SoFi

Student loan protection for borrowers has been a long time coming.

Luckily, there’s a new bill making its way through California’s state legislature that, if passed, would establish new student loan protections for borrowers in the Golden State.

This would be welcome news to the students who have found themselves with high loan balances and unclear guidance on how to pay them back. (According to the bill , over 1 million borrowers in California defaulted on their student loans in 2017—three times the number who lost homes to foreclosure in the same period.)

The gravity of the student loan situation is reflected on both the national and the state level. Borrowers hold $1.49 trillion in student loan debt in the United States, with $125 billion of that debt in the hands of 3.7 million California residents, netting out to around $33,000 per borrower, on average.

$125 billion

And as if paying back a student loan isn’t hard enough, the student loan market has dealt with its fair share of predatory practices. California is hoping to lead the charge on student loan protections, setting a standard that other states can follow.

The Student Borrower Bill of Rights, Assembly Bill 376, aims to tighten protections for California borrowers from servicing abuses that could end up costing them. Here’s what you need to know.

What Is the California Student Loan Borrower Bill of Rights?

Brought to the California State Assembly by Assemblymember Mark Stone, this legislation would establish consumer protections against predatory practices within the student loan industry.

The bill is being co-sponsored by Consumer Reports and other advocacy groups such as NextGen California, Student Borrower Protection Center, Student Debt Crisis, and Young Invincibles. The bill passed through the Assembly and Senate and is currently in committee.

The Student Borrower Bill of Rights focuses on private loan servicers, who act as the primary point of contact for most borrowers.

If a borrower has a question about their loan, wants to make an additional payment to their loan, or wants to change their repayment plan as is allowed by federal plans, they contact their servicer. The service provider acts as a recordkeeper for the loan and as a result, is where borrowers go for information on their loans.

According to the bill, the Consumer Financial Protection Bureau (CFPB) has continued to find that borrowers encounter servicers that engage in practices such as discouraging borrower-friendly alternative payment plans, failing to respond to questions about loans, overturning known payment processing errors, and generally failing to provide sufficient information to borrowers regarding their loans.

In recent years, these companies have been the target of lawsuits for abusive practices and mismanagement. Says Suzanne Martindale for Consumer Reports : “Multiple investigations have shown that loan servicers routinely lose paperwork, misapply payments, provide borrowers inaccurate information, and even steer them into more costly repayment options with virtually no accountability.

“At a time when the U.S. Department of Education has refused to set loan servicing standards to help borrowers, it’s critical for states like California to lead the way and address these longstanding abuses.”

This won’t be the first student loan-related bill in California in recent history—in 2016, California passed the Student Loan Servicing Act , requiring all student loan servicers to obtain licenses to operate in California.

Servicers in the state are also subject to routine oversight by the Department of Financial Protection and Innovation. The current bill looks to build on the 2016 bill, establishing a standard of practice for student loan servicers.

AB 376 states that “the State of California has an opportunity and an obligation to act” and that “with the increasingly uncertain federal landscape, it is now more important than ever to ensure that California student loan borrowers will be given meaningful access to federal affordable repayment options and loan forgiveness benefits, reliable information, and quality customer service and fair treatment.”

What Does the Student Borrower Bill of Rights Hope to Accomplish?

Behind the legislation is the desire to promote meaningful access to the services promised by federal student loans: affordable repayment and loan forgiveness benefits for student loan borrowers, and the ability to rely on information about their loans from service reps.

One goal of AB 376 is to build upon the Student Loan Servicing Act of 2016. The bill would strengthen the state’s ability to protect borrowers by creating minimum standards for student loan servicing companies and helping to improve oversight within the industry for California residents. Here is an overview of key points outlined by the bill, according to Consumer Reports :

•  Ban “abusive” student loan servicing practices that take unreasonable advantage of borrowers’ confusion over loan repayment options

•  Create minimum loan servicing standards to ensure fair application of payments, improved record-keeping on borrower accounts, and proper staff training so borrowers are informed of more affordable payment options

•  Establish a Student Loan Advocate to review borrower complaints, gather data, and issue reports to the state legislature

•  Grant the Department of Financial Protection and Innovation additional “market monitoring” authorities to collect better data about the student loan servicing industry.

