Are you a property manager looking to attract future residents, or a private owner aiming to showcase your rental online? The secret to success is apartment staging. Transforming your space into a welcoming and visually appealing environment can make all the difference in capturing potential tenants’ attention.
In this Redfin article, we’ll delve into expert apartment staging tips and rental staging techniques to help you shine in the competitive rental market, whether you’re in bustling cities like New York and Los Angeles or thriving rental markets such as Austin and Seattle. Let’s get started.
1. Curb appeal matters
Curb appeal isn’t just for homeowners; it’s equally vital when staging a rental property. Before potential tenants even step inside your rental property, they’ll form their first impression based on its exterior.
Whether it’s refreshing the paint on the front door, adding potted plants to the entryway, or ensuring the walkway is clean and well-lit, small enhancements to the property’s exterior can make a significant difference. Remember, the goal is to make prospective renters envision themselves coming home to that space every day.
2. Start with a clean slate
Before staging, ensure your rental is spotless. Clean every nook and cranny, including carpets, windows, and appliances. A clean space feels more inviting and allows potential tenants to envision themselves living there.
Expert tip: ”To successfully stage your rental home or apartment, the first step is organizing and decluttering your belongings,” shares professionals Cut the Clutter RVA. “It’s essential to edit your possessions. This means assessing what you actually use and removing items that no longer serve a purpose – a critical step, particularly in smaller spaces prone to clutter. A well-organized and clutter-free environment creates the illusion of more space and enhances the appeal of your rental property to potential tenants.”
3. Focus on your audience when staging
Whether it’s a home or a rental, your first step should always be to consider your potential tenant. It’s not just about making it look nice; it’s about ensuring it resonates with those who might call it home.
Expert tip: “When staging a property, whether it’s a home or rental, the first step is to consider your potential buyer,” recommends international media group Inspired Spaces. “Identify your audience – young families, singles, retirees, professionals – and adapt the style, room arrangements, and color palette accordingly. For instance, if your target is young professionals, a secondary bedroom could serve as an office. But for a young family, that same room is best as a child’s bedroom. Focus on neutral, yet inviting color palettes in each space. This appeals to a wider range of buyers, aiming for sophistication that remains relatable.”
4. Use a neutral color palette
Opt for a neutral color scheme when painting walls and selecting furnishings. Neutral tones create a blank canvas that appeals to a broader audience and allows renters to add their personal touches with ease.
Expert tip: Broker Corrie Hayes emphasizes the importance of cohesive decor in creating a balanced room. “Have you ever thought, ‘something is off?’ in a room, but you can’t put your finger on it? Your space can unintentionally feel like it’s having an identity crisis. Whether it’s shabby chic, industrial, rustic farmhouse, or modern sleek, creating harmony in your decor is key. Mixing contrasting styles can lead to visual confusion, but it can be resolved with purposeful choices like coordinating grey couches with beige or cream throws, wall art featuring a mix of complementary colors, and bedding that combines various neutral tones. The result is an inviting space that appeals to a broad range of individuals.”
5. Choose furniture that fits the space
When selecting furniture, consider the size of the space. Avoid overcrowding rooms; instead, opt for appropriately sized furniture that complements the room’s layout. Don’t forget comfortable seating in common areas to highlight a cozy atmosphere.
Expert tip: According to Southern Maryland interior designers at Chesapeake Staging & Interiors, LLC, there are key logistics to consider when staging a rental property or unit. “The first is whether or not the property or unit will be listed as furnished. If not, you’ll need to state that it is an unfurnished unit to avoid confusing potential renters. If it is furnished, you’ll need to stage it with quality furniture that can withstand a renter’s use.”
6. Focus on lighting
Natural light is a key selling point. Open curtains or blinds to let in sunlight and add floor or table lamps where needed, to create a warm and well-lit environment. Adequate lighting enhances the overall ambiance.
Expert tip: According to Aspect Staging, “Lighting plays a vital role in enhancing your rental property’s appeal. To create a warm and inviting atmosphere, strategically illuminate key areas like the living room and bedroom. Use modern floor lamps to brighten dark corners, and consider matching bedside table lamps for a cozy ambiance. Opt for soft white light bulbs with a color temperature between 3000k and 3500k lumens to strike the perfect balance between warm and cool lighting, making your space feel spacious and inviting.”
7. Emphasize storage possibilities
Highlight the storage options in your rental property, as it’s a top priority for many renters. Keep closets and cabinets organized and clutter-free, allowing tenants to envision their belongings neatly stored. Well-arranged storage spaces make your property appear spacious and cater to practical needs, enhancing its appeal.
8. Use staging to define spaces within your rental
If your rental space lacks distinct areas, create them with furniture placement and rugs. Clearly defined living, dining, and sleeping areas can help renters visualize the functionality of the space.
Expert tip: Birgit Anich, CEO and Creative Director at BA Staging & Interiors, emphasizes that staging a rental property parallels staging one for sale. “Given that rental apartments often have limited space, a clear definition of how each area is used is key. The level of sophistication in staging should align with the rental price. A deliberate design that incorporates the renter’s lifestyle and aspirations into the details can evoke emotions and foster a connection with the space, making it more enticing.”
9. Accessorize your rental thoughtfully
Incorporate tasteful accessories such as throw pillows, artwork, and decorative items. These personal touches add character to the space and help renters connect emotionally with the property.
Expert tip: Professional real estate photographer Cynthia James Photography advises that, “When selecting a rental property, it’s crucial to create a welcoming home-like ambiance. In urban areas, consider faux plants for a touch of nature. Enhance the kitchen’s charm with decorative canisters, a recipe book holder, draped kitchen towels, and fresh flowers. In the owner’s bedroom, a queen-size bed with neutral bedding, layered pillows, a quilt, and blankets add comfort. Transform the bathroom into a serene spa with a small rug, neatly arranged soaps, and folded white towels. At the entrance, a welcoming doormat and decorative items like a wreath or home sign can make your rental feel like a comfortable long-term home.”
10. Be creative while staging
In the world of rental property staging, creativity can be your secret weapon. When it comes to making your space more appealing to potential tenants, a dash of innovation can transform ordinary into extraordinary.
Expert tip: For renters looking to make their space more appealing, Florida interior designers TOSCANO INTERIORS recommend creative staging techniques. They suggest, “Converting underutilized spaces and incorporating local art and craftsmanship to add authenticity. The key is to strike a balance between uniqueness and broad appeal, ensuring that unique touches enhance the space. This helps renters create a compelling narrative in their home through furniture, decor, and color choices.”
11. Use fresh flowers and greenery throughout your space
Adding a touch of nature to your staging can work wonders. Fresh flowers and potted plants breathe life into your rental space, infusing it with vitality and freshness. Fresh flowers bring color and a welcoming fragrance, while greenery introduces a calming presence. They are versatile, complement various interior styles, and require minimal maintenance. These natural elements make your property feel like a vibrant and inviting home, leaving a lasting impression on potential tenants.
12. Make sure the rental is clean and smells nice
Before each showing or photoshoot, ensure the space is clean and well-maintained. A final walkthrough is crucial to catch any last-minute details that need attention.
Expert tip: “Don’t underestimate the impact of odors on potential buyers,” says CC Staging & Design. “Unpleasant smells, whether from pets, cooking, or other sources, can quickly deter them. Take proactive steps to ensure your home exudes a fresh and clean scent. Deep-clean carpets, introduce air purifiers for a crisp ambiance, and opt for subtle, pleasant scents rather than overpowering air fresheners. Elevate your home’s appeal with an inviting and refreshing fragrance.”
13. Hire a photographer
Invest in professional photography for your rental property. High-quality images make your online listing stand out and attract more potential tenants. Make sure the photographer captures the best angles and showcases the key selling points.
Expert tip: AV Home Staging brings attention to the advantages of staging in your rental property marketing strategy. Their tip, “Marketing increases more viewings and showings. With a vast number of renters starting their search online, professionally staged photos create a lasting impact, piquing interest and yielding a larger pool of potential applicants – a win-win for any rental property owner.”
14. Be ready to show your rental
In the competitive rental market, readiness is essential. Whether it’s in-person tours or virtual viewings, your ability to promptly and flexibly present the property is crucial. Be flexible with showing schedules, maintain the property’s condition, have the necessary technology for virtual viewings, be well-informed, follow protocols, and prioritize prompt communication to make your rental more appealing to prospective tenants.
A final note on staging a rental
By following these expert apartment staging tips and rental staging techniques, you’ll increase your chances of attracting the right tenants and securing your rental property’s success. Remember, the goal is to create a space that feels like home from the moment potential tenants step inside or view it online. Happy staging!
A bear market is defined as a broad market decline of 20% or more from recent highs, which lasts for at least two months. Although bear markets make for dramatic headlines, the truth is that bull markets tend to last much longer — the average bear market typically ends within a year.
While most investors know the difference between a bull and a bear market, it’s important to know some of the characteristics of bear markets in order to understand how different market conditions may impact your portfolio and your investment choices.
What Is a Bear Market?
Investors and market watchers generally define a bear market as a drop of 20% or more from market highs. So when investors refer to a bear market, it usually means that multiple broad market indexes, such as the Standard & Poors 500 Index (S&P 500), Dow Jones Industrial Average (DJIA), and others, fell by 20% or more over at least two months.
To be sure, 20% is a somewhat arbitrary barometer, but it’s a common enough standard throughout the financial world.
The term bear market can also be used to describe a specific security. For example, when a particular stock drops 20% in a short time, it can be said that the stock has entered a bear market.
Bear markets are usually associated with economic recessions, although this isn’t always the case. As economic activity slows, people lose jobs, consumer spending falls, and business earnings decline. As a result, many companies may see their share prices tumble or stagnate as investors pull back.
Why Is It Called a Bear Market?
There are a variety of explanations for why “bear” and “bull” have come to describe specific market conditions. Some say a market slump is like a bear going into hibernation, versus a bull market that keeps charging upward.
The origins of the term bear market may also have come from the so-called bearskin market in the 18th century or earlier. There was a proverb that said it is unwise to sell a bear’s skin before one has caught the bear. Over time the term bearskin, and then bear, became used to describe the selling of assets.
Characteristics of a Bear Market
There are two different types of bear markets:
• Regular bear market or cyclical bear market: The market declines and takes a few months to a year to recover.
• Secular bear market: This type of bear market lasts longer and is driven more by long-term market trends than short-term consumer sentiment. A cyclical bear market can happen within a secular bear market.
History of Bear Markets
The most recent U.S. bear market began in June 2022, largely sparked by rising interest rates and inflation. The bear market officially ended on June 8, 2023, lasting about 248 trading days, according to Dow Jones Market Data, and resulting in a market drop of about 25.4%.
Including the most recent bear market, the S&P 500 Index posted 12 declines of more than 20% since World War II. The table below shows the S&P 500’s returns from the highest point to the lowest point in a downturn. Bear markets average a decline of 34%, and generally last a little more than a year: about 400 days.
Recommended: What Is a Financial Crisis?
Bear markets have occurred as close together as two years and as far apart as nearly 12 years. A secular bear market refers to a longer period of lower-than-average returns; this could last 10 years or more. A secular bear market may include minor rallies, but these don’t take hold.
A cyclical bear market is more likely to last a few weeks to a few months and is more a function of market volatility.
Peak (Start)
Trough (End)
Return
Length (in days)
May 29, 1946
May 17, 1947
-28.78%
353
June 15, 1948
June 13, 1949
-20.57%
363
August 2, 1956
October 22, 1957
-21.63%
446
December 12, 1961
June 26, 1962
-27.97%
196
February 9, 1966
October 7, 1966
-22.18%
240
November 29, 1968
May 26, 1970
-36.06%
543
January 11, 1973
October 3, 1974
-48.20%
630
November 28, 1980
August 12, 1982
-27.11%
622
August 25, 1987
December 4, 1987
-33.51%
101
March 27, 2000
Sept. 21, 2001
-36.77%
545
Jan. 4, 2002
Oct. 9, 2002
-33.75%
278
October 9, 2007
Nov. 10, 2008
-51.93%
408
Jan. 6, 2009
March 9, 2009
-27.62%
62
February 19, 2020
March 23, 2020
-34%
33
June 2022
June 8, 2023
-25%
248
Average
-34%
401
Source: Seeking Alpha/Dow Jones Market Data as of June 8, 2023.
