Reviewed by Andrew Schmidt

LinkedIn wants to help you get a new job – it really, really does. But you’ve got to help it help you. It is a Microsoft subsidiary, and a very effective one. Even though LinkedIn has over 1 billion users, only a tiny fraction of those people are relevant for your job-hunting purposes, so you need to find—and get found by—the right ones. Here are four ways to make that happen.

What You Need to Know

• LinkedIn has over 1 billion members in 200 countries worldwide.
• Your LinkedIn profile should include a professional photo, relevant work and education history, and keywords from job listings in your profile description.
• Staying active on the platform and doing sufficient research into the job you want can help you land a new position in your desired field.

1. Make Your Profile Work Harder

Your first step to increasing your visibility is fairly easy: Add or change your photo to a better quality, more professional one. Research shows that adding a photo will increase your profile’s traffic by a factor of 11. Find or create an in-focus headshot of yourself dressed appropriately for what you do, smiling and making eye contact with the camera.

As far as what your profile should actually say, think of it as a reverse “Help Wanted” ad. As you scan job listings, note keywords you see repeatedly, things like “customer-centric” and “relationship building.” Headhunters search candidates’ LinkedIn profiles the same way, so you want to make sure your language reflects theirs.

Your Headline

Your first opportunity to work in important keywords is with the 120-character job title that appears under your name, aka, the headline. Don’t feel obligated to use your literal title, especially if your title doesn’t adequately describe what you do (e.g., not “community manager,” but “commercial real-estate management professional”). Most especially, don’t use “former” or any other word that indicates you aren’t currently employed.

Your Summary

The next opportunity to grab a potential employer’s attention is the “Summary” section—this is the make-or-break spot to sell yourself. Highlight your skills and be specific about accomplishments, awards and other recognition. Use employers’ hot-button terms (e.g., “fast-paced environment”), but don’t just stuff the summary full of keywords. Write in the first person—here’s one spot where you can let your personality shine through and add to your memorability (in a professional way, of course). Be strict about length: If you use the entire space allowed, you run the risk of appearing both boring and old, neither of which is going to win you a job.

Tip: It’s important to remember that LinkedIn will notify your contacts when you make changes to your profile, so while you are under construction, make sure you turn off the “Notify my network” function (found in the right-hand column on your Profile page). Otherwise, you run the risk of annoying your contacts with a continuous stream of insignificant updates. When you are happy with your new profile, though, turn it back on and let everyone know!

2. Stay Active (But Not Too Active)

To stay top of mind with your contacts, you want to maintain a visible presence on LinkedIn. It’s important, however, to be judicious about how active you are, especially if you are unemployed. You know that Facebook friend who seemingly posts every 15 minutes? Well, you don’t want to be that person on LinkedIn, especially if you haven’t used it at all in a while.

Start Slow

First, download the LinkedIn app to your phone; this will encourage you to check out the site whenever you have downtime. (Think: less Facebook, more LinkedIn, until you have a new job.) Then, visit LinkedIn’s home page at least once a day and see what others are posting. Like and comment on those posts. After you have a feel for what’s appropriate, begin adding items yourself every day or so. The easiest way to do this is to find interesting, provocative stories, photos and videos that involve your profession and make intelligent comments as you share them, rather than trying to blog with high frequency yourself. If you are a blogger, however, be sure to include LinkedIn in your social media outreach.

Use Visuals

LinkedIn has made sharing photos directly from your phone easier, so if you find yourself at a professional seminar, conference or networking event, remember to post a photo and positive comment. Or post your work itself, especially if you are a visual or performing artist, culinary pro, or contractor. (Be mindful of client confidentiality and copyrights, of course.) Won an award or doing some volunteer work? Snap a photo and share that.

Don’t Add New Contacts in Big Batches

It makes you look indiscriminate and possibly desperate. But keep an eye on LinkedIn’s suggestions for additions to your network and invite people you know to link every few days or so. If the person accepts the link, send a friendly note updating them on what you’re up to. (You can also customize the copy that goes out with the invitation.)

Don’t be reluctant to ask for help in your job search if you think they can be of assistance—that’s what LinkedIn is for. Stay on top of your contacts’ new positions, birthdays, job anniversaries and other accomplishments via the Keep in Touch section in the Connections channel, and send congratulations. It’s important to reinforce your connections with LinkedIn contacts; a network of people you barely know is unlikely to do you much good.

3. Research, Research, Research

Even if there’s no job that matches the exact criteria you’ve entered in the Jobs channel, LinkedIn is good at suggesting companies that might have a suitable opening. Spend some time looking through the Discover Jobs in Your Network area. (This is another reason to build a large network of contacts.) And look at the site’s list of “People Also Viewed” jobs on job listing pages. It can lead you to some interesting postings you might not otherwise find.

Beyond the extensive job listings, LinkedIn has enormous amounts of background information available on companies. While this may not directly help you find a job, being well informed once you have the interview will help you get the job.

4. Consider Joining LinkedIn Premium

Starting at $29.99 a month, LinkedIn’s paid service is a little pricey, but a short-term subscription may be worth it. One of the Premium services takes a page from Google’s paid search: It moves your correspondence to the top of the mailbox of whoever posted the job you’re applying for. Sure, the potential employer knows that the reason you’re the “featured applicant” is because you paid to be, but that doesn’t necessarily negate your advantage of being first.

Via Premium, you can also see complete information about who viewed your profile. It can be a bit of a red herring to know that someone has looked at your profile since you still don’t know why they looked—it could simply be that you share a name with the person they were really seeking.

Probably the most valuable element of the paid service is InMail, which allows you to contact anyone on LinkedIn directly, even if they are not a current contact. However, you are only allowed three InMails a year (pricier plans allow more), so you have to be extremely prudent about how you use them—they are not a cold-calling tool. Reserve the privilege of making contact with a key decision-maker for your dream job or other critical communication.

What Is the 4-1-1 Rule on LinkedIn?

The 4-1-1 rule argues that for every piece of content you share to LinkedIn about yourself, you should share one update from another source and four pieces of content from others. The idea behind this rule is to keep your feed focused on other’s needs and to start conversations and engage with other users.

What Are LinkedIn Professional Groups?

LinkedIn groups provide a place for professionals in a specific industry to meet together to discuss insights, ask for guidance, and build relationships. Joining a local group in your current or target industry can help you build connections and earn a job or grow in your current position.

What Is LinkedIn Advanced Search?

Premium users get access to LinkedIn’s Advanced Search feature. This feature offers additional search filters that can help users find company information, business leads, and job opportunities in a target industry or field.

The Bottom Line

LinkedIn is a valuable job search tool if you do it right. Fill out your complete profile, with a good professional photo, a headline and a compelling summary. Remember that LinkedIn is a search engine: Pay attention to the keywords that will get your profile noticed by the right people.

To stay visible, share links to interesting, provocative stories, photos and videos relevant to your profession, adding an intelligent comment. But don’t post so often you become annoying. And don’t forget that LinkedIn is a great place to research companies so that when you do get that callback, you’ll be ready to rock the interview.

Where they are, what they provide, and how they help

Reviewed by Margaret James
Fact checked by Betsy Petrick

Ever since the founding of the Bank of North America in 1781, banking has played a critical role in facilitating the American Dream. These institutions provide indispensable monetary services, ranging from accepting deposits to offering loans. Credit is king in the United States, and without high-quality financial institutions, countless Americans would struggle to acquire vehicles, housing, and other essential items.

However, like pretty much all of the nation’s older institutions, banks have also played a significant part in America’s racist past. Racial discrimination in the banking industry and financial system has targeted African Americans, and challenges to ending discrimination persist today. Black-owned banks arose as an alternative to larger institutions, to provide greater access to banking services as well as an opportunity to support local communities.

According to the Federal Deposit Insurance Corp. (FDIC), a minority depository institution (MDI) is “…a federal insured depository institution for which (1) 51 percent or more of the voting stock is owned by minority individuals; or (2) a majority of the board of directors is minority and the community that the institution serves is predominantly minority. Ownership must be by U.S. citizens or permanent legal U.S. residents to be counted in determining minority ownership.” Most of the Black-owned banks featured in this article fall into the former category.

For the purposes of this article, Black-owned and Black-managed credit unions that serve the Black community have been included to provide the most complete picture of America’s Black financial institutions. The article uses the term “Black-owned” in this broad sense, recognizing that stockholders own for-profit banks and members own credit unions.

Key Takeaways

• Today there are 148 minority-owned financial institutions in the United States. Taken together, they have approximately $349 billion in assets in total.
• Of these, 23 are Black-owned banks.
• Black-owned banks provide customers not only access to the financial resources they need but also the chance to invest in the financial health and well-being of their community.
• Black-owned banks also play a critical role in fighting modern-day systemic racism in the financial sector.
• Critics of Black-owned for-profit banks have posited that true financial justice requires institutions, such as not-for-profit credit unions, that are separate from a financial system rooted in racism and exploitation.

Background and History of Black-Owned Banks

Black-owned banks didn’t exist until more than a century after the Bank of North America first opened its doors. Prior to the chartering of the first Black-owned bank in 1888, the U.S. Congress and then-President Abraham Lincoln established Freedman’s Savings Bank in 1865. As part of the Freedman’s Bureau, this institution was designed to help newly freed African Americans navigate the U.S. financial system.

Despite Congress voting to close the Freedman’s Bureau in 1872, the bank continued to operate. In 1874, Frederick Douglass took over as the bank’s Washington, D.C., branch director, and he found the place to be rife with corruption and risky investments. Despite Douglass investing $10,000 of his own money in the bank in an attempt to save it, Freedman’s Savings went bankrupt later that same year. Although Freedman’s Savings Bank doesn’t fit the modern criteria of a Black-owned bank, it represents a critical first step.

The first officially chartered Black-owned bank, True Reformers Bank, was founded on March 2, 1888, by the Rev. William Washington Browne. A former slave and Union Army officer, Browne was founder of the Grand Fountain United Order of True Reformers fraternal organization. True Reformers Bank came about when Browne and his organization faced financial hardships while trying to establish a new branch in Virginia. Unable to manage the order’s money without arousing suspicion from paranoid and prejudiced locals, Browne founded True Reformers Bank so that the organization’s finances would be free of scrutiny from White people.

The bank opened its doors in 1889 and went from a small operation in Browne’s house to an institution strong enough to survive the financial panic of 1893. Although True Reformers Bank continued to operate after Browne’s death in 1897, problems were beginning to develop by 1900. Under its new president, the Rev. William Lee Taylor, branches were poorly regulated, unsecured loans were made, and an embezzlement scandal cost most accountholders their savings. By 1910, the State Corporation Commission had ordered the bank to be closed.

As the story of True Reformers Bank was playing out, other Black-owned banks were also getting their start in the U.S. Capital (spelled Capitol by some accounts) Savings Bank of Washington, D.C., opened its doors in Oct. 1888, roughly six months before True Reformers Bank. Capital Savings also managed to survive the financial panic of 1893, though it later closed in 1902.

From 1888 to 1934, more than 134 Black-owned financial institutions were founded, predominantly located in Southern states. Their numbers dwindled during the Great Depression, leaving nine by 1930. It wasn’t until the civil rights movement that a resurgence took place, raising their numbers to 50 by 1976.

By 1988, the savings and loan crisis had wiped out 35 Black-owned banks. The start of the most recent decline came in 2001, during the early 2000s recession, which rapidly accelerated once the Great Recession began.

“You can’t separate Black history from American history,” says Tyrone Ross, chief executive officer (CEO) of Onramp Invest, a crypto asset integration platform solution for financial advisors. “We’ve always been well adept and versed in financial education and the ability to be entrepreneurs. It’s just been stripped from us. So it’s OK to write these articles—or have panels or whatever—but let’s start with the history first so people go, ‘Oh, crap. It really was stripped from them, and they’re just trying to get it back.’”

Modern-Day Discrimination

As recently as 2023, the wealth of a White family was more than six times higher on average than that of a Black family. This is a result of inequality, discrimination, racism, and differences in power and opportunity compounding throughout America’s history. It also is why the diminishing number of Black-owned banks is especially of concern, given the role that these institutions play in fighting modern-day systemic racism in the financial sector.

Consider redlining. This unethical and now-illegal practice is used to block off access to important services for residents of certain neighborhoods based on their race or ethnicity. The Civil Rights Act of 1964, which prohibits discrimination on the basis of race, color, religion, sex, and national origin, was a start. And yet, although the Fair Housing Act of 1968 and the Community Reinvestment Act (CRA) of 1977 were both intended to eliminate redlining, this kind of discrimination is still seen today.

For instance, 68.1% of loans made from 2012 to 2018 for housing purchases in Chicago went to predominantly White areas; 8.1% went to predominantly Black areas. Banks also lent more money to predominantly White neighborhoods than to every predominantly Black neighborhood combined. This disparity is even starker when looking at individual lenders, with JPMorgan Chase lending 41 times more money in White neighborhoods than Black ones.

