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Jan

2023

Investing Survey: 85% of Investors Plan to Change How They Invest in 2023

By Brandon Lee | Growing Wealth, invest, Investing | Comments Off

We don’t need to tell you that 2022 has been a challenging year for investors — what with interest rates soaring, the stock market plummeting, and the onset of another crypto winter.

What you might be surprised to know: There’s some good news here. In a recent survey, we asked 1,000 investors how they managed their portfolios in 2022, how they’re feeling about the market, and what their predictions are for 2023*.

While you might expect some anxiety or pessimism (and there was some), investors overall remain positive after a difficult year. Here’s what they had to say about stocks, crypto, how they coped with investing stress — and more.

Note: We rounded percentages to the nearest whole number, so some data sets may not add up exactly to 100%.

*The survey was completed on October 5, 2022 and was conducted using a general U.S. population data set of 1,000 adults age 18 and older. Survey did not include known SoFi members or a SoFi member data set.

Key survey facts and findings

2022 SoFi Investing Survey

Before we dig into the details, here are some of the standout results.

• 93% of survey respondents continued to invest, despite the current market conditions.

• Men were more likely to invest than women, and invest more money as well.

• 78% of crypto investors are generally optimistic that values will rebound.

• And remarkably: 1 in four (25%) of investors had no regrets about 2022

Last highlight: How did investors cope with stress in 2022? Hobbies!

In general, investors stayed the course in 2022.

While the market hasn’t been kind to investors over the past year, it certainly hasn’t stopped many of them from investing. 93% of our respondents kept invested in 2022.

2022 SoFi Investing Survey

93% of respondents have invested in 2022

When it comes to the amount people have invested so far this year, men were more likely than women to invest — and invest more money when they did:

• $0 – $499: 24%

◦ Male: 44%

◦ Female: 56%

• $500 – $999: 23%

◦ Male: 50%

◦ Female: 49%

• $1000 – $4999: 26%

◦ Male: 57%

◦ Female: 43%

• $5000+: 21%

◦ Male: 68%

◦ Female: 32%

Many investors are still hoping to cash in on crypto.

It’s no secret that the crypto market has taken a beating, especially with the crash of FTX . Nonetheless, people are still holding on to their crypto investments.

45% of respondents say they have cryptocurrency in their portfolios. 65% of them even said they invested more than $500 in 2022. Most crypto investors (65%) are male and under the age of 55.

45% of respondents have cryptocurrency in their investment portfolio.

Over the past few years, cryptocurrency has become a more widely-accepted investment vehicle. Many investors have invested in crypto this year. Of these investors:

• 65% have invested $500 or more in 2022

• Less than 3% haven’t invested any money into crypto in 2022

• Only 7% of respondents aged 55 or older are invested in crypto

• 65% are male

And of those who invested $5000 or more in crypto in 2022, 80% are male.

While the crypto market is currently in a steep decline, most investors with cryptocurrency in their portfolios have invested at least $500 in 2022. Here’s what crypto investing looks like in 2022.

• $0 – $499: 32%

• $500 – $999: 23%

• $1000 – $4999: 26%

• $5000+: 16%

Only 3% of investors who have cryptocurrency in their portfolio haven’t invested anything into cryptocurrency this year.

78% of investors are either confident or cautiously optimistic the crypto market will bounce back

2022 SoFi Investing Survey
The crypto market remains volatile as rumors of a global recession continue to swirl. Despite this financial climate, most investors are hopeful of the future.

Of the 45% of respondents who have crypto in their portfolio:

• 78% of investors are at least “cautiously optimistic” that the crypto market will bounce back

• Only 5% of respondents believe crypto is “dead.”

Overall, the crypto market still has plenty of believers. Whether that optimism will pay off remains to be seen.

Nearly 90% of people have invested in non-stock market-related assets.

2022 SoFi Investing Survey

Non-traditional market assets are on the rise due to stock market volatility. In fact, nearly 90% of our respondents invested money into a non-stock-market-related asset. Crypto was the most common non-traditional investment choice.

Certificate of deposits (CDs), Real estate investment trusts (REITs), and gold were the next most popular options. One respondent even told us they invested in Magic the Gathering trading cards—definitely a niche investment choice, but representative of investments that aren’t directly impacted by the stock market.

Here’s a full list of all the responses we received:

• Certificate of deposits (CDs): 24%

• Real estate investment trusts (REITs): 20%

• Gold or other commodities: 20%

• Crypto: 48%

• Private equity funds: 22%

• Government bonds: 19%

• Other or none: 11%

Here’s what investors’ portfolios look like right now.

2022 SoFi Investing Survey

Nearly a third (32%) of respondents have less than $25,000 in their investment portfolio. Here’s a breakdown:

• $0 – $24,999: 32%

• $25,000 – $49,999: 22%

• $50,000 – $99,999: 21%

• $100,000 – $199,999: 12%

• $200,000+: 14%

Most investors (nearly 75%) also invest highly into stocks. Cryptocurrency, mutual funds, and cash were the next most popular investment types.

• Stocks: 72%

• Cryptocurrency: 45%

• Mutual funds: 41%

• Cash or cash equivalents: 38%

• Bonds: 31%

• Exchange-traded funds (ETFs): 30%

• Real estate: 23%

• Index funds: 21%

• Private equity: 14%

• Other: 2%

Market volatility has impacted investors’ purchase and investment decisions.

Market volatility has impacted investors at all ages and stages, but it hasn’t slowed them down. Not only have many people continued to invest during these uncertain times, market volatility has inspired investors to adjust their strategies and spending.

