source_product Archives

Oct

2025

Should Parents Pay for College?

By Carolyn Desalu | Student Loans, student_loan | No Comments

Table of Contents

Why Parents Pay for College
Why Parents Don’t Pay for College
How Parents Paying for College Can Get Financing
Financing Options for Your Child
FAQ

The question of whether parents should pay for their children’s college education is complex and multifaceted. It involves not only financial issues (namely, can you afford to?) but also ethical and personal considerations. While many parents aspire to pay 100% of their children’s college expenses to allow them to graduate debt-free, others feel that it’s important for kids to have some skin in the game.

If you’re weighing this issue, you’ll want to consider both the reasons for and against paying for your kid’s college education. Here’s a closer look at both sides of the argument.

Key Points

• Whether parents should pay for college depends on their financial situation and personal values.

• Parental support can give students a head start on their professional and financial goals.

• Student financial contributions can build a sense of responsibility and financial accountability.

• Paying for a child’s college education may risk parents’ retirement and financial security.

• College financing options include savings, grants, scholarships, part-time jobs, and loans.

Why Parents Pay for College

Some parents feel it’s their duty to cover the cost of their child’s college education. Here’s a look at some arguments in support of that viewpoint.

Giving Your Child a Head Start

The average student borrows over $30,000 to pursue a bachelor’s degree, according to the Education Data Initiative. That’s no small sum. Students who graduate debt-free generally have a leg-up on achieving their professional and financial goals. They can consider taking a job based on their career aspirations, rather than the one that pays the most. They also have the freedom to put all of their financial resources into other goals, such as building an emergency fund or buying a home.

Helping Your Child Stay in School

When you send your child off to college, you likely expect them to emerge with a bachelor’s degree. But the national college graduation rate is only around 61%. Among those who leave school, a significant number cite financial reasons for their decision. Taking the college bill off your child’s plate may help them stick to the program.

Allowing Your Child to Focus

Getting a job can help your student cover some of their tuition costs, but if they have to work too many hours, it can make it difficult for them to focus on their studies. Paying for their education may give them a better chance of getting good grades and possibly qualifying for academic scholarships. They might even be able to take on a bigger course load every semester and graduate early.

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Why Parents Don’t Pay for College

While many parents believe they should pay for college, others feel that students should be responsible for investing in their own education. Here’s a look at some reasons why some parents decide not to pay for college.

It Could Threaten Your Retirement

If you can afford to save for a healthy retirement and pay for college, you’re in good shape. But if you feel like you have to choose between the two, paying for college and not saving for retirement could force you to work longer or leave the workforce with less money than you might need.

It Builds Responsibility and Accountability

Having your child contribute to their education through part-time jobs and loans can help foster a sense of responsibility and ownership. They may value their education all the more — and work as hard as they can — knowing how much this opportunity costs.

It’s a Good Teaching Moment

Helping your child figure out their college financing and teaching them good financial habits now can help them continue those habits after they graduate. If you cover everything for them, they may have a difficult time transitioning to life after college and may end up coming back to you for help.

How Parents Paying for College Can Get Financing

If you’re interested in footing some or all of the bill for your child’s college education, you have a few different funding options. Here are some to consider.

Savings

One way to help students pay for college is to put some money aside each month in a 529 plan. Even if your child is already in high school, you can still open a 529 plan and take advantage of the federal (and sometimes state) tax benefits. Money in a 529 account grows tax-deferred and withdrawals are tax-free when used for eligible educational expenses. Any amount saved for college can reduce your child’s future student loan debt.

Parent PLUS Loans

The U.S. Department of Education offers PLUS Loans for parents that you can qualify for as long as you don’t have an adverse credit history. Parent PLUS Loans give you access to certain benefits, including the option to defer repayment while your child is enrolled at least half-time and for an additional six months after your child graduates. However, these loans also charge relatively high interest rates and upfront loan fees.

Private Student Loans

If you have excellent credit and a strong, steady income (and your child doesn’t get enough federal aid), you may want to explore getting a student loan for parents with a private lender. Typically, you can get prequalified with a soft credit check with many lenders online to see what rate you qualify for and compare it to other lenders and Parent PLUS Loan options.

💡 Quick Tip: Parents and sponsors with strong credit and income may find much lower rates on no-fee private parent student loans than federal parent PLUS loans. Federal PLUS loans also come with an origination fee.

Financing Options for Your Child

If you’ve decided that you can’t or don’t want to fully pay for your child’s college education, here are some ways that your child can get the funding they need.

Grants and Scholarships

By completing the Free Application for Federal Student Aid (FAFSA®), your child will automatically be considered for many federal, state, and institutional grants and scholarships. Scholarships are also available through private organizations and companies. To apply for these, your student will likely need to fill out a separate application for each one. To find more “free money” for school, your student may want to use an online scholarship search tool.

Part-Time Job

One good way to pay for school, especially if your child has a full or partial scholarship lined up, is to work part-time while in school. This can help pay for living expenses, books, or possibly even tuition. Working full-time during the summers can help to pay for the next year’s worth of expenses.

Student Loans

College students have a choice between federal and private student loans. In general, federal loans are better-suited for undergraduate students because they don’t require a credit check, have relatively low-interest rates, and offer access to income-driven repayment and loan forgiveness programs. Your child can apply for federal student loans by completing the FAFSA.

