The Ultimate List of Financial Ratios

Financial ratios are numerical calculations that illustrate the relationship between one piece or group of data and another. Business owners use financial statement ratios to performance, assess risk and guide decision-making. For investors, these calculations can provide meaningful data that reflects a company’s liquidity and financial health.

The use of financial ratios is often central to a quantitative or fundamental analysis approach, though they can also be used for technical analysis. For example, a value investor may use certain types of financial ratios to indicate whether the market has undervalued a company or how much potential its stock has for long-term price appreciation. Meanwhile, a trend trader may check key financial ratios to determine if a current pricing trend is likely to hold.

With either strategy, informed investors must understand the different kinds of commonly used financial ratios, and how to interpret them.

What Are Financial Ratios?

A financial ratio is a means of expressing the relationship between two pieces of numerical data. When discussing ratios in a business or investment setting, you’re typically talking about information that’s included in a company’s financial statements.

Recommended: How to Read Financial Statements

Financial ratios can provide insight into a company, in terms of things like valuation, revenues, and profitability. They can also aid in comparing two companies.

For example, say you’re considering investing in the tech sector, and you are evaluating two potential companies. One has a share price of $10 while the other has a share price of $55. Basing your decision solely on price alone could be a mistake if you don’t understand what’s driving share prices or how the market values each company. That’s where financial ratios become useful for understanding a company’s inner workings.

Key Financial Ratios

Investors tend to use some financial ratios more often or place more significance on certain ratios when evaluating business or companies. Here are some of the most important financial ratios to know.

1. Earnings Per Share (EPS)

Earnings per share or EPS measures earnings and profitability. This metric can tell you how likely a company is to generate profits for its investors. A higher EPS typically indicates better profitability, though this rule works best when making apples-to-apples comparisons for companies within the same industry.

EPS Formula:

EPS = Net profit / Number of common shares

To find net profit, you’d subtract total expenses from total revenue. (Investors might also refer to net profit as net income.)

EPS Example:

So, assume a company has a net profit of $2 million, with 12,000,000 shares outstanding. Following the EPS formula, the earnings per share works out to $0.166.

2. Price-to-Earnings (P/E)

Price-to-earnings ratio or P/E helps investors determine whether a company’s stock price is low or high compared to other companies or to its own past performance. More specifically, the price-to-earnings ratio can give you a sense of how expensive a stock is relative to its competitors, or how the stock’s price is trending over time.

P/E Formula:

P/E = Current stock price / Current earnings per share

P/E Example:

Here’s how it works: A company’s stock is trading at $50 per share. Its EPS for the past 12 months averaged $5. The price-to-earnings ratio works out to 10, meaning investors would have to spend $10 for every dollar generated in annual earnings.

3. Debt to Equity (D/E)

Debt to equity or D/E is a leverage ratio. This ratio tells investors how much debt a company has in relation to how much equity it holds.

D/E Formula:

D/E = Total liabilities / Shareholders equity

In this formula, liabilities represent money the company owes. Equity represents assets minus liabilities or the company’s book value.

D/E Example:

So, say a company has $5 million in debt and $10 million in shareholder equity. Its debt-to-equity ratio would be 0.5. As a general rule, a lower debt to equity ratio is better as it means the company has fewer debt obligations.

4. Return on Equity (ROE)

Return on equity or ROE is another financial ratio that’s used to measure profitability. In simple terms, it’s used to illustrate the return on shareholder equity based on how a company spends its money.

ROE Formula:

ROE = Net income – Preferred dividends / Value of average common equity

ROE Example:

Assume a company has net income of $2 million and pays out preferred dividends of $200,000. The total value of common equity is $10 million. Using the formula, return on equity would equal 0.18 or 18%. A higher ROE means the company generates more profits.

Liquidity Ratios

Liquidity ratios can give you an idea of how easily a company can pay its debts and other liabilities. In other words, liquidity ratios indicate cash flow strength. That can be especially important when considering newer companies, which may face more significant cash flow challenges compared to established companies.

5. Current Ratio

Also known as the working-capital ratio, the current ratio tells you how likely a company is able to meet its financial obligations for the next 12 months. You might check this ratio if you’re interested in whether a company has enough assets to pay off short-term liabilities.

Formula:

Current Ratio = Current Assets / Current Liabilities

Example:

So, say a company has $1 million in current assets and $500,000 in current liabilities. It has a current ratio of 2, meaning for every $1 a company has in current liabilities it has $2 in current assets.

6. Quick Ratio

The quick ratio, also called the acid-test ratio, measures liquidity based on assets and liabilities. But it deducts the value of inventory from these calculations.

Formula:

Quick Ratio = Current Assets – Inventory / Current Liabilities

Example:

Quick ratio is also useful for determining how easily a company can pay its debts. For example, say a company has current assets of $5 million, inventory of $1 million and current liabilities of $500,000. Its quick ratio would be 8, so for every $1 in liabilities the company has $8 in assets.

7. Cash Ratio

A cash ratio tells you how much cash a company has on hand, relative to its total liabilities. So in other words, it tells you how easily a company could pay its liabilities with cash.

Formula:

Cash Ratio = (Cash + Cash Equivalents) / Total Current Liabilities

Example:

So a company that has $100,000 in cash and $500,000 in current liabilities would have a cash ratio of 0.2. That means it has enough cash on hand to pay 20% of its current liabilities.

8. Operating Cash Flow Ratio

Operating cash flow can tell you how much cash flow a business generates in a given time frame. This financial ratio is useful for determining how much cash a business has on hand at any given time that it can use to pay off its liabilities.

To calculate the operating cash flow ratio you’ll first need to determine its operating cash flow:

Operating Cash Flow = Net Income + Changes in Assets & Liabilities + Non-cash Expenses – Increase in Working Capital

Then, you calculate the cash flow ratio using this formula:

Formula:

Operating Cash Flow Ratio = Operating Cash Flow / Current Liabilities

Example:

So for example, if a company has an operating cash flow of $1 million and current liabilities of $250,000, you could calculate that it has an operating cash flow ratio of 4, which means it has $4 in operating cash flow for every $1 of liabilities.