More than a third of respondents (37%) say market volatility has caused them to make impulsive investment decisions.

2022 SoFi Investing Survey
Market volatility has caused some investors to respond emotionally, with over a third of respondents (37%) saying market volatility has caused them to make impulsive investment choices.

31% of these impulse decisions were made by investors aged 18-24. In fact, the younger you are, the more likely you are to make impulsive or emotion-driven financial decisions. Here’s the age breakdown of those who made an impulse move due to market volatility:

• 18-24: 31%

• 25-34: 23%

• 35-44: 23%

• 45-54: 17%

• Older than 54: 7%

Of all the people who made impulsive investment decisions, 54% of our respondents say they’re happy with their choice. Specifically, only 20% of them regret them.

Maybe these rash decisions taught investors important lessons about the market. Maybe some are confident they’ll rebound.

One third of respondents (33%) had to cancel or delay plans or purchases in 2022 because of money lost on investments.

Many investors’ finances were impacted by the bear market: 33% said they had to cancel or delay plans in 2022 because they lost money on investments.

Ultimately, these mistakes prevented some investors from going on vacations, buying homes, and starting businesses. When we asked those who had to cancel or delay plans specifically which plans were impacted, here’s what they said:

• Going on a trip: 27%

• Making a major purchase (home, vehicle, etc.): 22%

• Home renovations: 19%

• Starting a business: 15%

• Growing my family (getting married, having a baby, etc.): 10%

• Retiring: 6%

• Other: 2%

Over half of respondents did not make any major investment changes.

2022 SoFi Investing Survey
Market volatility still isn’t scaring investors away. Over half, or 55% of respondents held on to their assets during this year’s economic crisis.

When we asked investors how they reacted to market swings this year:

• 29% said they bought a lot of investment

• 17% said they sold a lot of investments

• 55% said they did not buy or sell investments

The investors that did sell some of their assets (45%) ultimately relinquished less than half of their portfolio. Only 7% sold 76% or more of their total investments.

Many investors have investment regrets about 2022 and are looking toward 2023.

With 2023 on the horizon, many investors are planning to adjust their strategies based on the lessons they learned this year.

People are split on how inflation makes them feel about their investment strategies in 2022:

Inflation can be a thorn in the side of investors. Our respondents were split in how they approached inflation in 2022:

• 39% of respondents said they want to invest more, despite inflation.

• 33% said inflation makes them want to leave their investments alone.

• 28% said inflation makes them want to invest less.

Of the 39% who want to invest more, Gen Z appears to be the most optimistic (27% of that subgroup are between the ages of 18 and 24).

One thing is for certain — confident investors will continue to engage with the market despite inflation.

In general, people have mixed emotions about their investments in 2022, but the most common feeling was optimism (26%).

2022 SoFi Investing Survey

There was also some variance in how respondents feel about their investments. Most were optimistic, and fewer felt stressed, disappointed, and content.

• Optimistic: 26%

• Stressed: 19%

• Disappointed: 19%

• Content: 15%

• Excited: 14%

• Regretful: 5%

• Angry: 3%

Very few felt regretful or angry, which could be welcome signs of more market participation in the coming year.

While 5% of respondents feel regretful, a full 25% — or one in four investors — have zero regrets about 2022.

That said, 75% of respondents have some type of investment regret this year. And many have learned major lessons this year. Mainly, many wish they had bought more assets at lower prices.

Some of the most common investing regrets respondents expressed:

• They should’ve bought more crypto when prices were at their lowest (18%)

• They should’ve bought more stock when the market started to decline (16%)

• They should’ve sold stock before the market started to decline (15%)

Not everyone was regretful about their investing activities: As noted, 25% of respondents have no regrets at all. And of those that have no regrets, 60% are 45 or older.

Here’s the breakdown of the investment regrets respondents had this year:

• I have no regrets: 25%

• I should have bought more crypto while prices were their lowest: 18%

• I should have bought more stock when the market started tanking: 16%

• I should have sold stock before the market started tanking: 15%

• I should have sold my crypto early in the year: 10%

• I should have bought gold: 9%

• I should have held onto stock when the market started tanking: 7%

People use a variety of tactics to cope with the stress of market fluctuations:

We got a lot of interesting responses about how investors have dealt with the stress that came from market fluctuation.

• 41% took their mind off their portfolios by engaging in hobbies.

• 37% did their own investment research.

• 31% of them simply stopped checking their balances.

• 22% of respondents talked with their brokers for reassurance. 17% participated in online forums.

And on a positive note, 14% said the markets simply didn’t stress them out.

Nearly a third of respondents (30%) check their investment portfolios every day. And 75% check at least once a week.

Although one coping mechanism of market stress was to avoid checking balances, 30% of our respondents (65% of whom were male) check their investments every day.

Most respondents check their portfolio’s performance at least once a week. Here’s how often investors are checking their investment performance.

• Every day: 30%

• 2 to 3 times a week: 29%

• Once a week: 17%

• A few times a month: 12%

• Once a month: 7%

• Less than once a month: 7%

Looking forward to 2023

2022 is almost over and many investors are already looking forward to next year. Let’s see how our respondents plan to adjust their strategies in 2023.

85% of respondents plan to make some changes to how they invest in 2023.

While most respondents have agreed to change their plans, 21% of them want to invest more into the market.

Here are other ways people plan to change their investment strategies next year:

• 19% plan to do more of their own investment research

• 14% plan to work with a financial advisor

• 10% plan to buy into a new type of investment

• 9% plan to change the asset allocations in their portfolio

• 6% plan to decrease how much they invest overall

• 5% plan to use a robo-advisor or automated investing

• 15% don’t plan to change anything.

