There’s no relief in sight for high borrowing costs as interest rate cuts are pushed further into the distance. Still, a surge in housing inventory could give buyers more options, Fannie Mae said in a report.

Mortgage rates have ticked above 7% in recent weeks and that, combined with high home prices, has rendered housing unaffordable for many. Fannie Mae is still forecasting for mortgage rates to decrease later this year to 6.6%, but borrowing costs will only drop meaningfully once the Fed dials back interest rates. That won’t come until the central bank is confident that inflation will reach a 2% target rate. 

The inflation data registered this year has been higher than the Fed expected. The latest reading of the personal consumption expenditures (PCE) price index, excluding food and energy prices—a key metric the Federal Reserve tracks to measure inflation—increased by 3.7% after rising to 2% in the fourth quarter, raising concerns that inflation may be headed in the wrong direction. Fannie Mae has readjusted its expectations on inflation and now expects the Consumer Price Index to end 2024 at a 3.1% annual rate, compared to the previously projected 2.5%.   

“While we still expect economic growth and inflation to moderate going forward – and, thus, for mortgage rates to drift downward – interest rates existing in a ‘higher for longer’ state seems to be an increasingly real possibility in the eyes of market participants, as well as some homebuyers and sellers,” Fannie Mae Vice President, Economic and Strategic Research Hamilton Fout said. “While we’ve recently seen evidence that some potential home sellers are becoming more acclimated to the higher mortgage rate environment and putting their homes on the market, the recent move upward in rates is yet another headwind to the recovery of home sales, and it intensifies long-standing affordability challenges for consumers.”

The silver lining for the housing market is that supply is expected to build as home sales lag, which “should help gradually thaw housing inventory and contribute to decelerating home price growth,” Fannie Mae said. 

Homebuyers can find the best mortgage rate by shopping around and comparing your options. You can visit an online marketplace like Credible to compare rates, choose your loan term and get preapproved with multiple lenders at once.

SOCIAL SECURITY: COLA INCREASING BUT MEDICARE COSTS RISING TOO IN 2024

Home prices forecasted to keep rising

Fannie Mae has readjusted its home price projection and forecasts upwards, but there are signs that gains are slowing. Home prices are forecasted to increase 4.8% annually in 2024 and 1.5% in 2025.

Home prices are now 6.4% above their level this time last year, up from the 6% increase registered in January, according to the latest S&P CoreLogic Case-Shiller national home price index report.  Across the nation, home prices increased 0.6% month-over-month after dipping the previous month. This annual and monthly growth in home prices comes as homebuyers struggle with affordability issues caused by high mortgage rates and a lack of housing supply.  

“Home price growth pivoted in February, as the impact of the January 2023 Home Price Index bottom finally faded,” CoreLogic Chief Economist Selma Hepp said in a statement. “As a result, the U.S. should begin to see slowing annual home price gains moving forward.”  

If you’re looking to become a homeowner, you could still find the best mortgage rates by shopping around. Visit Credible to compare your options without affecting your credit score.

MILLENNIALS ARE DESPERATE TO BUY A HOME, MOST WILLING TO PAY A MORTGAGE RATE ABOVE 7%: SURVEY

Here’s how much homebuyers need to earn 

Homebuyers need to earn more today to afford a home. Based on the current interest rate of 7.22% over a 30-year mortgage, buyers today would need to earn an annual income of roughly $120,000, plus a 10% down payment, to afford a home, according to the Clever Real Estate report. However, the average American household earns about $45,000 less than that, and most first-time buyers can’t afford a 10% down payment.

Based on the median annual salary and a 10% down payment, most first-time buyers can afford a home priced at about $207,529 — 38% less than the current median-priced home. Increasing the down payment to 20% lowers the salary threshold to $98,202, but saving that amount could take years, the Clever report said. 

Moreover, higher mortgage rates and home prices mean that 20% of Americans spend roughly 30% of their paychecks on monthly home loan payments, and 10% spend more than half of their pay, according to a recent NewHomesMates.com survey. Homeownership is considered affordable if households spend at most 28% of their monthly income on housing costs. The survey said those ready to take the plunge have had to sink a larger portion of their paychecks into mortgage payments and make significant cuts to everyday spending.  

