Top 10 Fun Things to Do in Maui

Maui, known as “The Valley Isle,” is a lush Hawaiian island famous for its whale and turtle sightings, as well as the Haleakalā volcano, which makes up 75% of the island. When it comes to the best things to do in Maui, of course a big part of the allure is just enjoying the fantastic scenery.

But there’s more to do than just gaze at the horizon. There are fantastic beaches and hiking trails to explore; there are cliff divers to watch and craters to climb. Plus it’s a food lover’s paradise.

To help you plan an amazing trip to this natural paradise, read on. You’ll learn the top 10 fun things to do on a Maui vacation, as well as tips to help you travel smarter.

Best Times to Go to Maui

There’s really not a bad time to go to Maui. The weather stays warm, with highs in the 75- to 85-degree range year-round during the day. Summer, especially July and early August, can be very popular, with singles, couples, and families embarking on summer travel. If you prefer to have a less crowded and more lowkey trip, you might prefer to plan your trip for April, May, or mid-August through September.

But if it’s whale-watching you’re after, January is the month to visit, because it’s their migration season.

Here are some annual events you might want to include in your travel plans.

•   February: Great Maui Whale Festival

•   March: Lahaina Whale and Ocean Arts Festival

•   May: Lei Day

•   June: Maui Film Festival

•   July: Lana’i Pineapple Festival

•   October: Hawai’ian Food & Wine Festival

•   December: Lighting of the Banyan Tree

Bad Times to Go to Maui

While there really isn’t a bad time to go to Maui, if you want to lessen the chance of getting rained on while enjoying the top things to do in Maui, avoid the rainy season, which is November to March. That said, Wailea, an area on the southwestern side of the island, has its own microclimate and tends to be drier year-round.

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Average Cost of a Maui Vacation

Hawaii isn’t known for being a budget traveler’s paradise. Because it’s an island, food has to be shipped in, which can cause it to cost more. And renting a car can get expensive, depending on the time of year and demand. But how much will your Maui vacation cost?

For a couple, expect to pay about $4,517 for a week in Maui. The actual cost will depend on your accommodations, largely. A hotel room can range from $102 to $467 a night, while a vacation rental could be about $240 to $440 per night. Keep in mind that these price estimates don’t include airfare getting to the island. When you are purchasing your tickets, you might want to use an airline credit card to rack up some bonus miles or other rewards.

You might also take advantage of book now, pay later travel to book flights when you see affordable options instead of waiting until the last minute when prices may spike.

One other expense to consider is travel insurance. Check if your credit card travel insurance will cover you; some card issuers offer this. Otherwise, you might rest easier if you buy a separate policy to protect yourself if something were to go awry.

10 Fun Must-Dos in Maui

Every Hawaiian island has its own unique features and things to do. Maui is an in-demand destination because of all of its incredible attractions. Here, based on travelers’ advice, locals’ picks, and the best-rated sights on the web, are 10 fun things to to when in Maui, Hawaii.

1. Watch the Cliff Divers at Black Rock

This event feels like an insider’s secret, but in reality, lele kawa, or cliff-diving off of Black Rock has been attracting thousands of tourists for 60 years. Hawaiians have been cliff-diving for centuries, and this twice-weekly ceremony, lasting about 10 minutes, continues the tradition.

Stake out a place to view the spectacular event at the Sheraton Maui before sunset. You don’t have to be a guest of the property to attend, though you may choose to enjoy a cocktail at the outdoor bar for prime seating. Otherwise, find a spot along the shore and wait for the torch lighting that signifies the start of this nightly ceremony. marriott.com/en-us/hotels/hnmsi-sheraton-maui-resort-and-spa/experiences/

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2. Go Ziplining

Another top thing to do in Maui: Ziplining, a great way to fulfill your need for speed and see the gorgeous landscape. There are several ziplining companies in Maui, allowing you to glide down lines above the treetops and take in breathtaking views of the island and the sea. One business, North Shore Zipline Company (nszipline.com/), operates on a historic World War II landmark site, and the guides provide interesting tidbits about Maui’s role in the war. Kapalua Ziplines’ Dual Zipline Mountain Adventure (kapaluaziplines.com/) is another option, allowing a pair of zipliners to glide down parallel paths together.

Prices can range from $100 to $200 or more, depending on how many ziplines you do. This attraction could be a good time to use plastic and reap some credit card rewards.

