InvestZ Archives | Page 74 of 160

Oct

2024

How to Roll Over Your 401(k): Knowing Your Options

By MP Dunleavey | Budgeting & Goals, Building Your Career, Growing Wealth, invest, Investing, Life & Career | No Comments

It’s pretty easy to rollover your old 401(k) retirement savings to an individual retirement account (IRA), a new 401(k), or another option — yet millions of workers either forget to rollover their hard-won retirement savings, or they lose track of the accounts. Given that a 401(k) rollover typically takes minimal time and, these days, minimal paperwork, it makes sense to know the basics so you can rescue your 401(k), roll it over to a new account, and add to your future financial security.

Whether you’re starting a new job and need to roll over your 401(k), or are looking at what other options are available to you, here’s a rundown of what you need to know.

Key Points

• Rolling over a 401(k) to an IRA or new 401(k) is typically straightforward and your retirement funds will continue to have the opportunity to grow.

• Moving 401(k) funds to another 401(k) is often the simplest option and allows you to continue to have a higher contribution limit.

• Moving 401(k) funds to an IRA may provide more investment choices and control over those investments.

• Leaving a 401(k) with a former employer is an option but may involve additional fees and complications.

• Direct transfers are simpler and generally preferred over indirect transfers, which run the risk of incurring tax liabilities and penalties.

401(k) Rollover Options

For workers who have a 401(k) and are considering next steps for those retirement funds — such as rolling them to an IRA or another 401(k), here are some potential avenues.

1. Roll Over Money to a New 401(k) Plan

If your new job offers a 401(k) or similar plan, rolling your old 401(k) funds into your new 401(k) account may be both the simplest and best option — and the one least likely to lead to a tax headache.

That said, how you go about the rollover has a pretty major impact on how much effort and paperwork is involved, which is why it’s important to understand the difference between direct and indirect transfers.

Here are the two main options you’ll have if you’re moving your 401(k) funds from one company-sponsored retirement account to another.

Direct Rollover

A direct transfer, or direct rollover, is exactly what it sounds like: The money moves directly from your old account to the new one. In other words, you never have access to the money, which means you don’t have to worry about any tax withholdings or other liabilities.

Depending on your account custodian(s), this transfer may all be done digitally via ACH transfer, or you may receive a paper check made payable to the new account. Either way, this is considered the simplest option, and one that keeps your retirement fund intact and growing with the least possible interruption.

Indirect Rollover

Another viable, but more complex, option, is to do an indirect transfer or rollover, in which you cash out the account with the expressed intent of immediately reinvesting it into another retirement fund, whether that’s your new company’s 401(k) or an IRA (see above).

But here’s the tricky part: Since you’ll actually have the cash in hand, the government requires your account custodian to withhold a mandatory 20% tax. And although you’ll get that 20% back in the form of a tax exemption later, you do have to make up the 20% out of pocket and deposit the full amount into your new retirement account within 60 days.

For example, say you have $50,000 in your old 401(k). If you elected to do an indirect transfer, your custodian would cut you a check for only $40,000, thanks to the mandatory 20% tax withholding.

But in order to avoid fees and penalties, you’d still need to deposit the full $50,000 into your new retirement account, including $10,000 out of your own pocket. In addition, if you retain any funds from the rollover, they may be subject to an additional 10% penalty for early withdrawal.

Pros and Cons of Rolling Over to a New 401(k)

With all of that in mind, rolling over your money into a new 401(k) has some pros and cons:

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Pros:

• Often the simplest, easiest rollover option when available.

• Should not typically result in any tax liabilities or withholdings.

• Allows your investments to continue to grow (hopefully!), uninterrupted.

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Cons:

• New employer may change certain aspects of your 401(k) plan.

• There may be higher associated fees or costs with your new plan.

• Indirect transfers may tie up some of your funds for tax purposes.

¹Terms and conditions apply. Roll over a minimum of $20K to receive the 1% match offer. Matches on contributions are made up to the annual limits.

2. Roll Over Your 401(k) to an IRA

If your new job doesn’t offer a 401(k) or other company-sponsored account like a 403(b), you still have options that’ll keep you from bearing a heavy tax burden. Namely, you can roll your 401(k) into an IRA.

The entire procedure essentially boils down to three steps:

1. Open a new IRA that will accept rollover funds.

2. Contact the company that currently holds your 401(k) funds and fill out their transfer forms using the account information of your newly opened IRA. You should receive essential information about your benefits when you leave your current position. If you’ve lost track of that information, you can contact the plan sponsor or the company HR department.

3. Once your money is transferred, you can reinvest the money as you see fit. Or you can hire an advisor to help you set up your new portfolio. It also may be possible to resume making deposits/contributions to your rollover IRA.

Pros and Cons of Rolling Over to an IRA

This option also has its pros and cons, however.

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Pros:

• IRAs may have more investment options available.

• You’ll have more control over how you allocate your investments.