What Causes a Bear Market?
Usually bear markets are caused by a loss of consumer, investor, and business confidence. Various factors can contribute to the loss of consumer confidence, such as changes to interest rates, global events, falling housing prices, or changes in the economy.
When the market reaches a high, people may feel that certain assets are overvalued. In that instance, people are less likely to buy those assets and more likely to start selling them, which can make prices fall.
When other investors see that prices are falling, they may anticipate that the market has reached a peak and will start declining, so they may also sell off their assets to try and profit on them before the decline. In some cases panic can set in, leading to a mass sell-off and a stock market crash (but this is rare).
Is a Recession the Same as a Bear Market?
No. Bear market conditions can lead to recessions if the market slump lasts long enough. But this isn’t always the case. According to the National Bureau of Economic Research as reported in The New York Times, the U.S. has been in a recession only 14% of the time since World War II.
What Is a Bear Market Rally
Things can get tricky if there is a bear market rally. This happens when the market goes back up for a number of days or weeks, but the rise is only temporary. Investors may think that the market decline has ended and start buying, but it may in fact continue to decline after the rally. Sometimes the market does recover and go back into a bull market, but this is hard to predict.
If the bear market continues on long enough then it becomes a recession, which can go on for months or years. That said, it’s not always the case that a bear market means there will be a recession.
Once asset prices have decreased as much as they possibly can, consumer confidence begins to rise again, and people start buying. This reverses the bear market trend into a bull market, and the market starts to recover and grow again.
Example of a Bear Market
The most recent bear market occurred in June of 2022, when the S&P 500 closed 21.8% lower than its high on Jan. 3, 2022.
While the Nasdaq and the Dow showed a similar pattern in early 2022, the decline of those markets didn’t cross the 20% mark that signals official bear market territory.
Bear Market vs Bull Market
A bull market is essentially the opposite of a bear market. As consumer confidence increases, money goes into the markets and they go up.
A bull market is defined as a 20% rise from the low that the market hit in a bear market. However, the parameters of a bull market are not as clearly defined as they are for a bear market. Once the bottom of the bear market has been reached, people generally feel that a bull market has started.
Investing Tips During a Bear Market
There are a few different bear market investing strategies one can use to both prepare for a bear market and navigate through one.
1. Reduce Risky Investments
When preparing for a bear market, it’s a good idea to reduce riskier holdings such as growth stocks and speculative assets. One can move money into cash, gold, bonds, or other ‘safe’ investments to reduce the risk of losses if the market goes down.
These safe investments tend to perform better than stocks during a bear market. Types of stocks that tend to weather bear markets well include consumer staples and healthcare companies.
2. Diversify
Another investing strategy is diversification. Rather than having all of one’s money in stocks, distribute your investments across asset classes, e.g. precious metals, bonds, crypto, real estate, or other types of investments.
This way, if one type of asset goes down a lot, the others might not go down as much. Similarly, one asset may increase a lot in value, but it’s hard to predict which one, so diversifying increases the chances that one will be exposed to the upward trend, and you’ll see a gain.
3. Save Capital and Reduce Losses
During a bear market, a common strategy is to shift from growing capital into saving it and reducing losses. It may be tempting to try and pick where the market has hit the bottom and start buying growth assets again, but this is very hard to do. It’s safer to invest small amounts of money over time using a dollar-cost averaging strategy so that one’s investments all average out, rather than trying to predict market highs and lows.
4. Find Opportunities for Future Growth
However, in a broad sense if the market is at a high and assets are clearly overvalued, this may not be the best time to buy. And vice versa if assets are clearly undervalued it may be a good time to buy and grow one’s portfolio. A bear market can be a good time to identify assets that might grow in the next bull market and start investing in them.
5. Short Selling
A very risky strategy that some investors take is short selling in anticipation of a bear market. This involves borrowing shares and selling them, then hoping to buy them back at a lower price. It’s risky because there is no guarantee that the price of the shares will fall, and since the shares are borrowed, typically using a margin account, they may end up owing the broker money if their trade doesn’t work out as they hope.
Overall, it’s best to create a long-term investing strategy rather than focusing on short-term trends and making reactive decisions to market changes. It can be scary to watch one’s portfolio go down, especially if it happens fast, but selling off assets because the market is crashing generally doesn’t turn out well for investors.
The Takeaway
Bear markets can be scary times for investors, but even a prolonged drop of 20% or more isn’t likely to last more than a few months, according to historical data. In some cases, bear markets present opportunities to buy stocks at a discount (meaning, when prices are low), in the hope they might rise.
Also there are strategies you can use to reduce losses and prepare for the next bull market, including different types of asset allocation. The point is that whether the markets are considered bearish or bullish, any time can be a good time to invest.
If you’re looking to build a portfolio, no matter what the market, it’s easy when you set up an Active Invest account with SoFi Invest. The secure investing app lets you research, track, buy and sell stocks, ETFs, crypto, and other assets right from your phone or computer. You can easily move between different types of assets and you can set automated recurring investments if you want to put in a certain dollar amount each week or month. All you need is a few dollars to get started.
Start building a portfolio today.
FAQ
How long do bear markets last?
Bear markets may last a few months to a year or more, but most bear markets end within a year’s time. If they go on longer than that they typically become recessions. And while a bear market can end in a few months, it can take longer for the market to regain lost ground.
When was the last bear market?
The most recent bear market started in June of 2022, when the S&P 500 fell from record highs in January for more than two months.
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A place for everything, and everything in its place.
Have you ever visited a friend and opened their pantry doors to find an extremely organized space? If so, you can attest that it’s almost breathtaking. They’ve aligned bottles of oils, and beautiful jars contain nuts and dried fruit. Clear, labeled containers hold pasta and grains. They may have even gone so far as to color-coordinate each shelf.
Of course, we can’t all be Marie Kondo in the pantry. That is to say, don’t feel bad if your pantry has become the place to store, well, everything, from food to mail and kitchen appliances. You are definitely not alone.
So, how do you get started sorting it out and regaining control of this important organizational space? Let’s take it step-by-step with these 10 pantry organization ideas. You can create a pantry that captivates you and your family and friends.
Fair warning: Once you’ve organized your pantry with these organization ideas, the rest of your kitchen is sure to follow.
1. Clean out and declutter
Albert Einstein said, “Out of clutter, find simplicity. From discord, find harmony. In the middle of difficulty lies opportunity.” So, consider this an opportunity to bring harmony to your home with unique pantry organization ideas. As most humans, you’ve probably thought about organizing your pantry a hundred times. You may have even started with a shelf only to find yourself waylaid by one of life’s many other demands.
There’s one way to ensure you create the pantry you’ve seen in Better Homes & Gardens and on Pinterest. Start by cleaning it out entirely. Not only do you have a clean slate to work with, but you also get to clean the shelves. A win-win! Consider making your own lemony-fresh pantry cleaner by combining 1 ½ cups of water with ¼ cup white vinegar and about 20 drops of lemon essential oil.
Another fresh pantry organization idea: Have a trash bag handy as you remove items, and toss those opened food items that have been gathering dust in the corners.
2. Decide what to keep, share and discard
This is the time to check for expiration dates and be brutally honest. While it was very nice of your friend to give you wagon-wheel-shaped pasta made out of lentils when you were on a legume craze, will you really ever use it? For items like this that are still good and unopened, consider putting a box together for the local food bank or homeless shelter.
This is also the time to think about what doesn’t belong. Is there a better place for your kitchen appliances, like next to the stove? Would you use your herbs and spices more if they were in a beautiful spice rack on the side of a cabinet? Can you make an organized space in your cabinets for your Tupperware? Do you have room on your bookshelves for the cookbooks?
3. Gather like-minded products
Yes, opposites attract, but creating order from chaos is key in decluttering. One of our best pantry organization ideas is also the simplest: Place similar products in separate piles so you can see what you have to work with and how big your storage containers (the organizer’s guru) will need to be. Condiments and sauces in one pile, grains and starches in another and unrefrigerated produce in its own little group.
4. Get in the zone
This is when it starts getting fun if you’re Marie Kondo. For us mere mortals, it may get slightly interesting. Zones are the areas in your pantry dedicated to the specific items you’ve grouped together. But it gets better. You can also group items based on your lifestyle and the unique way you use them in your everyday affairs.
Do you love baking? Consider a basket or bin that holds all your baking items. Now, you have everything you need from your pantry when it’s time for morning cinnamon rolls or banana bread.
Do you regularly entertain? Consider creating a basket designed for last-minute get-togethers. A bin with a few bottles of wine, bagel bits, water crackers, olives and napkins will go well with the triple creme brie and Italian dry salami you keep in the fridge.
Are you an organized chef who prepares meal plans and shops once a week for food items? Good for you. Consider separate bins that contain the things you need for each meal. You can even label them according to the day of the week.
5. Keep it simple
Sometimes, as Leonardo da Vinci said, “Simplicity is the ultimate sophistication.” To keep things simple, organize by general categories based on what you have without getting too specific. An example of common categories includes the following:
Bread (Note: If you live in a humid, hot environment, it’s best to store bread in a well-ventilated area, i.e., not your pantry.)
6. Select your pantry organizers
Some people use clear bins for their transparency, allowing them to see items quickly. Others favor baskets with handles for their country-esque aesthetics. Chips find a great home in a rectangular basket, making them easy to grab and put back.
The extreme organizer may select different colored bins for various categories. And, if you’re eclectic in nature, you can enjoy the benefit of all different types of containers as long as they’re purposefully designed and implemented.
An important tip: If you’re low on space and high on dry goods, make sure the containers are stackable. You can also incorporate riser or stacking shelves that create extra space.
Turntables are a nice edition for regularly used items like sauces, oils and condiments. Placing them in the corners utilizes every inch of space. Glass mason jars add a country feel and are ideal for grains, pasta, nuts and beans. Larger jars can hold flour, sugar and pancake mix. Airtight, BPA-free plastic food canisters come in many sizes.
Before you make your selections, measure your shelves to ensure they’ll fit perfectly.
7. Labels are your new best friend
Labeling everything is critical to your pantry organizing success. Today, you can choose from Bluetooth options with corresponding apps or label makers with large keyboards and every font.
Of course, if you’re a scribe at heart, you can add a personal, handmade touch. Write directly on glass and plastic containers with wet-erase markers, or add some color by writing on decorative washi tape. You’ll also find reusable stickers and self-adhesive labels designed for pantry storage. You can label your baskets with reusable, dry-erase clip-on labels.
These labels identify major categories as well as individual items. Make sure to include the expiration date for items you’ve decanted, whether pasta, cereal or rice. Labels go a long way in ensuring your family can find the items they’re looking for and put them back in their correct location when they’re done.
8. Finding the right spot
Keep items you regularly use in easy reach and store occasionally used items on a higher shelf. Any things you’d like to keep away from the kids also go on the top shelf. Remember, nothing is set in stone. As you use your new-and-improved pantry, you’ll discover the perfect locations for your categories.
One of the most important considerations is making sure you buy for the space you have. In other words, a small pantry may limit your trips to Costco but will make you much happier whenever you open the doors.
9. Consider the little ones
If you have young children, take a look at your pantry from their vantage point. Then, set up a little basket just for them, maybe with their favorite cereals and snacks. Consider including a few spoons and plastic bowls. Little ones love the feeling of self-mastery that having some independence brings.
10. Quick touch-ups
Once you experience an organized pantry, there’s no going back. So it makes sense that one of the best pantry organization ideas is upkeep. A quick touch-up now and then ensures your hard work does not go wasted. A good time for a five-minute run-through is when you’re putting away your weekly groceries.
Create a pantry that makes you smile
Life gets busy. Creating an organized pantry with these pantry organization ideas makes finding what you’re looking for quick and easy. It also helps you remain mindful of what you have in stock and what to add to the grocery list. Not only do you save time, but you also save money.
“Still looking for that perfect kitchen where you’ll create culinary masterpieces and good memories? Find the perfect place in one of our available apartments for rent.“
Are you looking for the best side jobs for teachers? Teaching is a great career choice and teachers are very much needed in the world. Unfortunately, though, it is not the highest-paying job that exists. Due to that, you may be looking to find ways to make extra money as a teacher. Side hustles for…
Are you looking for the best side jobs for teachers?
Teaching is a great career choice and teachers are very much needed in the world. Unfortunately, though, it is not the highest-paying job that exists. Due to that, you may be looking to find ways to make extra money as a teacher.