Solvency Ratios

Solvency ratios are financial ratios used to measure a company’s ability to pay its debts over the long term. As an investor, you might be interested in solvency ratios if you think a company may have too much debt or be a potential candidate for a bankruptcy filing. Solvency ratios can also be referred to as leverage ratios.

Debt to equity is a key financial ratio used to measure solvency, though there are other leverage ratios that are helpful as well.

9. Debt Ratio

A company’s debt ratio measures the relationship between its debts and its assets. So you might use a debt ratio to gauge whether a company could pay off its debts with the assets it has currently.

Formula:

Debt Ratio = Total Liabilities / Total Assets

Example:

The lower this number is the better in terms of risk. A lower debt ratio means a company has less relative debt. So a company that has $25,000 in debt and $100,000 in assets, for example, would have a debt ratio of 0.25. Investors typically consider anything below 0.5 a lower risk.

10. Equity Ratio

Equity ratio is a measure of solvency based on assets and total equity. This ratio can tell you how much of the company is owned by investors and how much of it is leveraged by debt.

Formula:

Equity Ratio = Total Equity / Total Assets

Example:

Investors typically favor a higher equity ratio, as it means the company’s shareholders are more heavily invested and the business isn’t bogged down by debt. So, for example, a company with $200,000 in total equity and $200,000 in total assets has an equity ratio of 0.80. This tells you shareholders own 80% of the company.

Profitability Ratios

Profitability ratios gauge a company’s ability to generate income from sales, balance sheet assets, operations and shareholder’s equity. In other words, how likely is the company to be able to turn a profit?

Return on equity is one profitability ratio investors can use. You can also try these financial ratios for estimating profitability.

11. Gross Margin Ratio

Gross margin ratio compares a company’s gross margin to its net sales. This tells you how much profit a company makes from selling its goods and services after the cost of goods sold is factored in.

Formula:

Gross Margin Ratio = Gross Margin / Net Sales

Example

A company that has a gross margin of $250,000 and $1 million in net sales has a gross margin ratio of 25%. Meanwhile, a company with a $250,000 gross margin and $2 million in net sales has a gross margin ratio of 12.5% and realizes a smaller profit percentage per sale.

12. Operating-Margin Ratio

Operating-margin ratio measures how much total revenue is composed of operating income, or how much revenue a company has after its operating costs.

Formula:

Operating Margin Ratio = Operating Income / Net Sales

Example:

A higher operating-margin ratio suggests a more financially stable company with enough operating income to cover its operating costs. For example, if operating income is $250,000 and net sales are $500,000, that means 50 cents per dollar of sales goes toward variable costs.

13. Return on Assets Ratio

Return on assets or ROA measures net income produced by a company’s total assets. This lets you see how good a company is at using its assets to generate income.

Formula:

Return on Assets = Net Income / Average Total Assets

Example:

Investors typically favor a higher ratio as it shows that the company may be better at using its assets to generate income. For example, a company that has $10 million in net income and $2 million in average total assets generates $5 in income per $1 of assets.

Efficiency Ratios

Efficiency ratios or financial activity ratios give you a sense of how thoroughly a company is using the assets and resources it has on hand. In other words, they can tell you if a company is using its assets efficiently or not.

14. Asset Turnover Ratio

Asset turnover ratio is a way to see how much sales a company can generate from its assets.

Formula:

Asset Turnover Ratio = Net Sales / Average Total Assets

A higher asset turnover ratio is typically better, as it indicates greater efficiency in terms of how assets are being used to produce sales.

Example:

So, as an example, say a company has $500,000 in net sales and $50,000 in average total assets. Their asset turnover ratio is 10, meaning every dollar in assets generates $10 in sales.

15. Inventory Turnover Ratio

Inventory turnover ratio illustrates how often a company turns over its inventory. Specifically, how many times a company sells and replaces its inventory in a given time frame.

Formula:

Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory

Example:

Investors use average inventory since a company’s inventory can increase or decrease throughout the year as demand ebbs and flows. As an example, if a company has a cost of goods sold equal to $1 million and average inventory of $500,000, its inventory turnover ratio is 2. That means it turns over inventory twice a year.

16. Receivables Turnover Ratio

Receivables turnover ratio measures how well companies manage their accounts receivable. Specifically, it considers how long it takes companies to collect on outstanding receivables.

Formula:

Receivables Turnover Ratio = Net Annual Credit Sales / Average Accounts Receivable

Example:

If a company has $100,000 in net annual credit sales, for example, and $15,000 in average accounts receivable its receivables turnover ratio is 6.67. The higher the number is, the better, since it indicates the business is more efficient at getting customers to pay up.

Coverage Ratios

Coverage ratios are financial ratios that measure how well a company manages its obligations to suppliers, creditors, and anyone else to whom it owes money. Lenders may use coverage ratios to determine a business’s ability to pay back the money it borrows.

17. Debt Service Coverage Ratio

Debt service coverage reflects whether a company can pay all of its debts, including interest and principal, at any given time. This ratio can offer creditors insight into a company’s cash flow and debt situation.

Formula:

Debt Service Coverage Ratio = Operating Income / Total Debt Service Costs

Example:

A ratio above 1 means the company has more than enough money to meet its debt servicing needs. A ratio equal to 1 means its operating income and debt service costs are the same. A ratio below 1 indicates that the company doesn’t have enough operating income to meet its debt service costs.

18. Interest Coverage Ratio

Interest-coverage ratio is a financial ratio that can tell you whether a company is able to pay interest on its debt obligations on time. This is also called the times earned interest ratio.

Formula:

Interest Coverage Ratio = EBIT ( Earnings Before Interest and Taxes) / Annual Interest Expense

Example:

So, for example, a company has an EBIT of $100,000. Meanwhile, annual interest expense is $25,000. That results in an interest coverage ratio of 4, which means the company has four times more earnings than interest payments.

