Investopedia

Building an effective business launch plan

Fact checked by Vikki Velasquez
Reviewed by Samantha Silberstein

Starting a business in the United States involves a number of different steps spanning legal considerations, market research, creating a business plan, securing funding, and developing a marketing strategy. It also requires decisions about a business’ location, structure, name, taxation, and registration.

Here are the key steps involved in starting a business, as well as important aspects of the process for entrepreneurs to consider.

Key Takeaways

• Entrepreneurs should start by conducting market research to understand their industry space, competition, and target customers.
• The next step is to write a comprehensive business plan, outlining the company’s structure, vision, and strategy.
• Securing funding in the form of grants, loans, venture capital, and/or crowdfunded money is crucial if you’re not self-funding.
• When choosing a venue, be aware of local regulations and requirements.
• Design your business structure with an eye to legal aspects, such as taxation and registration.
• Make a strategic marketing plan that addresses the specifics of the business, industry, and target market.

Conducting Market Research

Before starting a business, entrepreneurs should conduct market research to determine their target audience, competition, and market trends. The U.S. Small Business Administration (SBA) breaks down common market considerations as follows:

• Demand: Is there a need for this product or service?
• Market size: How many people might be interested?
• Economic indicators: What are the income, employment rate, and spending habits of potential customers?
• Location: Are the target market and business well situated for each other?
• Competition: What is the market saturation? Who and how many are you going up against?
• Pricing: What might a customer be willing to pay?

Market research should also include an analysis of market opportunities, barriers to market entry, and industry trends, as well as the competition’s strengths, weaknesses, and market share.

There are various methods for conducting market research, and these will vary depending on the nature of the industry and potential business. Data can come from a variety of places, including statistical agencies, economic and financial institutions, and industry sources, as well as direct consumer research through focus groups, interviews, surveys, and questionnaires.

Crafting a Business Plan

A comprehensive business plan is like a blueprint. It lays the foundation for business development and affects decision making, day-to-day operations, and growth. Potential investors or partners may want to review and assess it in advance of agreeing to work together. Financial institutions often request business plans as part of an application for a loan or other forms of capital.

Business plans will differ according to the needs and nature of the company and should only include what makes sense for the business in question. As such, they can vary in length and structure. They can generally be divided into two formats: traditional and lean startup. The latter is less common and more useful for simple businesses or those that expect to rework their traditional business plan frequently. It provides a vivid snapshot of the company through a small number of elements.

Reviewing Funding Options

The process of funding a business depends on its needs and the vision and financial situation of its owner.  The first step is to calculate the startup costs. Identify a list of expenses and put a dollar amount to each of them through research and requesting quotes. The SBA has a startup costs calculator for small businesses that includes common types of business expenses.

The next step is to determine how to get the money. Common methods include:

• Self-funding, also known as bootstrapping
• Finding investors willing to contribute to your venture capital
• Raising money online by crowdfunding
• Securing a business loan from a bank, an online lender, or a credit union
• Winning a business grant from a donor, usually a government, foundation, charity, or corporation

Different methods suit different businesses, and it’s important to consider the obligations associated with any avenue of funding. For example, investors generally want a degree of control for their money, while self-funding puts business owners fully in charge. Of course, investors also mitigate risk; self-funding does not.

Availability is another consideration. Loans are easier to get than grants, which don’t have to be paid back. Additionally, the federal government doesn’t provide grants for the purposes of starting or growing a business, although private organizations may. However, the SBA does guarantee several categories of loans, accessing capital that may not be available through traditional lenders. No matter the funding method(s), it’s essential to detail how the money will be used and lay out a future financial plan for the business, including sales projections and loan repayments.

Understanding Legal Requirements

Businesses operating in the U.S. are legally subject to regulations at the local, county, state, and federal levels involving taxation, business IDs, registrations, and permits.

Choosing a Business Location

Where a business operates will dictate such things as taxes, zoning laws (for brick-and-mortar locations), licenses, and permits. Other considerations when choosing a location might include:

• Human factors: These include target audience and the preferences of business owners and partners regarding convenience, knowledge of the area, and commuting distance.
• Regulations: Government at every level will assert its authority.
• Regionally specific expenses: Examples are average salaries (including required minimum wages), property or rental prices, insurance rates, utilities, and government fees and licensing.
• The tax and financial environment: Tax types include income, sales, corporate, and property, as well as tax credits; available investment incentives and loan programs may also be geographically determined.

Picking a Business Structure

The structure of a business should reflect the desired number of owners, liability characteristics, and tax status. Because these have legal and tax compliance implications, it’s important to understand them fully. If necessary, consult a business counselor, a lawyer, and/or an accountant.

Common business structures include:

• Sole proprietorship: A sole proprietorship is an unincorporated business that has just one owner, who pays personal income tax on its profits.
• Partnership: Partnership options include a limited partnership (LP) and a limited liability partnership (LLP).
• Limited liability company (LLC): An LLC protects its owners from personal responsibility for the company’s debts and liabilities.
• Corporation: The different types of corporations include B corp, C corp, S corp, closed corporation, and nonprofit.

Getting a Tax ID Number

A tax ID number is the equivalent of a Social Security number for a business. Whether or not a state and/or federal tax ID number is required will depend on the nature of the business and the location in which it’s registered.

A federal tax ID, also known as an employer identification number (EIN), is required if a business:

• Operates as a corporation or partnership
• Pays federal taxes
• Has employees
• Files employment, excise, alcohol, tobacco, or firearms tax returns
• Has a Keogh plan
• Withholds taxes on nonwage income to nonresident aliens
• Is involved with certain types of organizations, including trusts, estates, real estate mortgage investment conduits, nonprofits, farmers’ cooperatives, and plan administrators

An EIN can also be useful if you want to open a business bank account, offer an employer-sponsored retirement plan, or apply for federal business licenses and permits. You can get one online from the Internal Revenue Service (IRS). State websites will do the same for a state tax ID.

Registering a Business

How you register a business will depend on its location, nature, size, and business structure.  For example, a small business may not require any steps beyond registering its business name with local and state governments, and business owners whose business name is their own legal name might not need to register at all.

That said, registration can provide personal liability protection, tax-exempt status, and trademark protection, so it can be beneficial even if it’s not strictly required. Overall registration requirements, costs, and documentation will vary depending on the governing jurisdictions and business structure.

Most LLCs, corporations, partnerships, and nonprofits are required to register at the state level and will need a registered agent to file on their behalf. Determining which state to register with can depend on factors such as:

• Whether the business has a physical presence in the state
• If the business often conducts in-person client meetings in the state
• If a large portion of business revenue comes from the state
• Whether the business has employees working in the state

If a business operates in more than one state, it may need to file for foreign qualification in other states in which it conducts business. In this case, the business would register in the state in which it was formed (this would be considered the domestic state) and file for foreign qualification in any additional states.

Obtaining Permits

Filing for the applicable government licenses and permits will depend on the industry and nature of the business and might include submitting an application to a federal agency, state, county, and/or city. The SBA lists federally regulated business activities alongside the corresponding license-issuing agency, while state, county, and city regulations can be found on the official government websites for each region.

Implementing Marketing Strategies

Every business should have a marketing plan that outlines an overall strategy and the day-to-day tactics used to execute it. A successful marketing plan will lay out tactics for how to connect with customers and convince them to buy what the company is selling.

Marketing plans will vary according to the specifics of the industry, target market, and business, but they should aim to include descriptions of and strategies for the following:

• A target customer: Including market size, demographics, traits, and relevant trends
• Value propositions or business differentiators: An overview of the company’s competitive advantage with regard to employees, certifications, and offerings
• A sales and marketing plan: Including methods, channels, and a customer’s journey through interacting with the business
• Goals: Should cover different aspects of the marketing and sales strategy, such as social media follower growth, public relations opportunities, and sales targets
• An execution plan: Should detail tactics and break down higher-level goals into specific actions
• A budget: Detailing how much different marketing projects and activities will cost

How Much Does It Cost to Start a Business?