3. Savor a Luau

Some may find it a tad hokey, but a luau experience can be one of the most fun things to do in Maui for couples. These typically involve local delicacies (perhaps including roast pig cooked in the earth) and action-packed, flame-throwing dance performances. If you can go at sunset, you’ll likely have the backdrop of stunning pink and purple skies.

4. Snorkel with Turtles in Honokeana Bay

One of the top 10 things to do in Maui is snorkeling with sea turtles. While there are many places you can see them, sometimes the number of tourists scares them away at the more popular beaches. However, at sleepy Honokeana Bay, you’re more likely to bump into one.

This bay doesn’t have a sandy beach, so wear water shoes; you’ll likely have to climb over some possibly sharp lava rock to get into and out of the water. Bring an underwater camera to get a shot of these graceful creatures, but remember: Don’t touch them!

5. Follow the Road to Hana

If you love gorgeous road trips and don’t mind a few curves on your path, take a day to drive the Road to Hana. This winding road will have you cruising through rainforests, black beaches, sacred burial sites, and past gushing waterfalls. There are apps you can download to guide you to the best places to stop (and note: Cell service may be spotty, so download your map beforehand).

Another way to see this memorable sight: Let one of the local guides do the driving, and be a passenger. Plenty of options are available to tour this way.

6. Take to the Trails

Maui is truly a nature lover’s paradise, and there are hikes for every level of skill. For an easy, ambling hike along the coast, try Kapalua Coastal Trail, especially if you don’t have time to drive to one of the parks for a hike.

If you do have more time, try Waihe’e Ridge Trail, which rises 2,500 feet above sea level and puts you right in the heart of the mountains. You’ll also get to see some of the island’s most beautiful waterfalls.

7. Get Up Close to the Haleakalā Crater

At the heart of Maui is the Haleakalā volcano, which makes up 75% of the island. Visitors love watching the sunrise from the crater, though know that you need a reservation. You can also book a van or bike tour, camp, or explore the park on your own. The park is open 24 hours a day, while the visitor’s center is open 8 am to 3:45 pm There is a $1.50 fee per vehicle for sunrise; this low fee can be one of the ways families can afford to travel. haleakalacrater.com/

8. Cool Off With Shave Ice

No trip to Maui is complete until you’ve had shave ice from Ululani’s (that’s right; shave not shaved ice). Shave ice is a local treat and is just what it sounds like: bits of ice shaved from a block and doused with sweet syrup. It’s similar to a snow cone, though that’s made with crushed ice.

As for Ululani’s, this institution has been creating smiles with its sweet treats since 2008. Try a fun flavor like passionfruit, coconut, guava, mango, or macadamia nut on a hot day. ululanishawaiianshaveice.com/

9. Bask on a Black Sand Beach

Of course you need beach time, so why not head to the black sand beach of Waiʻānapanapa State Park? It’s a great selfie spot. The black color comes from eroded rock mixed with sand.

You can also picnic, swim, and snorkel there. If you’re traveling with a pet, know that the park allows leashed dogs, so it can be a good place to explore together.

To combat the throngs of visitors, the park now requires reservations, and entry is $5 per person plus a $10 parking fee. dlnr.hawaii.gov/dsp/parks/maui/waianapanapa-state-park/

10. Sip Mai Tais at Sunset

Another of the best things to do on a Maui vacation is enjoy Happy Hour. There’s nothing more romantic in Maui than enjoying a Mai Tai as the sun dips below the sea. There are several places you can get a delicious cocktail, including Ka’anapali Beach Hotel and Duke’s Beach House. Some places get crowded at sunset, so it’s often best to make a reservation.

The Takeaway

A trip to Maui can provide the opportunity to see some true natural wonders, relax, hike, and eat amazingly well. With attractions like the Road to Hana and cliff-diving ceremonies, Maui offers diverse attractions that make a stay there amazingly memorable.

SoFi Travel is a new service exclusively for SoFi members. Through a partnership with Expedia, we make it easy to find the lowest rates and book your reservations — for flights, hotel rooms, car rentals, and more — all in one place. Earn 2x rewards when booking with your SoFi Mastercard or debit card. And when you redeem your SoFi rewards for travel, you get a 25% bonus: $100 of reward points are worth $125.


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FAQ

What are the best things to do in Maui?

There’s plenty to do in Maui, from snorkeling with turtles to watching cliff divers at Black Rock. Also don’t miss experiencing a luau or the amazing sunsets over the water.

Where should I hike in Maui?

If you drive the Road to Hana, there are many trails along the way where you can view waterfalls. Other noteworthy hikes can be found at Kapalua Coastal Trail, Waihe’e Ridge Trail, and the Haleakalā Crater.