If federal student loans and other aid isn’t enough to cover your child’s full cost of attendance, however, private student loans may be another option. Just keep in mind that you may need to cosign the loan application to help them get approved.

The Takeaway

The question of whether parents should pay for college is a personal one with valid arguments on both sides. Ultimately, the decision depends on your individual financial situation, retirement goals, and philosophical beliefs about your child’s responsibility.

Many parents choose to contribute to give their child a head start and allow them to focus on their studies, while others prioritize their own financial security and believe it’s important for their child to have “skin in the game.” There are various financing options available for both parents and students to help cover college costs, so it’s important to explore all avenues and create a plan that works best for your family.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

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FAQ

Are parents supposed to pay for college?

There’s no universal “yes” or “no” answer to this question. Whether parents pay for college depends on many factors, including their financial situation, retirement goals, the child’s academic performance, and personal beliefs about financial responsibility. Some parents feel a strong obligation to cover college costs to help their children avoid debt and focus on studies, while others believe contributing to education builds responsibility.

Do parents who make $120,000 still qualify for FAFSA?

Yes, parents making $120,000 may still qualify for financial aid, as there is no income cutoff for the FAFSA®. Financial aid eligibility is based on the Student Aid Index (SAI), which takes into account a variety of factors beyond just income, such as family size and assets. While a higher income can make it harder to get need-based aid, a student can still qualify for federal student loans and merit-based programs. Completing the FAFSA is always recommended to explore all available financial aid options. federal

Is it worth paying off your child’s student loan?

Paying off your child’s student loan can be worthwhile if you’re financially secure and it won’t impact your retirement or emergency savings. It can relieve your child’s financial stress and help them build a stronger financial future. However, if it strains your budget and limits your ability to meet personal goals, it may be better to offer partial help — like contributing to monthly payments — rather than paying off the entire balance.

How does a middle class family pay for college?

Middle-class families often combine several strategies to pay for college. These include applying for federal and state financial aid by completing the FAFSA®, seeking out scholarships and grants based on academic merit, talents, or specific backgrounds, utilizing 529 college savings plans, and having students work part-time jobs. Many also consider federal student loans, and sometimes private student loans, to cover remaining costs. It’s often a blend of savings, financial aid, and loans that makes college affordable.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Bank, N.A. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.

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SOISL-Q425-010

Oct

2025

Implied Volatility: What It Is & What It’s Used for

By Colin Dodds | Growing Wealth, invest, Investing | Comments Off

Editor's Note: Options are not suitable for all investors. Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Please see the Characteristics and Risks of Standardized Options.

Table of Contents

What Is Volatility?
What Is Implied Volatility?
How Implied Volatility Affects Options
Implied Volatility and Other Financial Products
How Is Implied Volatility Calculated?
What Affects Implied Volatility?
Implied Volatility Pros and Cons
FAQ

Implied volatility (IV) is a metric that describes the market’s expectation of future movement in the price of a security. Implied volatility, also known by the symbol σ (sigma), employs a set of predictive factors to forecast how volatile a security’s price may be.

Some investors may use implied volatility as a way to understand the level of market risk they may face. Implied volatility is often calculated using either the Black-Scholes model or the Binomial model.

Key Points

• Implied volatility measures expected future price movement, reflecting market sentiment.

• High implied volatility suggests larger price swings, which can significantly impact options premiums.

• Implied volatility may be calculated using the Black-Scholes and Binomial models, each with specific applications.

• Elevated market risk can be signaled through implied volatility, though it doesn’t indicate which direction prices may move.

• Limitations include the inability to predict future direction, account for unexpected events, and reflect fundamental value.

What Is Volatility?

Volatility, as it relates to investments, is the pace and extent that the market price of a security may move up or down during a given period. During times of high volatility, prices experience frequent, large swings, while periods of low volatility see fewer and smaller price changes.

What Is Implied Volatility?

Implied volatility is, in essence, a metric used in options trading that reflects the market’s anticipation of a security’s future price movements, rather than its historical performance. While it informs the price of an option, it does not guarantee that the price activity of the underlying security will be as volatile, or as stable, as the expectation embedded in its implied volatility. While implied volatility isn’t a window onto the future, it can often correlate with the broader opinion that the market holds regarding a given security.

To express implied volatility, investors typically use a percentage that shows the rate of standard deviation over a particular time period. As a measure of market risk, investors typically see the highest implied volatility during downward-trending or bearish markets, when they may expect equity prices to go down.

During bull markets on the other hand, implied volatility tends to go down as more investors may believe equity prices will rise. That said, as a metric, implied volatility doesn’t predict the direction of the price swings, only that the prices are likely to swing.

How Implied Volatility Affects Options

So how does implied volatility affect options? When determining the value of an options contract, implied volatility is a major factor. Implied volatility can help options traders evaluate an option’s price and also evaluate whether the option may be a good fit for their strategy.

An investor buying options contracts has the right, but not the obligation, to buy or sell a particular asset at an agreed-upon price during a specified time period. Because IV helps estimate the extent of the price change investors may expect a security to experience in a specific time span, it directly affects the price an investor pays for an option. It would not help them determine whether they want a call or a put option.