Business startup costs will vary depending on the industry, business activity, and product or service offered. Home-based online businesses will usually cost less than those that require an office setting to meet with customers. The estimated cost can be calculated by first identifying a list of expenses and then researching and requesting quotes for each one. Use the SBA’s startup costs calculator for common types of expenses associated with starting a small business.

What Should I Do Before Starting a Business?

Entrepreneurs seeking to start their own business should fully research and understand all the legal and funding considerations involved, conduct market research, and create marketing and business plans. They will also need to secure any necessary permits, licenses, funding, and business bank accounts.

What Types of Funding Are Available to Start a Business?

Startup capital can come in the form of loans, grants, crowdfunding, venture capital, or self-funding. Note that the federal government does not provide grant funding for starting a business, although some private sources do.

Do You Need to Write a Business Plan?

Business plans are comprehensive documents that lay out the most important information about a business. They reference its growth, development, and decision-making processes, and financial institutions and potential investors and partners generally request to review them in advance of agreeing to provide funding or to collaborate.

Is 2025 a Good Time to Start a Business?

Yes, according to the SBA. “According to research, the majority of small business owners are optimistic about America’s economy,” the SBA states. “That optimism, paired with a well-informed small business strategy, could mean plenty of success.”

The SBA identifies five trends to consider in business planning for 2025:

• Ecommerce: Online sales are expected to continue growing as a percentage of all retail sales.
• Online marketing: Almost three out of four small businesses have a website, and many employ social media.
• Artificial intelligence: More than half of small businesses use chatbots and virtual assistants powered by AI, which can help streamline processes, limit human error, and improve employee productivity and focus.
• Cybersecurity: Data security and privacy remain a top concern for consumers, so business owners should consider best practices, network security, up-to-date software, and multifactor authentication in preventing cybercrime.
• Customer experience: An interpersonal touch should be prioritized, from research to point of sale, to create happy customers.

The Bottom Line

Starting a business is no easy feat, but research and preparation can help smooth the way. Having a firm understanding of your target market, competition, industry, goals, company structure, funding requirements, legal regulations, and marketing strategy, as well as conducting research and consulting experts where necessary, are all things that entrepreneurs can do to set themselves up for success.

Reviewed by Robert C. Kelly

SolarCity and First Solar were two major players in the solar power industry, each taking distinct approaches to market dominance. SolarCity, founded in 2006, revolutionized residential solar by offering leasing and financing options that made solar panels accessible to homeowners. First Solar, established in 1999, focused on manufacturing thin-film solar panels and supplying large-scale utility projects. Let’s take a look back at the history of competition between the two companies.

Key Takeaways

• SolarCity revolutionized residential solar by offering leasing and financing options, allowing homeowners to install solar panels with little upfront cost.
• First Solar, founded earlier, focused on manufacturing thin-film solar panels for large-scale utility projects, offering lower production costs and better performance in high temperatures.
• SolarCity’s reliance on a financing model led to financial risk, and despite rapid growth, it faced challenges that culminated in its 2016 acquisition by Tesla.
• Post-acquisition, Tesla integrated SolarCity into its energy division.
• First Solar continues to thrive as it’s own company and has expended to international operations.

Understanding the Companies

SolarCity was founded by Lyndon and Peter Rive, cousins of Elon Musk, with the goal of making solar energy accessible to homeowners. The company capitalized on federal and state incentives while pioneering a leasing model that allowed customers to install solar panels with little to no upfront cost. With its aggressive sales tactics, the company became the largest residential solar installer in the U.S. by the early 2010s.

First Solar, on the other hand, took a completely different approach. Established in 1999, the company focused on developing and manufacturing thin-film solar panels using cadmium telluride technology. This alternative to traditional silicon-based panels allowed for lower production costs and better performance in high-temperature environments. First Solar’s emphasis on cost efficiency and large-scale projects made it a preferred partner for utility-scale solar installations, helping secure contracts with major energy providers worldwide.

Understanding the Business Models

One of the most defining differences between SolarCity and First Solar was their business models. SolarCity relied heavily on a leasing and financing model that enabled homeowners to install solar panels without an upfront investment. Customers would pay monthly fees, often lower than their existing utility bills, while SolarCity retained ownership of the panels. This model allowed for rapid adoption, but it also meant that SolarCity took on significant financial risk by financing these installations and relying on long-term customer payments in order for the company to make money.

First Solar focused primarily on manufacturing and selling solar panels rather than financing or installing them for consumers. The company specialized in producing thin-film photovoltaic panels and selling them to large-scale energy developers. This approach allowed First Solar to generate revenue without being tied to long-term customer contracts.

Differences in Solar Panel Technology

A key differentiator between SolarCity and First Solar was their approach to solar panel technology. SolarCity did not manufacture its own solar panels but instead relied on third-party suppliers. The company focused on delivering and financing installations rather than innovating new panel designs. As we’ll talk about later, this strategy shifted once SolarCity was later acquired by Tesla.

First Solar was more of an innovator in solar panel manufacturing. Its thin-film technology was a major departure from the industry’s dominant crystalline silicon panels. The advantage of thin-film solar was its lower production cost and better performance in high temperatures and low-light conditions.

Note

There was controversy with the Solarcity/Tesla acquisition, as leadership between the two companies were related and of the same family.

The Tesla Acquisition of SolarCity

One of the most pivotal moments in SolarCity’s history was its acquisition by Tesla in 2016. At the time, SolarCity was facing mounting financial pressure, with increasing debt and slowing customer growth. Elon Musk, who had been a major supporter of SolarCity due to his family ties and belief in clean energy, orchestrated a merger between Tesla and SolarCity. The move was framed as a way to create a vertically integrated clean energy company, combining Tesla’s battery technology with SolarCity’s solar installations.

The acquisition was controversial, with critics arguing that Tesla was bailing out a struggling company at the expense of its shareholders. Many questioned whether SolarCity’s financial troubles could drag down Tesla, which was already facing its own challenges in scaling electric vehicle production. However, Musk defended the deal, arguing that integrating solar energy with Tesla’s Powerwall batteries and electric vehicles would create a seamless renewable energy ecosystem.

Post-acquisition, SolarCity was effectively absorbed into Tesla’s energy division, and the brand was gradually phased out. Tesla shifted focus away from SolarCity’s traditional leasing model and instead prioritized the development of the Tesla Solar Roof. This transition marked a significant change in strategy, moving from rapid expansion through financing to a more product-focused approach centered on innovation and in-house technology.

First Solar’s Strategic Positioning

As SolarCity struggled with financial viability, First Solar continued to adapt its strategy to maintain its leadership in utility-scale solar. One of its key moves was its ongoing investment in improving thin-film solar panel efficiency. Another strategic shift was First Solar’s expansion into international markets. As solar adoption grew worldwide, First Solar positioned itself as a reliable supplier for large-scale projects around the world, shipping to more than 45 countries as of 2025.

First Solar also focused on integrating energy storage solutions into its projects. With the rise of battery storage technology, pairing solar farms with large-scale batteries became a key trend in the renewable energy industry.

Who Ultimately Won the Competition?

In hindsight, First Solar probably emerged as the more financially sustainable and strategically resilient company. While SolarCity initially disrupted the residential solar market, its reliance on debt-financed leasing made it vulnerable to economic fluctuations and policy shifts. The company’s rapid rise was met with an equally rapid decline, ultimately leading to its absorption into Tesla and the end of its independent operations.

First Solar, on the other hand, continued to grow and evolve. Its emphasis on technological innovation ensured that it remained a leader in utility-scale solar, even as new competitors entered the market.

What Was SolarCity’s Approach to the Solar Power Market?

SolarCity’s approach to the solar power market focused on making solar energy accessible to homeowners through leasing and financing models.