If this year has taught investors anything, it’s to adapt their strategies and stay optimistic. When asked how they planned to change their strategies, here is how investors responded.

Key Takeaways

Historically, market volatility tends to even itself out, and investment values typically rebound. Investors’ attitudes and behaviors tend to mirror this pattern. While markets have been low in 2022, there are signs of recovery as the year draws to a close, and people appear to be optimistic about an upswing and plan to continue investing.

If you’re ready to take advantage of buying when the market is low, online investing with SoFi Invest is an easy way to get started.

SoFi Invest®

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

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Dec

2022

What Is Cash Settlement in Options?

By Mike Zaccardi, CMT, CFA | Growing Wealth, invest, Investing, Terminology | Comments Off

Cash settlement in options is a method where the buyer of an option contract can exercise their right to receive the underlying asset, such as a stock or commodity, in the form of cash rather than the physical delivery of the asset. This means that instead of receiving the stock or commodity, the option holder will receive an amount of cash equal to the value of the underlying asset when the option is exercised.

Cash settlement may be used in options trading because it allows traders to speculate on the price movement of securities without actually having to own or hold the underlying assets. This can be particularly useful for traders looking to hedge their positions or who want to avoid the risks associated with holding the underlying assets.

What Is Cash settlement?

As noted above, cash settlement refers to a settlement method where the buyer of an option contract receives the cash difference between the strike price and the current market price of the underlying security. This is in contrast to the more traditional method of physical settlement, where the buyer of the option contract would receive the underlying security upon exercise.

When trading options, there are two primary methods for settling the contract: physical delivery and cash settlement. In physical delivery, the buyer of the option receives the underlying asset, such as a stock or commodity, when the option is exercised. Most listed equity options contracts are settled with the actual delivery of shares.

On the other hand, cash settlement allows the buyer of an option to receive the value of the underlying asset in the form of cash when the option is exercised. This means that the buyer does not receive the stock or commodity but receives an amount of cash equal to the value of the underlying asset when the option is exercised. Often, equity index and binary options are cash-settled.

How Does Cash Settlement Work?

The cash settlement process in options works like this:

When an options contract is exercised, the buyer has the right — but not always the obligation — to buy or sell the underlying security at the agreed-upon price (called the strike price). In a cash settlement, the buyer of the option is not required to purchase or sell the underlying security. Instead, they receive a cash payout based on the difference between the strike price and the current market price of the underlying security.

💡 Recommended: 10 Options Trading Strategies for Beginners

Example of Cash Settlement

Suppose an investor buys a call option on stock ABC with a strike price of $50. This means that the investor has the right to buy the stock at $50 per share at any time before the option expires if the stock’s price is above the strike price. If the stock’s market price rises above $50, the option becomes “in the money,” and the investor can exercise their right to buy the stock at $50, even if the market price is higher.

Suppose that, when the option expires, the stock’s market price is $55 per share. If the option is cash-settled, the investor can exercise their right to buy the stock at $50 per share and receive a cash payment of $5 per share (the difference between the strike price and the market price) multiplied by the number of options contracts that are exercised. This means the investor would receive a total cash payment of $500 (assuming they exercised a standard options contract of 100 shares).

Alternatively, if the stock’s market price is below $50 when the option expires, the option becomes “out of the money,” and the investor will not exercise their right to buy the stock. In this case, the option would expire worthless, and the investor would not receive any cash payment.

💡 Recommended: In the Money vs Out of the Money Options

Pros and Cons of Cash Settlement

Pros	Cons
Improves liquidity across derivatives markets	Prices have a risk of manipulation
Does not require cumbersome delivery coordination and costs in commodities markets or delivery of shares in options trading	Only available on European-style options
Allows parties to hedge and speculate financially on products that cannot be physically delivered	Commodities producers and consumers might prefer physical delivery when the product is needed for use

Advantages of Cash Settlement

There are several advantages to using cash settlement in options trading. First, it can be more convenient for the buyer, as they do not have to worry about physically receiving and storing the underlying asset. Cash settlement can be beneficial for traders who cannot hold the underlying asset, such as those who are trading options on futures contracts of commodities.

Another advantage of cash settlement is that it can be more cost-effective. Since the buyer does not have to take possession of the underlying asset, they do not have to pay any additional fees or expenses associated with holding an asset like gold, oil, wheat, or other commodities. This can help to reduce the overall cost of trading options and make them more accessible to a broader range of investors.

In addition to these advantages, cash settlement can provide greater flexibility for options traders. With physical delivery, the buyer must take possession of the underlying asset when the option is exercised, which can limit their ability to trade the asset in the future. With cash settlement, the buyer can use the funds received from the option to buy or sell the underlying asset in the market, allowing them to take advantage of changing market conditions.

Furthermore, cash settlement allows for a more efficient transaction in the overall derivatives markets — which includes options — adding to its liquidity.

Drawbacks of Cash Settlement

However, there are some drawbacks to cash settlement compared to physical settlement. For example, some investors may prefer the security and control that comes with physically owning and holding the underlying asset rather than receiving a cash payment. This is because cash can be more easily lost, stolen, or subject to inflation, whereas physical assets may provide a more tangible form of wealth. Also, physical settlement is not usually subject to manipulation by either party involved in the options contract because the activity is monitored by the broker and clearing exchange.

Other cash settlement drawbacks include that it is usually only available to European-style options, where the option holder can only exercise the contract at expiration rather than early like American-style options. Also, physical settlement may be preferred by traders who need the underlying asset for use.

