The second way diversifying a portfolio through real estate helps is because it is in its own class when it comes to types of investments. Including real estate in an investment portfolio can provide massive benefits because of this separation. Real estate has a low correlation with other asset classes, such as stocks and bonds … [Read more…]
When it comes to investing, your time horizon refers to the desired amount of time before you reach a financial goal. It’s one of the most important factors in your financial plan because the amount of time you have to reach your goal — whether it’s 3 months or 30 years — influences how much risk you want to take on, and therefore which investments you’ll choose.
In fact, a good way to think about your investing time horizon is like the leg of a table. Four key decisions uphold your investment portfolio, and the first is how much time you have, ideally, to attain a certain goal. The other three cascade from there: your risk tolerance, your investment choices, and your asset allocation.
Recommended: Investment Strategies for Beginners
What Is a Time Horizon?
What is an investment time horizon? In short, it is the expected time available to hold an investment or to achieve a financial goal.
First, an investing time horizon can refer to the amount of time that an investor is planning on holding an investment. For example, an investor may be planning to hold an investment for 10 years. Therefore, the investment horizon is 10 years.
Or, investors can think of a time horizon as a type of deadline: e.g. how long they plan to work toward a goal. For example, one common goal is to save and invest for retirement, which may be decades away.
This investing time horizon will likely be determined by the age of the investor and how much progress they are making towards their retirement goal.
An investment time horizon could also be short, long, or somewhere in the middle. 💡 Quick Tip: When people talk about investment risk, they mean the risk of losing money. Some investments are higher risk, some are lower. Be sure to bear this in mind when investing online.
Why Is Time Horizon Important?
Most financial goals have a time horizon attached to them implicitly, even if you haven’t spent much time thinking about it. If you’d like to buy a home, you might be thinking 2-3 years — or 10 years. If you’d like to buy a car, you might be thinking six months to a year. It all depends.
What drives the time horizon is the urgency of your goal. If you need a bigger home as soon as possible for your growing family, the goal of saving for a downpayment might be a short-term goal, with a shorter time horizon. If you want to buy a car, but you want to pay all cash, you might need a few years to save that money — so that goal would have a longer time horizon.
Goals like saving for college or retirement typically take years, and those time horizons are longer.
Once you can identify a realistic time horizon for the goal you’re investing toward, you can think about your investment strategy in more detail. Understanding the difference between short- and long-term investments is important, because some strategies will support your goals better than others.
Time Horizon and Risk Tolerance
Deciding on a short or long time horizon can help inform (or influence) your risk tolerance. Your tolerance for risk is, as it sounds, how much investment risk you can tolerate, when risk = the risk of losing money. If you can’t sleep unless you know your portfolio is relatively secure, and you’re on edge when markets are bumpy, you probably have a low risk tolerance.
Investors who have a low risk tolerance are considered risk averse, and they may prefer more conservative investments, like bonds. Low-risk investments like bonds and certificates of deposit (CDs) are less volatile, but they typically also have lower returns than higher-risk investments like stocks.
If you have a shorter time horizon of a year, and you don’t want to risk losing money, you may choose lower-risk investments like short-term bonds or types of CDs.
But if you have a higher risk tolerance, and you want to take on more risk with the hope of seeing higher returns, you might want to invest in stocks, mutual funds, or exchange-traded funds (ETFs).
Now let’s say you have a low risk tolerance, but you have a long time horizon to save for retirement: say 25 or 30 years. With a time horizon of three decades, your portfolio has more time to recover from periods of volatility, so you might feel more comfortable having a higher percentage of stocks in your portfolio, even though that increases your risk to some degree. It also increases your potential for growth over time.
This is often referred to as the risk-reward ratio, or a risk-reward calculation. Since no investment is genuinely risk-free, using a risk-reward ratio helps calculate the potential outcomes of any investment transaction — good or bad.
Recommended: 11 Golden Rules of Investing
Time Horizon, Risk, and Investment Choices
From the above examples, you can see that there is an interaction between the time you have until you achieve your goal, how much risk you’re willing to take on, and therefore what investment choices you might be open to.
Various investment types can exhibit different risk characteristics over different time periods. The stock market can be volatile during short time periods, like a month or a year. But over longer periods, the stock market generally continues to rise.
In fact, long-term investors may want to view risk through a different lens: If you don’t take on enough risk, you might not reach your investing goals. It is also possible to lose money by doing nothing, due to the effects of inflation. When cash just sits in low-interest accounts, it tends to lose purchasing power over time. 💡 Quick Tip: When you’re actively investing in stocks, it’s important to ask what types of fees you might have to pay. For example, brokers may charge a flat fee for trading stocks, or require some commission for every trade. Taking the time to manage investment costs can be beneficial over the long term.
Asset Allocation and Time Horizon
The purpose of deciding on the time horizon for your goals, examining your risk tolerance, and selecting different investments is to then land on an asset allocation that makes sense for you.
Asset allocation is the investor’s decision to divide a portfolio among various asset classes. Popular asset classes can include different types of stocks, bonds, as well as cash and cash equivalents (e.g. money market funds).
Asset allocation typically has a large impact on the performance of a portfolio over time. So, once again, an investor’s time horizon and risk tolerance will influence not only the selection of certain securities, but the proportion of higher- and lower-risk investments in a portfolio.
Asset Allocation Formula
For investors saving for retirement, there’s a general rule of thumb for deciding asset allocation. Subtract your age from 110, and that’s how much an investor should allocate to stocks.
If an investor is 30, subtract 30 from 110, which is 80. Thus the investor might consider an allocation of 80% stocks, with the other 20% going to bonds and cash. Of course, this is just a general rule — each investor will likely need to use their discretion and evaluate their overall financial profile and risk tolerance as they make investing decisions.
Short-Term Investing Time Horizons
A short-term investing time horizon could be anywhere between zero and three years. Some examples of short-term goals include: saving up for a vacation, emergency funds, holiday gifts, or a down payment on a home.
For the most part, it makes sense to keep money for short-term goals in cash or cash equivalents, because the focus is generally on safety and liquidity — and investors won’t want to risk losing money that they’ll need relatively soon.
This can be especially true when the goal does not allow for any timing flexibility.
For example, say that you’re saving up for a down payment on a house in about six months. Because this is a short-term time frame, and because the objective is to make sure that the money is available for use in six months, it does not make much sense to subject this money to risky assets with high volatility, like stocks and bonds.
Cash can be held in a checking or savings account. This can be done with a traditional retail bank or an online bank account.
Another option to consider is a short-term CD at a bank or local credit union. Investors may be able to earn slightly more interest with a CD. Tread carefully, here: There may be a penalty to access money held in a CD before the maturity date.
For short-term goals that are flexible on timing, it may be possible to invest all or some of that money. For example, imagine an investor with the goal of starting a business in about three years.
Because they are flexible on timing, and willing to take on more risk in order to potentially see bigger gains, they may put some of their business start-up money into stocks or equity mutual funds or ETFs.
Recommended: Investing for Beginners
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Medium-Term Investing Time Horizons
A medium-term investing time horizon could be anywhere between three and 10 years. Examples of medium-term goals include: starting a family or paying for a child’s college education, or potentially a house remodel.
Investing in mid-term goals can actually be more complex than investing for both short and long-term goals.
Likely, an investor will want to consider a balanced approach in a diversified combination of investments. The nearer the goal, the more bonds and cash the investor will likely want to have. The farther out the goal, the more risk that an investor might take.
How much an investor allocates to equities (stocks) will depend on their comfort level with the stock market during a medium investing time frame, and their willingness to be flexible.
Long-Term Investing Time Horizons
A long-term investing time horizon is generally longer than ten years.
Examples of long-term financial goals include: paying for college, retirement, financial independence, creating an endowment, and building intergenerational wealth.