If you’re considering becoming a homeowner, it could help to shop around to find the best mortgage rate. Visit Credible to compare options from different lenders and choose the one with the best rate for you.

THIS IS THE #1 CITY FOR FIRST-TIME HOMEBUYERS, AND OTHER HOT US HOUSING MARKETS

Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

Source: foxbusiness.com

Apache is functioning normally

Current consumer sentiment indexes:

  • The University of Michigan’s Index of Consumer Sentiment registered at 77.2 in April, down from 79.4 in March. The university’s index of Current Economic Conditions also fell in April, to 79.0, from 82.5 in March. 

  • The Conference Board’s Consumer Confidence Index fell for the third consecutive month in April, hitting 97.0 after reaching 103.1 in March. 

What is consumer sentiment?

Consumer sentiment, also known as consumer confidence, is an index of how U.S. consumers are feeling about the current and future state of the economy, and all that folds in to the economy: the job market, wages, business conditions and their personal finances. It’s a valuable tool for economists, as consumer sentiment can be used as an early predictor of economic changes.

How people feel about the economy can directly impact the economy, because consumers’ attitudes often affect how much they spend on things like food, transportation, household goods, entertainment and more. In 2023, consumers’ personal spending made up 67.9% of the U.S. GDP, or gross domestic product, according to the Federal Reserve Bank of St. Louis. That’s a significant majority of the nation’s GDP, so keeping a close eye on consumer sentiment is key in foreseeing potential economic slumps or rallies.

When the economy is in a recession, consumer sentiment falls. On the flip side, when the economy is expanding, consumer sentiment rises. The index does typically peak before a recession, though. Unlike other indexes, such as the Consumer Price Index (CPI), consumer sentiment isn’t calculated using spending data or hard figures. Instead, economists rely on two major surveys of consumer confidence: The University of Michigan’s Surveys of Consumers and the Conference Board’s Consumer Confidence Survey. Each survey collects the general attitudes and opinions of hundreds of U.S. consumers. Then, those opinions are assigned numeric values and aggregated into one number, or index.

The University of Michigan’s Index of Consumer Sentiment

The Index of Consumer Sentiment is one of three indexes derived from the University of Michigan’s Surveys of Consumers, which started in 1946. Originally conducted annually, the surveys switched to a monthly cadence in 1978. The surveys have a sample size of roughly 600 people selected randomly from the 48 adjoining U.S. states and the District of Columbia.

The surveys include roughly 50 questions covering personal finances, business conditions and buying conditions. From those surveyed, three indexes are produced: the Index of Consumer Sentiment, the Index of Consumer Expectations and the Index of Current Economic Conditions.

The Index of Consumer Sentiment is the most commonly cited index of the bunch. It’s derived from these five questions:

  1. “We are interested in how people are getting along financially these days. Would you say that you (and your family living there) are better off or worse off financially than you were a year ago?”

  2. “Now, looking ahead: Do you think that a year from now you (and your family living there) will be better off financially, or worse off, or just about the same as now?”

  3. “Now, turning to business conditions in the country as a whole. Do you think that during the next twelve months we’ll have good times financially, or bad times, or what?”

  4. “Looking ahead, which would you say is more likely: that in the country as a whole we’ll have continuous good times during the next five years or so, or that we will have periods of widespread unemployment or depression, or what?”

  5. “About the big things people buy for their homes, such as furniture, a refrigerator, stove, television, and things like that. Generally speaking, do you think now is a good or bad time for people to buy major household items?”

Historically, the surveys have been conducted by phone. Starting in July 2024, they’ll be conducted online, with researchers aiming for 900 to 1,000 respondents.

The Conference Board’s Consumer Confidence Index

Meanwhile, the Conference Board’s Consumer Confidence Survey was launched in 1967 as a mail survey conducted every other month. Today, the survey is conducted online, on a monthly basis, with a sample size of roughly 3,000 respondents.