It may also be used by some traders to help them determine whether they want to charge or pay an options premium for a security. Options on underlying securities that have high implied volatility tend to come with higher premiums, while options on securities with lower implied volatility typically command lower premiums.

Implied Volatility and Other Financial Products

Implied volatility can also impact the prices of financial instruments other than options. One such instrument is the interest rate cap, a product aimed at limiting the increases in interest charged by variable-rate credit products.

For example, homeowners might purchase an interest rate cap to limit the risks associated with their variable-rate mortgages and adjustable-rate mortgage (ARM) loans. Implied volatility may be a consideration in the prices that borrowers may pay for those interest rate caps.

How Is Implied Volatility Calculated?

There are two implied volatility formulas that some investors typically use to estimate fair option pricing based on market conditions.

Black-Scholes Model

One of the most widely used methods of calculating implied volatility is the Black-Scholes Model. Sometimes known as the Black-Scholes-Merton model, the Black-Scholes model is named for three economists who published the model in a journal in 1973.

It can be a complex mathematical equation investors use to project potential price changes over time for financial instruments, including stocks, futures contracts, and options contracts. Investors use the Black-Scholes Model to estimate the value of different securities and financial derivatives. When used to price options, it uses the following factors:

• Current stock price

• Options contract strike price

• Amount of time remaining until the option expires

• Risk-free interest rates

The Black-Scholes formula takes those known factors and effectively back-solves for the value of implied volatility.

The Black-Scholes Model offers a quick way to calculate European-style options, which can only be exercised at their expiration date, but the formula is less useful for accurately pricing American options, since it only considers the price at an option’s expiration date. With American options, the owner may exercise at any time up to and including the expiration date.

Binomial Model

Many investors consider the binomial option pricing model more intuitive than the Black-Scholes model. It also represents a more effective way of calculating the implied volatility of U.S. options, which may be exercised at any point before (and on) their expiration date.

Invented in 1979, the binomial model uses the assumption that at any moment, the price of a security will either go up or down.

As a method for calculating the implied volatility of an options contract, the binomial pricing model uses the same basic data inputs as Black-Scholes, along with the ability to update the equation as market conditions change or new information becomes available. In comparison with other models, the binomial option pricing model is very simple at first. It can become extremely complex, however, as it accounts for many time periods and supports early exercise for pricing American-style options.

By using the binomial model with multiple periods of time, a trader can use an implied volatility chart to visualize potential changes in implied volatility of the underlying asset over time, and evaluate the option at each point in time. It also allows the trader to update those multi-period equations based on each day’s price movements and emerging market news.

The calculations involved in the binomial model can take a long time to complete, which may make it difficult for short-term traders to use.

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What Affects Implied Volatility?

The markets fluctuate, and so does the implied volatility of any security. As the price of a security rises, that can change its implied volatility, which can influence changes in the premium it costs to buy an option.

Another factor that changes the implied volatility priced into an option is the time left until the option expires. An option with a relatively near expiration date tends to have lower implied volatility than one with a longer duration. As an options contract grows closer to its expiration, the implied volatility of that option tends to fall.

Implied Volatility Pros and Cons

There are both benefits and drawbacks to be aware of when using implied volatility to evaluate a security.

Pros

• Implied volatility can help an investor quantify the market sentiment around a given security.

• Implied volatility can help investors estimate the size of the price movement that a particular asset may experience.

• During periods of high volatility, implied volatility can help investors identify potentially lower-risk sectors or products.

Cons

• Implied volatility cannot predict the future.

• Implied volatility does not indicate the direction of the price movement a security is likely to experience.

• Implied volatility does not factor in or reflect the fundamentals of the underlying security, but is based primarily on the security’s price.

• Implied volatility does not account for unexpected adverse events that could affect the price of the security and its implied volatility in the future.

The Takeaway

Some investors use implied volatility to assess expected price movement and evaluate option value. It can be a useful indicator, but it has limitations. Investors may want to use it in connection with other types of analysis to better contextualize risk and potential price behavior.

That said, having a basic understanding of implied volatility can be a helpful foundation for nearly all investors.

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FAQ

What is implied volatility?

Implied volatility measures the extent and frequency that the market expects a security’s price to move. Options traders may use it to evaluate whether premiums are relatively expensive or inexpensive, and to help them gauge strategy timing.

Is high IV good for options?

High implied volatility can work in favor of option sellers, since they may collect a higher premium for those options. Option buyers typically pay more upfront for an option with high implied volatility, but the potential for bigger price swings may increase the likelihood that the option will move into the money, though this comes with higher risk, as well.

How can I try to profit from implied volatility?

Traders may try to profit by buying options ahead of events that are likely to trigger sharp price moves, hoping the option’s value rises. Others may sell options when IV is high to collect larger premiums, expecting volatility may drop. Both strategies hinge on timing and carry risk.

What is the function of implied volatility?

Implied volatility reflects how much price movement the market anticipates for a given security. It helps determine options pricing and offers a snapshot of perceived risk, but it doesn’t predict the direction that the security’s price may move.

Photo credit: iStock/nortonrsx

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

SOIN-Q325-019

Oct

2025

What Are Pink Sheet Stocks?