Side hustles for teachers are great because they can help you make extra income, pay off debt, save for a vacation, and more.
Teachers have many useful skills, which make them a great fit for many different side hustles alongside their main teaching job.
Quick Summary on Side Jobs For Teachers:
Online tutoring and selling lesson plans are popular side jobs for teachers that use their existing skills
Selling crafts, selling printables, or teaching online courses can be a nice creative outlet
Short-term and seasonal side gigs like coaching sports or teaching summer school may be better for your schedule than year-round gigs
Best Side Jobs For Teachers
There are 36 side jobs for teachers listed below. If you want to skip the list, here are some jobs that you may want to start learning more about first:
Below are 36 side hustles for teachers.
1. Sell educational printables
Selling educational printables can be a great way for teachers to make extra income and it is great for anyone who wants to learn how to make passive income as a teacher.
An educational printable is a teaching resource, either digital or physical, that educators create to help with learning.
Other teachers buy these for their classes and so do parents.
Educational printables are things like math problems, vocabulary cards, and science experiments. They work for different grades and learning goals, making it an easy way to add to regular teaching or homeschooling. You can share these resources online or print them for in-person classes, making them a helpful tool for improving education.You can learn more at How I Make $400,000 Per Year Selling Educational Printables.
Do you want to make money selling printables online? This free training will give you great ideas on what you can sell, how to get started, the costs, and how to make sales.
2. Tutor online or in person
Tutoring services or helping kids get ready for standardized tests either online or in person can be a great side hustle for teachers.
This option can be a natural fit, as you can use your teaching skills to tutor students.
To start, check out different online tutoring websites like Tutor.com or you can also do in-person tutoring sessions. For in-person tutoring sessions, you can contact local tutoring companies or promote your services on social media or in local Facebook parent groups for your area.
3. Sell your lesson plans
As a teacher, you already make lesson plans for your classes. You can actually sell your lesson plans, earn extra money, and help other teachers.
The most popular platform for this kind of side job is Teachers Pay Teachers (TPT). Here, you can upload your lesson plans, activities, assessments, and other educational resources. Each time someone purchases one of your items, you’ll earn some income.
Lesson plans need to be well-organized, easy to understand, and tailored to specific grade levels and subjects (such as fifth grade math). You should include clear objectives and step-by-step instructions to make your lesson plans more appealing to potential buyers.
4. Coach a school sport or other after-school program
Coaching a school sport is something that you can do within your own school district as many schools are in need of help with their sports teams.
Some sports and after-school programs that can be a teacher’s side hustle include soccer, basketball, volleyball, and track-and-field, as well as clubs such as yearbook, chess, choir, and more.
5. Start a dog bakery
Starting a dog bakery can be a fun side job for teachers who love both dogs and baking.
You can make an extra $500 to $1,000, or even more, each month by making treats for dogs. You can make dog treats like cupcakes, cookies, cakes, and more.
You can learn more at How I Make $4,000 Per Month Baking Dog Treats (With Zero Baking Experience!).
6. Sell crafts on Etsy
Selling crafts on Etsy can be a great way to make extra money by being creative.
Etsy is a website where people from all over can buy and sell handmade and digital products.
Some ideas for products you can create and sell on Etsy that are teaching-related include:
Classroom decor items
Educational games and activities
Customized planner pages and stickers
Flashcards and study materials
Of course, you can create things that aren’t related to teaching at all, such as knitwear, jewelry, and more.
7. Sell on Teachers Pay Teachers
Teachers Pay Teachers (TPT) is a site specifically for educators to buy and sell educational materials, and this is a popular teacher side hustle. If you’ve developed lesson plans, worksheets, or other teaching tools for your classroom, you can share and earn from them on TPT.
I know I talked about selling education printables and lesson plans above, but I want to talk more about Teachers Pay Teachers in its own section because it is such a popular teacher side hustle.
You can sell:
Lesson plans and unit studies
Worksheets and printable activities
PowerPoint presentations and interactive notebooks
Posters, charts, and visual aids
For example, I looked on Teachers Pay Teachers and searched for third grade lesson plans. There, I found over 49,000 results such as math lesson plans about rounding, substitute teacher plans for third graders, reading comprehension lesson plans, and more. Here’s an example of one that you can look at.
The average teacher on Teachers Pay Teachers can make around $300 to $500 extra, but there are some teachers that make hundreds of thousands of dollars extra each year.
8. Babysit
As a teacher, you may find that babysitting is an easy side job to pick up, and, depending on where you live, you may be able to earn around $15 to $25 an hour. Parents love hiring teachers as babysitters because they have so much experience with children.
While babysitting, you’ll find that your existing skills from teaching make a difference in providing the best care possible.
9. Teach English as a second language online
Teaching English as a second language (ESL) online is a popular side job for teachers. As an online ESL teacher, you can help students learn English and work from home.
Most jobs require you to be a fluent English speaker with a bachelor’s degree.
10. Teach summer school
One of the obvious ways for teachers to make extra money in the summer is to teach summer school.
It’s a great way to make use of your teaching skills while earning extra income. Plus, summer school takes place during summer break, so it should fit well with your schedule of already being off from school.
11. Summer camp counselor
Another great option during the summer months is to become a summer camp counselor.
As a counselor, you’ll supervise children in activities such as sports, arts, and crafts. Camps are always looking for instructors with teaching experience, making this a good side job for educators.
12. Grade papers
Grading papers as a side job may appeal to you if you’re looking for a more flexible, at-home option.
Companies such as Measurement Inc. hire teachers to grade student work, such as essays and test answers.
They are hiring evaluators to score in the subjects of English, mathematics, science, and more and pay starts at $15 per hour.
13. Work at a restaurant
If you’re looking for something completely different from teaching, you could take a part-time job at a restaurant.
Working in restaurants can be a good fit for teachers because they often offer flexible hours that can align with your teaching schedule. You can choose jobs like being a server, host, and more.
14. Proofread
As a teacher, you are probably already a great proofreader and are able to spot mistakes easily. With these skills, proofreading can be a great side job. By proofreading, you can help authors, website owners, students, and more improve their writing while earning some extra income.
Even the most skilled writers can make mistakes in grammar, punctuation, and spelling. That’s why hiring a proofreader can be very helpful for pretty much anyone and everyone.
If you want to find online proofreading jobs, I recommend watching this free 76-minute workshop all about how to get started proofreading.
Recommended reading: 20 Best Online Proofreading Jobs For Beginners (Earn $40,000+ A Year).
15. Blog
Blogging can be a fun way for you, as a teacher, to make extra money from home. Many blogs are run by teachers, and I completely get why – you can blog in your spare time and you don’t have to stick to any formal schedule.
To start your own blog, first, choose a topic that you’re interested in writing about, maybe something related to your teaching field or a hobby you enjoy.
You can make money from your blog in ways such as:
Affiliate marketing – Share links to products or services related to the topic you are writing about, and earn a commission for sales generated from your referral links.
Advertising – Include display ads or sponsored posts on your blog.
Courses and ebooks – You can create courses or ebooks related to your area of expertise, and sell them through your blog.
Since I began Making Sense of Cents, I’ve made more than $5,000,000 from my blog, and it all started as a side job.
Learn more at How To Start A Blog FREE Course.
Similar to blogging, a teacher could also start a YouTube channel, a TikTok, and more.
16. Freelance write
If you are looking for side jobs for teachers from home, then becoming a freelance writer can be a great choice.
Freelance writers write content for blogs, websites, magazines, newspapers, advertising companies, and so much more.
You can find different writing jobs on platforms like Upwork and Fiverr, or even find clients on your own, such as by reaching out to websites that you are interested in writing for.
Recommended reading: 14 Places To Find Freelance Writing Jobs – (Start With No Experience!)
17. Transcribe
An online transcriptionist’s job is to listen to video or audio files and then type out everything that they are hearing. There are many different types of transcriptionists, such as legal, general, and medical transcriptionists.
This job requires strong typing and listening skills, and you can work from home on your own schedule.
Transcriptionists earn around $15 to $30 per hour on average.
I recommend watching FREE Workshop: Is a Career in Transcription Right for You? You’ll learn how to get started as a transcriptionist, how you can find transcription work, and more.
Recommended reading: 18 Best Online Transcription Jobs For Beginners To Make $2,000 Monthly
18. Flip used items for resale
Flea market flippers find underpriced items at flea markets, yard sales, and thrift stores, then resell them for a profit. This job requires a good eye for finding valuable items that you believe can be sold for a higher price.
As a teacher, you could find and sell items in the evening, on the weekends, over holiday breaks, and in the summer. You get to make your own schedule, and it can be however many or few hours as you want.
Some items that you can resell include:
Vintage furniture
Collectibles, such as toys, coins, stamps, books, and more
Sporting equipment
Clothing
Electronics
I recommend signing up for a helpful webinar on this topic, How To Turn Your Passion For Visiting Thrift Stores, Yard Sales & Flea Markets Into A Profitable Reselling Business.
19. Bookkeep
Bookkeepers are people who keep track of all the money-related things for businesses. Bookkeepers do tasks like:
Tracking income
Organizing expenses
Making financial reports
This is typically a flexible job that you can do from home on your own time.
You can join the free workshop that focuses on finding virtual bookkeeping jobs and how to begin your own freelance bookkeeping business by signing up for free here.
Recommended reading: How To Find Online Bookkeeping Jobs
20. Sell Canva templates
Creating and selling Canva templates online allows you to work from home in your free time.
A Canva template is like a pre-designed layout that you can use for creating things like social media graphics, Pinterest pins, ebooks, or presentations. It is a helpful starting point if you’re not very skilled at designing from scratch. Business owners, marketing professionals, nonprofit organizations, educators, event planners, restaurants, and more buy templates all the time.
Canva templates come with blank spaces where buyers can add their own words or pictures, adjust colors and fonts, and more. They’re useful for people who want their graphics to look high quality without spending a lot of time in the process (or perhaps they don’t know how to do it so templates help them a lot!).
Making and selling Canva templates can be a great way to earn extra money as you only need to create them once, and then you can sell them as many times as you’d like.
Recommended reading: How I Make $2,000+ Monthly Selling Canva Templates
21. Rover (walk and watch pets)
Rover is a website that links pet owners with pet sitters and dog walkers. You can do this job on the weekends throughout the year, or simply only open up your schedule during the summer months. It is up to you.
Getting started is easy on Rover – you set up a profile that talks about your experience with pets and the services you can provide, like dog walking, pet sitting, and house sitting.
Then, you will receive requests from customers and talk about pricing. Rover takes care of processing payments, and you’ll receive payments directly into your account.
You can sign up for Rover here.
22. Care.com
Another platform for finding pet and house sitting side jobs is Care.com. Care.com is not limited to pet care and includes other caregiving services, such as childcare and senior care.
You can browse available jobs in your area and apply to those that match your skills and interests. Care.com also allows clients to contact you directly for your services after you’ve created a profile. Once a job is completed, you’ll receive payment through the site.
23. Be a virtual assistant
A virtual assistant provides administrative, technical, or creative support to clients from home.
Some of the tasks you might do as a virtual assistant include managing schedules, responding to emails, making travel arrangements, handling social media accounts, and even writing articles or creating presentations.
If you want to become a virtual assistant, I recommend taking the free workshop called 5 Steps To Become a Virtual Assistant.
Recommended reading: Best Ways To Find Virtual Assistant Jobs
24. Be a food photographer
Food photography can be a fun and creative way to earn extra income during your free time. Food photographers do just that – take pictures of food.
Whether you’re working directly for restaurants, magazines, or on a freelance basis, this job allows you to use your skills and interests to create beautiful images.
You can learn more at How To Become a Food Blog Photographer And Earn Over $50,000 Each Year.
25. House sit
As a teacher, you might be looking for ways to make some extra money during breaks or weekends. One option to consider is house sitting, and this is when you watch someone’s home (such as watering their plants and collecting mail) and sometimes take care of pets while their owners are away. People also hire house sitters so that their homes aren’t sitting empty because a visible presence can deter potential thefts.
To get started in house sitting, you can join house-sitting websites to find opportunities in your area, or ask friends and family for referrals (you might want to start by house sitting for people you know and then ask for references that you can use to broaden your job search).