What Was First Solar’s Approach to the Solar Power Market?

First Solar, founded in 1999, focused on manufacturing thin-film solar panels using cadmium telluride technology. The company targeted large-scale utility projects rather than residential installations, positioning itself as a supplier of solar panels to energy developers.

What Technological Differences Existed Between SolarCity and First Solar?

The key technological difference between SolarCity and First Solar was that SolarCity did not manufacture its own solar panels, relying instead on third-party suppliers. SolarCity focused on financing and delivering installations, whereas First Solar specialized in manufacturing thin-film solar panels.

What Was the Outcome of the Tesla-SolarCity Acquisition?

Following Tesla’s acquisition of SolarCity, the company’s operations were absorbed into Tesla’s energy division, and the SolarCity brand was gradually phased out. Tesla shifted its focus from SolarCity’s leasing and financing model to an emphasis on product innovation, particularly with the development of the Tesla Solar Roof.

The Bottom Line

SolarCity focused on making solar accessible to homeowners through financing, while First Solar specialized in large-scale projects and manufacturing efficiency. SolarCity’s rapid growth led to financial challenges and a Tesla acquisition, whereas First Solar’s stable approach ensured its long-term presence in the industry.

Reviewed by Michael J Boyle

If you’re looking at total returns on an annual basis, the capital preservation funds below are some of the best that managed to deliver in every environment over the past decade. No matter what kind of market lies ahead, bull or bear, it might be prudent to stick to a few capital preservation funds that have the majority of their exposure to investment-grade bonds—just in case.

Key Takeaways

• Capital preservation funds aim to minimize risk while providing modest returns, making them ideal for conservative investors.
• The Great-West Short Duration Bond (MXSDX) invests in U.S. Treasuries and high-quality bonds, delivering stable but low returns, with a 10-year return of 2.1%.
• The Prudential Short-Term Corporate Bond (PBSMX) focuses on corporate bonds for high income and capital preservation, with a long-term return of 4.43% since its inception in 1989.
• The BlackRock Allocation Target Shares Series S Portfolio (BRASX) has an almost zero expense ratio, no minimum investment, and a strong 5-year average return of 10.62%.

1. The Great-West Short Duration Bond (MXSDX): High Quality, Low Return

If you’re looking for exposure to investment-grade bonds, then consider the Great-West Short Duration Bond (MXSDX), which invests at least 80% of its net assets in U.S. Treasuries, commercial and residential mortgage-backed securities, asset-backed securities and corporate bonds. The expense ratio of 0.60%, and there is no minimum contribution.

The objective of the fund can be seen in the fund’s historical returns. Between March 2024 and March 2025, the one-year return of the fund was 5.93%. As of March 2025, the fund’s 3-year return was 3.11%, 5-year return was 2.04%, and the 10-year return was 2.1%. Note that the S&P 500 returns over the same 3-year period and 5-year period were both negative.

Note

In investing, risk and return are often positively correlated. If you want to minimize your risk and preserve capital, you can generally expect to have less opportunity for higher returns.

2. The Prudential Short-Term Corporate Bond (PBSMX): Bigger Investment, Not Better Results

The Prudential Short-Term Corporate Bond (PBSMX) focuses on high current income with capital preservation by investing in bonds of corporations with varying maturities. The effective duration of the fund is generally less than three years. Similar MXSDX, there’s a target amount of bonds to hold; the fund seeks high income and capital preservation by investing at least 80% of its assets in corporate bonds.

As of 1/31/2025, the fund’s total net assets were $8.231 billion. At the end of 2023, Barron’s ranked the fund as one of the best family funds. The dividends accrue daily and are paid monthly. Since the fund’s inception on September 1, 1989, the fund has returned 4.43%.

3. The BlackRock Allocation Target Shares Series S Portfolio (BRASX): No Expense Ratio

The BlackRock Allocation Target Shares Series S Portfolio (BRASX) does not come with an expense ratio (its adjusted expense ratio is 0.01%, effectively zero), which is impressive. However, the performance of the fund and its future potential are more important to note here.

There is no minimum investment, which makes this a low-risk starter capital preservation fund for wary investors. BRASX invests in commercial and residential mortgage-backed securities, obligations of non-U.S. governments and supra-national organizations, asset-backed securities, and U.S. Treasury and agency securities, among others. As of March 2025, the fund’s yield was 4.59%, and it’s 5-year average return was 10.62%.

What Is Capital Preservation in Investing?

Capital preservation is an investment strategy focused on protecting the principal amount of an investment while minimizing risk. It is commonly used by conservative investors who prioritize safety over high returns.

Why Is Capital Preservation Important for Investors?

Capital preservation is essential for risk-averse investors, retirees, and those with short-term financial goals. It ensures that funds remain secure, preventing significant losses and allowing for future liquidity.

How Do Capital Preservation Funds Minimize Risk?

These funds invest in low-volatility, high-quality securities such as government bonds, cash equivalents, and short-term debt instruments. They also avoid speculative assets to reduce market risk.

What Is the Difference Between Capital Preservation and Growth Investing?

Capital preservation focuses on maintaining the principal with minimal risk, while growth investing seeks to maximize returns through higher-risk assets like stocks and real estate. The difference between the two lies in their standard deviation around their expected average return; capital preservation funds aim to have a lower standard deviation.

The Bottom Line

If you’re looking for relative resiliency to challenging economic conditions while picking up a little yield, then you might want to consider further researching the funds above. You should not expect a big return. This is more about capital preservation, after all.

The median average credit card interest rate for March 2025 is 24.20%. Investopedia tracks over 300 credit card interest rates every month. March’s and February’s rate remained steady after falling 17 basis points in January.

Credit card interest rates tracked by Investopedia are based on median advertised rates across several hundred popular card offers. Investopedia’s average rates differ from those tracked by the Federal Reserve (the Fed), which was most recently reported to be 21.76% for the third quarter of 2024 because the Fed tracks average stated interest rates across all accounts at each reporting bank.

Key Takeaways

• The median average credit card interest rate for March 2025 is 24.20%.
• Your credit score and credit history will largely determine your credit card interest rate.
• You’ll likely get a lower credit card interest rate if you have an excellent credit score.
• The best credit cards on the market come with rewards, balance transfer offers, and more, and the right card for you will depend on your situation.

How Are Credit Card Interest Rates Determined?

Various consumer loans, including credit cards, are tied to movements of the Fed funds rate, which is the Fed’s mechanism to stimulate or slow the magnitude of lending, depending on economic conditions.

The Fed maintained the federal funds rate at its peak level for almost 14 months, beginning in July 2023. But on Sept. 18, the central bank announced the first rate cut in what was expected to be a series of decreases in 2024 and likely 2025. That first reduction was by 0.50 percentage points.

On Nov. 7 and Dec. 18, the Fed announced an additional successive rate cuts of 0.25 percentage points, bringing the federal funds rate to 4.25% to 4.50%. With those cuts, the fed funds rate reached its lowest level since March 2023. At the Jan. 31 meeting the fed held rates steady.

The Fed’s next rate announcement will be made on March 19.

Most credit card issuers employ variable interest rates indexed to the Federal Reserve’s prime rate, so the fed rate policy impacts card interest rates directly. However, available card rates’ lower and upper ends can change monthly depending on competitive pressures and individual banks’ risk policies.

Several factors influence how individual credit card rates are set, the most important of which is credit quality. Those with excellent credit receive the lowest rates, and those with no credit or bad credit receive the highest. Other factors include the type of credit card and the risk-based pricing policies of the specific credit card issuer.

Investopedia tracks average advertised rates for new applicants, typically quoted as a range for each card product, across more than 300 card offers. These rates are shown below and broken out by credit quality, card type, and issuer.