Ultimately, the bill’s creators hope it will be a guide for other states—or federal law. The text of the bill points to the lack of action by federal legislatures to combat widespread abuse, even though the Office of Inspector General at the United States Department of Education reported improper practices at each of the largest student loan servicers.

What Can Borrowers Do Now?

While the bill seems to be taking the necessary steps to protect borrowers from unscrupulous loan servicers, it does not solve the problem of nefarious loan servicing practices. Additionally, this bill does not seek to relieve any of the existing student debt burden held by borrowers, which is currently a topic of national conversation.

But that doesn’t mean there aren’t steps that borrowers can take to help make sure they’re set up for success. First, borrowers may find the simple act of identifying and organizing student loans could bring clarity.

You could list out each loan along with the student loan servicer, the interest rate, and the balance. It might be a good idea to learn as much as you can about your loans, including (and especially) the terms of your repayment.

If you have federal loans, you could make sure that you are using an appropriate repayment plan. If you don’t select another plan, most federal loans will be placed into the standard 10-year repayment plan, but there are other options.

For those borrowers struggling to make their monthly payments, moving to a more affordable income-driven repayment plan is generally a better option than missing loan payments.

If you do find yourself in a position where you need to miss a loan payment, you could contact your servicer to discuss your options as well.

If you have private loans, you are unlikely to have as many options for managing your student loan payments, such as income-driven repayment plans or options for deferment or forbearance.

Because the interest rates on student loans vary, borrowers who are looking to pay off their debt might want to focus on paying off the loans with the higher interest rates first, while also making minimum payments on any other debt.

It may also be possible to reduce the overall interest rate on student loans and consolidate loans through student loan refinancing. Refinancing is the process of paying off your old loans with a new loan through a private loan refinancing company like SoFi.

You can check your rates with SoFi in just a few minutes. There’s no obligation to sign up, and checking won’t affect your credit score1. For many borrowers, SoFi has been a breath of fresh air in an industry that hasn’t always felt friendly.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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

SOSL19087

Teachers in the U.S. are faced with underfunded classrooms and stagnant pay. In fact, the average teacher salary has actually decreased 4.5% over the last 10 years. However, the average teacher salary can vary greatly depending on your level of experience, location and cost of living, and grade level or subject you teach.

Average Teacher Salary by State

The national average salary for a first-year teacher in the 2017-18 school year was $39,249, according to the most recent data available from the National Education Association . This comes in far below the overall average starting salary of $50,944 for graduates with a bachelor’s degree employed across all fields of work.

But where a teacher decides to live and work has a huge impact on a starting salary. For instance, the state with the lowest average for new teachers is Montana, at only $31,418—almost $10,000 less than the national average. And in Washington state, first-year teachers averaged $42,240, the highest across the country.

For experienced teachers, the average salary is higher. According to the NEA , the average public school teacher salary in the U.S. was $60,477 in the 2017-18 school year.

As with first-year teacher salaries, there is still a wide range when it comes to state averages , with New York, California, and Massachusetts on the high end—all over $80,000—and Mississippi, West Virginia, and Oklahoma at the lower end—all between $44,000-$47,000.

Also, high school teachers tend to make, on average, more money than their colleagues in elementary or middle school. The national average high school teacher salary was $62,860 in 2017, according to U.S. News Best Jobs Rankings . Middle school teachers averaged $61,040, and elementary school teachers $60,830.

However, it’s important to note that most salary reports and rankings do not account for cost-of-living differences. NPR ran an analysis in 2018 , with the help of EdBuild, to adjust the 2016 rankings of teacher salaries by states for cost of living.