Chicago is far from the only place where redlining occurs. From 2015 to 2020, the denial rate for Black home loan applications in Boston was 15.3%, more than three times that of their White counterparts. And in 2018, people of color in 61 cities were more likely to be denied home loans than White residents. If homeowners aren’t moving into—and investing in—a neighborhood, then it means capital isn’t flowing into the community, which leads to poverty and crime having an inescapable presence in the area.

“One in five Black Americans now is unbanked. When you look at our poverty rates, our lack of ownership, lack of homeownership, that all goes back to economic empowerment,” Ross explains. “Economic empowerment starts with banking.”

The Importance of Black-Owned Banks

To understand why Black-owned banks matter, it’s critical to recognize the role that banks play in financial life. A common service that banks provide is access to a checking account, allowing for the safe storage of an individual’s funds, typically in exchange for a minimal fee. In addition to accepting monetary deposits, banks also furnish loans for both individuals and businesses looking to finance crucial purchases. Banks also offer mortgages for real estate purchases. Many banks issue credit cards, which are valuable tools for building the credit history necessary to receive most loans.

Outside of providing financial services, a number of banks have also launched programs on financial literacy for low- and moderate-income communities. It’s difficult, if not impossible, to imagine thriving in the modern economy without taking advantage of the aid that a bank can provide. And if access to these types of services is constantly denied to certain groups, then it’s easy to see how these groups may face more financial difficulties than others.

Black-owned banks offer an alternative for residents who have been consistently discriminated against by other financial institutions. They have typically provided more money to borrowers living in low- and moderate-income census tracts than other banks. Black-owned banks also are more willing to tolerate higher levels of risk than alternative institutions. Our research found that in 2016, 67% of mortgages made by Black-owned banks were either Federal Housing Administration (FHA) mortgages—which typically serve riskier borrowers—or mortgages held “in portfolio,” meaning they are liable to the risk of the borrower defaulting.

Additionally, Black-owned banks tend to focus their lending on small businesses, nonprofits, and Black homebuyers. As of 2018, all Black-owned banks were community banks; these institutions are dedicated to supporting the economies of the communities that they serve. Even during difficult times, Black-owned banks have stuck by their customers. During the 2007–2008 financial crisis, despite a 69% drop in all mortgage lending to Black borrowers, the number of mortgages that Black-owned banks provided rose 57%.

“So there’s lack of lending, there’s lack of funding, there’s lack of access to the ability to acquire assets and build wealth,” Ross says. “The Black community has for years been afraid of banking with traditional institutions. A lot of them live in banking deserts where there are no banks, which is also why you have credit unions, check-cashing places, and payday loans.”

Without Black-owned banks, countless vulnerable consumers could be forced to rely on high-interest loans from pawnshops and payday lenders for their financing. What’s more, Black-owned banks provide customers not only access to the financial resources they need but also the chance to invest in the financial health and well-being of their community and fellow Americans.

“I think we have a responsibility now to realize that—if you really want to be grassroots, and you really want to help Black Americans—get that money in Black banks and then have those Black banks fund the people,” Ross says.

A different book, Black Metropolis: A Study of Negro Life in a Northern City, published in 1945 by two American sociologists is considered a foundational work on the subject of African American sociology and cultural studies. It influenced generations of scholars and activists and is a key resource for investigating the impact of redlining, racial bias in medical-care decision-making tools, and the history of lending discrimination in the United States.

Other Alternatives for Community Funding

Not everyone sees Black-owned, for-profit banks as the solution. Critics argue that true financial justice requires institutions that are entirely separate from a financial system rooted in racism and exploitation.

“I’ve been very critical of for-profit Black banks and the capitalist logic that governs them,” says Professor Guy Mount, assistant professor at Wake Forest University. “In my opinion, member-owned credit unions and nonprofit co-ops are the way forward for Black communities hoping to not only survive within capitalism, but build a viable Black economic alternative to it.”

In fact, that choice is currently available to consumers. Of the Black-owned financial institutions in the U.S.—all listed below—many are credit unions.

Other critics have taken this concept further. In The Color of Money: Black Banks and the Racial Wealth Gap, Mehrsa Baradaran, professor of law at the University of California Irvine School of Law, posits that those in power have pushed the idea of Black-owned banks as a diversionary tactic whenever the African American community demanded more direct solutions to the racial wealth gap. For instance, although Freedman’s Bank remains a critical facet of Black history, the Freedman’s Bureau originally proposed providing newly freed slaves with an allotment of land—they received a bank instead.

More recently, when civil rights leaders began calling for a redistribution of wealth, then-President Richard Nixon co-opted the rhetoric of that same movement to create a civil rights platform centered around “Black capitalism.” He wasn’t the only president to support the idea of banking over financial support. Then-President Bill Clinton introduced legislation with the aim of promoting “community empowerment” via banking. Across party lines, then-Presidents George W. Bush and Barack Obama supported and upheld Clinton’s infrastructure. Former President Donald Trump also made similar promises during his time in office.

Baradaran further argues that—as it is nearly impossible for a segregated community to keep its wealth entirely self-contained—Black-owned banks may actually facilitate the flow of money out of African American communities and into the White economy.

Professor Mount sees it the same way. “By emerging themselves within a White-governed capitalist marketplace, Black banks are facilitating the very extraction of wealth from the communities they purport to serve,” he says.

Black-Owned Banks: State-by-State Breakdown

While the number of Black-owned financial institutions may have declined from their peak, they cumulatively have a significant presence. As of Jan. 31, 2022, the 44 Black-owned banks and credit unions in the U.S. had approximately $9.12 billion in assets. And although 23 states had no Black-owned financial institutions within their borders, several organizations have a presence across the U.S. because of their partnerships with major automated teller machine (ATM) networks. Additionally, many of the Black-owned financial institutions in the country are not-for-profit credit unions.

The majority of Black-owned institutions offer both traditional brick-and-mortar branches and online/mobile services. Even OneUnited Bank, originally an Internet-only bank, now has multiple physical locations across the U.S. Ensuring online accessibility is a smart move considering that, in 2019, approximately 34% of African American consumers were more likely to use mobile banking as their primary method of accessing their accounts.

Below: a list of Black-owned banks and credit unions in the U.S., in alphabetical order.

1st Choice Credit Union

Founded in 1946, the Hospital Authority Credit Union was created to provide financial services to employees of Grady Hospital. In 1991, the organization became known as 1st Choice Credit Union.

• Branches: Auburn Avenue Administrative Office (Atlanta) and Grady Memorial Hospital (Atlanta)
• ATMs: Crestview Health & Rehabilitation Center (Atlanta) and Ponce De Leon Center (Atlanta)
• State: Georgia
• Services: Personal and business checking and savings, in addition to loans (personal, mortgage, etc.)
• Assets: Over $36 million
• Availability: Brick-and-mortar and online

Alamerica Bank

Alamerica Bank was originally organized by a group of prominent Birmingham, Ala., community leaders on Jan. 28, 2000. Alamerica achieved operational profitability after six months of operation.

• Branches: The Alamerica Bank Building (Birmingham)
• ATMs: N/A
• State: Alabama
• Services: Deposit services (business and personal accounts), loan services (commercial and personal loans), internet banking, image statements, and MasterMoney debit cards
• Assets: $18.66 million
• Availability: Brick-and-mortar and online

Brookland Federal Credit Union

Founded in 1999, Brookland Federal Credit Union is a not-for-profit financial cooperative that provides financial services to members of Brookland Baptist Church and their immediate family members. If you join Brookland Federal, you and your family have a lifetime membership.

• Branches: Brookland Federal Credit Union (West Columbia, S.C.)
• ATMs: Via PULSE® and STARS® networks
• State: South Carolina
• Services: Savings, checking, loans, and other services (financial literacy, guaranteed auto protection, etc.)
• Assets: $4.9 million
• Availability: Brick-and-mortar and online

Brooklyn Cooperative Federal Credit Union

Brooklyn Cooperative Federal Credit Union, also known as Brooklyn Coop, was originally founded in 2001. Joining Brooklyn Coop requires a piece of mail as proof of address, a government-issued photo ID, Social Security card or individual Tax Identification Number (TIN), and a $25 membership fee plus a $5 minimum savings account balance.

• Branches: Bedford-Stuyvesant Branch (Brooklyn, N.Y.), Bushwick Branch (Brooklyn, N.Y.), and Chestnut Branch (Brooklyn, N.Y.)
• ATMs: Any ATMs in the CO-OP network
• State: New York
• Services: Banking accounts (checking, savings, etc.), loans, and financial counseling and education
• Assets: $50 million
• Availability: Brick-and-mortar and online

Carver Federal Savings Bank

Carver Federal Savings Bank was founded in 1948 to serve African American communities with limited access to mainstream financial services. The majority of its branches and ATMs are located in low- to moderate-income neighborhoods. Carver Federal Savings Bank is one of the four banks that are considered Black-operated instead of Black-owned.

• Branches: Atlantic Terminal Branch (Brooklyn, N.Y.), Bedford-Stuyvesant — Restoration Plaza Branch (Brooklyn, N.Y.), Crown Heights Branch (Brooklyn, N.Y.), Flatbush Branch (Brooklyn, N.Y.), St Albans Branch (Jamaica, N.Y.), 125th Street Branch (Manhattan, N.Y.), and Malcolm X Boulevard Branch (Manhattan, N.Y.)
• ATMs: Atlantic Terminal Branch (Brooklyn, N.Y.), Bedford-Stuyvesant — Restoration Plaza Branch (Brooklyn, N.Y.), Crown Heights Branch (Brooklyn, N.Y.), Flatbush Branch (Brooklyn, N.Y.), St Albans Branch (Jamaica, N.Y.), 125th Street Branch (Manhattan, N.Y.), Malcolm X Boulevard Branch (Manhattan, N.Y.), and all ATMs in the JPMorgan Chase, Wells Fargo, and Allpoint networks
• State: New York
• Services: Personal and business banking, loans, and community cash
• Assets: $751.9 million
• Availability: Brick-and-mortar and online

Carver State Bank

Established in 1927, Georgia Savings and Realty Corp. was a small, private bank as well as a real estate investment and management company. By 1962, Carver had become a full-service commercial bank, thus its name was changed once more to Carver State Bank.

• Branches: Main Office (Savannah, Ga.) and Skidaway Branch (Savannah, Ga.)
• ATMs: Main Office (Savannah, Ga.), Skidaway Branch (Savannah, Ga.), and any ATMs in the Wells Fargo and MoneyPass networks
• State: Georgia
• Services: Personal accounts (checking and savings), business accounts, loans, development programs, and other services (cashier’s checks, money orders, etc.)
• Assets: $91.4 million
• Availability: Brick-and-mortar and online

Citizens Bank

In 1904, originally founded as One Cent Savings Bank, Citizens Bank became the first minority-owned bank in Tennessee. Citizens Bank is the oldest continuously operating Black-owned bank in the U.S.

• Branches: Corporate Headquarters (Nashville, Tenn.), Main Office (Nashville, Tenn.), and Memphis Branch (Memphis, Tenn.)
• ATMs: N/A
• State: Tennessee
• Services: Personal and business banking (checking and savings), credit cards, and loans (personal, business, etc.)
• Assets: $182.18 million
• Availability: Brick-and-mortar and online

Citizens Trust Bank

In 1921, Citizens Trust Bank was created to serve the African American citizens of Atlanta. Today, the bank plays an active role in providing sponsorship support for multiple community organizations.

• Branches: Birmingham (Birmingham, Ala.), Eutaw Branch (Eutaw, Ala.), Cascade Branch (Atlanta), Corporate Headquarters (Atlanta), Westside Branch (Atlanta), East Point Branch (East Point, Ga.), Rockbridge Branch (Stone Mountain, Ga.), and Panola Branch (Stonecrest, Ga.)
• ATMs: Castleberry Inn ATM (Atlanta), Westside ATM (Atlanta), South Dekalb Mall ATM (Decatur, Ga.), Lithonia ATM (Lithonia, Ga.), Rockbridge Plaza ATM (Stone Mountain, Ga.), Stone Mountain ATM (Stone Mountain, Ga.), and Panola ATM (Stonecrest, Ga.)
• States: Alabama and Georgia
• Services: Banking (savings, checking, etc.) and borrowing (loans, credit cards, etc.) services
• Assets: $769.6 million
• Availability: Online and brick-and-mortar

City First Bank

City First Bank is a subsidiary of Broadway Financial Corp. that was founded in 1998. In 2021, City First Bank merged with Broadway Federal Bank to become the largest Black-led MDI in the U.S. and the one of two with more than $1 billion in total assets. City First Bank is also one of the four banks that are considered Black-operated instead of Black-owned.

• Branches: Exposition Park Branch (Los Angeles), Inglewood Branch (Los Angeles), and Branch & Corporate HQ (Washington, D.C.)
• ATMs: Exposition Park Branch (Los Angeles), Inglewood Branch (Los Angeles), and Branch & Corporate HQ (Washington, D.C.), in addition to any ATMs in the MoneyPass network
• Locations: California and Washington, D.C.
• Services: Personal and business banking (checking, savings, etc.), small business finance, and cash management
• Assets: $1.37 billion
• Availability: Brick-and-mortar and online

Columbia Savings & Loan

Columbia Savings & Loan has served Milwaukee’s inner city, particularly its growing minority population, since 1924.