• You could potentially reduce related expenses, depending on your specifications.

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Cons:

• May require you to liquidate your holdings and reinvest them.

• Lower contribution limit compared to 401(k).

• May involve different or higher fees and additional costs.

• IRAs may provide less protection from creditor judgments.

• You’ll be subject to new distribution rules – namely, you’ll need to be 59 1/2 before withdrawing funds to avoid incurring penalties.

3. Leave Your 401(k) With Your Former Employer

Leaving your 401(k) be – or, with your former employer – is also an option.

If you’re happy with your portfolio mix and you have a substantial amount of cash stashed in there already, it might behoove you to leave your 401(k) where it is.

You’ll also want to dig into the details and determine how much control you’ll have over the account, and how much your former employer might.

You might also consider any additional fees you might end up paying if you leave your 401(k) where it is. Plus, racking up multiple 401(k)s as you change jobs could lead to a more complicated withdrawal schedule at retirement.

Pros and Cons of Leaving Your 401(k) Alone

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Pros:

• It’s convenient – you don’t do anything at all, and your investments will remain where they are.

• You’ll have the same protections and fees that you previously had, and won’t need to get up to speed on the ins and outs of a new 401(k) plan.

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Cons:

• If you have a new 401(k) at a new employer, you could end up with multiple accounts to juggle.

• You’ll no longer be able to contribute to the 401(k), and may not get regular updates about it.

4. Cash Out Your Old 401(k)

Cashing out, or liquidating your old 401(k) is another option. But there are some stipulations investors should be aware of.

Because a 401(k) is an investment account designed specifically for retirement, and comes with certain tax benefits — e.g. you don’t pay any tax on the money you contribute to your 401(k), depending on the specific type — the account is also subject to strict rules regarding when you can actually access the money, and the tax you’d owe when you did.

Specifically, if you take out or borrow money from your 401(k) before age 59 ½, you’ll likely be subject to an additional 10% tax penalty on the full amount of your withdrawal — and that’s on top of the regular income taxes you’ll also be obligated to pay on the money.

Depending on your income tax bracket, that means an early withdrawal from your 401(k) could really cost you, not to mention possibly leaving you without a nest egg to help secure your future.

This is why most financial professionals generally recommend one of the next two options: rolling your account over into a new 401(k), or an IRA if your new job doesn’t offer a 401(k) plan.

Pros and Cons of Cashing Out Your 401(k)

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Pros:

• You’ll have immediate access to your funds to use as you like.

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Cons:

• Early withdrawal penalties may apply, and there will likely be income tax liabilities.

• Liquidating your retirement account may hurt your chances of reaching your financial goals.

When Is a Good Time to Roll Over a 401(k)?

If there’s a good time to roll over your 401(k), it’s when you change jobs and have the chance to enroll in your new employer’s plan. But you can generally do a rollover any time.

That said, if you have a low balance in your 401(k) account — for example, less than $5,000 — your employer might require you to do a rollover. And if you have a balance lower than $1,000, your employer may have the right to cash it out without your approval. Be sure to check the exact terms with your employer.

When you receive funds from a 401(k) or IRA account, such as with an indirect transfer, you’ll only have 60 days from the date you receive them to then roll them over into a new qualified plan. If you wait longer than 60 days to deposit the money, it will trigger tax consequences, and possibly a penalty. In addition, only one rollover to or from the same IRA plan is allowed per year.

The Takeaway

Rolling over your 401(k) — to a new employer’s plan, or to an IRA — gives you more control over your retirement funds, and could also give you more investment choices. It’s not difficult to rollover your 401(k), and doing so can offer you a number of advantages. First of all, when you leave a job you may lose certain benefits and terms that applied to your 401(k) while you were an employee. Once you move on, you may pay more in account fees for that account, and you will likely lose the ability to keep contributing to your account.

There are some instances where you may not want to do a rollover, for instance when you own a lot of your old company’s stock, so be sure to think through your options.

Ready to invest for your retirement? It’s easy to get started when you open a traditional or Roth IRA with SoFi. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

Help grow your nest egg with a SoFi IRA.

FAQ

How can you roll over a 401(k)?

It’s fairly easy to roll over a 401(k). First decide where you want to open your rollover account, then contact your old plan’s administrator, or your former HR department. They typically send funds to the new institution directly via an ACH transfer or a check.

What options are available for rolling over a 401(k)?

There are several options for rolling over a 401(k), including transferring your savings to a traditional IRA, or to the 401(k) at your new job. You can also leave the account where it is, although this may incur additional fees. It’s generally not advisable to cash out a 401(k), as replacing that retirement money could be challenging.

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.
For a full listing of the fees associated with Sofi Invest please view our fee schedule.

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

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

Claw Promotion: Customer must fund their Active Invest account with at least $50 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.