How long should I visit Maui?

With so much to see, not to mention the slow pace of the island, you’ll probably want to allow a minimum of five days in Maui.


Photo credit: iStock/Jacob Boomsma


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Top 10 Fun Things to Do When Visiting Albuquerque

Alburquerque, New Mexico, can be an exciting destination to explore, whether you’re familiar with the Southwest or a first-timer. There’s the iconic hot air balloon festival, rugged landscapes, top-notch art museums, pueblos, and more to take in.

It’s New Mexico’s biggest city, with a modern downtown, but it also sits in the high desert and has retained elements of its past, making a fascinating town to visit for a weekend away or longer.

Here, you’ll learn some of the not-to-be-missed sights, as well as savvy tips to make your travel more enjoyable and get more for your money.

Best Times to Go to Albuquerque

The best time to go to Albuquerque is during the fall, between September and November. The temperature is warm and pleasant, in the 60s to 80s. October is also when the famous Albuquerque International Balloon Fiesta happens.

That said, the nine days of the Balloon Fiesta (the first two weekends in October, and the week between) are by far the most popular times to visit this otherwise quiet city. So expect to pay a premium for flights and hotels during this time.

Bad Times to Go to Albuquerque

June through September is the rainy season in the Southwest, but in between the rain, the city is warm and inviting. However, for some people, it may be too warm: The average daytime temperature in July can rise above 90 degrees. So that might put a damper on your summer travel.

Also keep in mind that the city isn’t all sunbaked and beautiful come winter. The average overnight temperature in January, the coldest month, is in the low 20s. Depending on your tolerance for cold and whether you plan on being outdoors much, that might be a less than ideal time to visit.

Average Cost of an Albuquerque Vacation

The estimated cost of a weeklong stay in Albuquerque for two people is $1,885 or $942 for one person. That doesn’t include transportation to get there and back, and of course prices will vary if you’re a traveler who’s happy at a basic chain hotel or one who prefers a high-end boutique location.

If you are visiting Albuquerque, you may want to look into staying in the Old Town area. Old Town is the site of the original city settlement in 1706, and has Native American and Spanish influences on the architecture and culture.

Prices to stay in Old Town will vary by time of year. For example, hotels in Old Town during the Albuquerque International Balloon Fiesta during the first week of October will cost about $500 a night or more. If you go just two weeks later, the same hotels run $150 to $250 a night, which can be a good tactic for how to save money on hotels. And thankfully, the town’s famous New Mexican food is surprisingly affordable, especially compared to fine dining in larger cities.

In general, Albuquerque is a fairly affordable city. Most attractions cost less than $30, with some costing only a few dollars. You can also find affordable and incredibly delicious food in the city. (Don’t miss the breakfast burritos, which can keep you fueled for hours, or the red chile enchiladas; more on food below.)

When you are booking a trip, you may see a “book now pay later” travel option. Proceed with caution: You could end up paying more in interest if you use this method.

Instead, you should save money ahead of time to use to pay for your trip. Make sure to research where to keep travel fund when saving for a trip. A high-yield savings account might be your best option as your money will be accessible but will also enjoy some growth as you save.

If you are thinking about booking a trip to Albuquerque but are worried that you may have unforeseen circumstances causing you to cancel your trip, look into travel insurance as a safety net. If you pay for your trip with certain credit cards, they may provide travel insurance for certain situations. You should understand how credit card travel insurance works when deciding whether to purchase private travel insurance or use your credit card protections.

10 Fun Must-Dos in Albuquerque

Now, onto the fun part: Figuring out what fun things to do in Albuquerque, New Mexico. This list was culled from people who visit the city often, locals, and those attractions that are top-rated online. The top 10 list includes things like museums, parks and festivals, including free and affordable options. Worth noting: Albuquerque is not a very walkable city, so you may want to look into renting a car in order to see the various attractions.

1. Be Amazed by Those Albuquerque Balloons

The Albuquerque International Balloon Fiesta is known as one of the largest and best balloon festivals in the world. The area’s dry climate is ideal for hot air ballooning. The Albuquerque International Balloon Fiesta is held every year for one week during the first week of October. You can see over 500 colored hot air balloons each morning just before sunrise. It’s a mesmerizing and memorable sight to see those brilliantly colored balloons fill the sky. Plus, there are fireworks, skydiving, and all kinds of other sky-focused attractions, as well as music and more.