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

Table of Contents

What Is a Pink Sheet OTC?
Pros and Cons of Pink Sheet Stocks
Pink Sheet Stock Investment Risks
Where to Find Pink Sheet Stocks
Investing in Pink Sheet Stocks
FAQ

Pink sheet stocks are stocks that trade through the over-the-counter (OTC) market rather than through a major stock exchange. The term “pink sheets” comes from the paper that stock quotes used to be printed on, though today, stock quotes and stock trading takes place electronically.

The over-the-counter market may appeal to smaller companies and companies that don’t meet the listing requirements of the major stock exchanges. A pink sheet stock does not face the same level of regulation as stocks from publicly traded companies that are traded on the New York Stock Exchange or NASDAQ and many pink sheet stocks tend to be volatile and high risk.

Key Points

• Pink sheet stocks trade over-the-counter (OTC), not on major stock exchanges.

• Pink sheet stocks are listed on the OTC market along with the stock’s country of origin, price, and trading volume.

• Companies may use pink sheets/OTC for such reasons as to save money on the IPO process, because they’re in financial distress, and/or because they can’t meet SEC listing requirements.

• Risks of pink sheet stocks include potential fraud, lack of regulation, and limited transparency.

• Pink sheet stocks also tend to have low liquidity and be highly volatile.

What Is a Pink Sheet OTC?

Pink sheet stocks are those that trade over the counter (OTC), rather than via stock exchanges. OTC Markets Group provides quotes for pink sheet stocks, and broker-dealers execute trades directly with each other.

Pink sheet OTC stock trading happens on an open market that does not have the same level of financial reporting rules as mandated by trading on the NYSE, NASDAQ or another stock exchange. It’s not illegal, though the Securities and Exchange Commission (SEC) warns investors to stay vigilant for potential scams or fraudulent trading involving the pink sheets market and microcap or penny stocks.

A company may choose to sell shares on the over-the-counter market if it can not meet the listing requirements established by the SEC, or does not want the expense of going through the IPO process. Many pink sheet stocks are penny stocks.

Pink sheet stocks can be highly volatile and risky so it’s important for investors to understand both the risks and potential rewards.

Listing Requirements

In order for a company to get listed on OTC pink sheets, they must file Form 211 with the Financial Industry Regulatory Authority (FINRA). Companies typically do this through a sponsoring market maker, or registered broker dealer firm. The sponsoring market maker accepts the risk of holding a certain number of shares in a pink sheet company to facilitate trading of those shares.

The Form 211 asks for financial information about the listed company. The broker dealer can then use this information to generate a stock price quote. Pink sheet over-the-counter stocks do not need to adhere to the same financial reporting requirements as stocks that trade on major exchanges.

Are Pink Sheets and OTC the Same?

The terms pink sheet stocks, and OTC or over the counter, are not the same thing, though they both refer to trades that take place outside of the traditional stock exchanges. The company OTC Markets provides quotes for companies listed on the pink sheets, as well as the OTCQX and the OTCQB trading marketplaces.

The OTCQX allows for trading of companies that are not listed on traditional exchanges but still subject to SEC rules. The OTCQB includes emerging companies with a stock price of at least a penny that are not in bankruptcy, have a minimum of 50 beneficial shareholders who each own 100 shares, and annually confirm that information is up to date.

Pink sheet stocks listed on the OTC marketplace have fewer financial reporting requirements than the OTCQX and OTCQB. In mid-2025, the OTC Markets Group took the step of splitting its Pink Current Market into two, more specific groups, called the OTCID Basic Market and the Pink Limited Market.

Companies listed on the OTCID Market provide certain baseline information, such as financial disclosures, management certification, and a company profile. Companies listed on Pink Limited, however, have limited information available and do not certify compliance with established reporting standards. OTC Markets lists these companies with a yield sign to alert investors to proceed with caution.

Are Pink Sheets and Stocks the Same?

Pink sheet stocks are stocks, meaning each one represents an ownership share in a company. A primary difference between pink sheet stocks and other types of stocks, such as blue chip stocks, is how investors trade them. Investors trade pink sheet stocks over the counter, and other types of stocks on an exchange.

Pink sheet stocks may have much lower valuations than small-cap, mid-cap or large-cap stocks, or they may be newer companies that have yet to establish themselves in the market.

Companies that Use Pink Sheets

There are quite a few companies that use pink sheet stocks, and that includes some big-name, well-known companies that most people would recognize. That said, most companies that use pink sheets likely wouldn’t be recognizable immediately to the average investor.

Pros and Cons of Pink Sheet Stocks

Pink sheet stocks have benefits and disadvantages, both for the companies that list over the counter and for investors. Here are some of the most important pros and cons.

Benefits of Pink Sheet Stocks

From a business perspective, being listed on the pink sheets can save companies resources. Rather than going through the IPO process to become a publicly-traded company, pink sheet stocks circumvent the major stock exchanges and their listing requirements.

Foreign companies may choose the pink sheets to avoid SEC financial reporting rules. Additionally, companies delisted from a stock exchange may seek to trade on the pink sheets OTC market.

For some investors, the possible appeal of pink sheet stock trading may be the potential to pick up stocks at very low prices. Because there are fewer reporting requirements, it may be possible to find a much broader range of stocks to invest in when trading on the OTC pink sheets. However, there are significant risks involved — see the information below.