26. Rent out an unused room in your home
If you have a room in your home that you are not using, then you may be able to rent it to someone on either a short-term (such as by becoming an Airbnb host) or long-term basis (getting a full-time roommate).
I have rented out rooms many times in the past, and it was a great way to make some extra income for space that I wasn’t using.
You can learn more at What You Need To Know About Renting A Room In Your House.
27. Rent your garage space
If you have empty storage space, such as a garage, driveway, closet, basement, or attic, you may be able to rent it out and make extra money. This can be a lucrative side hustle where you don’t have to use up much of your spare time.
You can use Neighbor to list your extra space for rent and make up to $15,000 per year by doing so. With Neighbor, you can rent out your garage, driveway, basement, or even a closet.
You can sign up at Neighbor for free here and list your space.
You can also learn more about Neighbor at Neighbor Review: Make Money Renting Your Storage Space.
28. Rent out a photo booth
Renting a photo booth can be a fun side job for teachers.
To get started, you will need to buy a photo booth as well as things like backdrops and props for people to hold in the picture (such as hats, signs, fun things to hold, etc.).
On average, photo booth rentals can range from $500 to $1,000 per event, and in some cases, even more for specialized events or packages with additional features.
I have personally rented a photo booth for an event in the past, and it was a lot of fun!
29. Online surveys and focus groups
Taking online surveys and answering questions for focus groups is very part-time and can be a way to side hustle for teachers.
You share your thoughts plus answer questions and can earn cash or free gift cards.
The survey companies I recommend signing up for are:
American Consumer Opinion
Survey Junkie
Swagbucks
InboxDollars
Branded Surveys
Pinecone Research
PrizeRebel
User Interviews – These are the highest paying surveys with the average being around $60.
Recommended reading: 18 Best Paid Survey Sites To Make $100+ Per Month
30. Voice over act
A voice-over actor is the person whose voice you hear but don’t see in YouTube videos, radio ads, educational videos, and more.
Different companies need a wide variety of voices, and that’s where you come in.
Recommended reading: How To Become A Voice Over Actor And Work From Anywhere
31. Mystery shop
I was a secret shopper in the past, and there were often mystery shops that gave me $100 to put toward a free dinner. I always looked forward to these, as I was living paycheck to paycheck, and I used these restaurant mystery shops to reward myself every now and then.
There were other mystery shops that paid me actual money, and some paid me in free items, such as makeup, movie theater tickets, and car oil changes.
Companies hire mystery shoppers to get an understanding of their customer’s experience. Companies want to know a real product opinion, how the customer felt they were treated at their business, how phone calls were handled, and more.
Basically, mystery shopping is a way to anonymously test the entire shopping experience.
You can learn more at How To Become A Mystery Shopper.
32. Fitness trainer
Fitness trainers help people reach their health goals through customized exercise plans and nutrition advice. This is typically a job where you can choose your schedule, so you can choose to work hours outside of your teaching job, such as in the evenings and on the weekends.
I actually know a few teachers who are fitness trainers on the side, so it must be a good fit!
Another positive is that you can even choose between in-person and online coaching. Online coaching can mean that you can work remotely, making it a more flexible side job for teachers looking to earn extra income.
33. Find random gigs on Craigslist
As a teacher looking for side jobs, you can look for random gigs on Craigslist to earn some extra income. To begin your search, simply go to the Craigslist website and select your city from the home page.
Here are some jobs I found through a quick search:
Cleaning a house
Help assembling furniture
Taking down a shed in a backyard
Garage cleanup
Mover
Handyman
Movie extra
Sign holder
You can even post your own services on Craigslist if you have a skill you’d like to share with others, such as giving music lessons or tutoring.
34. Deliver groceries with Instacart
Grocery delivery services are popular because there are more and more people who want someone to do their grocery shopping for them.
Services like Instacart need personal grocery shoppers, and the average shopper makes $15 to $20 an hour to deliver groceries. Drivers are paid per order, and you get to keep 100% of your tips. You also get to choose your schedule, so a teacher could choose to work in the evenings or on weekends. Or, you could choose to only deliver groceries during the summer.
You can click here to sign up to be an Instacart Shopper.
You can also learn more at Instacart Shopper Review: How much do Instacart Shoppers earn?
There are many other gig ideas that you can try out too, such as Uber Eats and DoorDash.
35. Real estate agent
Some teachers are real estate agents on the side of their full-time job as a teacher. This is because you can list and sell homes on your weekends, during breaks, at night, and over the summer.
Selling homes can be more difficult, though, as your clients may want your full attention during the day occasionally and you would be busy teaching, so this is something to think about.
36. Driver’s ed teacher
A common side hustle for teachers is teaching driving lessons to teenagers and adults. As a teacher, you may be able to check if the high school near you is in need of a teacher for this subject. Or, you can reach out to a local driving school to see if they are hiring.
Driving instructors make around $20 an hour more or less, depending on where you live.
Frequently Asked Questions
Below are answers to common questions about side hustles for teachers.
How can I make money on the side while teaching?
Some good side jobs for teachers include tutoring, freelancing, transcribing, blogging, selling lesson plans, and more.
What can teachers do to make extra money?
Teachers can do a lot of things to make extra money, such as jobs like tutoring, freelance writing, blogging, or creating educational printables.
What is a second career for teachers?
Second careers for teachers can include jobs such as educational consultants, curriculum developers, or even working in corporate training and development.
Do most teachers have 2 jobs?
Many teachers have two jobs. This is for many reasons, such as the typically low pay of a teacher as well as teachers wanting to make money while they are off in the summer.
How to make extra money on Teachers Pay Teachers?
Teachers can make extra money on Teachers Pay Teachers by selling lesson plans and printables.
How can teachers make money in the summer?
Teachers can make money when they’re off in the summer by teaching summer school, helping students with test prep, babysitting, selling lesson plans, working at a restaurant, working as a real estate agent, and more.
What to do after quitting teaching? How do you pivot out of teaching?
Quitting teaching and moving on to something else will take a few steps, and you can begin by thinking about your skills and interests. Then, start exploring different job options and connect with people in the field you’re interested in, attend industry events, and consider getting any certifications that you may need.
How can teachers earn extra income through online tutoring?
Sites like Tutor.com look for teachers to tutor students remotely, and you can even offer your services through social media.
How can a teacher make six figures by utilizing their skills?
While it’s not always easy for teachers to earn a six-figure salary, it is possible if you find ways to make extra income or by starting a business of your own.
What opportunities do music educators have for side income?
Side income ideas for music educators can include jobs like giving private music lessons or working as a weekend or evening instructor at a music school. Music educators can also sell lesson plans (I found some examples on Teachers Pay Teachers here).
What are some good side jobs for teachers?
I hope you enjoyed this article on the best side jobs for teachers.
Whether you are looking for side jobs for teachers from home, side jobs for teachers in the summer, or if you want to learn how to make passive income as a teacher, there are many ways to make extra money as a teacher.
Some of the best side hustles for teachers include:
Sell educational printables
Tutor online or in person
Sell your lesson plans
Coach a school sport
Start a dog treat bakery
Sell crafts on Etsy
Sell on Teachers Pay Teachers
Babysit
Teach English as a second language online
Teach summer school
Summer camp counselor
Grade papers
Work at a restaurant
Proofread
Blog
Freelance write
Transcribe
Flip used items for resale
Bookkeep
Sell Canva templates
Rover (walk and watch pets)
Virtual assistant
Food photographer
House sit
Rent out an unused room in your home
Rent your garage space
Rent a photo booth
Online surveys and focus groups
Voice over act
Mystery shop
Fitness trainer
Find random gigs on Craigslist
Deliver groceries
Real estate agent
Driver’s ed instructor
What do you think are the best ways for teachers to make extra money?
There are two sides to inflation for consumers: The rising cost of goods and services means that the basic cost of living rises for most people. But the right amount of inflation can spur production and economic growth.
Deciding whether inflation is good or bad therefore depends on how various factors might play out in different economic sectors.
What Is Inflation?
Inflation is an economic trend in which prices for goods and services rise over time. The Federal Reserve uses different price indexes to track inflation and determine how to shape monetary policy.
Generally speaking, the Fed targets a 2% annual inflation rate as measured by pricing indexes, including the Consumer Price Index. Historically, though, the inflation rate has been about 3.3%.
Rising demand for goods and services can trigger inflation when there’s an imbalance in supply. This is known as demand-pull inflation.
Cost-push inflation occurs when the price of commodities rises, pushing up the price of goods or services that rely on those commodities.
Asking whether inflation is bad isn’t the right lens for this economic factor. Inflation can have both pros and cons for consumers and investors. Understanding the potential effects of inflation can maximize the positives while minimizing the negatives. 💡 Quick Tip: How do you decide if a certain trading platform or app is right for you? Ideally, the investment platform you choose offers the features that you need for your investment goals or strategy, e.g., an easy-to-use interface, data analysis, educational tools.
Is Inflation Good or Bad?
Answering the question of whether inflation is good or bad means understanding why inflation matters so much. The Federal Reserve takes an interest in inflation because it relates to broader economic and monetary policy.
Some level of inflation in an economy is normal, and an indication that the economy is continuing to grow. While inflation has remained relatively low over the past decade, it has historically seen the most change during or right after recessions.
The Fed believes that its 2% target inflation rate encourages price stability and maximum employment.
Recommended: 7 Factors That Cause Inflation
Broadly speaking, high inflation can make it difficult for households to afford basic necessities, such as food and shelter. When inflation is too low, that can lead to economic weakening. If inflation trends too low for an extended period of time, consumers may come to expect that to continue, which can create a cycle of low inflation rates.
That sounds good, as lower inflation means prices are not increasing over time for goods and services. So consumers may not struggle to afford the things they need to maintain their standard of living. But prolonged low inflation can impact interest rate policy.
The Federal Reserve uses interest rate cuts and hikes to keep the economy on an even keel. For example, if the economy is in danger of overheating because it’s growing too rapidly, or inflation is increasing too quickly, the Fed may raise rates to encourage a pullback in borrowing and spending.
Conversely, when the economy is in a downturn, the Fed may cut rates to try to promote spending and borrowing.
When both inflation and interest rates are low, that may not leave much room for further rate cuts in an economic crisis, which may spur higher employment rates. If prices for goods and services continue to decline, that could lead to a period of deflation or even a recession.
So, is inflation good or bad? The answer is that it can be a little of both. How deeply inflation affects consumers or investors — and who it affects most — depends on what’s behind rising prices, how long inflation lasts, and how the Fed manages interest rates.
What Is Core Inflation?
Core inflation measures the rising cost of goods and services in the economy, but excludes food and energy costs. Food and energy prices are notoriously volatile, even though demand for these staples tends to remain steady.
Both food and energy prices are partly driven by the price of commodities — which also tend to fluctuate, owing to speculation in the commodities markets. So the short-term price changes in these two markets make it difficult to include them in a long-term reading of inflationary trends: hence the core inflation metric.
The Consumer Price Index and the core personal consumption expenditures index (PCE) are the two main ways to measure underlying inflation that’s long term.
Who Benefits from Inflation?
The Federal Reserve believes some inflation is good and even necessary to maintain a healthy economy. The key is keeping inflation rates at acceptable levels, such as the 2% annual inflation rate target. Staying within this proverbial Goldilocks zone can result in numerous positive impacts for consumers and the economy in general.
That said, the core inflation rate began to climb out of that range in Q1 of 2021, and reached a peak of about 9.02% in June 2022. As of Q3 2023, the inflation rate has eased down in the 4.0% range, according to data from the Consumer Price Index.
Inflation Pros
Sustainable inflation can yield these benefits:
• Higher employment rates
• Continued economic growth
• Potential for higher wages if employers offer cost-of-living pay raises
• Cost-of-living adjustments for those receiving Social Security retirement benefits
The danger, of course, is that inflation escalates too rapidly, requiring the Federal Reserve to raise interest rates as a result. This increases the overall cost of borrowing for consumers and businesses.
Who Is Inflation Good For?
Inflation can benefit certain groups, depending on how it impacts Fed shapes monetary policy. Some of the people who can benefit from inflation include:
• Savers, if an interest rate hike results in higher rates on savings accounts, money market accounts or certificates of deposit
• Debtors, if they’re repaying loans with money that’s worth less than the money they borrowed
• Homeowners who have a low, fixed-rate mortgage
• People who hold investments that appreciate in value as inflation rises
💡 Quick Tip: Distributing your money across a range of assets — also known as diversification — can be beneficial for long-term investors. When you put your eggs in many baskets, it may be beneficial if a single asset class goes down.