• Branches: Columbia Savings & Loan Association (Milwaukee)
• ATMs: N/A
• State: Wisconsin
• Services: Mortgages, church loans, certificates of deposit (CDs), and individual retirement accounts (IRAs)
• Assets: $27.37 million
• Availability: Brick-and-mortar only

Commonwealth National Bank

Founded in 1976, Commonwealth National Bank is a full-service nationally chartered commercial institution. Commonwealth is the sole bank headquartered in Mobile, Ala., out of the 45 banks doing business there. In addition to being the only MDI in Mobile, it is one of two in Alabama.

• Branches: Main Office Branch (Mobile) and Crichton Branch (Mobile)
• ATMs: Main Office Branch (Mobile), Crichton Branch (Mobile), any Publix Super Market ATM, and any PNC Bank ATM
• State: Alabama
• Services: Consumer and business services, in addition to loans
• Assets: $68.14 million
• Availability: Brick-and-mortar and online

Credit Union of Atlanta

Founded in 1928, the Credit Union of Atlanta remained stable and secure throughout the Great Depression. Any profits earned are used to secure better rates for the institution’s members.

• Branches: Main Office (Atlanta) and Pryor Street Lending Center (Atlanta)
• ATMs: Atlanta Detention Center (Atlanta), Atlanta Public Safety Annex (Atlanta), Credit Union of Atlanta (Atlanta), and Pryor Street Lending Center (Atlanta), in addition to any ATMs in the MoneyPass and STAR networks
• State: Georgia
• Services: Personal savings and checking, business checking, credit builder and personal loans, and payment protection
• Assets: $78.15 million
• Availability: Brick-and-mortar and online

Faith Community United Credit Union

Originally chartered in 1952 as Second Mount Sinai Baptist Church Credit Union, Faith Community United Credit Union became a Community Development Credit Union (CDCU) in 1991. Faith is one of the largest minority-owned credit unions in Ohio, and it is available to anyone who lives, works, worships, or attends school in Cuyahoga County, as well as their family, business, and organization. Membership is also possible through a Select Employee Group (SEG).

• Branches: Faith Community United Credit Union (Cleveland)
• ATMs: N/A
• State: Ohio
• Services: Deposit services, loan services, insurance, and other services
• Assets: $14.94 million
• Availability: Brick-and-mortar and online

Faith Cooperative Federal Credit Union

The story of Faith Cooperative Federal Credit Union is a tale of two different organizations. St. John Federal Credit Union was founded in 1959. It became known as Faith Cooperative Federal Credit Union after it was integrated with Friendship-West Baptist Church’s vision of a microloan bank.

• Branches: Administrative Offices (Dallas)
• ATM: One located “near the Banquet Hall”
• State: Texas
• Services: Savings, loans, and gap protection
• Assets: $2.33 million
• Availability: Brick-and-mortar and online

FAMU Federal Credit Union

On May 8, 1935, six individuals were convinced to deposit $50 to acquire a federal credit union charter, resulting in the founding of Florida A&M College Employees Federal Credit Union. By 1953, the organization renamed to Florida A&M University Federal Credit Union due to its location on the FAMU campus.

• Branches: Office (Tallahassee)
• ATMs: One located in the “first drive-thru lane” as well as any ATMs that are part of American Express, CULIANCE, The Exchange, Honors, Member Access, Plus, Presto, Publix, Walmart, and “other credit unions with the participating listed networks”
• State: Florida
• Services: Accounts (checking, savings, money market accounts), Rattler debit and VISA credit cards, loans, wire transfers, and other services (notary services, bill payments, etc.)
• Assets: $29.2 million
• Availability: Brick-and-mortar and online

Financial Health Federal Credit Union

Financial Health Federal Credit Union has been serving its local community, which is more than 10,000 Indianapolis members strong, since 1971. Membership is limited to employees of Indiana University (IU) Health and its affiliates as well as individuals who live, work, worship, or attend school in one of 12 Indianapolis ZIP codes.

• Branches: IU Health West Hospital (Avon, Ind.), East Branch (Indianapolis), Indianapolis Urban League Branch (Indianapolis), IU Health Medical Tower (Indianapolis), and Sunstone Branch (Indianapolis)
• ATMs: IU Health West Medical Center (Avon, Ind.), IU Health North Medical Center (Carmel, Ind.), East Branch (Indianapolis), Indianapolis Urban League Branch (Indianapolis), IU Health University Hospital (Indianapolis), Methodist Hospital (3) (Indianapolis), and Sunstone Branch (Indianapolis), in addition to any ATMs in the Alliance One network)
• State: Indiana
• Services: Deposit accounts (checking, savings, etc.) and loans (personal, auto, etc.)
• Assets: $36.5 million
• Availability: Brick-and-mortar and online

First Independence Bank

In business since May 11, 1970, First Independence Bank has served the Detroit metropolitan area for 50 years. First Independence is the sole African American‐owned bank headquartered in Michigan, in addition to being one of two banks headquartered in Detroit.

• Branches: Main Office Branch (Detroit), Seven Mile Branch (Detroit), Lake Street Branch (Minneapolis), and University Branch (Minneapolis)
• ATMs: Clinton Township (Clinton Township, Mich.), 1st Floor International Building (Detroit), City County Building (Detroit), Livernois (Detroit), Main Office Branch (Detroit), Seven Mile Branch (Detroit), Lake Street Branch (Minneapolis), and University Branch (Minneapolis), in addition to any ATMs in the FIB, Fifth Third Bank, Huntington National Bank, U.S. Bank, JPMorgan Chase Bank, Bank of America, Wells Fargo Bank, and Bremer Bank networks
• State: Michigan and Minnesota
• Services: Consumer and business services, in addition to loans
• Assets: $664.81 million
• Availability: Brick-and-mortar and online

First Legacy Community Credit Union

The School Workers Federal Credit Union was founded by a group of educators in Feb. 14, 1941. On Jan. 1, 2020, First Legacy Community Credit Union merged with Self-Help Federal Credit Union and now operates as a division of Self-Help.

• Branches: Apopka Branch (Apopka, Fla.), DeLand Branch (DeLand, Fla.), Jacksonville (Kendall Town) Branch (Jacksonville, Fla.), Jacksonville (River City) Branch (Jacksonville, Fla.), Jacksonville (Westside) Branch (Jacksonville, Fla.), Jacksonville Downtown (JEA Tower) Branch (Jacksonville, Fla.), Miami Springs (Miami Springs, Fla.), Tallahassee Branch (Tallahassee, Fla.), Winter Park Branch (Winter Park Fla.), Asheville Branch (Asheville, N.C.), Asheville (South) Branch (Asheville, N.C.), Charlotte Branch (Charlotte, N.C.), Charlotte (Beatties Ford Road) Branch (Charlotte, N.C.), Durham (South Mangum Street) Branch (Durham, N.C.), Durham (West Main Street) Branch (Durham, N.C.), Brevard Branch (Pisgah Forest, N.C.), Greensboro Branch (Greensboro, N.C.), Hendersonville Branch (Hendersonville, N.C.), Kinston Branch (Kinston, N.C.), Laurinburg Branch (Laurinburg, N.C.), Lexington Branch (Lexington, N.C.), Maiden Branch (Maiden, N.C.), Morganton Branch (Morganton, N.C.), Old Fort Branch (Old Fort, N.C.), Raleigh Branch (Raleigh, N.C.), Rocky Mount Branch (Rocky Mount, N.C.), Rosman Branch (Rosman, N.C.), Salisbury Branch (Salisbury, N.C.), Wilmington Branch (Wilmington, N.C.), Wilson Branch (Wilson, N.C.), Windsor Branch (Windsor, N.C.), Columbia (Bush River Road) Branch (Columbia, S.C.), Columbia (Federal Building) Branch (Columbia, S.C.), Greenville (Garlington Road) Branch (Greenville, S.C.), Greenville (Mills Ave.) Branch (Greenville, S.C.), Greenville (Woodruff Road) Branch (Greenville, S.C.), Piedmont (Aviation) Branch (Piedmont, S.C.), and Galax Branch (Galax, Va.)
• ATMs: Apopka Branch (Apopka, Fla.), DeLand Branch (DeLand, Fla.), Jacksonville (Kendall Town) Branch (Jacksonville, Fla.), Jacksonville (River City) Branch (Jacksonville, Fla.), Jacksonville (Westside) Branch (Jacksonville, Fla.), Jacksonville Downtown (JEA Tower) Branch (Jacksonville, Fla.), Miami Springs (Miami Springs, Fla.), Tallahassee Branch (Tallahassee, Fla.), Winter Park Branch (Winter Park Fla.), Asheville Branch (Asheville, N.C.), Asheville (South) Branch (Asheville, N.C.), Charlotte Branch (Charlotte, N.C.), Charlotte (Beatties Ford Road) Branch (Charlotte, N.C.), Durham (South Mangum Street) Branch (Durham, N.C.), Durham (West Main Street) Branch (Durham, N.C.), Brevard Branch (Pisgah Forest, N.C.), Greensboro Branch (Greensboro, N.C.), Hendersonville Branch (Hendersonville, N.C.), Kinston Branch (Kinston, N.C.), Laurinburg Branch (Laurinburg, N.C.), Lexington Branch (Lexington, N.C.), Maiden Branch (Maiden, N.C.), Morganton Branch (Morganton, N.C.), Old Fort Branch (Old Fort, N.C.), Raleigh Branch (Raleigh, N.C.), Rocky Mount Branch (Rocky Mount, N.C.), Rosman Branch (Rosman, N.C.), Salisbury Branch (Salisbury, N.C.), Wilmington Branch (Wilmington, N.C.), Wilson Branch (Wilson, N.C.), Windsor Branch (Windsor, N.C.), Columbia (Bush River Road) Branch (Columbia, S.C.), Columbia (Federal Building) Branch (Columbia, S.C.), Greenville (Garlington Road) Branch (Greenville, S.C.), Greenville (Mills Ave.) Branch (Greenville, S.C.), Greenville (Woodruff Road) Branch (Greenville, S.C.), Piedmont (Aviation) Branch (Piedmont, S.C.), and Galax Branch (Galax, Va.), in addition to any ATMs in the Cashpoint and CO-OP networks
• States: Florida, North Carolina, South Carolina, and Virginia
• Services: Personal and business accounts, loans, and services, in addition to real estate
• Assets: First Legacy operates as a division of Self-Help, which claims more than $1.86 billion in assets.
• Availability: Brick-and-mortar and online

First Security Bank and Trust Company

First Security Bank and Trust Company is located in the heart of Oklahoma City. The bank was among the state’s top ten participating banks in the SBA’s Paycheck Protection Program, supporting local small businesses hardest hit by the subsequent economic lockdowns. According to First Security’s website, 96% of its PPP loans went to minority-owned businesses throughout 2020 and 2021.

• Branches: Main branch (Oklahoma City, Oklahoma).
• ATMs: N/A
• State: Oklahoma.
• Assets: $149.2 million
• Availability: Brick-and-mortar and online.

GN Bank

In 1934—after working closely with Federal Home Loan Bank of Chicago—13 African American men founded Illinois Service Federal to provide a savings and loan association for Black Chicagoans. The institution was acquired by Groupe Ndoum in 2016, which led to its name change to GN Bank in 2018.

• Branches: Main Office (Chicago) and Chatham Office (Chicago)
• ATMs: N/A
• State: Illinois
• Services: Personal checking and savings accounts as well as business services, lending services, and credit cards
• Assets: $65.94 million
• Availability: Brick-and-mortar and online

Greater Kinston Credit Union

Greater Kinston Credit Union was founded in 1952 and provides a variety of loans and deposit accounts. People who live, work, worship, or attend functions in Lenoir, Greene, Jones, Craven, and Pitt counties in North Carolina are eligible for membership.

• Branches: Branch Office (Kinston, N.C.)
• ATMs: Part of the CashPoints network
• State: North Carolina
• Services: Debit and credit cards; deposit (checking, savings, etc.), nonprofit, and youth accounts; mortgage and personal lending; and other services (automated services, branch services, etc.)
• Assets: $14.11 million
• Availability: Brick-and-mortar and online

Hill District Federal Credit Union

Hill District Federal Credit Union got its start in 1970 and has provided financial services to its members for 50-plus years. People who live, work, or worship in Pittsburgh’s Hill District—as well as members of an organization that provides economic assistance in the same area—are eligible to join this institution.

• Branches: Hill District Federal Credit Union (Pittsburgh)
• ATMs: N/A
• State: Pennsylvania
• Services: Debit and gift cards, savings, checking, loans, other services (money orders, financial literacy classes, etc.)
• Assets: $14.8 million
• Availability: Brick-and-mortar and online

Hope Credit Union

In 1995, members of Anderson United Methodist Church organized Hope Federal Credit Union to help low-income Jackson, Miss., residents with asset development, cooperation, and self-empowerment. Hope has since spread across the Deep South through its sponsors and by merging with other financial organizations, the most recent with Tri-Rivers Federal Credit Union in 2017. In June 2020, Netflix invested $10 million into Hope as part of its $100 million initiative to support economic opportunities for Black communities.