Cash Settlement vs Physical Settlement

There are several important differences between cash settlement and physical settlement.

Definitional Differences

Cash settlement of options is a financial reconciliation. Physical settlement reconciles a contract with the underlying asset. A common physical delivery example is a commodity, but it can also be shares of an underlying financial asset such as stock.

Mode of Payment

Option cash settlement payments are made instantly by parties. It is a straightforward financial account transfer of the difference between the underlying asset’s spot price and the options contract or strike price.

Physical settlement’s mode of payment is a full payment of the underlying asset — the option contract’s underlying asset is physically delivered to the buyer.

Level of Liquidity

Liquidity is better in markets with a cash settlement option versus those with physical settlement only. More market traders — hedgers and speculators — can participate in cash-settled derivative markets since there can be lower capital requirements. Options traders also can engage in rolling options instead of exercising them.

Time Taken

Option cash settlement can be done with instantaneous financial transactions. Physical delivery involves potentially lengthy delivery times of an underlying commodity.

Level of Risk

Another upshot in markets with a cash settlement option is market risks are lower. Physical settlement often involves transfer certificates and other documents that could be susceptible to manipulation, loss, and theft.

Convenience

It is hard to argue with the convenience of cash settlement. Two parties square up using straightforward price differences rather than figuring out the logistics of the physical delivery of an asset. With equity index options, taking delivery of all the shares of a stock index can also be unwanted by the buyer. There can also be fewer fees with cash settlement, resulting in fewer trades.

Practicality, costs, and simplicity make cash settlement easier than physical settlement.

Practicality

Due to lower costs and quick payments, option cash settlement is more practical than physical settlement.

Costs Involved

Trades with cash settlements have low or even zero cost until settlement when the buyer and seller reconcile with a payment. With physical delivery, there are several costs, such as transportation costs, delivery expenses, and broker fees.

Simplicity

A final aspect that makes cash settlement advantageous versus physical settlement is the pure simplicity of cash settlement. Cash settlement is a netted payment from one party to the other.

Popularity

Cash Settlement	Physical Settlement
Popular with retail traders who might not want to take large physical deliveries	Popular with commodities firms that use the underlying asset
Popular with exchanges since more traders can transact, leading to more commissions and better liquidity	Popular with large exchanges since a single exchange can become the primary exchange for a certain asset
Popular with large traders since they can quickly settle contracts with low cost	Popular with listed stock options traders if they want to take delivery of shares

The Takeaway

Cash settlement in options trading may provide a convenient and cost-effective way for buyers of options contracts to exercise their rights to the underlying asset. By receiving the asset’s value in cash, traders can avoid the costs and complications associated with physical delivery while still maintaining the flexibility to trade the underlying asset in the market. However, investors should be aware that most equity options are not cash-settled but are settled with the delivery of underlying shares of stock.

If you’re ready to try your hand at options trading, SoFi can help. You can trade options from the SoFi mobile app or through the web platform. And if you have any questions come up along the way, SoFi offers educational resources about options to learn more.

Trade options with low fees through SoFi.

FAQ

What is the difference between a physical and cash settlement?

Cash settlement is a financial payment for the value of a stock or commodity underlying an options or futures contract when the holder exercises. Physical settlement entails the actual delivery of the underlying asset. In commodities markets, that means the commodity is delivered to the buyer. With equity options, physical delivery happens when the buyer receives shares of the underlying asset specified in the options contract.

Can you trade with unsettled cash?

Yes. You can use the proceeds from a sale to make another purchase in a cash account while your funds remain unsettled. Unsettled cash from a day trade cannot be used for another purchase until the settlement date

Which futures are cash settled?

According to the CME Group, equity indexes and interest rate futures are the most common cash-settled markets. Some precious metals and foreign exchange markets also settle in cash, along with agricultural products. In the options market, cash-settled options include digital options, binary options, and plain-vanilla index options.

Photo credit: iStock/FreshSplash

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

Dec

2022

Guide to Leverage in Options Trading

By Dan Miller | Growing Wealth, invest, Investing | Comments Off

Options leverage is a core concept of options trading. For a given capital outlay, investing in options will increase your potential returns compared with investing in the underlying stock. However, options leverage works both ways by also increasing the potential losses.

Options leverage is inherent to options trading and allows you to use call or put options to earn the returns on a specific amount of stock (usually 100 shares per contract) with less money than purchasing the stock outright.

What Is Leverage?

Leverage applies to a variety of different financial products. The leverage example most familiar to people is the purchase of a home.

If you’re looking to buy a new home valued at $400,000, one approach would be to pay $400,000 upfront in cash. A more common approach would be to put 20% down ($80,000) and get a mortgage for the $320,000 balance.

Continuing with our house example, let’s say your house appreciates in value to $500,000. If you paid all cash, you get a return of $100,000 or 25% of your initial investment of $400,000. But through the use of a mortgage, you get the same return of $100,000 but on a lower initial investment of $80,000, a return of 125%.

Using a mortgage leverages your cash to potentially get higher returns.

How Leverage Works in Options Trading

Using options leverage works much the same way. No matter which strategies for trading options you use, you may increase the leverage of your investment by using options.

💡 Recommended: How to Trade Options

Example of Leverage in Options

For example; an investor wants to invest in stock ABC currently trading at $50 per share. There is also an at-the-money option with a strike price of $50 trading at $5. They can choose to buy 100 shares at $50 each for a capital outlay of $5,000. Or, using options leverage, they can purchase an options contract at $500 ($5 times 100 shares per option contract).