General admission is typically $15 for those 13 and up; younger kids are free. You can opt for glamping and shipping container cabanas right at the Fiesta, but these can be pricey. (If you go for it, put it on your card that earns the best credit card rewards.) Hotels will also be expensive and crowded during this week. balloonfiesta.com/

2. Spend Some Time at the International Balloon Museum

Whether you are visiting during the Albuquerque International Balloon Fiesta and want to learn more or are visiting without seeing the balloons, the Anderson Abruzzo Albuquerque International Balloon Museum is a great stop. You’ll learn so much about these incredible flying machines, and there are interactive exhibits to keep kids entertained. There’s even a balloon flight simulator.

The museum is open Tuesdays through Sundays, except for Thanksgiving, Christmas and New Year’s Day. Admission usually ranges from $3 to $6; the first Friday of the month is free as are Sundays between 9 am and 1 pm. balloonmuseum.com/

3. Take in an Incredible View

If you want to see the beautiful Albuquerque landscape from above, the Sandia Peak Tramway delivers. You’ll see the city and the Sandia Mountains as you ride three miles on a cable car up the summit of Sandia Peak. These rugged mountains reach a peak of over 10,000 feet and are part of the distinctive landscape you’ll find in this part of New Mexico.

It’s not just the heart-stopping tram ride that you’ll enjoy. At the peak, you can take in the views, hike along the trails, or grab a snack at the restaurant. Sandia Peak Tramway is open Wednesdays through Mondays, from 11 am to 7 pm. Sandia Peak Tramway tickets cost $23 to $33 roundtrip, depending on the guest’s age. sandiapeak.com/

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4. Marvel at Masterpieces

Ready to learn about the art, history, and culture of the Southwest? The Albuquerque Museum, located in Old Town, Albuquerque, has a large collection of historic artifacts from the area, and exhibitions that feature renowned artworks. Depending on when you visit and what is being shown, you might see some canvases by Georgia O’Keeffe or photographs of the Civil Rights Movement by Danny Lyon.

The Albuquerque Museum is open Tuesdays through Sundays, from 9 am to 5 pm, and tickets cost $3 – $6. cabq.gov/artsculture/albuquerque-museum

5. Relive the Best “Breaking Bad” Scenes

The TV show “Breaking Bad” took place and was filmed partly in Albuquerque. If you’re a fan, hop aboard the Breaking Bad RV Tour. You can ride on a replica Bounder RV, just like Walter used as a mobile lab on the show, and visit local filming spots. The tour guides all worked as actors or crew on “Breaking Bad” or the sequel “Better Call Saul,” which makes the tour that much more fun. Tours cost $95 and start at 10 am Thursdays through Mondays. breakingbadrvtours.com/

6. Visit a Pueblo

Puebloans, or Pueblo people, are Native Americans who are indigenous to the New Mexico region and have a rich, centuries-old culture, rooted in farming and their distinctive, compactly planned communities. The Indian Pueblo Cultural Center is owned by the Pueblos of New Mexico, and is an educational facility where Pueblo dancers perform and the Indian Pueblo Kitchen serves traditional dishes, like fry bread and blue corn porridge, as well as Southwestern dishes. The center is located near Old Town and is open Tuesdays through Sundays from 9 am to 4 pm. Tickets cost $8 to $12. indianpueblo.org/

7. Take a Closer Look at Turquoise

Turquoise, the mineral, has been prized for ages as a gemstone, given its brilliant, intense shade of blue. New Mexico is known for its Indigenous turquoise jewelry, and you will undoubtedly have the opportunity to purchase pieces while visiting the city. You can also trek over to the Turquoise Museum and learn the history of mining and crafting turquoise, as well as see plenty of specimens. The museum is open on Mondays, Tuesdays, Fridays, and Saturdays. Admission to the museum costs $15 to $20. turquoisemuseum.com/

8. Discover the Flora and Fauna

A great way to spend an afternoon (or longer): Head to the ABQ BioPark, located in Old Town, Albuquerque. There’s much to see here, including a zoo with elephants, flamingos, and all kinds of other animals, an aquarium, a botanic garden, and Tingley Beach, which has free public fishing ponds (a great way to afford to travel as a family). The other attractions can be visited with individual tickets, costing in the range of $5 to $15 each, or with combination tickets, which can cost up to $22. The zoo, aquarium, and botanic gardens are open from 9 am to 5 pm daily, except for Thanksgiving, Christmas, and New Years Day. Tingley Beach is open from sunrise to sunset. cabq.gov/artsculture/biopark

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9. Get Your Fill at a Food Hall