• Branches: Arba Street Branch (Montgomery, Ala.), McGehee Road Branch (Montgomery, Ala.), College Station Branch (College Station, Ark.), Little Rock Branch (Little Rock, Ark.), West Memphis Branch (West Memphis, Ark.), Central City Branch (New Orleans), Elysian Fields Branch (New Orleans), Mississippi Coast Branch (Biloxi, Miss.), Drew Branch (Drew, Miss.), Greenville Branch (Greenville, Miss.), Itta Bena Branch (Itta Bena, Miss.), Medical Mall Branch (Jackson, Miss.), University Boulevard Branch (Jackson, Miss.), Louisville Branch (Louisville, Miss.), Moorhead Branch (Moorhead, Miss.), Shaw Branch (Shaw, Miss.), Terry MS Branch (Terry, Miss.), Utica Branch (Utica, Miss.), West Point Branch (West Point, Miss.), Crosstown Branch (Memphis, Tenn.), Harvester Lane Branch (Memphis, Tenn.), Madison Avenue Branch (Memphis, Tenn.), and Ridgeway Branch (Memphis, Tenn.), in addition to any credit unions in the Shared Branching network
• ATMs: Arba Street Branch (Montgomery, Ala.), McGehee Road Branch (Montgomery, Ala.), College Station Branch (College Station, Ark.), Little Rock Branch (Little Rock, Ark.), West Memphis Branch (West Memphis, Ark.), Central City Branch (New Orleans), Elysian Fields Branch (New Orleans), Mississippi Coast Branch (Biloxi, Miss.), Drew Branch (Drew, Miss.), Greenville Branch (Greenville, Miss.), Itta Bena Branch (Itta Bena, Miss.), Medical Mall Branch (Jackson, Miss.), University Boulevard Branch (Jackson, Miss.), Louisville Branch (Louisville, Miss.), Moorhead Branch (Moorhead, Miss.), Shaw Branch (Shaw, Miss.), Terry MS Branch (Terry, Miss.), Utica Branch (Utica, Miss.), West Point Branch (West Point, Miss.), Crosstown Branch (Memphis, Tenn.), Harvester Lane Branch (Memphis, Tenn.), Madison Avenue Branch (Memphis, Tenn.), and Ridgeway Branch (Memphis, Tenn.)
• States: Alabama, Arkansas, Louisiana, Mississippi, and Tennessee
• Services: Personal (checking and wealth-building accounts, personal loans, credit cards, etc.) and business (checking and loans) banking, in addition to transformational deposits
• Assets: $616.1 million
• Availability: Brick-and-mortar and online

Howard University Employees Federal Credit Union

Originally chartered on Oct. 11, 1935, Howard University Employees Federal Credit Union (FCU) provides financial services to employees of Howard University and their family members. Those who join Howard University Employees FCU have a lifetime membership.

• Branches: C B Powell Building (Washington, D.C.)
• ATMs: Part of the CO-OP and CULIANCE networks
• Location: Washington, D.C.
• Services: Accounts (savings, checking, etc.) and loans
• Assets: $10.6 million
• Availability: Brick-and-mortar and online (home loans only)

Industrial Bank

Industrial Bank first opened on Aug. 20, 1934, and is one of the larger Black-owned banks in the U.S. In addition to a wide variety of financial services, Industrial Bank offers free financial education programs.

• Branches: Harlem Banking Center (Manhattan, N.Y.), Frelinghuysen Banking Center (Newark, N.J.), Halsey Street Banking Center (Newark, N.J.), Anacostia Gateway Banking Center (Washington, D.C.), Forestville Banking Center (Washington, D.C.), Georgia Avenue Banking Center (Washington, D.C.), Oxon Hill Banking Center (Washington, D.C.), and U Street Banking Center (Washington, D.C.)
• ATMs: Forestville Office (Forestville, Md.), Oxon Hill Office (Oxon Hill, Md.), Harlem Office (Manhattan, N.Y.), Frelinghuysen Office (Newark, N.J.), Halsey Street Office (Newark, N.J.), Anacostia Gateway Office (Washington, D.C.), Ben’s Chili Bowl (Washington, D.C.), D.C. Court of Appeals (Washington, D.C.), D.C. Superior Court (2) (Washington, D.C.), Georgia Avenue Office (Washington, D.C.), Nationals Park (Washington, D.C.), and U Street Office (Washington, D.C.), in addition to any ATMs in the Allpoint network
• Locations: Maryland, New Jersey, New York, and Washington, D.C.
• Services: Personal (loans, checking, etc.) and business (services, loans, etc.) services
• Assets: $748.28 million
• Availability: Brick-and-mortar and online

Liberty Bank

Liberty Bank was originally chartered in New Orleans in 1972. After acquiring United Bank and Trust Co. in 2009, its service grew across the Greater New Orleans area. With branches in nine states, Liberty Bank is one of the largest Black-owned banks.

• Branches: Montgomery Liberty Bank (Montgomery, Ala.), Tuskegee Liberty Bank (Tuskegee, Ala.), Liberty Bank Forest Park (Forest Park, Ill.), Kansas City Liberty Bank (Kansas City, Kan.), Louisville Liberty Bank (Louisville, Ky.), Southdowns Liberty Bank (Baton Rouge, La.), Southern Heights Liberty Bank (Baton Rouge, La.), Canal Street Liberty Bank (New Orleans), Crowder Boulevard Liberty Bank (New Orleans), Franklin Avenue Liberty Bank (New Orleans), General DeGaulle Liberty Bank (New Orleans), Gentilly Boulevard Liberty Bank (New Orleans), Woodward Avenue Liberty Bank (Detroit), Jackson Liberty Bank (Jackson, Miss.), Kansas City Liberty Bank (Kansas City, Mo.), and Liberty Bank Memphis (Memphis, Tenn.)
• ATMs: Montgomery Liberty Bank (Montgomery, Ala.), Tuskegee Liberty Bank (Tuskegee, Ala.), Liberty Bank Forest Park (Forest Park, Ill.), 4850 State St. (Kansas City, Kan.), Southdowns Liberty Bank (Baton Rouge, La.), Southern Heights Liberty Bank (Baton Rouge, La.), 910-B Decatur St. (New Orleans), 2714 Canal St. (New Orleans), 2800 Gravier St. (New Orleans), American Can (New Orleans), Canal Street Liberty Bank (New Orleans), City Hall (New Orleans), Crowder Boulevard Liberty Bank (New Orleans), Dillard — Rosenwald Hall (New Orleans), Franklin Rouses (New Orleans), French Market (New Orleans), General DeGaulle Liberty Bank (New Orleans), Gentilly Boulevard Liberty Bank (New Orleans), Lafon Nursing Facility (New Orleans), Lockheed Martin Buildings 102 & 350 (New Orleans), Orleans Sheriff (New Orleans), Xavier University (2) (New Orleans), Jackson Evers International Airport (Jackson, Miss.), Jackson Liberty Bank (Jackson, Miss.), Student Center (Jackson, Miss.), Tougaloo College (Jackson, Miss.), Union Station (Jackson, Miss.), and Liberty Bank Memphis (Memphis, Tenn.)
• States: Alabama, Illinois, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, and Tennessee
• Services: Personal (checking, savings, etc.), business (checking, savings, etc.), and institutional (cash management, corporate financing, etc.) services
• Assets: $1.08 billion
• Availability: Brick-and-mortar and online

Liberty Savings Federal Credit Union

Hudson County School Employees Federal Credit Union was founded in 1951 by William and Catherine Miller. The name was changed to Educational Federal Credit Union 1977 before becoming Liberty Savings Federal Credit Union nine years later. Membership is open to anyone who lives, works, worships, or attends school in Hudson County, N.J., or falls within a lengthy list of employment, education, and organizational eligibilities.

• Branches: City Line Branch (Bayonne, N.J.), Five Corners Main Branch (Jersey City, N.J.), and North Hudson Branch (Union City, N.J.)
• ATMs: City Line Branch (Bayonne, N.J.), Five Corners Main Branch (Jersey City, N.J.), and North Hudson Branch (Union City, N.J.), in addition to any ATMs in the CO-OP network
• State: New Jersey
• Services: Deposit accounts (checking, IRA, etc.), loans (auto, mortgages, etc.), insurance services, and investment counseling
• Assets: Liberty claims $115 million
• Availability: Brick-and-mortar and online

Lower East Side People’s Federal Credit Union

Lower East Side (LES) People’s Federal Credit Union was originally organized in 1986 to promote economic justice and opportunity in New York City neighborhoods. Individuals interested in joining LES People’s FCU will need to open a share (savings) account and must be one of the following: individuals who live, work, volunteer, worship, attend school, or belong to any organization located in the Lower East Side, Central Harlem, East Harlem, or the North Shore of Staten Island; any organization or business located in these communities; residents of New York City who have an annual income of less than $48,500; anyone who lives in an Housing Development Fund Corp. (HDFC) co-op building; graduates of the Getting Ahead personal financial management class; anyone affiliated with one of its Select Partner Groups; or a family member of an existing member.

• Branches: East Harlem Branch (Manhattan, N.Y.), Lower East Side Branch (Manhattan, N.Y.), and North Shore Branch (Manhattan, N.Y.)
• ATMs: Any ATMs in the CO-OP network
• State: New York
• Services: Personal (checking, money market, etc.) and business (savings, checking, etc.) accounts as well as loans (personal, auto, etc.)
• Assets: $87.63 million
• Availability: Brick-and-mortar and online

Mechanics & Farmers Bank

Founded in 1907 by nine businessmen, Mechanics & Farmers Bank (M&F) is a state-chartered commercial bank. By 1935, M&F Bank became the first lending institution in North Carolina to receive Federal Housing Administration (FHA) certification. Mechanics & Farmers merged with Fraternal Bank & Trust in 1921 and acquired Mutual Community Savings Bank in 2008.

• Branches: Charlotte Branch (Charlotte, N.C.), Corporate Headquarters (Durham, N.C.), Durham Branch (Durham, N.C.), Durham Branch — Durham-Chapel Hill Boulevard (Durham, N.C.), Greensboro Branch (Greensboro, N.C.), Raleigh Branch — East Hargett Street (Raleigh, N.C.), Raleigh Branch — Rock Quarry Road (Raleigh, N.C.), and Winston-Salem Branch (Winston-Salem, N.C.)
• ATMs: Any ATMs in the Wells Fargo, JPMorgan Chase, and Bank of America networks
• State: North Carolina
• Services: Personal (checking and savings accounts, loans, etc.) and business (commercial checking and savings, loans, etc.) services, in addition to wealth management
• Assets: $482.54 million
• Availability: Brick-and-mortar and online

Mount Olive Baptist Church Federal Credit Union

Mount Olive Baptist Church Federal Credit Union is a faith-based, not-for-profit financial institution. It received its federal charter on Oct. 21, 1997. Mount Olive Baptist Church members and their immediate families are eligible to join this organization.

• Branches: Mount Olive Baptist Church FCU (Arlington, Texas)
• ATMs: N/A
• State: Texas
• Services: Loans (auto, unsecured, etc.), savings accounts, direct deposits, and wire transfers
• Assets: $10.33 million
• Availability: Brick-and-mortar and online

Oak Cliff Christian Federal Credit Union

Officially chartered on Sept. 22, 2008, Oak Cliff Christian Federal Credit Union is a Christian-based financial institution sponsored by Oak Cliff Bible Fellowship. Members, employees, students, or family of Oak Cliff Bible Fellowship (and its subsidiaries) are eligible to join the organization.

• Branches: Oak Cliff Christian FCU (Dallas)
• ATMs: N/A
• State: Texas
• Services: Loans, financial products (IRAs, money market, etc.), direct deposit, money orders, and credit reports
• Assets: $6.49 million
• Availability: Brick-and-mortar and online

Omega Psi Phi Fraternity Federal Credit Union

Founded in 1986, Omega Psi Phi Fraternity Federal Credit Union is open to members of the fraternity, including its chapters, districts, and other related organizations, and their families, in addition to employees of both the fraternity and the credit union itself.

• Branches: Omega Psi Phi Fraternity Federal Credit Union c/o CAMO (Toccoa, Ga.)
• ATMs: N/A
• State: Georgia
• Services: Accounts (single, joint, etc.), share draft checking, loans, and credit cards
• Assets: $5.1 million
• Availability: Brick-and-mortar and online

OneUnited Bank

OneUnited Bank was the first online-only Black-owned bank and is the largest Black-owned bank in the U.S. Originally founded in 1968 as Unity Bank and Trust Co., OneUnited has financed almost $1 billion in loans thus far, predominantly in low- to moderate-income communities.

“Everyone is talking about OneUnited Bank now, but what they’re not focusing on with OneUnited Bank is they’re heavily engaged in financial education and financial literacy in the cities that need it most,” Tyrone Ross, CEO of Onramp Invest, explains. “So I feel like right now, when you support OneUnited, again you get those end roads into their programs they already have instituted to provide access to financial education and financial literacy.”