Credit Card Interest Rates vs. Personal Loan Interest Rates

Interest rates for credit cards tend to run in a similar range to those interest rates for personal loans. Credit cards are a type of revolving credit with variable interest rates, whereas personal loan rates are typically fixed for a specific amount and repayment term. Many consumers use balance transfer credit card offers to consolidate higher-interest credit card debt. Additionally, the best personal loans can also be used for debt consolidation involving credit card debt and other types of consumer debt.

Debt consolidation was the most popular reason for using a personal loan, according to a survey conducted by Investopedia in September 2023.

Interest Rates by Credit Quality Types

Different credit quality ranges can vary depending on the type of score used, but the most popular credit score used by credit card lenders is the FICO score.

Credit quality is defined according to the FICO score ranges for each credit quality level:

FICO Credit Score Ranges
Very Good to Excellent	740–850
Good	670–739
Fair	580–669
Poor or No Credit	350–579

Tip

For those needing to build or rebuild their credit, it’s critical to begin actively using credit responsibly—always paying bills on time and keeping credit utilization below 30% of credit lines. A secured credit card can be a good place to start if you don’t already have credit in your name. It can take time, but responsible credit use can produce positive results after as little as six months and builds over time.

Interest Rates by Credit Card Types

• Balance transfer: Credit cards that offer a promotional rate, often 0%, for a year or more.
• Business: Credit cards designed for small business owners, providing segregation of business expenses, working capital, and often rewards and discounts on business-related purchase categories.
• Low cost: Credit cards for those with bad credit or no credit history that often have no annual fee but charge higher interest rates to offset higher credit risk.
• Rewards: Credit cards that offer points, miles, or cash back on purchases.
• Secured: Credit cards that require a security deposit as an initial credit line.
• Student: Credit cards for those with limited credit history and credit education, often for college students.

Interest Rates by Issuer

Credit card issuers have different risk-based pricing policies that cause variation in the ranges of interest rates they advertise and eventually assign to customers based on approved applicants’ credit scores.

Prime Rate Trend

Credit card interest rates are predominantly indexed to the prime rate along with a margin, which varies at the card product level and individual account holder’s credit quality. The prime rate stands at 7.75%% in December 2024, having risen 525 basis points since the beginning of 2022 following several rate increases by the Federal Reserve, which ended with an increase of 0.50% in July of 2023. At the Nov. 7, and Dec. 18, 2024 meetings, the fed funds rate was cut by another 25 basis points in succession in reaction to a sustained reduction in inflation supporting the 2% fed target.

Delinquency Rate Trend

Credit card delinquency rates, defined as accounts that are 90 days or more overdue, have been below 3% in recent years. However, during the pandemic, the delinquency rate fell to a low of 1.48%, bottoming out in April of 2021. Since then, the delinquency rate has more than doubled due to increased revolving debt incurred by consumers in the past two years, reaching 3.23% as of Q3 2024, easing slightly from Q2 but still near its highest level since the start of 2012.

Credit Card Debt Trend

Total consumer revolving credit card debt passed the $1 trillion mark just before the pandemic and fell sharply to a low of $970 billion in January 2021. Since then, revolving debt has climbed back beyond pre-pandemic levels to over $1.358 trillion as of Q3 2024, as reported by the Federal Reserve.

How We Find the Average Credit Card Interest Rate

Investopedia tracks individual credit card rates on more than 300 network-branded cards offered to the public from 43 of the nation’s largest banks and issuers. Most credit card rates are advertised in the form of a range from low to high, depending on the applicant’s credit score. In determining average rates by credit quality, card type, or card issuer, Investopedia calculates the average midpoint of advertised interest rate ranges and also calculates the average of the lower and upper ends of rates that are expressed in ranges.

Cruise line shareholders receive more than potential stock appreciation and dividends—they can access exclusive onboard credits and more.

By owning as few as 100 shares of Carnival Corporation & plc (CCL), Norwegian Cruise Line Holdings (NCLH), or Royal Caribbean Cruise Lines (RCL), investors can unlock perks that effectively create a “vacation dividend” ranging from $50 to $250 depending on cruise length. For frequent cruisers, these benefits can represent returns equivalent to about a 9.5% annual dividend while also improving their onboard experiences.

Key Takeaways

• Some publicly traded cruise lines offer shareholders modest perks, typically as onboard credits.
• These credits range from $50 to $1,000, depending on the length of the voyage.
• Norwegian, Royal Caribbean, and Carnival Cruises offer similar levels of benefits.

The Hidden “Dividend” of Cruise Line Stocks

Major cruise operators, including Carnival, Royal Caribbean, and Norwegian Cruises, offer onboard credits to shareholders who own a minimum number of shares and book cruises with their brands.

These credits can be applied toward onboard purchases such as specialty dining, shore excursions, spa treatments, and more—effectively creating a “dividend” that comes as ways to improve your vacation. These modest but welcome discounts can add a little more fun to holiday voyages.

Carnival Cruises

Carnival provides benefits across its wide-ranging lines, which include Carnival Cruise Line, Princess Cruises, Holland America Line, Seabourn, Cunard, Costa Cruises, AIDA, and P&O Cruises.

Shareholders who hold at least 100 shares of CCL become eligible for the following:

• $250 onboard credit when they book cruises that last at least 14 days.
• $100 onboard credit for cruises lasting between seven and 13.
• $50 onboard credit for durations of six days or fewer.

You must request rewards and verify stock ownership at least three weeks before your departure date through the Carnival “Stockperks” app.

Norwegian Cruise Lines

The Norwegian Cruise Line Holdings brands—Norwegian Cruise Line, Oceania Cruises, and Regent Seven Seas Cruises—provide similar benefits (excluding charter sailings). Any shareholder owning a minimum of 100 shares qualifies for the following:

• $250 onboard credit when they book cruises lasting 15 days or more.
• $100 onboard credit for sailings between seven and 14 days
• $50 onboard credit for six days or fewer.

Shareholders must send the shareholder benefit request form via mail or email at least 15 days before the sailing.

Royal Caribbean

Royal Caribbean’s benefits are especially useful for world cruisers. The onboard credit benefits are for Royal Caribbean International, Celebrity Cruises, and Silversea Cruises (excluding Galapagos and charter sailings). Holders of 100 or more shares qualify for the following:

• $1,000 onboard credit for World Cruises.
• $250 onboard credit for sailing 14 nights or longer.
• $100 onboard credit between six and 13 nights.
• $50 onboard credit for five nights or less.
• Requests should be received two to three weeks before the sail date through the Royal Caribbean website.

Calculating the Real Investment Return

Frequent cruisers may find that these benefits substantially improve their investment returns.

Suppose you buy 100 Carnival Cruises shares at $21 each (their approximate value in March 2025) for a total investment of $2,100) and take two seven-night cruises annually. You’ll gain $200 in onboard credits annually. Assuming the price of CCL shares remains unchanged, that’s like receiving a 9.5% dividend.

For luxury or extended voyages, the value proposition becomes even more compelling. A 14-plus night cruise with a $250 onboard credit represents an immediate 12% return on a 100-share investment.

While these benefits offer tangible value, benefits are typically nontransferable and apply only to the stateroom in which the shareholder is sailing. In addition, credits can’t usually be applied toward prepurchased activities.

The Bottom Line

While any investment should be evaluated primarily on its financial merits, shareholder benefits for cruise line stocks represent a unique advantage for travel enthusiasts. For investors who already enjoy cruising, these perks reduce vacation costs while providing exposure to the travel and hospitality industries.

Food Insecurity Negatively Affects the Economy, and Therefore the Stock Market

Fact checked by Vikki Velasquez
Reviewed by JeFreda R. Brown

Food insecurity is considered an economic and social issue but generally not one that affects the stock market. Its ramifications nonetheless involve the food, retail, and consumer goods sectors and it can be a symptom of broader economic problems including poverty, unemployment, and inflation.

The struggle of households to put food on the table can also indirectly influence stock valuations and investment returns. The tendrils of food insecurity effectively stretch into the core mechanisms of the stock market, affecting consumer behavior, corporate earnings, and even investor sentiment.

