financial

From Trading to Staking: Ways to Make Money with Crypto

Cryptocurrency has evolved from an obscure digital experiment into a major asset class with a combined market capitalization of nearly $3 trillion. As these digital currencies have entered the mainstream, more investors are exploring ways to generate income through this asset class.

From casual investors looking to diversify their portfolios to dedicated traders seeking new prospects, this guide provides the knowledge needed to navigate the cryptocurrency market’s income potential and pitfalls.

Key Takeaways

• Cryptocurrency offers multiple ways to earn money, including trading, dividends, and running master nodes.
• The market’s volatility presents both opportunities and significant risks.
• Thorough research and strategic planning are essential to avoid common investment pitfalls.
• Understanding the tax implications is crucial for anyone earning through cryptocurrency.

Understanding Cryptocurrency

Cryptocurrencies are digital or virtual tokens that use cryptography for security. They operate on decentralized networks based on blockchain technology. Their decentralized, peer-to-peer nature means that cryptocurrencies function without intermediaries like banks or government institutions.

Since Bitcoin’s launch in 2009, the space has evolved dramatically, from Ethereum’s introduction of smart contracts to the emergence of thousands of specialized tokens serving unique and varied purposes. This expansion has created a rich landscape of digital assets with different value propositions and use cases.

The investment landscape has also grown. Beyond price appreciation, today’s token holders can earn passive income through staking, generate yields through decentralized finance (DeFi) protocols, and even earn transaction fees by providing liquidity to exchanges.

Popular Cryptocurrencies

• Bitcoin (BTC): The first and most well-known cryptocurrency, Bitcoin is often considered “digital gold. Its dominance and network security make it the benchmark for the entire cryptocurrency market.
• Ethereum (ETH): The second-largest cryptocurrency by market capitalization, known for its smart contract capabilities. Ethereum hosts thousands of decentralized applications (dApps).
• Tether (USDT): The largest and most active stablecoin, USDT is pegged to the U.S. dollar at a one-to-one ratio. USDT serves as a crucial bridge between traditional finance and crypto markets.
• Solana (SOL): Known for its high-speed transactions and low fees, Solana has emerged as a favored platform for meme coins and NFTs.
• Ripple (XRP): Developed by Ripple Labs, XRP is designed for efficient international money transfers and cross-border settlements.
• Dogecoin (DOGE): What began as a satirical commentary of the early crypto space, DOGE has gained a wide following among speculators, though its infinite supply and meme-like nature raises questions about its long-term value.
• Other notable cryptocurrencies: Binance Coin (BNB), Cardano (ADA), and Stellar/Lumen (XLM).

Ways To Earn Money with Cryptocurrency

Buying and Holding

The simplest approach is a basic buy-and-hold strategy, also known as “HODLing” in crypto parlance.

HODLing often involves buying market dips and holding firm through volatility.

Cryptocurrency Trading

Active trading requires more skill, strategy, and time. Traders can pursue various strategies, from day trading based on technical analysis to longer-term position trading focused on more fundamental factors.

Established exchanges like Binance and Coinbase offer easy buying and selling and advanced tools and are regulated (requiring AML/KYC verification), while decentralized exchanges (DEX) such as Uniswap provide greater privacy and access to newer tokens but fewer user protections.

Arbitrageurs try to capitalize on price discrepancies across exchanges, though success requires split-second execution and sophisticated tools to spot prospects. Transfer delays and fees can quickly erode profits.

Since 2024, traders have had access to spot Bitcoin ETFs and spot Ether ETFs, which trade via regular brokerage accounts.

Lending and Borrowing

Lenders earn yields that often exceed traditional savings rates, while borrowers gain access to capital for leveraged trading without triggering taxable events or giving up their long-term crypto positions.

Centralized services like BlockFi offer fixed rates and institutional security, while decentralized protocols such as Aave use smart contracts to automate lending with algorithmically set interest rates.

Mining

Mining remains a significant way to earn proof-of-work crypto tokens, despite increased competition and the vast amounts of energy often required. Today, crypto mining is an industrial-scale operation requiring specialized hardware and access to low-cost electricity. Many miners join mining pools, combining computational power with others to earn more consistent, though smaller, rewards.

Staking

“Staking” locks up tokens to help maintain the security and operations of a proof-of-stake blockchain network, earning regular rewards in return.

Direct staking involves running validator nodes and offering the highest rewards, but it requires technical expertise and significant upfront capital.

Delegated staking through pooled validators provides a more accessible alternative, while liquid staking protocols like Lido have eliminated lockup periods by issuing tradable tokens representing staked assets.

Important

Staking rates vary by blockchain and period. As of Q1 2025, ETH staking earned about 3.2% annual percentage yield (APY), while SOL staking earned about 7.1% APY.

Running a Master Node

Beyond just staking, “master nodes” offer tech-savvy holders a way to earn passive income by essentially becoming a backbone operator of certain blockchain networks. Master node operators lock up a significant amount of cryptocurrency (say, 1,000 coins) while running powerful servers to help process transactions. In return, they receive regular rewards from the network

DASH popularized this model, while newer networks offer tiered entry points requiring different collateral amounts.

Yield Farming

“Yield farming” allows crypto holders to earn excess returns by providing liquidity to decentralized exchanges and lending protocols, though this also comes with significant risk.

For instance, someone may deposit equal amounts of ETH and USDT into a liquidity pool on Uniswap or Sushiswap, earning a portion of the trading fees generated when other users swap these tokens. They might then stake their liquidity-provider tokens on another platform which becomes loaned capital that generates more yield through protocol rewards. 

Advanced strategies may employ leverage (borrowing) to boost returns, but this requires careful risk management and a solid understanding of the protocol mechanics involved.

Tax Implications for Cryptocurrency Earnings

Cryptocurrency taxation is complex and evolving. In most jurisdictions, including the U.S., cryptocurrency is treated as property for tax purposes, which means every trade, conversion, or sale potentially triggers a taxable event. Capital gains taxes apply when selling or trading cryptocurrencies held as investments.

Mining income may be considered self-employment income, while staking and liquidity rewards are typically treated as ordinary income at their fair market value when received. Interest earned through lending platforms must be reported as ordinary income, just like traditional bank interest.

Warning

Some activities, like swapping tokens or harvesting yield farming rewards, could create taxable events even when no fiat currency is received.

Risks and Considerations

The cryptocurrency market presents significant risks that investors must carefully evaluate, with fraud being a particularly serious concern. Losses from crypto-related fraud totaled more than $5.6 billion in 2023.

Common fraud schemes include the following:

• “Rug pulls” where developers abandon projects after collecting investor funds
• Fake cryptocurrency exchanges that disappear with deposited money
• Phishing scams targeting crypto wallet passwords and security keys
• Social media impersonators promising guaranteed returns
• Pump-and-dump schemes where groups artificially inflate prices

Beyond fraud, market volatility in crypto far exceeds traditional assets. Even Bitcoin, the largest cryptocurrency, has had 70% price drops within months.

Regulatory uncertainty adds another layer of risk. Government policies on cryptocurrency can change suddenly, potentially affecting asset values or even making certain cryptocurrencies illegal in some jurisdictions. China’s 2021 crypto ban, for instance, caused a market-wide sell-off.

Security vulnerabilities also pose significant threats. While blockchain technology itself is secure, the infrastructure around it—exchanges, wallets, and smart contracts—can be hacked.

Common Mistakes to Avoid

• Overinvestment: Risking more than you can afford to lose or taking loans to invest in cryptocurrency without understanding the extreme downside risk.
• FOMO trading: Buying at market peaks or rushing into trending coins without proper research, often followed by panic selling during downturns.
• Bad security practices: Using weak passwords, keeping large amounts on exchanges, or failing to enable two-factor authentication.
• Ignoring the tax implications: Failing to keep proper records of trades and earnings, leading to tax compliance issues.
• Misunderstanding DeFi: Diving into complex yield farming or leveraged trading without grasping concepts like impermanent loss or liquidation risks.
• Lack of diversification: Concentrating investments in a single cryptocurrency or token instead of spreading risk across different assets.

The Bottom Line

Cryptocurrency offers opportunities for generating value, from HODLing and passive investment strategies to active trading and network participation. Success requires a thorough understanding of the technology and market dynamics, careful risk management, and a strategic approach to choosing which earning methods to pursue.

While the potential for significant returns exists, it remains essential to approach cryptocurrency investment with significant caution. Consider consulting with knowledgeable financial professionals for personalized advice based on your specific situation and goals.

