money

Reviewed by Margaret James
Fact checked by Vikki Velasquez

If you’re an investor in real estate, especially in a large metropolitan area, you might have considered opening your rentals to Section 8 tenants. This federal program assists those with low incomes to find housing by subsidizing a portion of their monthly rent.

As a landlord, there are pros and cons to accepting housing vouchers. So, before you make the decision to do so, it’s wise to thoroughly research what to expect.

Key Takeaways

• Section 8 properties provide much-needed affordable housing to low-income families.
• Section 8 housing is nearly always in demand and may have long waiting lists. 
• Before purchasing property to use as Section 8 rentals, it is essential to be aware that the building must pass an inspection by the U.S. Department of Housing and Urban Development (HUD). 
• Landlords must follow strict HUD procedures when it comes to evicting tenants. 
• Families must meet eligibility guidelines to be awarded Section 8 housing.

What Is Section 8 Housing?

The Housing and Community Development Act of 1974 established the Housing Choice Voucher Program, which was an amendment to Section 8 of the Housing Act of 1937. This program assists low-income renters by providing vouchers that pay approximately 70% of their monthly rent and utilities.

Section 8 housing is overseen by the U.S. Department of Housing and Urban Development (HUD), and it is administered by public housing agencies (PHAs) in every state. PHAs determine Section 8 eligibility for their area based on income and family size.

In general, a family’s income must be below the 50% median income for their area to qualify for Section 8, but this can vary based on the city and the state. Because demand for Section 8 vouchers is so high in many areas, the waiting lists can be very long. Some families wait many years to receive assistance.

Note

Local PHAs may close their waiting lists—for example, in Los Angeles County, the waiting list was closed as of February 2025.

Once a family receives their Section 8 voucher, it is up to them to find a suitable property that accepts Section 8 tenants. Local PHAs normally have lists of such properties, while websites such as GoSection8 make it easy to search for rentals by zip code. The housing voucher generally covers 70% of standard rent for that area, with the family responsible for paying the remaining 30%.

Benefits of Section 8

Rent Is Paid on Time

One of the biggest perks of renting to Section 8 tenants is having 70% of your rent paid right on time each month. If you have struggled in the past to collect rent from tenants, you can count on partial payments on every unit.

Payments Are Deposited Monthly

The government will deposit your portion of the rent money right into your bank account on the same day each month.

No Shortage of Tenants

There is a huge need for affordable housing across the U.S. Waitlists for Section 8 properties are a testament to that fact, so you should have ample potential renters. Owning Section 8 property in an area where rentals tend to sit vacant for lengthy periods can be beneficial.

Challenges of Section 8

Extensive Property Inspections

Before you can accept renters, your property must pass an extensive inspection by HUD personnel. If your property is deemed insufficient, you have 30 days to make necessary corrections before being reinspected. After the initial inspection, your property will undergo repeated inspections, generally on an annual basis.

Rent Is Capped

The local PHA determines the fair market rent for your unit, which is the maximum you can charge. Plus, the rent cannot be more than 40% of a prospective tenant’s income. This often leads to Section 8 landlords charging their tenants less than they could a non-Section 8 tenant.

Evictions

While you are entitled to evict Section 8 tenants, you will need to follow HUD procedures to do so. HUD is usually more restrictive than the local eviction process. So if you are concerned about the potential of difficult evictions, this is something to consider.

How Do I Rent to Section 8 Tenants?

In order to rent to Section 8 tenants, you must apply for a permit from your local Public Housing Authority. This will require an inspection of your building. Once you are approved, you may start interviewing tenants who are planning to use housing choice vouchers to pay their rent.

Who Are Section 8 Tenants?

Section 8 tenants are individuals and families who meet the income thresholds to use housing choice vouchers to pay part of their rent.

Can Any Building Be Rented to Section 8 Tenants?

If you buy a building you plan to rent out to Section 8 tenants, you will need to make sure it meets all the local building codes and passes an inspection by your local Public Housing Authority.

The Bottom Line

Whether you are new to the world of real estate investment or an old hand, at some point you are likely to consider opening your property to Section 8 tenants. Before making the decision, it is prudent to arm yourself with knowledge of both the good and the bad about renting to this particular niche.

Only you, along with your property manager, can decide whether the pros outweigh the cons in your particular situation. If you do decide to move forward, it’s good to know that you’ll be providing safe housing to families who need it.

Fact checked by Marcus Reeves
Reviewed by Thomas J. Catalano

For investors seeking steady wealth-building rather than get-rich-quick schemes, dividend reinvestment plans (DRIPs) offer a methodical approach to growing investments over time. They come with built-in compounding that can greatly increase the size of your portfolio over the years and decades.

Many trading experts, including Yvan Byeajee, author of “Trading Composure: Mastering Your Mind for Trading Success,” argue that DRIPs can be a great part of a systematic approach that long-term investors need to succeed.

“Investing is about building wealth steadily over time. The key phrase is ‘over time,'” Byeajee told Investopedia. “Sustainable investing is about playing the long game, respecting the process, and allowing compounding to work its magic over time.” DRIPs embody this philosophy by automatically reinvesting cash dividends to buy additional shares of a company’s stock.

Key Takeaways

• Most investment experts and financial advisors suggest that most people benefit from a systematic, long-term way to build up their portfolios.
• A DRIP is one of these. It’s a dividend reinvestment plan through which cash dividends are reinvested to buy more stock.
• DRIPs use dollar-cost averaging (DCA), which is intended to average the price at which you buy stock as it moves up or down.
• DRIPs help investors accumulate additional shares at a lower cost since there are no commissions or brokerage fees.

Most major publicly traded companies like Johnson & Johnson (JNJ), The Coca-Cola Company (KO), and Procter & Gamble (PG) offer DRIPs either directly or through brokerage firms. These plans give investors a low-cost way to steadily increase their holdings without paying commissions or fees on reinvested dividends. DRIPs also help remove emotion from investing decisions since the reinvestment happens automatically, no matter the market conditions.

How DRIPs Work

A dividend is a reward to shareholders—often in the form of a cash payment via direct deposit. DRIPs allow investors the choice of reinvesting that cash in more shares of the company’s stock.

Many brokers allow you to reinvest dividends in the underlying securities through DRIP programs. However, you can also enroll in DRIPs directly with the company through direct stock purchase plans.

How Dollar-Cost Averaging (DCA) Works With DRIPs

“For most people in most situations, a long-term, buy-and-hold, diversified, low-cost investment approach is likely more suitable than active trading,” said David Tenerelli, a certified financial planner at Values Added Financial in Plano, Texas. “This is because it helps the investor ignore the ‘noise’ and instead focus on a disciplined approach.”

Tenerelli explained that one such strategy for long-term investing is dollar-cost averaging (DCA)—putting a set amount away periodically, no matter what. “It takes discipline to continue to buy investments during a market downturn, but a shift in mindset can help—rather than fearing financial loss, an investor can reframe it as buying stocks ‘on sale,'” he said.

DCA is a key feature of DRIPs. With DRIPs, your dividends automatically buy more shares when prices are low and fewer shares when prices are high. This means the dividends being reinvested are doing the work that most people with DCA strategies do by putting away a set amount of cash in an investment each pay period.

For example, suppose you receive a $100 quarterly dividend from a company. If the stock price is $50, your DRIP would buy two shares. But if the stock price drops to $25, that same $100 dividend would buy four shares. This automatic adjustment helps cut the risk of investing all your money when prices are at their peak and thus getting fewer shares in the long run.

Thus, the upshot of using DCA in DRIP programs is that it turns market volatility from your enemy into an ally, automatically buying more shares when prices dip.

Important

Experts like Byeajee and Tenerelli advise combining DCA with DRIPs because it removes more of the emotional element from investing. “It takes discipline to continue to buy investments during a market downturn,” Tenerelli said. “But a shift in mindset can help—rather than fearing financial loss, an investor can reframe it as buying stocks ‘on sale.'”

Types of DRIPs

Company-sponsored and brokerage-operated DRIPs offer different paths to reinvesting your dividends. Understanding the differences can help you choose the option that best fits your investment style and goals.

Company-Sponsored DRIPs

These let you buy stock directly from companies like Coca-Cola or Johnson & Johnson, often at a discount of 3% to 5% below market price, our review of such plans available online showed. DRIPs typically let you start with a small investment—sometimes buying even one share—and then make additional purchases over time.