Of course you’ll have plenty of great food options in New Mexico’s capital, but one fun stop is the Sawmill Market, which is billed as an artisanal food hall in the historic Sawmill district. You’ll have your pick of chicken mole tacos at Flora Taco To-Go, Frito pie at Red & Green, Mexican street food at Churro Y Corn, and Blueberry Mojitos at the Botanic Bar. sawmillmarket.com/

10. Trek along the Paseo del Bosque Trail

Ready to get outdoors and savor being in the Southwest? The Paseo del Bosque Trail can be one of the best things to do in Albuquerque. It’s a 17-mile paved walking and biking trail through central Albuquerque, running from the northern to southern edges of the Rio Grande’s cottonwood bosque, or forest. The trail is uninterrupted by road crossings, making it a great option for strolling when traveling with pets or young children. The trail also features public art, making it a terrific free thing to do in Albuquerque.

The Takeaway

Albuquerque is more than just its famous hot air balloon festival. The city can keep you busy with its array of museums, scenic views, indigenous culture, and great food. Among the top things to do in Albuquerque are getting acquainted with the history of the Puebloans, seeing the work of Southwestern artists, and spending a day in the city’s gardens and zoo. There’s plenty of fun to fill your days and nights.

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FAQ

What is Albuquerque famous for?

Albuquerque is most famous for its International Balloon Fiesta, which happens in the beginning of October each year. However, there are a lot of other things to do in Albuquerque throughout the year. It’s also famous for southwestern food, including dishes served “Christmas style,” covered in green or red chile sauce. For breakfast, go to any Wecks for huge portions of New Mexican favorites, but expect lines on the weekends.

How many days do you need to see Albuquerque?

Albuquerque is a small to mid-sized city, so you can probably see most attractions in a few days. Albuquerque is perfect for a long weekend trip.

What are things to do in Albuquerque with kids?

Albuquerque has several family-friendly attractions, like the ABQ BioPark and the Anderson Abruzzo Albuquerque International Balloon Museum. There’s also the nature and science museum and the Explora kids museum, right next to each other. Most ticketed attractions in Albuquerque cost only a few dollars for kids, or are free.


Photo credit: iStock/Sean Pavone


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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.

**Terms, and conditions apply: The SoFi Travel Portal is operated by Expedia. To learn more about Expedia, click https://www.expediagroup.com/home/default.aspx.

When you use your SoFi Credit Card to make a purchase on the SoFi Travel Portal, you will earn a number of SoFi Member Rewards points equal to 3% of the total amount you spend on the SoFi Travel Portal. Members can save up to 10% or more on eligible bookings.


Eligibility: You must be a SoFi registered user.
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Additional Terms: Changes to your bookings will affect the Rewards balance for the purchase. Any canceled bookings or fraud will cause Rewards to be rescinded. Rewards can be delayed by up to 7 business days after a transaction posts on Members’ SoFi Credit Card ledger. SoFi reserves the right to withhold Rewards points for suspected fraud, misuse, or suspicious activities.
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Pros & Cons of Buying Mid-Cap Stocks

Mid-cap stocks are shares of publicly traded companies with market capitalizations of about $2 billion to $10 billion. The range also indicates where they fall in the spectrum of valuation between small-cap and big-cap (sometimes called large-cap) companies.

Because the stocks are approximations based on a company’s current value, their classification might change over time. There are also pros and cons to investing in mid-cap stocks — as there are when investing in stocks of all types and sizes.

Market Capitalization Investing

Market capitalization is a company’s total value: the number of outstanding shares a company has multiplied by the current price per share. For example, a company with 40 million shares selling at $100 a share would have a market cap of $4 billion.

When investing, the case can be made for including small-, mid-, and big-cap stocks in your portfolio. But when thinking about the numbers involved — small-cap companies have a value of less than $2 billion, and large-cap companies have a value of over $10 billion — understand that the values also govern potential growth.

In other words, small-cap stocks might grow into mid-cap stocks. But a large-cap stock can only stay a large-cap stock unless the value goes down. (Investors have informally come up with valuation categories for nano cap stocks, micro-cap stocks, and mega-cap stocks, but there isn’t a broad consensus about their cutoff values.)

Either way, when investing, the hope is generally for stocks to increase in value or appreciate — and the prevailing wisdom is that small- and mid-cap stocks are appealing because they have room to grow.


💡 Quick Tip: Before opening an investment account, know your investment objectives, time horizon, and risk tolerance. These fundamentals will help keep your strategy on track and with the aim of meeting your goals.