When discussing average salaries, usually those numbers have not been adjusted for regional differences on things like rents and mortgages or day-to-day spending like food and day care.

Those costs can vary widely depending on where you live. The adjustments NPR made to the 2016 NEA data meant that, for instance, while New York ranked first in average salary at $77,957, it dropped to 17th place after the adjustment.

Another interesting example is that while Indiana and California appear to be vastly different in average teacher salary, at $50,715 and $72,842 respectively, the cost-of-living adjustment brings them within $100 of each other.

In the past year, teachers across the country have been going on strike to protest everything from low education budgets to flat wages.

In South Carolina, where the average teaching salary in 2017-18 was only $50,182 (about $10,000 lower than the national average), NBC News reports many teachers are working extra jobs just to make ends meet.

The state has pushed back on several efforts to give teachers substantial raises, according to the report. Teachers are working on factory assembly lines, checking tickets at event venues, or in retail jobs in order to make up for not having a living wage from their day jobs as teachers.

So, when you are looking for the average teacher salary in your state, make sure you also take into account your years of teaching experience, type of school, location, and cost of living.

Paying Off Your Student Loans as a Teacher

The National Center for Education Statistics reported in April 2018 that for the 2015-16 school year, there were 3.8 million full- and part-time public school teachers in the U.S., split evenly between elementary and secondary school teachers.

The class of 2016 graduated with an average debt of about $28,500, according to the College Board . On a standard 10-year repayment plan with a 6% interest rate, the monthly payment for that average debt amount would be about $316 per month.

For the new public school teacher only making an average of $39,249, that’s almost 10% of their annual income just spent on student loan payments.

Teachers in many states are also required to maintain certification by continuing their education, and may even decide to pursue a graduate degree or further education to help advance in their careers, which could result in compounded debt.

For teachers who are hoping to pursue student loan forgiveness, there are a few possibilities when it comes to federal loans:

Teacher Loan Forgiveness

This program currently can forgive up to $5,000 or up to $17,500 in federal loans, depending on the subject you teach. In order to qualify, you must be a full-time teacher and complete five years in a row teaching at a qualifying school or educational service agency. The eligible loans are federal Direct Loans and Stafford Loans.

Highly qualified math or science teachers or special education teachers may be able to receive the maximum amount of up to $17,500 of their student loans forgiven. Teachers of other subjects may be able to get up to $5,000 of their loans forgiven. There are additional requirements for teachers who are new to the profession as well.

Teachers may be able to get loan forgiveness under both the Teacher Loan Forgiveness and Public Service Loan Forgiveness programs, just not for the same period of teaching service.

Public Service Loan Forgiveness (PSLF)

Under this program, qualifying public service employees, which can include teachers, may be eligible to have their loan balance forgiven on federal Direct Loans after making 120 on-time payments under a qualifying repayment plan.

Unlike the Teacher Loan Forgiveness program, teachers do not need to teach at a low-income school or in a certain subject when applying for the PSLF Program. The requirements include that you are employed by the government on a local, state or federal level or work for certain non-profit organizations.

The payments only count if you are a teacher employed full-time by a qualified public service employer. Private loans and non-Direct federal loans are not eligible for this program, but may be able to be consolidated into a Direct Consolidation Loan. However, keep in mind that consolidation will probably restart the repayment clock and previous payments might not count.

That’s why it’s important to be on the right repayment plan from the start. The Department of Education recommends an income-driven repayment plan, instead of the 10-Year Standard Repayment Plan, to get the best value from the program.

This will cap your payments based on your income, and if you’re on the lower end of the teacher pay scale that will likely mean that, after 120 payments, there will probably still be some amount of debt to be forgiven.

If you didn’t choose an income-driven repayment plan before choosing the PSLF program, you may have been placed on the standard 10-year repayment plan and, possibly, there would be nothing left to forgive.