How should long-term money be invested? In general, longer investment time horizons allow for more risk — which may set the stage for higher potential returns. Therefore, it is possible to have the majority of long-term funds invested in the stock market or similarly risky asset classes, if the investor’s personal risk tolerance allows.
The notion of risk is complex during longer periods, however. With money that is saved and invested now to be held for use over the long-term, investors may have to contend with losing purchasing power to inflation, in addition to market volatility.
Inflation is the economic phenomenon of rising prices, which means that over time each dollar can buy less. Historically, the inflation rate has run at 2% to 3%, which means money that’s “earning nothing” is actually losing 3% each year. Therefore, one of the biggest risks for long-term investors may actually be acting too conservatively, too soon.
Example of an Investment Time Horizon
To recap the above, an investor’s time horizon depends on the goal in question. Not all goals have a specific time horizon, but those that do — like retirement or buying a home or paying for college — require careful planning.
In order to reach a specific goal with the needed amount of money, investors must take into consideration how much risk they are willing to take on, given the time allowed, and choose their portfolio investments and asset allocation accordingly.
Investment Time Horizon and Risk Types
Investor’s must contend with different types of risk, depending on the time horizon for their goal.
Market Risk
This is the most common and likely the most well-known type of risk: it’s simply market volatility. The more exposure you have to the equity markets (or any market with greater volatility, e.g. crypto, commodities, high-risk bonds) that puts you at a higher risk for losing money.
While market risk is a factor for most investments to some degree, time horizon obviously impacts how much market risk you’re exposed to.
Inflationary Risk and Investment Time Horizon
As noted above, a big risk factor for longer time horizons is inflation risk: The risk that your money won’t grow enough to keep up with inflation. If an investor has a 20-year time horizon, for example, and invests conservatively during that time, there is a risk that they won’t end up with enough growth.
Interest Rate Risk
Interest-rate risk is the risk that interest rates could rise, affecting the value of the fixed-income part of a portfolio. While interest rate changes can impact many investments, bond values fall as interest rates rise.
Investing With SoFi
Your investment time horizon is effectively a type of financial deadline for any given goal. Some time horizons are more flexible than others — and that’s important to know, because the amount of time you have may influence your risk tolerance and investment choices.
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).
Invest with as little as $5 with a SoFi Active Investing account.
FAQ
How do you calculate your time horizon?
Your time horizon is simply the amount of time between now (or when you start investing for your goal) and when you hope to reach your goal. For example, if you’re 35 and you’re planning to retire at 65, your time horizon for that goal is 30 years.
If you’re aiming to buy a home once you have $50,000 saved, you need to create a time horizon for when you’ll be able to reach that goal, based on the amount you can save per year, and your expected rate of return for the investments you choose.
What is the ideal investment horizon?
The ideal investment horizon varies from goal to goal. In the course of your life you may find yourself dealing with multiple time horizons for a range of goals. In some cases (e.g. saving for college or the arrival of a new baby), there’s an inflexible time horizon and you may have to adjust the amount you’re saving or the investments you choose. In other cases, like retiring or buying a home, you may be able to take more time to reach your goal.
What is time important in investing?
Time is a critical element in all investing decisions, whether long term or short term. As its most basic, time may allow investors to save more, recover from market volatility, adjust their risk exposure (if needed), and potentially see greater gains.
SoFi Invest® The information provided is not meant to provide investment or financial advice. Also, past performance is no guarantee of future results. Investment decisions should be based on an individual’s specific financial needs, goals, and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below. 1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC registered investment advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or 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.
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.
Northwestern Mutual Research Shows that Nearly Half of American Millionaires Believe Their Financial Plans Need Improvement, and a Third Think They Could Outlive Their Savings Wealthy people value professional help and trust financial advisors, with 70% working with a financial advisor – nearly double the amount of the general population Wealthy Americans are proactive, disciplined … [Read more…]
Financial markets rallied worldwide today as a massive plan to remove bad mortgage debt from the balance sheets of troubled institutions was introduced by Treasury Secretary Henry Paulson.
Last night, Paulson held discussions with Fed Chairman Ben Bernanke and SEC Chairman Chris Cox about taking a “comprehensive approach” to solve the ongoing credit crisis.
After addressing problems on a case-by-case basis over the past few weeks, such as the bailout of Fannie and Freddie and AIG, it became clear that a more systematic plan would be necessary to maintain market stability.
“The underlying weakness in our financial system today is the illiquid mortgage assets that have lost value as the housing correction has proceeded,” said Paulson in prepared remarks posted on the Treasury website. “These illiquid assets are choking off the flow of credit that is so vitally important to our economy.”
“When the financial system works as it should, money and capital flow to and from households and businesses to pay for home loans, school loans and investments that create jobs. As illiquid mortgage assets block the system, the clogging of our financial markets has the potential to have significant effects on our financial system and our economy.”
The so-called troubled asset relief program currently being mulled over aims to be the “ultimate taxpayer protection,” though it will involve a “significant investment” from taxpayer dollars.
“I am convinced that this bold approach will cost American families far less than the alternative – a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion,” said Paulson.
While the new plan is being worked on over the weekend, Treasury is taking immediate steps to provide relief to the mortgage market.
First, Fannie and Freddie will boost their purchases of mortgage-backed securities, and second, Treasury will expand its MBS purchase program to increase available capital for new home loans.
Additionally, a temporary guaranty program for the U.S. money market mutual fund industry has been established and a ban on short selling is in place on 799 financial companies until October 2.
As for the millions of delinquent borrowers, banks receiving assistance may need to endorse judicial loan modifications and allow bankruptcy judges to facilitate refinances on primary residences in return.
Market cap represents the total market value of a company’s outstanding shares. A company’s market capitalization, or market cap, provides a good measure of its size and value versus revenue or sales figures.
Knowing what the market cap is for a given company can help investors compare it to other companies of a similar size.
Note the market cap (the value of a company’s total equity) is different than a company’s market value, which is a more complex calculation based on various metrics, including return-on-equity, price-to-earnings, and more.
Recommended: What Is Market Value?
How to Calculate Market Cap
To figure out a company’s market cap, simply multiply the number of outstanding shares by the current price per share. If a company has 10 million outstanding shares of stock selling for $30 per share, the company’s market cap is $300 million.
Share prices fluctuate constantly, and as a result, so does market cap. You should be able to find the number of outstanding shares listed on a company’s balance sheet, where it’s referred to as “capital stock.” Companies update this number on their quarterly filings with the Securities and Exchange Commission (SEC).
Market Cap Formula
The formula for determining a company’s market cap is fairly simple:
Current price per share x Total # of outstanding shares = Market capitalization
Remember that the share price doesn’t determine the size of the company or vice versa. When measuring market cap you always have to look at the share price multiplied by the number of outstanding shares.
• Company A could be worth $100 per share, and have 50,000 shares outstanding, for a total market cap of $5 million.
• Company B could be worth $25 per share, and have 20 million shares outstanding, for a total market cap of $500 million.
Market Cap and Number of Shares
In some cases, market cap can change if the number of stocks increases or decreases. For example, a company may issue new stock or even buy back stock. When a company issues new shares, the stock price may dip as investors worry about dilution.
Stock splits do not increase market share, because the price of the stock is also split proportionally.
Changes to the number of shares are relatively rare, however. More commonly, investors will notice that changes in share price have the most frequent impact on changing market cap. 💡 Quick Tip: If you’re opening a brokerage account for the first time, consider starting with an amount of money you’re prepared to lose. Investing always includes the risk of loss, and until you’ve gained some experience, it’s probably wise to start small.
Market Cap Versus Stock Price
If you’re new to investing, you may assume a company’s share price is the clearest indicator of how large a company is. You may even assume it’s as important in choosing a stock as market cap.
While the share price of a company tells you how much it costs to own a piece of the company, it doesn’t really give you any hints as to the size of the company or how much the company is worth.