• Branches: Compton Branch (Compton, Calif.), Corporate Office and Crenshaw Branch (Los Angeles), Miami Branch (Miami), Corporate Headquarters (Boston), Grove Hall Branch (Dorchester, Mass.), and Roxbury Branch (Roxbury, Mass.)
• ATMs: Part of the MoneyPass network or Chase Bank ATMs
• States: California, Florida, and Massachusetts
• Services: Checking, savings, and secured VISA credit card
• Assets: $572.66 million
• Availability: Brick-and-mortar and online

OPTUS Bank

The story of OPTUS Bank began in 1921, with the founding of Victory Savings Bank by a group of African American leaders. OPTUS is committed to helping anyone, regardless of background or situation, build their wealth and improve their lives.

• Branches: Main Branch (Columbia, S.C.)
• ATMs: Corporate Office (Columbia, S.C.) and Main Branch (Columbia, S.C.)
• State: South Carolina
• Services: Personal (IRAs, consumer loans, etc.) and business (transaction accounts, merchant services, etc.) banking
• Assets: $615.38 million
• Availability: Brick-and-mortar and online

South Side Community Federal Credit Union

Since 2003, South Side Community Federal Credit Union has offered access to credit and savings services, in addition to financial education, for its members. Individuals are eligible for membership if they live, work, worship, attend school, or belong to an organization within Chicago’s South Side.

• Branches: South Side Community Federal Credit Union (Chicago)
• ATMs: N/A
• State: Illinois
• Services: Accounts (savings, checking, etc.), loans (payroll advance, payday alternative, etc.), financial education classes, and other services (transfer sweeps, money orders, etc.)
• Assets: $6.3 million
• Availability: Brick-and-mortar and online

Southern Teachers & Parents Federal Credit Union

With more than 80 years of service, Southern Teachers & Parents Federal Credit Union provides personalized financial services to its members. Those eligible for membership include alumni, employees, parents, and students of Southern University; employees in Louisiana’s Assumption, East Baton Rouge, Lafourche, and West Feliciana parishes; employees in Thibodaux and the Lafourche Parish Juvenile Justice Facility; and their family members.

• Branches: Main Office (Baton Rouge, La.) and Lafeda Branch (Thibodaux, La.)
• ATMs: Part of the CULIANCE network
• State: Louisiana
• Services: Accounts (checking, savings, and youth), loans, and other services (VISA debit and credit cards, financial counseling, etc.)
• Assets: $29.8 million
• Availability: Brick-and-mortar and online

St. Louis Community Credit Union

Originally chartered in 1942 as Teachers Credit Union, St. Louis Community Credit Union offers both financial services and several programs to support consumers in the local community. Individuals who live or work in St. Louis City, Franklin, and St. Louis County in Missouri—as well as in St. Clair, Madison, Monroe, and Jersey counties in Illinois—are eligible for membership, in addition to their families.

• Branches: Ferguson Branch (Ferguson, Mo.), Florissant Branch (Florissant, Mo.), Richmond Heights Branch (Richmond Heights, Mo.), St. John Branch (St. John, Mo.), Benton Park Branch (St. Louis), Delmar Divine Branch (St. Louis), Gateway Branch (St. Louis), LifeWise STL (St. Louis), Midtown Branch (St. Louis), South City Branch (St. Louis), Southtown Branch (St. Louis), Sullivan Branch (St. Louis), Urban League of Metropolitan St. Louis — Peter Bunce Campus (St. Louis), Jennings Branch (St. Louis), University City Branch (University City, Mo.), and Wellston — MET Center (Wellston, Mo.)
• ATMs: Part of the CO-OP network
• State: Missouri
• Services: Loans (auto, personal, etc.), accounts (savings and checking), business development, advocacy, and insurance (life, accidental death and dismemberment (AD&D), etc.)
• Assets: $397.31 million
• Availability: Brick-and-mortar and online

The Harbor Bank of Maryland

Originally opening its doors in September 1982, The Harbor Bank of Maryland offers banking and other financial services, primarily in the Baltimore metropolitan area. Harbor Bank was also the first community bank in the U.S. to have an investment subsidiary and the first to receive funding from Fannie Mae via the Community Development Financial Institution (CDFI) program. Harbor Bank is one of the four banks that are considered Black-operated instead of Black-owned.

• Branches: Fayette Branch (Baltimore), Harbor East Branch (Baltimore), Northwood Commons Branch (Baltimore), Pimlico Office (Baltimore), Research Park Office (Baltimore), Science & Technology Park Branch (Baltimore), Randallstown Office (Randallstown, Md.), and Silver Spring (Silver Spring, Md.)
• ATMs: Fayette Branch (Baltimore), Harbor East Branch (Baltimore), Pimlico Office (Baltimore), Research Park Office (Baltimore), Science & Technology Park Branch (Baltimore), and Randallstown Office (Randallstown, Md.), in addition to any ATMs in the AllPoint network
• State: Maryland
• Services: Personal (checking, mortgages, etc.) and business (checking, savings, etc.) banking, in addition to loans (personal, mortgage, and business)
• Assets: $350.98 million
• Availability: Brick-and-mortar and online

Tioga-Franklin Savings Bank

Founded as Tioga Building & Loan Association on March 31, 1873, TBLA was a facet of Philadelphia’s banking community through the Spanish-American War, Word War I, the stock market crash of 1929, World War II, and every financial event up to OPEC oil shock of 1973. That year, TBLA merged with the Franklin Savings and Loan Association to form the Tioga Franklin Savings Association. Then in July 2000, the bank was renamed Tioga Franklin Savings Bank and became a member of the FDIC, making it Philadelphia’s oldest chartered bank. Tioga-Franklin Savings Bank is one of the four banks that are considered Black-operated instead of Black-owned.

• Branches: Main Branch (Philadelphia)
• ATMs: N/A
• State: Pennsylvania
• Services: Personal (checking and savings) and business (checking, savings, etc.) banking, in addition to loans (personal, mortgage, and business)
• Assets: $72.63 million
• Availability: Brick-and-mortar and online

Toledo Urban Federal Credit Union

Toledo Urban Federal Credit Union originally opened its doors on July 21, 1996, to help its members achieve economic empowerment. Membership in the first community development credit union in Toledo, Ohio, is available to individuals who live, work, worship, perform volunteer services, or participate in associations headquartered in the central city community, in addition to their families.

• Branches: Toledo Urban Federal Credit Union (Toledo, Ohio)
• ATMs: N/A
• State: Ohio
• Services: Checking and share accounts, loans (personal, tuition, etc.), credit and ATM/debit cards, credit counseling, and other services (notary service, overdraft protection, etc.)
• Assets: $18.5 million
• Availability: Brick-and-mortar and online

United Bank of Philadelphia

Originally founded in 1992, United Bank of Philadelphia offers personalized banking services in the Greater Philadelphia area to both individuals and businesses. By providing financing to small businesses in urban areas, United Bank supports their growth and allows them to create jobs with livable wages, thus improving the economic condition of those working in the local community.

• Branches: Center City (Philadelphia) and Progress Plaza (Philadelphia)
• ATMs: C-Town Supermarket (Philadelphia), City Hall (Philadelphia), Criminal Justice Center (Philadelphia), Masjidullah Inc. (Philadelphia), Philadelphia Traffic Court (Philadelphia), Police Districts (Philadelphia), The Fillmore-Philadelphia (Philadelphia), and West Philadelphia (Philadelphia)
• State: Pennsylvania
• Services: Personal and business banking (checking, savings, etc.), in addition to loans (U.S. Small Business Administration (SBA) and commercial loans)
• Assets: $57.23 million
• Availability: Brick-and-mortar and online

Unity National Bank

Unity National Bank was founded in 1963 and chartered in 1985. “In February 1989, through a series of transactions and diligent efforts, it was acquired from Bay Bancshares by local minority leaders,” the bank’s history reports. Unity focuses on helping to rebuild the community with an emphasis on commercial loans and mortgages. It also works closely with civic organizations and agencies, such as the NAACP and the Third Ward Redevelopment Council.

• Branches: Atlanta Branch (Atlanta), Blodgett Branch (Houston), and Fort Bend Branch (Missouri City, Texas)
• ATMs: Atlanta Branch (Atlanta), Blodgett Branch (Houston), and Fort Bend Branch (Missouri City, Texas), in addition to any ATMs in the Select network
• States: Georgia and Texas
• Services: Business and personal services (loans, checking and savings accounts, etc.)
• Assets: $209.01 million
• Availability: Brick-and-mortar and online

Urban Upbound Federal Credit Union

Urban Upbound Federal Credit Union was founded in 2004, to provide six integrated programs to individuals living in public housing and and other low- and moderate-income neighborhoods. Urban Upbound offers affordable financial services to its members.

• Branches: Urban Upbound Federal Credit Union (Long Island City, N.Y.)
• ATMs: N/A
• State: New York
• Services: Savings, share certificates, and personal and small business loans
• Assets: Over $2 million
• Availability: Brick-and-mortar and online

Virginia State University Federal Credit Union

Authority to establish Virginia State College Federal Credit Union was granted on Oct. 19, 1938. On May 22, 1979, the organization’s board of directors voted to change the name to Virginia State University Federal Credit Union.

• Branches: Virginia State University Federal Credit Union (South Chesterfield, Va.)
• ATMs: Virginia State University Federal Credit Union (South Chesterfield, Va.)
• State: Virginia
• Services: Loans, accounts (checking, savings, etc.), insurance, and other services (wire transfer, direct deposit, etc.)
• Assets: $12.5 million
• Availability: Brick-and-mortar and online

What is the History of Black-Owned Banks in the United States?

The first Black-owned bank, True Reformers Bank, was chartered in 1888. These banks emerged as a response to racial discrimination and the lack of access to financial services for Black Americans. Over the years, they have faced significant challenges, including economic downturns and systemic racism, but have persisted as key players in supporting Black economic empowerment.

How Do Black-Owned Banks Help Their Communities?

Black-owned banks provide access to financial resources for underserved populations, particularly in low- and moderate-income areas. They offer services like loans, mortgages, and credit that may not be available from larger, mainstream financial institutions due to discrimination or redlining. They also tend to reinvest in the local community by prioritizing small businesses and nonprofit organizations.

How Can Consumers Support Black-Owned Banks?

Consumers can support Black-owned banks by opening accounts, taking out loans, and using banking services from these institutions. Many Black-owned banks offer brick-and-mortar branches and online/mobile banking, making it easier to access their services.

The Bottom Line

Black-owned banks play a crucial role in promoting financial equity and combating systemic racism in the U.S. banking system. While historically challenged by discrimination, economic crises, and financial instability, these institutions continue to provide essential banking services, such as loans and mortgages, to underserved Black communities.

By focusing on financial literacy, small businesses, and supporting homeownership in Black neighborhoods, Black-owned banks help bridge the racial wealth gap. However, they also face significant hurdles, including limited resources and competition from larger institutions. Despite these challenges, supporting Black-owned financial institutions is vital for fostering economic empowerment, and their continued presence highlights the ongoing fight for financial justice and racial equality in America.

Fact checked by Suzanne Kvilhaug
Reviewed by Ebony Howard

In December 2017, President Donald Trump signed a new tax bill into law. Known previously as the Tax Cuts and Jobs Act (TCJA), the reform has far-reaching impacts on many areas of tax and financial planning. One significant area of impact is estate planning by raising the exemption on the estate tax. Keep reading to learn more about how this law affects the strategies for estate planning.

Key Takeaways

• President Donald Trump signed the Tax Cuts and Jobs Act in 2017.
• The law brought sweeping changes to the U.S. tax system, including to estate planning.
• Under the TCJA, the estate tax exemption more than doubled between 2017 and 2018.
• The generation-skipping tax was also raised.
• More people can give away their wealth without incurring income taxes until the end of 2025.

Changes Under the Tax Reform

The tax reform legislation raised the estate tax exemption to $11.18 million per person and $22.36 million per married couple for 2018. That was a significant increase over prior limits. The estate tax exemption for an individual is $13.61 million in 2024 and $13.99 million in 2025 (an increase to account for inflation). This eliminates any federal estate taxes on amounts under those limits gifted to heirs during your lifetime or left to them upon your death.

The new legislation effectively eliminated the federal estate tax for all but the wealthiest individuals. It is worth noting that as with most of the provisions of the act, these rules are set to expire at the end of 2025. At that time, the exemption amounts will revert to previous levels, adjusted for inflation.

Generation-Skipping Tax

The generation-skipping tax rate exemption also increased to the same amount as above for individuals and married couples. This increase also expires at the end of 2025.

The method used to calculate inflation on these exemptions and other related areas has been changed. Instead of the traditional Consumer Price Index (CPI), which was previously used, inflation and exemptions are calculated based on the chain-weighted CPI, a modified measure of inflation that adjusts for “situation bias,” or accounts for the shifting purchasing behaviors of consumers. The chain-weighted CPI generally yields a lower rate of inflation.