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 assets discussed here.

Fact checked by Vikki Velasquez
Reviewed by JeFreda R. Brown

BRICS exchange-traded funds (ETFs) offer investors the chance to invest in emerging markets. Investing in a single fund provides convenient access to stocks and bonds from these countries.

While there is a high degree of interest in BRICS ETFs as an investment because of these countries’ high economic growth, they are expected to experience heightened volatility and uncertainty compared to developed markets.

So are they worth it? That depends on you, your financial situation, and your goals. Keep reading to learn more about BRICS ETFs and more pros and cons of investing in these securities.

Key Takeaways

• BRICS ETFs offer an avenue to invest in Brazil, China, Egypt, Ethiopia, India, Iran, Russia, Saudi Arabia, South Africa, and the UAE.
• These funds are appealing because of the growth prospects of the BRICS countries.
• At the same time, emerging market countries like the BRICS often face heightened volatility and unique risks.
• Because they trade like shares on American exchanges, these ETFs offer convenient access and diversification across these emerging markets.

History of BRICs ETFs

The BRIC acronym was coined by economist Jim O’Neill in 2001 in a research paper. He used the term to describe Brazil, Russia, India, and China—four emerging market countries with the biggest economic growth potential. In 2010, BRIC added South Africa, becoming BRICS and five more countries joined the alliance in 2024: Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE.

After Russia invaded Ukraine in 2022, many BRICS indexes dropped Russia from their portfolios, and Russia-specific ETFs were delisted from American exchanges. The expansion marks a push by some BRICS members to balance out a U.S.-dominated world economy.

The first BRIC ETF was launched in November 2007: the iShares MSCI BRIC ETF. Russia was reclassified from MSCI’s ETFs and indexes in 2022.

Pros and Cons of Investing in BRICS ETFs

Pros

• Higher potential returns

• Geographic diversification

• Emerging markets exposure

• Convenient

• Cost-effective

Cons

• Higher volatility and risk

• Political, regulatory, and economic uncertainty

• Currency risk

Pros of Investing in BRICS ETFs

Higher Potential Returns

The higher projected gross domestic product (GDP) growth of BRICS economies compared to developed markets suggests a strong return potential for BRICS ETFs. Investing early in these emerging markets as they expand could supply higher long-term returns.

Growth projections are driven by increased industrialization, urbanization, and consumer demand within these economies. The 2024 additions to BRICS mean it covers not only about 3.5 billion people and many consumers but also about 42% of global crude oil output.

As these countries develop, companies within these markets could see significant gains in revenues and profits, translating to higher stock prices and greater returns for investors in BRICS ETFs.

BRICS countries tend to have younger populations and a growing middle class. This could lead to higher domestic consumption and a growing demand for various products and services from both domestic and foreign producers.

Geographic Diversification

BRICS ETFs offer diversification through exposure to different emerging markets in a single fund. This can help balance an investment portfolio heavily weighted in U.S. and European stocks and bonds.

The diversification of BRICS ETFs can help achieve a more balanced portfolio and enhance returns while mitigating risks compared with investing only in developed markets. For example, emerging economies may grow when developed markets like the United States or Western Europe stagnate.

Emerging Market Exposure

BRICS ETFs offer some of the easiest and most direct exposure to emerging markets. Most of these countries are significant actors on different continents. Not only do they provide geographical diversification, but they also offer broader emerging market exposure. They also have major oil reserves and other significant raw materials exports important for the world economy.

Convenient

Investing in individual stocks in these countries would require a deep understanding of each market, including local economic conditions, regulations, and market dynamics. ETFs streamline the process, providing a single investment vehicle encompassing stocks across each country. By buying shares in a BRICS ETF, investors thus gain exposure to a basket of stocks spread across different sectors and regions in a single transaction.

Because they trade like shares, ETFs are liquid securities that can be bought and sold throughout the trading day, with many brokerages today offering commission-free trading in most ETFs.

Cost-Effective

Direct investment in international markets (such as opening a foreign brokerage account) also often involves higher transaction costs and minimum investment thresholds, which can be prohibitive for individual investors.

BRICS ETFs typically have lower transaction costs than direct international investments, allowing investors to gain exposure to these markets with relatively small investment amounts.

Cons of Investing in BRICS ETFs

Higher Volatility and Risk

Emerging markets tend to experience larger price swings. Therefore, a primary concern with BRICS ETFs is their potential for higher volatility than developed market investments.

Stock markets in the BRICS countries can experience sudden fluctuations because of various factors, including economic uncertainty, political instability, trade disruptions, and global market dynamics. This could lead to significant short-term swings in BRICS ETF values, which could unsettle risk-averse investors.

For example, some BRICS economies, like Brazil, Saudi Arabia, and the UAE, rely heavily on commodity prices. This means that the performance of ETFs invested in these countries can be disproportionately affected by global commodity market fluctuations and geopolitical events, adding other layers of risk.

Political, Regulatory, and Economic Uncertainty

The political and economic environments in the BRICS countries can be less stable than in more developed economies. Changes in government policies, regulations, and political unrest can significantly impact these markets.

For instance, armed conflict or sanctions have affected Russia, while regulatory changes can significantly impact China. Such instabilities can directly affect the performance of companies within BRICS ETFs.

Regulatory environments in the BRICS countries can also be less robust than in developed markets, leading to concerns about corporate governance and transparency. This can make it more difficult for investors to accurately assess the risks and prospects of the companies within the ETF.

Currency Risk

When investing in BRICS ETFs, investors are also exposed to currency risk. Fluctuations in the value of these countries’ currencies against the investor’s home currency can affect returns from these ETFs.

When those currencies weaken vs. the U.S. dollar, it negatively affects the relative performance of those holdings. The fact that the BRICS countries have experienced periods of high inflation in the past also dampened currency values.

Currency risk adds an extra layer of complexity and can either enhance or erode investment returns, depending on currency movements.

Factors to Consider When Investing in BRICs ETFs

When researching BRICS ETFs, review their holdings, expense ratios, liquidity, assets under management (AUM), and historical returns and compare them with each other and benchmarks. Higher expense ratios, for example, can erode net returns, all else being equal.

Comparing several BRICs ETFs can help identify a suitable fund for your portfolio and risk tolerance.

It’s also important to diversify your exposure or pair BRICS ETFs with other emerging market ETFs rather than concentrate your exposure in the BRICS countries. Broader emerging market ETFs could provide more balanced exposure.

Important

Emerging markets, including the BRICS countries, are often less efficient than developed markets. This means that information might not be reflected in stock prices as quickly or accurately as in more developed markets. Skilled investors and fund managers can exploit these inefficiencies to achieve higher returns. However, it’s important to note that these inefficiencies can contribute to higher volatility and increased investment risk.

Other Emerging Market ETFs

In addition to ETFs that track stocks in the BRICS countries, there are other emerging markets funds to consider. The following are a few ETFs that have broad-based emerging markets exposure, with BRICS among those from several other countries:

• Vanguard FTSE Emerging Markets ETF (VWO)
• iShares MSCI Emerging Markets ETF (EEM)
• SPDR Portfolio Emerging Markets ETF (SPEM)
• Schwab Emerging Markets Equity ETF (SCHE)

Individual country ETFs, like those for Indonesia, Mexico, Poland, Thailand, Turkey, and Saudi Arabia, among others, also have emerging market exposure.

Top BRICS ETFs

Top BRICS ETFs
ETF	Ticker	Mandate	Assets Managed	Expense Ratio
iShares MSCI BIC ETF	BKF	Provides broad exposure to securities from three developing countries in the BRICS region: Brazil, India, and China	$70.26 million	0.72%
iShares MSCI Brazil ETF	EWZ	Tracks an index of large-cap and midcap companies from the B3 exchange in Brazil	$3.09 billion	0.59%
iShares MSCI Brazil Small-Cap ETF	EWZS	Tracks a market-capitalization-weighted index of Brazilian small-cap firms	$110.51 million	0.60%
Franklin FTSE Brazil ETF	FLBR	Tracks a market cap-weighted index of Brazilian large-cap and midcap stocks	$155.40 million	0.19%
iShares MSCI India ETF	INDA	Tracks a market-cap-weighted index of the top 85% of firms in the Indian securities market	$8.12 billion	0.62%
WisdomTree India Earnings Fund	EPI	Tracks a total market index of Indian companies selected and weighted by earnings	$3.36 billion	0.87%
Invesco India ETF	PIN	Tracks an index of India-listed stocks, screened for yield and quality and weighted by market cap	$227.1 million	0.78%
iShares China Large-Cap ETF	FXI	Tracks a market-cap-weighted index of the 50 largest Chinese stocks traded on the Hong Kong Stock Exchange	$7.60 billion	0.74%
SPDR S&P China ETF	GXC	Tracks a broad, market-cap-weighted index of investable Chinese shares. The fund’s holdings stretch across all market cap sizes.	$462.25 million	0.59%
iShares MSCI China ETF	MCHI	Tracks a market-cap-weighted index of investable Chinese shares. The fund stretches across all market cap sizes.	$5.87 billion	0.59%
iShares MSCI South Africa ETF	EZA	Tracks the performance of a market-cap-weighted index of South African stocks. It captures 85% of the publicly available market, excluding all small caps.	$340.15 million	0.59%

Note that two Russia-focused ETFs, RSX and ERUS, were delisted following Russia’s invasion of Ukraine in 2022.