Many companies go out of their way to make such plans seem like you’re joining a special club where you get special perks—which you do, including discounted shares and zero commission fees.

But why do companies do this? Simple: They get investment dollars or capital from shareholders, which they can use to reinvest and grow the company. In addition, investors who are part of a company’s DRIP program are believed to be less likely to sell their shares if the company has one bad earnings report or if the overall market declines.

Brokerage DRIPs

Brokerage DRIPs work differently. If you already have an account with Fidelity, Charles Schwab, etc., you can typically enroll any dividend-paying stocks you own in their DRIP program. While you won’t get the company discount, these plans offer more flexibility since you can easily manage all your investments in one place and quickly turn the DRIP feature on or off for different stocks.

Most investors start with brokerage DRIPs because they’re convenient and don’t require setting up separate accounts with each company. However, if you plan to invest regularly in a specific company over many years, a company-sponsored DRIP will save you more money in the long run.

The Benefits of Using DRIPs

Beyond automatic reinvestment, DRIPs offer several advantages that make them attractive for long-term investors. The most obvious benefit is the 3%-to-5% discount we mentioned above.

But DRIPs also help enforce investment discipline. When dividends are used to automatically buy more shares, you’re less likely to spend that money elsewhere.

Perhaps most importantly, DRIPs harness the power of compounding. Each reinvested dividend buys more shares, which then generate larger dividend payments, which then buy even more shares. Over time, this snowball effect can significantly increase your total returns.

Potential Drawbacks to DRIPs

While DRIPs offer many benefits, they’re not right for everyone.

Math With Fractions

Since dividends are typically less than the price of company shares, you’ll be buying fractional shares over time. For example, let’s say that Company X pays a $10 dividend on a stock that traded at $100 per share. Every time there’s a dividend, those within the DRIP plan would receive one-tenth of a share.

Since you’re buying fractional shares at different prices over time, calculating your cost basis for taxes can become complicated—imagine tracking hundreds of tiny purchases over many years. That said, whether you use a DRIP through the company or your brokerage, your DRIP account will likely take care of this, keeping detailed records of your share ownership percentages for you.

You’ll Need Patience

DRIPs also require patience and a long-term perspective. This is because, even if something comes up that requires you to sell your shares quickly, company-sponsored DRIPs can slow this process down since you typically must sell through the company rather than through a broker.

Diversification

In addition, too much of a focus on dividend-paying stocks might lead to a less diversified portfolio. Not all great companies pay dividends—for example, many growth stocks like technology companies reinvest their profits rather than paying dividends.

The problem becomes even more acute if you use company-sponsored DRIPs since you might limit yourself just to one or two companies, putting a far greater part of your portfolio in just one part of the market.

Tax Implications of DRIPs

Even though you’re reinvesting rather than receiving dividends in cash, the IRS still considers the dividends as taxable income in the year they’re paid out. Just like if you take your paycheck and put it right into a savings account, you still owe taxes on that income even if you never touch the money.

For regular dividend-paying stocks held in taxable accounts, these dividends are typically counted as qualified dividends, which are taxed at lower long-term capital gains rates rather than as ordinary income. However, you’ll need to meet certain holding period requirements to qualify for these lower rates.

In addition, when you eventually sell the DRIP shares, you’ll owe capital gains taxes on any appreciation in share value. This is where good record-keeping becomes crucial—you’ll need to know your cost basis (purchase price) for all those shares bought through your DRIP over the years.

Can I Participate in DRIPs If I Buy Stocks Through My Individual Retirement Account (IRA)?

Yes, you can enroll stocks held in IRAs and other retirement accounts in DRIPs. One advantage of reinvesting dividends in retirement accounts is that you won’t face any immediate tax consequences on the dividends, unlike in taxable accounts.

However, any dividends automatically reinvested still count toward your required minimum distributions once you reach the age when these become mandatory.

What Happens to My DRIP Investments If the Company is Acquired or Merges With Another?

There are a couple of possibilities. If the acquiring company has a DRIP, your enrollment might transfer to the new company’s plan. In cash buyouts, your DRIP typically ends and you receive cash for your shares. In stock-for-stock deals, your shares usually convert to the shares of the acquiring company. It’s important to read all communications from the company during these transitions since you may need to decide what happens to your DRIP account.

How Do Stock Splits Affect DRIPs?

When a company splits its stock, your DRIP should shift over seamlessly. For example, in a two-for-one split, you’ll now own twice as many shares at half the price, but the total value of your account will be the same.

Future dividend reinvestments will simply buy shares at the new split-adjusted prices. The main impact is that you might be able to buy more whole shares with each reinvestment since the share price is lower.

When Is a DRIP Not the Best Choice?

DRIPs might not suit investors who rely on dividends for income since reinvesting them takes away the cash you might need to be available. In addition, investors focused on maintaining a diversified portfolio may find DRIPs concentrate their investments too heavily on a single stock or handful of stocks. In these cases, manually reinvesting dividends in other securities might be more appropriate.

The Bottom Line

DRIPs offer a great way to build a portfolio over time, especially if you get a discount on the shares along with the effects of compounding. While DRIPS require patience and careful record-keeping, the potential long-term benefits often outweigh these challenges.

Just remember to consider both the advantages and limitations of these plans in the context of your overall investment strategy, risk tolerance, and tax situation.

Reviewed by Chip Stapleton
Fact checked by Vikki Velasquez

House flipping involves buying properties to renovate and resell quickly, and it requires more than just binge-watching HGTV and picking up a paintbrush. The real estate strategy generated median profits of about $73,500 per property in 2024—though novices are among those who consistently earned below that.

“As interest rates remain double what they were a few years ago and inflation keeps raising renovation costs, investors continue to have a tough time,” said Rob Barber, CEO of ATTOM, the real estate data analytics company. “It’s not as if profits have shot through the roof and investors are riding a new wave of good times. Far from it.”

This makes it all the more important that those flipping homes avoid the costly errors that can be ruinous for many in the mid-2020s. There are substantial risks many house-flipping shows skip over, from unexpected renovation costs to market downturns. Understanding these challenges—and how to avoid common pitfalls—can mean the difference between a profitable flip and a mistake so costly that it takes you out of the game entirely.

Key Takeaways

• Flipping is a real estate strategy that involves buying, renovating, and selling homes quickly for a profit.
• Novice real estate investors often underestimate the time and money a project will require.
• Another error that house flippers make is overestimating their skills and knowledge.
• Patience and good judgment are especially important in a timing-based business like real estate investing.
• Most successful flippers have either construction expertise or reliable relationships with contractors, since renovation costs can quickly eat up all the potential profits.

How Flipping Houses Works

Unlike traditional real estate investing where investors buy properties to rent them out, flippers aim to buy, renovate, and resell properties as quickly as possible to maximize profits and minimize holding costs.

Success in flipping comes from two main sources: market appreciation in rapidly growing neighborhoods and adding value through improvements to a property. For instance, a flipper might buy a dated home in an up-and-coming area for $300,000, spend $50,000 on strategic renovations, and sell it for $400,000—earning a $50,000 profit before accounting for holding costs and taxes.

However, every day a property sits unsold costs money in mortgage payments, utilities, property taxes, and insurance. This is why experienced flippers often focus on speed rather than squeezing out maximum profit. Carrying costs can quickly overtake potential profits.

The National Association of Realtors estimates the top 10 markets for home sales in the U.S. in 2025 will include four from the South: Boston-Cambridge-Newton, Massachusetts-New Hampshire; Charlotte-Concord-Gastonia, North Carolina-South Carolina; Grand Rapids-Kentwood, Michigan; Greenville-Anderson, South Carolina; Hartford-East-Hartford-Middletown, Connecticut; Indianapolis-Carmel-Anderson, Indiana; Kansas City, Missouri-Kansas; Knoxville, Tennessee; Phoenix-Mesa-Chandler, Arizona; and San Antonio-New Braunfels, Texas.

Where To Start

Successful flipping begins with getting a reasonable purchase price. Professional flippers often use the “70% rule”: Never pay more than 70% of a property’s after-repair value minus renovation costs.