Teachers with Perkins Loans may be able to have their loans entirely forgiven by serving full-time in a public or nonprofit elementary or secondary school as a:
•   Teacher in a school serving low-income students.
•   Special education teacher.
•   Math, science, foreign languages, or bilingual education teacher, or teacher in any field determined by a state education agency as having a shortage of qualified teachers in that area.

To qualify , you must teach for at least one year, and then the loan amount is cancelled in yearly increments until 100% is cancelled after five years. The federal Perkins Loan program ended in September 2017, but loans distributed through the program may still qualify.

Refinancing Student Loans

If you have other loans, such as private loans, that do not qualify for these federal loan forgiveness programs it might be worth considering refinancing your student loan debt. This may help make your loan payments more affordable and possibly offer you a lower interest rate.

If you qualify to refinance with a private lender, such as SoFi, you may also be able to change your student loan’s term length to help lower your monthly payments.

While private lenders like SoFi can refinance both your federal and private student loans, you should know that in doing so, you lose benefits that federal student loans provide like income-driven repayment programs and Teacher Loan Forgiveness programs.

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.

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

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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

There’s nothing quite like the feeling of having your credit card balance paid in full. It’s like a breath of fresh air, a surge of pride, and a huge sigh of relief all rolled into one. But Americans have an on-going love affair with plastic.

Collectively we hold more than $1 trillion in credit card debt. When it comes to getting rid of credit card debt, baby steps can lead to big victories—even the possibility of getting those credit cards paid off in 2020.

To be clear, we’re not talking about being completely debt-free in 2020. Depending on how much you owe on all your debt in total, that could be a longer journey. But targeting your credit card debt can be a smart first-step since credit card debt can sometimes come with a high interest rate.

We’ve put together eight common strategies for how to get rid of credit card debt. But first, you’ll need to get your head in the game. Unless you suddenly receive an inheritance or win the powerball, unloading debt can be challenging.

If you truly want to try and eliminate credit card debt in the new year, it’s going to require a lot of budgeting, discipline, and will-power. You’ll likely have to make sacrifices and compromises. But if you can keep your eye on the prize, next year you could be looking at a nice, round zero.

1. Limit Your Use of Credit

No strategy for how to crush credit card debt is going to work if you continue to rely heavily on your credit cards. Pick one card to keep—ideally, one with good terms, like a low interest rate or a great rewards program —and put the rest away.

You can store them in a safe place or even cut them up so you’re not tempted to use them. If the card doesn’t carry a large annual fee, consider not canceling your credit card account, since losing that cards credit history or percentage of credit utilization could possibly have an affect on your credit score.

2. Take a Hard Look at Your Spending

Go through last month’s bank and credit card statements and add up all the money you spent eating out, or shopping for non-essentials. You may be surprised at what you find.

Review your spending closely and see if there is any room for you to cut back on unnecessary expenses. Then, create a budget that’s completely within your means.

The goal is to cut back on your discretionary spending so you can focus additional funds on paying off your credit card debt. Take a look at our tips for creating a better budget. Building a workable budget is one of the first steps in tackling your debt.

3. Create a Debt-Repayment Strategy and Stick to It

There are a few different schools of thought when it comes to eliminating your credit card debt, especially if you have debt spread over multiple credit cards. Regardless of the strategy you choose, make the minimum monthly payments on all of your debts.

One strategy is called the debt avalanche method. Using this method you’ll organize your credit card debt from highest interest rate to lowest interest rate.

Focus your efforts on repaying the debt with the highest interest rate first. Then as you pay off each credit card, you can contribute the money you were contributing to the next debt.

On average, Americans will pay more than $1,000 in interest this year, so tackling the highest interest rate first could be appealing. You can use our credit card interest calculator to see an estimate of how much interest you’ll accrue on your current track.

The other approach suggests you focus on the credit card with the smallest balance first. This is called the debt snowball method. The goal of this strategy is to encourage you to continue your debt repayments. Since you start with the smallest balance, you’ll start seeing the impact of your payments faster.