19. Asset-Coverage Ratio

Asset-coverage ratio measures risk by determining how much of a company’s assets would need to be sold to cover its debts. This can give you an idea of a company’s financial stability overall.

Formula:

Asset Coverage Ratio = (Total Assets – Intangible Assets) – (Current Liabilities – Short-term Debt) / Total Debt

You can find all of this information on a company’s balance sheet. The rules for interpreting asset coverage ratio are similar to the ones for debt service coverage ratio.

So a ratio of 1 or higher would suggest the company has sufficient assets to cover its debts. A ratio of 1 would suggest that assets and liabilities are equal. A ratio below 1 means the company doesn’t have enough assets to cover its debts.

Market-Prospect Ratios

Market-prospect ratios make it easier to compare the stock price of a publicly traded company with other financial ratios. These ratios can help analyze trends in stock price movements over time. Earnings per share and price-to-earnings are two examples of market prospect ratios. Investors can also look to dividend payout ratios and dividend yield to judge market prospects.

20. Dividend Payout Ratio

Dividend payout ratio can tell you how much of a company’s net income it pays out to investors as dividends during a specific time period. It’s the balance between the profits passed on to shareholders as dividends and the profits the company keeps.

Formula:

Dividend Payout Ratio = Total Dividends / Net Income

Example:

A company that pays out $1 million in total dividends and has a net income of $5 million has a dividend payout ratio of 0.2. That means 20% of net income goes to shareholders.

21. Dividend Yield

Dividend yield is a financial ratio that tracks how much cash dividends are paid out to common stock shareholders, relative to the market value per share. Investors use this metric to determine how much an investment generates in dividends.

Formula:

Dividend Yield = Cash Dividends Per Share / Market Value Per Share

Example:

For example, a company that pays out $5 in cash dividends per share for shares valued at $50 each are offering investors a dividend yield of 10%.

Ratio Analysis: What Do Financial Ratios Tell You?

Financial statement ratios can be helpful when analyzing stocks. The various formulas included on this financial ratios list offer insight into a company’s profitability, cash flow, debts and assets, all of which can help you form a more complete picture of its overall health. That’s important if you tend to lean toward a fundamental analysis approach for choosing stocks.

Using financial ratios can also give you an idea of how much risk you might be taking on with a particular company, based on how well it manages its financial obligations. You can use these ratios to select companies that align with your risk tolerance and desired return profile.

The Takeaway

Learning the basics of key financial ratios can be a huge help when constructing a stock portfolio. Rather than focusing on a stock’s price, you can use financial ratios to take a closer look under the hood of a company.

If you’re ready to start putting these ratios to use and invest in stocks, the SoFi Invest® investment app can help you take the first steps. You can choose between automated investing if you prefer a hands-off approach, or active trading to create a portfolio that suits your needs and goals.

Photo credit: iStock/MStudioImages


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 . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).

2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.

3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.

For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.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. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
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Source: sofi.com

What Is a Blockchain Explorer? Guide to Block Explorers

A blockchain is a public ledger of transactions. Whenever someone sends Bitcoin or another cryptocurrency from one wallet to another, the transaction is recorded on the ledger.

But how does anyone view the transaction? The simplest way is by using something called a block explorer.

What Is a Block Explorer?

A cryptocurrency block explorer is an online blockchain browser that can show the details of all transactions that have ever happened on a blockchain network.

There are block explorers for Bitcoin and also for individual altcoins. Some block explorers can be used on multiple different networks, while others are only for one specific blockchain. A BTC block explorer, for example, would only be able to find information from the Bitcoin network, such as when someone is sending Bitcoin to another wallet.

A block explorer can be used to find any specific transaction or view the recent history of the chain more generally.

What Can You Do With a Blockchain Explorer?

A blockchain explorer allows users to view blockchain activity. Users might use block explorers to track the status of a pending transaction (technically referred to as exploring Mempool status, since the transaction has not yet been recorded in a block and added to the chain) or to view the balance of a wallet they hold without having to use the crypto wallet itself.

Beyond these types of tasks, block explorers can also be used to:

•   Examine the history of any wallet address, including all transactions sent to and from that address.

•   Explore change addresses, which are transaction outputs that return coins to the spender in an effort to prevent too much of the input value being spent on transaction fees.

•   View blocks that aren’t attached to the main blockchain and whose parent blockchain is unknown. These are called “orphaned blocks.”

•   Explore the largest transaction that was sent in the last 24 hours.

•   Explore the number of double-spend transactions happening in a blockchain.

•   Discover the individual or mining pool who mined a specific block.

•   Explore the genesis block, or the first block that was ever mined on a given chain.

•   See other information specific to a blockchain, such as average transaction fees, hash rate, mining difficulty, and other data.

There are also more advanced use cases for block explorers, but these are mostly utilized by companies that create sophisticated software to track criminal activity or try to predict cryptocurrency prices.

How Do Blockchain Explorers Work?

An explorer is basically a blockchain search engine. It can be used to search for just about any information pertaining to the state of a specific blockchain that someone might want to know. The details of every crypto wallet and all of its transactions and more can all be found using a blockchain explorer.

Before we get into the step-by-step of this process, there are a few key terms worth knowing.

•   Rational Database: Allows for the storage of data in a table in terms of how each piece of data is related to others. Rather than having one giant block table with all details for each block, entries can be organized according to their type and relation to similar entries, for example.

•   Structured Query Language (SQL): A protocol for searching a database, or giving a query. Software of this nature can create a table in a database, insert records into that table, search for a given term, then create a new table with relevant results and present them on a web page.

•   Application Programming Interface (API): A protocol that makes it possible for users to communicate with computers through software. APIs define the formatting details for responses that are sent and received by the software being used.

How a Blockchain Explorer Works, Step by Step

From a technical perspective, here’s what it looks like:

1.    Blockchain explorers use application programming interfaces (APIs), rational databases, and SQL databases alongside a blockchain node to retrieve information from a network.