Key Takeaways

• Food insecurity is a lack of access to affordable food.
• It’s an ongoing problem in the developed and developing world including more than 10% of American households.
• Food insecurity can affect consumer spending which can in turn dampen corporate earnings and stock valuations.
• Socially responsible investing can offer a pathway for investors to help combat food insecurity while achieving financial returns.
• Food insecurity disproportionately impacts lower-income and minority households so investors can’t solve the problem alone.

What Is Food Insecurity?

Food insecurity is a lack of reliable access to affordable food. It’s a complex condition that involves economic, social, and geographic factors. A household is facing food insecurity if it’s uncertain about where its next meal will come from or has to choose between food and other basic needs like healthcare or housing.

It begins at the household level where the struggle to afford food frequently leads to reduced spending in other areas. Families often cut expenditures in other sectors such as retail, entertainment, and healthcare when they cut back on food spending.

This decline in consumer spending has a cascading effect on businesses. Companies that rely on consumer demand can see revenues drop, resulting in lower profit margins. These diminished earnings can negatively influence their stock prices.

Areas referred to as “food deserts” have limited access to affordable and nutritious food, making it harder for residents to maintain a healthy diet. Some counties in the U.S. don’t have a single grocery store, mainly in the Great Plains and Midwest regions.

Important

Food insecurity in the U.S. increased from 12.8% of households in 2022 to 13.5% in 2023 and 8.4% or 11.2 million households had low food security at that time, according to government statistics.

How Food Insecurity Affects the Stock Market

Food insecurity can set off a chain reaction that eventually reaches the stock market. The stocks of companies in certain sectors are more exposed to the consequences than others, however.

Companies in the food and beverage industry may experience decreased sales as consumers turn to cheaper options or no options at all. Retailers, particularly those selling nonessential items, can experience a slump in demand. Even the healthcare sector can be impacted as food-insecure individuals delay or forgo medical treatments because of financial constraints, affecting the revenue streams of healthcare companies.

Food insecurity can also influence investor sentiment. Rising levels of food insecurity can indicate economic instability, making investors more cautious. This might be seen in reduced investments in stocks that are considered to be riskier, contributing to market volatility.

The Effect of Other Factors

Consumer spending isn’t the only factor that affects corporate earnings and stock valuations. The relationship between food insecurity, corporate earnings, and stock valuations is neither straightforward nor deterministic.

Other factors such as supply shocks, technological innovations, competition, regulations, taxes, interest rates, exchange rates, or geopolitical events can significantly affect the profitability and attractiveness of varying businesses and industries.

What Food Insecurity Means for Investors

Investors traditionally look at indicators like price-to-earnings (P/E) ratios, dividend yields, and earnings reports to assess the health and potential profitability of stocks. These remain important but incorporating food insecurity data can add another layer to risk evaluation.

Understanding that certain sectors like food and retail are more sensitive to fluctuations in food insecurity levels allows investors to weigh their portfolios accordingly. Stocks in these sectors might become riskier when and if food insecurity rises. Food insecurity can vary significantly by region as well. Investing in companies with heavy exposure to areas with high levels of food insecurity might also be seen as a higher risk.

Food insecurity frequently correlates with broader economic conditions. High levels of food insecurity could be an early warning sign of a looming recession. Investors can be better equipped to navigate market downturns or capitalize on emerging opportunities when they keep an eye on this metric.

Donating a part of your gains to socially responsible investments such as nonprofit organizations working to combat food security can provide help as well as tax advantages. Charitable donations are tax-deductible in many jurisdictions and at the federal level and this can help offset some of the capital gains tax you might otherwise owe on your investments.

Fighting Food Insecurity

Governments worldwide use various strategies to combat food insecurity, each tailored to their respective nations’ distinctive challenges and resources. Their methods can be different but the goals are generally the same: to ensure that all citizens have reliable access to sufficient, healthy food.

This includes setting up and supporting direct food programs like food banks and food vouchers such as the Supplemental Nutrition Assistance Program (SNAP) in the United States. Providing free or subsidized meals in schools is another way to directly alleviate food insecurity among children and, by extension, their families.

Note

Investors can have a role in the fight against food insecurity. Not only do they frequently have the financial resources to make a difference but they can also influence corporate behavior and public policy.

Investors can try to influence change by consciously choosing to invest in companies that are committed to reducing food insecurity. Look for companies with clearly defined corporate social responsibility (CSR) programs to reduce food insecurity or related issues like poverty. This could range from food companies sourcing their products sustainably to technology companies that develop platforms that help redistribute excess food.

Companies that report their social impact metrics transparently can help you see what they’re doing. Investing in companies with strong social initiatives isn’t just about doing good. It can also benefit your portfolio. Research has shown that companies with strong CSR initiatives frequently have a lower cost of capital, lower volatility, and higher profitability.

How Does Food Insecurity Impact the Economy?

Food insecurity reduces consumer spending among those who are struggling and this can contribute to lower economic growth. The public costs of addressing health and educational disparities caused by food insecurity can also weigh on the economy to a certain degree.

Where Does Food Insecurity Have the Greatest Impact?

Food insecurity has the most significant impact in low-income communities and countries with high poverty rates. These areas are frequently ensnared in a cycle of poverty and food insecurity that hampers economic development.

Countries that were facing critical levels of food insecurity in 2022 include Afghanistan, the Central African Republic, the Democratic Republic of the Congo, Ethiopia, Haiti, Honduras, Somalia, South Sudan, Sudan, Syria, and Yemen.

How Can Food Insecurity Impact the Workforce?

Food insecurity can lead to health problems and decreased productivity among workers, affecting individual lives and overall economic output. Employees are more likely to miss work or perform at suboptimal levels, leading to decreased productivity, when they face health issues because of inadequate nutrition.

Why Is Food Insecurity a Problem in the U.S.?

The U.S. grapples with food insecurity despite being a wealthy nation because of income and wealth disparities, structural inequalities, and inadequate social safety nets. Official statistics reported that more than 27% of American households faced some degree of food insecurity during 2023. It affected 36 million households.

What Has the U.S. Done About Food Insecurity?

The U.S. government has taken steps to better address food insecurity, particularly during the COVID-19 pandemic. It provided stimulus packages, extensions of unemployment benefits, and expansions of food assistance programs. These were mostly short-term solutions, however. They weren’t meant to address the systemic issues that lead to food insecurity.

Programs like SNAP exist but they often provide insufficient support to completely alleviate food insecurity.

The Bottom Line

Food insecurity is a problem affecting millions of Americans and many millions more around the world. This lack of access or affordability to food isn’t an isolated problem. It has far-reaching implications that may include influencing the stock market. Understanding this connection can help investors make more informed decisions and potentially contribute to solutions that alleviate this pressing issue.

Submitting the Free Application for Federal Student Aid (FAFSA) is key in order to qualify for financial aid, including federal student loans. The FAFSA is used to determine whether a student is eligible for any direct loans or Pell Grants, both of which can make earning a degree more affordable. Other strategies for maximizing your student aid include reducing your taxable income and reaching out to a school’s financial aid office.

Key Takeaways

• Filling out the Free Application for Federal Student Aid (FAFSA) form early may unlock additional need-based aid.
• Your eligibility for aid is largely based on how much your family earns, though there are other factors that can affect how much you’ll be offered.
• Neglecting to file the FAFSA may mean leaving aid on the table, so it’s worth submitting an application even if you assume you won’t qualify for anything.

1. File as Early as Possible

Certain federal loans and grants are first-come, first-served, so you’ll want to fill out the Free Application for Federal Student Aid (FAFSA) as early as possible.

The deadline for the 2025–2026 FAFSA application is 11:59 p.m. Central Time on June 30, 2026. Any necessary application updates or corrections must be submitted by 11:59 p.m. Central Time on Sept. 12, 2026. However, the deadline for submitting the FAFSA set by a school may differ from the federal one, so it’s worth checking the timelines for every university you’re applying to.