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Oct

2024

How to Start Investing: A Beginner’s Guide

By Michael Flannelly | Growing Wealth, Investing | No Comments

Investing can be a great way to secure your financial future, but it can also feel like an intimidating minefield for the uninitiated. Fortunately, modern technology has made it easier to start an investment portfolio. You could get started today if you have an internet connection and a bank account.

But it’s important to understand what you’re doing before you put your money into the nebulous financial markets. You’ll want to know the basics of investing, from the different types of investments to the various strategies you can use to try to build your wealth. With this knowledge, you should have a good idea of what sorts of investments are right for you, and how to get started.

Key Points

• Investing early can help you take advantage of compound returns, which may lead to financial growth over time.

• Having a diverse investment portfolio may help mitigate volatility and risk when certain companies or sectors aren’t performing well.

• Typically, your long-term financial goals, time horizon, and tolerance for risk help guide investment choices and portfolio asset allocations.

• Regular investments, even in small amounts, may help build wealth over time.

• Two common investment strategies for beginners include dollar-cost averaging and buy and hold.

• Investing involves significant risk, and investors should research their investments to be better prepared for potential losses.

How to Start Investing

If you are ready to start investing and want to build a portfolio on your own, you can follow these steps to get up and running — just remember to do your homework first!

1. Determine Your Investment Goals

You’ll want to do your best to establish your financial goals before you start investing. Since investments have such strong growth potential over time, many people use their portfolio’s gains to fund future financial goals, like purchasing a home or retirement. Figuring out which investment strategy is right for you starts by assessing and understanding your goals, because they’re not the same for everyone.

2. Choose an Investment Account

You will also need to open a brokerage account and deposit money into it. Once your account is funded, you can buy and sell stocks, mutual funds, and other securities.

You can also utilize an employer-sponsored retirement plan, like a 401(k), or an individual retirement account (IRA) – such as a Roth IRA – to make your investments. One benefit of some retirement investment accounts is that they are tax-advantaged, meaning your investments can grow tax-free within the accounts. However, you may need to pay taxes when withdrawing money from the account.

💡 Need more help? Follow our guide on how to open a brokerage account.

3. Know Your Investment Options

There are numerous types of investment that you can explore and choose from. Here are some examples:

1. Stocks

When you think of investing, you probably think of the stock market. A stock gives an investor fractional ownership of a publicly-traded company in units known as shares. Investing in stocks as a beginner — which may involve investing in and monitoring a small number of stable, low-risk companies — can be a good way to learn about the markets.

Investors might generate returns by investing in stocks through capital appreciation, dividends, or both. Capital appreciation occurs when you buy a stock at one price, then sell it for a higher price in the future. The company may also pay dividends if it distributes part of its profits to its shareholders.

Note, however, that it’s possible that investors could lose their initial investment if a company’s share price hits zero. Investing in stocks carries some significant risks, and investors should be aware of those risks.

2. Bonds

Bonds are loans you make to a company or a government — federal or local — for a fixed period. In return for loaning them money, they promise to pay you, the investor, periodic interest and, eventually, your principal at the end of the period.

Bonds are typically backed by the full faith and credit of the government or large companies. They’re often considered less risky investments than stocks.

However, the risk varies, and bonds are rated for quality and creditworthiness. Because the U.S. government is less likely to go bankrupt than an individual company, Treasury bonds are considered some of the least risky investments. However, they also tend to have lower returns.

Recommended: How to Buy Bonds: A Guide for Beginners

3. Mutual Funds and ETFs

A mutual fund is an investment managed by a professional. Funds typically focus on an asset class, industry, or region, and investors pay fees to the fund manager to choose investments and buy and sell them at favorable prices.

Exchange-traded funds (ETFs) are similar to mutual funds, but the main difference is that ETFs are traded on a stock exchange, giving investors the flexibility to buy and sell throughout the day.

Mutual funds and ETFs allow investors to diversify their holdings in one investment vehicle.

4. Real Estate

Real estate may be another type of investment, and many people initially invest in real estate by purchasing a home or a rental property.

If owning a home is out of reach for you, you can also invest in a real estate investment trust (REIT), or a company that operates in the real estate business. You can trade shares of a REIT on a stock exchange like you would a stock. With a REIT, an investor buys into a piece of a real estate venture, not the whole thing. If opting to invest in a REIT, there may be less responsibility and pressure on the shareholder when compared to purchasing an investment property.

4. Decide Your Investment Style

Each individual investor will have different goals and concerns as it relates to their portfolio. You may want to work with a financial professional to help you zero in on what type of investments and overall portfolio may give you the best shot at reaching your goals.

With that in mind, you’ll want to think about your style and investing habits, too. Consider your time frame, or time horizon – that is, how long you have to invest, and how long you might want to wait before selling your investments and reaping potential profits – assuming your investments accrued value.

Also think about your risk tolerance, or how much risk you’re willing to take with your portfolio. Riskier investments may generate larger returns over shorter periods of time, but they can also lead to significant losses. Again, this is something to think about when figuring out your specific investment style.