6. Transfer to a Balance Transfer Credit Card

This could help you toward your goal of eliminating your credit card debt but in order to do so it will require diligence to avoid common pitfalls.

A balance transfer credit card allows you to open a new low-interest or interest-free credit card and transfer your existing balance from a high-interest credit card, so you can pay off the debt. In theory, paying off the debt should be easier without a high APR.

The introductory APR on low or 0% transfers generally lasts anywhere from six to 18-months, so be sure you understand the terms and conditions. These can be a useful tool if you can repay your debt during the introductory period.

7. Consolidate Your Debt with a Personal Loan

A personal loan won’t eliminate your debt, but it could help you get out of the high-interest credit card game. Instead of a revolving door of debt, you can opt to pay one monthly fixed payment, possibly at a lower interest rate.

8. Pay More than You Owe, More Often than You Owe It

As you work toward paying your credit card debt, consider making more than the monthly minimum payments. This can help you pay off your debt faster and in doing so, could help you reduce the amount of money you spend in interest over the life of the debt. This can be helpful in both the avalanche and snowball methods of debt repayment.

Ready to see how consolidating your credit card debt with a personal loan could help you take control of your finances? SoFi can help. Use our personal loan calculator to compare your current debts with a personal loan.

When you take out a loan with SoFi there are no prepayment penalties or origination fees. You’ll also gain access to a community of like-minded savers.

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.

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.

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.

SOPL19020

As you begin to build your portfolio of investments, you will find that there are many ways to approach investing. Some require a significant amount of time and involvement, while others are more passive.

Before putting a significant amount of money into a portfolio, it’s important to figure out what your investment goals are and to learn about the many possible investment options.

One popular type of investment is called index investing, and as with any investing, there can be benefits, but there also may be risks. In this article we will go over what index investing is and how best to use this investing strategy.

An index fund is a mutual fund or exchange-traded fund which aims to mimic the overall performance of a particular market. The fund includes multiple stocks or bonds from the market and can be bought and sold like it’s a single investment.

There are index funds for the U.S. bond market, the U.S. stock market, international markets, and others. Index investing is the process of investing in these index funds.

Active investing typically involves in-depth research into each stock purchase, as well as regularly watching the market in order to time buys and sells. Passive investing strategies either aim to bring in passive income or to grow a portfolio over time without as much day-to-day involvement. Index investing is a passive strategy which looks to match the returns of the market it seeks to track.

Index investing started in the 1970s, when economist Paul Samuelson claimed that stockpilers should go out of business. Samuelson claimed that even the best money managers could not usually outperform the market average.

Instead of working with money managers, Samuelson suggested that someone should create a fund that simply tracked the stocks in the S&P 500.

Two years later, struggling firm Vanguard did just that. The fund was not widely accepted, and neither was the concept of index funds. Index investing has only become widely popular in the past two decades as data continues to reaffirm its merits.

Index investing has been gaining in popularity in recent years. Out of investments in mutual fund assets, the percentage allocated to index funds grew from 11 percent to 25 percent between 2006 and 2016. In 2017 investors withdrew $191 billion from U.S. stock funds and invested $198 billion into U.S. stock fund indexes.

Popular Indexes Include:

•  S&P 500 Index

•  Dow Jones Industrial Average

•  Russell 2000 Index

•  Wilshire 5000 Total Market Index

•  Bloomberg Barclays Aggregate Bond Index

Popular Index Funds Include:

•  Vanguard S&P 500

•  T. Rowe Price Equity Index 500

•  Fidelity ZERO Large Cap Index

•  SPDR S&P 500 ETF Trust

•  iShares Core S&P 500 ETF

•  Schwab S&P 500 Index Fund

The Pros of Index Investing

Can Be Easier to Manage

Although it may seem as though active investors have a better chance at seeing significant portfolio growth than index investors, this isn’t necessarily the case. Day trading and timing the market can be extremely difficult, and may result in huge losses or underperformance.