Market cap, on the other hand, might give you some hints about how a particular stock might behave. For example, large companies may be more stable and experience less volatility than their smaller counterparts.
Recommended: Intrinsic Value vs. Market Value
Market-Cap Categories
Analysts, as well as index and exchange-traded fund (ETF) providers commonly sort stocks into small-, mid-, and large-cap stocks, though some include a broader range that goes from micro or nano-cap stocks all the way to mega cap on the large end.
The size limits of these categories can change depending on market conditions but here are some rough parameters.
Nano-cap and Micro-cap Stocks
Nano- and micro-cap companies are those with a total market capitalization under $300 million. Some define nano-cap stocks as those under $50 million, and micro-cap stocks as those between $50 million and $300 million.
These smaller companies can be riskier than large-cap companies (though not always). Many microcap stocks trade over-the-counter (OTC). Over-the-counter stocks are not traded on a public exchange like the New York Stock Exchange (NYSE) or Nasdaq. Instead, these stocks are traded through a broker-dealer network.
As a result there may be less information available about these companies, which can make them difficult to assess.
Small-cap Stocks
Small-cap companies are considered to be in the $300 million to $2 billion range. They are generally younger and faster-growing than large-cap stocks. Investors often look to small-caps for growth opportunities.
While small-cap companies have historically outperformed large-caps, these stocks can also be more risky, and may require more due diligence from would-be investors.
Mid-cap
Mid-cap companies lie between small- and large-cap companies, with market caps of $2 billion to $10 billion.
Some investors may find mid-cap stocks attractive because they can offer some of the growth potential of small-caps with some of the maturity of large-caps. But mid-cap stocks likewise can share some of the downsides of those two categories, being somewhat vulnerable to competition in some cases, or lacking the impetus to expand in others.
Large-cap
Large-cap stocks are those valued between $10 billion and $200 billion, roughly. Large-cap companies tend not to offer the same kind of growth as small- and mid-cap companies. But what they may lack in performance they can deliver in terms of stability.
These are the companies that tend to be more well established, less vulnerable to sudden market shocks (and less likely to collapse). Some investors use large-cap stocks as a hedge against riskier investments.
Mega-cap
Mega cap describes the largest publicly traded companies based on their market capitalization. Mega cap stocks typically include industry-leading companies with highly recognizable brands with valuations above $200 billion.
Recommended: Investing 101 Guide
Evaluate Stocks Using Market Cap
Understanding the market cap of a company can help investors evaluate the company in the context of other companies of similar size.
For instance, as noted above market cap can clue investors into stocks’ potential risk and reward, in part because the size of a company can be related to where that company is in its business development. Investors can also evaluate how a company is doing by comparing its performance to an index that tracks other companies of a similar size, a process known as benchmarking.
• The S&P 500, a common benchmark, is a market-cap weighted index of the 500 largest publicly traded U.S. companies.
• The S&P MidCap 400, for example, is a market-cap weighted index that tracks mid-cap stocks.
• The Russell 2000 is a common benchmark index for small cap stocks.
Within this system, companies with higher market cap make up a greater proportion of the index. You may often hear the S&P 500 used as a proxy for how the stock market is doing on the whole. 💡 Quick Tip: Look for an online brokerage with low trading commissions as well as no account minimum. Higher fees can cut into investment returns over time.
What Market Cap Can Tell You
Here are some characteristics of larger market-cap companies versus smaller-cap stocks:
Volatility: Larger companies, also often dubbed blue-chip stocks, tend to be less volatile than smaller stocks and tend to offer steady returns. What’s more, compared to larger companies, they have relatively few resources, such as access to cheaper credit and access to liquidity.
Revenue: Larger stocks tend to have more international exposure when it comes to their sales and revenue streams. Meanwhile, smaller stocks can be more oriented to the domestic economy.
Growth: Smaller companies tend to have better odds of offering faster growth.
Valuation: Larger stocks tend to be more expensive than smaller ones and have higher valuations when it comes to metrics like price-to-earnings ratios.
Dividends: Many investors are also drawn to large cap stocks because companies of this size frequently pay out dividends. When reinvested, these dividends can be a powerful driver of growth inside investor portfolios.
Market Cap and Diversification
So how do you use market cap to help build a portfolio? Market cap can help you choose stocks that could help you diversify.
Building a diversified portfolio made up of a broad mix of investments is a strategy that can help mitigate risk.
That’s because different types of investments perform differently over time and depending on market conditions. This idea applies to stock from companies of varying sizes, as well. Depending on market conditions, small, medium, and large cap companies could each beat the market or trail behind.
Because large-cap companies tend to have more international exposure, they might be doing well when the global economy is showing signs of strength. On the flip side, because small-cap companies tend to have greater domestic exposure, they might do well when the U.S. economy is expected to be robust.
Recommended: Guide to Investing in International Stocks
Meanwhile, larger-cap companies could also be outperforming when there’s a downturn, because they may have more cash at hand and prove to be resilient. In recent years, the biggest companies in the U.S. have been linked to the technology. Therefore, picking by market cap can have an impact on what kind of sectors are in an investor’s portfolio as well.
What Is Free-Float Market Cap?
Float is the number of outstanding shares that are available for trading by the public. Therefore, free-float market cap is calculating market cap but excluding locked-in shares, typically those held by company executives.
For example, it’s common for companies to provide employees with stock options or restricted stock units as part of their compensation package. These become available to employees according to a vesting schedule. Before vesting, employees typically don’t have access to these shares and can’t sell them on the open market.
The free-float method of calculating market cap excludes shares that are not available on the open market, such as those that were awarded as part of compensation packages. As a result, the free-float calculation can be much smaller than the full market cap calculation.
However, this method could be considered to be a better way to understand market cap because it provides a more accurate representation of the movement of stocks that are currently in play. Many of the major indexes, such as the S&P 500 and the MSCI indices, use the free-float method.
Market Cap vs Enterprise Value
While market cap is the total value of shares outstanding, enterprise value includes any debt that the company has. Enterprise value also looks at the whole value of a company, rather than just the equity value.
Here is the formula for enterprise value (EV):
Market cap + market value of debt – cash and equivalents.
A more extended version of EV is here:
Common shares + preferred shares + market value of debt + minority interest – cash and equivalents.
The Takeaway
Market capitalization is a common way that analysts and investors describe the value and size of different companies. Market cap is simply the price per share multiplied by the number of outstanding shares. Given that prices fluctuate constantly, so does the market cap of each company, but the parameters are broad enough that investors generally know whether a company is a small cap vs. a mid cap vs. a large or mega cap.
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).
Invest with as little as $5 with a SoFi Active Investing account.
FAQ
What is the maximum market cap?
In theory there is no cap on market cap; i.e. there is no maximum size a company can be. As of Aug. 21, 2023, the top five biggest companies by market cap, according to Forbes, are: Apple ($2.744 trillion), Microsoft ($2.353 trillion), Saudi Aramco ($2.224 trillion), Alphabet (Google) ($1.624 trillion), Amazon ($1.336 trillion).
How does market cap go up?
A company’s market cap can grow if the share price goes up.
Are large-cap stocks good?
The market cap of any company is neither good nor bad; it’s simply a way to measure the company’s size and value relative to other companies in the same sector or industry. You can have mega cap companies that underperform and micro-cap companies that outperform.
SoFi Invest® The information provided is not meant to provide investment or financial advice. Also, past performance is no guarantee of future results. Investment decisions should be based on an individual’s specific financial needs, goals, and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below. 1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC registered investment advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or 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.
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.
Arizona’s vast landscapes and diverse architectural styles present a unique backdrop for the real estate market. Whether you’re buying a Spanish-inspired villa in Scottsdale or selling a contemporary home in Phoenix, home inspection is a critical stage that can’t be overlooked. For buyers, this process unveils the home’s hidden stories, ensuring a sound investment. For sellers, it’s an affirmation of the property’s worth and a chance to address possible concerns proactively.