Who Does Inflation Hurt the Most?
Some of the negative effects of inflation are more obvious than others. And there may be different consequences for consumers versus investors.
Inflation Cons
In terms of what’s bad about inflation, here are some of the biggest cons:
• Higher inflation means goods and services cost more, potentially straining consumer paychecks
• Investors may see their return on investment erode if higher inflation diminishes purchasing power, or if they’re holding low-interest bonds
• Unemployment rates may climb if employers lay off staff to cope with rising overhead costs
• Rising inflation can weaken currency values
Inflation can be particularly bad if it leads to hyperinflation. This phenomenon occurs when prices for goods and services increase uncontrolled over an extended period of time. Generally, this would mean an inflation growth rate of 50% or more per month. While hyperinflation has never happened in the United States, there are many examples from different time periods around the world: For example, Zimbabwe experienced a daily inflation rate of 98% in 2007-2008, when prices doubled every day.
Recommended: How to Protect Yourself From Inflation
Who Is Inflation Bad For?
The negative impacts of inflation can affect some more than others. In general, inflation may be bad for:
• Consumers who live on a fixed income
• People who plan to borrow money, if higher interest rates accompany the inflation
• Homeowners with an adjustable-rate mortgage
• Individuals who aren’t investing in the market as a hedge against inflation
Inflation and higher prices can be detrimental to retirees whose savings may not stretch as far, particularly when health care becomes more expensive.
If the cost of living increases but wages stagnate, that can also be problematic for workers because they end up spending more for the same things.
Recommended: Cost of Living by State Comparison (2023)
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How to Invest During Times of Inflation
While inflation is an investment risk to consider, some investing strategies can help minimize its impact on your portfolio.
How to Protect Your Money From Inflation
The first step is to understand that inflation rates may be variable from year to year, but the upward trend in the cost of goods and services is typically a factor investors must contend with. Essentially, if inflation is historically about 2% per year, it’s ideal to look for returns above that.
For example, while savings accounts may yield more interest if the Fed raises interest rates, investing in stocks, exchange-traded funds (ETFs) or mutual funds could generate higher returns, though these investments also come with a higher degree of risk.
• Diversification. Having a diversified portfolio that includes a mix of stock and bonds and other asset classes may help mitigate the impact of inflation.
• Always be aware of investment costs and the impact of taxes and fees. Minimizing investment costs is a time-honored way to keep more of what you earn.
• Investing in Treasury-Inflation Protected Securities (TIPS). TIPS are government-issued securities designed to generate consistent returns regardless of inflationary changes.
• If prices are rising, that can increase rental property incomes. You could benefit from that by investing in real estate ETFs or real estate investment trusts (REITs) if you’d rather not own property directly.
• Compounding interest allows you to earn interest on your interest, which is key to building wealth.
• Dollar-cost averaging means investing continuously, whether stock prices are low or high. When inflationary changes are part of a larger shift in the economic cycle, investors who dollar-cost average can still reap long term benefits, despite rising prices.
The Takeaway
Inflation is unavoidable, but you can take steps to minimize the impact to your personal financial situation. Building a well-rounded portfolio of stocks, ETFs and other investments is one strategy for keeping pace with rising inflation. Being aware of how taxes and fees can impact your returns is another way to keep more of what you earn.
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FAQ
How is economic deflation different from inflation?
Deflation is when the cost of goods and services trends downward rather than upward (the sign of inflation). Deflation can be positive for consumers, as their money goes further, but prolonged deflation can also be a sign of a contraction.
How do homeowners benefit from inflation?
Typically tangible assets like real estate tend to increase in value over time, even in the face of inflation. Currency, on the other hand, tends to lose value.
How does the government measure inflation?
The Bureau of Labor Statistics produces the Consumer Price Index (CPI), based on the change in cost for a range of goods and services. The CPI is the most common measure of inflation.
Photo credit: iStock/AJ_Watt
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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 prequalification for any loan product offered by SoFi Bank, N.A.
Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.
Exchange Traded Funds (ETFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or by email customer service at [email protected]. Please read the prospectus carefully prior to investing. Shares of ETFs must be bought and sold at market price, which can vary significantly from the Fund’s net asset value (NAV). Investment returns are subject to market volatility and shares may be worth more or less their original value when redeemed. The diversification of an ETF will not protect against loss. An ETF may not achieve its stated investment objective. Rebalancing and other activities within the fund may be subject to tax consequences.
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.
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.
Some investment terms and definitions may seem complex, but a little research can take the mystery out of most common investing terminology. That can help investors feel even more confident about starting their investing journey. It’s more or less the same as starting any new endeavor — from rock climbing to investing — at first, you need to get familiar with new words and phrases.
Given the girth of the investment space, the sheer amount of investment terminology investors need to know can be intimidating. But the more you read, invest, and envelope yourself in it, the easier it’ll become. If you’re just starting out, though, it may be helpful to get a big rundown of some of the more common investing terms. 💡 Quick Tip: How do you decide if a certain trading platform or app is right for you? Ideally, the investment platform you choose offers the features that you need for your investment goals or strategy, e.g., an easy-to-use interface, data analysis, educational tools.
Investment Terminology Every Beginner Investor Needs to Know
Here are a slew of common investing terms and definitions (in alphabetical order) that investors may benefit from committing to memory.
1. Alpha
Alpha is used to gauge the success of an investment strategy, portfolio, portfolio manager, or trader compared with a relevant benchmark. You may also hear alpha defined as “excess return” in that it refers to returns that can be attributed to active management, over and above market returns.
2. Assets
An asset is anything that holds value that can be converted to cash. Personal assets might include your home, a car, other valuables. Business assets might include machinery, patents. When it comes to investing, assets are typically the securities you invest in.
3. Asset Class
An asset class is a group of investments with similar characteristics that is likely to perform differently in the market than another asset class. Types of asset classes include stocks, bonds, real estate, currencies, and more. Given the same market conditions, stocks and bonds often move in opposite directions. Most financial advisors typically recommend you invest in multiple asset classes in order to have a well-diversified portfolio and minimize risk.
4. Asset Allocation Fund
An asset allocation fund is a diversified portfolio consisting of various asset classes. Most asset allocation funds have a mix of stocks, bonds, and cash equivalents. These types of funds can be popular as some advisors stress the importance of having diverse portfolios to minimize potential losses.
5. Beta
Beta refers to how risky or volatile a security or portfolio is compared with the market overall. Calculating the beta of the stocks in your portfolio can help you determine how your portfolio might respond to market volatility. You can also gauge the beta of a stock to help determine how much risk it might add to your portfolio.
6. Bear Market
A bear market occurs when the market declines, typically when broad market indexes fall 20% or more in two months or less. Bear markets can accompany a recession, but not always. They often signal that investors feel pessimistic about their investments’ ability to make money and the market’s ability to rebound.
7. Bull Market
A bull market is the opposite of a bear market, meaning prices are rising or are expected to rise for extended periods of time. Bull markets usually mean security prices are rising for months or even years at a time.
8. Blue Chip
Blue chip companies are generally thought to be well-established, financially sound, and therefore high-quality investments. Blue chip stocks are typically large companies, and many of them are household names. In some cases, blue chips may be more expensive to invest in since they can be considered relatively stable and likely to grow.
9. Bonds
When governments or corporations need to borrow money they issue bonds. Investors who buy the bonds are effectively loaning that entity cash, which will be repaid according to the terms of the bond (e.g. a 10-year bond with an interest rate of 3%). Bonds are often considered to be relatively stable, lower-risk investments compared with stocks.
10. Broker
An investment broker, whether a person or a firm, acts as a middleman to help investors buy and sell securities. Brokers may be necessary because some securities exchanges only allow members of that exchange to make an investment order. A broker’s primary function is to help clients place trades, although many brokers also help clients with market research and investment planning.
11. Diversification
You’ve probably heard that you should aim to have a diversified portfolio. That means investing in a range of asset classes that are likely to behave differently under different market conditions, in order to mitigate risk. A portfolio of only stocks, for instance, could be more vulnerable to market volatility than a portfolio that also included bonds, real estate, commodities, and so on.
12. Dividends
When a company shares their profits with investors, these are called dividends. Dividends are often paid in cash (although they can be paid in stocks). Some companies — e.g. many blue chip firms — pay dividends, but not all companies do. Ordinary dividends are taxed differently than qualified dividends, so you may want to consult a tax professional if you own dividend-paying stocks.
13. Dollar Based Investing
Also called fractional share investing, dollar based investing is a way for investors to buy partial shares of stocks. Instead of buying shares of a company, you instead invest a dollar amount. Dollar based investing is a great way for smaller investors to buy into popular companies that they may otherwise be priced out of.
14. EBITDA
EBITDA is a way to evaluate a company’s performance that is considered more precise than simply looking at net income. EBITDA stands for: earnings before interest, taxes, depreciation, and amortization. To calculate EBITDA, use the following formula: Net Income + Interest + Taxes + Depreciation + Amortization.
15. EBIT
EBIT is a simpler way to calculate a company’s profits than EBITDA, as it’s only one part of the EBITDA equation (literally!). It stands for “earnings before interest and taxes.” It’s calculated using this formula: Net Income + Interest + Taxes.
16. EPS
EPS stands for earnings per share, which is a common way investors measure how well a stock is performing. EPS is calculated by finding a company’s quarterly or annual net income and dividing it by the company’s outstanding shares of stock. Increases in EPS can be a sign that the company’s profit performance is on the upswing, whereas a decrease can be a red flag for investors.
17. ETF
Exchange-traded funds, or ETFs, are similar to mutual funds in that the fund’s portfolio can include dozens or even hundreds of different securities, and investors buy shares of the fund. Unlike mutual funds, ETF shares can be traded like stocks throughout the day (mutual fund shares are traded once a day). Most ETFs are considered lower-cost, passive investments because they track an index, although there are actively managed ETFs.
18. Expense Ratio
An expense ratio is an annual fee investors pay to cover the operating costs of mutual funds, index funds, ETFs and other types of funds. Fees are typically deducted from your investments automatically (you don’t pay a separate charge), and they can reduce your returns over time so it’s wise to shop around for lower fees. Expense ratios are calculated using this formula: Total Funds Costs / Total Fund Assets Under Management.
19. FCF
Free cash flow is the money a company has after it has paid its expenses. This number is important to investors because it can show them how likely it is that a company could have extra cash for dividends or share buybacks. A continuous decrease in free cash flow over a few years can also be a red flag to investors.
20. Growth Stock
Growth stocks are shares in a company that’s growing faster than its competitors, typically showing potential for higher revenue or sales. Growth stock companies may be considered leaders in their industry.
21. Hedge Fund
Hedge funds are usually managed by an LLC or limited partnership that invests in securities and other assets using money from multiple investors. Hedge funds tend to be more risky and expensive than mutual funds or ETFs, which often makes them accessible to more wealthy investors.
22. Index Fund
Index funds are a type of mutual fund that invest in securities that mirror a particular index, such as the S&P 500 Index or the MSCI World Index. Indexes track many different sectors, from smaller U.S. companies to big global companies to various kinds of bonds. Each index acts as a proxy for how that market sector is performing; the corresponding index funds reflect that performance.
23. Interest Rate
The interest rate is the amount a lender charges to borrow money — and it can also mean the amount your cash earns in a savings, money market or CD account. The baseline interest rate in the U.S. is set by the Federal Reserve. This rate in turn influences savings rates, mortgage rates, credit card rates, and more. Generally, when the Federal Reserve lowers interest rates, the stock market tends to rise.
24. Large Cap
A large-cap company has $10 billion or more in market capitalization. These companies are often considered industry leaders, and are relatively conservative, low-risk, and safe investments. A company’s stock may be considered large cap, mid cap, or small cap.
25. Market Cap
Market capitalization, or market cap, is the value of a company’s total outstanding shares. It’s often used to measure a company’s value and build a diversified portfolio. You can calculate market cap by multiplying the number of outstanding shares by the current price per share. Companies with lower market caps usually have more room to grow and usually are associated with newer companies, meaning they can also be riskier.
26. Mid Cap
Mid-cap companies are usually between $2 billion to $10 billion in market capitalization, putting them somewhere between small- and large-cap companies. Many mid-cap companies are in a growth phase, making them attractive to some investors who believe the company may grow into a large-cap over time, although this is not guaranteed to happen.