Parents might assume they have to wait to file their upcoming tax return before completing their child’s FAFSA. However, under the current rules, tax information from two years before the award year is used when calculating aid eligibility.

Note

With consent and approval, federal tax return information can be automatically shared when completing the FAFSA, streamlining the whole process.

2. Reduce Your Taxable Income

The information provided when you fill out the FAFSA is used to determine your Student Aid Index (SAI), which is the estimated amount that both the student and their parents can feasibly contribute toward paying higher education costs.

Generally, the lower your SAI is, the better. The factor that carries the most weight in the calculation of your SAI is your family’s income, so (if possible) keep your family’s taxable income as low as possible in the base year in order to qualify for more need-based financial aid.

One method to achieve a lower taxable income is to postpone the sale of any securities from which you’ll make a profit. Parents should also consider delaying any early withdrawals from their retirement accounts.

3. Leverage the Parent’s Assets

The FAFSA assumes that a student’s contributions toward their education will be greater than those of their parents, meaning that the former’s assets will have a bigger impact on their SAI. As such, a parent may want to consider setting up a Coverdell Education Savings Account (ESA) and/or 529 plan on their child’s behalf. Because these accounts are treated as the parent’s assets (so long as the student is their dependent), the hit to their SAI will be relatively small.

4. Apply, Even if You Think You Won’t Qualify

Regardless of your financial situation, you should fill out the FAFSA even if you have doubts about whether you’ll qualify for financial aid. The needs analysis formula is complicated, and some states and schools utilize the information in your FAFSA to determine their own financial aid offers. So your family having a substantial income doesn’t guarantee that you’ll be ineligible for aid, but failing to submit an application makes that possibility much more likely.

5. Look Beyond the FAFSA

The FAFSA is a crucial lifeline for students, but it isn’t the only option available to them. Financial aid counselors are typically able to disburse aid as they deem appropriate, and the applicant’s SAI might not be the sole factor in their decision.

Generally, the more interested a university is in a particular student, the more likely it is to offer them additional financial aid. It’s worth asking the financial aid office of each school that your child is considering what grants and other forms of assistance it offers, and whether or not your child is likely to be eligible.

The Bottom Line

Attending college is expensive, but being proactive about securing funding can help make it more affordable. Filing the FAFSA as early as possible, making smart financial decisions for your family, and consulting with the financial aid offices of each school you’re considering can unlock scholarships, grants, and other forms of financial aid that you might never have known you could qualify for.

Getting a personal loan online can be as easy as uploading a couple documents to a lender’s website and providing some basic personal information. If approved, you could see the new funds in your bank account within days—yours to spend on practically anything. To secure a favorable deal with minimal hiccups, there are some additional steps to follow.

Key Takeaways

• To get a personal loan online, all you need are a few documents that verify your identity and show you have a stable financial background.
• The better your income, debt-to-income (DTI) ratio, and credit score, the more likely you are to be approved and the better the loan terms you can get.
• Use personal loans to consolidate debt or fund unexpected expenses, major life events, or home improvements.

How to Get a Personal Loan Online

Your chance of getting a personal loan—on the best possible terms—largely depends on how well you follow these six steps and best practices:

1. Get your finances in order: Lenders won’t extend you a personal loan without reviewing your credit history, so check yours first and dispute any errors you find. You can pull a free report from each of the three major credit reporting agencies once per week by accessing AnnualCreditReport.com.
2. Shop around and compare lenders: Many lenders—potentially including your current bank or credit union—advertise their basic loan terms and eligibility requirements on their websites. Compare these along with any online reviews and ratings from past borrowers.
3. Get pre-qualified: Once you have a shortlist of potential lenders, find out which ones will let you pre-qualify. Pre-qualification requires you to provide some basic information and agree to a soft credit check in order to secure a preliminary loan estimate.
4. Choose a lender and apply: Based on the results of your research, select the lender that has the best offer for you and then submit an application. This typically requires a hard credit check and uploading documents to verify your identity, address, income, and financial situation.
5. Review the loan offer: Once approved, carefully review the loan offer to ensure you understand the terms and cost, including any fees. Also be sure to double-check for any changes from your pre-approval estimate.
6. Accept the loan: If everything looks good, sign the closing documents to collect your loan funds (typically as a lump sum) and start making monthly payments. Most lenders let you schedule automatic payments to help you avoid late fees.

Once you close on a personal loan, you could receive the loan funds anywhere from a week later to the same day, depending on the lender.

How to Choose a Personal Loan Online

Now that you know how to get a personal loan, let’s dive deeper into how to evaluate and compare loan offers. After all, subtle differences can have a significant impact on a loan’s final cost and your overall borrowing experience. Here are some factors to consider.

Loan Size

Before you spend too much time entertaining a loan offer, make sure it’s large enough to meet your needs. For example, if you require $25,000 to renovate your kitchen but the lender has a $20,000 loan maximum, then you may want to look elsewhere.

However, you also don’t want to borrow more than you need. If a lender sets a minimum loan amount of $2,500 and you only require $2,000, that could be more debt than you want to take on and/or have the ability to repay.

Loan Cost

Pay special attention to each loan’s interest rate—even a small difference can greatly affect the total cost. For instance, a seven-year loan for $30,000 with a 10% annual percentage rate (APR) will cost approximately $11,835 in interest over the life of the loan, while the same loan with an 11% APR costs about $13,149.

Also be sure to check for any origination fees, late fees, and other charges that could increase the loan’s cost. Avoid loans with prepayment penalties, which penalize you for paying the loan off early, offsetting any interest savings.

Use a loan calculator to determine total loan cost based on the amount, term, and interest rate. This way, you can rule out unfavorable loan offers more quickly.

Loan Term

The loan term is the time you have to repay the debt. Longer terms generally mean lower monthly payments but higher total interest costs, while loans with shorter terms have higher monthly payments but lower total interest costs. To save on interest, pick the shortest loan term for which you can afford the monthly payment.

Lender Reputation

On top of securing favorable loan terms, it’s just as important to work with a reputable lender. For example, check what past borrowers have to say about each lender you’re considering on third-party review sites like the Better Business Bureau.

User Experience

Online loans are all about speed and convenience. The application process prior to closing and the loan servicing afterward should require minimal effort on your part. To see how different lenders stack up in this regard, explore their websites and mobile apps.

You may also want to contact the lender’s customer service department to see how quick (and willing) it is to answer your questions. Be sure to ask how long loan disbursements typically take. Look out for red flags, such as long hold times, pushy sales tactics, or a lack of transparency.

Negotiation

It’s worth checking if there’s room for negotiation regarding interest rates, fees, etc. While some lenders won’t budge, others will, especially if you have a strong borrower profile and quotes from other lenders.

What’s Needed to Get a Personal Loan Online?

Of course, just as you’ll want to vet lenders before applying for a loan, they’ll want to confirm that you’re a trustworthy borrower who will repay your debt in full and on time. As a result, they typically require the following:

• A copy of your driver’s license, passport, birth certificate, or other form of identification
• Proof of address, such as a utility bill, lease agreement, or property tax bill
• Your contact information, such as your phone number or email address
• W-2 forms, tax returns, pay stubs, 1099s, or other proof of income
• Bank and/or debt statements
• Access to your credit report 

When reviewing your information, lenders look for proof of a stable income to ensure you can keep up with your monthly payments. They’ll also check that your total debt-to-income (DTI) ratio won’t exceed a certain threshold. This lessens the chance that you’ll be taking on more debt than you can handle. Finally, most lenders have a minimum credit score requirement of 580 or higher to minimize the risk of you defaulting on the loan.

That said, the better your credit score, DTI ratio, and income, the more likely you are to be approved for a personal loan and offered more favorable loan terms. 