For example, if a house is worth $300,000 after renovations and needs $50,000 in repairs, the maximum purchase price would be as follows:

$300,000 x 0.70 = $210,000 – $50,000 = $160,000

The formula builds in a margin for unexpected costs, market shifts, and profit. But you’ll need accurate estimates of both the after-repair value and renovation costs, and that takes skills that only come with experience and greater market knowledge.

Like any other small business, flipping requires time, money, planning, patience, skill, and effort. It will likely wind up being harder and more expensive than you ever imagined. Take it lightly at your peril. If you’re just looking to get rich quickly by flipping a home, you could end up in the poorhouse.

Below are the five mistakes to avoid if you get into the business of flipping homes.

1. Not Enough Money

Investing in real estate is expensive. The first and most obvious cost is the amount needed to buy the property. If you’re financing the acquisition, you’ll probably need to come up with a downpayment, and you’ll need to make mortgage payments, including interest. Interest on mortgages and home equity lines of credit (HELOCs) is deductible. The principal, taxes, and insurance portions of your payment are not.

Research your financing options to determine the best choice for your needs and to find the right lender. Use a mortgage calculator to compare rates that various lenders offer. Paying cash certainly eliminates the cost of interest, but even then, there are holding costs and opportunity costs for tying up your cash. In the flipping business, the sale price must be higher than the cost of acquisition, renovation costs, and holding costs combined.

Warning

Even if you manage to overcome the financial hurdles of flipping a house, don’t forget about capital gains taxes, which will take a chunk of your profit.

Making a profit is more challenging than before, as the median return on investment (ROI) in recent years has dipped under 30%, down from over 50% a decade ago. This doesn’t mean you can’t make money. It’s just that you’ll need to be more careful to ensure you do.

Important

Even if you get every detail right, changing market conditions could mean that every assumption you made at the beginning will be wrong by the end.

2. Not Enough Time

Flipping houses is time-consuming. It can take months to find the right property. Then you’ll need time to renovate, often the biggest time sink. Those with day jobs face a difficult choice: either sacrifice evenings and weekends to handle renovations personally or hire contractors and still spend significant time managing the project.

Even with contractors, investors must coordinate inspections, handle permits, and ensure work meets local building codes. If it doesn’t, you’ll need to spend more time and money to bring it up to par.

Selling the property also requires a great deal of time. If you show it to prospective buyers yourself, you may spend a good deal of time commuting to and from the property and in meetings. If you use a real estate agent, you’ll have to pay a commission.

For many, it might make more sense to stick with a day job, without taking on the financial risk and a major time commitment.

3. Not Enough Skill

Professional builders and skilled professionals, such as carpenters and plumbers, often flip houses to earn income on the side. They have the knowledge, skills, and experience. Some also have union jobs that may provide unemployment checks all winter long while they work on their side projects.

The real money in house flipping comes from sweat equity. So even if it’s not otherwise related to your employment, if you’re handy with a hammer, enjoy laying carpet, can hang drywall, roof a house, and install a kitchen sink, then you have important skills that save money when flipping a house.

But if you don’t know a Phillips-head screwdriver from a flat one, you will need to pay a professional to do the renovations and repairs. And that will cut the odds of making a substantial profit on your investment.

4. Not Enough Knowledge

You must know how to pick the right property, in the right location, at the right price. In a neighborhood of $400,000 homes, do you really expect to buy at $200,000 and sell at $300,000? That simply won’t happen regularly.

Even if you get the deal of a lifetime—for example, you snap up a house in foreclosure for a song—knowing which renovations to make and which to skip is key. You also need to understand the applicable tax laws and zoning laws and know when to cut your losses and get out before your project becomes a money pit.

Major lenders and private equity companies have also started to seek profits in the flip-loan marketplace, with global investment firm KKR joining other private investment firms seeking a piece of the action.

5. Not Enough Patience

Professionals take their time and wait for the right property. Novices rush out and buy the first house that they see. Then they hire the first contractor who makes a bid to address work that they can’t do themselves. Professionals either do the work themselves or rely on a network of prearranged, reliable contractors.

Novices hire real estate agents to help sell the house. Their commissions eat into profits (even after changes arising from the National Association of Realtors, which will eliminate advertising buyers’ agent commissions on the MLS). Many professionals sell the properties themselves to minimize costs and maximize profits. Novices expect to rush through the process, slap on a coat of paint, and earn a fortune. Professionals understand that buying and selling houses takes time and that the profit margins are sometimes slim.

Do I Need to Have a Cash Offer to Flip a House?

No. Cash can be more attractive to sellers, so you may see more cash offers accepted. Nationwide, about 63% of house flips are purchased with cash. However, that obviously leaves many people who do finance their house flips.

Which Cities Are the Best To Flip a House?

This depends a lot on what you’re looking for and your bankroll. But according to Merchants Mortgage, which provides capital to real estate investors, the best cities for house flipping in 2024 were Pittsburgh, Pennsylvania; Buffalo, New York; Baltimore, Maryland; and Oklahoma City, Oklahoma.

How Long Does It Take to Flip a House?

It generally takes four to six months from the purchase date to sell the finished home. However, the less experience you have, the more time it will likely take.

The Bottom Line

At any given time, at least a half-dozen shows are available to stream featuring amiable, well-dressed investors who make the flipping process look fast, fun, and profitable. But making a nice profit quickly by flipping a home is not as easy as these shows often make it appear.

Novice flippers can underestimate the time or money required and overestimate their skills and knowledge. If you are thinking about flipping a house, make sure you understand what it takes and the risks involved.

Fact checked by Kirsten Rohrs Schmitt
Reviewed by Michael J Boyle

Ren Zhengfei, a former officer of the People’s Liberation Army, founded Huawei (pronounced Wah-Way) in 1987. Since then, the Shenzhen, China-based company has become one of the world’s largest smartphone makers next to Apple (AAPL) and Samsung.

Huawei also makes other consumer electronics and builds communication equipment and infrastructure. It has become a multinational giant with over $118 billion in revenue in 2024.

Important

On Nov. 12, 2020, then-President Donald Trump signed an executive order forbidding U.S. investors from investing in companies that he designated “Communist Chinese military companies.” The ban took effect at 9:30 a.m. on Jan. 11, 2021, and included 31 companies listed here.

Despite impressive growth, Huawei remains a private entity fully owned by company employees. That means the company is not traded on any public market and that people other than current employees cannot invest in it. Despite the inability to invest in Huawei, investors may still want to keep an eye on one of the world’s largest smartphone producers.

Where Does (and Where Doesn’t) Huawei Do Business?

Beyond making smartphones, Huawei builds consumer electronics such as tablets and wearable technology, telecommunications networks and services, and provides solutions to enterprise customers. As of 2025, Huawei had 207,000 employees in more than 170 countries. It conducts the majority of its business in China and EMEA (Europe, the Middle East, Africa, and the Asia-Pacific region).

Key Takeaways

• Huawei is a multinational company that makes consumer electronics and communication equipment.
• Despite impressive growth, the company is 100% owned by employees and has never had a public offering.
• Huawei has been the subject of much controversy, as U.S. officials suspect that the Chinese government is actively involved in the business.
• With the exception of the Americas, Huawei continues to see rapid sales growth across all regions.
• There are no signs that the company plans an initial public offering or to list shares in the United States.

While it’s helpful to know where Huawei does business, it’s far more telling to know where it doesn’t. Global skepticism about Huawei has grown following a 2012 congressional report that first highlighted the security risks of using the company’s equipment.

In addition, while the company claims that it is 100% owned by employees, U.S. officials are skeptical that the Chinese government and the Communist Party might be calling the shots at Huawei. A Chinese law requiring Chinese companies to assist in national intelligence networks, passed in 2017, added to those concerns.

Many companies have already ceased using Huawei products. In January 2018, large U.S. mobile companies like AT&T and Verizon stopped using Huawei’s products in their networks. In August 2018, Australia decided not to use the company’s technology as it builds out its nationwide 5G mobile networks. In November 2018, New Zealand prevented Spark, one of the country’s biggest telecom companies, from using Huawei products in its 5G network. Despite these governmental roadblocks, Huawei can still conduct business with private companies in each of these countries.