The Conference Board issues a five-question survey to calculate three distinct indexes: the Consumer Confidence Index, the Present Situation Index and the Expectations Index. Once the surveys have been completed, each question is given a relative value. Then, those values are compared against their relative values from 1985 — the survey’s benchmark year, with an index set at 100.

The Consumer Confidence Index is the average index for all five questions. The Present Situation Index is calculated using the average indexes for the first two questions, and the remaining three questions determine the Expectations Index.

Present Situation Index

  1. Respondents’ appraisal of current business conditions.

  2. Respondents’ appraisal of current employment conditions.

Expectations Index

  1. Respondents’ expectations regarding business conditions six months hence.

  2. Respondents’ expectations regarding employment conditions six months hence.

  3. Respondents’ expectations regarding their total family income six months hence. 

Consumer Confidence Index

This is the average index for all five questions above.

What is consumer sentiment like right now?

The University of Michigan’s Index of Consumer Sentiment, released on April 5, dipped only slightly from its March reading, making for the third month in a row of relatively stable results. It registered at 77.2, which is a 2.8% decrease from the previous month.

The index measuring Current Economic Conditions was at 79.0 in April, compared to 82.5 in March. And the Index of Consumer Expectations was at 76.0 — a 1.8% decrease from March, when it was at 77.4.

Meanwhile, the Conference Board’s Consumer Confidence Index declined for the third month in a row. The index fell to 97.0 in April, compared to 103.1 in March. Its Present Situation Index fell to 142.9 in April, compared to 146.8 in March. And the Expectations Index registered at 66.4, compared to 74.0 in the previous month.

When does the next report come out?

The University of Michigan’s next Surveys of Consumers will be released on Friday, May 10. The Conference Board will release its next Consumer Confidence Survey on Tuesday, May 28.

Source: nerdwallet.com

Apache is functioning normally

Do you want to learn how to get free PayPal money? Yes, there are actually many ways to get cash straight in your own PayPal account. Receiving PayPal cash for the extra income you make is great because PayPal cash can be used for almost all online shopping. If you want to increase your budget…

Do you want to learn how to get free PayPal money?

Yes, there are actually many ways to get cash straight in your own PayPal account.

Receiving PayPal cash for the extra income you make is great because PayPal cash can be used for almost all online shopping.

If you want to increase your budget without working extra hours, earning free PayPal money could be the solution. Many legitimate platforms offer tasks like surveys, watching videos, or trying new apps in exchange for cash directly deposited into your PayPal account.

I have personally used many of the apps below on a regular basis and have earned a lot of free PayPal money over the years.

Recommended reading: How To Get $20 PayPal Now

How To Get Free PayPal Money

Here are some places where you can start earning free PayPal money:

Below is more detailed information about each method for getting free PayPal cash in your PayPal account.

Here’s a screenshot of how you can redeem your points for free PayPal money on Swagbucks.

1. Swagbucks

Swagbucks is a well-known rewards website that gives you PayPal cash as a reward. It has been downloaded over 5 million times and has paid out over $500 million in rewards.

On Swagbucks, you can earn points called “SB” by answering surveys, getting cash back when you shop through their platform, and watching short videos.

With the points you earn on Swagbucks, you can put money directly into your PayPal account. You can redeem your points starting at $5 (this is 500 points) all the way up to $250 (25,000 points).

I began using Swagbucks about 10 years ago, and since then, I’ve earned over 110 free gift cards for myself, including a lot of PayPal cash. I don’t spend a lot of time on it – just every now and then.

Sign up for Swagbucks here and get up to a free $10 bonus.

2. User Interviews

User Interviews is a company that pays for online studies. These are more in depth than paid online surveys, and you can earn around $50 to $100 per hour or more for sharing your opinions and feedback.

They launch over 2,000 studies monthly, and they have paid over 85,000 people in the last year.

These are typically completed over the phone or in a video call where an interviewer is asking you questions.

The average study pays over $60. When you participate in User Interviews, you can receive payments in various forms such as cash, a check, PayPal, Amazon gift cards, Visa gift cards, and more.

You can click here to sign up for User Interviews.