Disadvantages of Pink Sheet Stocks

Trading on the pink sheets OTC can call a company’s reputation or credibility into question. Investors may wonder why a company is not seeking an IPO to get listed on a stock exchange or why a company has been delisted. That can make it difficult for a company to cement its footing in the marketplace and attract attention from new investors.

Investing in pink sheet stocks involves substantially more risk than trading stocks on a major exchange, since there is less transparency around them and may be limited financial information. That means investors are generally taking on more risk when investing in pink sheets because they may not know what they’re buying. In addition, pink sheet stocks can be highly volatile, and tend to have lower liquidity, meaning it can be more difficult to buy or sell shares.

Pink Sheet Stock Investment Risks

Part of investing means paying careful attention to risk management. Pink sheet stocks can present a much greater risk in a portfolio for several reasons. A major issue with pink sheet stocks is that they can be susceptible to price manipulation or fraud.

Individuals might use shell companies, for example, to trade on the pink sheets for the purpose of laundering money or otherwise defrauding investors. Because there’s so little regulation and transparency surrounding these stocks, it can be difficult to tell if a company is legitimate.

Also, there’s less liquidity surrounding these stocks due to lower trading volume. That could make it harder to sell shares of a penny stock or pink sheet stock.

The pink sheets market and over-the-counter trading in general can be more susceptible to stock volatility. Rapid price fluctuations could generate higher-than- anticipated losses if the price of a pink sheet stock nosedives unexpectedly.

And share dilution can also reduce the value of penny stocks or other pink sheet stocks. Dilution occurs when a company issues more shares of stock, watering down the value of the existing shares on the market.

Where to Find Pink Sheet Stocks

Pink sheet stocks may be offered through certain brokerages and can also be found through the OTC Markets Group. The platform has a stock screener to filter for Pink Limited stocks, as well as OTCID stocks. The filter provides the stock’s ticker symbol, its country of origin, price, and trading volume, among other information.

Investing in Pink Sheet Stocks

Those interested in investing in pink sheet stocks need a brokerage account and, specifically, a broker that offers pink sheet trading. Not all brokers offer this service so you may need to look into different options for where to trade pink sheet stocks online.

Given the high degree of risk involved, it’s important to thoroughly research the background, executives, and financials of a company you’re considering investing in. It’s equally crucial to consider how much you could realistically afford to lose if a pink sheet stock or penny stock gamble doesn’t pay off.

Keep in mind that commissions may apply, and brokerages may charge higher trading fees for pink sheet stocks versus stocks that trade on a major exchange, so it’s important to factor cost in when estimating your risk/reward potential.

The Takeaway

Pink sheet stocks, or OTC stocks, are stocks that do not trade on traditional large exchanges, and instead, trade “over the counter.” Companies that trade stocks on the over-the-counter market may include smaller companies, some foreign companies, and companies that don’t meet the listing requirements of the major exchanges.

Pink sheet stocks are risky and highly volatile since there is less regulation and oversight of them, a lack of transparency and financial information, and the potential for fraud and price manipulation. For investors, it’s very important to be aware of the risks involved.

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🛈 SoFi does not offer OTC pink sheet stock trading at this time.

FAQ

Why do companies use pink sheets?

Companies may choose to use pink sheets or list their stocks on the over-the-counter (OTC) market for a number of reasons, including if they can’t meet listing requirements set forth by the SEC, or if they don’t want to go through the IPO process. Pink sheet stocks have less regulation and transparency, and they can be very risky and highly volatile.

Why is it called pink sheets?

“Pink sheets” refers to the paper that stock quotes were once printed on, which was pink in color. The term is still in use today even though stock quotes are now done electronically.

What are the risks of pink sheet investing?

Pink sheet investing can be very risky. Risks include potential fraudulent activity, less regulatory oversight, lack of transparency, low liquidity, and high volatility.

Photo credit: iStock/PeopleImages

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

SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

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

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SOIN-Q325-108

Oct

2025

A happy woman wearing sunglasses and a hat is driving a red, vintage-style car down a tree-lined road, making one wonder how much is my car really worth.

How Much Is My Car Worth Really?

By Austin Kilham | relay | Comments Off

Table of Contents

Understanding the Different Estimated Values
Common Car Value Estimate Resources
Who Gives the Most Accurate Car Value Estimate?
Car Brands With the Highest Resale Value
The Takeaway
FAQ

The value of a car depends on many factors, from the make and model to age, condition, and mileage. How quickly you want to sell and where you live can also play a big part in how much money you get for your car.

It’s important to understand these factors as you appraise your vehicle. Here’s a closer look at resources you can consult as you determine how much your car is worth.

Key Points

• The value of your car is determined by factors like make, model, year, condition, and mileage.

• Websites and like Kelley Blue Book and Edmunds can provide accurate estimates of your car’s value.

• The physical and mechanical condition of your car significantly impacts its worth.

• Car values can vary by location due to differences in demand and local market conditions.

• Checking recent sales of similar vehicles in your area can give you a realistic idea of your car’s market value.

What Is a Good Price for My Used Car?

In Q2 2025, the average used car price hovered around $31,000. Whether you’re able to sell your car for above or below that price will depend on many factors. First of all, mileage has a big impact on price. The more you’ve driven your car, the less it will be worth.