The average investor typically underperforms the stock market by 4-5%. Active investors may have one very successful year, but the same strategy may not work for them over time. A 2013 study showed that index investing outperformed other strategies up to 80-90% of the time. SoFi users can take advantage of index investing by setting up an auto investing strategy that will automatically rebalance and diversify portfolios.

Lower Cost of Entry for Multiple Stocks

If you only have a small amount of money to start investing and you choose to invest in individual stocks, you may only be able to invest in a few companies. With index investing, you gain access to a wide portfolio of stocks with the same amount of money.

Also, index investing doesn’t necessarily require a wealth manager or advisor—you can do it on your own. The taxes and fees tend to be lower for index investing since you make fewer trades, but this is not always the case. Always be sure to look into additional fees and costs before you make an investment.

Portfolio Diversification

One of the key facets of smart investing is diversifying your portfolio. This means that rather than putting all of your money into a single investment, you divide it up into different investments.

By diversifying, you may lower your risk because if one of your investments loses value, you still have others. At the same time, if an investment significantly goes up in value, you still typically benefit.

Index funds give you access to a large number of stocks all within a single investment. For example, one share of an index fund based on the S&P 500 can give you exposure to up to 500 different companies for a relatively small amount of money.

Index Investing is Fairly Passive

Once you decide which index fund you plan to invest in and how much you will invest, there isn’t much more you need to do. Most index funds are also fairly liquid, meaning you can more easily buy and sell them when you choose to.

The Cons of Index Investing

Although there can be upsides to investing in index funds, there can also be downsides and risks to be aware of.

Index Funds Follow the Market

Studies have shown that investors don’t always understand what they’re investing in when it comes to index funds. 66 percent of investors think that index funds are less risky than other investments, and 61 percent believe that index funds help to minimize portfolio losses. However, index funds track with the market they follow, whether that’s the U.S. stock market or another market. If the market drops, so does the index fund.

Index Funds Don’t Directly Follow Indexes

Although index funds generally follow the trends of the market they track, the way they’re structured means that they don’t always directly track with the index. Since index funds don’t always contain every company that’s in a particular index, this means that when an index goes up or down in value, the index fund doesn’t necessarily act in exactly the same way. This is why it’s important to understand how specific index funds seek to track their underlying index.

Index Investing Is Best as a Long-Term Strategy

Since index funds generally track the market, they do tend to grow in value over time, but they are certainly not get-rich-quick schemes. Returns can be inconsistent and typically go through upward and downward cycles.

Some investors make the mistake of trying to time the market, meaning they try to buy high and sell low. Investing in index funds tends to work the best when you hold your money in the funds for a longer period of time or dollar-cost-average (e.g. invest consistently over time to take advantage of both high and low points).

Choosing an Index to Invest in

The name of a particular index fund may catch your eye, but it’s important to look at what’s inside an index fund before investing in it. Determine what your short and long term goals are and what markets you are interested in being a part of before you begin investing.

There are both traditional funds and niche funds to choose from. Traditional funds follow a larger market such as the S&P 500 or Russell 3000. Niche markets are more focused and may contain fewer stocks.

They may focus on a particular industry. Typically, a good way to start investing in index funds is to add one or more of the traditional funds first, then add niche funds if you feel strongly about their growth potential.

Index Funds Are Weighted

Depending on which index fund you invest in, it may be weighted. For example, the S&P 500 index is weighted based on market capitalization, meaning larger companies like Amazon and Facebook hold more weight than smaller ones.

If Facebook’s stock suddenly goes down, it may be enough to affect the entire index. Other indexes are price weighted, which means companies with a higher price per share will be weighted more heavily in the index. Another form of index weighing could be equal-weight or weights determined by other factors, such as a company’s earnings growth.