What This Means for You

The temporary increase in the exemptions for the federal estate tax and the generation-skipping tax means that until the end of 2025 (unless Congress repeals or extends these rules), many will be able to give away more of their estate to their heirs without paying estate taxes.

The tax law has obvious benefits for beneficiaries, but its introduction doesn’t eliminate the need for estate and tax planning. Trump’s tax reform did not repeal the estate tax for those states that assess one. If you live in one of the following states, your assets are subject to the appropriate level of any state-imposed estate tax:

• Connecticut
• District of Columbia
• Hawaii
• Illinois
• Maine
• Maryland
• Massachusetts
• Minnesota
• New York
• Oregon
• Rhode Island
• Vermont
• Washington

Note

With many states facing substantial fiscal challenges, it’s not beyond the realm of possibility that some states that currently don’t have an inheritance tax might consider enacting one in the future.

Individuals facing state-level estate taxes should consider tactics such as a disclaimer and a bypass trust or a qualified terminable interest property (QTIP) trust—both of which allow a degree of flexibility in the allocation of the assets in your estate, to minimize the impact of taxes on their estate.

With the increased exemption limits, lifetime gifts of estate assets can be made without concern of triggering federal gift and estate taxes, except for those with estates over the exemption amounts. Gifting can also be done by shifting assets likely to experience high levels of appreciation. This can shield the appreciation of those assets from future estate taxation in your estate once the exemption limits expire after 2025.

Warning

Lifetime gifts are not entitled to a step-up in cost basis as with assets transferred to heirs upon your death. This means that before gifting appreciated assets like shares of stock, be sure to consider the tax impact upon the recipient of the gift.

A Strategy to Protect Your Spouse

You may want to consider the spousal lifetime access trust as a way to protect your spouse. This is an irrevocable trust that removes the assets from your estate and transfers them to an irrevocable trust for your spouse’s benefit.

The advantage is that those assets are out of your estate, allowing you to take advantage of the increased estate tax exemption before the 2025 deadline, while still retaining a degree of control over those assets via your spouse during their lifetime.

Be warned, though, that SLATs come with downsides. Should you divorce, you have no claim to the assets in the SLAT. It is also critical to ensure that, should you both use a SLAT, the trusts are not identical. This helps to avoid the risk that the trusts will be deemed to be substantially identical, in violation of the reciprocal trust doctrine, which could invalidate the trust.

Accidental Disinheritance

One potential unintended consequence of the higher exemption limits is that some heirs may unintentionally be disinherited.

Many estate plans are set up to use a bypass trust, which directs a trustee to use any remaining estate tax exemption amount to fund the bypass trust. This would be done before distributing the remaining assets in the estate to the intended heirs.

The size of the bypass trust in a case like this could cause some heirs to be unintentionally disinherited. Those with this type of provision should review their estate planning documents.

The Life Insurance Option

Life insurance is a popular way to help heirs cover any estate taxes that might be due in conjunction with a large estate over the exemption limits. With the increase in the exemption, the prevalence of these exemptions may wane.

These policies can now serve as a backstop for the estate, allowing grantors to pass assets in a tax-efficient manner and providing liquidity in cases where some of the estate assets are illiquid, such as real estate or an interest in a business.

What Are the Tax Rates for U.S. Taxpayers?

The tax rates for individual taxpayers are: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The threshold for each tax rate changes each year based on inflation and is different for married couples filing jointly and other tax filers. But, the rates are set to revert to their original levels after the TCJA expires at the end of 2025.

What Happens to the Tax Cuts and Jobs Act after 2025?

Many provisions of the Tax Cuts and Jobs Act are set to expire at the end of 2025. This includes marginal tax rates, the increased basic standard deduction, and the credit for other dependents among others. Experts suggest that extending the expiring cuts would cost taxpayers an additional $4 trillion over 10 years.

What Type of Tax System Does the U.S. Have?

The United States functions under a progressive tax system. This means that the rate at which individual taxpayers are taxed is based on how much they earn. As such, your taxes increase if you earn more income while those with lower income levels are taxed less.

The Bottom Line

Tax reform has resulted in many changes for taxpayers, beginning with the 2018 tax season. Estate planning is one area that has been impacted, but like most of the tax reform legislation, the impact is temporary and will largely revert to the prior rules after 2025.

Especially for those with larger estates, it is wise to review your current estate planning documents to ensure that they still do what you intended for them to do and to ensure that you are taking full advantage of any opportunities under tax reform.

ETFs can help investors diversify their portfolio through a single investment product

Exchange-traded funds (ETFs) are investment funds that trade on stock exchanges, similar to individual stocks, and typically track an index, sector, commodity, or asset class. They offer
investors diversification, as a single ETF can hold a broad mix of securities, reducing risk compared to investing in individual stocks. ETFs also tend to have lower expense ratios than actively managed mutual funds and provide liquidity, allowing investors to buy and sell shares throughout the
trading day at market prices.

Key Takeaways

• Leading ETFs offer investors an opportunity to broadly diversify their holdings through a single investment with a low expense ratio and/or higher returns compared to competitors.
• We screened for the equity, bond, fixed income, commodities, and currency ETFs providing the highest one-month total returns for February 2025.
• These funds include XES, XMPT, CMBS, UNG, FXY

Below, we outline the top equity, bond, fixed income, commodities, and currency ETFs that generated the highest returns over the last month. We have excluded leveraged and inverse ETFs, as well as funds with less than $50 million in assets under management (AUM).

All data are current as of Jan. 27, 2025.

Equity ETF with the Best 1-Month Return: SPDR S&P Oil & Gas Equipment & Services ETF (XES)

• One-month performance: 12.9%
• Expense Ratio: 0.35%
• Annual Dividend Yield: 1.22%
• 30-Day Average Daily Volume: 48,460 
• Assets Under Management (AUM): $240.4 million
• Inception Date: June 19, 2006
• Issuer: State Street

The SPDR S&P Oil & Gas Equipment & Services ETF (XES) offers investors exposure to the U.S. energy industry’s equipment and services sub-sector. By employing an equal-weighted
strategy, XES provides balanced exposure across its holdings, reducing the concentration risk associated with larger-cap companies. As of Jan. 24, 75% of the portfolio is in stocks of oil and gas equipment and services companies, and 25% of the portfolio is in oil and gas drilling.

Bond ETF with the Best 1-Month Return: VanEck CEF Muni Income ETF (XMPT)

• One-month performance: 2.4%    
• Expense Ratio: 1.98%
• Annual Dividend Yield: 5.3%
• 30-Day Average Daily Volume: 176,335
• Assets Under Management (AUM): $199 million
• Inception Date: July 12, 2011
• Issuer: VanEck

The VanEck CEF Muni Income ETF (XMPT) offers investors exposure to the municipal bond market by investing in closed-end funds that hold municipal bonds. This approach provides access to a
diversified portfolio of municipal bonds managed by various fund managers.

Fixed Income ETF with the Best 1-Month Return: iShares CMBS ETF (CMBS)

• One-month performance: 0.95%      
• Expense Ratio: 0.25%
• Annual Dividend Yield: 3.3%
• 30-Day Average Daily Volume: 65,065
• AUM: $436 million
• Inception Date: Feb. 14, 2012
• Issuer: iShares/BlackRock

The iShares CMBS ETF (CMBS) provides targeted exposure to U.S. commercial mortgage-backed
bonds, offering investors access to a specific segment of the mortgage-backed securities market.

Commodities ETF with the best 1-Month Return: United States Natural Gas Fund LP (UNG)

• One-month performance: 15.9%
•  Expense Ratio: 1.06%
• Annual Dividend Yield: N/A
• 30-Day Average Daily Volume: 13,123,380
• AUM: $665 million
• Inception Date: April 18, 2007
• Issuer: Marygold

The United States Natural Gas Fund (UNG) is an ETF designed to closely track the daily price movements of natural gas using its Benchmark Futures Contract, primarily the near-month natural gas futures trading on the NYMEX. UNG had a strong one-month performance, as natural gas prices have rallied following colder-than-anticipated weather in the United States.

Currency ETF with the Best 1-Month Return: Invesco Currency Shares Japanese Yen Trust (FXY)

•  One-month performance: 0.77% 
• Expense Ratio: 0.4% 
• Annual Dividend Yield: N/A
• 30-Day Average Daily Volume: 144,980 
• AUM: $396 million 
• Inception Date: Feb. 12, 2007
• Issuer: Invesco

The Invesco Currency Shares Japanese Yen Trust (FXY) is an ETF designed to track the price of the Japanese yen through physical yen holdings. The yen serves as Japan’s national currency and is managed by the Bank of Japan, the country’s central bank.

How We Chose the Best ETFs

We selected the best ETFs across five areas of focus—equities, bonds, fixed-income, commodities, and currencies—utilizing a screener by VettaFi. In each case, we sorted ETFs according to the specified category and ranked them by highest one-month returns. We then filtered out any ETFs that employ a leveraged or inverse strategy, as well as any with less than $50 million in assets under management. Finally, for currencies ETFs, we excluded any funds focused on cryptocurrencies from our screen.

How to Invest in ETFs

To invest in ETFs, start by researching and selecting an ETF that aligns with your financial goals, risk tolerance, and investment strategy—whether it tracks a broad market index, a specific sector, or a commodity. Open a brokerage account with a platform that offers ETF trading, then place an order
just like you would for a stock. Consider factors such as expense ratios, liquidity, and tracking accuracy to ensure you’re getting the best value for your money. Depending on your time horizon and risk tolerance, ETFs typically require minimal maintenance and are often considered long-term, buy-and-hold investments.

The Bottom Line

ETFs are versatile and cost-effective investment options that provide diversification, liquidity, and tax efficiency, making them ideal for both new and experienced investors. With minimal maintenance required, they offer a simple way to gain exposure to broad markets or specific sectors while managing risk.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the above ETFs.

Fact checked by Hans Daniel Jasperson
Reviewed by Charles Potters

New legislation is introduced and passed through the U.S. Congress every five to six years to subsidize farmers and agricultural products. These bills provide benefits like cash, minimum prices, and crop insurance programs. Most academic economists and policy analysts oppose agricultural subsidies, but that seems to have little impact on the continuous transfer of taxpayer money to farmers.

Key Takeaways

• The farm bill is used to subsidize farmers and agricultural products.
• The bill is passed through Congress every five to six years.
• Some of the main farm subsidies include crop insurance, agricultural risk coverage, and disaster relief.
• Subsidies were deemed necessary as farmers were considered essential to the national economy.

The Farm Bill

As noted above, the farm bill allows lawmakers to make changes to agriculture and food programs every five to six years. The Agriculture Improvement Act of 2018, P.L. 115-334 was signed into law by President Donald Trump in December 2018 and was extended beyond the five-year term to include the 2024 crop year. The bill:

• Modified farm commodity support
• Expanded crop insurance coverage
• Made changes to conservation programs
• Reauthorized and revised nutrition assistance

When the bill was enacted in 2018, the farm bill’s mandatory programs were estimated to cost $428 billion for the full five-year period. That cost was estimated at $867 billion over a 10-year basis, with nutrition and crop insurance taking up the bulk of the outlays.

Important

The U.S. Department of Agriculture (USDA) is a federal agency that oversees the farming, ranching, and forestry industries. It is also responsible for food quality, food safety, and nutrition labeling.

Scope of Farm Subsidies

These bills tend to be massive. From 1962 to 2019, farm income stabilization programs averaged $13.2 billion. These subsidies target wheat, rice, soybeans, oats, barley, sorghum, minor oilseeds, peanuts, corn, and cotton.

Marketing loans set minimum prices for crops, encouraging overproduction beyond market demands for the aforementioned products as well as honey, chickpeas, wool, and mohair.

The table below highlights some of the major types of agricultural subsidies, including counter-cyclical payments for crops, conservation subsidies that pay farmers to not grow crops, USDA farm insurance programs, special crop disaster assistance programs, and taxpayer-funded agricultural research.

Reasons for Farm Subsidies

Before the Industrial Revolution, nearly all of the workforce was employed in farm labor. For example, 90% of all working Americans were farm owners or worked on farms in 1790. Understandably, farmers were seen as economically crucial. Politicians were elected by being friends of farmers.

Wealthy farmers have been successful in lobbying for government favors throughout history. Some subsidies existed in the U.S. before the Great Depression, but most modern programs date to the 1930s. It was thought that propping up farm prices would keep farmers from going bankrupt; the net result made food more expensive for people struggling to afford it.

Political economists note that subsidies tend to never go away through a phenomenon called public choice theory. This means that wealthy farmers essentially have more incentive to fight for subsidies than consumers do to fight against them.

What Is a Subsidy?

A subsidy is a sum of money or financial benefit provided to an individual, business, or other entity by the government. Subsidies are often provided for economic or social benefit and to remove a financial burden from the recipient. Examples of subsidies include welfare payments, unemployment benefits, and those paid to major industries that function within the economy, such as agriculture and energy companies.

What Is the Largest Agricultural Subsidy Program?