In December 2018, Canadian officials arrested Meng Wanzhou, the chief financial officer of Huawei and the daughter of the company’s founder, on the request of the U.S. government. On Jan. 28, 2019, the U.S. government officially filed a formal request for her extradition, alleging that she violated U.S. sanctions against Iran. The U.S. also banned Huawei from doing business with U.S. companies due to the sanctions violations.

In September 2021, the U.S. Department of Justice announced it had reached a deal with Wangzhou to resolve the case via a deferred prosecution agreement. She agreed to a statement of facts that said she had made untrue statements to HSBC to enable transactions in the U.S., at least some of which supported Huawei’s work in Iran in violation of U.S. sanctions, but she didn’t have to pay a fine or plead guilty to charges. In December 2022, the presiding judge dismissed the charges against Wangzhou following the U.S. government’s request.

In June 2019, then-President Donald Trump lifted the restrictions on Huawei as part of ongoing U.S.-China trade war negotiations. Nevertheless, Huawei announced plans to cut 600 jobs in Santa Clara, California, and, by December 2019, decided to move the center to Canada.

On Nov. 12, 2020, Trump signed an executive order forbidding U.S. investors from investing in companies that he designated “Communist Chinese military companies.” The ban took effect on Jan. 11, 2021, and included Huawei and 30 other companies.

In November 2021, then-President Joe Biden signed into law the Secure Equipment Act of 2021, intended to prevent companies like Huawei that are deemed security threats from receiving new equipment licenses from U.S. regulators.

How Does Huawei Make Money?

Huawei operates in the carrier, enterprise, and consumer segments of the market. Because the company is not public, it is not traded on any stock market and is not required to submit filings to the U.S. Securities and Exchange Commission (SEC). The company still reports its numbers on a regular basis, however.

In its 2023 annual report (the most recent annual data available), Huawei said that total revenue was $99.4 billion, up 9.6% from a year earlier. Profits jumped 15.4%.

Huawei reported that business in China—by far its largest market—rose 16.7% in 2023. Business in the Asia Pacific region fell 14.6%, it fell 2.6% in EMEA, while its business in the Americas—the smallest market—rose 10.9%.

U.S. restrictions have hampered Huawei’s ability to access computer chips and software from American suppliers and prevented it from selling its telecommunications gear to U.S. customers. Despite this, the company made a comeback in the smartphone market in 2023 with the release of its high-end Mate 60 smartphone line, powered by an advanced chip that it made together with China’s Semiconductor Manufacturing International Corp. (SMIC).

Why Can’t You Invest in Huawei?

Huawei is privately held by the company’s China-based employees only, but anyone working for the company outside of China cannot buy into the company. The company’s shareholders admit, however, that they don’t understand the company’s structure, are not provided updated information on their holdings, and have no voting power. Thirty-three union members elect nine candidates to attend the annual shareholder meeting. Shareholders receive dividend payments, and they have the potential to earn bonuses based on performance. Their salaries also are reviewed on an annual basis.

In 2014, upper management at Huawei was asked if it would consider a stock market listing, but the idea was rejected. Huawei’s debut on the public market can’t be completely ruled out in the future, though, especially if the company is in need of additional capital in the future. It’s not likely that Huawei could list in the United States, partly because of its poor relationship with the country and the company’s growing reputation for using technology to spy on users.

As far as investing in Huawei goes, right now there’s only one potential solution—but it’s far-fetched. In order to receive dividends, you would have to become an employee of the company in Shenzhen, and you would have to make management believe you aren’t a spy. Good luck.

What Is a Multinational Corporation?

A multinational corporation is a company that has business operations in at least one country other than its home country and generates revenue beyond its borders. China’s Huawei is an example of a multinational corporation.

How Is Huawei Getting Around U.S. Sanctions?

In August 2023, Huawei launched new smartphones with locally made chipsets that defied U.S. sanctions. Its Mate 60 line is powered by an advanced chip that Huawei made together with China’s Semiconductor Manufacturing International Corp. (SMIC). U.S. lawmakers have accused SMIC of violating U.S. sanctions by supplying chips to Huawei.

What Is the Status of U.S.-China Trade Relations in 2025?

Donald Trump returned to the U.S. presidency in January 2025 and imposed 10% tariffs on Chinese imports. China retaliated with duties on the imports of some American goods and an antitrust probe into Alphabet’s (GOOGL) Google, broadening the trade war between the world’s two largest economies.

The Bottom Line

Huawei is one of the world’s largest smartphone makers. The Chinese company is 100% owned by employees and has never had a public offering, despite its growth. U.S. investors are forbidden from investing in Huawei, and American suppliers are prevented from selling computer chips and software to Huawei.

Can ‘a proud Democrat’ reach out to become the ‘Uniter in Chief’?

Reviewed by Doretha Clemon
Fact checked by Michael Logan

“America is an idea …

It instills in every person in this country the belief that no matter where you start in life, there’s nothing you can’t achieve if you work at it.”—Joseph R. Biden, April 25, 2019

Joseph Robinette Biden Jr. became the 46th president of the United States on Jan. 20, 2021. Known to most people as Joe Biden or simply Joe, he is the oldest person ever elected to the White House.

Joe Biden was one of the youngest senators in U.S. history at 30, serving the state of Delaware from 1973 to 2009. He previously ran for president in two failed attempts in 1988 and 2008. Biden served two terms as vice president under Barack Obama, from 2009 until Jan. 20, 2017. Biden previously ran for reelection in the 2024 presidential race. He dropped out on July 21, 2024. His term ended on Jan. 20, 2025, when he was succeeded by Donald Trump.

Key Takeaways

• Joseph R. Biden’s career in national politics began in 1973 in the U.S. Senate.
• Biden won the presidency in 2020, becoming America’s 46th president on Jan. 20, 2021. His term ended on Jan. 20, 2025.
• Biden is widely considered an expert in diplomacy and an influential negotiator.

Early Life and Education

Joseph Robinette Biden Jr. was born on Nov. 20, 1942, to Catherine Eugenia Finnegan Biden and Joseph Robinette Biden Sr. in Scranton, Pennsylvania. His siblings include Valerie, James, and Frank. In 1953, the family moved to Claymont, Delaware, where the Biden children attended school.

Biden enrolled at the University of Delaware in 1961 and graduated with an undergraduate degree in history and political science. He attended Syracuse University and earned his law degree in 1968. Biden worked as an attorney before turning his attention to politics in 1970, when he ran for and won a seat on Delaware’s New Castle County Council. His platform included support for public housing, an area he continued to champion as president.

Biden’s Political Career

U.S. Senator

Biden became the junior U.S. senator from Delaware in 1973 after defeating Republican J. Caleb Boggs, based on a platform that focused on withdrawing from Vietnam, environmental issues, civil rights, mass transit, tax reform, healthcare, and public unhappiness with “politics as usual.” His longevity in the Senate resulted in his membership on the Senate Judiciary Committee from 1981 to 1997, where he served as chair from 1987 to 1995.

He presided over two contentious Supreme Court confirmations, Robert Bork and Clarence Thomas. Biden also wrote and helped pass the Violence Against Women Act. As chair or ranking member of the Senate Foreign Relations Committee for 12 years, Biden helped shape U.S. foreign policy on terrorism, weapons of mass destruction, the Middle East, Southwest Asia, and the end of apartheid.

Vice President

Biden ran for president in 2008 but withdrew after failing to get the support he needed to continue. Barack Obama then asked Biden to be his running mate. The two men won the election, beating John McCain and Sarah Palin.

Biden oversaw the $840 billion economic stimulus package, ran the Middle Class Task Force, and helped to negotiate the START treaty with Russia. Biden also played an advisory role regarding conflicts in Iraq and Afghanistan.

Road to the White House

Two Failed Runs

Joe Biden first ran for the presidency in 1987 and was considered a strong candidate as chair of the Senate Judiciary Committee. The Biden campaign raised more money than any other candidate in the first quarter of 1987. The tide turned as accusations of plagiarism, false claims, and exaggerations grew that he earned three college degrees and graduated in the top half of his law school class. He graduated near the bottom.

On Sept. 23, 1987, Biden withdrew from the race. In his 2008 memoir, “Promises to Keep: On Life and Politics,” Biden wrote, “When I stopped trying to explain to everybody and thought it through, the blame fell totally on me.” Biden attempted a second run in 2008, withdrew due to lack of support, and continued as Obama’s running mate.

