.

Convertible bonds can come with a wide range of terms. For instance, with mandatory convertible bonds, investors must convert these bonds at a pre-set price conversion ratio. There are also reverse convertible bonds, which give the company — not the investor or bondholder — the choice of when to convert the bond to equity shares, or to keep the bond in place until maturity.

But it also allows the investor to convert the bond to stock when they’d make money by converting the bond to shares of stock when the share price is higher than the value of the bond, plus the remaining interest payments.

How Big Is the Convertible Bond Market?

In 2022, the size of the global convertible bond market was estimated to be about $375 billion. Securities have been issued by hundreds of companies. But note that these numbers are miniscule compared to the U.S. equity market, which has trillions in value and thousands of stocks.

The total size of the convertible bond market does expand and contract, though, often with the cycling of the economy. As such, it’s likely that the market could be bigger or smaller a year from now.

Reasons to Invest in Convertible Bonds

Why have investors turned to convertible bonds? One reason is that convertible bonds can offer a degree of downside protection from the bond component during stock volatility. The companies behind convertibles are obligated to pay back the principal and interest.

Meanwhile, they can also offer attractive upside, since if the stock market looks like it’ll be rising, investors have the option to convert their bonds into shares. Traditionally, when stocks win big, convertibles can deliver solid returns and outpace the yields offered by the broader bond market. However, when stocks retreat, convertibles tend to deliver short-term losses.

For example, In 2020, the U.S. convertibles market returned a blockbuster 43%, making it one of the top performing global asset classes. The convertibles market also did well in 2009, just as the global economy was recovering from the financial crisis, when it returned 49%.

Downsides of Convertible Bonds

One of the biggest disadvantages of convertible bonds is that they usually come with a lower interest payment than what the company would offer on an ordinary bond. And the chance to save on debt service is a big reason that companies issue convertibles. So for investors who are primarily interested in income, convertibles may not be the best fit.

There are also risks. Different companies issue convertible debt for different reasons, and they’re not always good. Convertible financing is sometimes labeled “death spiral financing.”

The death spiral is when convertible bonds drive the creation of an increasing number of shares of stock, which drives down the price of all the shares on the market. The death spiral tends to occur when a convertible allows buyers with a large premium to convert into shares at a fixed conversion ratio in which the buyer has a large premium.

This can happen when a bond’s face value is lower than the convertible value. That can lead to a mass conversion to stock, followed by quick sales, which drives the price down further.

Those sales, along with the dilution of the share price can, in turn, cause more bondholders to convert, given that the lower share price will grant them yet more shares at conversion. Being one of the shareholders who makes something out of such a catastrophe can be a matter of close study and good timing.

How to Invest in Convertible Bonds

Most convertibles are sold through private placements to institutional investors, so retail or individual investors may find it difficult to buy them.

But individual investors who want to jump into the convertibles market can turn to a host of mutual funds and exchange-traded funds (ETFs) to choose from. But because convertibles, as hybrid securities, are each so individual when it comes to their pricing, yields, structure and terms, each manager approaches them differently. And it can pay to research the fund closely before investing.

For investors, one major advantage of professionally managed convertible bonds funds is that the managers of those funds know how to optimize features like embedded options, which many investors could overlook. Managers of larger funds can also trade in the convertible markets at lower costs and influence the structure and price of new deals to their advantage.

Recommended: How to Trade Options

The Takeaway

Convertible bonds are debt securities that can be converted to common stock shares. These hybrid securities offer interest payments, along with the chance to convert bonds into stock.

While convertible bonds are complex instruments that may not be suitable for all investors, they can offer diversification, particularly during volatile periods in the equity market. Investors can gain exposure to convertible bonds by putting money into mutual funds or ETFs that specialize in them.

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.

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.

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.

Probability of Member receiving $1,000 is a probability of 0.028%.

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