Less Flexibility

If you actively invest in individual stocks, you can usually choose exactly how many shares you want to buy in each company. But when you invest in index funds, you have less flexibility. If you’re interested in investing in a particular industry, there may not be an index fund focused solely on that.

How to Get Started With Index Investing

In order to invest in an index, investors typically purchase exchange-traded funds (ETFs) which seek to track the index. Some funds include all the assets in an index, while others only include particular assets.

Prior to investing in any particular index fund, be sure to look into the details of how the fund works. You can find information about what is contained in the fund, how it is weighted, its fees and quarterly earnings, and other details on the fund’s website, through your financial advisor, or EDGAR , the Electronic Data Gathering, Analysis, and Retrieval system that is overseen by the U.S. Securities and Exchange Commission.

Alternatives to Index Investing

Despite the fact that index investing has grown in popularity over the past two decades, some analysts are now bringing up additional downsides and alternatives which investors may want to consider.

The stock market includes companies from many different industries, some of which investors are moving away from investing in. Oil and gas companies, pesticide companies, and others which some people may consider harmful to the environment or human populations may be included in an index fund.

As the economy moves away from these industries, these types of companies may not perform as well, and as an investor you may not want to financially support them.

Some new index funds are being formed around the principles of sustainability and positive impact. You may also be interested in impact investing and other types of ETFs and mutual funds which focus on specific, positive industries.

Active stock portfolio management has been showing stronger performance over the past two years. This shift is partly due to the fact that certain industries are performing much stronger than others, and stock pickers can account for that as they build portfolios.

Investors in index funds may also see a downturn in coming years if the U.S. experiences a bear market.

Building Your Portfolio

Whether you’re interested in investing in index funds or in hand-selecting each stock, it’s important to keep track of your portfolio and current market trends.

Once you know what your investment goals are, SoFi Invest® can be a great tool to build your portfolio and track your finances. With SoFi Automated investing, you can easily add index fund ETFs to your portfolio, all on your phone.

The automated investments are pre-selected for you, so you simply need to decide which funds to invest in, and how much you want to invest. Or, if you prefer to hand-select each stock in your portfolio, you can use the SoFi Active Investing platform.

SoFi has a team of credentialed financial advisors available to answer your questions and help you reach your goals. The SoFi platform has no transaction fees, and you only need a $1 to get started.

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.

Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.


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

SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, LLC and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
SOIN19173

About 10% of Americans moved within the country last year, according to the U.S. Census Bureau. Though that number may seem small, its actual value is not—that amounts to an estimated (and whopping) 32 million people.
Within that group, the impetus for moving varied, from people moving in order to establish their own household, opting for a more affordable home or moving for a new job.

While the prospect of a new home can be exciting, the move itself can require a surprising amount of time and money. Unless you have a family or friend group ready and willing to pack your things, haul your boxes, and load your belongings into your new space, chances are you will hire a professional moving company to assist you with the above tasks.

Just as you make a weekly or monthly budget in order to see your finances clearly, it can be helpful to crunch the numbers on the cost of a move before you get started. One question worth considering before you cross hire movers off your to-do list is, how much do professional movers cost?

The short answer is—it depends. There are a variety of factors that will influence the cost of hiring professional movers. Below is some information that might help you prepare mentally and financially for a big move.

Making a Local Move

While moving across town might seem straightforward, it can be a drawn-out process—though a more affordable one—if you’re doing some of the legwork yourself. Keep in mind that unless you’re taking vacation days to pack and move, you may be filling boxes on nights and weekends for a while.

The upside of packing (and later unpacking) your own stuff is that you’re paying zero dollars to a moving company for those hours. That means you need only need a standard moving service. Once your boxes are taped up and ready, a moving company can come to load boxes and furniture into a truck, transfer them to your new neighborhood and unload them into your new space.