Market Cap As a Basic Investor Tool

Knowing the market cap of a company can help investors compare the company to others of similar size. An investor choosing auto-manufacturing stocks could look at mid-cap companies in that particular market sector and compare how they are doing against one another.

To dig even deeper into the basics, it’s good to understand the difference between stocks and bonds. Bonds are a type of debt instrument, whereas stocks represent ownership in a company. Generally, stocks have the potential to offer the highest gains, while bonds are generally safer.

Investing In Mid-Cap Stocks

Finding an investment strategy that makes sense for you is largely about understanding the trade-offs involved. There’s really no such thing as a sure thing in finance, and probably the only way to think about the “best” mid-cap stocks is to look for ones that will offer a return on investment — and ideally a large one, sooner rather than later.

Beyond that, here’s a look at a couple of possible advantages and disadvantages of investing in mid-cap stocks.

Growth, Earnings, Capital

Pro: Whether mid-cap stocks are the sole investments being targeted for a portfolio or they’re part of a more diverse selection, a good argument for them is that they are often companies that are trying to expand.

These are established companies in industries that are experiencing rapid growth, or are expected to. And thanks to that growth, the average mid-cap company’s earnings often grow at a faster rate than the average small cap, and with less stock volatility and risk.

Most mid-cap companies are small caps that have burgeoned, and some are on their way to becoming large-cap businesses. Growth eases the ability to access financing to fuel expansion, so mid-caps typically have an easier time obtaining financing than small caps do.

Investing in mid-cap stocks can be the happy medium between small-cap growth and large-cap stability.

Con: Mid-cap stocks can be more vulnerable than large-cap ones. Being middle tier, by definition, means such companies don’t have as much capital to sustain them through market downturns as big-cap companies do.

And because they are also not massive companies like large-cap companies with a value over $10 billion, it also means they are not as diversified as bigger-cap companies. If the market for that company disappears, the company is also at risk.

Performance

Pro: Because $2 billion to $10 billion is a sizable range of valuations, it means that mid-cap stocks often outperform large- and small-cap stocks just because it’s a markedly wide net of stocks. There are no guarantees that that will happen, of course, which is very important to keep in mind. And, naturally, historical performance is not necessarily an indicator of what will happen in the future.

Con: Investment risk is risk, and even those who don’t dabble in investing likely know that something that seems low risk isn’t the same as something that is not a risk. It doesn’t matter how many reports you read — there are always exceptions. It’s still a good idea to read up on different strategies and try to develop a sense of why some investments are riskier than others.


💡 Quick Tip: How to manage potential risk factors in a self directed investment account? Doing your research and employing strategies like dollar-cost averaging and diversification may help mitigate financial risk when trading stocks.

Researching Mid-Cap Stocks

Many mid-cap companies are household names, and you’d likely recognize a whole host of them. Even so, it’s best for anyone interested in investing in mid-cap stocks to do their homework — look at who’s running the company, who’s already invested, and what the stated goals in earnings and annual reports are.

And it might be smart to consult a financial professional if you need guidance.

It’s tempting to think of a “hot tip” as something you must rush to get in on, but it’s worth taking a breath and considering what you might be overlooking by fixating on something that seems lucrative but also requires urgent action. Again, do your homework.

The Takeaway

Market capitalization is a way for investors to understand the value of different companies and compare their performance and outlook, and mid-cap stocks — which can be seen as lying between small-cap growth and big-cap stability — are one investment strategy to consider.

But there are pros and cons to investing in mid-cap stocks, as there are when investing in other types of stocks. It’s always best to do as much research as you deem necessary before making decisions, and even consider consulting with a financial professional.

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.

Claw Promotion: Customer must fund their Active Invest account with at least $25 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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Why your debt-to-income ratio matters

Why Your Debt to Income Ratio Matters

Imagine you’re a lender, and a wellness entrepreneur comes to you to borrow thousands or hundreds of thousands of dollars. The loan seeker is the picture of health, drives a Tesla S, and lives in a solar-powered manse. But what if the would-be borrower is overextended, and not in a yoga-like way?

You’re going to want to compare their current income to their debts to help gauge how likely you are to be paid back.

Makes sense, right? A debt-to-income ratio helps to determine whether someone qualifies for a loan, credit card, or line of credit and at what interest rate.

A low DTI ratio demonstrates that there is probably sufficient income to pay debts and take on more. But what’s “low” or “good” in most lenders’ eyes?