Recommended reading: User Interviews Review – Make $50 To $100 An Hour Sharing Your Opinion

3. KashKick

KashKick is a rewards platform where you can get rewards for doing things like answering questions and playing games online. You can then turn these rewards into free PayPal money.

They have games like Monopoly GO, Yahtzee, Bingo Blitz, Scrabble Go, and others where you can earn $100 or more per game.

You need just $10 to cash out.

Sign up for KashKick here.

4. Ibotta

Ibotta is an app that gives you money back when you buy groceries. Just upload your receipts after you shop to earn cash that you can use as free PayPal cash.

Here’s how Ibotta works:

  1. Browse offers – Check the Ibotta app to see what cash back offers are available before you go shopping (like for granola bars or toothpaste).
  2. Shop in store – Go to the store and make your purchases.
  3. Upload your receipt – Take a picture of your grocery receipt using the Ibotta app on your phone to earn cash back.

Some examples of the cash back you might be able to earn include: $0.50 cash back for buying body wash, $3.00 cash back for buying laundry detergent, and $1.00 cash back for buying cereal.

You need $20.00 to cash out to PayPal in the Ibotta app.

You can join Ibotta here.

5. Upside

Upside is an app that gives you cash back when you buy gas at certain gas stations. You can earn about $150 per year in cash back. Not all gas stations nearby are part of the app, but many are, so you’ll likely find some that qualify near you.

When you use the app for the first time, you can get a higher cash back amount to help you get familiar with it. In my first experience with the app, I received $0.74 back per gallon. I bought 12.62 gallons of gas and saved $9.33 just by using the app for the first time. It’s super easy and was a no-brainer to use.

Getting cash back on your gas is nice, especially with how expensive gas is these days!

To complete a PayPal cash-out on Upside, you need just $1.00 in your account.

You can sign up for Upside here.

6. Sell your old phones on Decluttr

Decluttr is a website where you can sell your old phones, CDs, DVDs, books, video game consoles, and more. It’s one of the most popular places to buy and sell electronics and tech items because they pay well and quickly.

Here’s how Decluttr works:

  1. Open the Decluttr app and get a free valuation for the items you want to sell. It takes just a few moments to see what your item is worth.
  2. Tell them the make, model, and condition of what you are selling. If you’re selling DVDs, CDs, or games, then you just enter your barcode or take a picture of the barcode with the Decluttr cell phone app.
  3. If you’re satisfied with the offer for your item from Decluttr, just find a box that will keep it safe during shipping. Pack the item in the box, and Decluttr will provide a free shipping label. Simply print out the label and tape it to your box to send it off.
  4. Finally, once Decluttr receives and checks your item, you’ll get paid the next day through direct deposit to your bank account or PayPal.

You can check out Decluttr here.

7. American Consumer Opinion

American Consumer Opinion is a site where you can take online surveys and earn points.

Their surveys pay around $1 to $5 each and once you earn enough points, you can redeem them for free PayPal money.

You need at least 1,000 points before you can withdraw and get free PayPal cash.

Click here to join American Consumer Opinion.

8. Survey Junkie

Survey Junkie is a paid online survey site where you can earn free PayPal cash for answering paid online surveys.

You can earn around $40 in free PayPal cash each month by completing around three short surveys each day.

You can redeem your points for free PayPal money starting at just $5 or 500 points.

Please click here to sign up for Survey Junkie.

9. Branded Surveys

Branded Surveys rewards you with points for answering survey questions. Surveys typically take 5 to 15 minutes and pay between $0.50 and $5.00 each. You can redeem these points for free PayPal cash.

You might have noticed there are several survey sites listed here. Companies pay you to answer questions because they want to improve their products and advertising. By understanding more about you, they can make better decisions. The best part is that these surveys are simple to answer, and you can join as many survey sites as you like.

You can click here to join Branded Surveys for free.

10. PrizeRebel

PrizeRebel is a website where you earn points by taking surveys, watching videos, and referring new members. You can redeem these points for free PayPal cash.

Just a few days ago I logged in to PrizeRebel, and I realized that I had enough points for around $150 in free PayPal cash. I redeemed them all at once, and now I have some nice extra spending money!