You’ll also want to think about how you allocate your investments, or the degree to which you diversify your portfolio. That means looking at the specific mix of investment types in your portfolio, and getting a sense of the risks and potential returns each brings to the fold.

Quick Tips for Investing Beginners

An investment strategy is a plan that outlines how you will invest your money. As noted, an ideal strategy should consider your financial goals, risk tolerance, and time horizon. Here are three recommended tips and strategies for beginner investors.

• Consider a buy-and-hold approach: Investors practicing buy and hold strategies tend to buy investments and hang on to them over the long term, regardless of short-term movements in the market. Doing so can help curb the tendency to panic sell, and it can also help minimize fees associated with trading, which may boost overall portfolio returns.

• Utilize dollar-cost averaging: Dollar-cost averaging is a strategy that helps individuals regularly invest by making fixed investments on a regular schedule regardless of price. A dollar-cost average strategy can help individuals access a lower average share price and help them avoid emotional investing.

• Stay stoic: Remember to keep your emotions in check when investing. You may feel panicked every time the market dips, the economy slows, or a friend tells you that you need to shift your portfolio — it may be wise to stick to your strategy, keep your goals in mind, and let the chips fall where they may. There are no guarantees in investing, but don’t let the whims of the market give you whiplash.

Remember the Risks

It bears repeating: Investing involves risk. There are all sorts of risks that investors assume when they put their money in the markets, and each individual investment may have different types of associated risks. Some investment types are significantly riskier than others, too.

The important thing for beginner investors to keep in mind is that there are no guarantees when investing, and that there’s a chance they could see negative returns, or lose all of their initial investment.

The Takeaway

For beginners, investing can seem complicated and intimidating — in many ways, it is. But if you take some simple initial steps to familiarize yourself with the markets, investing tools, and types of investments — and pair them with a sound strategy – you should set yourself up to be more confident and comfortable when you start investing.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.

FAQ

How much money do you need to start investing?

It’s possible to start investing with very little money. Some brokerages allow investors to open accounts with as little as $5, in some cases, depending on what types of investments you’re interested in buying. In some cases, all you need is $5 to start investing, but generally, the more you have, the better.

What are the most popular investment options for beginners?

Some popular beginner investments include stocks, mutual funds, and exchange-traded funds (ETFs).

What are some simple investment strategies for beginners?

Some common investment strategies for beginners include buy and hold and dollar-cost averaging. Many beginners may also employ an index investing strategy, buying ETFs and mutual funds that track a benchmark index, like the S&P 500.

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.
For a full listing of the fees associated with Sofi Invest please view our fee schedule.

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

Claw Promotion: Customer must fund their Active Invest account with at least $50 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.

SOIN-Q324-041

Oct

2024

What Is a Golden Cross Pattern in Stocks? How Do They Form?

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

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

The golden cross pattern is a technical indicator that appears when a security’s short-term moving average rises above its long-term moving average. A golden cross is generally interpreted as the sign of an upcoming market rally.

The golden cross pattern is a momentum indicator, and it tends to be popular because it is easy for chart watchers to spot and interpret. It doesn’t occur as often as other chart patterns, but when it does it sometimes even makes news headlines because it is a strong bullish indicator for a stock or an index.

How Do Golden Cross Patterns Form?

The golden cross candlestick chart pattern happens when the short-term moving average (e.g. the 50-day moving average) moves above and crosses a long-term moving average such as the 200-day moving average, or DMA.

It is an indicator that the market will probably head in a bullish direction, and can be used by stock investors, day traders, swing traders, options traders, or anyone interested in analyzing price movements.

A moving average is a graph of the average value of a stock price for some trailing period of time. Commonly used moving averages are the 50-day moving average (DMA) as a short-term measure and the 200 DMA as a long-term measure.

That said, traders can use moving averages of various lengths, from hours to months, to capture a desired time frame.

Recommmended: Important Candlestick Patterns to Know

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Trade options with SoFi Invest on an easy-to-use, intuitively designed online platform.

*Check out the
OCC Options Disclosure Document.

3 Stages of a Golden Cross

There are three stages that form the Golden Cross pattern:

1. Downtrend. The first stage of the golden cross happens before the moving average lines cross. A downtrend occurs, and the short-term average is lower than the long-term average, but then buyer volume starts exceeding seller volume.

2. Breakout. Next, the cross happens. The short-term moving average crosses over and above the long-term moving average, reflecting a reversal of the downward trend and upward momentum.

3. Upward momentum. The trend continues and the prices continue to rise, with both the short- and long-term DMAs creating support levels (the lower end of both average prices) and indicating movement toward a bullish market.

Understanding support and resistance levels is key to reading technical charts. Support indicates where the price tends to stop falling; resistance indicates where the price tends to stop rising.

What Does a Golden Cross Tell Traders?