Which of the BRICS Countries Has the Highest GDP?

China has the largest GDP of the BRICS countries, at just under $17.88 trillion in 2022, making it one of the largest economies in the world. Despite its significant economic growth and global influence, China’s classification as an emerging market in the financial and investment world can seem counterintuitive. However, this designation is based on its low per-capita GDP, restrictive regulatory environment, capital controls, and limited market accessibility to foreign investors.

Who Created the Category of BRICS?

The concept of BRICS was coined by Jim O’Neill, a British economist, in 2001. At the time, O’Neill was the chair of Goldman Sachs Asset Management. He introduced the term in “Building Better Global Economic BRICs,” published as part of the Global Economics Paper series by Goldman Sachs.

Which BRICS Country Has the Highest Economic Growth?

Here are the estimated GDP growth rates for 2022:

• UAE: 7.5%
• Saudi Arabia: 7.5%
• India: 7.0%
• Egypt: 6.6%
• Ethiopia: 5.3%
• Argentina: 5.3%
• Iran: 3.8%
• Brazil: 3.0%
• China: 3.0%
• South Africa: 1.9%
• Russia: -2.1%

What Is the Most Popular Emerging Market ETF?

The Vanguard FTSE Emerging Markets ETF (VWO) and iShares MSCI Emerging Markets ETF (EEM) are among the most popular and widely traded emerging market ETFs. These ETFs are favored because of their broad exposure to a range of emerging market economies, large assets under management, and liquidity.

Which Are the Most Used BRICS Benchmark Indexes?

• MSCI BIC Index: Broad index of Brazil, India, and China stocks. Widely tracked benchmark for emerging market equity performance.
• Dow Jones BRIC 50 Index: A market capitalization-weighted stock index composed of 50 of the most liquid and largest companies in BRICS (excluding Russia after it invaded Ukraine).
• S&P BRIC 40: Tracks the 40 largest companies in the BRICS countries. Focuses on liquid large-cap stocks.
• FTSE/RAFI BRIC 50 Index: Includes 50 stocks from the BRICS countries weighted by market capitalization. Designed to represent the leading blue chip companies.

The Bottom Line

The key advantages of BRICS ETFs are diversification, access to fast-growing economies, and the possibility of generating higher long-term returns than developed markets. However, there are also greater risks involved. Volatility tends to be higher because of political instability, slower growth, and currency fluctuations. Also, the BRICS countries face challenges with corruption, infrastructure gaps, and economic reforms.

For investors with high risk tolerance, a small allocation to BRICS ETFs can provide portfolio growth potential. But limit exposure to 5% to 10% of the total portfolio value. Emerging markets should be balanced with holdings in stable developed markets.

Always conduct thorough research before selecting a specific BRICS ETF. Compare expenses, liquidity, holdings, and historical performance against other funds and benchmarks. Diversify across several emerging market ETFs rather than concentrating solely in the BRICS countries.

These women lead Fortune 500 companies

Reviewed by Somer Anderson

It is often said that the glass ceiling in corporate boardrooms is still intact. However, a few cracks appear here and there. Though the number of women chief executive officers (CEOs) at the helm of the largest companies is still significantly lower than the number of men serving as CEOs, their ranks continue to grow.

The following are 10 women CEOs leading Fortune 500 companies.

Key Takeaways

• Women represent a small fraction of chief executive officers (CEOs) at the largest corporations, although their ranks are growing.
• Women lead some of the largest corporations in a variety of industries, ranging from technology to finance.
• Not only are women breaking barriers, but some are also changing history by occupying spaces formerly held by men.
• Most of the featured CEOs rank in Forbes’ World’s Most Powerful Women list.

Karen Lynch

CEO, CVS Health (CVS)

Lynch assumed the CEO role in February 2021. Previously, she was executive vice president of CVS Health and the president of Aetna, the corporation’s insurance arm.

CVS is one of the largest health providers in the world. Lynch is number six on the Forbes’ 100 Most Powerful Women in the World 2023 list.

Gail Boudreaux

CEO, Elevance Health (ELV), formerly Anthem

Boudreaux was named CEO of Elevance Health, one of the largest health insurers in the U.S., in 2017. In her first four years as CEO, the company’s stock increased by more than 70%.

Previously, Boudreaux was CEO of UnitedHealthcare, the largest division within UnitedHealth Group. She ranks 11th on Forbes’ 100 Most Powerful Women in the World 2024.

Note

In 2024, 52 CEOs of Fortune 500 companies were women.

Mary Barra

CEO, General Motors (GM)

Barra is the first female CEO of General Motors and pretty much the first for a major automobile company in the United States. She slid into the driver’s seat at GM in January 2014, taking the wheel from Daniel Akerson, who is credited for turning the company profitable after filing for Chapter 11 bankruptcy protection in 2009.

Barra is leading the charge for GM to transition to electric vehicles by 2035. She ranked fifth on  Forbes’ 100 Most Powerful Women in the World 2024 list.

Carol Tomé

CEO, United Parcel Service (UPS)

Tomé came out of retirement to take the helm of UPS in June 2020. She retired as the chief financial officer (CFO) of Home Depot in 2019. Tomé is the first female CEO at UPS and the first UPS CEO who wasn’t promoted from within.

During the first 100 days as CEO, she prioritized planning the logistics for the 2020 holiday season and COVID-19 vaccine deliveries. She is number 22 on Forbes’ 100 Most Powerful Women in the World 2024 list.

Jane Fraser

CEO, Citigroup (C)

Stepping into the role of Citigroup’s CEO in 2021, Jane Fraser became the company’s first female CEO and the first to run a Wall Street bank. She joined Citi in 2004 and held various executive roles, including CEO of Global Consumer Banking and Citi’s president.

Soon after becoming CEO, Fraser initiated a “refresh” to simplify operations. Her goal is to make it “easier to run and improve” bank operations. Fraser is listed as number ten on Forbes’ 100 Most Powerful Women in the World 2024 list.

Corie Barry

CEO, Best Buy (BBY)

Barry was named CEO of Best Buy in 2019 at the age of 44. She was the youngest CEO of a Fortune 100 company at the time. Previously, Barry held positions including chief financial and strategic transformation officer and CFO. Barry joined Best Buy in 1999.

In terms of career advice, Barry says, “Have those uncomfortable moments. Because my strong personal belief is it is those moments that cause you to grow the most yourself, but that also differentiate you the most in your career.”

Tricia Griffith

CEO, Progressive (PGR)

In 2016, Griffith was named CEO of Progressive after prior roles as Personal Lines COO and chief human resources officer. Progressive, a property and casualty insurance firm, reported $75.4 billion in revenue in FY 2024.

Under Griffith’s leadership, Progressive is a top-rated company in diversity and inclusion. In management, more than 20% are people from marginalized groups, and approximately 45% are women. Notably, there is no gender pay gap. Griffith ranks 56th among Forbes’ 100 Most Powerful Women in 2024.

Thasunda Brown Duckett

CEO, Teachers Insurance and Annuity Association of America (TIAA)

Retirement and investment manager TIAA named Thasunda Brown Duckett as its CEO in February 2021.

Duckett succeeded Roger W. Ferguson Jr., who was one of five Black CEOs in the Fortune 500 before retiring. Before TIAA, she was CEO of Chase Consumer Banking. For 2024, Duckett holds the 34th spot on Forbes‘ 100 Most Powerful Women.