A car’s condition is also important. Are there repairs that have to be made or parts that need replacing? Does the car have an accident history? If so, the value of the car may be negatively impacted.

The older a car is, the more wear and tear it’s likely to have experienced. As a result, older cars usually cost less than newer counterparts.

Some factors that can impact car price are more surprising, such as where you live and how quickly you need to sell it. The weather in your area can take its toll on your vehicle. Harsh New England winters and salted roads, for example, can cause metal components to rust. Sunny climes have their own issues, too; too much sun can cause paint and other finishes to lose their luster.

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Understanding the Different Estimated Values

There are a few different ways to calculate estimated car value. Here’s a look the most common terms:

Market Value

The market value of a used car is a reflection of how much buyers are usually willing to pay for a given vehicle. It will depend on factors such as location, make and model, mileage, and condition. See below for resources to determine market value.

Recommended: How to Save Up for a Car

Trade-In Value

Trade-in value comes into play when you’re considering buying a used car or a new vehicle. It’s the amount of money a dealer is willing to give you for your old car that you can then put toward the purchase price of another vehicle.

The trade-in value is often lower than top market value. That’s because the dealer needs to turn a profit when they resell the vehicle.

If you’re trading in your car for a new or new-to-you model, your credit score will impact the interest rate you receive on your auto loan. There is generally no baseline credit score required to qualify for auto financing, but lower scores will pay significantly higher interest rates.

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Private Party Value

You may encounter the phrase “private party value” as you research how much your car is worth. This usually means the fair market value when selling your vehicle to an individual rather than a dealership.

Instant Trade-In Dealer Quotes

Brick-and-mortar dealerships and websites, such as Kelley Blue Book, Vroom, TrueCar, and Carvana, may offer instant cash or instant dealer trade-in quotes.

The process is similar to looking up the value of your vehicle online. You often need to share only a few details about your car, such as the vehicle identification number (VIN) or your license plate number, and the company will come back to you with an offer of cash for your car.

Once you receive an offer, there will likely be an in-person follow-up to review your vehicle before you receive any money.

Common Car Value Estimate Resources

There are a variety of resources available where you can research car prices and estimate the value of your vehicle.

Kelley Blue Book

Kelley Blue Book, or KBB, is an online resource for finding the value of new and used vehicles. It dates back to the 1920s, when the company published an actual blue book dealers would look at to establish pricing information and car values.

To research your car’s value, you can provide your vehicle identification number (VIN), license plate number, or year, make, model, mileage, and zip code. You can also input the equipment that is included on your vehicle and the color of your car to further narrow down the value.

Black Book

Similar to KBB, Black Book offers VIN-specific valuations. However, it also integrates vehicle history report data from Autocheck, such as reported damage to the vehicle. The company then offers an adjusted valuation based on this information.

National Automobile Dealers Association

The National Automobile Dealers Association (NADA) provides resources for shoppers looking for new and used vehicles. Use the website to compare prices on similar vehicles to your own to help determine what the going market rates are. The company also provides shopping guides that can help you learn more about the car buying and selling process, and glean tips for what buyers are looking for in a used vehicle.

Edmunds

Edmunds offers a car appraisal tool that also allows you to search vehicle values by VIN, license plate number, and year, make, and model. The California-based company was founded in 1966 “for the purpose of publishing new and used automotive pricing guides to assist automobile buyers.”

Who Gives the Most Accurate Car Value Estimate?

Kelley Blue Book and Edmunds are two of the most widely used and trusted general reference sites when it comes to valuations of particular makes and models of used cars and trucks.

Each site may show different values for the same vehicle, but no site consistently provides higher or lower estimates than the other.

Car Brands With the Highest Resale Value

The brand of a car, also known as its make, can have a big impact on resale value. Some makes are more popular than others, often due to a reputation for safety, fuel economy, or durability.

According to research by iSeeCars, the following 10 cars had the lowest depreciation in 2025.

	Make and Model	Average 5-Year Depreciation
1.	Porsche 911	19.5%
2.	Porsche 718 Cayman	21.8%
3.	Toyota Tacoma	26.0%
4.	Chevrolet Corvette	27.2%
5.	Honda Civic	28.0%
6.	Chevrolet Camaro	28.0%
7.	Toyota Tundra	29.1%
8.	Ford Mustang	29.2%
9.	Porsche 718 Boxster	29.6%
10.	Toyota Corolla Hatchback	30.1%

💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

Importance of Add-On Options

Pricey add-ons, such as splash guards, alarm systems, and tinted windows, don’t always add value to used cars. In fact, once a car is two or three years old, they may have little effect on value at all.

Recommended: Trading in a Car in 5 Easy Steps

The Takeaway

The value of your car will change from year to year as it ages, and supply and demand shift. Staying on top of your car’s value can help you make informed decisions about your net worth, as well as decisions about when to sell or trade in your vehicle for a new car.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

How do you estimate the value of a car?

You can estimate a car’s value by considering its make, model, year, condition, and mileage. Use online tools like Kelley Blue Book and Edmunds, check recent sales of similar vehicles in your area, and factor in local market conditions.

How do I find the fair market value of my car?

To find the fair market value of your car, use online tools like Kelley Blue Book and Edmunds, check recent sales of similar vehicles in your area, and consider factors such as make, model, year, condition, and mileage.