If you have a poor credit history, you may still be able to get a personal loan. It’ll just come with a higher interest rate.

When to Get a Personal Loan Online

Depending on the situation, getting a personal loan can be either a smart move or a risky one. Here are some scenarios when taking out a loan might make sense:

• Debt consolidation: Consolidating higher-interest debts (such as credit card balances) into a personal loan can save money and simplify payments. 
• Emergency expenses: An unexpected medical bill or car repair could justify getting a personal loan—especially if it means avoiding higher-interest credit card debt.
• Major life events: Funding a wedding, funeral, move, or other significant event with a personal loan can make sense if you have a solid repayment plan.
• Home improvements: Renovating your house can raise its value, potentially beyond the cost of a personal loan.

In contrast, using a personal loan to fund discretionary spending on vacations, luxury items, or entertainment is often a bad idea. You’d be taking on unnecessary debt, which could damage your credit and lead to long-term financial strain.

A few alternatives to getting a personal loan include:

• Home equity loan: As the name suggests, a home equity loan lets you borrow against the equity in your home. It may offer a better rate than a personal loan, but you could lose your house if you default. 
• Home equity line of credit (HELOC): This option is similar to a home equity loan, except that it’s a revolving line of credit instead of a lump sum.
• Balance transfer credit card: This is a credit card with a low or 0% introductory APR that can help you consolidate and pay off other credit card balances faster.
• 401(k) loan: This essentially lets you take money out of your 401(k), which you pay back via automatic payroll deductions.

The Bottom Line

Getting a personal loan online can be a fast and convenient way to get cash for a worthwhile purpose. In order to borrow responsibly, you must carefully compare loan offers and read the fine print. Ultimately, you should only take out a loan if you have a good reason to do so, a solid repayment plan, and the confidence that the potential benefits outweigh the costs.

Reviewed by Marguerita Cheng

BlackBerry Limited (BB), known as Research in Motion (RIM) until January 2013, has a long history of extreme success and failure. It’s credited by many as creating the first smartphone. And at its peak in January 2010, there were 41 million BlackBerry subscribers worldwide.

But the rise of Google’s Android platform and Apple’s iOS caused it to decline in popularity by nearly three-quarters. BlackBerry’s stock price effectively tanked from highs of $147 to around $4 to $5 as of February 2025.

How did a high-flying revolutionary tech company get eclipsed so badly? A movie, released in Canada in May 2023, told the tale.

Key Takeaways

• BlackBerry pioneered handheld devices but has lost market share to larger rivals like Apple.
• The company, formerly known as Research in Motion, grew by leaps and bounds from 1999 to 2007, as its innovative product lines were well received.
• The launch of the touchscreen iPhone in 2007 triggered a dramatic shift away from BlackBerry handheld devices.
• Hopes for a turnaround have been dashed as the company grapples with intense competition from larger technology companies.
• BlackBerry has lost more than half of its market value in two years.
• “BlackBerry,” a movie about the company’s founders, premiered in Canada on May 12, 2023.

History of BlackBerry

The pioneer in bringing email services to handheld mobiles, with its trademark QWERTY keyboard, BlackBerry became an instant darling of world leaders, corporate honchos, and the rich and famous alike. Indeed, owning a BlackBerry device was once a status symbol, and BlackBerry addiction was a prevalent condition.

The always-on, always-connected wireless world that allowed secure and reliable access to emails turned out to be very useful for businesses. The first prominent release from BlackBerry, the Inter@ctive Pager 950, was in 1998. It had a small-sized screen, keyboard buttons, and the iconic trackball that allowed seamless syncing and continuous access to corporate emails. It became an instant hit, and then there was no looking back.

In 1999, the company introduced the 850 pager, which supported “push email” from the Microsoft Corp. (MSFT) exchange server, and in 2000, BlackBerry launched the first smartphone, called the BlackBerry 957.

Attributed to increased use by enterprises and governments, RIM’s revenues grew by leaps and bounds from 1999 to 2001. The company continued to expand functionality in the BlackBerry Enterprise Server (BES) and BlackBerry OS. The golden period of 2001 to 2007 saw BlackBerry’s global expansion and the addition of new products to its portfolio. After successfully gaining a foothold in the enterprise market, BlackBerry expanded into the consumer market. The BlackBerry Pearl series was very successful, and subsequent releases of the Curve and Bold product lines were well received.

Note

“BlackBerry,” the movie, tells the story of the founders who created the world’s first smartphone. The satirical history is loosely based on the book “Losing the Signal: The Untold Story Behind the Extraordinary Rise and Spectacular Fall of BlackBerry,” by Sean Silcoff and Jacquie McNish. It premiered in Canada on May 12, 2023.

The Game Changer

BlackBerry’s stock price peaked at an all-time high of $147 in mid-2008. A year earlier, Apple Inc. (AAPL) introduced its iPhone—the first prominent touchscreen phone. BlackBerry ignored it initially, perceiving it to be an enhanced mobile phone with playful features targeted at younger consumers. However, iPhone was a huge hit—and this was the start of BlackBerry’s demise.

Not just aimed at individuals, the iPhone managed to attract business leaders, penetrating BlackBerry’s core market, which was soon flooded with many similar email-enabled smartphones from other manufacturers. Yet, BlackBerry managed to maintain its status as a “business email device.” People used to carry two phones: a BlackBerry for business and another personal phone.

BlackBerry introduced Storm in 2008, its first touchscreen phone to compete with the iPhone. But after high initial sales, complaints started pouring in about the device’s performance. This was the first time that investors, analysts, and the media started to worry about the business prospects of BlackBerry.

The Swings

In 2009, RIM secured first place in Fortune’s 100 fastest-growing companies. In January 2010, Comscore reported RIM having the largest market share (43%) in the U.S. smartphone market. Its global user base stood at 41 million subscribers. Unfortunately, that was the peak of market penetration for RIM in the United States. After that, the company continued to lose ground to rival operating systems—the Apple iOS and Google’s (GOOG) Android—and was never able to make it back.

By November 2012, BlackBerry’s U.S. market share had dropped to just 7.3%, with Google and Apple claiming 53.7% and 35%, respectively. Despite declining U.S. sales, BlackBerry continued to have success globally. It reported 77 million users globally during the last quarter of 2012, demonstrating its success in global expansion.

Owing to these local losses vs. global success, the stock displayed high volatility. The worst year was 2011, as BlackBerry’s stock price tanked around 80% amid declining market share. Continued earnings losses resulted in further declines—most prominently the first-quarter loss in 2014 of $84 million, which led to a roughly 30% decline in the share price on the day after the announcement.

Corporate Comeback

The high volatility in the stock is attributed to several comeback attempts, corporate developments, associated recommendations by analysts, and competitor developments. In April 2010, RIM acquired the real-time operating system QNX, which formed the basis of the BlackBerry Tablet OS. The BlackBerry Playbook tablet was introduced on the QNX platform. Unfortunately, it turned out to be a total failure due to its high price, limited features, and poor performance.

The next generation of BlackBerry phones were announced in 2011, but the eventual product—the BlackBerry 10—failed to catch on. Nonetheless, based on interim forecasts that the BlackBerry 10 would surpass sales predictions, the company’s stock saw an upswing of 46% between October and November 2012. By January 2013, the stock had risen another 12%, and the volatility continued.

Wide positive swings were observed a couple of times during the first half of 2014. Those were based on announcements of BlackBerry transforming from mobile devices to a mobile solutions company. Those plans yielded less-than-meaningful results.

Another swing came in January 2015, when it was reported that Samsung was interested in buying BlackBerry. This led to a 30% spike in the latter’s share price. However, the jump proved to be a short-term blip, as the stock resumed a downtrend through 2015 and 2016.

44%

Enterprise software sales represent almost half of BlackBerry’s revenue in 2020.