First, a Debt to Income Ratio Refresher

In case you don’t know how to calculate the percentage or have forgotten, here’s how it works:

DTI = monthly debts / gross monthly income

Let’s say monthly debt payments are as follows:

•   Auto loan: $400

•   Student loans: $300

•   Credit cards: $300

•   Mortgage payment: $1,300

That’s $2,300 in monthly obligations. Now let’s say gross monthly income is $7,000.

$2,300 / $7,000 = 0.328

Multiply the result by 100 for a DTI ratio of nearly 33%, meaning 33% of this person’s gross monthly income goes toward debt repayment.

What Is Considered a Good DTI?

The federal Consumer Financial Protection Bureau advises homeowners to consider maintaining a DTI ratio of 36% or less and for renters to consider keeping a DTI ratio of 15% to 20% or less (rent is not included in this ratio).

In general, mortgage lenders like to see a DTI ratio of no more than 36%, though that is not necessarily the maximum.

For instance, DTI limits can change based on whether or not you are considering a qualified or nonqualified mortgage. A qualified mortgage is a home loan with more stable features and without risky features like interest-only payments. Qualified mortgages limit how high your DTI ratio can be.

A nonqualified mortgage loan is not inherently high-risk or subprime. It is simply a loan that doesn’t fit into the complex rules associated with a qualified mortgage.

Nonqualified mortgages can be helpful for borrowers in unusual circumstances, such as having been self-employed for less than two years. A lender may make an exception if you have a high DTI ratio as long as, for example, you have a lot of cash reserves.

In general, borrowers looking for a qualified mortgage can expect lenders to require a DTI of 43% or less.

Under certain criteria, a maximum allowable DTI ratio can be as high as 50%. Fannie Mae’s maximum DTI ratio is 36% for manually underwritten loans, but the affordable-lending promoter will allow a 45% DTI ratio if a borrower meets credit score and reserve requirements, and up to 50% for loans issued through automated underwriting.

In the market for a personal loan? Some lenders may allow a high DTI ratio because a common use of personal loans is credit card debt consolidation. But most lenders will want to be sure that you are gainfully employed and have sufficient income to repay the loan.

Front End vs Back End

Some mortgage lenders like to break a number into front-end and back-end DTI (28/36, for instance). The top number represents the front-end ratio, and the bottom number is the back-end ratio.

A front-end ratio, also known as the housing ratio, takes into account housing costs or potential housing costs.

A back-end ratio is more comprehensive. It includes all current recurring debt payments and housing expenses.

Lenders typically look for a front-end ratio of 28% tops, and a back-end ratio no higher than 36%, though they may accept higher ratios if a credit score, savings, and down payment are robust.

How Can I Lower My Debt-to-Income Ratio?

So what do you do if the number you’ve calculated isn’t your ideal? There are two ways to lower your DTI ratio: Increase your income or decrease your debt.

Working overtime, starting a side hustle, getting a new job, or asking for a raise are all good options to boost income.

Strangely enough, if you choose to tackle your debt by only increasing your payments each month, it can have a negative effect on your DTI ratio. Instead, it can be a good idea to consider ways to reduce your outstanding debt altogether.

The best-known debt management plans are likely the snowball and avalanche methods, but there’s also the fireball method, which combines both strategies.

Instead of canceling a credit card, it might be better to cut it up or hide it. In the world of credit, established credit in good standing is looked upon more favorably than new.

The Takeaway

Your debt-to-income ratio matters because it affects your ability to borrow money and the interest rate for doing so. In general, lenders look at a lower DTI ratio as favorable, but sometimes there’s wiggle room.

If you’re struggling with student loan debt, refinancing might be a good option if you can lower your interest rate. And if you’re trying to pay off high-interest credit card debt, one method is to consolidate the debt with a fixed-rate personal loan. This can lower your monthly payment, thus changing your DTI ratio.

Check your rate on SoFi’s student loan refinancing and personal loans.


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


SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.


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

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

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IRA Basis: Guide to Tracking It for Traditional and Roth IRAs

Investing money in an individual retirement account (IRA) can be an important part of saving for retirement. Among the types of IRAs you may have are Traditional IRAs and Roth IRAs. With a Traditional IRA, you can often deduct your contributions in the year you make them and pay tax on your withdrawals. A Roth IRA works in the opposite way — contributions are generally not tax-deductible and your earnings and withdrawals can be tax-free.

Because of the way that withdrawals from IRAs can be tax-free, it’s important to be aware of your IRA basis. When you withdraw money from a Traditional or Roth IRA, you may only need to pay tax on withdrawals that exceed your basis.

What Is a Roth IRA Basis?