Some time later the ABC stock trades at $60 per share. If you purchased 100 shares, your shares would now be worth $6,000, an increase of $1,000 and a 20% return on your initial outlay of $5,000.

An investor in the options strategy could see their options triple in price to $15. The options contract would now be worth $1,500, also an increase of $1,000 but on the much smaller initial outlay of $500 for a return of 200%.

In addition, the options investor would still have the opportunity to invest the $4,500 from the original capital as they saw fit. That includes investing the additional capital in ABC stock, buying more ABC options, or pursuing other investments entirely.

Pros and Cons of Leverage in Options

Here are a few of the pros and cons of using leverage in options trading:

Pros	Cons
Potentially higher percentage of return	Risk of losing your entire investment
Options can allow you to hedge an existing position against unfavorable movement	You can lose money if you are wrong on any one of the direction, timing or magnitude of the stock’s move, even if you are right on the other two
Flexibility to make money with a variety of different strategies	Options typically have less liquidity than stocks

Calculating Leverage

The options leverage example above presents the options price movement from $5 to $15 without explaining what drove the price change. Generally, the price of an option is driven by asset volatility, time to expiration, and asset price. Those factors drive the delta Greek of an option which tells an investor how much the option price will change relative to a change in the underlying stock price.

One way to calculate the amount of leverage that you get with a particular option is to take the option’s delta value, multiply it by the stock’s price and divide it by the price of the option. This calculation is usually represented by the Greek letter lambda.

The Takeaway

Options can be a way to increase your returns, but with those higher potential returns comes higher potential risk. Before trading options, make sure you understand the risks and rewards of your position, and set up an exit plan.

Trade options with low fees through SoFi.

FAQ

How much leverage can you get with options?

In theory you can have nearly unlimited leverage with options, if you buy an option with a very low cost. However, the cheaper the option contract that you purchase, the higher the risk that it will expire worthless.

How is option leverage calculated?

To calculate the amount of leverage that you will get with a particular option contract, first determine the option’s delta value. Then multiply that by the stock’s price and divide it by the price of the option to get the leverage or lambda of the option.

Do call options use leverage?

Yes, using call options is one way to use leverage to invest in the stock market. When you buy a call option, you can control 100 shares of stock for a much lower price than purchasing those 100 shares outright.

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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.

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. Before an investor begins trading options they should familiarize themselves with the Characteristics and Risks of Standardized Options . Tax considerations with options transactions are unique, investors should consult with their tax advisor to understand the impact to their taxes.
Exchange Traded Funds (ETFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or by email customer service at https://sofi.app.link/investchat. Please read the prospectus carefully prior to investing.
Shares of ETFs must be bought and sold at market price, which can vary significantly from the Fund’s net asset value (NAV). Investment returns are subject to market volatility and shares may be worth more or less their original value when redeemed. The diversification of an ETF will not protect against loss. An ETF may not achieve its stated investment objective. Rebalancing and other activities within the fund may be subject to tax consequences.
Investing in an Initial Public Offering (IPO) involves substantial risk, including the risk of loss. Further, there are a variety of risk factors to consider when investing in an IPO, including but not limited to, unproven management, significant debt, and lack of operating history. For a comprehensive discussion of these risks please refer to SoFi Securities’ IPO Risk Disclosure Statement. IPOs offered through SoFi Securities are not a recommendation and investors should carefully read the offering prospectus to determine whether an offering is consistent with their investment objectives, risk tolerance, and financial situation.

New offerings generally have high demand and there are a limited number of shares available for distribution to participants. Many customers may not be allocated shares and share allocations may be significantly smaller than the shares requested in the customer’s initial offer (Indication of Interest). For SoFi’s allocation procedures please refer to IPO Allocation Procedures.

*Borrow at 11%. Utilizing a margin loan is generally considered more appropriate for experienced investors as there are additional costs and risks associated. It is possible to lose more than your initial investment when using margin. Please see SoFi.com/wealth/assets/documents/brokerage-margin-disclosure-statement.pdf for detailed disclosure information.

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Dec

2022

Using a Credit Union to Refinance Student Loans

Credit Union Student Loan Refinancing: All You Need To Know

By Melissa Brock | Fresh Out of School, Student Loans, student_loan | Comments Off

In addition to typical banking and lending services, some credit unions also offer student loan refinancing opportunities. Refinancing student loans means that you pool all or some of your existing federal or private student loans into a new loan with a new, private lender. The goal is to achieve some sort of advantage when you refinance: for example, a lower interest rate or a lower monthly payment by extending your loan term.

It’s important to note that if you refinance federal student loans, you will forfeit access to federal repayment plans, such as the Standard, Graduated, and Extended Repayment plans.

Keep reading to learn more about how credit unions differ from traditional banks and why you may want to consider a credit union for student loan refinance.

How Credit Unions Differ from Traditional Banks

A credit union is a financial services cooperative that exists to serve its members. Products and services of a credit union typically include member education, financial planning help, mobile and online banking, checking and savings accounts, and the usual menu of loans.

Banks deliver many of the same types of services as credit unions. Their main goals are to benefit stakeholders and customers. But credit unions differ from traditional banks in one main way — they are nonprofit, whereas traditional banks are for-profit. Take a look at the comparison table below to learn more about the differences between credit unions vs. banks.