Safra Catz

CEO, Oracle (ORCL)

Former Oracle CFO Safra Catz was appointed as one of two company CEOs in 2014 after Lawrence Ellison stepped down from the position. Following the stepping down and eventual passing of co-CEO Mark Hurd, Catz became the sole CEO in 2019.

Under her leadership, the tech giant has pursued an aggressive acquisition strategy, completing more than 130 acquisitions. Catz is listed in the 16th position on Forbes 100 Most Powerful Women in 2024 and 20th on Forbes‘ America’s Richest Self-Made Women 2024 list.

Who Is the Most Famous Woman Chief Executive Officer (CEO)?

Perhaps the most famous woman CEO is Karen Lynch, chief executive officer (CEO) of CVS Health, with more than $357.8 billion in revenue in 2023. Following closely are Gail Boudreaux, CEO of Elevance Health, and Mary Barra, CEO of General Motors.

How Many CEOs Are Women?

In 2023, 52 women were CEOs of Fortune 500 companies, exceeding 10% of the total, marking a record year for women in the highest-ranking corporate role. One-quarter of those women became CEOs in the last year.

Which Companies Have Women CEOs?

As of the end of 2023, some Fortune 500 companies that have women CEOs include CVS Health, General Motors, Rite Aid, Opendoor Technologies, Bed Bath & Beyond, Lumen Technologies, Fannie Mae, Citigroup, United Parcel Service, Best Buy, Progressive, TIAA, and Oracle.

How Many Black Women CEOs Are There?

As of February 2024, there is only Black woman CEO of a Fortune 500 company, Thasunda Brown Duckett. Duckett is CEO of the Teachers Insurance and Annuity Association of America (TIAA).

The Bottom Line

While women still face barriers in the workplace due to gender-based discrimination, they are increasingly joining the ranks of the C-suite at some major companies. And, even though the number of men serving as CEOs far outnumbers the number of women in this top position, every year more women become CEOs. Currently, 52 CEOs of Fortune 500 companies are women, and one-quarter of those women became CEOs in the last year.

Fact checked by Vikki Velasquez

Trusts are a cornerstone of wealth management for the ultra-wealthy, providing asset protection, tax efficiency, and a structured way to pass down wealth. Let’s look at some potential missteps you can avoid to safeguard your legacy.

Key Takeaways

• Neglecting tax planning can cause unnecessary tax bills, and poor wording can lead to confusion.
• Update your trust often, though there might be some legal complexities here.
• You should educate your beneficiaries so they know what to expect and plan accordingly.

Failing to Clearly Define Trust Terms

One of the biggest mistakes in trust planning is vague or overly complex terms. Without clear language, beneficiaries and trustees may interpret provisions differently, leading to disputes and potential litigation. It can also lead to misappropriation of assets, potentially leading to estate taxes, gift taxes, income taxes, or generation-skipping taxes. Trust documents should leave no room for ambiguity—make it easy to understand exactly what you want to happen with specific assets.

This also allows you to be as complex as you want. According to C. Jay Rhoden of Legacy Legal Solutions, ”Another advantage a trust has over just having a will is the level of control they offer you when it comes to distributing assets to your heirs.”

Choosing the Wrong Trustee

Every family has complexities and differing personalities. A well-structured trust might fail if the wrong trustee is in charge.

Some families opt for a relative or close friend. Others appoint a corporate trustee. The best trustees balance professional knowledge with the ability to navigate complex family dynamics.

In short, even though it is a political topic, make sure you pick the right person.

Not Updating the Trust Over Time

Many families create trusts but fail to revisit them as laws, assets, and family situations change. Births, deaths, divorces, and new legislation happen all the time. It’s extra work to make updates each time a major life event happens, but you’ll want to make sure those changes happen (since those life events might have driven changes in your trust). Your trust may also be impacted by evolving tax rules that shift over time.

Keep in mind that updating your trust might involve some extra steps. For example, according to Suze Orman, “If you want to make changes to an irrevocable trust, it will generally require the consent of the beneficiaries of that trust, and you have to have court approval, one or the other or both.”

Not Preparing Your Beneficiaries

You have to make sure your beneficiaries are prepared for their roles. Without knowing what they’ll be tasked with or given, they might not plan their wealth appropriately. More specifically, be clear about how your beneficiaries could and should shield their distributions from tax based on how you planned your estate.

You could incorporate financial literacy programs, mentorship, and phased distributions into your trust planning to help beneficiaries develop responsible money management habits.

Failing to Consider Tax Implications

One of the biggest errors is failing to fund the trust properly. If assets aren’t correctly transferred to the trust, they may not benefit from the intended tax advantages. This can result in the estate or assets being subject to higher taxes, like estate or probate taxes. You can also trigger different tax rules based on the type of trust you set up.

Another mistake is not taking full advantage of tax deductions and exemptions. Trusts can be taxed at higher rates than individuals, so manage income distributions and deductions. Also, some trusts may qualify for charitable deductions if a portion of the assets is allocated to charity. All this means there are delicate rules to be careful of, or else you may encounter unwanted taxes.

The Bottom Line

Trusts are powerful tools for preserving wealth, but poor planning can leave you and your family at risk. You have to think through the impact on your beneficiaries, tax complications, and contract language as you work through setting up or revising your trust.

Reviewed by Gordon Scott

Once the richest man in India and, for a brief time in 2008, a contender for the title of the richest man in the world, Mukesh Ambani is the chair and managing director of Reliance Industries, an Indian conglomerate with interests in refining, oil and gas, petrochemicals, telecoms, retail, and media.

Ambani had a net worth of $85.6 billion as of March 4, 2025. Most of this comes from his stake in Reliance Industries, which is the largest oil refining complex in the world.

Key Takeaways

• Ambani is one of the wealthiest people in the world.
• Mukesh’s stake in Reliance Industries is the source of most of his wealth.
• Other major assets include a stake in Jio Financials Services, the Mumbai Indians cricket team, and a mansion in Mumbai.

Early Life and Education

Ambani was born in April 1957 in Yemen. His father, Dhirubhai, moved the family to Mumbai. Then, his father and his father’s cousin founded the Reliance Commercial Corporation. The company would eventually grow into Reliance Industries Limited.

Ambani remained in Mumbai for college, getting a bachelor’s degree in chemical engineering from the University of Mumbai, then moved to Palo Alto, California, to pursue a master of business administration (MBA) at Stanford University. He eventually dropped out to return home to assist his father in the construction of a polyester filament yarn plant.

Reliance Industries

Reliance received a license from the Indian government to produce polyester filament yarn when Ambani returned to India from America in 1981.

When the company began in 1958, it was as a provider of textiles. In the 1970s, the firm diversified into petrochemicals and refining.

When Ambani came on board and joined the family business, it became one of the largest petrochemical companies in the world. Working under his father and then later taking control alongside his younger brother Anil, Ambani was credited for helping to bring Reliance into new growth markets and turning it into the conglomerate it is today.

The secret to its growth was using the most advanced technologies and systems to implement a dynamic supply chain to achieve significant economies of scale. 

Important

Mukesh Ambani officially joined Reliance in 1981, dropping out of Stanford University’s MBA program to help his father run the family business.

Father’s Death

In 2002, Ambani’s father died of a stroke without leaving a will. This caused a feud between Ambani and his brother Anil.

Three years later, with the help of their mother, the two brothers agreed to split the business. Mukesh retained the flagship Reliance Industries, with interests in petrochemicals, oil and gas exploration, refining, and textiles, while Anil held on to telecoms, entertainment, power generation, and the asset management side of the business.

1957

The year Mukesh was born his father returned to India to create Reliance, which started out as a yarn trading business in Mumbai.

Reliance Under Ambani

Since 2005, Reliance’s revenues and profits have soared. Under Ambani’s direction, the company developed best-in-class manufacturing facilities, strengthened its petroleum operations, and branched out into new areas, such as retail, 4G wireless broadband, and media.

$119.9 billion

The gross revenue reported by Reliance Industries for the 2024 fiscal year.

Reliance’s expansion caused its valuation to balloon. However, sentiment dipped and the share price fell flat. This has partly been blamed on corporate governance issues and Reliance’s opaque corporate structure.

The company’s image has taken a hit, with accusations of crony capitalism and all the bad press associated with it. There have also been allegations that Reliance uses its political connections to rig the system and get favorable deals.

Ambani has also been criticized personally for building a 400,000-square-foot luxury home in Mumbai, a city where poverty is rife.

Why Is Mukesh Ambani One of the Richest People in the World?