2.    The software organizes this information into a database and displays things in a searchable format.

3.    The explorer can then be used to perform searches through an organized table in response to user demands through a simple user interface (think: search engine) that allows people to conduct searches.

4.    The explorer server creates a web page through which it can interact with users.

5.    An API also allows the explorer to interface with other computers.

6.    Search requests are sent to the backend server, which then responds to the user interface.

7.    Finally, the user interface and API sends web pages in HTML format to the user’s browser so the results can be read in a manner that is easy to understand.

Examples of Blockchain Explorers

What follows are some of the most popular blockchain explorers. There are different explorers for different types of cryptocurrency, though some explorers can be used to search multiple chains.

Blockchain.org

Blockchain.org, formerly known as Blockchain.com, is a popular Bitcoin block explorer. It allows users to search the Bitcoin blockchain by transaction, address, or block. Many Bitcoin users have probably used Blockchain.org at some point to monitor or record their Bitcoin transactions.

Blockchair

While most block explorers work on only one blockchain, Blockchair can be used to search multiple chains. This explorer allows for searches on the Ethereum, Bitcoin Cash, and Bitcoin blockchains. Users can look up words, mining difficulty, Mempool size, and nodes.

Tokenview

Tokenview also allows for searches to be conducted on multiple blockchains — more than 20 of them, in fact. This explorer is based in China and was launched in 2018.

Etherscan

Etherscan might be the most popular blockchain explorer for the Ethereum network. It allows users to conduct searches for ETH addresses, wallet balances, transactions, smart contracts, and more.

The Takeaway

A block explorer can be thought of as a search engine for a blockchain — allowing a user to find lots of different information about that blockchain.

To use a block explorer, you simply visit its website and enter the information you’re looking for. To look up a pending transaction currently stored in the Mempool, for example, you could enter the transaction hash ID provided by your wallet or exchange.

Or, those curious about blockchain technology could just use the block explorer to “explore” the blockchain in general and look at things like the largest transactions, the most recently mined block, or hash rate.

Looking to invest in cryptocurrency? With a SoFi Invest® brokerage account, investors can trade more than two dozen cryptocurrencies, including Chainlink, Bitcoin, Ethereum, Dogecoin, Solana, Bitcoin, Litecoin, Cardano, and Enjin Coin.

Find out how to get started with SoFi Invest.

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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 . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).

2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.

3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.

For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.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. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments. Limitations apply to trading certain crypto assets and may not be available to residents of all states.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Source: sofi.com

How to Use a Personal Loan for Loan Consolidation

If you have multiple loans or credit cards with high interest rates, you might feel like you are continually paying interest and not making much headway on the principal of the debt. Consolidating those debts into one loan, ideally with a lower interest rate, can be one way to reduce your monthly payments or save on interest. Using a personal loan to consolidate debt can be one way to accomplish this goal.

This guide tells you everything you need to know about how loan consolidation works, what types of loans benefit from consolidation, and when to start the consolidation process.

What Is Loan Consolidation?

Loan consolidation, at its most basic, is the process of combining multiple debts into one. Usually, this means using a new loan or line of credit to pay off your existing debts, consolidating your multiple payments into one.

For example, imagine you have the following debt: $5,000 on a private student loan, $10,000 in credit card debt on Card A, and $10,000 in credit card debt on Card B. Your private student loan may have a high interest rate, and your credit card interest rates probably aren’t much better. You owe a total of $25,000, and each month you’re making three different payments on your various debts. You’re also continuing to rack up interest on each of the debts.

When you took out those loans, maybe you were earning less and living on ramen you bought on credit, but now you have a steady job and a good credit score. Your new financial reality means that you may qualify for a better interest rate or more favorable terms on a new loan.

A personal loan, sometimes called a debt consolidation loan, could be one way to help you pay off the $25,000 you currently owe on your private student loan and credit cards in a financially beneficial way.

Using a debt consolidation loan to pay off the three debts effectively condenses those debts into one single debt of $25,000. This avoids the headache of multiple payments with, ideally, a lower interest rate or more favorable repayment terms.

What Types of Loan Consolidation Are Available?

There are different types of loan consolidation depending on your financial circumstances and needs.

Student Loan Consolidation

•   If you have more than one federal student loan, the federal government offers Direct Consolidation Loans for eligible borrowers. This program essentially rolls multiple federal student loans into one. However, because the new interest rate is the weighted average of all your loans combined, it might be slightly higher than your initial interest rate.

•   You may also be able to consolidate your student loans with a personal loan. If you’re in a healthy financial position with a good credit score and a strong income, among other factors, a personal loan might give you more favorable repayment terms, including a lower interest rate or a shorter repayment period.

•   Consolidating federal student loans may not be right for every borrower. There are some circumstances in which consolidating some types of federal student loans may lead to a loss of benefits tied to those loans. It’s not a requirement to consolidate all eligible federal loans when applying for a Direct Consolidation Loan.

Credit Card Consolidation Loan

If you’re carrying balances on multiple credit cards with varying — and possibly high — interest rates, credit card consolidation could be one way to manage that debt.

Credit card loan consolidation is the process of paying off credit card debt with either a new, lower-interest credit card or a personal loan that has better repayment terms or a lower interest rate than the credit cards. Choosing to consolidate with a personal loan instead of another credit card means potential balance transfer fees won’t add to your debt.

General Loan Consolidation

If you have multiple debts from various lenders, perhaps some credit card debt, some private student loan debt, and maybe a personal loan, you may be able to combine these debts into a single payment. In this case, using a personal loan to consolidate those debts would mean you would no longer have to deal with multiple monthly payments to multiple lenders.

Why Consider Loan Consolidation?

There are many reasons to consider loan consolidation, but here are some to consider:

•   You want to be a minimalist. Did you join in the “pandemic purge” during this past year and a half? If your home looks less cluttered and you’d like your finances to match, you might be thinking about financial decluttering by consolidating some of your high-interest debt into one personal loan that has a lower interest rate or terms that work better for your budget.