Insurance is the largest agricultural subsidy program. This program costs the government about $10 billion each year and provides farmers with 60% of their insurance premiums. Private sector insurance companies are also reimbursed for their administrative expenses and underwriting gains for writing insurance policies.

When Was the First Farm Bill Passed?

The farm bill was first signed into law in the United States in 1933 as part of the New Deal. It was called the Agricultural Adjustment Act of 1933. The bill aims to address areas of concern for the agricultural industry, including trade and support. The most recent bill was signed into law by Donald Trump in December 2018.

The Bottom Line

Subsidies are commonly paid by governments to different industries for a variety of reasons. This includes boosting production and consumption levels and helping keep key players in struggling sectors afloat. The farm bill, which was introduced in 1933 as part of the New Deal, offers government benefits to farmers and companies in the agricultural sector. It is updated every five to six years. Crop insurance, price loss coverage, and disaster aid are among the largest and most common subsidies offered by the U.S. government.

These are some of the best-performing stocks in the health care sector over the past month

The health care sector is massive and incredibly varied, including companies that make medical equipment or drugs, those that offer medical services, and even those providing insurance in some cases. Within this sector, there are startups that are pre-revenue and working from quarter to quarter to launch an innovative product, major legacy service providers, and everything in between. Investors thus have many options to choose from when focused on health care. At the same time, though, the health care sector is highly complex, and investors are cautioned to familiarize themselves with the ins and outs of health care companies before launching an investment.

Key Takeaways

• Some of the best health care stocks for February 2025, based on 30-day returns, include Akero Therapeutics Inc., Guardant Health Inc., and Inari Medical Inc.
• The best-performing health care stocks in the last month returned at least 39.5%.
• An aging population and increasing medical needs are two factors contributing to massive growth in the health sector.

We examine below several of the best health care stocks to watch for February 2025, based on highest 30-day percentage return. We include an explanation of the other factors in our screen below. All data are current as of Jan. 28, 2025.

What to Know About the Health Care Sector

The health care sector was among the hardest hit by the COVID-19 pandemic and has yet to fully recover; the sector continues to face a significant labor shortage that has been exacerbated by ongoing inflation concerns. Significant elements of the way health care operations function—from a shift away from in-person medical appointments to changes in insurance and demand for new products, among many others—have forced long-time leaders in the space to reevaluate their offerings and presented openings for upstart firms to gain a foothold. Going forward, the health care sector will wrestle with a growing population of patients who are eligible for Medicaid and Medicare, opportunities presented by AI, and more.

One trend for investors to keep a close eye on is the ongoing popularity of GLP-1 agonists, a type of drug used to treat Type 2 diabetes and to help with weight loss. With about 1 billion people globally living with obesity, the potential market for these drugs is incredibly large. The two leading providers of these drugs are Novo Nordisk A/S (NVO) and Eli Lilly and Co. (LLY), but the market is far from settled.

How We Chose the Best Health Care Stocks

To screen for the best health care stocks this month, we looked at firms listed on either the Nasdaq or the New York Stock Exchange. To ensure we focused on established companies, we filtered out any companies with a share price below $5, with a minimum daily trading volume of under 100,000, and with a market capitalization below $300 million. From that subset of stocks, we ranked companies according to the highest 30-day percentage return.

Notably, none of the companies in our results had a P/E ratio. One of the most common reasons for a company to not have a P/E ratio is if it either took a loss or generated no earnings in the given time period, or in the prior-year period for comparison. This makes the calculation of a P/E ratio impossible. For clinical-stage pharmaceutical firms, many of which are pre-revenue or consistently post losses while developing their products, it is common to not have a P/E ratio until the launch of a significant drug product.

Health Care Stock Advantages and Disadvantages

National health expenditures reached $4.9 trillion in 2023, making the health care sector massive. A key benefit health care provides to investors is consistent demand. Because individuals will always have medical needs to be met, the overall demand for health products and services typically remains at least constant and tends to increase over time as populations grow older. Nationwide health care expenditures are expected to surge to $6.8 trillion by the year 2030.

Health care companies are enticing to investors because they are highly incentivized to use and create new technology, both to meet rising demand and to improve the affordability of care they can offer. This focus on innovation may mean that health care stocks offer the potential for short- and long-term gains.

It is common in the sector for individual companies to experience a significant breakout when an important new product is launched—such as a new medical device with broad applications or a blockbuster new drug—or even when clinical trial data is encouraging. Health care stocks often experience astronomical rallies during these moments.

On the other hand, there are some risks to investing in health care companies that investors should be aware of as well. One of the biggest risks is the size and scope of the sector. Due to the technical nature of the work of many health care companies, it can be difficult for outside investors to accurately assess the viability of a company or its products. Additionally, many companies in the space are heavily impacted by legislation, which can change and contribute to volatility.

Undoubtedly there are opportunities for major returns for investors looking to the health care sector. However, no one can predict how a company’s stock may perform. The companies above led the sector in our screen, but past performance is not a guarantee of future returns.

The Bottom Line

The health care sector is massive, complex, and rich with opportunities for investors willing to take the time to understand its ins and outs. Our screen favors companies in the pharmaceuticals space that have experienced strong returns in the last month, occasionally due to the success of a popular drug or other product. But just as some of these firms may rise rapidly, they may also fall just as precipitously, particularly if a promising new product ends up not working as expected.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the above securities.

These are some of the best-performing stocks in the energy sector over the past month

Companies in the energy sector explore for and develop oil and gas products, provide consolidated utility services, and discover and market renewable energy sources, among other things. The energy market is massive and likely to only grow as demand surges. However, large-scale shifts away from the traditional fossil fuel portion of the sector have prompted even stalwart energy firms to pivot in recent years.

Key Takeaways

• The best energy stocks for February 2025 based on 30-day returns include Valero Energy Corp., PBF Energy Inc., and Civitas Resources Inc.
• Collectively, energy stocks were up about 6.4% in the last month.
• Energy company stocks frequently move in tandem with the prices of energy products themselves. Because these products can be highly volatile, stock prices also have the potential for instability.

We’ve compiled the best energy stocks to watch for February 2025 based on 30-day returns. Other factors included in our screen can be found in the detailed explanation of our ranking methodology below. All data are current as of Jan. 28, 2025.

What to Know About the Energy Sector

As a group, energy stocks rose throughout fall 2024, spiking after the U.S. presidential election and falling toward the end of the year. In January, they recovered most of the ground given up during that time. Generally, energy stock prices often move in tandem with energy prices. For example, in 2022, amid the initial months of Russia’s invasion of Ukraine, energy prices peaked and many companies in the sector also experienced gains.

Production levels around the world are an essential factor in the performance of energy sector stocks. U.S. oil production is expected to increase under President Trump, although it has been at a high level for some time prior to the new administration. On the other hand, some OPEC+ countries have capped production. Analysts expect demand for energy products to continue to grow, driven by factors including increased reliance on high-usage services like cloud and artificial intelligence, among other things.

How We Chose the Best Energy Stocks

We screened for the best energy stocks by looking at all energy companies trading on either the Nasdaq or the New York Stock Exchange. From there, we included companies with a share price of at least $5, with daily trading volumes of 100,000 or more, and with a market capitalization of $300 million or higher. This is to ensure that our screen includes established firms in the energy industry.

Next, we ranked the remaining energy companies by 30-day return and identified the top-performing stocks based on that metric. We excluded any companies with negative returns during that period. Our screen includes stocks of energy companies and does not include products utilized directly in energy trading.

In our list, one of the stocks does not include a P/E ratio. This may be the case when a company has posted losses in the period in question or in the prior year period, making it impossible to calculate a P/E ratio.

Energy Stock Advantages and Disadvantages

The energy market is both gargantuan and growing, providing a significant potential benefit to investors. The global energy market is valued at about $6 trillion. Due to continued demand for energy to power factories, machinery, cars, and much more, companies are able to take part in the energy sector in many ways. This provides investors a range of options from which to choose within this large sector, including companies focused on energy production, transportation, distribution, storage, and more. Energy companies also exist in both traditional and more experimental corners of the market.

Demand for energy products is only likely to increase, and this is likely to drive growth in the size of the market into the future. The U.N. anticipates a global investment of $2.4 trillion per year over the coming decade in order to meet the goals of the Paris Climate Agreement. Renewable energy sources are becoming more popular and commonplace globally, offering investors a greater degree of variety in terms of the types of energy investment opportunities they experience.

There are also some important disadvantages and risks associated with energy sector investment. Fundamentally, many energy companies are heavily dependent upon the price of energy products; a crash in the market could be devastating, and even day-to-day volatility can make investing a challenge. As a highly complex, global market, energy can be difficult to assess for investors looking to identify strong options.

Further, many companies in the energy sector use products and practices that contribute significantly to climate change. Investors seeking companies with a strong history of meeting ESG standards may be limited in their approach in the energy sector.

While the stocks above are at the top of our list for this month, it’s important to remember that past performance does not guarantee future returns.

The Bottom Line

Energy sector companies include those focused on hydrocarbons, renewable energy, some utilities firms, and much more. Because they are often closely linked to the price of oil and other energy products, their share prices may be volatile. But the size of the market and the expectation of future growth make energy an enticing prospect for many investors.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the securities listed above.

Reviewed by Gordon Scott

Risk management is the work of balancing opportunities for gains with the potential of making losses from your investing choices. This work can help reduce potential losses and increase potential gains. It can also help protect traders’ accounts from losing all of their money. The risk of losing money occurs when traders open positions. The larger the positions, the greater the risk, but also the greater opportunity for profit.

Risk management is an essential but often overlooked prerequisite to successful active trading. After all, a trader who has generated substantial profits can lose it all in just one or two bad trades without a proper risk management strategy. So how do you develop the best techniques to curb the risks of the market?

This article will discuss some simple strategies that can be used to protect your trading profits.

Key Takeaways

• Trading can be exciting and even profitable if you are able to stay focused, do due diligence, and keep emotions at bay.
• Still, the best traders need to incorporate risk management practices to prevent losses from getting out of control.
• Having a strategic and objective approach to cutting losses through stop orders, profit taking, and protective puts is a smart way to stay in the game.

Planning Your Trades

As Chinese military general Sun Tzu’s famously said: “Every battle is won before it is fought.” This phrase implies that planning and strategy—not the battles—win wars. Similarly, successful traders commonly quote the phrase: “Plan the trade and trade the plan.” Just like in war, planning ahead can often mean the difference between success and failure.

First, make sure your broker is right for frequent trading. Some brokers cater to customers who trade infrequently. They charge high commissions and don’t offer the right analytical tools for active traders.

Stop-loss (S/L) and take-profit (T/P) points represent two key ways in which traders can plan ahead when trading. Successful traders know what price they are willing to pay and at what price they are willing to sell. They can then measure the resulting returns against the probability of the stock hitting their goals. If the adjusted return is high enough, they execute the trade.

Conversely, unsuccessful traders often enter a trade without having any idea of the points at which they will sell at a profit or a loss. Like gamblers on a lucky—or unlucky—streak, emotions begin to take over and dictate their trades. Losses often provoke people to hold on and hope to make their money back, while profits can entice traders to imprudently hold on for even more gains.

Consider the One-Percent Rule

A lot of day traders follow what’s called the one-percent rule. Basically, this rule of thumb suggests that you should never put more than 1% of your capital or your trading account into a single trade. So if you have $10,000 in your trading account, your position in any given instrument shouldn’t be more than $100.

This strategy is common for traders who have accounts of less than $100,000—some even go as high as 2% if they can afford it. Many traders whose accounts have higher balances may choose to go with a lower percentage. That’s because as the size of your account increases, so too does the position. The best way to keep your losses in check is to keep the rule below 2%—any more and you’ll be risking a substantial amount of your trading account.

Setting Stop-Loss and Take-Profit Points

A stop-loss point is the price at which a trader will sell a stock and take a loss on the trade. This often happens when a trade does not pan out the way a trader hoped. The points are designed to prevent the “it will come back” mentality and limit losses before they escalate. For example, if a stock breaks below a key support level, traders often sell as soon as possible.

On the other hand, a take-profit point is the price at which a trader will sell a stock and take a profit on the trade. This is when the additional upside is limited given the risks. For example, if a stock is approaching a key resistance level after a large move upward, traders may want to sell before a period of consolidation takes place.

How to More Effectively Set Stop-Loss Points

Setting stop-loss and take-profit points is often done using technical analysis, but fundamental analysis can also play a key role in timing. For example, if a trader is holding a stock ahead of earnings as excitement builds, they may want to sell before the news hits the market if expectations have become too high, regardless of whether the take-profit price has been hit.

Moving averages represent the most popular way to set these points, as they are easy to calculate and widely tracked by the market. Key moving averages include the 5-, 9-, 20-, 50-, 100- and 200-day averages. These are best set by applying them to a stock’s chart and determining whether the stock price has reacted to them in the past as either a support or resistance level.

Another great way to place stop-loss or take-profit levels is on support or resistance trend lines. These can be drawn by connecting previous highs or lows that occurred on significant, above-average volume. The key is determining levels at which the price reacts to the trend lines or moving averages and, of course, on high volume.