With an estimated net worth of over $85 billion (as of March 4, 2025), Ambani is one of the wealthiest people in the world.

The majority of his wealth is attributed to his stake in Reliance Industries. The company’s market capitalization was $184.74 billion as of March 4, 2025.

Mukesh also owns the Mumbai Indians cricket team and a stake in Jio Financials Services, which used to be a subsidiary of Reliance but was then spun off into a separate entity. Other notable assets include Antilia, his Mumbai mansion valued at more than $2.2 billion in 2020. The 48,000-square-foot, 27-story skyscraper houses three helipads, a yoga studio, a temple, a movie theater, a ballroom, and parking for 168 vehicles.

What Makes Mukesh Ambani So Rich?

Most of Ambani’s net worth derives from the stake he holds in Reliance Industries, a Fortune 500 company valued at over $184 billion as of March 4, 2025.

Was Mukesh Ambani Born Rich?

No, he wasn’t born rich. His father initially worked as a gas station attendant. When the family moved to Mumbai shortly after his birth, they reportedly lived in a modest apartment in a large tenement building known locally as a chawl.

How Does Reliance Industries Make Money?

The bulk of Reliance’s revenues comes from oil and chemicals, followed by retail.

The Bottom Line

Mukesh Ambani became one of the richest people in the world by helping to turn his father’s company, Reliance Industries, into a huge conglomerate and market leader across several industries. The company is worth over $184 billion as of March 4, 2025.

How much you pay for Medicare supplement insurance depends on two main things: what the plan covers and which company you choose. These plans help fill the gaps in Original Medicare, but you can’t use them with Medicare Advantage plans. You can choose from 10 different standardized Medicare supplement plans. While the price for each lettered plan will differ, all plans with the same letter offer the same coverage and benefits. 

Key Takeaways

• A Medicare supplement plan fills the gaps by helping you pay for out-of-pocket costs Original Medicare doesn’t cover. 
• Medicare supplement plans cover Parts A (hospitalization) and B (medical services) but not C (Medicare Advantage) and D (drug coverage).
• You can choose from 10 Medicare supplement plans and choose the insurance company you want to use.

Understanding Medicare Supplement Plan Costs and Benefits

You can buy Medicare supplement plans, also known as Medigap, from private insurance companies. These plans pay for the costs Original Medicare doesn’t cover, like deductibles, copays, and coinsurance.

The 10 standard Medicare supplement plans are designated by the letters A–D, F, G, or K–N. All carriers offer the same coverage for the same letter plans, but the premiums can vary. Plans E, H, I, and J are unavailable for new beneficiaries. Plans C and F are only available if you were eligible for Medicare before Jan. 1, 2020.

Medicare Premium Costs

Most working people pay nothing for Medicare Part A (hospitalization). If you don’t qualify for premium-free Part A, you may be able to buy the coverage. Those who qualify for Medicare Part B (medical services) typically pay $185 per month. Higher-income earners pay more.

Medicare Parts C, D, and supplement premiums vary based on the plan you choose. 

Important

For Original Medicare, you need to enroll in Part A and Part B. You get extra coverage by adding a Medicare supplement plan and Part D drug coverage.

Potential Medicare Out-of-Pocket Costs

Your coinsurance costs, copays, deductibles, and premiums make up your total annual out-of-pocket costs. Your premium is the amount you pay for your Medicare coverage. The deductible is the amount you must pay before Medicare pays anything, and the coinsurance or copay is your share of costs after Medicare pays. 

Important

You have to pay a separate premium for Medicare supplement plan on top of your Original Medicare premium. 

The Part B deductible is $257 in 2025. After the deductible, you’ll pay 20% of the costs of your care. 

Important

Medigap plans won’t necessarily pay for all the medical services you need. Depending on your plan, you may have to pay for vision, dental, and long-term care. 

The Part A hospitalization deductible is $1,676 per inpatient hospital visit during the benefit period. The coinsurance costs aren’t as straightforward. The fees vary depending on how long you stay in the hospital.

Here’s what you can expect Medicare to pay:

• Days 1–60: Your Part A deductible of $1,676
• Days 61–90: $419 per day
• Days 91–150: $838 per day
• After day 150: $0 (you pay 100% of costs)

After the first 90 days, Medicare will pay for 60 additional days of inpatient hospital care during your lifetime. There is no maximum out-of-pocket cost if you stay in the hospital for more than 150 days.

Your Medicare supplement plan will pay for your costs beyond the figures listed above for plans A–D, F, G, M, and N without limits. Plans K and L have caps on how much you’ll pay for out-of-pocket expenses.

Medicare supplement plans sold after 2005 don’t pay for your prescription drug costs, but you may be able to cover them under Part D. 

Let’s look at an example of a hospital stay of 14 days with medical expenses of $4,000 and prescription drugs. 

Here’s what you’d have to pay in out-of-pocket costs:

• Your Part A deductible of $1,676 for your hospital stay
• Your Part B $257 deductible for your medical bills
• 20% of the remaining $3,743, which is $748.60
• Prescription drug costs

With this scenario, your total costs would be $2,681.60, plus your drug costs. A Medicare supplement plan would likely cover everything except your medications. Your prescription drugs may be covered under Part D, depending on your drug plan.

Lastly, your Medicare out-of-pocket costs can change yearly based on inflation, so it pays to research the best Medicare supplement insurance plans annually.

Medicare Supplement Cost Comparison

You have a variety of choices for Medicare supplement plans. Because each plan differs, the premium and out-of-pocket expenses can vary significantly depending on the coverage you pick and your health needs. 

All Medicare supplement plans cover some or all of the following expenses:

• Your Part B coinsurance fees (all or a portion of those fees)
• Up to three pints of blood (full or partial coverage)
• Part A hospice care coinsurance
• Part A coinsurance and hospital costs for an extra 365 days once you have exhausted Original Medicare benefits

Differences Between Standardized Letter Plans

The Medicare supplement plans that offer the most coverage will usually cost you more each month.

According to health policy research firm KFF, Medicare supplement Plan G—the most comprehensive plan for new beneficiaries—was the most popular plan type in 2023. Nearly 39% of policyholders chose Plan G. The average monthly premium among all Medicare supplement policyholders was $217.

In comparing the various plans, you’ll want to account for the cost of the Part A and B deductibles and the copay/coinsurance amount. You’ll also want to consider the plan benefits for the following coverages:

• Skilled nursing facility
• Part A deductible
• Part B deductible
• Part B excess charges
• Foreign travel emergency

Here are some important considerations when choosing a provider:

• Availability of discounts 
• Availability of a Medicare SELECT policy (requires you to use specific network providers)
• Availability of a high-deductible plan
• Medical underwriting

Some states offer Medicare SELECT, a cheaper Medigap option. It requires you to use network hospitals and doctors for full benefits.

If you don’t have guaranteed issue rights, which means insurance companies have to sell you a Medigap plan regardless of your health, you’ll have to go through medical underwriting and you might face higher premiums. You typically have guaranteed issue rights during Medigap open enrollment or if your health coverage changes in some way. 

So if you miss the open enrollment period, you might pay more or get denied coverage altogether. The Medigap open enrollment period starts on the first day of your birthday month and runs for six months.

Note

While you may get a discount on your Medigap plan for being married, Medigap plans only cover one individual. Each spouse must buy their own policy.

The price ranges for a 70-year-old male nonsmoker living in Texas in ZIP code 79936 are:

Medigap Plan Type	Medigap Cost Range (monthly)
Medicare Supplement Plan A	$118–$891
Medicare Supplement Plan B	$176–$445
Medicare Supplement Plan C	$187–$548
Medicare Supplement Plan D	$149–$354
Medicare Supplement Plan F	$142-606
Medicare Supplement High-Deductible Plan F	$44-81
Medicare Supplement Plan G	$118–$573
Medicare Supplement High-Deductible Plan G	$37–$84
Medicare Supplement Plan K	$73–$184
Medicare Supplement Plan L	$120–$271
Medicare Supplement Plan M	$85–$231
Medicare Supplement Plan N	$90–$507

While most plans don’t have an out-of-pocket limit, those with plan K won’t have to pay more than $7,220. The maximum out-of-pocket limit for plan L is $3,610. Once you reach those limits on plans K and L, you pay nothing more. 

Factors Affecting Your Medicare Supplement Costs

Your age, gender, residential area, and smoking status are the main factors that affect your Medicare supplement costs, in addition to the type of Medigap plan you choose.