A Third Run

Joe Biden declined to run for president during the 2016 election following the death of his eldest son, Beau, who died from brain cancer in 2015. Hillary Clinton won the Democratic primary but lost the election to Donald Trump.

On April 25, 2019, Biden announced his intention to run for president a third time. The announcement focused on what Biden called “a battle for the soul of this nation.” Biden secured enough delegates by June 2020 to grab the nomination. Biden chose then-Senator Kamala Harris (D-Calif.) as his running mate. They would challenge incumbent President Trump and Vice President Mike Pence and win in November 2020.

2020 Presidential Debates

Several issues prevailed during the presidential debates between Biden and President Trump, notably:

• COVID-19: Biden disputed Trump’s handling of the pandemic. Trump defended his administration’s response.
• National Security: Biden argued that a country that interfered in American elections should pay a price. Trump claimed that Biden enriched himself through relationships with Russia and China.
• Crime and Climate Change: Biden acknowledged that his support for laws related to drugs in the past was a mistake. He rejected Trump’s claims that his climate plan was an endorsement of the Green New Deal.
• Healthcare: Biden supported a public option for healthcare but would not back Medicare for All. Trump criticized the Affordable Care Act (ACA), noting that he eliminated the individual mandate set by his predecessor.

The Election

Highlights of the 2020 election include:

• Biden and Trump both brought more voters to the polls.
• Biden received 54% of suburban votes compared to 45% in favor of Clinton in 2016.
• The Biden-Harris team gained votes among men, while Trump’s female voter base increased.
• Trump increased his share of Hispanic voters, but Biden earned more votes among this demographic.

The final tally was 81,268,754 votes for the Biden-Harris ticket. The Trump-Pence team won 74,216,721 votes. The Electoral College total was 306 to 232 in favor of Biden-Harris. On Nov. 7, 2020, Biden detailed a plan that included one of two major stimulus packages and the pandemic.

Trump challenged the election, alleging mass voter fraud. Additional claims by others were made across social media and during protests as votes were counted. On Jan. 6, 2021, a group of Trump supporters interrupted the Electoral College vote when they attacked the U.S. Capitol, protesting the election results and resulting in five deaths.

The Biden Presidency

Below is an overview of key executive actions taken by President Biden within his first 100 days in office. In addition, the administration’s stated priorities are listed, followed by an analysis of the degree to which they were achieved.

Changes to Trump Administration Policies

• Overturning a ban on refugees from certain parts of the world and increasing the 15,000-cap on refugee admissions placed by the Trump administration.
• Revoking policies by the previous administration that eased regulatory requirements.
• Ensuring equal access to LGBTQIA+ refugees seeking asylum.
• Eliminating the process of separating asylum-seeking families at the border and creating a task force reuniting families who were separated.
• Paving the way for a federal minimum wage of $15.

Biden Administration Priorities

• COVID-19 relief package, an infrastructure bill, and a climate-and-health spending bill
• A gun safety bill requiring expanded background checks
• Strengthening the Violence Against Women Act
• Banning assault weapons
• Paid family leave
• Implementing universal prekindergarten
• Expanding affordable housing
• Student loan forgiveness

Success and Failure

Biden strengthened the Violence Against Women Act and added extensive background checks to gun purchases. He did not complete his promises of banning assault weapons, implementing paid family leave, or adding universal pre-K. In 2022, the administration saw inflation rise to record highs, before decreasing across 2023 and 2024.

President Biden achieved some success on expanding affordable housing, with more than 500,000 units built or repaired during his term and 1.7 million new housing units built in 2022 alone.

On Nov. 15, 2021, President Biden signed the Infrastructure Investment and Jobs Act, which allocated $1.2 trillion to fund roads, bridges, water infrastructure, internet, and more. He also extended student loan forbearance because of the pandemic. Federal student loan interest resumed in September 2023, and payments restarted in October 2023.

On June 30, 2023, the U.S. Supreme Court struck down President Biden’s attempt to forgive more than $400 billion in student loan debts. Shortly after, he launched the Saving on a Valuable Education (SAVE) plan. SAVE is an income-driven repayment (IDR) plan that includes the following benefits for borrowers:

• Calculates a monthly payment amount based on income and family size and provides the lowest monthly payments.
• As monthly payments are made, the loan balance does not grow due to unpaid interest.
• The plan eliminates the need for a spouse to co-sign an IDR application.

On July 18, 2024, a federal appeals court blocked the SAVE plan pending the resolution of two court cases involving the plan. The U.S. Department of Education moved borrowers enrolled in SAVE into an interest-free forbearance while the litigation is ongoing.

Biden’s Political Positions

Biden had been characterized as a moderate centrist Democrat. His ideological score his first year in the Senate, according to UCLA’s Voteview, pegged him as more liberal than 70% of his fellow senators and more conservative than 53% of Democrats. His last score in 2009 put him 69% more liberal than the rest of the Senate and more conservative than 50% of Democrats. He once described himself as a liberal on civil rights, older Americans, and healthcare but conservative on abortion and the draft.

The Draft

In an interview in 1974, Biden said, “If you still think I’m a liberal, let me tell you that I support the draft. I’m scared to death of a professional army.” In 2020, he told the Military Officers Association of America, “The United States does not need a larger military, and we don’t need a draft at this time. The all-volunteer force has been a source of strength for decades.”

Abortion

Biden’s position in the 1970s reflected his strong religious beliefs. “But when it comes to issues like abortion, amnesty, and acid,” he said, “I’m about as liberal as your grandmother. I don’t like the Supreme Court’s decision on abortion. I think it went too far.”

His position has since evolved. When elected to the White House, for instance, the Biden Agenda for Women intended to stop state laws violating Roe v. Wade. In 2022, the Supreme Court overturned the ruling of Roe v. Wade and eliminated the constitutional right previously upheld. President Biden issued a third executive order in 2023 to strengthen access to affordable contraception, a critical aspect of reproductive healthcare. 

School Busing

Biden was a leading opponent of busing in the 1970s, a civil rights issue. He supported court-ordered busing but opposed it to remedy the de facto segregation due to housing discrimination elsewhere. Biden supported antibusing legislation and constitutional amendments in 1975, 1976, and 1977.

The Environment

Biden is credited with introducing one of the first climate change bills to Congress in 1986. Though that bill died in the Senate, President Ronald Reagan signed it into law as an amendment to a State Department funding bill in 1987. Following his election, President Biden rejoined the Paris Agreement, supported initiatives such as the Department of Energy’s Better Climate Challenge, and created the first National Climate Task Force to meet the following goals:

• Reduce U.S. greenhouse gas emissions 50%–52% below 2005 levels by 2030
• 100% carbon pollution-free electricity by 2035
• Net-zero emissions economy by 2050

Arms Control

Biden spent much of his early Senate career concentrating on arms control negotiations, meeting with Soviet Foreign Minister Andrei Gromyko in 1979 at the behest of President Jimmy Carter. He and fellow senators were tasked with securing changes to the then-recently signed SALT II treaty, which was replaced with START and then by New START. New START was extended through 2026 early in the Biden presidency; however, in 2023, Russian President Vladimir Putin announced that the country would suspend its participation.

Law and Order

As ranking minority member of the Senate Judiciary Committee in 1980s, Biden supported and helped pass the Comprehensive Crime Control Act, tough-on-crime legislation he would later call some parts of a “big mistake.”

He later helped pass the 1994 Violent Crime Control and Law Enforcement Act, which included the Federal Assault Weapons Ban and the Violence Against Women Act. In a USA Today op-ed in June 2020, Biden said, “While I do not believe federal dollars should go to police departments violating people’s rights or turning to violence as the first resort, I do not support defunding police.”

LGBTQIA+ Rights

In 1993, Biden voted for a provision that effectively banned gays from serving in the armed forces. He followed that up in 1996 by voting for the Defense of Marriage Act, which prohibited the government from recognizing same-sex marriages. That law was deemed unconstitutional by the U.S. Supreme Court in 2015. Biden’s evolution on LGBTQ rights is evident on his 2024 presidential campaign website, which includes “Biden’s Plan to Advance LGBTQ Equality in America and Around the World.”