What is the difference between market value and fair market value?

Fair market value is an estimate of what a potential pool of buyers might pay, while the market value is what they are actually willing to pay.

Photo credit: iStock/DjordjeDjurdjevic

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This content is provided for informational and educational purposes only and should not be construed as financial advice.

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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SORL-Q425-004

Oct

2025

Important Candlestick Patterns to Know

By Laurel Tincher | Growing Wealth, invest, Investing, Terminology | Comments Off

Table of Contents

What Is a Candlestick Pattern?
History and Origins of Candlestick Charts
Reading Single Candlesticks
Types of Candlestick Patterns
FAQ

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 are used to reveal potential patterns in stock price movements.

Candlestick charts are one of multiple types of technical tools that traders use to analyze stock prices. There are some general patterns that are helpful to know and understand if you’re using candlestick charts while trading.

Key Points

• Candlestick patterns show sequences of price changes, which may help assess stock price movements.

• The use of candlestick patterns originated in 18th-century Japan, as a way to anticipate price trends and reversals.

• The rectangular body of the candle represents a stock’s opening and closing prices; the wicks (or shadows) represent the high and low of the time period.

• The color of a candlestick (green, white, red, or black) is a visual snapshot of the price direction, whether bullish or bearish.

• There are many candlestick patterns that traders use to identify specific trends.

• Candlestick charts can’t predict price movements, rather they are one of many technical tools traders use in combination to anticipate trends.

What Is a Candlestick Pattern?

A candlestick pattern is a sequence of price changes that are represented as a series of candle-like formations on a chart. Each candlestick 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, one that may help traders assess whether a stock may go up or down in value, and to 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 can be useful for helping some traders assess entry and exit timing for trades, when investing online or through a brokerage. Based on how stock price movements have repeatedly occurred in the past, traders may decide whether to put faith in them potentially moving in a similar way again. The reason these patterns form is that human perceptions, actions, and reactions to stock price movements also tend to be repeated.

Past events are not predictions of the future, however, and there are always risks when trading stocks. But candlestick patterns can be useful guidelines and one more piece of information for those looking to make informed trading decisions.

History and Origins of Candlestick Charts

Candlestick charts originated in 18th-century Japan, where a rice trader named Munehisa Homma developed a system to track rice prices and market sentiment. Homma’s techniques combined price patterns with observations about trader psychology, laying the groundwork for modern candlestick analysis.

While the system evolved over time, it was introduced to Western markets in the late 20th century. Today, candlestick charts are widely used across financial markets by day traders and other investors to assess short-term price movements and spot potential reversals or continuation patterns.

Recommended: Stock Trading Basics

Reading Single Candlesticks

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

• Body. The body, or real body, is the rectangular candle-like shape that represents the opening and closing prices. A short body tends to indicate lack of a strong trading direction; a longer body suggests strong selling or buying pressure.

• Wicks. 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 can indicate that the high or low trade was close to the opening or closing price. The difference between the high and low price of the candlestick wicks is called the range.

• Candlestick color. The color provides a quick take on the price direction. A green or white candlestick body is bullish, with the closing price at the top, indicating it’s higher than the opening price. A red or black body is bearish, and reflects a lower closing price (at the bottom) vs. the opening, signaling potential downward pressure.

A diagram illustrating bullish (green) and bearish (red) candlesticks, showing open, close, high, and low prices.

Candlesticks can represent different time frames. One popular time frame when stock trading is a single day, so each candlestick on a chart will show the price change for 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 may also show that there is a strong trend, or 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 the stock’s intraday high or low prices may not hold.

Doji Candles

When a candle’s opening and closing price are almost the same, this forms a doji candle, which looks like a 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 roughly equal forces from buyers and sellers, with little net price movement in either direction.

Long Shadow Candles

Candles with a long wick or shadow may indicate a rejection of higher or lower prices. A candle with a long upper shadow can signal seller rejection of higher prices, while a long lower shadow can signal buyer rejection of lower prices.

Marubozu Candles

A Marubozu candle is a single candlestick pattern that has no upper or lower wicks, showing only the real body. It may indicate that buying or selling pressure was especially strong during the selected time period.

A green Marubozu may suggest steady upward pressure, while a red Marubozu might point to consistent downward pressure. Traders sometimes view Marubozu candles as potential signals that prevailing trends could continue.

Types of Candlestick Patterns

Candlestick patterns are used to help analyze stock price action. There are dozens of candlestick patterns that 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 may indicate selling pressure and a potential decrease in the stock’s price.

3. Reversal candlestick patterns may demonstrate that the price trend of a stock could reverse.

4. Continuation patterns may indicate that the stock’s price will continue heading in the direction it’s currently going.

It’s important to remember that some patterns may be interpreted as 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 that may indicate a reversal from a bearish trend towards a bullish trend. The first candle is long-bodied and red. The second candle opens lower and has a short body, often with a gap and a small body. Its color may vary. The third candle is green and closes at or above the center of the first candle body.

Morning Star Doji: This three-candlestick pattern is sometimes interpreted as a possible 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 larger candle, which engulfs it. Although both candles are important, the higher the high of the second candle’s body, the more some traders may view it as a potential reversal signal.