The insurance company you choose also affects your Medicare supplement costs because each carrier determines its own rates.

In setting rates, providers use one of the following three structures:

• Community-rated: Everyone with the same plan pays the same premium regardless of gender or age. Premiums may increase because of inflation or other factors. 
• Issue-age-rated: If you buy a plan when you’re younger, you’ll pay less each month than someone who buys the same plan when they’re older. Your premium won’t go up as you age. 
• Attained-age-rated: Premiums are based on your current age and increase every year you get older. 

Here are some examples of Medigap price variations among companies for a 70-year-old male nonsmoker living in Texas in Zip code 79936.

	AARP/United Healthcare	BlueCross BlueShield of Texas	State Farm	Humana
Plan A	$169	$364	$193	$134
Plan B	$198	N/A	N/A	N/A
Plan C	$244	N/A	$274	N/A
Plan D	N/A	N/A	$183	N/A
Plan F	$233	$278	$276	$164
Plan F High-Deductible	N/A	$81	N/A	N/A
Plan G	$177	$201	$183	$135
Plan G High-Deductible	N/A	$75	N/A	$50
Plan K	$81	N/A	N/A	N/A
Plan L	$120	N/A	N/A	N/A
Plan M	N/A	N/A	N/A	N/A
Plan N	$128	$166	$134	$109

Tips for Saving on Medicare Supplement Insurance

There are several ways to save on Medicare supplement insurance: Avoid late enrollment penalties, pick the right plan and company for your needs, see if you qualify for discounts, and shop around every year to make sure you’re getting the best deal. 

Here are some actionable tips to help lower Medicare supplement insurance costs. 

1. Purchase during the open enrollment period: To avoid a penalty, you must enroll in a Medicare supplement plan the first month you are eligible for Part B and for the six months following your birthday month.
2. Choose a provider that uses issue-age-rating: Inquire about how the provider rates premiums and choose one that uses your age when the policy is issued. 
3. Ask about available discounts: Take advantage of one or more discounts for being married, being a non-smoker, or paying annually or by electronic funds transfer.
4. Choose a high-deductible plan (Plan G or F): Your premiums will be lower when you choose a high-deductible plan (but your out-of-pocket costs will be higher).
5. Choose Medicare SELECT if it’s available in your state: This plan will save you on your premiums, but be aware of the restrictions on the covered providers you can visit.
6. Shop for plans every year: Medigap plans renew automatically, but you may find a better deal by shopping around each year during the open enrollment period.

The Bottom Line

Medigap plans can help control the cost of your Medicare coverage by paying for deductibles and copays. You can choose from 10 standardized plans. All plans with the same letter offer the same benefits. Medicare supplement plans don’t cover Medicare Advantage or Part D drug plans, but some may include vision, dental care, or long-term care. Weigh your options carefully to get the best Medicare supplement coverage for your needs.

Current student loan interest rates and ranges for 2025

Fact checked by Michael Logan

The interest rate on a federal undergraduate student loan for the 2024–2025 academic year is 6.53%. If you’re looking to take out a new private student loan, you’ll find that interest rates vary by lender and whether the loan has a fixed or variable interest rate. For example, your rate for a fixed-interest loan from the lending marketplace Credible will range between 3.39% and 17.99%.

Key Takeaways

• Interest rates are 6.53% for new federal undergraduate loans, 8.08% for graduate loans, and 9.08% for parent PLUS loans.
• As of March 2025, Credible, a student loan marketplace, listed fixed rates starting at 3.39% and variable rates starting at 4.13%.
• As of Q4’24, total outstanding federal student loan debt has reached over $1.6 trillion.

Private Student Loan Interest Rates

Private lenders set a range for interest rates. Your actual rate will be based on the creditworthiness of you and your co-signer.

In the table below, you can see the current rates from the loan marketplace Credible. Annual percentage rates (APRs) on Credible start at 3.39% for a fixed-rate private student loan as of March 2025. These rates reflect the rates offered by a variety of lenders on the marketplace. Individual lenders will each have their own range, which may be a bit narrower.

Loan Type	Fixed APR	Variable APR
Undergraduate and Graduate	3.39% to 17.99%	4.13% to 17.99%
Refinance	3.85% to 11.69%	4.35% to 12.68%

Federal student loans don’t take into account credit scores and income. However, these factors play a big role in private lenders’ decisions. Students who don’t meet lenders’ credit requirements will need a co-signer. Over 90% of newly originated undergraduate private student loans were made with a co-signer in 2022–2023.

However, even if you don’t have a good credit score or a co-signer, there are lenders that offer student loans for bad credit and student loans without a co-signer.

Try to take out no more in student loans than what you expect to make in your first year out of school.

Federal Student Loan Interest Rates

Between July 1, 2024, and June 30, 2025, federal student loan rates for new undergraduate loans are 6.53%. New graduate loan rates are 8.08% and new parent PLUS loan interest rates are 9.08% during that same time period. These rates change annually.

There is an origination fee of 1.057% for federal direct subsidized loans and direct unsubsidized loans. The origination fee is higher at 4.228% for parent PLUS loans. This fee isn’t added to your repayment. Instead, it’s deducted from your initial loan disbursement.

College Enrollment Trends

In the fall of 2020, colleges and universities re-opened their classrooms and dorm rooms after going remote due to the pandemic. But within weeks, many schools had to once again postpone sports and other activities as widespread quarantines forced them to switch from in-person classes back to virtual ones.

As the pandemic dragged on, many thought that community colleges would see higher enrollment, but data showed that fall enrollment was up for some large public universities, while enrollment at community colleges was down as much as 30% at some institutions.

By the spring of 2022, enrollment continued to exhibit worsening trends, with total post-secondary enrollment falling to around 16.2 million, a one-year decline of 4.1%. This followed a 3.5% drop the year prior. The bulk of the drop was in undergraduate enrollment, down 4.7% from the previous year. The number of individuals enrolled in undergraduate programs was down 9.4% from before the pandemic.

Enrollment began to stabilize in fall 2022, but combined undergraduate and graduate enrollment was still 5.8% lower than in 2019. Enrollment rose by 2.5% in the spring of 2024, which marked the second consecutive semester of growth after the pandemic.

Student Debt Continues to Rise

Following the 2007–2008 Great Recession, state higher education funding fell a full 25%. The share of higher education revenues paid by students rose from 36% in 2008 to 47% in 2012. This has led to federal student loan debt that’s surpassed $1.6 trillion as of Q4’24.

While student debt is an ongoing issue, some borrowers may be able to get relief through student loan forgiveness programs.

Borrowers working toward forgiveness under the Public Service Loan Forgiveness (PSLF) program and on an income-driven repayment (IDR) plan may get their remaining balance forgiven after 120 qualifying payments are made.

Note

The Saving on a Valuable Education (SAVE) plan would set monthly payments for undergraduate student loan borrowers at 5% of discretionary income, unpaid interest would not be capitalized, and those with balances under $12,000 could receive loan forgiveness after 10 years of payments. However, on July 18, 2024, a federal appeals court blocked the SAVE plan until two court cases centered around the IDR plan can be resolved. The Department of Education has moved borrowers enrolled in the SAVE plan into an interest-free forbearance while the litigation is ongoing. It has also outlined options for borrowers who were nearing PSLF—borrowers can either “buy back” months of PSLF credit if they reach 120 months of payments while in forbearance or switch to a different IDR plan.

How Is Student Loan Interest Calculated?

The interest on student loans can be calculated as either compound or simple interest, depending on the lender. Federal student loans and most private student loans use a simple interest formula to calculate student loan interest. This formula consists of multiplying your outstanding principal balance by the interest rate factor and multiplying that result by the number of days since you made your last payment.

• Interest Amount = (Outstanding Principal Balance × Interest Rate Factor) × Number of Days Since Last Payment

The interest rate factor is used to calculate the amount of interest that accrues on your loan. It is determined by dividing your loan’s interest rate by the number of days in the year.

How Are Student Loan Interest Rates Calculated?

Federal student loan interest rates are determined by the 10-year Treasury note auction every May, plus a fixed increase with a cap.

• Direct unsubsidized loans for undergraduates: 10-year Treasury + 2.05%, capped at 8.25%
• Direct unsubsidized loans for graduates: 10-year Treasury + 3.60%, capped at 9.50%
• Direct PLUS loans: 10-year Treasury + 4.60%, capped at 10.50%

Private student loan interest rates are determined by each lender based on market factors and the borrower’s and co-signer’s creditworthiness. Most private lenders also offer a variable interest rate, which typically fluctuates monthly or quarterly with overnight lending rates, such as the Secured Overnight Financing Rate (SOFR).