Credit Unions	Banks
Nonprofit organizations	For-profit institutions
Must be a member; they are member-owned	Anyone can be a customer; they are owned by shareholders
Dividends issued to members and also to benefit capital development for the overall benefit of members	Stockholders receive dividends
More-limited product offerings	Wide variety of product offerings
Deposit insurance, which helps provide insurance in case of institution failure, is provided by the National Credit Union Administration (NCUA)	Deposit insurance in case of bank failure is provided by the FDIC
May offer lower rates and better fees	Rates and fees may be higher due to for-profit status
Fewer locations and ATMs	More branches and ATMs

Pros and Cons of Refinancing Student Loans With a Credit Union

Credit unions can offer benefits that other lenders might not give you, but there are some downsides to watch out for as well. It’s a good idea to take a look at both the pros and cons before refinancing student loans with a credit union.

Pros of Credit Union Refinancing	Cons of Credit Union Refinancing
May charge lower interest rates and fees	May encounter limits on how much you can refinance
Credit unions have a greater understanding of member needs (such as alumni, military, or community credit unions)	May offer less flexible repayment options
May earn discounts if you’re already a member or if you make your loan payments on time	Interest rates and fees may cost more than with other types of financial institutions
Potentially better customer service due to dedication to members compared to large banks or online lenders	Must apply to become a credit union member

If you’re looking for more in-depth information, SoFi offers a comprehensive student loan refinancing guide.

Finding a Credit Union That Refinances Student Loans

Which credit unions refinance student loans? It’s a good idea to consider a wide variety of lenders before you land on a credit union, including national credit unions, local credit unions, alumni credit unions, and even church credit unions. Not every credit union offers student loan refinancing, so you’ll have to do a little homework based on where you’re likely to be able to tap into membership opportunities.

By the time you finish comparing and contrasting all of your options (including interest rates), you’ll have a better idea of what type of lender you should choose. In addition to searching around for the right lender, you can do a few other things to strengthen your overall profile.

Review your FICO® credit score, the three-digit number that tells lenders how well you handle debt. Your credit score can reveal the rate and terms you will likely receive. It’s a good idea to try for the highest credit score you can get. The higher your credit score, the more favorable your terms will be, which can help you save a significant amount of money over time.

Consider paying down other debts you have, such as personal loans or credit card debt. Lenders take a look at your debt-to-income (DTI) ratio, which compares your monthly debt to the income you bring in. The lower your DTI, the better your opportunities may be.

You can also assemble the types of documents that you know your lender may need, including government-issued identification (such as your driver’s license), pay stubs from your employer, and recent tax returns. It may speed up the process of loan approval once you apply for a student loan refinance with the credit union.

Recommended: What Is a Bad Credit Score?

Comparing Credit Union Loan Terms

Loan terms refer to all the conditions and options available to you when borrowing money. The key elements you should look for in a refinance lender are:

• Interest rate: What interest rate will you receive from the lender? You want to be able to get a lower interest rate than what you have on your current loan(s). The lower the interest rate, the more money you’ll be able to save on your loan over time.

• Payoff amount: Know the total “payoff amount” for each loan offer. Getting a round figure from each lender will let you determine the interest amount you’ll pay over your entire loan period. A student loan refinancing calculator can also help you calculate your final costs. You can also find out whether a 20-year student loan refinance or 30-year student loan refinance makes sense for your needs.

• Fees. Some lenders charge fees to help cover the cost of servicing a loan. These may include origination fees, prepayment penalties, and late fees.

Besides loan terms, consider asking about flexible repayment options and customer service:

• Flexible repayment options: What happens if you have trouble making your payments? Will your lender work with you? It’s a good idea to ask questions about the types of repayment options they offer in the case of a job loss or a demotion, for example.

• Customer service: Will you get good customer service from the credit union you’re considering? Ask for references from current customers. You may also know of student loan refinance customers in your community who already use a particular credit union and who can talk to you about their experiences.

Alternatives to Credit Unions for Student Loan Refinancing

What alternatives to credit unions do you have, and should you refinance student loans in the first place? You can refinance with banks, online lenders, and other financial institutions.

Some online banks and lenders differ in that they cannot accept cash deposits (to savings or checking accounts) from customers. Or they may only offer loans, lines of credit, and credit cards. Because they don’t accept cash deposits, online lenders face less stringent government requirements than traditional banks and credit unions.

Before you make a final decision about a credit union student loan refinance or alternative banking solution, take a look at the interest rates, overall payoff amounts, repayment options, and customer service reviews.

The Takeaway

You can refinance private student loans with a credit union (as well as federal student loans), but it isn’t your only option. Credit unions differ from traditional banks due to their nonprofit status, membership requirements, dividends offered to members, limited product offerings, and backing by the NCUA rather than the FDIC. Shop around to find the best loan terms (interest rate, repayment period, and fees) before you settle on a lender.

If you think refinancing might make sense for your situation, consider refinancing your student loans with SoFi. You can refinance online and pay zero fees.

Check out student loan refinance rates offered by SoFi.

Student Loan Refinancing Tips

1. Refinancing student loans is a way to lower your monthly payments by either getting a lower interest rate and/or extending the loan term. Please note: If you refinance a federal loan, you will no longer have access to federal protections and benefits.

2. When refinancing a student loan, you may shorten or extend the loan term. Shortening your loan term may result in higher monthly payments but significantly less total interest paid. A longer loan term typically results in lower monthly payments but more total interest paid.

3. It might be beneficial to look for a refinancing lender that offers extras. SoFi members, for instance, can qualify for rate discounts and have access to career services, financial advisors, networking events, and more — at no extra cost.

Photo credit: iStock/SDI Productions

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FOREFEIT YOUR EILIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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.

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

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.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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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Dec

2022

How To Handle Student Loans During a Job Loss

By Jamie Cattanach | Debt Payoff, Student Loans, student_loan | Comments Off

Editor's Note: For the latest developments regarding federal student loan debt repayment, check out our student debt guide.