This Redfin article will shed light on the nuances and best practices of inspections in the Grand Canyon State while also featuring expert insights from Arizona home inspectors themselves. Given Arizona’s unique climate and housing trends, understanding the home inspection process in the local context is vital. Let’s get started.
Why should you get a home inspection in Arizona?
Securing a home inspection in Arizona is not merely a procedural step; it’s a strategic move, given the state’s distinct environmental and architectural dynamics. Arizona’s unique climate, marked by intense heat, monsoon seasons, and occasional dust storms, can impose specific wear and tear on properties. These factors might lead to issues like foundational cracks, roof damage, or HVAC inefficiencies that aren’t immediately evident to the untrained eye. Furthermore, with the diverse range of architectural styles and ages of homes in the state, potential hidden complications can vary widely. A thorough home inspection offers buyers peace of mind, ensuring they are making a sound investment, and gives sellers an edge by addressing concerns proactively, promoting a smoother transaction process.
Are there any specialized inspections that Arizona buyers should consider?
Arizona buyers should consider several specialized inspections when purchasing a property. Given Arizona’s unique climate and geographical features, some of the key inspections to consider include a thorough termite inspection due to the prevalence of termites in the state, a comprehensive pool inspection if the property has a pool, a radon gas test, and a geological inspection in areas prone to soil instability or geological hazards.
Kyle Pritchett of Pritchett Home Inspection says that regardless of which specialized inspection you opt for, your inspector should have all the necessary tools and equipment.
“There are a lot of different types of inspections out there today for both sellers and buyers to choose from,” says Pritchett. “So, if you are going to choose one of those, why not choose one that is going to give the inspector an upgrade on what he is able to see? When you select a thermal home inspection, the inspector should be utilizing a top-of-the-linermal camera, which will enable them to detect missing insulation, air leakage, bad window seals, electrical issues, water intrusion, moisture issues, and even pest intrusions they are not able to detect with the naked eye. When making one of the biggest investments of your life, make sure your inspector has the tools to see everything you need to know about the home you’re purchasing.”
Hailey Rodriguez from WIN Home Inspections adds, “In addition to their home inspection, home buyers in Arizona should consider getting an infrared scan to identify abnormalities within the home such as moisture, insulation gaps, energy loss, and electrical hazards that are hidden within the walls, floors, and ceilings of the home.”
Are home inspections required in Arizona?
Home inspections are not legally required in Arizona, but they are highly recommended. They safeguard buyers from unexpected problems and provide an opportunity to negotiate repairs or pricing based on inspection findings.
“Even though a home inspection may not be required for your purchase, it is a great way for a home buyer to prepare for the home they are considering purchasing,” says Dylan Bucknavich of ProInspect. “They reveal a lot about a home and can even include services such as Sewer Scopes, Pool Inspections, and Indoor Air Quality. When purchasing a resale or new home, we highly recommend the buyer speak to few inspectors to get a sense or their experience and level of service.”
How much does a home inspection cost in Arizona?
The cost of a home inspection in Arizona varies based on factors like the property’s size, location, and additional services requested. According to House and Home Inspection Services, home inspections usually cost between $350 and $450 for standard sized houses, though this figure can vary depending on square footage and other factors.
David Dion of Whole Home Inspections recommends prioritizing experience over price when choosing a home inspector. “Home inspection prices in Arizona are generally based on size, age and any additional services requested. It’s important to hire an experienced home inspector who has a trained eye to see what other inspectors may not. Therefore, we don’t recommend using price as your determining factor when trying to find the right inspection company for your needs. However, if a company is a few hundred dollars above or below many others, you may consider asking why.”
Can you sell a house in Arizona without an inspection?
You can sell a house in Arizona without an inspection. However, it’s advisable for sellers to get pre-listing home inspections to attract more confident buyers and streamline the negotiation process.
Expert advice for buyers getting a home inspection in Arizona
“Be present at the inspection, so you can meet the inspector and let them go over the findings with you personally at the end,” says Tim Sponsler of 1st Priority Inspections. “This helps immensely with understanding the property you are purchasing.”
“With inflation and rising costs, life got expensive, really quick,” says Matthew Willer of Truss Home Inspections. “Get a home inspection and get the full picture before making the leap. Repair costs can add up more now than ever before.”
“The average new build home buyer is convinced they do not need a home inspection for a new build, says Cy Porter of CyFy Home Inspections. “The State of Arizona holds builders to a higher standard than most parts of the country. All new build homes in Arizona come with a 2 year state required warranty which includes cosmetic defects. If the buyer wants to have all of their warranted items addressed by the builder, the buyer must identify the defects and present them to the builder. If the builder refuses to address any defects then a complaint can be filed against the builder with the Arizona Registrar of Contractors (ROC). The Arizona ROC will then send out an investigator to verify the defects and then require the builder to address them.” A home inspector can identify warranted defects and hold builders accountable.
“Be sure to hire a licensed, experienced, inspector by asking how long they’ve been performing inspections and how many inspections they’ve performed,” according to DoubleTree Home Inspection Services. “Ask if the inspector provides a review at the end of the inspection to go over the findings so you can see the items for yourself. For items needing repair, it may be preferable to negotiate a discount or credit for repairs, rather than relying on the sellers to make satisfactory corrections.”
“A home inspector may not perform any repairs on a home that they’ve inspected,” says Connor Barickman of Purple Cactus Inspection. “This restriction allows the inspector to remain impartial. The sword cuts both ways because when a home inspector identifies a problem with the home, the inspector is not in a position to provide a quote to remedy the problem. The inspector is not licensed to perform the work and it would be a violation of the code of ethics to do so. Once a problem has been identified, it is time to bring in a licensed contractor. An excellent contractor will be familiar with the most up-to-date standards on how to correct the issues identified on a home inspection report. Furthermore, they can provide accurate written quotes which can be used to make a request of the seller which could be a price reduction, or a request to have the issue repaired before the transaction closes.”
Getting an Arizona home inspection: the bottom line
Getting a home inspection in Arizona is a smart investment. It empowers buyers with information, aids in identifying specialized issues, and facilitates smoother transactions. While not mandatory, an inspection is a practical step towards ensuring a safe and secure real estate investment in the Grand Canyon State.
With the cooling, chilly temps of the fall come our natural desire to slow down and savor the coziness of the season. We swap out our smoothies for soups, swimsuits for sweaters, and soak up the simple joy of staying in. Now’s the time for us to tackle our reading lists alongside setting our autumnal intentions. While there are festivals to visit and outdoor adventures to embark on, this fall, I’m happy to spend the majority of my days being happy at home. And designers’ fall 2023 home decor trends predictions align perfectly with that shift inwards. Warm tones, natural textures, and fabrics that invite you into their comfy cocoon. Prepare to embrace a little timeless, organic luxury this season.
Featured image of Claire Zinnecker’s home by Michelle Nash.
In this article
Fall 2023 Home Decor Trends Designers Love This Season
We chatted with The Citizenry team to get the scoop on the fall 2023 home decor trends that will populate our homes. From our conversation, it’s evident that a consistent tone of optimism will inspire the fabrics, furniture, and accent pieces displayed in every room. But more than that, there’s a certain sentimentality woven throughout it all. “We expect this to translate into muted, warm colors that evoke feelings of romance and beauty while also leaning into the stories behind the products and brands that they support,” notes the team.
Intimacy, warmth, and artistry all sit at the core of this prediction. Ahead, the experts explain how this shakes out in the fall 2023 home decor trends you can expect to see through the end of the year. And with the timelessness on display—beyond.