Personal Life

Joe Biden and Neilia Hunter married in 1966, a year after Biden received his law degree. The couple had three children, Beau, Robert Hunter, and Naomi. The joy of Biden’s Senate victory in 1973 was short-lived when Neilia and their daughter, Naomi, were killed in a car accident weeks after the election. He considered resigning his Senate seat but opted to commute by train between Delaware and Washington each night to be with his sons Beau and Hunter, a practice he followed for the rest of his 36-year Senate career.

In 1977, he married Jill Jacobs. The couple had a daughter, Ashley, in 1980. In 2007, Jill Biden received a doctorate in education. Biden’s eldest son, Beau, died of brain cancer in 2015.

What Did Joe Biden Accomplish as President?

Joe Biden signed several bills during his presidency. These included a $1.9 trillion COVID-19 relief package and a $1.2 trillion infrastructure bill. He also signed a climate and health spending bill into law. In 2022, he signed gun control legislation requiring extensive background checks and strengthened the Violence Against Women Act.

Why Didn’t Joe Biden Run During the 2016 Presidential Election?

Joe Biden opted not to run for the Democratic primary race during the 2016 election cycle. One of the main reasons behind his decision was the death of his eldest son Beau, who died in 2015 of brain cancer.

What Happened to Joe Biden’s Student Loan Forgiveness Program?

The Biden administration attempted to forgive $400 billion in student loans under the Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act). The plan would have forgiven up to $20,000 in debt per borrower, wiping out student loan balances of roughly 20 million student loan borrowers and significantly reducing the amount owed for 23 million others. After six states sued the Biden administration, the U.S. Supreme Court struck down the plan on June 30, 2023.

In August 2023, the Biden administration launched the Saving on a Valuable Education (SAVE) plan, an income-driven repayment option that lowers monthly payments for student loan borrowers. In 2024, two groups of Republican-led states filed lawsuits aimed at blocking SAVE.

On July 18, 2024, a federal appeals court blocked the SAVE plan pending the resolution of two court cases involving the plan. The Department of Education moved borrowers enrolled in SAVE into an interest-free forbearance while the litigation is ongoing.

The Bottom Line

Joseph R. Biden was the 46th president of the United States, taking office on Jan. 20, 2021, and serving until Jan. 20, 2025. He served as a senator from Delaware from 1973 to 2009 and as vice president under Barack Obama from 2009 to 2017.

Biden consistently supported public housing, mass transit, healthcare, and civil rights and was considered an expert in diplomacy and a top negotiator. During his presidency, Biden signed the Infrastructure Investment and Jobs Act, pardoned federal marijuana possession offenders, and gave his support to Ukraine in its effort to repel the Russian invasion of its territory. Biden ran for reelection in the 2024 presidential race but later dropped out.

Connect with available housing and financial resources

Reviewed by Thomas J. Catalano

For an older LGBTQ+ individual, planning for retirement involves more than just ensuring they have enough income to meet their needs and enjoy their lifestyle. Fortunately, there is a growing number of retirement communities and resources that help address the unique needs of LGBTQ+ retirees.

Key Takeaways

• Retirement planning for LGBTQ+ people involves more than just getting their finances in order.
• LGBTQ+ retirees may face challenges, such as a lack of social and family support.
• The number of LGBTQ+ inclusive retirement communities is increasing.

Retirement Planning

The LGBTQ+ rights movement has made tremendous progress since the police raid on the Stonewall Inn sparked days of protests in 1969, and societal attitudes and legal protections continue to evolve. As of 2025, marriage equality and laws help protect LGBTQ+ people where they live and work. Still, many older LGBTQ+ people may feel isolated or lack the support of family members who would typically help with caregiving.

About 80% of older LGBTQ+ people surveyed by AARP expressed concern about having family and social support systems they can rely on as they age. About three-quarters worried about sexual orientation leading to discrimination in purchasing a home.

A history of discrimination in areas as broad as education, employment, and housing has also had a cumulative impact on the financial well-being of many LGBTQ+ people. Poverty rates tend to be higher among members of the LGBTQ+ community, while income levels tend to be lower. In general, earning less means saving less. Same-sex couples have put away less toward retirement, on average, and are less likely to have an estate plan.

Note

Over 50% of middle-income LGBTQ+ respondents say they aren’t confident they will save enough for retirement, according to a survey by the Employee Benefit Research Institute.

Finding Community

According to SAGE, an organization that provides advocacy and resources to LGBTQ+ elders, there will be 7 million LGBTQ+ older adults 65 or older by 2030. Groups like SAGE recognize that finding a welcoming living situation can seem daunting for older LGBTQ+ people, especially if they’ve experienced discrimination in housing or healthcare situations in the past.

Indeed, more than six in 10 respondents to previous AARP surveys have expressed concern about neglect, abuse, or harassment in a long-term care environment. An investigation by the Equal Rights Center found that nearly half of same-sex couples exploring senior housing in 10 states experienced unfavorable treatment in the form of less favorable housing options, costs, and financial incentives.

To meet the needs of the LGTBTQ+ community, SAGE has been developing welcoming living communities that combine affordable housing with community centers. The group also joined with the Human Rights Campaign to create the Long-Term Care Equality Index, an assessment tool to help care facilities provide a welcoming environment for older LGBTQ+ people.

Housing Resources

LGBTQ+ organizations can also help with everything from finding housing and care to advocating on your behalf. The Equality Federation has local advocacy groups in most states, while CenterLink lists LGBTQ+ community centers around the country. SAGE’s National Resource Center on LGBT Aging also tracks legal and financial resources in each state. Individuals are commonly advised to:

• Find out if the facility has anti-discrimination policies and training.
• Look for places that host LGBTQ+ community organizations or events.
• Designate someone as a medical power of attorney, authorizing them to make medical decisions in case of incapacitation.
• Individuals who experience discrimination should wage a complaint to facility staff or management. Additionally, they can file a complaint with the U.S. Department of Housing and Urban Development if in federally supported housing, or with the state or local government.

Warning

Over one-third of U.S. states don’t have explicit laws banning discrimination based on sexual orientation or gender identity.

Prepare Financially

The legal landscape has become significantly friendlier to the LGBTQ+ community, especially for same-sex couples. In 2015, the landmark Supreme Court ruling in Obergefell v. Hodges made same-sex marriage legal across the country.

Married same-sex couples can access all of the federal program benefits other married couples do, such as leveraging their spouse’s work history when claiming Social Security, as well as tax and estate planning advantages. However, for unmarried LGBTQ+ couples, benefits often won’t transfer to surviving partners without some legal and estate planning efforts. Planning for retirement for older LGBTQ+ people can be challenging, so estate planning is important:

• Review important documents such as a will, life insurance policy, and 401(k) to make sure the beneficiaries are included.
• If married, consider ways to maximize newfound benefits, such as a spousal IRA.
• Seek professional advice to develop a plan that meets all unique retirement needs.

Legislation and Government Policy

Another key Supreme Court win for the LGBTQ+ community was Bostock v. Clayton County in 2020, which banned employment discrimination based on sexual orientation and gender identity. In January 2021, President Joe Biden issued an executive order ensuring the protections cover other areas where sex discrimination is outlawed, such as in housing, education, and healthcare.

According to the Human Rights Campaign, several Executive Orders issued by President Trump in January 2025 will affect LGBTQ+ individuals who may need to review new or upcoming restrictions on federal identification documents such as passports. The White House has confirmed that it intends to honor unexpired passports that reflect a person’s gender identity but will not renew or issue new passports that reflect anything other than assigned sex at birth. 

For those in the military planning to retire, President Trump is reinstating and expanding the military ban on transgender service members. Additionally, proposed cuts to the federal workforce in 2025 could impact 314,000 LGBTQ+ employees according to the Williams Institute.

SAGE, an organization that advocates for older LGBTQ+ people, launched SAGECents, a digital platform that provides financial information and tools as a resource.

Can an Unmarried Individual Receive Their Partner’s Retirement Benefits?

Unmarried partners don’t receive Social Security spousal benefits. In addition, non-spousal beneficiaries are given less favorable tax treatment than spouses when they inherit an IRA or 401(k).

What Is a Retirement Community?

Retirement communities are designed for people in their mid-50s and older. They are often also called independent living communities. They commonly offer amenities such as a pool or on-site dining. Housing in a retirement community might include single-family homes, apartments, or both.