When setting these points, here are some key considerations:

• Use longer-term moving averages for more volatile stocks to reduce the chance that a meaningless price swing will trigger a stop-loss order to be executed.
• Adjust the moving averages to match target price ranges. For example, longer targets should use larger moving averages to reduce the number of signals generated.
• Stop losses should not be closer than 1.5 times the current high-to-low range (volatility), as it is likely to get executed without reason.
• Adjust the stop loss according to the market’s volatility. If the stock price isn’t moving too much, then the stop-loss points can be tightened.
• Use known fundamental events such as earnings releases, as key time periods to be in or out of a trade as volatility and uncertainty can rise.

Calculating Expected Return

Setting stop-loss and take-profit points are also necessary to calculate the expected return. The importance of this calculation cannot be overstated, as it forces traders to think through their trades and rationalize them. It also gives them a systematic way to compare various trades and select only the most profitable ones.

This can be calculated using the following formula:

[(Probability of Gain) x (Take Profit % Gain)] + [(Probability of Loss) x (Stop-Loss % Loss)]

The result of this calculation is an expected return for the active trader, who will then measure it against other opportunities to determine which stocks to trade. The probability of gain or loss can be calculated by using historical breakouts and breakdowns from the support or resistance levels—or for experienced traders, by making an educated guess.

Diversify and Hedge

Making sure you make the most of your trading means never putting all your eggs in one basket. If you put all your money into one idea, you’re setting yourself up for a big loss. Remember to diversify your investments—across both industry sector as well as market capitalization and geographic region. Not only does this help you manage your risk, but it also opens you up to more opportunities.

You may also find yourself needing to hedge your position. Consider a stock position when the results are due. You may consider taking the opposite position through options, which can help protect your position. When trading activity subsides, you can then unwind the hedge.

Downside Put Options

If you are approved for options trading, buying a downside put option, sometimes known as a protective put, can also be used as a hedge to stem losses from a trade that turns sour. A put option gives you the right, but not the obligation, to sell the underlying stock at a specified priced at or before the option expires. Therefore, if you own XYZ stock for $100 and buy the six-month $80 put for $1.00 per option in premium, then you will be effectively stopped out from any price drop below $79 ($80 strike minus the $1 premium paid).

What Is Active Trading?

Active trading means regularly attempting to take advantage of short-term price fluctuations. You’re not buying stocks for retirement. The goal is to hold them for a limited amount of time and try to profit from the trend. Active traders are named as such because are frequently in and out of the market.

What Are the Risk Management Techniques Used by Active Traders?

Techniques that active traders use to manage risk include finding the right broker, thinking before acting, setting stop-loss and take-profit points, spreading bets, diversifying, and hedging.

What Is the 1% Rule in Trading?

The 1% rule demands that traders never risk more than 1% of their total account value on a single trade. In a $10,000 account, that doesn’t mean you can only invest $100. It means you shouldn’t lose more than $100 on a single trade.

How Do I Become a Successful Active Trader?

To become a successful active trader you must understand financial markets and be familiar with the various tools used to read price movements. You must also have sufficient capital and time to trade and be capable of keeping your emotions in check. The key is having a strategy and sticking to it. And, if you want to be successful over the long term, spreading out your bets.

Active trading isn’t for everyone. Despite what you may hear, it isn’t easy and guaranteed to generate enough money for you to quit your day job. Think carefully, start small, and try simulating some trades on a test account before putting your money on the line.

The Bottom Line

Traders should always know when they plan to enter or exit a trade before they execute. By using stop losses effectively, a trader can minimize not only losses but also the number of times a trade is exited needlessly. In conclusion, make your battle plan ahead of time and keep a journal of your wins and losses.

Fact checked by Michael Logan
Reviewed by Somer Anderson

The stock markets famously display a sustained upward trend over the long term. But it’s the intermittent tailspins—like the 50% drop endured by most major markets during the 2008-09 global credit crisis—that test the fortitude of an investor.

The nimblest investors can make money no matter what is happening in the world. Trading the news should be an integral component of your investing strategy. While a day trader may trade the news constantly, a long-term investor might do so only occasionally.

Regardless of your investing horizon, learning to trade the news is an essential skill for astute portfolio management and long-term performance.

Key Takeaways

• Much of the news that moves the markets is scheduled, such as earnings reports and economic updates. Plot your strategy in advance rather than reacting on the fly.
• Most news events are good for one asset class and bad for others. Hedging your portfolio cushions losses.
• Avoid reacting to crowd sentiment. If you have confidence in your choices of investments, stick with them.

Classifying News

News can be broadly classified into two categories:

• Periodic or Recurring: This includes the scheduled releases of news that moves the markets, including interest rate announcements by the Federal Reserve, economic data releases, and quarterly earnings reports from companies.
• Unexpected or One-Time: These are bolts from the blue such as a terrorist attack, a sudden geopolitical flare-up, or the threat of debt default by an indebted nation. As a rule of thumb, unexpected news is more likely to be bad than good.

News can be specific to a particular stock or it can affect a sector, an industry, or the markets as a whole.

Trading the News

Here are a few examples of historical events and the actions that an investor could have taken in response.

A Federal Reserve Announcement

The Federal Open Market Committee’s (FOMC) interest rate announcements have always been among the biggest market-moving events, but its announcement in mid-March 2020 was of unusual interest, not least because it was issued on a Sunday.

In an effort to ease the economic effects of the 2020 coronavirus crisis, the Fed cut its main lending rate by 1%. It was the second cut of the month. It also announced plans to buy $700 billion in government securities.

The next day, the Dow Jones Industrial Average dropped 3,000 points for its worst day since the 1987 crash.

Many investors would have bet on a great day on Wall Street, and they would have been wrong. Other headlines dominated, including comments from President Donald Trump saying that the pandemic could last until August. (It turned out to be much worse.)

Nevertheless, investors who held on for just a few more weeks would have been amply rewarded when the markets started climbing again.

An investor in stocks who was looking to hedge potential downside risk could have done any of the following immediately after the Fed’s announcement:

• Trimmed positions in highly profitable equity positions to take some money off the table.
• Purchased puts either on specific stocks in the portfolio or on a broad market index like the S&P 500 or Nasdaq 100. Purchasing puts gives the investor the right to sell a stock for an agreed-upon price at a future time. If the security’s market price falls below the agreed-upon price, the investor gains by selling at the higher contractual price.
• Bought inverse exchange-traded funds (ETFs) to protect portfolio gains. These move in the opposite direction of the broad market or a specific sector.

While these reactive moves would typically be carried out after the Fed announcement, a proactive investor could implement the same steps in advance of a scheduled Fed statement.

This reactive or proactive approach to an important event or piece of news, of course, depends on the investor’s confidence in predicting the market’s near-term direction. An individual’s risk tolerance and trading approach (passive or active) also are factors.

A Jobs Report

In terms of economic data releases, few are more important than the U.S. jobs report because of its wider implications.

Traders and investors closely watch the employment level because it has a substantial impact on consumer confidence and spending, which accounts for 70% of the U.S. economy.

Job numbers that miss economists’ forecasts are generally interpreted as signs of incipient economic weakness, while payroll numbers that surge past forecasts are seen as a sign of strength.

In March 2021, the government announced that nonfarm payroll employment had increased by 916,000 the previous month, lowering the unemployment rate to 6%. About 210,000 new jobs were expected to be created. Crucially, many of the new jobs were in the travel industry, signaling a rebound in discretionary spending.

After a seesaw session, the Dow Jones Industrial Average closed up 171 points.

The investor playbook for trading jobs data is based on predictable market reactions.

• Payroll numbers below expectations: Suggests that the Fed will be forced to keep interest rates low for an extended time period. The impact on specific asset classes could be predicted in this table:

• Payroll numbers above expectations: Implies that the Fed may scale back the pace of asset purchases, which could send bond yields and market interest rates higher. The likely result:

An investor could use these market reactions to formulate an appropriate trading strategy to implement either in advance of the jobs report or after its release.

A Corporate Earnings Report

If you invest in individual stocks, it is advisable to have a trading strategy in place in advance of the relevant company earnings reports.

A stock’s price can soar or tank in minutes after releasing numbers that impress or disappoint. Imagine having a huge short position in a stock and watching it soar 40% in the after-market because its earnings were much better than expected.

Trading an earnings report is by no means required. If you’re in a stock for the long term, and you believe in its potential, you can ride out any quarterly storms.

But if you have a large position in a stock, long or short, you need to weigh the merits of leaving it unchanged over the earnings report or making changes just before the report comes out. Factors that should play a part in this decision include:

• The current state of the overall market (bullish or bearish);
• Investor sentiment for the sector to which the stock belongs;
• The current level of short interest in the stock;
• Earnings expectations (too high or comfortably low);
• Valuations for the stock;
• Its recent and medium-term price performance;
• The earnings and outlook reported by its competitors.

For example, an investor with a 15% position in a big-cap technology stock that is trading at multi-year highs may decide to trim positions in it ahead of the earnings report so that it constitutes only 10% of the portfolio.

An alternative option could be to buy puts to hedge downside risk. While this would enable the investor to leave the position unchanged at 15% of the portfolio, this hedging activity would incur a significant cost.

Key points to note: Avoid taking an unduly large position, and have a risk mitigation strategy in place to cap losses if the trade does not work out.

A Bolt from the Blue

Not surprisingly, the onset of the coronavirus pandemic in 2020 was a global event that threw stock exchanges around the world into a bear market from Feb. 20, 2020, until April 7, 2020.

Don’t worry if you don’t remember this. The stock markets then began a long upward trajectory and hit new record highs. The bull market that had begun after the 2007-2008 financial crisis resumed after a blip that lasted for less than two months.

This does not mean that bad news doesn’t matter. But it does suggest that the impulse to sell everything and take to the hills may be an overreaction. Over the years, the financial markets have demonstrated resilience.

During times of geopolitical uncertainty, it may be prudent to rotate out of more speculative stocks and into higher-quality investments. You might also consider hedging downside risk using options and inverse ETFs.

While you should scale back your stock exposure if it is uncomfortably high, bear in mind that in most cases, short-term corrections caused by unexpected geopolitical or macroeconomic events have proved to be the quintessential long-term buying opportunities.

Tips for New Traders

• Know the dates and times of important events: Information on the dates and times of key market events such as FOMC announcements, economic data releases, and earnings reports from key companies is readily available online.
• Have a strategy in place beforehand: Plot your trading strategy in advance so that you are not forced into making a rash decision in the heat of the moment. Know your exact trading entry and exit points before the action begins.
• Avoid kneejerk reactions: Make rational investment decisions based on your risk tolerance and investment objectives. This may require you to be a contrarian on occasion, but as successful long-term investors will attest, it’s the best approach for successful equity investing.
• Cap your risk levels: Avoid the temptation to make a fast buck by taking a concentrated long or short position. What if the trade goes against you?
• Have the courage of your convictions: Assuming you’ve done your homework, consider adding to an existing position if the stock plunges below its intrinsic value, or selling out to take profits in a stock that is wildly popular at the moment.
• See the big picture: Often, investor reaction to the news may not be as expected. You’d think an announcement of a dividend cut would lead to a sell-off in a stock. Sometimes, investors applaud the move as a signal that a company is investing more in its business.
• Don’t be swayed by market sentiment: Being overly swayed by market sentiment can tempt you to buy high—when euphoria runs rampant—and sell low. Many hapless investors were so spooked by the unrelenting tide of bad news in 2008 that they exited their equity positions near the lows, incurring massive losses in the process. They missed out on a stunning gain of 166% in the S&P 500 from March 2009 to October 2013.
• Know when to “fade” the news: Sometimes it is as important to ignore the news or “fade” it as it is to trade it. If you’re in it for the long term, you can ignore the noise.

What Are the Most Important Economic Indicators?

Investopedia identifies the 10 most important reports that an investor should keep an eye on to understand the big economic picture: quarterly gross domestic product; monthly employment; industrial production; consumer spending; inflation; home sales; home construction; construction spending; manufacturing demand, and retail sales.

Collectively, these reports can give you a good sense of the current state of U.S. business and its likely near-term direction.

What Is a Leading Indicator vs. a Lagging Indicator?

A leading indicator is an economic report that can be used to anticipate a trend. The new construction starts report indicates whether the home-building industry is betting on higher or lower sales in the short-term future.

A lagging indicator confirms a trend. The home sales report tells you whether home builders were correct in their assumptions.

Investors tend to pay more attention to leading indicators. They want to anticipate the news, not react to it.

What Is Market Sentiment and Should I Pay Attention to It?

Market sentiment is the mood of the market. In short, it’s the herd mentality. It’s best avoided unless you judge that the sentiment, upbeat or downbeat, has a sound basis in fact. Ignore it and you qualify as a contrarian.

The Bottom Line

Trading the news is crucial for positioning your portfolio to take advantage of market moves and boost your overall returns. But your trading decisions should be made in a thoughtful and measured way. Keep an eye on the news and watch for meaningful trends. Panic decisions are almost always a cause for regret.