Every product is curated with care by our editors and we’ll always give an honest opinion, whether gifted or purchased ourselves. If you buy something through our links, we may earn a small commission at no cost to you.
Warm, Earthy Tones
Sun-baked pinks and tans layer onto warm ivory and pumice tones to bring comfort to interiors this fall. We expect ivory to become the go-to shade of white, from wall colors, to bedding, to upholstered furniture. This creamy tone adds instant warmth while maintaining a neutral foundation to build a home around. We also expect warm undertones to dominate a cooler palette with sages, warm olives, and muted blues.
2 of 21Image by Michelle Nash
Natural Materials
Expect an increased appetite for organic, natural textures—especially natural wood and bold, high-contrast stones. The closer to their raw state, the better! These components connect our interior spaces to the natural world outside and bring the joy and serenity of the outdoors in, a sentiment consumers are leaning toward.
3 of 21Image of Sarah Solis’ Los Angeles home
Luxe Textiles and Upholstery
Textured, luxurious finishes and surfaces bring warmth and interest to spaces. The cozy feel of these pieces are perfect as the days get cooler. This fall, velvet will take center stage as the biggest trend in upholstery, creating an irresistibly warm and cozy space. Plush, wool rugs will continue to trend, especially in warm neutral tones, as well as these same finishes on larger pieces such as seating.
This season, we are introducing our first custom upholstered seating collection featuring a range of performance fabrics including velvets with the goal of bringing durability to everyday elegance.
4 of 21Image by Michelle Nash
Vintage Vibes
Consumers are increasing investments in high-quality materials made to last a lifetime —prioritizing a “fewer, better” mentality and leaning into sustainability more than ever. They are looking to invest in soulful, modern heirlooms prioritizing value and longevity in the products they buy.
This fall, contemporary takes on silhouettes inspired by the past will dominate furniture collections. We expect to see old-world charm reemerge with pieces reminiscent of traditional styles infused with refined European lines and modernized silhouettes. These vintage signatures will be high-quality, showcasing artisanal handiwork, and luxe fabrics in current colors will bring these pieces to life.
5 of 21Image by Suruchi Avasthi
Subtle Curves
There’s a continued demand for pieces with subtle, softened shapes in furniture and decor. We find ourselves drawn to designs with a fluid elegance and unexpected forms as these silhouettes add a sense of serenity and calm and create inviting spaces.
6 of 21Image by Michelle Nash
Grids
Contrary, yet complementary, to the trend of subtle curves, simple gridded patterns have increased in popularity recently. These understated lines, created with texture in addition to color, add a minimal architectural element to any room and anchor the eye in an otherwise undulating environment.
7 of 21Image by Michelle Nash
Global Patterns
Looking forward, we predict a movement toward a more collected home. Inspired by travels across continents, collections showcasing global patterns offer a more intimate relationship with the outside world. This season, we have a spotlight on Turkish kilim pillows in a range of muted tones, a step toward preserving the unique craft of Kilim weaving.
In the investment world, a reward-to-risk ratio indicates how much money an investor stands to gain, against how much they’ll have to risk. For example, a reward-to-risk ratio of 6:1 means that for every dollar an investor stands to lose, they have the potential to gain $6.
The risk-reward ratio is a valuable analytical tool available to investors. Since no investment is genuinely risk-free, the risk-reward ratio helps calculate the potential outcomes of any investment transaction — good or bad.
What Is the Risk-Reward Ratio?
As noted, the reward-to-risk ratio indicates how much money an investor stands to gain levied against how much they’re risking in order to generate that potential gain. This can be particularly important for those with small portfolios, and it may be helpful to review tips on risk for new investors.
Typically, the more money one invests — such as in high-risk stocks — the more ample the reward if the investment turns out to be a winner. On that note, it may be beneficial to review a guide to high risk stocks, too. Conversely, the less risk you take with an investment, the less reward will likely be earned on the investment.
In addition, the investment itself directly impacts the risk-reward ratio. For example, if an individual parks his money in a savings account at a bank, the risk of losing that money is significantly low, as bank deposits are insured and there’s little chance the bank saver will lose any money on the deal.
In other words, using a savings account to accrue interest is a fairly safe investment.
Likewise, the potential reward for parking cash in a bank savings account is also low. Bank savings accounts offer routinely low interest rates earned on insured bank deposits, meaning the individual will likely earn little in interest on the deposit. If savings accounts were somewhere on an investment risk pyramid, they’d be among other relatively safe investments — low risk, but low potential returns.
Compare that scenario to a stock market investor, who has no guarantees that the money she steers into a stock transaction will be intact in the future. It’s even possible the stock market investor will lose all of her investment principal if the stock turns sour and loses significant value.
Correspondingly, this investor is presumably looking at a greater reward for the risk taken when buying a stock. If the stock climbs in value, the investor is rewarded for the risk she took with the investment, as she’ll likely earn significantly more money on the stock deal than the bank saver will make on the interest earned on his bank deposit. 💡 Quick Tip: Are self-directed brokerage accounts cost efficient? They can be, because they offer the convenience of being able to buy stocks online without using a traditional full-service broker (and the typical broker fees).
How To Calculate Risk-Reward Ratio
The reward-to-risk ratio formula is a fairly straightforward calculation, and involves following a formula.
Risk-Reward Ratio Formula
To calculate risk-reward ratio, divide net profits (which represent the reward) by the cost of the investment’s maximum risk.
For instance, for a risk-reward ratio of 1:3, the investor risks $1 to hopefully gain $3 in profit. For a 1:4 risk-reward ratio, an investor is risking $1 to potentially make $4.
Example of a Risk-Reward Ratio Calculation
Let’s say an investor is weighing the purchase of a stock selling at $100 per share and the consensus analyst outlook has the stock price topping out at $115 per share with an expected downside bottom of $95 per share.
The investor makes the trade, hoping the stock will rise to 115, but hedges his investment by putting in a “stop-loss” order at $95, ensuring his investment will do no worse by automatically selling out at $95. The investor can also lock in a profit by instructing the broker to automatically sell the stock once it reaches its perceived apex of $115 per share.
As an aside: A stop loss order is a type of market order in which the order that is placed with a stockbroker to buy or sell a specific stock once that security reaches a predetermined price level. The mechanism is specifically designed to place a limit on an investor’s stock position.
In this scenario, the “risk” figure in the equation is $5 — the total amount of money that can be lost if the stock declines and is automatically sold out at $95 (i.e., $100 minus $95 = $5).
The “reward” figure is $15. That’s the amount of per-share money the investor will earn once the share price rises from buying the stock at $100 per share and selling it if and when the stock rises to $115 per share.
Thus, with an expected risk of 5 and an expected reward of 15, the actual risk reward ratio is 1:3 — the potential to lose $5 in order to gain $15.
Pros and Cons of the Risk-Reward Ratio
There are pros and cons to using the risk-reward ratio when investing.
As for the upsides, it’s a relatively simple formula and calculation that can help investors get a sense of whether their strategy makes sense. In that sense, it can be very useful with some basic risk management when tinkering with a portfolio.
On the other hand, it’s a relatively simple formula and calculation that may not be terribly accurate, and doesn’t necessarily deliver a whole lot of additional insight into a strategy. That’s something investors should take to heart, and why they may not want to only rely on risk-reward ratio to guide their overall strategy.
Recommended: Guide to Risk Neutral Probability
Three Risk-and-Reward Investor Types
Investors have their own comfort levels when assessing risk and reward ratios with their portfolios, with some proceeding cautiously, some taking a moderate dose of investment risk, and still others taking on more risk by investing aggressively on a regular basis.
The investment portfolios you build, either by yourself or with the help of a money management professional, reflect your personal risk tolerance.
Typically, there are three different types of investor when it comes to risk:
• Conservative investors. These investors focus on low-risk, low-reward investments like cash, bonds, bond funds, and large-company stocks or stock funds.