Getting laid off? Not great. Getting laid off with student loans? Even worse. Although the payment pause for federal student loans has been extended well into 2023, now is a good time to plan ahead and rethink your payment plan.

Fortunately, there are options for borrowers to lean on when they lose their jobs or experience another change in circumstances.

While many of these repayment plans can increase the amount you pay over time, including interest, they can make your student loans more affordable during a temporary period of financial hardship.

How COVID Affected Student Loans

COVID-19 led to pretty major derailments for some of us. Whether you were just starting your career or had a rapidly growing resume, there’s a good chance your job situation looks different now than before the pandemic.

Unemployment filings reached a record high at the end of March 2020, meaning a slew of people wondered how to pay their student loans with no job. Educational debt can be difficult to keep up with under the best of circumstances, let alone in the midst of a crisis. Fortunately, the government made some moves to offer federal student loan borrowers some solace.

The Trump administration suspended both principal and interest payments on federal student loans through January 2021. President Biden then extended the forbearance several times, most recently until the second half of 2023. Payments automatically stopped on March 13, 2020, and the suspension doesn’t affect the borrower’s eligibility for student loan forgiveness programs.

To be clear, the ruling doesn’t affect privately held student loans, like the ones through lenders like Sallie Mae® or smaller providers. However, private loan holders may still have options that can help keep their loans from becoming financially overwhelming.

Talk to Your Student Loan Servicer

If your loans haven’t been automatically suspended, you can still reach out to your student loan servicer about a modified repayment agreement if you’ve lost your job or are otherwise experiencing trouble with your current plan.

Sallie Mae, for instance, has “instituted additional options for customers experiencing financial difficulty” due to COVID-19. The company invites borrowers to contact them via online chat or phone to discuss alternatives and assistance.

No matter who your lender is, there’s a good chance they can offer you a temporary solution if you’re unable to make your payments. You may be able to pause your payments, for instance — though you’ll probably still accrue interest during the pause.

Either way, it’s worth reaching out to lenders to update them on your situation and hear what they might be able to offer.

File for Unemployment

Unemployment insurance — commonly referred to simply as “unemployment” — is a joint federal-state benefit that offers cash relief to eligible workers who lose jobs through no fault of their own.

Each state has its own requirements and filing processes, which you can learn more about by selecting your state in the drop-down menu .

Unemployment benefits may offer you enough cash flow to make some payments toward your student loans, especially if you were able to modify your payment plan with your servicer. But if not, there are alternatives to consider.

Options for Paying Off Student Loans While Unemployed

Life moves in unexpected ways. Student loan servicers know that, which is why most have specific protocols in place for borrowers whose plans change in one way or another.

Here are some that might be helpful in the case of sudden joblessness.

Forbearance

Student loan forbearance allows borrowers to pause student loan payments or make a smaller payment for a set period of time. It’s available for both federal and private student loans, and it can take a big load off your monthly budget.

In many cases, it’s worth exploring other options before turning to forbearance. You may still be accruing interest during the forbearance period, which can drive up your total debt quickly.

You also may not be making any progress toward potential student loan forgiveness programs.

Deferment

Another option that may be right for you is student loan deferment, which works similarly to forbearance: You won’t be required to make payments for a temporary period, but you’ll still be responsible for the interest that will accrue during that time.

The main difference between forbearance and deferment is that deferments are usually granted in response to a certain life change, such as going back to school at least half-time or actively serving in the military, whereas you can always apply for forbearance (though it may not be granted).

Losing your job is another life change that may make you eligible for student loan unemployment deferment. Again, it’s important to understand that you’ll likely still be responsible for the interest generated during the deferment period, which could mean you pay more for your loan overall.

Certain types of federal student aid may not incur interest during the deferment, such as Direct Subsidized Loans, but you’ll want to double-check with your servicer before you make any decisions.

Income-Driven Repayment Plans

If you have federal student loans, you can look into income-driven repayment programs, which allow borrowers to adjust their payments based on what they can afford.

The government offers a variety of income-driven repayment plans, including the Pay As You Earn Plan (PAYE), the Income-Contingent Plan (ICR), and the Income-Based Repayment Plan (IBR).

Income-driven repayment plans generally reduce your payments to 10% of your discretionary income, which could bring your payments down to $0. The plans adjust once you’re making money again, ensuring that your payments are affordable. But because they might extend your overall repayment period, you can also end up paying significantly more interest in the long run.

In August 2022, President Biden proposed changes to some income-driven repayment programs as part of his forgiveness plan. Payments for undergraduate borrowers would be reduced to 5% of discretionary income instead of the current 10%.

Student Loan Forgiveness

A variety of programs allow certain borrowers to have their student loans forgiven, canceled, or discharged if they meet certain requirements.

In many cases, you will be required to have made a certain number of qualifying monthly payments on the loan and meet the terms for the specific forgiveness program you’re considering.

Many student loan forgiveness programs are contingent on the borrower being employed in a specific industry or by a nonprofit organization. That means this option might not help you during unemployment. But it’s worth keeping in mind over the life of your student loan. You might want to bookmark our guide to student loan forgiveness.

Dealing With Late Student Loan Payments

When you’re late making a federal student loan payment, your account quickly becomes past due or “delinquent.” You’ll likely face a late fee, which is usually a percentage of the missed payment.

If you cannot make the payment, it’s important to call your loan servicer right away to make arrangements, such as deferment, forbearance, or a new repayment plan. Otherwise your account will remain delinquent, even if you continue to make subsequent payments on time.