•   Your financial circumstances have improved. Maybe you spent some time living off student loans to finish your degree, and now you’ve started your dream job. You have a steady salary and you’ve taken control of your finances. Because of your financial growth, you may be able to qualify for lower interest rates than when you first took out your loans. Loan consolidation can reward all that hard work by potentially saving you money on interest payments.

•   You’ve got sky-high credit card rates. If thinking about the interest rate on your current credit cards makes you want to hide under your desk, consolidating those cards with a personal loan may be just what you’re looking for. High interest rates can add up over the time it takes to pay off your credit card. Using a personal loan to consolidate those cards can potentially reduce your interest rate and help you get your debt paid off more quickly.

Are There Downsides To Loan Consolidation?

Using a personal loan to consolidate debt may not be the right move for everyone. Here are some things to think about if you’re considering this financial step.

Potentially High Interest Rate

Not everyone can qualify for a personal loan that offers a lower interest rate than the credit cards you want to pay off. Using a credit card interest calculator will help you compare rates and see if consolidating credit cards with a personal loan is worth it for your financial situation.

Fees May Apply

Looking for a lender that offers personal loans without fees can help you avoid this potential downside. Some lenders, however, do charge fees on personal loans. They could include application fees, origination fees, or prepayment penalties.

Recommended: Find out how a balance-transfer credit card works.

Putting Your Assets at Risk

If you choose a secured personal loan, you pledge a particular asset as collateral, which the lender can seize if you don’t pay the loan according to its terms.

Possibility of Adding to Your Debt

The general idea behind consolidating debt is to be able to pay off your debt faster or at a lower interest rate — and then have no debt. However, continuing to use the credit cards or lines of credit that have zero balances after consolidating them into a personal loan will merely lead to increasing your debt load. If you can get to the root of why you have debt, it may make it easier to remain debt free.

The Takeaway

Putting a stop to the revolving debt cycle could help place you in a better situation for future financial goals you may have. A personal loan is an installment loan, so there is a fixed end date, and if it’s a fixed-rate loan, monthly payments will remain the same for the life of the loan.

If you’re thinking about consolidating credit card or other debt, a SoFi Personal Loan is one option you may want to consider. With fixed rates and no fees, you may be able to pay off other debts with lower interest rates than credit cards or in a shorter amount of time.

Learn more about unsecured personal loans from SoFi.


SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

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Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

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. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.
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’swebsite .
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Source: sofi.com

What Is the Bancor Network Token (BNT)? How Does It Work?

Developers created the Bancor blockchain to help provide liquidity for token swaps. It does this by providing economic incentives (money) to users who lock up their crypto in pools. The incentives come in the form of fees paid by traders who buy and sell the locked-up tokens.

All of this happens automatically via smart contracts, without any financial institution managing the system. Cross-chain conversion is what’s known as an automated market maker (AMM), a cornerstone of the decentralized finance (DeFi) ecosystem. AMMs like Bancor aim to make more niche altcoins that have smaller market caps more liquid by making it lucrative for users to sustain pools of tokens, and allowing for the swaps to take place without relying on a large exchange.

Bancor has one feature other DeFi platforms do not – interoperability. Bancor works across both the EOS and Ethereum blockchains, whereas most DeFi protocols only work on Ethereum or another, similar smart contract platform.

Having launched in 2017 when DeFi was still new, Bancor is one of the more established AMMs. Other types of cryptocurrencies and platforms that leverage more than one crypto or blockchain were less common back then.

Here in this guide to crypto, we’ll explore how the Bancor cryptocurrency works.

History of the Bancor Network Token (BNT) Crypto

In 2017, the Bancor project raised $153 million in a token sale, managed by Bprotocol Foundation, a Swiss non-profit organization. Participants of the token sale received half the tokens, while the other half went to the founders of the project, Galia and Guy Benartzi. Silicon Valley venture capitalist Tim Draper is also an investor in the project.

How Does BNT Work?

Bancor automates its service by incentivizing users to deposit crypto into pools. A pool has two components – a token trading pair and a reserve of the BNT crypto.

Users deposit coins into a pool and receive new pool tokens in exchange. These pool tokens allow the user to get back their original funds they’ve locked away in the protocol.

BNT crypto serves as an intermediary between the trades of each token. In other words, the first token converts to BNT, and then BNT is converted to the second token. Because the process happens through a smart contract, some people refer to BNT as a “smart token.”

These automated features of the network may appeal to some traders as a security feature, since the crypto market is still largely unregulated.

Bancor also allows users to lock in one token at a time as opposed to a pair. Other AMMs sometimes require users to lock up pairs of tokens in certain proportions to each other. In a Bancor liquidity pool, users have the option to deposit ETH or DAI, for example. Some alternatives to Bancor would require a deposit of both ETH and DAI.

It’s worth noting that users also have to deposit BNT into the Bancor pool of their choice.

Using liquidity pools and the BNT token in this manner differentiates Bancor from some other decentralized applications, which require each trade order to match with another order. Instead of having to wait for a buyer or seller, Bancor users can access liquidity right away, thanks to the BNT smart token.

Developers overhauled the platform in 2020 to make it more user-friendly.

The Use of Price Oracles

In order to access accurate pricing information for the coins locked into the protocol, Bancor V2 uses a solution called an “oracle.” Oracles send real-time price information from an external source into an existing blockchain.

With this price data, the pools on Bancor can automatically adjust token proportions in alignment with changes in price. Liquidity providers can then withdraw tokens of the same value they originally deposited.

BNT Coin Price

At the time of writing, BNT was the #104 cryptocurrency by market cap and trading at $4.29 per BNT. This represents an approximately 150% increase year-to-date, as the token began 2021 trading at around $1.30.

The all-time high for the BNT price was about $9.30, reached in January 2018. The all-time low was about $0.14, reached in March 2020. That kind of volatility could make a difficult coin to HODL long-term.