Hopes for a dramatic turnaround at BlackBerry have been dashed repeatedly. The stock rallied to a closing high of $14.40 in January 2018—almost doubling value after two years of gains. Since then, however, the stock has lost more than half of its market value, as the company’s mobile business has been decimated by the competition and it has been forced to shift its focus its efforts toward other segments like enterprise software.

Will BlackBerry Survive?

In its current iteration, BlackBerry Limited is a provider of cybersecurity and Internet of Things (IoT) services, having effectively given up on smartphones as a business. On Feb. 29, 2024, the company filed its annual report for fiscal year (FY) 2024. they reported a total revenue of $853 million, with IoT revenue of $215 million and cybersecurity revenue of $378 million. The fiscal year 2024 revenue for the company’s IoT business showed $9 million increase year-over-year (YOY) revenue.

It is possible, often even necessary, for a technology company to change its stripes. Google and Meta (formerly Facebook) (META) have blazed trails in that arena. BlackBerry, however, will not only have to morph but will also have to overcome its reputation as a failed smartphone maker. Time, as they say, will tell whether BlackBerry is up to these tasks. Stay tuned.

What Business Is BlackBerry in Now That It Has Stopped Making Smartphones?

Currently, BlackBerry Limited is primarily a provider of cybersecurity and Internet of Things (IoT) services. The company recently reported FY2024 total revenue of $853 million.

Why Did BlackBerry Smartphones Fail?

Competition, in a nutshell. The introduction of the Apple iPhone, which BlackBerry didn’t take seriously, caused a loss of market share that BlackBerry couldn’t recover from. More competitors entered the smartphone space, eventually crowding BlackBerry out.

When Was the BlackBerry Movie Out?

“BlackBerry,” which premiered across Canada on May 12, 2023, told the story of the three men who took an idea and turned it into the world’s first smartphone. The movie, described as more satire than history, is loosely based on the 2015 book “Losing the Signal: The Untold Story Behind the Extraordinary Rise and Spectacular Fall of BlackBerry.”

The Bottom Line

BlackBerry is an example of the big risks associated with the highly dynamic technology sector. None of the industry rankings, predictions, or recommendations seems to fit the BlackBerry stock play. Long-term investors have been burned, while only a few traders may have made money on the wide swings. Unless confirmed news of solid acquisition or partnership comes in, this stock will likely remain a pure trader’s play.

ETFs are a type of investment fund, while robo-advisors are a type of digital financial advisor

Fact checked by Suzanne Kvilhaug
Reviewed by Katie Miller

ETFs vs. Robo-Advisors: An Overview

Robo-advisors provide automated, algorithm-driven financial planning and investment services without human supervision and help investors optimize their portfolios.

Exchange-traded funds (ETFs) are similar to mutual and index funds in that they hold shares of companies that meet a strategy or follow an index, and investors can purchase shares of the fund during market hours at real-time prices.

Key Takeaways

• Exchange-traded funds (ETFs) give investors flexibility and control to target specific sectors.
• Robo-advisors help automate decision-making and recommend investments that align with your goals and preferences.
• Robo-advisors might have higher fees than ETFs, but they usually remain lower than a human advisor’s.

ETF

Like mutual funds, exchange-traded funds (ETFs) are pooled investments of a basket of financial instruments. However, unlike mutual funds, ETFs trade on exchanges like individual stocks, fluctuating in value throughout the trading day. ETFs provide a cost-effective and liquid vehicle for investing in multiple underlying assets to target a specific sector or sectors.

When ETFs were introduced in the 1990s, they provided a low-cost, easy way to invest in a group of securities or a market index. ETFs have remained popular, with growth expected to double through 2027.

Investors can find ETFs focusing on stocks, commodities, and bonds, or choose a fund that tracks a broad market index like the iShares Russell 3000 Fund (IWV), which tracks the Russell 3000. Investors can choose a specific sector like energy and invest through an ETF like the Energy Select Sector SPDR Fund (XLE).

Note

In January 2024, the Securities and Exchange Commission (SEC) approved eleven spot bitcoin ETFs listed on the NYSE Arca, Cboe BZX, and Nasdaq exchanges. In May 2024, it effectively approved ether spot ETFs to trade on the same exchanges.

 

Advantages and Disadvantages

Pros

• Easy to trade

• Very flexible

• Low fees

• Huge array of ETFs available

Cons

• Can require a lot of legwork

• Need to monitor portfolio

• Expenses and transaction costs may eat into profits

ETFs provide an easy-to-trade and low-fee vehicle for investing in a basket of securities. The vast array of ETFs available—tracking everything from broad swaths of the market to specific industries and investment themes—opens the door to a seemingly infinite realm of possibilities.

However, investing in ETFs can require a lot of legwork and research. While ETF fees tend to be reasonable, paying for a fund’s administrative and operating expenses can eat into profits. To counter this and attract interest, many brokerage platforms offer commission-free ETF trading.

Robo-Advisor

As its name implies, a robo-advisor is an automated alternative to traditional financial advice. First launched in 2008, the digital platforms are designed to help investors build customized portfolios based on their financial goals.

A robo-advisor uses algorithms to deliver personalized investment planning services. Investors typically complete an online survey that assesses financial goals, time horizons, and risk tolerance. Then, the robo-advisor uses proprietary data to construct a portfolio to meet that investor’s needs.

Working with a robo-advisor allows investors to access professional investment management services at a lower price than a human advisor. Some robo-advisors can even automate other aspects of an individual’s strategy like tax-loss harvesting, or strategically selling assets at a loss to offset taxable gains on other investments.

Advantages and Disadvantages

Pros

• Low-cost alternative to human financial advisors

• Personalized portfolios

• Offer strategies like tax-loss harvesting and rebalancing

Cons

• Lack human touch

• Limited set of investments and strategies available

• May not be able to see the whole picture

Robo-advisors offer a significant cost advantage compared with traditional, human financial advisors. Most robo-advisors adopt Modern Portfolio Theory (MPT), aiming to maximize returns while sticking within the investor’s threshold for risk, and algorithmically developing a strategy tailored to an individual’s needs.

Some robo-advisors can help investors adjust their portfolios via rebalancing and tax-loss harvesting. However, they lack the human touch and cannot see the full picture when analyzing an individual’s financial situation.

Key Differences

The main distinction between an ETF and a robo-advisor revolves around the level of guidance it provides. ETFs allow you to focus your portfolio on certain sectors, but you must decide which funds to buy. A robo-advisor allows you to automate investment decisions by recommending a portfolio customized to help meet your investment goals.

Most ETFs are passively managed, designed to replicate the performance of an underlying index. The ETFs that operate with active management strategies typically have a higher expense ratio—the percentage that you pay in administrative and operating expenses and fees.

Robo-advisors typically use ETFs to construct a portfolio that aligns with their client’s goals and preferences. In other words, if you choose a robo-advisory service, you’ll likely be purchasing shares of ETFs, so choosing a robo-advisor doesn’t necessarily keep you out of ETFs.

Are Robo-Advisors Better than Trading?

Robo-advisors give guidance on investing and can automatically maintain a portfolio over time. Algorithmic trading is designed to conduct many trades when certain criteria are met or to take advantage of incremental price changes throughout a trading day using multiple trades.

Do Robo-Advisors Outperform the S&P 500?

Robo-advisors sometimes do and sometimes don’t outperform the S&P 500. It depends on the investing guidance they are given and market conditions, among many other factors.

What Is One of the Biggest Downfalls of Robo-Advisors?

Robo-advisors are programmed a certain way and take your input when choosing your investments. They may not be “aware” of conditions that affect the markets, where a human advisor would be aware of them.

The Bottom Line

ETFs and robo-advisors are tools for investing. ETFs provide low-cost, diversified exposure to a collection of assets, typically designed to replicate the performance of an underlying market index. Robo-advisors are digital platforms that can help investors tailor a portfolio that aligns with their goals and at a lower cost than working with a human advisor.