On PrizeRebel, you can get free $5 PayPal cash for 500 points. You can also choose any custom amount to redeem as well in PayPal cash.

Click here to sign up for PrizeRebel.

11. PayPal Honey

PayPal Honey is a free browser extension that automatically finds and applies coupon codes for you when you shop online. By using it, you earn points that you can redeem for extra money.

You can redeem your points for cash, gift cards, or free PayPal shopping credits.

Sign up for PayPal Honey by clicking here.

12. Rakuten

Rakuten lets you earn cash back on your everyday purchases from over 3,500 stores like Target, Walmart, Lululemon, Macy’s, Lowe’s, and Best Buy. When you make a purchase, you get a percentage of your spending back in cash.

When you shop through Rakuten, you get cash back as a percentage of what you spend. For example, if a store offers 5% cash back and you spend $200 there, you’d earn $10.00 in rewards in your Rakuten account.

You can receive your earnings via a check or PayPal once every quarter.

I have received over $1,000 in PayPal cash from Rakuten over the years. It’s a no-brainer if you want to easily save money when shopping online.

You can sign up for a free account on Rakuten here.

13. Find free PayPal money giveaways

If you’re looking to earn free PayPal money, entering sweepstakes and giveaways can be a fun way to try your luck. Companies host giveaways to attract new followers and keep existing followers and customers excited about their brand.

You can find free PayPal money giveaways by searching and/or following related hashtags on social media, such as #freepaypalmoney, #giveaway, #giveawayalert, and #freebie.

You can also follow online sweepstakes websites that list current giveaways.

Entering giveaways doesn’t guarantee free PayPal cash since they’re contests, but it’s quick and easy. I used to spend about an hour a week entering giveaways and have won gift cards and cash prizes.

14. Honeygain

The Honeygain app pays you up to $30 a month to share your internet connection with companies that use it as a tower.

You’re paid based on the amount of traffic that goes through your connection, earning $1 for every 10 GB of traffic.

Please click here to sign up for the Honeygain app.

Here’s a screenshot of how you can redeem your points for free PayPal money on Prime Opinion.

15. Prime Opinion

If you want to learn how to get free money on PayPal, then Prime Opinion makes that possible with easy minimum threshold payout amounts to reach. You can get free PayPal cash starting at just 500 points, which is $5.

Prime Opinion is a survey website where you can earn money by sharing your opinions from home. They have lots of surveys available, and when I logged in recently, I had almost 50 surveys that I could take right away.

Please click here to join Prime Opinion and get up to a $5 free bonus.

16. Five Surveys

Five Surveys is a market research company that pays you to complete surveys. You just need to complete five surveys and then you can earn $5.

I signed up for Five Surveys myself to test it out for you. One thing I really like about Five Surveys is the number of available surveys. On the first day, there were 42 surveys I could start with, and more are being added all the time.

To withdraw from your Five Surveys account, just choose your preferred method. Options include PayPal cash, bank transfer, Venmo, and gift cards.

Please click here to sign up for Five Surveys.

17. Dosh

Dosh is a quick and simple app that automatically gives you cash back when you shop at certain stores like Costco, Sam’s Club, AT&T, American Eagle, and over 10,000 other companies.

Just link your debit or credit card (or even your Venmo or bank account) to the app, and everything else is handled for you. When you shop and pay with your linked card, you’ll automatically receive cash back into your Dosh account, which you can then transfer to your bank or PayPal account.

Once you accumulate $15 in your Dosh account (this is the minimum payout threshold), you can transfer it to your bank, PayPal, or Venmo. Alternatively, you can choose to donate your cash back to charity.

Recommended reading: 14 Best Apps To Scan Receipts for Money

Frequently Asked Questions

Below are answers to common questions about how to get free PayPal money.

How do I get money from PayPal for free?

You can earn free money on PayPal by completing online surveys, watching videos, selling your old stuff, and getting cash back when shopping online.

How do gamers receive PayPal funds by playing online games?

Apps like KashKick will pay you in points to play their online games. The points that you earn can then be redeemed for free PayPal funds straight in your personal PayPal account. YouTubers can also get paid to play online games and stream what they are doing.