How to Use BNT

You can use BNT tokens to exchange one type of crypto for another without needing a third-party. This may help traders who hold low liquidity tokens that don’t have a lot of trading volume on large exchanges.

BNT holders can also earn interest by locking up their tokens in the protocol. Those who stake tokens receive a portion of the trading fees incurred by traders using the platform.

BNT Coin Storage

BNT holders can keep their coin in any crypto wallet that supports ERC-20 tokens. ERC-20 is a type of standard for tokens that run on the Ethereum network. Many utility tokens fall under this category. Popular Ethereum wallets like MyEtherWallet support storage of ERC-20 tokens like BNT.

Traders might also hold their BNT tokens on an exchanged-hosted wallet. After buying coins on an exchange, the exchange will automatically hold it in a wallet on behalf of the investor. This method of storage is only as secure as the exchange itself, and is generally not advised for large amounts of funds held over the long-term.

Recommended: Cold Wallet vs Hot Wallet: Which to Choose?

How to Buy BNT Cryptocurrency

Buying Bancor network token is similar to buying other digital assets. Doing so involves a few simple steps.

•   Step 1: First, choose an exchange that supports BNT trading.

•   Step 2: Sign up for an account on the chosen exchange.

•   Step 3: Fund your account. Make sure the exchange supports a trading pair of the currency you deposit. For example, if the exchange only supports BTC/BNT, you will have to deposit bitcoin. If it only supports USD/BNT, you will have to deposit U.S. dollars, and so on.

•   Step 4: Place a buy order for BNT. Doing so could work differently depending on the exchange. Beginner-friendly exchanges allow users to simply place an order for a certain amount of BNT and have it instantly executed at the current market price. Other exchanges require users to select an existing ask (sell) order from the order books, and buy at that price, or create a new buy order at a price of their choosing.

•   Step 5: Optionally, users can then move their BNT off of an exchange, into their own crypto wallet.

•   Step 6: As with all assets, traders must keep track of their transactions so that they can declare the value of their crypto holdings at tax time.

BNT can also be acquired directly through the Bancor smart contract. Users can convert any supported ERC-20 token on Bancor’s web app.

The Takeaway

BNT is a smart token that facilitates decentralized trading through an automated market maker by functioning as a reserve currency. It may be a way for some investors to bet on its technology, or to build a diversified portfolio of cryptocurrency.

An easy way to get started trading cryptocurrency is by opening a brokerage account on the SoFi Invest® crypto trading app. You can use the app to securely buy and hold crypto assets, including Bitcoin, Ethereum, Dogecoin, Cardano, and BNT.

Photo credit: iStock/gradyreese


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 . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).

2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.

3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.

For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.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. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments. Limitations apply to trading certain crypto assets and may not be available to residents of all states.
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Source: sofi.com

What Is a Bond Option? Definition & Examples

A bond option allows the contract holder to buy or sell an underlying investment (in this case, a bond) at a specific price and at a specific time. While considered less risky than stock options, bond options still typically carry higher risk than more traditional investments.

Like all options, bond options are derivative securities, used by investors to bet on the direction of an underlying security. Understanding what bond options are and how they work can help you understand these risks and determine whether bond options make sense for your portfolio.

Here’s a closer look at bond options, and the risks and rewards they bring to investors.

What are Bond Options?

A bond option is a legal contract to buy and sell underlying bond assets, usually via a call bond (i.e., the option to buy an underlying bond) or a put bond (the option to sell a bond) at a specific price (known as the “strike price)” at or before a specific time deadline (known as the “expiration date”).

For example, an investor might purchase a bond call option with a strike price of $900. The level value (also known as “par value”) of the underlying U.S. government bond is $1,000. Let’s say market conditions push the value of that bond up to $1,100. In that scenario, the option holder has the right to buy the government bond at $900 – even as the value of that underlying bond now stands at $1,100.

Investors typically trade options, including bond options, through over-the-counter exchanges. Bond options are also typically available wherever U.S. Treasury bonds are sold in fund form through investment companies.

Recommended: A Beginner’s Guide to Options Trading

Pros and Cons of Bond Options

There are benefits and drawbacks to incorporating bond options in your portfolio.

Pros of Bond Options

Higher return potential. As discussed in the example above, when executed well a bond options strategy can increase a trader’s gains on a particular investment. Bond options can also protect against downside risk. Investors often use bond options as hedges against more risk-laden investment strategies.

Risk hedging. Bond options investors can leverage derivative contracts to take advantage of interest rates and other short-term drives of investment performance. Investors can also lean on bond options to take advantage of pricing variations in options pricing or to position their portfolios ahead of major geopolitical events, like presidential elections, potentially big Federal Reserve policy decisions, or major recessions and other powerful economic forces.

Cons of Bond Options

The risk of non-exercise. Bond options investors may do well to let an options contract expire rather than execute a trade that goes awry and loses money. While a bond options investor isn’t obligated to exercise their bond options contracts, letting a contract expire means the original money used to buy or sell a bond option is gone forever. So, too, are the fees investment companies charge to handle options trades.

The risk of unlimited investment loss. While call options provide an investor with the possibility of unlimited gain if the underlying security rises in value, that same investor faces unlimited loss potential if that investor is selling a call or put option. If the underlying assets plummet to a value of zero, the options investor could face massive financial losses.

The risk of losing money quickly. As options, by nature, are short-term investing instruments, investors need to have extensive knowledge of near-term investment price movements to minimize the downside risk of investing in bond options. Often, traders make decisions about their options strategy based on a short time horizon. That means all options investors must master two key trading objectives – knowing the right time to purchase an options contract and knowing when to sell that contract, or cut losses by allowing the contract to expire without exercising the option to buy or sell by the expiration date.

Recommended: 10 Options Trading Strategies

Types of Bond Options

Bond options offer investors the right to buy or sell (via calls and puts) an underlying investment security at a specific time and at a set price.

Call Option Bonds

With a bond call option, if the price of the underlying bond option rises in value, the contract holder can earn a profit on the call by exercising the option to purchase the asset (with a call option) at a lower price and then selling it when the underlying asset goes up. A call option is in the money if the strike price is lower than the current market price of the underlying bond.