If you are delinquent on your federal student loan for 90 days or more, your lender will report it to the three major national credit bureaus. Your credit score will take a hit, making it more difficult to qualify for good terms on loans and credit cards.

After 270 days, your loan will go into default. Defaulting on your student loan has serious consequences. First, the entire amount you owe on your loan, including interest, becomes due immediately. You won’t be able to take out any other student loans, and you’ll no longer qualify for deferment or forbearance. The government may take your tax refund and federal benefits and garnish your wages to pay off your loan.

Terms and fees for private student loans vary by lender, but the fallout from missed payments is essentially the same.

All you have to do to avoid delinquency and default is talk to your lender or loan servicer as soon as you can. The worst thing you can do is ignore the problem and hope it goes away.

Paying It Off: New Jobs, Side Hustles, and More

Although COVID led to layoffs, furloughs, and hiring freezes, many companies are now actively recruiting again. If you’re back at work but still struggling to make payments, consider ways to bring in some extra money each month.

That’s where the side hustle comes in. Many people have turned their crafting hobby into a small business on Etsy. Others are delivering groceries or pre-made meals with a service like Instacart. Check out our roundup of 9 ways to pay off student loans.

Once you’re back on your feet, refinancing student loans is one way to reduce your debt burden. It can be difficult to refinance while unemployed: Income is one of the factors lenders look at when assessing potential borrowers. But when you’re ready, refinancing private student loans, or a combo of private and federal loans, can lower monthly payments, the interest rate, or both. And that can make loans more affordable in both the short and long term.

It is important to remember that if you refinance your loans with a private lender, you forfeit all of federal benefits, including student loan forgiveness and deferment.

The Takeaway

After a job loss, student loan borrowers have options. Deferment and forbearance allow you to pause payments during times of financial hardship. Just be aware you’ll still be responsible for the interest that accrues during the payment pause. Income-driven repayment plans are another option that can lower your monthly loan bill to as little as $0. Talk to your lender as soon as you foresee a problem paying your bill. That way you can protect your credit score and reduce the stress that comes with loan delinquency or default.

Hoping to get a handle on student debt? Refinancing with SoFi can help lower your payments or save money over the long term.

^*If you become involuntarily unemployed, deferred payments may be applied for a maximum of 12 months, in aggregate, over the life of the loan. Additional terms and conditions apply; see SoFi.com/faq-upp for details.
SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FOREFEIT YOUR EILIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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.

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

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.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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.

SOSL0222009

Investing Survey: 85% of Investors Plan to Change How They Invest in 2023

Key survey facts and findings

In general, investors stayed the course in 2022.

93% of respondents have invested in 2022

Many investors are still hoping to cash in on crypto.

45% of respondents have cryptocurrency in their investment portfolio.

78% of investors are either confident or cautiously optimistic the crypto market will bounce back

Nearly 90% of people have invested in non-stock market-related assets.

Here’s what investors’ portfolios look like right now.

Market volatility has impacted investors’ purchase and investment decisions.

More than a third of respondents (37%) say market volatility has caused them to make impulsive investment decisions.

One third of respondents (33%) had to cancel or delay plans or purchases in 2022 because of money lost on investments.

Over half of respondents did not make any major investment changes.

Many investors have investment regrets about 2022 and are looking toward 2023.

People are split on how inflation makes them feel about their investment strategies in 2022:

In general, people have mixed emotions about their investments in 2022, but the most common feeling was optimism (26%).

While 5% of respondents feel regretful, a full 25% — or one in four investors — have zero regrets about 2022.

People use a variety of tactics to cope with the stress of market fluctuations:

Nearly a third of respondents (30%) check their investment portfolios every day. And 75% check at least once a week.

Looking forward to 2023

85% of respondents plan to make some changes to how they invest in 2023.

Key Takeaways

What Is Cash Settlement in Options?

What Is Cash settlement?

How Does Cash Settlement Work?

Example of Cash Settlement

Pros and Cons of Cash Settlement

Advantages of Cash Settlement

Drawbacks of Cash Settlement

Cash Settlement vs Physical Settlement

Definitional Differences

Mode of Payment

Level of Liquidity

Time Taken

Level of Risk

Convenience

Practicality

Costs Involved

Simplicity

Popularity

The Takeaway

FAQ

What is the difference between a physical and cash settlement?

Can you trade with unsettled cash?

Which futures are cash settled?

Guide to Leverage in Options Trading

What Is Leverage?

How Leverage Works in Options Trading

Example of Leverage in Options

Pros and Cons of Leverage in Options

Calculating Leverage

The Takeaway

FAQ

How much leverage can you get with options?

How is option leverage calculated?

Do call options use leverage?

Credit Union Student Loan Refinancing: All You Need To Know

How Credit Unions Differ from Traditional Banks

Pros and Cons of Refinancing Student Loans With a Credit Union

Finding a Credit Union That Refinances Student Loans

Comparing Credit Union Loan Terms

Alternatives to Credit Unions for Student Loan Refinancing

The Takeaway

How To Handle Student Loans During a Job Loss

How COVID Affected Student Loans

Talk to Your Student Loan Servicer

File for Unemployment

Options for Paying Off Student Loans While Unemployed

Forbearance

Deferment

Income-Driven Repayment Plans

Student Loan Forgiveness

Dealing With Late Student Loan Payments

Paying It Off: New Jobs, Side Hustles, and More

The Takeaway

JOIN THE COMMUNITY

Student Loan Refinancing

Personal Loans

Online Investments

Other

Student Loan
Refinancing

Personal
Loans

Online
Investments