When the short-term average is higher than the long-term average, this means that short-term prices are rising compared to previous prices, showing bullish momentum.

The candlestick pattern that’s opposite the golden cross is the Death Cross chart pattern, which is when the short-term average moves below the long-term average, indicating a bearish market trend.

You can think of the golden cross pattern as a logical example of how price momentum can work. Because it’s the short-term DMA that rises and crosses the long-term DMA in a stock chart, it makes sense that analysts would interpret this as a bullish indicator that could have some staying power, as the short-term DMA would eventually play into the long-term DMA.

How Does a Golden Cross Work?

A golden cross occurs in a technical chart when the short-term moving average dips down to its resistance level, and then moves upward, crossing the long-term moving average.

Traders can use different time periods when conducting technical analysis, but the use of the 50-day moving average and the 200-day moving average are common when it comes to identifying the golden cross pattern. The longer the time period, the more lasting the upward trend may be.

Different traders, for example day traders or options traders, can use shorter periods, depending on when they’re aiming to place trades and what their strategy is.

Pros and Cons of Using the Golden Cross

The golden cross can be a useful technical pattern for traders to use to spot changes in market trends. However, on its own it has some limitations.

Benefits of the Golden Cross

The golden cross is known as one of the strongest bullish technical indicators, and can reflect other positive underlying factors in a particular stock.

Furthermore, since the pattern is so widely known, it can attract buyers, thereby helping to fulfill its own prediction.

Drawbacks of the Golden Cross

Like any chart pattern, there is no guarantee that prices will rise following the golden chart pattern.

Chiefly, the golden cross is a lagging indicator. It shows historical prices, which are not necessarily an indicator of future price trends.

Even if prices do rise, they might not rise for long after the golden cross forms.

Due to these uncertainties, it is best to use the golden cross in conjunction with other indicators.

How to Trade a Golden Cross

Both long-term and short-term traders can use the golden cross to help them decide when to enter or exit trades. It can be used both for individual stocks and for trading market indexes.

Most traders use the golden cross and Death Cross along with other indicators and fundamental analysis, such as the relative strength index (RSI) and moving average convergence divergence (MACD).

RSI and MACD are popular indicators because they are leading indicators, potentially providing more real-time information than the golden cross pattern.

What Time Frame Is Best for a Golden Cross?

The most popular moving averages to use to spot the golden cross are the 50-DMA and the 200-DMA. However, day traders may also spot the golden cross using moving averages of just a few hours or even one hour.

Whatever the chosen time period, traders enter into the trade when the short-term average crosses over the long-term, and they exit when the price reverses again.

Because the golden cross is a lagging indicator, investors enter a trade when the stock price itself rises above the 200-DMA rather than waiting for the 50-DMA to cross over the 200-DMA. The logic being: If traders wait for the pattern to form they may have missed the best opportunity to enter into the market.

Short sellers may also use the golden cross to determine when the market is turning bullish, which is a good time for them to exit their short positions.

The Takeaway

Chart patterns are useful tools for both beginning investors and experienced traders to spot market trends and find entry and exit points for trades. The golden cross is one indicator that technical analysts might use to determine whether a stock or market is bullish.

Invest with as little as $5 with a SoFi Active Investing account.

Photo credit: iStock/Prostock-Studio

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.
For a full listing of the fees associated with Sofi Invest please view our fee schedule.

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.
Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.
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.

SOIN0124098

Oct

2024

5 Common Recession Fears and How to Cope

By Matthew Zeitlin | Growing Wealth, invest, Investing, Life & Career | Comments Off

Millions of Americans are anxious about recessions and economic downturns, which often involve job-losses and tightening budgets. Not to mention, investment portfolios tend to take a hit, too. These worries are normal, and fortunately there are ways to cope in the short-term.

The first step to handling that anxiety is overcoming the fear itself. While it’s normal to be worried about a recession — how long it might last, how dire the consequences might be — the truth is that the economy is cyclical. It expands and contracts, and recessions are a natural part of the order.

5 Common Recession Fears

Some investors choose to stick to their strategies or mantras during a recession. Of course, you can always carry on with your online stock trading even during a recession, but whether you choose to do that is up to you. But it’s not always so simple for every investor.

That’s because when it comes to making financial decisions, emotions are rarely your friend – that includes fear, doubt, and anxiety. With that in mind, here are some of the most common recession-related fears people often grapple with during times of economic uncertainty.

1. What If This Recession Lasts for Many Years?

While it’s possible that a recession could last for a long time, it helps to have some historical context.

Since the end of World War II, there have been 12 recessionary periods — including the short, sharp decline in early 2020 sparked by the pandemic. While that one only lasted a couple of months, U.S. recessions have averaged about 11 months in duration.

There have been outliers: Notably, the Great Recession of 2008 lasted for 18 months; and the Great Depression of the 1930s lasted about four years, although the repercussions extended that financial crisis until 1938.