27. Mega Cap
Mega-cap companies are the largest companies you can invest in, with a market value of $1 trillion or more. Mega-cap stocks are typically industry leaders and household name brands.
28. Mutual Fund
Mutual funds may invest in stocks, bonds, and other securities — or a combination of these (e.g. a blended fund). Mutual funds can also be industry-specific (such as a mutual fund consisting only of energy stocks, green bonds, or tech companies, and so on).
29. Net Income
When talking about investing, net income usually refers to how much a company makes (or its total losses) after it has paid all its expenses. Net income is therefore usually calculated by subtracting a company’s expenses from its revenue. Investors may want to know a company’s net income because it can help determine how profitable the company is, although EBITDA (defined above) is another measure.
30. Over-the-Counter Stocks
Not all stocks are publicly traded. These “private” stocks, often called over-the-counter stocks, usually have to be traded through a broker. Companies may offer OTC stocks if they don’t meet the requirements to be traded publicly. Such companies are often startups or other small companies. So, while these companies may eventually grow to be able to trade publicly, investing in them also carries the risk that they may fold or even engage in fraudulent activity since the market is far less regulated than publicly traded markets are.
31. Price-to-Earnings Ratio
Investors commonly use P/E, or price-to-earnings ratios, to gain insight into how profitable a company is compared to its stock price. In other words, price-to-earnings ratios can help investors decide if the price of a stock is worth it when compared to how much a company is making.
32. Prime Interest Rate
Banks are likely to offer their best customers — those with the best credit histories and the lowest risk of defaulting — a prime interest rate for a loan. The prime interest rate is generally the lowest rate the bank will offer. A bank’s criteria for determining their prime interest rate may vary, but most banks consider the federal funds rate when setting any interest rate.
33. Portfolio Management
Portfolio management simply refers to how you select and manage the investments in your portfolio. There are many different management styles, such as active or passive, growth or value. Additionally, you can elect to manage your own portfolio or hire an individual or group to manage it for you.
34. Preferred Stock
A preferred stock means investors own shares in a company and get scheduled dividends, similar to how bond interest payments work. Preferred socks may not fluctuate in price like common stocks do, meaning they are often less volatile and risky.
35. Profit & Loss Statement
You probably know what profit and losses are, but do you know how to read a company’s P&L, or profit & loss statement? It can help you determine a company’s bottom line, as it can show you how well a company is doing compared to its peers in the same industry. If you’ve never read one before, this article about profit & loss statements could give you some tips on what to look for.
36. Prospectus
Companies that offer stocks, bonds, and mutual funds to investors are required to file a prospectus with the Securities and Exchange Commission that provides details about the investment they are offering (e.g. the expense ratio, the constituents of a fund, and more). Investors can use the prospectus to better understand a given security and how it might fit in their portfolio, or not.
37. Recession
A recession is a period of economic contraction. The National Bureau of Economic Research (NBER) defines a recession further as a decline in monthly employment, personal income, and industrial production. As an investor, a recession may indicate a drop in the value of your portfolio, although this may be temporary: When looking at the history of U.S. recessions, the stock market has always rebounded, sooner or later, after recessions.
38. REIT
Real estate investment trusts (REITs) are a way that investors can further diversify their portfolios. Instead of having the responsibility of managing an investment property yourself, you can invest in REITs, which are generally large-scale real estate projects that investors can help fund in exchange for partial ownership. Most REITs are publicly traded and pay dividends to investors.
39. Retained Earnings
When looking for a company’s net income statement, you may come across the term “retained earnings,” also sometimes called unappropriated profit, uncovered loss, member capital, earnings surplus, or accumulated earnings. In general, retained earnings is the amount of money a company keeps and potentially reinvests after it gives its investors a dividend payout.
As an investor, knowing whether a company had positive retained earnings can help you determine how much money it has to continue growing. If its retained earnings are negative, that could be a sign the company is in debt and may not be a good investment.
40. Return on Equity
Return on equity, sometimes called return on net worth, can help investors compare how well companies are managing their stockholders’ contributions. You can calculate it using this formula: Net income/Average shareholder equity. A higher return on equity can signal to investors that a company is managing its money efficiently.
41. ROI
Return on investment (ROI) is just that: the return you get after making an investment in a stock, bond, mutual fund, and so forth. Investors generally hope for a positive ROI, meaning that their investment has made a profit. While a good ROI will vary depending on the type of investments you’re making, some investors look to the historic return of the stock market (about 7% annually) as a barometer.
42. Small Cap
A small-cap company usually has a market cap of $250 million to $2 billion. Investors may be attracted to a small-cap company because they believe it has growth potential or may be undervalued.
43. SPAC
SPAC stands for special purpose acquisition company. SPACs are shell companies that list shares on an exchange to raise money so they can merge with a privately held company. Once the merger between the public SPAC and the private company is complete, that company is now in effect a public company — which is why a SPAC is sometimes called a backdoor IPO. Many companies may elect to use SPACs instead of traditional IPOs because they are often faster and less expensive.
44. Stocks
If you’ve made it this far, you probably know what a stock is. To review, a stock is a way to buy a piece of ownership into a company. You can buy and sell your stocks depending on whether you anticipate your stocks will decrease or increase in value.
45. Stock Exchange
A stock exchange is the place where you buy, sell, or trade stocks. Common U.S. stock exchanges are the New York Stock Exchange (NYSE) and the Nasdaq.
46. Stop-Loss Order
A stop-loss order can help investors have more control over their stocks. When a stock reaches a certain price that you choose, your broker will sell, buy, or trade that stock. Having a stop-loss order can help you limit how much money you make or lose in the stock market.
47. Target Date Fund
A target date fund is a type of mutual fund that includes a mix of asset classes to provide investors with a portfolio that adjusts over time to become more conservative as they age. Target date funds are often used to help investors plan their retirements. Target funds are typically constructed around various target retirement years (e.g. 2030, 2040, 2050) so investors can pick a date that corresponds with their hoped-for retirement.
48. Value Stock
A value stock is a stock that investors believe is undervalued and/or inexpensive compared to its past prices on the stock market or with its competitors. Investors may consider a stock’s price-to-earnings ratio to help them determine if something is a value stock.
49. Venture Capital
Venture capital is money a startup uses to grow its business. This money usually comes from private investors or venture capital firms. Investors may elect to invest venture capital into startups they believe have the potential to be profitable with time.
50. Yield
Yield is another way of referring to the return of an investment over a set period of time, expressed as a percentage. You may hear the term in relation to bonds (e.g. high-yield bonds), but yield is more accurately a measure of the cash flow an investor gets on the amount they invested in a security during that time period, and is different from total return. 💡 Quick Tip: The best stock trading app? That’s a personal preference, of course. Generally speaking, though, a great app is one with an intuitive interface and powerful features to help make trades quickly and easily.
The Takeaway
Getting familiar with a few key investing words and phrases can go a long way in helping you gain confidence when you’re new to investing. Getting fluent with investing terminology is like any other pursuit — there’s a learning curve at first, but the terms will feel more natural as you move forward and start investing regularly.
Learning key investing terms and definitions is only the beginning, though. Putting your knowledge into practice is another thing entirely. Although, it is helpful to know the lingo before diving into 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), 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
What are the main investment types?
There are many types of investments, but perhaps the main investment types would include stocks, bonds, funds (mutual funds, index funds, exchange-traded funds), and options, though there are more.
What is the basic rule of investing?
There are many guidelines investors might want to follow, but the basic rule of investing is that you shouldn’t invest more than you’re comfortable losing – which is associated with an investor’s risk tolerance.
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Starting a family comes with an entirely new set of responsibilities. One of the most important, yet frequently overlooked, necessities is setting up a will. This crucial document outlines tons of important details should you pass away, including what happens to your child.
Estate planning for parents can be broken down into just a few digestible steps. Here’s everything you need to think about, plus tips on how to organize all of your documents.
Estate Planning for New Parents
1. Draft a Will
About 67% of Americans don’t have a will. Setting up a will can be simpler than it seems. A will is a document that outlines how you want things handled after you pass away, including distribution of assets and how any minor children to be cared for.
While some people with complex investments and multiple properties may want to hire a lawyer for help, younger, healthy individuals can seek out online services that can walk them through the steps to make a will and sometimes have no initial cost.
Then, you can follow the execution instructions, which typically include signing your will in front of eligible witnesses. Check your state’s individual requirements. Sometimes, you must have your will notarized in order to become valid. Many banks and public libraries offer this service for free.
If you’re married, consider drafting a joint will with your spouse. This gives you the ability to plan for different scenarios, like what happens when one spouse passes away versus both passing away at the same time. Remember to regularly update your will whenever a major life change occurs, like having another child or adding new major assets. 💡 Quick Tip: We all know it’s good to have a will in place, but who has the time? These days, you can create a complete and customized estate plan online in as little as 15 minutes.
2. Choose an Executor
When you’re setting up a will, you’ll need to choose an executor. This is the person responsible for handling the legal and logistical aspects of disbursing your assets. They are also responsible for filing any remaining taxes and settling your debts.
Consequently, your executor should be someone you trust and who has the ability to handle the tasks involved. This is especially important when you have young children because the executor’s ability to tie up your finances will impact your kids’ inheritance.
Once you choose an executor, let them know that you’ve chosen them. Give them a quick rundown of what to expect, and also let them know where to find your will and other relevant documents.
3. Name a Guardian
When you start having kids, you also need to name a guardian to care for them if you pass away before they reach legal adulthood. There are a lot of things to consider when making this important decision.
First, think about the potential guardian’s ability to care for children. Are their grandparents too old to take care of them? Does the guardian live far away from other friends and family who could serve as a support system?
Also consider their financial capabilities and their ability to manage any assets you leave to help pay for your kids’ expenses.
Finally, think about your values and who would raise your children in a way that’s similar to your own parenting style. Also realize that your kids will be going through a tough time, so their guardian would ideally be someone whom they trust and would provide emotional comfort.
If you have more than one child, make sure you name a guardian for each one, even if it’s the same person. That means you need to update your will every time you have a new baby. Be as explicit as possible when naming a guardian; for instance, if you pick a sibling and their spouse, name both individuals as coguardians.
4. Set Up the Right Accounts
Some types of accounts may help you pass on your assets without having to pay as much in taxes. It’s an important part of the estate planning process and can help you maximize the amount of money you’re able to pass onto your kids. A trust fund can protect the money from being spent too quickly, either by the guardian or your children themselves.
You can implement safeguards as to how much money can be taken out and when. Even if your kids are of legal age, you can put annual withdrawal limits on the trust to prevent a young adult from overspending. Alternatively, even if you pick a guardian to oversee the emotional wellbeing of your children, that same person may not be the best at handling money. Choosing a trust can limit their spending on behalf of your children as well.
There are many different types of trusts, so you may consider consulting an estate planning attorney to choose the best one for your family’s needs. 💡 Quick Tip: A trust is a customized estate planning tool that can be helpful for your heirs in addition to a will.
5. Designate Beneficiaries
The final step of estate planning for parents is to designate a beneficiary for every account and insurance policy you have. Include bank accounts, retirement and other investment accounts, and life insurance policies.
When choosing beneficiaries, find out how each type of account is taxed for the recipient. Also create a list of all of your account numbers and other pertinent details and include them with your will. This makes it easy for your executor to locate all of your assets. Include debt information as well, like your mortgage and/or auto loan servicer.
You can also update beneficiaries as life changes. For instance, you might initially name your spouse as your life insurance beneficiary. But if they pass away before you, it’s time to update that designation to someone else.
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6. Safely Store Your Documents
Once you’ve drafted your will and signed it in accordance with your state’s laws, it’s time to store all of the appropriate estate planning documents to make it easy for your executor and beneficiaries to access.
Lots of documents are now stored online, but you’ll still need to keep your original, signed will in physical form. You can keep it in a fire-proof box at home, or in a safety deposit box at your local bank. Be sure your executor knows where and how to access your documents.
7. Outline Access to Financial Accounts
Remember to keep an up-to-date list of all your financial accounts that need to be taken care of. Bank statements should include the account numbers to make it easy for your executor to find. Also include the location of any valuable items, like art or jewelry.