What methods are available to secure a quick $10 on PayPal?

You can quickly earn $10 on PayPal by completing tasks such as taking surveys, reading emails, or shopping online through websites like Rakuten. These sites allow you to cash out once you reach a minimum amount. You can also become a freelancer on Fiverr and get paid in PayPal cash for hard or simple tasks. This wouldn’t be free money because you would have to work for it, but it is another option.

How do I check my PayPal balance?

To check your PayPal balance, you will have to log in to your PayPal account. Right after you log in, your PayPal balance will be listed for you to easily see.

Can you get PayPal money right away?

Some platforms may pay instant payouts to your PayPal account, while others may have a processing time or a minimum threshold before you can cash out. Always check the payout terms of the website or app you’re using to understand how and when you can access your earnings. Sometimes, it may take a couple of days before it lands in your personal PayPal account.

If you really need money right away, then another option may be to ask someone that you know for help or to ask for donations.

Best Ways To Get Free PayPal Money

I hope you enjoyed this article on how to get free money on PayPal.

Getting free PayPal money is great because it is just like extra cash. You can pay for your online purchases with it at almost all stores, and PayPal also has the PayPal Debit Card (so, this is kind of like getting a free PayPal gift card), so that you can buy things in-store too. Or you can also transfer it to your bank account and withdraw it just like cash.

Now, there are PayPal cash scams out there, so I do recommend that you be careful. If you are ever suspicious, do as much research as you can.

I have personally used many of the sites above and have earned well over $1,000 in free PayPal money over the years for doing things just in my spare time.

Have you ever earned free PayPal money?

Recommended reading:

Source: makingsenseofcents.com

Apache is functioning normally

Margin level is a risk-management indicator that helps you understand what influence the currently opened positions have on your account.

The margin level in your options trading account is a formula that tells you how much of your funds are available to open new trades. The higher your margin level percentage, the more funds are available to trade. If the margin level drops too low, you could receive a margin call.

What Is Margin Level?

Your margin level percentage is a measure of the relationship between the equity in your trading or brokerage account and how much margin is in use. The margin level calculation is expressed as a percentage: (equity / margin) x 100.

It’s helpful to think of margin level as a reading of your trading account’s health. A margin level percentage of 0% means you have no open positions. A margin level of 100% means that the amount of a portfolio’s equity and used margin are equal. Equity is the cash available to trade, plus any unrealized profits and losses on open positions. Many brokers will not allow investors to make new opening trades when the margin level on their options trading account is 100% or less.

When margin level falls below 100%, the broker might issue a margin call. Unless the market moves back in your favor, you must deposit more funds (or assets) into your account when you are hit with a margin call. You can also satisfy a margin call by exiting your current holdings.

The margin level percentage depends on various factors. The volume of your positions and their potential effect on the market can affect your margin level calculation; as can the amount of leverage you use.

💡 Quick Tip: One of the advantages of using a margin account, if you qualify, is that a margin loan gives you the ability to buy more securities. Be sure to understand the terms of the margin account, though, as buying on margin includes the risk of bigger losses.

What Does Margin Level Really Do?

To understand what margin level means, it’s important first to grasp the concept of margin in options trading.

Margin is the amount of cash or securities a trader must deposit in their account before being able to write (or sell) options. You can think of it as a good faith deposit or a form of collateral. The Federal Reserve Board’s Reg T sets margin requirements.

Margin works differently in options and futures accounts than in stock trading accounts. Margin debt in stock trading refers to the amount of borrowed funds used to buy new shares. This is also referred to as using leverage.

The margin level calculation tells you how much of your funds are available to use for new opening trades. The higher your margin level, the more “free margin” you have. Free margin is the amount of money available to place new trades. Margin is composed of “used” and “free” amounts. Used margin is the aggregate of all the required margin on your existing positions. Free margin, on the other hand, is the difference between equity and used margin.

Margin level also can inform you of how much wiggle room you have in your options trading account, or other types of accounts. A very high margin level percentage means you have a large amount of equity relative to the total amount of required margin. A low margin level calculation tells you that your account might not be far from getting a margin call.