• Moderate investors. These investors look for a blend of risk and reward when constructing their investment portfolios, putting money into lower-risk investment vehicles like bonds, bond funds, and large-company stocks and funds with more broadly based categories like value and/or growth stocks and funds, international stocks, and funds, along with a small slice of alternative funds and investments like real estate, commodities, and stock options and futures.
• Aggressive investors. This type of investor may completely bypass conservative investments and elect to fill his investment portfolio with higher-risk stocks and funds (like overseas stocks or small company stocks), along with higher-risk assets like gold and oil (commodities), stock options and futures, and more.
Each of the above investors recognizes the realities of risk and the potential of reward and balances them in different ways. Even conservative investors will accept a little risk to gain some reward.
For example, a conservative investor may invest in a corporate bond or municipal bond, knowing that in return for a guaranteed profit (in the form of paid interest) and upside asset protection (the bond’s principal being repaid), she takes on the small risk that the bond will default, and the principal and interest on the bond disappears.
An aggressive investor understands that by placing money in a high-risk stock, he is potentially risking some or all of his investment if the stock goes under, or significantly underperforms. In return for that risk, the more aggressive investor may reap the financial rewards of a booming stock price and a resulting major return on his investment.
In either scenario, the investor gauges the risk reward ratio and acts accordingly, betting that the outcome will work out in their favor, and that the risk outweighs the reward.
By not acting at all, and taking both risk and reward out of the equation, the investor won’t see their investment portfolio appreciate in value, and risk losing ground as economic realities like inflation, taxes, and stagnation eat into their wealth. 💡 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.
Investing With SoFi
The risk-reward ratio is helpful in allowing investors to get an idea of how much they stand to gain versus how much they stand to lose in a given investment situation. Any risk-reward engagement depends on the quality of the research undertaken by the investor and/or a professional money management specialist.
That research should set the proper expected parameters of the risk (i.e., the money the investor can lose) and the reward (i.e., the expected portfolio gain the investment can make.) Once the risk and reward boundaries are set, the investor can weigh the potential outcomes of the investment scenario and make the decision to go forward (or not) with the investment.
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 is a good risk-reward ratio?
Generally speaking, a good risk-reward ratio is one that skews toward reward, rather than risk. If the ratio is calculated, a ratio below 1 is better, as it indicates that an investment has a bigger potential reward compared to risk.
What is a poor risk-reward ratio?
A poor risk-reward ratio would be one that is higher or greater than 1, as that would indicate that an investment involves more risk relative to the potential reward.
What are some things that the risk-reward ratio doesn’t take into account?
The risk-reward ratio doesn’t take several factors into account, and some of those include external and current events, market volatility, and liquidity in the markets.
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Mortgage rates may fall slightly by the end of the year, but don’t expect record lows anytime soon.
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The Federal Reserve has been working to tame inflation for nearly 18 months now, approving 11 hikes to its benchmark interest rate since March 2022. Those moves — along with other economic factors — have pushed mortgage rates up considerably in that time. In fact, since last March, the average rate on 30-year mortgage loans has jumped from under 4% to 7.23% today, according to Freddie Mac. Mortgage interest rates are currently the highest they have been since 2000.
That’s a far cry from the sub-3% rates the market saw in 2020 and 2021 — and a significant barrier for many hopeful homebuyers.
Fortunately, mortgage rates fluctuate constantly, so they won’t stay that high forever. Just how long could those elevated rates stick around? And when can consumers expect lower rates once again? We asked a few experts for their opinion.
Explore your mortgage rate options here now to see what you qualify for.
Where are mortgage interest rates headed?
There’s no way to tell for sure, but most experts and industry groups think rates are at or near their peak. As Matt Clarke, chief operating officer of Churchill Mortgage, puts it, “We’re approaching a glass ceiling where rates going too much higher would be detrimental to other critical aspects of the economy.”
Still, rates being at their peak doesn’t necessarily mean they’ll decrease. For that to happen, inflation would need to slow, investments into mortgage-backed securities would need to increase and the Federal Reserve would need to ease up on its rate hikes.
According to the CME Group’s Fed Watch tool, there’s only about an 18% chance the Fed increases its rate at its upcoming September meeting. For its November meeting, the chances are higher (though that’s still a way out and a lot could change before then).
“Inflation needs to slow, and unemployment needs to start creeping up,” says Jerry Schiano, CEO at home equity lender Spring EQ. “I think unemployment will start increasing before year-end. Consumers are stressed, and that could lead to less buying and pullback by companies.”
If this happens, the Fed could ease up on its benchmark rate hikes and mortgage rates may decrease as well.
Explore your mortgage purchase and refinance rate options here to learn more.
When will mortgage interest rates drop?
Realtor.com, Fannie Mae, the National Association of Realtors, and the Mortgage Bankers Association all expect mortgage rates to be slightly lower by the end of the year, with predictions ranging from 6% to 6.7% on average.
That’s a drop — but not anything significant. For reference, a 7.23% rate (today’s average) on a 30-year $400,000 loan comes with about a $2,723 monthly payment. At 6.7%, it falls to $2,581 — just a $142 difference.
“I expect mortgage rates to stay elevated through most of 2024,” says John Paasonen, co-founder and CEO of Maxwell, a mortgage technology provider.
More notable dips in rates are probably much further down the line — possibly by 2025, Clarke says.
“I think significantly lower rates — back to the 5% range — could realistically happen in 2025, with 2024 beginning a slow trend downward,” Clarke says.
Note that he says 5% — not the 2 to 3% rates we saw a few years ago. According to all three experts, those record-low numbers aren’t returning any time soon (and they may never).
“Let’s just say I’m glad I locked into a 2.6% mortgage rate on my own home,” Paasonen says. “The market will restabilize at a new norm, likely within the next 12 to 18 months. That new norm most certainly will not be below 3% — that was a unique attribute of the amount of economic stimulation following a global pandemic.”
Getting a mortgage in the meantime
Until that new norm is achieved, taking out a mortgage is going to be more expensive than it has been in years past. You also may want to think carefully about selling your home if you’re one of the many who took advantage of those ultra-low mortgage rates.
“Anybody who took record low rates made a great decision,” Schiano says. “They are saving a lot of money each month and should think carefully before refinancing or even selling their house.”
If buying a new home is necessary, though, there are strategies for getting a lower mortgage interest rate. You can buy points, negotiate a temporary buydown, or consider a lower-rate mortgage product, like a 15-year loan or adjustable-rate mortgage. VA loans and USDA loans also tend to have lower rates than other mortgage options (if you can qualify for them).
Looking for an app that does it all – automate savings, track spending, investing, and get a free $250 cash advance?
Welcome to my Albert App Review.
Looking for an all-in-one personal finance app that will help you manage your money, save for your future, or even get a free cash advance when you need it?
In that case, you’ve come to the right spot!
In this Albert App Review, I’ll go over everything you need to know about the popular Albert app, and I will discuss its features, benefits, how the app can help you, and more.
You can sign up for the Albert app here.
The Albert app is becoming more and more popular as a money tool that can simplify your life. Instead of needing a bunch of different financial apps, Albert can help you consolidate your phone and need less. The app is a one-stop shop for your monthly financial needs – it automates savings, helps you manage your budget, and has spending, borrowing, and investing tools. With this easy app and the wide range of tools that you can use, Albert has many benefits.
This app reduces the need for multiple apps since it offers a wide range of tools and features.
If you’re looking for a money saving app, Albert can be a great option to start with. There’s a reason why it’s one of the top money apps in the App Store!
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Albert is one of the most popular personal finance apps, and it is designed to make it easier to save and invest all in one place. This app has features for saving, investing, and budgeting.