How Does Discrimination Impact the Financial Wellbeing of LGBTQ+ People?

Discrimination can lead to fewer job opportunities and lower wages. As a result, many older LGBTQ+ adults lag behind their heterosexual counterparts when it comes to saving for retirement. When you earn less, you save less. If you get a late start, saving enough for a comfortable retirement becomes even more difficult.

The Bottom Line

Older LGBTQ+ individuals may face challenges as they retire. Knowing their rights and seeking out LGBTQ+-friendly resources and retirement communities are among the ways to overcome some of the obstacles the community faces.

The big economic issues of the 2020 U.S. presidential election

Reviewed by Michael J Boyle
Fact checked by Jiwon Ma

The Associated Press called the presidential election for Joe Biden on Nov. 7, 2020. He became the official president-elect when the Electoral College’s vote was certified by Congress on Jan. 7, 2021 and he was sworn in as the 46th president of the United States on Jan. 20, 2021.

Georgians went to the polls to vote in two runoff elections for their state’s U.S. senators on Jan. 5, 2021. The election was of special importance because it determined who gained control of the Senate. Both Democratic candidates, Jon Ossoff and Raphael Warnock, won their races, handing control of the U.S. Senate to the Democratic Party.

Key Takeaways

• Joe Biden became the president-elect when the Electoral College’s vote was certified by Congress on Jan. 7, 2021. He was sworn in as the 46th president of the United States on Jan. 20, 2021.
• The COVID-19 crisis was ongoing when Biden became president and it was the core focus of the election and his administration.
• One of the key issues for voters in the election was the student loan debt crisis.
• Biden also proposed increasing taxes on the wealthy and corporations.
• Other key issues of the 2020 election included healthcare, climate change, trade, and housing.

Economics 

The COVID-19 crisis shook the U.S. economy to its core, making the role of government in the economy front and center. Exactly how much responsibility the U.S. government had to help Americans hurt by the pandemic was a huge bone of contention in creating the stimulus and relief packages, as well as whom to prioritize.

Stimulus Debate

Congressional Republicans largely pushed for more aid for businesses, believing that shoring them up would help people by broadly strengthening the economy and protecting jobs. Congressional Democrats pushed for more individual aid such as increased unemployment benefits to ensure that families could afford day-to-day necessities and that consumer spending stayed strong.

Another major economic issue at play was the role and purpose of the Federal Reserve. The Fed introduced a large number of monetary stimulus measures to try to prevent the COVID-19 crisis from causing a liquidity crisis.

There was one empty space on the Federal Reserve Board. President Donald Trump had attempted to appoint his nominee, Judy Shelton, to fill it before Biden took office. Shelton believed in returning to the gold standard and opposed the Federal Deposit Insurance Corporation (FDIC). Both positions are far outside the bounds of conventional monetary policy. Biden withdrew Shelton’s nomination after taking office.

Student Debt

Student loan debt was one of the most critical issues facing U.S. voters in 2020. About 45 million people carried a total of $1.54 trillion in student loan debt in the first quarter. That amount increased to $1.57 trillion by the end of the second quarter of 2023.

Student borrowers were graduating from college with a whopping $30,000 in debt on average which presented a major obstacle to beginning their postgraduate life on sound financial footing.

This debt overhang had major implications for the housing market upon which much of the U.S. economy is based. It was a major reason for lower rates of homeownership among millennials.

Presidential candidates including Senators Elizabeth Warren and Bernie Sanders presented plans for wiping out student loan debt entirely but they failed to gain their party’s nomination.

Important

The total student loan debt owed by Americans in the first quarter of 2020 was $1.54 trillion. That increased to $1.57 trillion by Q2 2023.

Biden was vague on his plans for student loan forgiveness after taking office but he said that canceling student loan debt does “figure in [his] plan.” Biden announced broad student loan forgiveness in August 2022.

The plan called for student loan debt cancellation of up to $20,000 for Pell Grant recipients and $10,000 for non-Pell Grant recipients. Individuals had to earn less than $125,000 or $250,000 for couples to qualify.

Federal courts blocked Biden’s plan to extend debt relief to student loan borrowers on Nov. 11, 2022. The Department of Education announced that it would work to overturn the block but stopped accepting new applications from those who were looking for relief. Applications that were already submitted were put on hold.

The Supreme Court ruled on June 30, 2023 that the Biden administration lacked the authority to cancel up to $20,000 in federal student debt per borrower. The administration announced on July 14, 2023 that it was canceling $39 billion in student debt, a move that impacted 800,000 borrowers. The measures were enacted through the Higher Education Act.

Climate Change

This is one of the most hotly debated topics in American politics and around the world. Democratic candidates released their own climate change policy proposals throughout the campaign after the U.S. pulled out of the Paris Climate Accord. The Biden-Harris administration proposed a $1.7 trillion green energy plan over the next four years and pledged to rejoin the Paris Accord.

Trade

The U.S.-China trade war dominated headlines during the first Trump administration. Trump pulled out of several trade deals in his first two years as president. He introduced a trade deal with Canada and Mexico and levied hundreds of billions of dollars in tariffs on Chinese companies.

The year 2020 started with trade tensions cooling off as President Trump worked to finalize the United States-Mexico-Canada Agreement (USMCA) trade pact and seemed to have set Phase 1 of his China trade deal in place.

Trump threatened to place tariffs on Mexico in the lead-up to the USMCA but he backed down after a public outcry. He briefly levied tariffs on Canadian aluminum after the USMCA was finalized but he backed down when the Canadians threatened retaliatory tariffs. The North American trade situation largely cooled down.

Trump then demanded that Chinese firm Bytedance, owner of the TikTok app, must sell its U.S. operations. He also banned the sale of electronic components to Chinese telecom firm Huawei, threatened to delist Chinese companies from U.S. stock exchanges, and banned U.S. investors from investing in companies that he claimed had too many ties to the Chinese military.

Housing

The eviction moratorium and unemployment expansion provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act lapsed in late July 2020. President Trump ordered the Department of the Treasury, the Department of Housing and Urban Development, and the Federal Housing Financing Agency (FHFA) which oversees Fannie Mae and Freddie Mac to find ways to provide assistance to renters and homeowners to prevent eviction or foreclosure.

These instructions didn’t suggest any specific methods or remedies, however, nor did they yet produce any concrete policies.

The problem was so great and the remedies were so scarce that the Centers for Disease Control and Prevention (CDC) had to take the unprecedented step of using its authority to issue an eviction moratorium to stop the crowding and spread of COVID-19 that evictions would cause.

Housing was likely to be a significant issue during the election even in the absence of the coming eviction crisis considering that more than 50% of households in America pay more than 30% of their income on housing. This is the standard definition of affordability.

Presidential candidate Biden proposed a refundable, advanceable tax credit of up to $15,000 to help first-time homebuyers and to fully fund the Section 8 voucher program so the program could serve more than 25% of the eligible households it served.

Biden also proposed reinstating the Affirmatively Furthering Fair Housing rule which required “communities receiving certain federal funding to proactively examine housing patterns and identify and address policies that have a discriminatory effect.” That rule was meant to redress the long-lasting impact of discriminatory practices such as redlining that excluded people of color from purchasing houses in many suburbs throughout the 20th century.

Healthcare

The U.S. spent far more per person than other countries on healthcare in 2020 while having lower life expectancy and rates of infant mortality that were higher than most other rich countries. No one could agree on what would fix our system, however. President Trump and congressional Republicans proposed the American Health Care Act (AHCA) in 2017 during his first term but it failed to pass.

Biden was looking to expand on the Affordable Care Act (ACA) that passed when he was vice president.

The results of vaccine testing began emerging after the election. Pfizer Inc. and BioNTech announced on Nov. 9, 2020 that a vaccine that they were jointly developing not only worked but was 90% effective. That effectiveness was significantly more than expected. Moderna followed up with early results from its trials that found its vaccine was roughly 95% effective and could be stored at higher temperatures.

The struggle remained to manufacture and distribute the enormous number of these vaccines across the nation and around the world. They both required some level of cold storage.

Investing

The stock market returned to record highs while the U.S. economy was still deep in recession and the gap between the stock market and the rest of the economy was as wide or wider than ever. Only 61% of Americans owned stocks so that gap also increased wealth and income inequality that was also at near-record levels.