Increase your buying power with a margin loan from SoFi.

Borrow against your current investments at just 11%* and start margin trading.

Calculating Margin Level

Calculating margin level is straightforward: Divide the equity by the amount of used margin; then multiple that quotient by 100:

Margin level = (equity / margin) x 100

If you don’t have any open positions, then your margin level calculation will be zero. This can be confusing because usually, a low margin level means your account might be at risk for a margin call. A 0% margin level is the safest and lowest-risk margin level you can have, because in that scenario, you’d have no open positions.

Margin level = (equity / margin) x 100

Margin Level Example

Suppose you deposit $10,000 into your account. Before you make any trades, your margin level is 0%, as you don’t have any used margin (the divisor in the earlier-mentioned equation is zero). Your first buy is a call option on shares of XYZ stock, and you pay a $5,000 premium. Your margin level calculation is now 200% ($10,000 / $5,000 = 200%).

Now let’s say you open another $5,000 options position. Your margin level declines to 100% ($10,000 / $10,000 = 100%). We will assume that is the broker’s minimum margin level before a margin call is issued. Later, we’ll detail what happens if your margin level falls below the critical 100% threshold.

💡 Quick Tip: How to manage potential risk factors in a self-directed investment account? Doing your research and employing strategies like dollar-cost averaging and diversification may help mitigate financial risk when trading stocks.

Why Understanding Margin Level Is Important

The margin level percentage is important, as brokers use this figure to determine whether you can open new positions. Many brokerage firms set a minimum margin percentage at 100%. So if your margin percentage drops below that threshold, then you will encounter a margin call — or even a forced liquidation — on one or more of your open trades. If you want to take on new positions, then you’d be forced to sell an existing holding or add more funds to your account.

Margin Level Below 100%

Taking our earlier example a step further, If the market moves against you, and your option values fall to $9,000 on the market, your margin level calculation would decline to below the minimum margin level ($9,000 / $10,000 = 90%). The broker then could issue a margin call.

You have two choices: either sell an existing position or deposit more assets into the account. If you do not act promptly, the broker can sell one of your positions automatically.

Your margin level could fall below 100% based on small moves in the assets you own. Broad market conditions, like volatility, also could affect your account negatively. In an extreme example, Silver Thursday rocked the silver trading market and caused long futures and options positions on silver to suffer severe losses. In turn, this triggered an onslaught of margin calls in the precious metals markets. The moral of the story: It’s important to manage risks carefully when using leverage.

If you’re interested in trading on margin, or just want to know more about it, you’ll need to understand the difference between marginable and non-marginable securities.

The Takeaway

As discussed, the margin level in your options trading account is a formula that tells you how much of your funds are available to open new trades. Trading on margin is an advanced strategy that comes with greater risk than trading other securities, like stocks or ETFs, for example. But while the risks are greater, so are the potential rewards (and losses).

For experienced traders, using margin can enhance buying power. But using margin and leverage introduces additional risk into the mix, which investors should be aware of.

If you’re an experienced trader and have the risk tolerance to try out trading on margin, consider enabling a SoFi margin account. With a SoFi margin account, experienced investors can take advantage of more investment opportunities, and potentially increase returns. That said, margin trading is a high-risk endeavor, and using margin loans can amplify losses as well as gains.

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.


Photo credit: iStock/fizkes

SoFi Invest®
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below:
Individual customer accounts may be subject to the terms applicable to one or more of these platforms.

1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.

2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.

For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.

Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

*Borrow at 10%. Utilizing a margin loan is generally considered more appropriate for experienced investors as there are additional costs and risks associated. It is possible to lose more than your initial investment when using margin. Please see SoFi.com/wealth/assets/documents/brokerage-margin-disclosure-statement.pdf for detailed disclosure information.
Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Before an investor begins trading options they should familiarize themselves with the Characteristics and Risks of Standardized Options . Tax considerations with options transactions are unique, investors should consult with their tax advisor to understand the impact to their taxes.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Claw Promotion: Customer must fund their Active Invest account with at least $25 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.

SOIN-Q224-1871555-V1

Source: sofi.com