That said, bull markets tend to last longer than bear markets. Equally important to remember is that every financial crisis has also informed new monetary policy and new fiscal tools that help protect consumers and investors.

2. What If Unemployment Soars?

It’s true that the potential for job loss is higher during a recession, when companies may be forced to lay off some of their workforce. While this is a common occurrence — as demand for goods lessens and output drops, companies typically need to cut expenses — there is a potential upside.

Unemployment numbers tend to lag a bit; joblessness typically rises to its highest level at certain points during the recession, and recovers to prior levels after the recession has ended. This means that some workers may have a window of opportunity to either look for new jobs now, or shore up their savings (in case of a layoff).

Be open and flexible to changes in responsibility. Lower your expectations around raises and bonuses. Try to bring value to the company, by going above and beyond, or by learning a new skill.

Make connections with your coworkers and network with people in your industry. It might be helpful to spruce up your resume too. That way, should you be laid off you can hit the ground running.

Take advantage of the shift to the gig economy, e.g. becoming your own boss, and relying on various income streams rather than a single full-time job. Not only are part-time positions becoming more common, it’s possible that your employer may be open to a gig arrangement, rather than completely letting go of a qualified employee.

A common rule of thumb is to keep three to six months’ worth of income in an emergency fund.

Recommended: Discover your ideal emergency fund amount with our emergency fund calculator.

3. What If You Lose Your Savings?

Emergency savings are important in any circumstances, as life is full of curveballs and unpredictable expenses. To that end, it’s smart to keep at least one month’s worth of expenses in a rainy day fund — three to six months is better, of course, but always have a cushion for life’s inevitable emergencies.

A recession can hit your savings hard. But it’s better to spend down your emergency fund than to panic and make financial moves you’ll later regret. At all costs, try to avoid the following:

• Covering expenses with your credit card, and incurring debt that you have to pay off at high interest rates.

• Taking out a home equity loan. While the interest rates may be lower on these loans, it’s still an additional monthly expense. And if your home value dips, you could put yourself in a precarious position when you need to sell.

• Taking a loan from your 401(k). While borrowing from a 401(k) has its pros and cons, and a loan is usually better than taking an early withdrawal, there are still a number of risks. The biggest being: If you do get laid off, the entire loan could be due within a 12-month period.

In short: Build up your savings while you can, especially if you’re concerned about losing your job. And don’t be afraid to spend some or even all of that emergency money if things go south. That’s what the money is there for.

4. What If You Can’t Cover All Your Bills?

A recession can mean that money is tight, and that your bills may go up. If a job loss is looming, you may have real fears of being able to cover your expenses. Fortunately, one area where you have some control is how much money you spend.

The first step in lowering your expenses is to get to know them, especially the bills and subscriptions you pay automatically (or are on an auto-renewal system).

Take a look at your current spending habits by examining your bank statements (you can usually get a transaction history right on your phone). You don’t have to read through months of expenditures. What you spend in one month is probably similar to what you spend any other month (despite some seasonal differences).

As you examine what, where, and why you spend, note that some expenses are easier to control than others. Here are some common areas where it’s often possible to make cutbacks:

• Food (eating out, snacks) and groceries are generally the biggest household expenses, after mortgage or rent — but they’re also easy to rein in.

• Utilities (e.g. use less gas, oil, electricity).

• Clothing and other “nice-to-haves” (limit spending to necessities).

• Subscriptions (you’re likely paying for several streaming or music services you rarely use; it’s easy to forget what you signed up for a year ago).

• Examine your insurances. Sometimes you can lower premiums by switching providers or calling and asking for a discount.

Once you trim your expenses, you may realize there are other ways you can cut back that aren’t on the above list — but not everyone has these options. You could change your commute to save money. You could take on a roommate who can split expenses.

5. What If Your Investments Lose Value?

It’s likely that your retirement account(s) and investment portfolio could lose value when the markets are down, or fluctuating. As discussed above, you don’t want to react strongly and pull your money out of the market impulsively. That’s when you lock in losses that can be hard to recover from.

If you have a financial advisor, or you’re thinking of working with one, you may want to discuss sooner rather than later how well-diversified your portfolio is. Diversification can help protect against volatility in some cases. But portfolio diversification is ideally something you do before a recession sets in.

A better approach during a recession is to stay the course. Continue to invest; continue to save for retirement. Rather than impulsively change your financial behavior, intentionally keep doing what you’ve always done. One way to do this is by using a robo advisor, which incorporates highly sophisticated technology that uses automation to help you stick to your own plan. You’ll likely find yourself in better shape when the recession ebbs and the markets rise once more.

The Takeaway

It’s natural to feel worried about the onset of a recession. Most people have fears about how long a recession could last and what the possible consequences could be in terms of their jobs, their bills, their long-term savings and even retirement.

That said, there are a number of ways to cope. While headlines may sound dire, the reality of a recession is that it may not last as long as you fear. Also, it can take some time for ordinary people to feel the impact. That can give you time to be proactive, including giving your job options (and spending habits) a careful review, beefing up your emergency savings, and reminding yourself to stay calm above all.