Finally, it’s helpful to include the contact information for any professionals you work with, like an accountant, financial advisor, and estate attorney. Include insurance policy numbers, loan details, credit card numbers, and any other financial accounts that would need to be closed.
The Takeaway
Estate planning for parents isn’t a one-time event. Get started when you have your first child, but also review your intentions and make changes at least once a year. That way, you always have an up-to-date and comprehensive will that reflects your current financials and family structure.
When you want to make things easier on your loved ones in the future, SoFi can help. We partnered with Trust & Will, the leading online estate planning platform, to give our members 15% off their trust, will, or guardianship. The forms are fast, secure, and easy to use.
Create a complete and customized estate plan in as little as 15 minutes.
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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.
Canceling your credit card is as simple as paying off your remaining balance, collecting any unused rewards and contacting your card issuer to close the account.
If you’re wondering how to cancel a credit card, you should know that you risk harming your credit score and losing out on credit card rewards. As stated by Equifax®, one of the three major credit bureaus, closing your credit card not only impacts the length of your credit history, but it also affects your credit utilization ratio. These two factors are a combined 45% of your overall credit score.
To help you feel more confident making the decision about whether to cancel a credit card, we’ll go over reasons to close your credit card account, how to easily cancel one, as well as some simple steps to protect your credit score. We’ll also discuss how you can avoid leaving free money on the table when you close the account.
Table of contents:
Should you cancel a credit card?
Ideally, you shouldn’t cancel your credit cards unless necessary. Tanza Loudenback, CFP and author of multiple finance books, says, “It pays to hang on to old ones, even if they’re collecting dust.” As you’ll learn, closing your account can lead to a drop in your credit score, which can make it difficult to open new lines of credit.
Closing a credit card shortens the length of your credit history, changes your credit utilization ratio, and may also affect your credit mix by reducing the various types of credit you have access to—all three of these factors weigh on your credit score.
Also keep in mind that if you’re not using a credit card, the card issuer may send a notice that they’re closing the account due to inactivity. If you’re not being charged any fees on the card, it may be a good idea to negotiate with the issuer to keep the card open. One way to do this is to assure them you’ll start using it monthly, and you can make small charges with groceries and gas or whatever you choose.
Reasons to cancel your credit card
There are, of course, situations in which canceling your credit card may be a good idea, including:
Fees: Some cards come with monthly or annual fees. If you’re not using the card, you can save money by closing the account.
Separation or divorce: If you’re separating and have a joint account, your credit will still be attached to your ex-spouse or partner, which means you’re liable for charges they make.
Temptation: If you’re trying to break a spending habit, once you pay the card off, you may want to close the account to avoid the temptation of spending.
How to cancel a credit card in 7 steps
Now that you know when it may be time to close a credit card account, follow the below steps to learn how to cancel a credit card properly. Doing so will help you avoid a larger dip in your score than necessary while also making sure you’re receiving all the benefits possible.
1. Pay off the balance
Before closing your account, ensure the balance is paid in full. Leaving a balance on the account can lead to derogatory marks on your credit score.
2. Cancel recurring payments
If you have recurring payments, you’ll want to cancel them before closing the account. Be thorough when you check so you don’t accidentally miss a bill payment. The best way to do this is to go through one of your monthly statements to see what was charged.
3. Redeem your rewards
Many credit cards have rewards in the form of cash back or points for different stores and companies. You can redeem your reward points, and sometimes you can use them toward your remaining balance.
4. Call the card issuer or visit the website
Oftentimes you can cancel your credit card account through the issuer’s website, but it may be a good idea to call and follow up as well.
5. Follow up in writing
When canceling credit cards or doing anything that may affect your credit score, it’s smart to follow up in writing. This gives you documentation just in case the account continues to show up on your credit report.
6. Check your credit report
Within 30 days after closing your credit card account, check your credit report to ensure the account no longer appears. If it does, you’ll need to contact your card issuer to resolve the situation. If they’re unable to help, you’ll need to contact the three credit bureaus with your documentation of closing the account.
7. Destroy the card
It’s important to protect yourself from identity theft or someone trying to make charges on your card, so once you’ve completed the previous steps, you can physically cut up or shred your old card.
Does closing a credit card hurt your credit?
Closing a credit card account can affect your credit score for up to 10 years, according to Experian®. This happens because it changes three of the five factors that contribute to your overall credit score.
The FICO® scoring model is the most common form of credit scoring, and this is how they weight their scores:
Payment history: 35%
Credit utilization: 30%
Credit age: 15%
Credit mix: 10%
New credit: 10%
How canceling a credit card affects credit utilization
Credit utilization is the ratio of how much you owe versus your max limit of all your lines of credit. For example, if you have two credit cards with a max limit of $1,000 each and one with a max limit of $3,000, your total max limit would be $5,000. If you owe $1,000 between the three cards, your utilization ratio is 20%.
Capital One recommends keeping your utilization ratio at 30%or less. Using the previous example, a 20% utilization ratio would be helpful for your credit score. If you were to have an outstanding balance of $3,000, your utilization would be at 60%, which is much higher than the ideal 30% or less. With a high utilization ratio like this, it can harm your credit score.
How closing a credit card affects your credit mix
Credit mix refers to the various types of lines of credit you have. The primary types of credit according to FICO include:
Credit cards
Retail accounts
Installment loans
Mortgage loans
To maximize your credit score, you’ll want a well-rounded mix of these lines of credit. And when you close a credit card, your credit mix will be reduced.
How closing a credit card affects your credit age
Creditors like to see that you have experience managing lines of credit, which is why the age of your credit card accounts is so important. This scoring factor is usually the average length of all your lines of credit. If you close an old account, this will lower the average age, lowering your overall credit score.
FAQ
There’s more to know about canceling your credit card, so here are some answers to the most frequently asked questions.
Should I cancel unused credit cards or keep them?
It’s typically a better idea to keep your unused credit cards rather than cancel them so you don’t lower your credit age. The most common reason to cancel an unused card is when you’re being charged monthly or annual fees.
Do negative marks from a closed credit card stay on my report?
Yes. Closing a credit card doesn’t erase your credit history. If you have late or missed payments on a credit card, those will continue to stay on your credit report for up to 10 years.
Can I cancel a credit card online?
Yes. Many credit card companies allow you to cancel your card through their website.
What if my credit card has a balance when I close it?
You will still owe any balances remaining on your credit card, so it’s a good idea to ensure the balance is paid in full before you close it to avoid any missed payments that could hurt your score.
You can still close the account while you have a balance, but you’ll still be responsible for it, and it will continue to accrue interest. It can be easy to forget about the outstanding balance after closing the account, so it’s best to pay it off before closing the account.
How to repair your credit after closing your credit card
There are a few reasons you may need to close your credit card account, such as fees on an unused card or going through a separation or divorce. Although your credit score will likely be affected negatively, there’s still a lot you can do to rebuild your credit score.
Here at Credit.com, we have a variety of services like our ExtraCredit program that can help you work to repair and rebuild your credit score. We’ll also provide you with a free credit report card that can help you make a plan to improve and maintain your credit score. Sign up today to get started on your credit-building journey!
The number on your credit card is more than a passcode to payments when you swipe your card. Many of the digits have a specific meaning. Find out what a credit card number is, what it means, and why it matters.
In This Piece
What Is a Card Number?
A credit card number is a unique number that helps identify your account and card. This number makes it possible for you to pay with the card and for money to be taken out of the right account.
Think about it similarly to your checking account number. Your personal checks are printed with a specific series of numbers. First is the routing number, which indicates which bank the check draws on. Next is the account number, which tells which account the money should come from.
Credit card numbers work the same way. Each part of that long number has a specific function. These are standardized by the International Organization for Standardization (ISO).
I just watched a documentary on the dark web, and I will never feel safe using my credit card again!
Luckily I don’t have to worry about that. I have ExtraCredit, so I get $1,000,000 ID protection and dark web scans.
I need that peace of mind in my life. What else do you get with ExtraCredit?
It’s basically everything my credit needs. I get 28 FICO® scores, rent and utility reporting, cash rewards and even a discount to one of the leaders in credit repair.
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…we live in Oklahoma.
How to Tell the Credit Card Type by the First Four Digits
The first digit in any credit card number tells you what type of card it is—Visa, Mastercard, Discover, or Amex. Card numbers of each type always start with the same number:
3: American Express or cards under the Amex umbrella
4: Visa
5 or 2: Mastercard
6: Discover
American Express goes even further by starting card numbers with either 34 or 37, depending on the secondary branding on the card.
That first digit plus the next five in the credit card number is called the Issuer Identification Number (IIN) or Bank Identification Number. This identifies the credit card company and its network, similar to the bank routing number on a personal check.
In some cases, the IIN may be eight digits. To allow for more IINs to support growing needs, the ISO is requiring the financial industry to move to eight-digit IINs.
The rest of the digits in your credit card number, with the exception of the final number, are related to your specific account. They aren’t necessarily the same numbers that appear in the account number on your statement. But this string of numbers is tied to your account so that payment processes use the right account when you make a credit or debit card payment.
The last digit of a credit card number is known as the check digit. This number is applied in an unusual formula that helps determine if your credit card number is valid when you enter it. Using this formula, it takes only a fraction of a second for a computer to confirm that a credit card number is valid.
What Do the Last Four Digits on a Credit Card Mean?
The last four digits of your credit card number don’t actually mean much on their own, but there’s a reason you might be asked for them. If you save a credit card in an online account or other database, the information has to be encrypted. Employees of that company can’t just look up accounts and see full credit card information. They’re usually only able to see the last four digits.
You might be asked to confirm those numbers to ensure the right card is being charged. You might also be asked to confirm them when buying something online with a saved card number to ensure you’re really you and not someone who’s hacked into an account.
You can’t tell a credit card number by the last four digits. However, you could find a credit card you’ve saved in an account, such as on Amazon, by the last four numbers. Those are the only digits you’ll be able to see when you look at the saved payment methods in your account.
How Many Numbers Are in a Credit Card?
Typically, credit card numbers are 16 or 15 digits. Only American Express uses the 15-digit format. Around 2020, Visa started issuing some cards with 19-digit card numbers, but these aren’t typically used in the United States.
Finding the Right Credit Card
Before applying for a new credit card, determine what kind of credit card you need. For example, if you want to maximize rewards, you may want a cash-back card with perks that match your budget. If you’re looking to build credit, you may need to apply for a secure credit card that’s easy to get with lackluster credit.
To understand what options might be right for you, check your credit. This helps you know what type of credit card you might be approved for.
Then educate yourself about applying for a credit card online. Review options that seem appropriate for you and pick the best one. You can get started in our credit card marketplace. Gather all the information you need and apply.
A limit order allows investors to buy or sell securities at a price they specify or better, providing some price protection on trades.
When you set a buy limit order, for example, the trade will only be executed at that price or lower. For sell limit orders, the order will be executed at the price you set or higher. By using certain types of orders, traders can potentially reduce their risk of losses and avoid unpredictable swings in the market.
Table of Contents
How do Limit Orders Work?
In the simplest terms, limit orders work as a sort of restriction that an investor can choose (to either buy or sell) with “limits” on a minimum or maximum price. An investor places an order to buy a stock at a minimum price, for instance, or places an order to sell at a maximum price, in an effort to maximize their returns.
There are two types of limit orders investors can execute: buy limit orders and limit sell orders. An important thing to know is that while a limit order specifies a desired price, it doesn’t guarantee the trade will occur at that price — or at all.
When you set a limit order, the trade will only be executed if and when the security meets the terms of the order — which may or may not happen, depending on the overall market conditions. So, when an investor sets a limit order, it’s possible to miss out on other investing opportunities.
Types of Limit Orders
As mentioned, there are two types of limit orders investors can execute: buy limit orders and limit sell orders.
For buy limit orders, you’re essentially setting a ceiling for the trade — i.e. the highest price you’d be willing to pay for each share. For sell limit orders, you’re setting a price floor — i.e. the lowest amount you’d be willing to accept per share.
• What is limit order to buy? If a trader places a buy limit order, the intention is to buy shares of stock. The order will be triggered when the stock hits the limit price or lower.
For example, you may want to buy shares of XYZ stock at $15 each. You could place a buy limit order that would allow the trade to be carried out automatically if the stock reaches that purchase price or better.
• What is limit order to sell? If a trader places a limit order to sell, the order will be triggered when the stock hits the limit price or higher. So you could set a sell limit order to sell XYZ stock once its share price hits $20 or higher.