What Are Current Student Loan Interest Rates?

Federal student loan rates for the year between July 1, 2024, to June 30, 2025, are:

• Direct subsidized and unsubsidized loans for undergraduates: 6.53%
• Direct unsubsidized loans for graduates or professional borrowers: 8.08%
• Direct PLUS loans for parents and graduate or professional students: 9.08%

The Bottom Line

Federal student loan rates are relatively low when compared to historic levels. If you need student loans to pay for a college education, learn what the interest rates are and how they work before applying. Always exhaust all your options for federal student loans first by using the Free Application for Federal Student Aid (FAFSA), then research the best private student loans to fill in any gaps. Whether you choose federal or private loans, only take out what you need and can afford to repay.

If you have student loans and need help paying them, you may want to consider a refinance—but know that this could cause you to lose any protections you receive from having federal loans. If refinancing is right for you, review all of the best student loan refinance companies, which offer competitive rates and can cater to unique debt situations.

Reviewed by Thomas Brock

In the Money vs. Out of the Money: An Overview

Traders define options as “in the money” (ITM) or “out of the money” (OTM) by the strike price’s position relative to the market value of the underlying stock, commonly called its moneyness.

An ITM option is one with a strike price that has already been surpassed by the current stock price. An OTM option has a strike price that the underlying security has yet to reach, meaning the option has no intrinsic value.

Key Takeaways

• In options trading, the difference between “in the money” (ITM) and “out of the money” (OTM) is a matter of the strike price’s position relative to the market value of the underlying stock, called its moneyness.
• ITM options have intrinsic value and are priced higher than OTM options in the same chain, and they can be immediately exercised.
• OTM are almost always less costly, making them more desirable to traders with smaller amounts of capital.
• OTM options are more commonly traded for strategies such as covered calls or protective puts.

In the Money

ITM options have their uses. For example, a trader may want to hedge or partially hedge their position. They may also want to buy an option that has some intrinsic value rather than just time value.

Because ITM options have intrinsic value and are priced higher than OTM options in the same chain, the price moves (%) are relatively smaller. It is possible for ITM options to have large price moves but, compared to OTM options, the percentage moves are smaller.

Important

Certain strategies call for ITM options, while others call for OTM options, and sometimes both. One is not better than another; it comes down to what works best for the strategy in question.

Calls

A call option gives the option buyer the right to buy shares at the strike price when and if it is beneficial to do so. An in the money call option, therefore, is one that has a strike price lower than the current stock price.

For example, a call option with a strike price of $132.50 would be considered ITM if the underlying stock is valued at $135 per share because the strike price has already been exceeded. A call option with a strike price above $135 would be considered OTM because the stock has not yet reached this level.

In this case, the option would have $2.50 worth of intrinsic value, but the option may cost $5 to buy. It costs $5 because there is $2.50 of intrinsic value and the rest of the option cost, called the premium, is composed of time value. You pay more for time value the further the option is from expiry because of the greater probability the underlying stock price will move before expiry, which provides an opportunity to the option buyer and risk to the option writer which they need to be compensated for.

Puts

Put options are purchased by traders who believe the stock price will go down.

ITM put options, therefore, are those that have strike prices above the current stock price. A put option with a strike price of $75 is considered in the money if the underlying stock is valued at $72 because the stock price has already moved below the strike. That same put option would be out of the money if the underlying stock is trading at $80.

Generally, the price of a put option increases the farther away from expiry it is, because of the time value.

Out of the Money

In the money or out of the money options each have their pros and cons. One is not better than the other. Rather, the various strike prices in an options chain accommodate all types of traders and option strategies.

When it comes to buying options that are ITM or OTM, the choice depends on your outlook for the underlying security, financial situation, and what you are trying to achieve. 

OTM options are less expensive than ITM options, which in turn makes them more desirable to traders with limited capital.

Some of the uses for OTM options include buying the options if you expect a big move in the stock. Since OTM options have no instrinsic value, they have a lower up-front cost than ITM options. If a stock currently trades at $100, you can buy an OTM call option with a strike of $102.50 if you think the stock can reasonably rise well above $102.50.

OTM options often experience larger percent gains/losses than ITM options. Since the OTM options have a lower price, a small change in their price can translate into large percent returns and volatility.

It is not uncommon to see the price of an OTM call option bounce from $0.10 to $0.15 during a single trading day, which is equivalent to a 50 percent price change.

What Is Options Trading?

Options are contracts that give their holders the right to buy or sell a number of shares of an asset if it reaches a predetermined price within a set time period. Options are derivatives. That is, the contract represents a number of shares of a stock, a bond, or even a currency but does not convey ownership of an asset.

What Is the Purpose of Options Trading?

Options trading is a bet on the future direction of an asset’s price. The options trader thinks that a stock or other asset will rise or fall in value in the near future. By arranging an options contract, the trader who guesses correctly has the right to buy (if it’s a call option) or sell (if it’s a put option) a number of shares of that asset as long as the contract is in effect.

Can Anyone Trade Options?

Theoretically, anyone can trade options. Most brokers require that prospective options traders fill out a form testifying that they have the financial resources and the basic knowledge required to trade options. There are higher levels of tests to pass before an investor can engage in the more esoteric varieties of options trading.

The Bottom Line

In the money options have an intrinsic value. That is, the strike price that is agreed upon has already been surpassed by the current market price of the asset.

An out of money option has a strike price that the underlying security has yet to reach. That makes this type of option cheaper to obtain but riskier as an investment.

Reviewed by Thomas J. Catalano

The financial services industry is one of the most important parts of the U.S. economy. The sector includes insurance, investment, and real estate firms, and, more importantly, banks. According to the Federal Reserve, there are 2,148 large commercial banks in the United States alone as of Dec. 31, 2024.

One of those is Wells Fargo, which ranks as the third-largest bank in the country as measured by total consolidated assets. This article outlines some of the key facts about Wells Fargo and its main competitors in the U.S.

Key Takeaways

• Wells Fargo is among the largest banks in the U.S. by total consolidated assets.
• JPMorgan Chase is the largest bank in the country and among the five largest banks in the world.
• Bank of America reached its size through a series of mergers and acquisitions including NationsBank and Fleet Boston Financial.
• Citigroup, which was once the largest company and bank worldwide, ranks as the fourth-largest bank in the country, after Wells Fargo.

Wells Fargo: An Overview

Wells Fargo (WFC) was founded in 1852 by Henry Wells and William G. Fargo. It holds the distinction of operating under the very first national bank charter granted in the U.S.

Headquartered in San Francisco, Wells Fargo offers a wide range of banking and financial services, operates in 22 countries, has 68 million customers, and more than 5,600 retail branches.

Wells Fargo reported a net income of $19.7 billion and revenue of $82.3 billion at the end of its 2024 fiscal year. The company’s return-on-asset (ROA) ratio was 1.03% and its return-on-equity (ROE) ratio was 11.4% for the same period.

The company has a market cap of $253.3 billion as of March 3, 2025, and domestic assets of $1.7 trillion as of Dec. 31, 2024.

The main competitors of Wells Fargo are three of the other four major U.S. banks—JPMorgan Chase, Bank of America, and Citigroup. These four banks serve the majority of personal and commercial accounts in the United States.

Note

The world’s largest bank is the Industrial and Commercial Bank of China.

JPMorgan Chase

• Market Capitalization (as of March 3, 2025): $728.7 billion
• Domestic Assets (as of Dec. 31, 2024): $2.7 trillion

JPMorgan Chase (JPM) as we know it today was formed through the merger of JP Morgan Bank and Chase Manhattan Bank in 2000. It is the largest bank in the United States by market capitalization and total assets held in the country and is among the top 5 banks in the world by total assets.

Headquartered in New York, the bank operates across the entire spectrum of banking and financial services in more than 100 countries.

Services include asset management, corporate and investment banking, consumer and community banking, and commercial banking. The bank has engaged in many mergers and acquisitions (M&A) including Bank One, the Bank of Chicago, and Bear Stearns.

The company reported net income of $58.5 billion and non-interest revenue of $85 billion for the 2024 fiscal year. Its ROA ratio was 1.43% and its ROE ratio was 18% for the same period.