Bond Put Options

A bond options investor who buys believes a bond will go up in price may purchase a put option or put bond. With that option, buy the asset at the current low price and sell it at the rising strike price, assuming the price moves in the direction the trader had hoped. What a bond investor strives to avoid is being on the wrong side of an options trade, i.e., selling at a below market rate or buying at an above-market rate.

If an investor anticipates that bond prices will decline, given future expected market conditions, they’d purchase a put option. If the level value of the underlying bond option were$1,000, a bond put option gives the contract holder the right to sell the option contract at the strike price of $900 – on or before the expiration date. If bond prices fall, the underlying bond is now valued at $870. Now, that bond option investor can exercise the sale of the options contract at the strike price of $900, even as the bond’s value has fallen to $870. That guarantees a big profit for the investor, given the outsized nature of options contracts.

Embedded Bond Options

Embedded bond options are bonds in which the holder or the issuer has a right to take a specific action with a certain period going forward. Examples of embedded bond options include call provision, convertible provisions, and floored floating-rate provisions.

Callable Bond Options

Callable bonds are one type of embedded bond option. With callable bonds, the issuer has the option to repay investors the face value of the bond before the maturity date.

Recommended: Popular Options Terminology You Should Know

Bond Options Pricing

Given all the variables, including the current price and future price of a bond, volatility levels, interest rates, and time to expiration, it can be very complicated to properly price a bond option. Investors rely on several different mathematical formulas for this, including the Black-Derman-Toy Model and the Black Model.

The Takeaway

Options traders may use a bond option as a hedge against economic volatility in key areas like interest rates, currency rates, and bond yield rates, a bond option can be a useful portfolio management tool. However, there are plenty of other types of investments that an investor can use when building a portfolio, without trading bond options.

While SoFi does not currently offer bonds or bond options, you can create an investment portfolio on the SoFi Invest trading app composed of stocks, exchange-traded funds, and even cryptocurrency. You can either select the securities in your portfolio yourself or use the automated service to have a customized portfolio built for you.

Photo credit: iStock/PeopleImages


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 . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).

2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.

3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.

For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.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. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
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.
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Source: sofi.com

Stock Market Today: Boffo Jobs Report Spurs Fresh Dow Highs

A pair of bullish headlines had the major indexes poised to end the week on a euphoric note, but investors had to settle for more pedestrian gains.

This morning, the Bureau of Labor Statistics delivered a nonfarm payrolls report that was, by most measures, simply outstanding. Not only did the U.S. add 531,000 jobs in October to easily beat estimates for 450,000, but September’s weak 194,000 jobs added was revised higher to 312,000, and August also was revised higher (to +483,000 from +366,000).

The unemployment rate also declined, to a better-than-expected 4.6% from 4.8% in September.

“Payrolls surged in October with the trifecta of waning COVID concerns, back-to-school season, and declining unemployment benefits contributing to a strong uptick in hiring,” says Peter Essele, head of portfolio management for Commonwealth Financial Network. “Notable increases came from goods-producing industries like construction and manufacturing, a sign that the recovery is permeating industries beyond the work-from-home segments of the economy.”

Lindsey Bell, Ally Invest’s chief markets and money strategist, added that wages continue to rise quickly, with average hourly earnings up 4.9% year-over-year. But she adds “wage increases are a double-edged sword: they help the consumer, but they can also increase costs for businesses (and eventually, costs for customers). So far, consumer demand remains strong despite higher prices and corporate margins have yet to be dented.

“Going forward, wages and productivity could be the most interesting metrics to watch on the labor market front, with inflation worries top of mind.”

Sign up for Kiplinger’s FREE Investing Weekly e-letter for stock, ETF and mutual fund recommendations, and other investing advice.

It wasn’t all roses. A team of BofA Securities strategists points out that there are still 4.2 million fewer people employed today than in February 2020. The labor force participation rate was unchanged at 61.6%, as well.

“We know that retirements have played a big role in the decline in participation, but the question is, what about those who left the labor force for other reasons (e.g. COVID concerns and childcare responsibilities)?” BofA team’s asks.

Also Friday, as we discussed in our free A Step Ahead newsletter, Pfizer (PFE, +10.9%) announced that a key clinical trial demonstrated that its drug Paxlovid reduced risk of death or hospitalization by 89% in high-risk patients.

The double shot of pleasant news triggered heavy morning buying, but some of the enthusiasm waned by the close. The Dow Jones Industrial Average, for instance, gained as much as 360 points (1.0%) before finishing up 203 points (0.6%) – still good enough for a record close.

There was similar action in the S&P 500 (+0.4% to 4,697), Nasdaq Composite (+0.2% to 15,971) and the small-cap Russell 2000 (+1.4% to 2,437), all of which notched new highs.

stock chart for 110521stock chart for 110521

Other news in the stock market today:

  • U.S. crude futures jumped 3.1% to finish at $81.27 per barrel.
  • Gold futures rose 1.3% to settle at $1,816.80 an ounce.
  • The CBOE Volatility Index (VIX) headed sharply higher, up 6.5% to close the week at 16.44.
  • Bitcoin lost a sliver of its value, declining 0.1% to $61,138.64. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)
  • Peloton Interactive (PTON) was one of the worst stocks today, sinking 35.3% following its quarterly report. In its fiscal first quarter, the at-home fitness equipment maker recorded a wider-than-expected loss of $1.25 per share on lower-than-anticipated revenue of $805.2 million. The company also lowered its full-year forecasts for subscribers (to a range of 3.35 million-3.45 million vs. its previous estimate of 3.63 million) and sales (to a range of $4.4 billion-$4.8 billion vs. prior guidance of $5.4 billion). There were a number of Wall Street pros that chimed in on PTON after earnings, including Argus Research analyst John Staszak who downgraded the stock to Hold from Buy. “We expect losses over the remainder of fiscal 2022 driven by higher input prices and increased freight costs,” he says. “Moreover, the reopening of gyms and a growing number of competitors are likely to weigh on results.” Nevertheless, Staszak adds that over the long term, “we see significant growth as demand for in-home fitness products remains solid and operating leverage improves.”
  • Shake Shack (SHAK) was another big post-earnings mover, only its shares surged 16.3% on the day. The burger chain reported an adjusted loss of 5 cents per share on $197.5 million in revenues in its third quarter compared to analyst expectations for a per-share loss of 6 cents on $193.9 million in sales. Additionally, Shake Shack CEO Randall Garutti said in the earnings call that “in the fourth quarter, we expect to surpass $1 billion in system-wide sales for the year, a first for us.” Oppenheimer analysts Michael Tamas and Brian Bittner reiterated their Outperform (Buy) rating in the wake of the results. “SHAK is not immune to the industry’s sales and margin challenges,” they wrote in a note. “However, we remain highly attracted to its new unit designs and outsized growth opportunity, particularly into 2022 as unit growth could be near 20% (45-50 new units).”

What’s Really Driving the Market?

Celebrate the jobs report, but don’t hang your hat on it. That’s the advice from Jay Pestrichelli, CEO of investment firm ZEGA Financial.

“Friday’s jobs report isn’t likely to mean much for the stock market, as the jobs report is a lagging economic data point, and the stock market currently is focused on corporate earnings and a continued reopening of the economy,” he says.

Earnings look especially healthy, with FactSet’s John Butters reporting that with its Q3 results, the S&P 500 is delivering its second-highest revenue growth rate since his firm started tracking the data in 2008.

No wonder, then, that Pestrichelli still sees stocks as “one of the most attractive assets.”

Investors jolted by a rush of confidence often will sample smaller companies like many of these 12 lesser-known names, or scintillating trendsetters like the stocks in these “futuristic” funds. But you might also want to consider some of Wall Street’s true juggernauts.

There are large companies, and there are large companies. Mega caps – typically viewed as firms worth $200 billion or more in market value – are clearly the latter. And while some businesses tend to hit inertia at that size, several mega-cap stocks are hold growth potential.

Read on as we look at Wall Street’s five favorite mega caps.

Source: kiplinger.com

Using a Coborrower on Your Loan

Qualifying for a loan is sometimes easier said than done. Just because you need a mortgage to buy your first home, or a personal loan to consolidate and pay off credit card debt, doesn’t mean a lender is going to magically understand and give you the exact loan and interest rate you want.

Thankfully, if you’re struggling to qualify for a loan, you might be able to ask a friend or family member to step in to help. If they agree, essentially, you leverage their income, credit score, and financial history to help you get a loan that’s right for you.

The downside is that this type of borrowing (as in, borrowing money with another person) can get a little jargon heavy. “Coborrower,” “co-applicant,” and “cosigner” are all terms that are going to come up. Let’s dive into the details.

What is a Coborrower?

A loan coborrower basically takes on the loan with you. Their name will be on the loan with yours, making them equally responsible for paying back the loan. They will also have part-ownership of whatever this loan buys — for example, a coborrower will own half of the home if you take out a mortgage together.

Spouses, for example, might coborrow when buying property, or if they are taking out a home improvement loan for a remodel. You and your coborrower may qualify for a larger loan or better loan terms than if you were to take out a loan solo, and this way you both own the investment and are equally responsible for loan payments.

Another quick piece of jargon: A co-applicant is the person applying for the loan with you. Once the loan is approved, the co-applicant becomes the coborrower.

Coborrower vs. Cosigner

A cosigner, on the other hand, plays a slightly different role than that of a coborrower.

A cosigner’s financial history and credit score is factored into the loan decision, and their positive financial history can be a boon to the primary applicant’s loan application. But they do not have ownership of any property the loan might be used to purchase, they do not receive any loan proceeds, and would only help make your loan payments if you were unable to make them.

Cosigning helps to assure lenders that someone will be able to pay back the loan. Typically, a cosigner with a stronger financial history than you have, which can help you get a loan you might not qualify for on your own (or for better terms than you may qualify for on your own). Lenders might be more comfortable lending to you if your cosigner has a strong credit score and a dependable income, but loan underwriting criteria (that is, the personal financial factors used to determine who gets a loan at what rates and terms) differ from lender to lender.

For an example, let’s go back to our hypothetical home-buying experience. A parent with a strong credit history might cosign their child’s mortgage, allowing the child to get a lower interest rate on their home loan than they would have on their own. The parent wouldn’t own the home, but they would have to make mortgage payments if their child couldn’t.

Benefits of a Coborrower

Having a coborrower can help two people who both want to achieve a financial goal — like homeownership or buying a new car — put in a stronger application than they might have on their own. Because the lender will have double the financial history to consider (and two borrowers to rely on when it comes to repayment), the loan is a potentially less risky prospect for them, which could translate to more favorable terms.

Basically, having a coborrower has the potential to improve the borrowing power for both partners involved — whereas having a cosigner is generally more beneficial to the primary applicant than it is for the cosigner.

When Does Having a Coborrower Make Sense?

Applying with a coborrower makes the most sense when you’re working as a team toward some financial objective. Spouses buying a house together is a common example, but a joint personal loan with a partner might also be considered in order to fund home improvements or consolidate debt to get your finances in better shape before getting married. Business partners also sometimes coborrow loans to help get their ventures up and running.

Many companies, including SoFi, now allow qualified individuals to coborrow on personal loans. That means you and your coborrower (whether they’re your spouse, friend, or a member of your family) may be able to qualify for an even better interest rate and fund your financial goals that much more easily.

The Takeaway

It’s a big decision to take out a loan, so it may be a good idea to make sure both coborrowers are 100% ready to take on this financial commitment. Both of you will be responsible for making monthly loan payments.

Thinking about coborrowing on a personal loan? Check out your rate on a SoFi Personal Loan in minutes.


SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

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. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.
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Source: sofi.com