As noted above, the main upside of using limit orders is that traders get to name a desired price; they generally end up paying a price they expect; and they can set an order to execute a trade that can be executed even if they are doing other things.
In this way, setting limit orders can help traders seize opportunities they might otherwise miss because limit orders can stay open for months or in some cases indefinitely (the industry term is “good ‘til canceled,’ or GTC). The limit order will still execute the trade once the terms are met.
Limit Order vs Market Order
Limit orders differ from market orders, which are, essentially, orders to buy a security immediately at its given price. These are the most common types of orders. So, while a market order is executed immediately regardless of terms, limit orders only execute under certain circumstances.
Limit orders can also be set for pre-market and after-hours trading sessions. Market orders, by contrast, are limited to standard trading hours (9:30am to 4pm ET).
Remember: Even though limit orders are geared to a specific price, that price isn’t guaranteed. First, limit orders are generally executed on a first-come-first-served basis. So there may be orders ahead of yours that eliminate the availability of shares at your limit price.
And it bears repeating again: There is also the potential for missed opportunities: The limit order you set could trigger a trade. But then the stock or other security might hit an even better price.
In other words, time is a factor. In today’s market, computer algorithms execute the majority of stock market trades. In this high-tech trading environment, it can be hard as an individual trader to know when to buy and sell. By using certain types of orders, like limit orders, traders can potentially limit their losses, lock in gains, and avoid swings in the market.
Though limit orders are commonly used as a part of day trading strategies, they can be useful for any investor who wants some price protection around their trades. For example, if you think a stock is currently undervalued, you could purchase it at the current market price, then set a sell limit order to automatically sell it when the price goes up. Again, the limit order can stay open until the security meets your desired price — or you cancel the order.
However, speculating in the market can be risky and having experience can be helpful when deciding how and when to set limit orders. 💡 Quick Tip: Did you know that opening a brokerage account typically doesn’t come with any setup costs? Often, the only requirement to open a brokerage account — aside from providing personal details — is making an initial deposit.
Limit Orders vs Stop Orders
There is another type of order that can come into play when you’re trying to control the price of a trade: a stop order. A stop order is similar to a limit order in that you set your desired price for a stock, say, and once the stock hits that price or goes past it, a market order is triggered to execute the purchase or sale.
The terms of a limit order are different in that a trade will be executed if the stock hits the specified price or better. So if you want to sell XYZ stock for $50 a share, a sell limit order will be triggered once the stock hits $50 or higher.
A stop order triggers a market order once XYZ stock hits $50, period. By the time the order is executed, the actual stock price could be higher or lower.
Thus with a stop order there’s also no guarantee that you’ll get the specified price. A market order is submitted once the stop price is hit, but in fast-moving markets the actual price you pay might end up being higher or lower.
Stop orders are generally used to exit a position and to minimize losses, whereas limit orders are used to capture gains. But two can also be used in conjunction with each other with something called a stop-limit order.
Stop-Limit Orders
A stop-limit order is a combination of a stop order and a limit order. Stop-limit orders involve setting two prices. For example: A stock is currently priced at $30 and a trader believes it’s going to go up in value, so they set a buy stop order of $33.
When the stock hits $33, a market order to buy will be triggered. But with a stop-limit order, the trader can also set a limit price, meaning the highest price they’re willing to pay per share — say, $35 per share. Using a stop-limit order gives traders an additional level of control.
Stop-limit orders can also help traders make sure they sell stocks before they go down significantly in value. Let’s say a trader purchased stock XYZ at $40 per share, and now anticipates the price will drop. The trader doesn’t want to lose more than $5 per share, so they set a stop order for $35.
If the stock hits $35 — the stop price — the stock will be triggered to sell. However, the price could continue to drop before the trade is fully executed. To prevent selling at a much lower price than $35, the trader can set a limit order to only sell between $32 and $35.
When a Trader Might Use a Limit Order
There are several reasons why you might want to use a limit order.
• Price protection. When a stock is experiencing volatility, you may not want to risk placing a market order and getting a bad price. Although it’s unlikely that the price will change drastically within a few seconds or minutes after placing an order, it can happen, and setting a limit order can set a floor or a ceiling for the price you want.
• Convenience. Another occasion to use a limit order might be when you’re interested in buying or selling a stock but you don’t want to keep a constant eye on the price. By setting a limit order, you can walk away and wait for it to be executed. This might also be a good choice for longer-term positions, since in some cases traders can place a limit order with no expiration date.
• Volatility. Third, an investor may choose to set a limit order if they are buying or selling at the end of the market day or after the stock market has closed. Company or world news could be announced while the market is closed, which could affect the stock’s price when the market reopens. If the investor isn’t able to cancel a market order while the market is still closed, they may not be happy with the results of the trade. A limit order can help prevent that.
Limit orders can also be useful when the stock being traded doesn’t have a lot of liquidity. If there aren’t many people trading the stock, one order could affect the price. When entering a market order, that trade could cause the price to go up or down significantly, and a trader could end up with a different price than intended.
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When to Consider a Market Order vs a Limit Order
If you’re trying to parse out when a market order or a limit order is the best tool to use, consider the following.
A trader might want to use a market order if:
• Executing the trade immediately is a priority
• The stock is highly liquid
• They’re only trading a small number of shares
• The stock has a narrow bid-ask spread (about a penny)
A trader might want to use a limit order if:
• They want to specify their price
• They are trading an illiquid stock
• They want to set a long-term trade (or even walk away for their lunch break and still have the trade execute)
• They feel a stock is currently over- or undervalued
• The stock has a large bid-ask spread
• They are trading a larger number of shares
How to Set a Limit Order
When placing a limit order with your brokerage firm, the broker or trading platform might ask for the following information:
• The stock or security
• Is it a buy or sell order
• Number of shares to buy or sell
• Stock order type (limit order, market order, or another type of order)
• Price
When setting up a limit order, the trader can set it to remain open indefinitely, (until the stock reaches the limit price), or they can set an expiration date.
For example, say a trader would like to purchase 100 shares of stock XYZ. The highest price they want to pay per share is $26.75. They would set up a limit buy order like this:
Buy 100 shares XYZ limit 26.75.
Is a Limit Order Bad?
Limit orders are not necessarily good or bad. As mentioned, they can offer advantages to investors who understand how to use them.
For example, limit orders can offer more control and flexibility than using market orders. And they can work well in a number of different trading situations. If the stock being traded is highly volatile, for instance, a limit order can help traders retain control and avoid paying an unexpected price.
Each time a trader does research on a stock and decides to buy or sell shares, they also consider their goals and the current market conditions to decide whether to place a market or a limit order.
Pros and Cons of Using Limit Orders
Each type of order has pros and cons depending on the particular situation.
Pros of Limit Orders:
• The trader gets to name their price. One of the chief reasons traders rely on limit orders is to set baselines for profits and losses. They won’t end up paying a price they didn’t expect when they buy or get a price below their target when it’s time to sell.
• The trader can set the order and walk away. Day trading can be time consuming and it requires a significant amount of knowledge. Investors who use limit orders don’t have to continuously watch the market to get the price they want.
• Traders may pay less in fees. Commissions can take a bite out of your profits, something many investors would prefer to keep to a minimum. When trading illiquid stocks, sometimes the bid-ask spread is enough to cover broker fees.
• Insulate against volatility. Volatility can cause you to make emotional decisions. Limit orders can give traders more control over their portfolio and ward off panic-buying or selling.
• Ride the gaps. Stock prices can fluctuate overnight due to after hours trading. It’s possible to benefit from price differences from one day to another when using limit orders.
For example, if a trader places a buy limit order for a stock at $3.50, but the order doesn’t get triggered while the market is open, the price could change overnight. If the market opens at $3.30 the next morning, they’ll get a better price, since the buy limit order gets triggered if the stock is at or below the specified price.
Cons of Limit Orders:
• The order may never be executed. There may not be enough supply or demand to fulfill the order even if it reaches the limit price, since there could be hundreds or even thousands of other traders wanting to buy or sell at the specified price.
• The stock may never reach the limit price. For example, if a stock is currently priced at $20, a trader might set a limit order to buy at $15. If the stock goes down to $16 and then back up to $20, the order won’t execute. In this case, they would miss out on potential gains.
• The market can change significantly. If a trader sets a shorter-term limit order they might miss out on a better price. For example, if a stock a trader owns is currently priced at $150, the trader may choose to set a sell limit order at $154 within four weeks. If the company then makes a big announcement about a new product after that period, and the stock’s price spikes to $170, the trader would miss out on selling at that higher price.
• It takes experience to understand the market and set limit orders. New investors can miss out on opportunities and experience unwanted losses, as with any type of investment.
What Happens If a Limit Order Is Not Filled?
A limit order can only be filled if the stock’s price reaches the limit price or better. If this doesn’t happen, then the order is not executed and it expires according to the terms of the contract. An order can be good just for a single trading day, for a certain period of time, or in some cases it’s possible to leave the limit order open-ended using a GTC (good ‘til canceled) provision.
So if you placed a buy limit order, but the stock does not reach the specified price or lower, the purchase would not be completed and the order would expire within the specified time frame.
And if you’re using a sell limit order, but the security never reaches the specified sell price or higher, the shares would remain in your trading account and the order would expire. 💡 Quick Tip: How do you decide if a certain trading platform or app is right for you? Ideally, the investment platform you choose offers the features that you need for your investment goals or strategy, e.g., an easy-to-use interface, data analysis, educational tools.
Limit Orders and Price Gaps
Price gaps can occur when stocks close at one price then open at a different price on the next trading day. This can be attributed to after-market or pre-market trading that occurs after the regular market hours have ended. After-hours trading can impact stock price minimally or more substantially, depending on what’s spurring trades.
For example, say news of a large tech company’s planned merger with another tech giant leaks after hours. That could send the aftermarket trading markets into a frenzy, resulting in a radically different price for both company’s stocks when the market reopens. Pricing gaps don’t necessarily have to be wide but large pricing swings are possible with overnight trading.
Limit orders can help to downplay the potential for losses associated with pricing gaps. Placing a buy limit order or limit sell order may not close the gap entirely. But it could help to mitigate the losses you may experience when gaps in pricing exist. Whether the gap is moving up or down can determine what type of limit order to place and where to cap your limit price.
The Takeaway
Limit orders can be an effective and efficient way for investors to set price caps on their trades, and also give them some protection against market swings. Limit orders offer other advantages as well, including giving traders the ability to place longer- or shorter-term trades that will be executed even if they’re not continuously watching the market. This can potentially protect investors against losses and potentially lock in gains.
That said, limit orders are complicated because they don’t guarantee that the trade will be executed at the set price. The stock (or other security) could hit the limit price — and there might not be enough supply or demand to complete the trade. There is also the potential for some missed opportunities, if the price you set triggers a trade, and subsequently the stock or other security hits an even better price.
Investors can also consider combining a limit order with a stop order. A stop-limit order can provide even more protection against potential losses.
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FAQ
Can I specify the price for a limit order?
Yes, investors can specify the price for a limit order. In fact, the price typically is the limit in a limit order, representing either a price ceiling or a price floor.
How long does a limit order stay active?
Generally, a limit order will stay active indefinitely, unless an investor cancels it or specifies otherwise. That means that if the limit is never reached, the order will not execute, and the limit order will remain active until the limit is reached.
Can I cancel a limit order once it’s placed?
Investors can cancel standing limit orders as long as conditions haven’t arrived that’s led to the order being actively executed. The cancelation process will depend on the specific exchange an investor is using, however.
What happens if the market price doesn’t reach my limit price?
If the market price of a stock does not reach the limit price — either a price floor or price ceiling — then the limit order will not execute, and the limit order will remain active until it does.
Can I place a limit order outside of regular trading hours?
It’s possible to place limit orders outside of regular trading hours, depending on the rules of a given exchange, and market conditions dictate. The order itself, of course, won’t execute until the market opens, assuming that the limit is reached.
Are there any fees associated with limit orders?
There may or may not be fees associated with limit orders, and it’ll depend on the specific exchange or brokerage an investor is using. Note that some brokerages may charge higher fees for limit orders than market orders — but some may charge no fees at all.
Are limit orders guaranteed to be executed?
No, there is no guarantee that a limit order will be executed, as it will only execute if the limit price is reached. If the limit is not reached, the order will remain active but not execute.
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