Costs for a standard move like this will depend on a few key factors, including the amount of stuff you have, the distance you are moving, and the number of hours it takes movers to move your things. (Because quantity matters here, it can be a good idea to use a move as the impetus for donating things you no longer want or need.)
To get an idea of how much movers cost for a local move in your area, gather estimates from a few companies. Most offer a free quote, and there are websites like QuoteRunner that aggregate moving quotes for local companies based on a few moving details provided by you.

By comparing the prices of local movers, the Unpackt Blog estimated the average moving price for a standard move in various cities. In each location, the blog shows how the size of your current home impacts the cost.

In New York City, for example, a local standard move for someone in a large one bedroom might cost around $350, while a four-bedroom move could cost more than $1,000. Keep in mind this is simply transporting packed boxes from Point A to Point B. The blog gathered moving data and estimated local costs for cities such as Raleigh , Baltimore , and Minneapolis .

A full-service move includes a good deal more assistance from your moving company, but for a greater price. The higher price is because this service covers just about everything.

You can opt to have your movers pack your things, disassemble (and later reassemble) all your furniture, load and unload everything, then unpack it for you, with your guidance as to where things go. Full-service movers also usually take care of packaging supplies and their disposal.
According toMove.org , the cost of a full-service local move will range between $550 and $12,000. Again, the price range varies so greatly because it depends on the number of belongings the movers will be packing and transporting.

It might help to compare and contrast a few different moving companies, Moving.com suggests reviewing at least three. This can help you make the best pick for your move and budget. Some movers will tell you a cost per hour for moving, but it can be hard to estimate just how many hours a full-service move will take since so many processes are included.

An additional note for your budget: Consumer Affairs says that tipping movers is customary, so maybe plan to tack on an additional $20 to $40 per day, per mover. So if you’ve got three movers helping you across two days, gratuity could range from $120 to $240.

Moving Out of State

The American Moving and Storage Association (AMSA) found that about 650,000 Americans use professional movers for an interstate move—that means they leave one state for another.

Some of those folks—about 39% of them, actually—don’t pay for their own moves, thanks to corporate sponsorship, which sometimes foots the bill if you’re moving for a job. About 44% of interstate moves are paid for by individuals. Military and other government-sponsored moves make up the rest.

If you’re an individual moving to a new state, know that your moving costs will likely depend on three primary factors, similar to a local move: the weight of your shipment, the mileage your belongings will be transported, and labor costs outlined by the moving company you’ve chosen.

Free cost calculator City to City can help you estimate your move. Users enter their Point A and Point B, and can also select premium services to see how that impacts price.

For example, using that calculator, a move from Los Angeles to Denver—about 830 miles—with about 3,500 pounds of belongings and including packing services might cost around $2,500.

A move from Los Angeles to Chicago—about 1,750 miles—with the same specs might cost around $3,300 miles.
Keep in mind that the weight of your belongings may need to be altered. Some say to estimate that each furnished room in your house contains weighs about 1,500 pounds.

Financing a Move

If you already have a clear picture of your personal budget, it may be simple to tell whether you need to do more of a do-it-yourself move or if you can spring for a full-service move through a professional moving company.

Some people might opt to use a credit card to pay for moving fees. If you go this route, consider keeping your card interest rate in mind. If you can’t pay off your incurred moving costs fairly quickly, remember that interest will rack up, potentially making your move more expensive in the long run.

Another way to pay for a move is with an unsecured personal loan, which may come with a lower interest rate than your credit cards. You can check your interest rate for a personal relocation loan through SoFi online and within minutes.

If you qualify, this loan gives you access to cash (usually in less than a week), which may come in handy if your mover offers a discount for an up-front cash payment. You can also use a personal loan to help pay for other moving-related costs that can come up, such as first and last month’s rent for a rental unit.

Ultimately, a move can be a fresh start and offer a new perspective on life. Paying for that fresh start in a way that best suits your budget can help make this life transition go smoothly.

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.

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.

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.

SOPL19062