Quick Summary – Albert App Review
Albert app is a financial management tool that helps you to save, spend, and invest right in the app
The Genius feature allows you to ask any money question and get a real response from a real person
Albert app’s cash advance feature can get you up to $250
The app is free, but some features do require a monthly subscription
Albert App Review
What Is The Albert App?
The Albert app is a personal finance app that will help you manage your money better by making it easier to save and invest all in one place. This app has features for saving, investing, budgeting, and more.
It has many different features, such as budgeting tools, real-time alerts, and a helpful service where you can ask an expert money questions and get real answers catered to your situation. The app strives to make financial management easier and more organized for everyone.
Albert makes it easy to manage your finances, eliminating the need for visits to physical bank branches or formal phone calls with a financial expert. With the ease of using an app, you can easily track your financial well-being, helping you stay organized, reach goals, and find smart ways to save, spend, and invest. Albert stands out by simplifying your personal finances, all while keeping things very easy to use.
Albert also has a feature where you can get a small cash advance of up to $250 with no late fees, interest, or credit check. This advance is repaid from your next paycheck, giving you the option to avoid high-interest personal loan lenders for those in need of quick cash.
There are no hidden fees, and it is free to sign up. They do have a paid subscription plan that you can sign up for which will give you access to different features such as financial advice from experts. I talk about the paid part further below.
Does The Albert App Give You Money?
Albert provides instant cash advances to users who need small amounts of money before their payday. They do not charge late fees, interest, or run a credit check for this feature.
This can be a great way to not pay high rates on payday loans for when you just need a little bit of cash.
How it works is that the Albert app will send you up to $250 from your next paycheck straight to your bank account. Then, you simply repay them when you get paid. You can pay a small fee to get your money instantly, or you can wait 2-3 days and get the cash advance for free.
Albert Instant is available to all members of the Albert app who qualify, whether they are a paid subscriber or not. Now, not everyone will qualify. To determine your eligibility for a cash advance, they look at things such as if your income is direct deposited into your connected bank account, if your bank account has been open for at least 2 months and has a balance greater than $0, and if you’ve received consistent income in the past 2 months from the same employer.
Albert App Features
The Albert App has many other features, such as:
Banking with Albert
Albert has a user-friendly banking service through its partnership with FDIC-insured Sutton Bank. This includes features like no minimum balance requirement and access to your paycheck up to two days early.
With an Albert account, you can also earn cash back rewards, such as getting a cash back bonus on gas, groceries, and more when you purchase items with your Albert debit card. You can earn an average of $2.00 per gas tank fill-up. You do need to be a Genius subscriber to take advantage of this benefit.
The app also has fee-free ATMs for their paid subscribers at over 55,000 ATMs (when using the Albert Mastercard debit card).
Albert Savings
Albert Savings is the app’s automatic savings tool that is available to Genius subscribers. It saves money from your linked bank account to your Albert Savings account.
This automated savings tool helps you build up your funds without the stress of manual transfers. It analyzes your income and expenses to calculate the amount you can save comfortably. Or, you can manually set your own savings schedule.
The Albert saving feature can help you to save more money and reach your goals.
The money in your Albert Savings account is yours, and you can withdraw it at any time.
Albert Budgeting
The Albert Budgeting feature is super handy and packed with a bunch of useful tools to help you manage your money with ease.
The Albert app has budgeting tools to help you track your income and expenses, find fees that you shouldn’t be paying, and watch your financial progress. The app will send real-time alerts and notifications to help you stay on track with your budget. But, that’s not all.
Other features of Albert Budgeting include:
The Albert app can negotiate your bills so that you can save money. The app will help you lower your bills such as for cable TV, internet, cell phone, and more.
The Albert app also makes it easy to see all of your budgeting info in one quick place, such as tracking your recent bills, seeing how much you’re spending in different categories, and more.
The app will categorize your spending so that you can see where your money is going (this can help you to realize where you may need to cut back)
Also, the app will help you find hidden charges and subscriptions that you may not be using.
These are all very helpful features that can help you save a lot of money in the long run.
Albert Investing
If you’re new to investing or you’re looking for an easier way to invest, the Albert Investing side of the app can make getting started much, much easier.
With Albert Investing, you can start an investment portfolio that matches the amount of investment risk you want to take on and your financial goals. The app even provides investment guidance and lets you start investing without any minimum investment amount needed.
So, that means that you can start investing with Albert Investing with just $1.
You can get started investing in the app by answering some questions (the app wants to learn more about you so that it can make selections based on your personal situation). The app will then choose individual stocks or funds for you to invest in (or, you can choose these yourself if you know what you want to invest in). You can even ask the app to only invest in themes as well, such as companies that are interested in sustainability and the environment. You can then continue to invest automatically or on a recurring schedule. The auto-investing feature can be a great tool if you are looking to save time and invest regularly without really thinking about it.
Albert Genius
This is one of my favorite parts in the app.
The Albert Genius service gives you financial advice from a team of expert financial advisors (this is a team of real human experts that you are able to talk to – not a robot), available through a paid monthly subscription in the app.
You can ask their experts any money question that you have, whether it’s a big or small question, a general question, or something more specific to your personal situation. Your questions can be about anything from credit cards, budgeting, student loans, investing, credit card rewards, life insurance, your personal financial life, and more. These experts will help you answer your questions 7 days a week too. And, there’s no limit to the amount of questions you can ask.
This is a very nice feature to have access to.
Some of the questions you can ask include:
How do I start a budget?
How do I lower my car insurance? Am I paying too much?
How much can I personally afford to spend on a house?
How can I improve my credit score?
How much money should I have in my emergency fund?
Should I use extra cash to pay off debt or invest?
Can you help me to better under travel miles and credit cards?
There are so many different questions that you can ask the team at Albert!
Albert Protect
Albert Protect is a feature for paid subscribers on the app.
The Albert Protect feature monitors your money around the clock. The app will alert you if something suspicious comes up for any of your connected financial accounts or your identity. The app continuously watches for suspicious activity on your credit report, the dark web, data breaches, and unusual charges.
How Does The Albert App Work?
Signing up for Albert is easy!
Simply click here to get started.
Or, you can head to the Google Play or App Store, depending on your device (Android or iOS), and download the app. Once installed, the app will walk you through the setup process. There’s no need to worry about a credit check as Albert doesn’t require one for signing up.
Next, you’ll be asked some questions about yourself such as your name and age. The app is trying to learn more about you. Here’s what Albert says specifically about the questions that they ask: “We do this in order to best serve your needs: a 19-year-old single student has different financial objectives and priorities than a 37-year-old professional with two kids who will be starting college soon.”
Then, you’ll be asked to connect your financial accounts to the app. So, you may connect your bank account that your bills come out of, your credit card accounts, student loans, mortgage, investments accounts, and more. You can connect as many or as little as you want. This information helps the app better serve you so that it can give you recommendations, track your spending, give you alerts, and more.
After you sign up, you’ll have access to the many features mentioned above to help you manage your finances. As you learned above, there are a lot of tools in this app, so I recommend just playing around in the app at first to better familiarize yourself with it and see how it can help you. Maybe sit down for a few minutes at a time until you understand how to use the app in the best way for your financial situation. That’s exactly what I did when I first downloaded the app because it was a little intimidating at first trying to see all of the different things that the app can do. But, it’s so nice that everything can be done right from one app!
To sign up for the app, they do require that you be a U.S. citizen or resident, be at least 18 years old, and have a bank account with a U.S. financial institution. Unfortunately, at this time, the app is not available to those outside the U.S.
How Much Does Albert App Cost?
The Albert app has a lot of different features, so you may be wondering what the cost is or if there are any monthly fees.
The great thing is that many of the tools and features on the Albert app are free.
For example, the Albert App has a fee-free cash advance feature to help you cover unexpected expenses. If you need some extra cash until your next paycheck, you can get up to $250 as a cash advance, with no cost. There are no late fees, overdraft fees, or maintenance fees associated with this service.