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SOIN-Q324-052

Sep

2024

52 Week Savings Challenge (2022 Edition)

52-Week Savings Challenge (2025 Edition)

By Kelly Boyer Sagert | Budgeting & Goals, relay | Comments Off

Many experts recommend having an emergency savings fund. The money is intended to cover bills or living expenses due to a job loss, medical issue, or unexpected repairs. But finding money to put aside on a regular basis can be challenging. The 52-week Savings Challenge will get you there in the simplest way possible.

Learn how this savings challenge works and who will benefit the most from it.

What Is the 52-Week Money Challenge?

The 52-week Savings Challenge is a straightforward way to set aside a little money every week. The plan can help you save more than you might expect over the course of a year. The goal is to have a healthy emergency fund that you can dip into to cover unexpected expenses — like car repairs or a trip to the doctor — without blowing your monthly budget.

Although some people like to start these types of challenges on Jan. 1, you can start today, or the first week of next month, or anytime you like. The result will be the same.

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How Much You’ll Save After Completing the Challenge

Follow our basic guidelines, and you’ll save $1,378 in a year’s time. If you deposit the money in a high-interest savings account, interest will accumulate, increasing the amount you’ve saved.

How the 52-Week Money Challenge Works

The challenge’s structure is simple. In week one, put $1 in savings. Week two, $2. Week three, $3, and so forth for 52 weeks in a row. You can tuck the money into an envelope or put it in a piggy bank — but only if you won’t be tempted to withdraw cash before the challenge ends.

Temptation and interest are two good reasons to deposit the money into a bank account. Once a week, you could transfer the money from a checking account to a savings account that you designated for this challenge.

52-Week Savings Schedule

Week Number	Weekly Deposit	Total Saved
1	$1	$1
2	$2	$3
3	$3	$6
4	$4	$10
5	$5	$15
6	$6	$21
7	$7	$28
8	$8	$36
9	$9	$45
10	$10	$55
11	$11	$66
12	$12	$78
13	$13	$91
14	$14	$105
15	$15	$120
16	$16	$136
17	$17	$153
18	$18	$171
19	$19	$190
20	$20	$210
21	$21	$231
22	$22	$253
23	$23	$276
24	$24	$300
25	$25	$325
26	$26	$351
27	$27	$378
28	$28	$406
29	$29	$435
30	$30	$465
31	$31	$496
32	$32	$528
33	$33	$561
34	$34	$595
35	$35	$630
36	$36	$666
37	$37	$703
38	$38	$741
39	$39	$780
40	$40	$820
41	$41	$861
42	$42	$903
43	$43	$946
44	$44	$990
45	$45	$1,035
46	$46	$1,081
47	$47	$1,128
48	$48	$1,176
49	$49	$1,225
50	$50	$1,275
51	$51	$1,326
52	$52	$1,378

Enhancing the Challenge

Perhaps you’re looking ahead to Christmas or another time of year when you know that money will be especially tight. You can decide to pay ahead so that, if needed, you can skip saving during the weeks in December. That’s the beauty of this challenge: You can customize it to meet your needs.

When December rolls around, if you don’t have extra cash, no worries. You’ve already made those deposits (which are earning interest). If you can keep depositing money throughout December, do so, and you’ll reap even more benefits at the end of 52 weeks.

Here’s another possibility. As you start to save money in this way, you might find that you can save even more. If so, up the ante, perhaps by doubling the amount you’ll deposit each week, so that you can save money fast.

Pros and Cons of the 52-Week Money Challenge

First, the benefits:

• You’ll be saving money at a time when so many people live paycheck to paycheck. That, all by itself, is a good thing.

• You can gain confidence in your ability to budget, and to “pay yourself first.” For extra help, use a budget planner app to make planning easy.

• As the dollars add up, use the momentum to continue the challenge for a second (third, fourth…) year.

• Let this challenge motivate you to focus more on your financial goals — and improve your financial situation in new ways. Maybe you want to save money on food or pay off student loans, for example.

• You can participate in this challenge with friends and family members, which can motivate you to keep going.

• As your savings muscles get stronger, you can create a plan to save for other goals: a new car, for example, or a trip with your family.

Next, the challenges:

• If the money is too easy to access, it can be tempting to use the funds before the year is up. To prevent this from happening, it may help to put the money in a bank account where you don’t have a debit card.

• Because the deposit amounts are relatively small, it can be easy to forget to make your deposit or lose track of which week you’re on. Set reminders in your calendar, or use a buddy system where you and a friend remind each other.

• If you start this challenge at the beginning of the year, the biggest deposits will be scheduled for the holiday season when you may have more expenses. In that case, start with $52 on Jan. 1, when the challenge is fresh and new, and then deposit a dollar less each week. This has the added benefit of getting more money into the account more quickly, which gives you more motivation early on. Plus, you’ll benefit from more interest more quickly.