The total amount that you’ve contributed to your Roth IRA over the years is considered your Roth IRA basis. Because Roth IRA contributions are not deductible in the year that you contribute them, you can withdraw your contributions at any time without tax or penalty.

Is a Roth IRA Basis Different From a Traditional IRA Basis?

Calculating your Traditional IRA basis is a bit different than calculating your Roth IRA basis. Understanding these differences in large part comes down to understanding what an IRA is and how various types of IRAs work.

When calculating your Roth IRA basis, you add up all of the contributions you make. This is because no Roth IRA contributions are tax-deductible.

With a Traditional IRA, on the other hand, some contributions are deductible in the year that you make them. So your Traditional IRA basis only includes contributions that were not tax-deductible in the year that you made them.

What Are the Rules of a Roth IRA Basis?

Contributing to a Roth IRA can be a great way to invest and save for retirement, because your earnings and withdrawals are tax-free, as long as you make qualified distributions. Your Roth IRA basis is easy to calculate, since it’s the net total of any contributions that you make, minus any distributions.

What Are the Rules of a Traditional IRA Basis?

If you open a Traditional IRA, you’ll want to make sure that you’re familiar with the rules of a Traditional IRA basis. Your basis in a Traditional IRA is the total of all of any non-deductible contributions you made, as well as any non-taxable amounts included in rollovers, minus all of your non-taxable distributions.

How Is IRA Basis Calculated?

When you start saving for retirement, you’ll want to make sure that you are accurately calculating your IRA basis. The exact formula for calculating your IRA basis varies slightly based on whether you have a Traditional or Roth IRA.

💡 Recommended: When Should You Start Saving for Retirement?

Roth IRA Basis Formula

Contributions to a Roth IRA are never tax-deductible. That means that you will use the sum of all of your contributions to calculate your Roth IRA basis.

Traditional IRA Basis Formula

Calculating your Traditional IRA basis works in a slightly different fashion. Because many contributions to Traditional IRAs are tax-deductible in the year you make them, you don’t include all of your contributions when calculating your basis. Instead, you will only use the contributions that are NOT tax-deductible when calculating your Traditional IRA basis. If all of your Traditional IRA contributions are tax-deductible, then your basis will be $0.

Why Is Knowing Your IRA Basis Important?

Not knowing your IRA basis is a retirement mistake you can easily avoid. You want to know what your IRA basis is, because it represents the amount of money that you can withdraw from your IRA without tax or penalty.

Generally, any withdrawals up to your tax basis are tax and penalty-free, while withdrawals above your tax basis may be subject to income tax and/or a 10% penalty. While it is usually not a good idea to withdraw money from your retirement accounts, knowing your basis can help you make an informed decision.

💡 Recommended: How to Open an IRA: A Beginner’s Guide

Starting an IRA With SoFi

Understanding your IRA basis is an important part of investing and planning for your retirement. At its simplest, you can calculate your IRA basis by adding up all of your non-tax-deductible contributions and subtracting any previous distributions. For your Roth IRA basis, you can use all of your contributions, while for Traditional IRAs you can only use the value of any contributions that you did not deduct from your taxes. Your IRA basis is the amount that you can typically withdraw from your account without having to pay income tax and/or a penalty.

Opening an IRA online with SoFi can be a great way to start saving for retirement. Starting a Traditional IRA may allow you to lower your taxable income this year, while contributing to a Roth IRA your retirement by allowing your retirement contributions to grow tax-free. It can be a smart financial decision to use one of these accounts to make sure you have enough money put aside for your retirement.

Help grow your nest egg with a SoFi IRA.

FAQ

Do I have an IRA basis?

Everyone with an IRA has an IRA basis, although it’s possible that your IRA basis is $0. Your IRA basis is the net total of your non-tax-deductible contributions minus any distributions. For a Roth IRA, you use the value of all your contributions, while with a Traditional IRA, it’s only the contributions that were not tax-deductible.

How do I find my IRA basis?

Your IRA basis is the sum of any non-tax-deductible contributions that you make to an IRA minus any distributions that you take from your account. Your IRA basis is not generally reported anywhere. So if you don’t know your basis, you will need to calculate it based on your historical contributions and distribution amounts.

Who keeps track of your IRA basis?

The IRS does not generally keep track of your IRA basis — you are responsible for making sure your IRA basis is accurately calculated. If you use an accountant, they may calculate and track your IRA basis. You’ll want to make sure that you are accurately tracking your basis so that you can correctly pay any taxes you owe on IRA distributions.


Photo credit: iStock/Eva-Katalin

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.

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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