Hammer: This single-candle pattern typically appears at the end of a decline. The hammer candle looks like a hammer, with a short real body with little or no upper shadow. This shows that the low for the period is significantly lower than the close for that period, which is generally viewed as a potential bullish reversal after a downtrend. However, many traders look for confirmation, such as a higher close on the next candle, before acting on the pattern.

Inverted Hammer: The inverse of the hammer pattern, this is a single-candle pattern which may suggest weakening downward momentum and can indicate the end of a downtrend and reversal towards a bullish movement.

This candle has a short real body near the low, little or no lower shadow, and a long upper shadow. Unlike a hammer, the inverted hammer may show buyers testing higher prices but failing to hold them. This makes confirmation on the next candle especially important.

Bullish Harami: This reversal pattern happens during a downtrend and may suggest 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.

Dragonfly Doji: This is a pattern some traders view as a possible reversal signal. In this pattern, a doji candle opens and closes at or near the highest price of the day. The lower shadow tends to be long, but it can vary in length.

Piercing Line: In this two-candle pattern, the first candle is long and red, followed by a long green candle that opens below the prior close and closes above the midpoint of the first candle’s real body. This pattern is often interpreted as a potential bullish reversal after a bearish trend.

Stick Sandwich: This is a three-candle pattern with an opposite-colored middle candle that consists of a long candle sandwiched between two long candles of the other color. The closing prices of the two outer candles are similar, creating a potential level of support that some traders interpret as a possible bullish signal.

Three White Soldiers: A three-candle pattern that looks like a staircase toward higher prices, sometimes viewed as a potential bullish continuation signal. It consists of three green candles, each of which opens within or above the prior candle’s body and closes progressively higher.

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, sometimes interpreted as a possible shift from bullish to bearish momentum. The first candle is long and green. The second candle gaps up 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 is sometimes seen as a possible reversal towards a bearish trend. The first candle is a long green candle. The second candle is a doji, or is very narrow and gaps up to a higher price. The third candle is red and closes at or below the center point of the first candle body.

Shooting Star: This is a single-candle pattern defined by shape with a small real body near the low, very little or no lower shadow, and a long upper shadow. The shooting star may be interpreted as a potential sign of weakening upward momentum.

Hanging Man: This is a single candlestick pattern that appears after an uptrend and may indicate a potential bearish reversal. The candle has a long lower wick and a short candle body. Despite resembling a hammer, it typically signals selling pressure after a rally and is not bullish.

Dark Cloud Cover: A two-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. The second candle, which is red, completes the pattern by closing below the midpoint of the prior green candle.

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

Two Black Gapping: This pattern appears near a top and happens when price gaps down and then prints two red candles that gap down again. This is sometimes viewed as a potential bearish sign of an emerging 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 is generally viewed as a potential bearish reversal, especially after an uptrend, but often requires confirmation.

Three Black Crows: This bearish reversal pattern appears after an uptrend and consists of three long red candlesticks. Each opens with the real body of the prior candle and closes lower, showing sustained selling pressure.

Reversal Patterns

Harami Cross: 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 is a long real body in the prevailing trend, and the second candle is a doji within its body.

Abandoned Baby: This reversal pattern is made up of three candles. The middle candle is a doji that is isolated by gaps on both sides, with no overlap to adjacent candles (i.e., “standing alone”). The third candle moves strongly in the opposite direction after the gap. 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 candles.

Continuation Patterns

Falling Three Methods: This is a five-candlestick bearish continuation pattern which may reflect a brief pause within 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 may suggest buyers have not yet shifted the downtrend’s momentum.

Three Line Strike: A four-candlestick pattern that consists of three same-direction candles followed by a long, counter-trending candle, and is sometimes interpreted as a potential trend continuation or, depending on the context, a reversal signal. The fourth candle typically engulfs the prior three candlesticks’ real bodies.

Other Patterns

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

Spinning Top: A short-bodied candlestick with similar 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 may move quickly one way or another, so prior price movement and patterns may help assess whether the stock will move up or down.

Supernova: If there’s a high-volume, low-float stock that experiences a price explosion, followed by a sharp 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 assess whether a stock’s price may rise or fall. 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. For traders who understand their limits, candlestick patterns can still offer a practical read on near-term supply and demand.

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FAQ

What is the most reliable candlestick pattern?

No candlestick pattern can guarantee accuracy, but many traders view the engulfing pattern as a strong signal, especially in combination with volume. Some confirmation from the next candle is often used before acting.

Can candlestick patterns be used for all asset classes?

Yes — candlestick patterns can apply to stocks, ETFs, and even futures. However, their reliability may vary depending on the asset’s liquidity and volatility.

How do you confirm a candlestick pattern?

Traders often look for confirmation through the next candle’s direction, volume changes, or supporting indicators, such as the Relative Strength Index (RSI). The RSI is a momentum indicator that measures how quickly prices are rising or falling, which may help traders identify potential overbought or oversold conditions.

Are candlestick patterns useful for day trading?

Candlestick patterns are widely used in day trading and options trading strategies in general to identify short-term price setups. That said, success often depends on combining them with other technical signals.

What are common mistakes when reading candlestick charts?

Relying on patterns without context, skipping confirmation, and ignoring volume are common errors. It’s also a mistake to treat any pattern as a guaranteed prediction.

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SOIN-Q325-057