• If you find that you can’t make the deposit during one week, don’t get too down about it. This is a marathon, not a sprint. You can catch up.

Who the 52-Week Money Challenge Is Best For

First, if you’re enthusiastic about the idea, then it’s definitely for you. This idea can be adjusted for all ages, too. If, for example, you have young children and want to teach them good saving habits, start them with cents instead of dollars.

If you’d like to turn the savings process into a game, then this challenge is tailor made. You can, for example, write each of the dollar amounts, $1-$52 on a large piece of paper and then cut them out — one dollar amount per square.

Put the slips of paper in a hat or box, and select a square each week. That’s the amount you’ll save this week. If you need more advance notice of your savings target, pull the slips out of the container at the beginning of the challenge, one by one, and mark them on a calendar. The first slip drawn goes on week one, the second on week two and so forth.

Search for “52-week savings challenge printable,” and you’ll find plenty of other ways to keep track of and enjoy participating in the challenge.

The Takeaway

The 52-Week Savings Challenge is a straightforward way of saving a relatively small amount of money each week to build up an emergency savings fund. In Week One, you save $1. Week Two, save $2. The most you’ll have to save in a week is $52, at the end of the challenge. Simple as it is, it’s also quite flexible and easy to customize in whatever way will work best for you.

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

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

FAQ

Is the 52-week savings challenge worth it?

If you stick with the plan for a year, you’ll save $1,378 — plus interest if you deposit the funds into an interest-bearing account. This challenge can help you strengthen your savings skills and serve as a springboard for accomplishing other financial goals.

What is the $10,000 challenge?

This challenge is structured in the same way as the 52-week one. In week one, though, you’ll start with $125. Each week, you’ll add another $25 to the amount you save. The result: $10,000 plus any interest earned.

What is the no-spend challenge?

In this challenge, you’ll commit to spend money only on essentials, such as housing, gas, groceries, and utilities. You can set a timeframe for this challenge to build up your savings account. And you can customize the rules however you like — perhaps limiting the challenge to no-spend weekends.

Photo credit: iStock/Jose carlos Cerdeno

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SORL-Q324-049

How to Roll Over Your 401(k): Knowing Your Options

401(k) Rollover Options

1. Roll Over Money to a New 401(k) Plan

Direct Rollover

Indirect Rollover

Pros and Cons of Rolling Over to a New 401(k)

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2. Roll Over Your 401(k) to an IRA

Pros and Cons of Rolling Over to an IRA

3. Leave Your 401(k) With Your Former Employer

Pros and Cons of Leaving Your 401(k) Alone

4. Cash Out Your Old 401(k)

Pros and Cons of Cashing Out Your 401(k)

When Is a Good Time to Roll Over a 401(k)?

The Takeaway

FAQ

How can you roll over a 401(k)?

What options are available for rolling over a 401(k)?

How to Start Investing: A Beginner’s Guide

How to Start Investing

1. Determine Your Investment Goals

2. Choose an Investment Account

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3. Know Your Investment Options

1. Stocks

2. Bonds

3. Mutual Funds and ETFs

4. Real Estate

4. Decide Your Investment Style

Quick Tips for Investing Beginners

Remember the Risks

The Takeaway

FAQ

How much money do you need to start investing?

What are the most popular investment options for beginners?

What are some simple investment strategies for beginners?

What Is a Golden Cross Pattern in Stocks? How Do They Form?

How Do Golden Cross Patterns Form?

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3 Stages of a Golden Cross

What Does a Golden Cross Tell Traders?

How Does a Golden Cross Work?

Pros and Cons of Using the Golden Cross

Benefits of the Golden Cross

Drawbacks of the Golden Cross

How to Trade a Golden Cross

What Time Frame Is Best for a Golden Cross?

The Takeaway

5 Common Recession Fears and How to Cope

5 Common Recession Fears

1. What If This Recession Lasts for Many Years?

2. What If Unemployment Soars?

3. What If You Lose Your Savings?

4. What If You Can’t Cover All Your Bills?

5. What If Your Investments Lose Value?

The Takeaway

52-Week Savings Challenge (2025 Edition)

What Is the 52-Week Money Challenge?

Check your score with SoFi

Track your credit score for free. Sign up and get $10.*

How Much You’ll Save After Completing the Challenge

How the 52-Week Money Challenge Works

52-Week Savings Schedule

Enhancing the Challenge

Pros and Cons of the 52-Week Money Challenge

Who the 52-Week Money Challenge Is Best For

The Takeaway

FAQ

Is the 52-week savings challenge worth it?

What is the $10,000 challenge?

What is the no-spend challenge?

JOIN THE COMMUNITY

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Personal Loans

Online Investments

Other

Double down on your retirement goals with a 1% match on every dollar you roll over and contribute to a SoFi IRA.¹

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