Bank of America

• Market Capitalization (as of March 3, 2025): $346.5 billion
• Domestic Assets (as of Dec. 31, 2024): $2.4 trillion

Bank of America Corporation (BAC) is headquartered in Charlotte, North Carolina, but has a vast retail banking presence with more than 3,700 retail operations, serving 69 million consumer and business accounts.

It is the second-largest bank in the United States by total assets. It achieved its current size through a series of mergers and acquisitions, including NationsBank in 1998—the biggest bank merger at that time—and Fleet Boston Financial.

Bank of America’s 2008 acquisition of Merrill Lynch transformed it into one of the largest investment banking operations worldwide, boosting it to one of the largest wealth management companies in the world.

For 2024, Bank of America reported revenue of $101.9 billion and a net income of $27.1 billion. As of Dec. 31, 2024, Bank of America’s full-year ROA was 0.83%, while its ROE was 9.53%.

Citigroup

• Market Capitalization (as of March 3, 2025): $145.4 billion
• Domestic Assets (as of Dec. 31, 2024): $1.1 trillion

Like its peers, Citigroup (C) is a multinational banking and financial services company. Headquartered in New York, the bank was formed through one of the largest mergers in history, that of Citicorp and the financial services firm, Travelers Group.

Before the Great Recession, Citigroup was ranked as the largest company and the largest bank worldwide, but the company suffered massive losses during the financial crisis, dropping down to the last position among the big four.

For the 2024 fiscal year, Citigroup reported a net income of $12.7 billion on revenue of $81.1 billion. Citigroup’s ROA was 0.51% and its ROE was 6.1% for the full year of 2024.

What Are the Three Main Types of Banks in the U.S.?

In regard to the types of banks where customers can make deposits, there are three primary types of financial institutions. These include commercial banks, thrifts/savings and loans, and credit unions. Each of these has different specialties and is better suited for specific needs; however, the distinction between them has become blurred over time and many provide the same offerings.

Are Banks and Financial Institutions the Same?

Not exactly. Banks are financial institutions but not all financial institutions are banks. Financial institutions encompass any entity that provides financial services. These include traditional banks, investment funds, insurance companies, hedge funds, and private equity firms. So a bank is one kind of financial institution among many.

How Safe Is the U.S. Banking System?

The U.S. banking system is considered to be extremely safe given the stability of the U.S. economy, the strict regulation of the system, the oversight of the Federal Reserve, and the deposit insurance of $250,000 for each deposit account provided by the FDIC. While the banking system is generally stable, it is not without issues, as seen during the financial crisis and other bank collapses and liquidity crises.

The Bottom Line

Wells Fargo is one of the largest financial institutions in the U.S., playing a significant role in banking and other financial services. In terms of total assets, it ranks as the third-largest bank in the U.S., behind only JPMorgan and Bank of America.

Wells Fargo has a long history, a global presence, a large customer base, and a broad range of offerings keeping it competitive in the banking landscape.

How They Differ and Practical Uses in Finance and Investing

Standard Error of the Mean vs. Standard Deviation

Suppose you’re choosing between two jobs. You’re told both pay an average of $5,000 a month, but there’s a catch: Job A has a traditional salary that pays $5,000 every month according to a contract. Job B is gig work, where you might earn $7,500 one month and $2,000 the next. They have the same average but mean something very different when you are planning your rent or mortgage payments.

Situations like this are why statistical measures like standard deviation (often symbolized as σ) and standard error of the mean (SEM) are employed—they give you more depth than simple averages. Standard deviation tells you how wild those income swings might be. In our example, Job A’s steady salary would have a smaller standard deviation (in fact, none at all month to month), while Job B’s unpredictable gig income would have a large one.

SEM tackles a different question: how much can you trust the figure of $5,000 per month? If Job A’s average comes from tracking hundreds of employees over several years, but Job B’s is based on just a few gig workers’ experiences last month, that’s crucial information for your decision. Most succinctly put, standard deviation is about where the data are clustered in one sample data, while SEM is where the means would be clustered around many samples taken of a given set of things. We tackle both below.

Key Takeaways

• Standard deviation describes how much variability—or fluctuation—exists within a data set.
• The standard error of the mean (SEM) indicates how accurately a data set represents the true population by comparing the dataset’s average to the population’s average.
• The size of the data set—the sample size—doesn’t affect standard deviation, but the sample size is a key factor in calculating the SEM.
• A larger random sample will always provide a mean that is closer to the mean of the population.

How SEM and Standard Deviation Are Used

Both standard deviation and SEM are widely used in scientific research, business, and finance to measure the variability and estimate the reliability of data. They are usually reported together.

Using Standard Deviation

Standard deviation is employed in everything from sports analytics to finance and investing. In finance, standard deviation is key to helping businesses and investors quantify risk and, therefore, the return they would require from an investment to make it worthwhile.

In modern portfolio theory, standard deviation is used to determine the range of possible outcomes of future performance, both for individual assets and portfolios as a whole. Another way of putting it is that it measures volatility, which is a way of measuring risk. The higher the standard deviation of possible outcomes or volatility, the greater the risk.

Let’s return to our example of the jobs available. Say you’re looking at that gig work position where your monthly income bounces around. The company tells you the average (mean) monthly income is $5,000, and the standard deviation is $1,000. But what does that actually mean for your bank account?

The standard deviation of $1,000 tells you that about two-thirds of your monthly paychecks will fall within $4,000 to $6,000 ($5,000 ± $1,000). But some months will fall outside this range. You might have a great payday one month at $6,100, but you must also be prepared for those tougher months when you make $4,100.

This is practical knowledge: With a steady job, you might only need to keep one month’s expenses as a safety net. That’s because its standard deviation should be zero, set by contract. But with your gig work and its $1,000 standard deviation, you’d need a bigger emergency fund to handle those low-income months.

Using Standard Error of the Mean

SEM is commonly used in scientific studies, medical studies, and clinical trials, as well as political surveys and numerous other fields. In finance and investing, SEM is used to judge the consistency—or uncertainty—of estimates such as average returns, risk, and economic indicators by assessing the reliability of the sample data set.

For example, investors or fund managers often use historical data to calculate projected average returns of a stock or index. They use SEM to calculate how much those future returns are likely to fluctuate based on the data sample used, including different time frames, market conditions, etc.

While standard deviation reveals how much variation exists within a single sample, SEM shows how likely the mean of the sample is correct. The smaller the SEM, the closer your sample’s mean is to the actual average of the whole population (remembering that in statistics, “population” isn’t just people but might be all monthly salaries for a specific job).

Here’s the formula:

$SEM = frac{sigma}{sqrt{n}}$SEM=n​σ​

Where:

• σ represents the standard deviation of the population. In practice, we rarely know the true population standard deviation. We usually use the standard deviation of our sample as an estimate.
• n is the sample size—the number of data points in your sample.
• √n is the square root of the sample size.

While online calculators can take care of the above for you, the concept is straightforward: the smaller the sample size, the less chance you’re matching the real population.

Coming back to our job example, let’s say you’re not just considering one gig work opportunity, but you’re researching the income of all gig workers in your field. You can’t possibly survey everyone, so you take a sample. Let’s say you survey 100 gig workers and find their average (mean) monthly income is $5,000, with an SEM of $100.

The SEM of $100 is not about your individual salary but about how reliable that $5,000 average is for all gig workers. The SEM of $100 tells you that if you were to repeat your survey many times, taking different samples of 100 gig workers each time, the average of those sample means would cluster around the true population mean. Specifically, about 68% of those sample means would fall within $4,900 and $5,100 ($5,000 ± $100). About 95% of them would fall within two standard errors ($4,800 to $5,200, or $5,000 +/- $200.

This is practical knowledge when examining research. Imagine another researcher surveys only 25 gig workers and also reports an average income of $5,000. Because their sample size is smaller, their SEM will likely be larger (let’s say, $200). This means their $5,000 average is less reliable than yours. There’s a wider range of uncertainty around their estimate of the true population mean.

The SEM gives you a sense of how much confidence you can place in the reported average. A smaller SEM means more confidence, indicating that the sample mean is a good representation of the actual population mean. A larger SEM indicates greater uncertainty, meaning the true population mean could be very different from the sample’s average.

The Bottom Line

Both standard deviation and standard error of the mean are commonly used measures of variability in finance and investment as well as any field that requires statistical analysis. In investing, both are used to assess risk: standard deviation looks at how significant the fluctuations within a data set are, and SEM assesses how reliable the mean is compared with the actual population.