You can also start investing with as little as $1 and use the free cash advances feature (as long as you meet eligibility requirements) without the need for a subscription.
Now, the Genius subscription does have a cost.
If you’re looking to unlock all of Albert’s helpful budgeting, saving, and investing tools, you might want to consider their Genius subscription. This subscription starts at just $14.99 per month and gives you access to some helpful benefits like cash bonuses and personalized financial advice. Keep in mind that the true value of the Genius subscription depends on how often you use the app and all its features. So, if you’re a frequent user of the app, it could be a great investment in your financial well-being.
Is Albert App Safe to Use?
Yes, Albert is safe to use.
Let’s start with the basics – the Albert app isn’t a bank, but it teams up with FDIC-insured Sutton Bank to offer you banking services. That means that the money in your Albert Cash account is safe because it’s protected by the Federal Deposit Insurance Corporation (also known as FDIC). That’s a fancy way of saying your funds are insured for up to $250,000.
Your Albert Savings accounts are held at FDIC-insured banks, including Coastal Community Bank, Axos Bank, and Wells Fargo.
When it comes to data security and privacy, Albert takes that seriously too. The app has security measures to protect your sensitive personal and financial information.
As for customer service, if you ever face any issues with the Albert app, you can easily reach out to their support team for assistance. Many Albert app reviews have mentioned their responsive customer service.
Pros and Cons of Albert
Like with any personal finance app, there are pros and cons. I can’t write an Albert app Review and not talk about the pros and cons, so that you can make the best decision for yourself.
Some of the benefits of using Albert include:
The app aggregates all of your accounts – Albert gives you an overview of your financial life by combining all your accounts in one place.
Savings and investments – The app offers customizable savings goals and can create a custom portfolio for your investment needs. It will also keep track of your transactions and help you identify potential savings opportunities as well as avoid late fees.
The Albert app is safe – Your information is kept safe with the same level of security used by major banks, as well as FDIC insurance.
Albert Genius – This feature provides personalized money advice from financial experts (real people, not a robot!) to help you make smarter financial decisions. You can ask any money question and will get personalized advice.
Free cash advance – Get a cash advance on your next paycheck without any late fees using Albert Instant, or access your paycheck up to two days early with direct deposit.
Free ATM withdrawals – This is a feature paid monthly members get to have.
While Albert has many helpful tools and features, there are some potential downsides to using the app such as:
App-only functionality – All features of Albert are limited to the app, which may be inconvenient for some people who prefer to be on their computer instead of their cell phone.
Fees – While many features in Albert are free to use, some, such as the Albert Genius service, require a subscription fee. The fee is quite affordable for the services you receive, though.
No phone calls – If you need to talk to customer support, there is no phone number to call. Instead, it’s all done through the app, text message, or email.
Frequently Asked Questions
Here are answers to commonly asked questions about the Albert app.
Is Albert a trustworthy app?
Yes, Albert is a trustworthy app. Your banking money is FDIC-insured, with coverage up to $250,000, and your investments are SIPC-insured. The app has many financial tools and you can even get personalized advice from experts.
How much can you borrow with Albert?
The maximum for a cash advance is $250.
How do you get $250 from Albert app?
Albert offers a cash advance feature called Albert Instant. After you enable this feature and meet the requirements, you can access funds quickly, sometimes up to $250.
Does Albert give you money right away?
In some cases, Albert can provide instant cash advances or help you get your paycheck up to two days early via direct deposit, depending on your employer and banking situation.
How long does it take to get money from Albert?
Getting your hands on the cash you need from Albert is all about the service you’re using. If you’re in a hurry, instant cash advances could have those funds in your pocket right away. But for paycheck advances and other features, it might take a couple of days before you see the money.
What are the requirements to get a cash advance on Albert?
Requirements for a cash advance with Albert include a history of consistent income, using the Albert app for a certain period, and having a bank account linked.
Does Albert hurt your credit?
Albert does not directly impact your credit score as it is not a lender. However, using the app’s guidance to improve financial management can help you work towards building or maintaining a higher credit score.
Does Albert need your social security number?
Yes, when signing up for the Albert app, it will ask you for your SSN. This is because it is an investment app and they need to verify that it is actually you signing up.
Is Albert or Chime better?
Albert and Chime are different financial apps with different features. Albert focuses on money management, investing, and advice, while Chime is a mobile banking app offering checking and savings account services. Your choice should depend on your financial goals and preferences.
Why is Albert taking money from my account?
If you’re already an Albert user, this may be a troubleshooting question that you have (and perhaps you searched Google and found this blog post). Albert takes money from your account (such as your bank checking account) to fund the services you’ve opted into, such as investments or automatic savings. You can check the app’s settings or contact Albert to learn more,
Is Albert app affiliated with a specific local bank?
Albert is backed by Sutton Bank.
Is the Albert app reliable and secure for banking?
Yes, Albert is a reliable and secure app for managing your finances. It is FDIC and SIPC-insured and has a variety of financial tools and resources to help you improve your financial situation.
How is Albert app customer service?
I did some research and I found great Albert app reviews on their customer service. The Albert app has customer service options within the app and online. They do not have an option to call their customer service and speak on the phone. But, if you’re like me, you probably prefer to get your questions answered via text message or email anyways.
Is Albert app legit?
Yes, the Albert app is a legitimate personal finance app that can help you manage and improve your finances. Millions of people (last I checked, over 10,000,000 people use this app) use the app’s many helpful tools. The app is available for people on Apple or Android devices and it has great reviews.
Who is Albert app best for? Who should not use it?
The Albert app is a helpful all-around financial app that can help many different people. If you’re looking for an all-in-one app to help you save, spend, borrow, and invest, Albert might be a good fit for you. The app is helpful for people who:
Want fee-free cash advances up to $250 (this is a feature that many people like because they don’t have to sign up for high-interest rate loans when they just need something for a short amount of time)
Need an app that gives you an overview of all your accounts in one place
Are interested in automatic savings and easy investing tools
Albert takes the work out of managing your finances and may be helpful for people who are trying to stay on top of their personal budget without having to juggle multiple apps.
However, Albert may not be the best fit for everyone and not everyone needs to have it. So, if you fall into any of the below, then this may not be the app for you
If you’re an experienced investor looking for more advanced trading tools, then this may not be the best investing app for you (the Albert app is basic in this area because I think it caters more to those who are new investors or are looking for something easier to manage)
If you’re someone who doesn’t feel comfortable linking their bank accounts to a third-party app (you will need to link accounts in order to get full use of the app – I understand that some people may not want to do this)
Albert App Review – Summary
I hope you enjoyed my Albert App Review.
I think this is a very helpful app, and I can see why it’s one of the most popular money apps today.
Albert is an app designed to help manage your saving, budgeting, investing, and more, all in one easy app. The app has all of the different money tools that you would want, plus some extras that you may have not realized you needed yet.
Albert is an app that helps you to manage many different parts of your financial life right from your cell phone (it’s not available on computers).
They even have the Genius feature (one of my favorite parts of the app), which is an in-app chat where you can ask one of their experts anything related to money, from credit cards, buying a car, student loans, and more. This is very helpful if you ever have questions about money.
And, if you need cash now, Albert may be able to give you a small advance of up to $250. There are no late fees, interest, or a credit check. If you want to avoid personal loan lenders who have high-interest rates, and only need a small cash advance, then Albert may be a place to start with. How this works is that they send you $250 from your next paycheck. You simply repay them when you receive your next paycheck.
You should keep in mind that investment options don’t include retirement plans and customer service can only be reached via email and text. Though the app’s budgeting tools are more basic compared to budgeting-focused apps, the Albert app still has many, many benefits to help you manage your finances effectively and it’s all from one easy-to-use app.
You can learn more about Albert here.
What’s your favorite personal finance app? Do you use the Albert app?