When Securities and Exchange Commission (SEC) Chairman Jay Clayton announced that he was stepping down at the end of 2020, this allowed President Biden to begin picking a replacement early. Biden nominated Gary Gensler to take over.

Taxes

One of the largest if not the largest pieces of legislation passed under President Trump during his first term was the 2017 Tax Cuts and Jobs Act (TCJA). The legislation consisted of a large, permanent tax cut for corporations and temporary cuts to individual taxes that threaten to expire at the end of 2025.

The provisions cut individual taxes largely for higher-income Americans but they also introduced some level of tax cuts across the board. Investors were a big winner because most of the corporate money repatriated under the law went to share repurchases and dividends rather than to wage increases or investments. This mirrored the effects of the repatriation holiday in 2004.

President Biden proposed a tax plan during his candidacy that would raise taxes for wealthy Americans and tax long-term capital gains at the same rate as normal income. This went completely in the opposite direction from Trump’s tax plan.

President Trump resisted releasing his tax returns to the public during his first term, breaking with a presidential tradition dating back to the 1970s. The New York Times published information from his tax returns beginning on Sept. 27, 2020.

Tech

The five tech titans, Apple, Amazon, Meta (Facebook), Microsoft, and Alphabet, made over 20% of the Standard & Poor’s (S&P) 500’s market capitalization. The outsized role that these companies had in our country would go on to become an issue for President Biden.

President Trump long railed against large tech companies for what he perceived as a bias against conservatives. These allegations had an effect when it was revealed that Facebook stopped enforcing its anti-fake news policies versus conservative outlets.

That’s not to say that these tech giants hadn’t come under attack from Democrats. Many Democratic politicians attacked these companies for their sale of users’ data and use of corporate inversions to avoid paying taxes. Politicians from both sides of the aisle accused many of these companies of being monopolies and proposed that they be broken up like Standard Oil Trust of old.

Remember that years are company fiscal years.

This idea was reinforced by an investigation by the Federal Trade Commission (FTC) into all five of these companies and Microsoft, looking into whether their acquisition strategies were anti-competitive.

The Department of Justice (DOJ) filed an antitrust suit against Google on Oct. 20, 2020 over exclusivity deals that Google had made with smartphone manufacturers.

President Biden made one specific statement about big tech. He said that he wanted to revoke Section 230 of the Communications Decency Act. This provision stops internet platforms from being sued for what people post on their platforms. Biden argued that this allows companies like Facebook to casually profit from allowing the spread of dangerous misinformation with no repercussions.

Why Is It Important to Vote?

It is important to vote because the citizens of a nation are participating in the overall democratic process and how the nation moves forward and changes. Citizens vote to elect leaders that represent their ideas, goals, and the changes they wish to see.

What Are Some of the Main Issues That Face American Elections?

Some of the issues that face American elections include income inequality, abortion rights, racial inequality, education, student debt, healthcare, and taxation.

Does the Economy Influence Presidential Elections?

Economic sentiment is one of several factors that can influence electoral decisions. Voters often hold incumbent presidents responsible for the state of the economy.

The Bottom Line

The 2020 election was unlike many others before. The country was battling the COVID-19 pandemic and many Americans were suffering from the fallout. Much of the election focused on how to handle the pandemic and improve upon what President Trump had done in his first term.

Other key issues for voters included the student loan debt crisis, income inequality, the tax code, healthcare, and housing.

Reviewed by Samantha Silberstein

While many are familiar with buying stocks in hopes of profiting, the strategies for benefiting from price declines are often less understood. Two powerful tools in the bearish (pessimistic) investor’s arsenal are short selling and put options. These techniques, both aimed at capitalizing on downward price moves, are based on fundamentally different principles and carry distinct risk profiles.

Short selling, a practice dating back to the 17th century, involves borrowing shares and then selling them immediately, wagering on a price drop. Put options, a more recent financial invention, give investors the right to sell at a preset price within a specific time frame.

Below, we examine the mechanics, advantages, and risks of short selling and put options. We’ll explore how these strategies work, when and why investors might choose one over the other, and the pitfalls to avoid.

Key Takeaways

• Both short selling and buying put options are bearish strategies that become more profitable as the market drops.
• Short selling involves the sale of a security not owned by the seller but borrowed and then sold in the market, to be repurchased later, with the potential for large losses if the asset increases in price.
• Buying a put option gives the buyer the right to sell the underlying asset at a price stated in the option. The maximum loss is the premium paid for the option.
• Both short sales and put options have risk-reward profiles that may not make them suitable for novice investors.

Short Selling

Short selling is a bearish strategy that involves selling a security you don’t own, borrowing it, and hoping to reap profits by buying it at a lower price later. A trader will undertake a short sell if they believe a stock, commodity, currency, or other asset or class will take a significant move downward in the future. While often the subject of public scorn—you seem to be betting on companies to fail—in a broad sense, borrowing something to sell it later at a profit isn’t far from taking out a mortgage hoping to sell a home for more some years later.

Short sales can be used either for speculation or as an indirect way of hedging long exposure. For example, if you have a concentrated long position in large-cap technology stocks, you could short the Nasdaq-100 exchange-traded fund (ETF) to balance that.

The seller now has a short position in the security—as opposed to a long position, where the investor owns the security. If the stock declines as expected, the short seller will repurchase it at a lower price in the market and pocket the difference, which is the profit on the short sale.

Because of its many risks, short selling should only be done by experienced traders. 

Short selling is far riskier than buying puts. With short sales, the reward is potentially limited—since the most that the stock can decline to is zero—while the risk is theoretically unlimited, because the stock’s value can just keep climbing. Despite the hazards, short selling is a valuable strategy during broad bear markets since stocks decline faster than they increase In addition, shorting carries slightly less risk when the security shorted is an index or ETF since the risk of runaway gains in the entire index is much lower than for an individual stock.

It’s also more expensive than buying puts because of the margin requirements. Margin trading uses borrowed money from the broker to finance buying an asset. Because of the risks involved, not all trading accounts can trade on margin. Your broker will require you to have the funds in your account to cover your shorts. As the price of the shorted asset climbs, the broker will also increase the value of the margin the trader holds. 

For experienced investors, choosing between a short sale and puts to execute a bearish strategy depends on investment knowledge, risk tolerance, cash available, and whether the trade is for speculation or hedging.

Put Options

Put options offer an alternative. When traders buy a put option, they buy the right to sell the underlying asset at the price stated in the option. The trader is not obligated to buy the asset secured by the contract.

The option must be exercised within the time frame specified by the put contract. If the stock declines below the put strike price, the put’s value will go up. However, if the stock remains above the strike price, the put will expire worthless, and the trader won’t need to buy the asset.

While there are some similarities between short selling and buying put options, they have different risk-reward profiles that make both unsuitable for novice investors. That said, buying puts is much better suited for the average investor than short selling because of the limited risk. Understanding their risks and benefits is essential to learning about scenarios where these two strategies can maximize profits.

Put options can be used either for speculation or for hedging long exposure. Puts can directly hedge risk. For example, if you were concerned about a possible decline in the technology sector, you could buy puts on the technology stocks held in your portfolio.

Buying put options also has risks, but not as potentially harmful as shorts. With a put, the most you can lose is the premium you have paid for buying the option, while the potential profit is high.

Puts are particularly well suited for hedging the risk of declines in a portfolio or stock since the worst that can happen is that the put premium—the price paid for the option—is lost. A loss would come if the anticipated decline in the underlying asset price didn’t materialize. However, even here, the rise in the stock or portfolio may offset part or all the put premium paid.

Also, a put buyer doesn’t have to fund a margin account—although a put writer has to supply margin—meaning that one can initiate a put position even with limited capital. However, since time is not on the side of the put buyer, the risk here is that the investor may lose all the money invested in buying puts if the trade doesn’t work out.

Implied volatility is a significant consideration when buying options. Buying puts on highly volatile stocks may mean paying exorbitant premiums. Traders must ensure the cost of buying such protection is justified by the risk to the portfolio holding or long position.

Short Selling and Put Options Are Not Always Bearish

Short sales and puts are essentially bearish strategies. But just as in mathematics, where the negative of a negative is a positive, short sales and puts can also be used for bullish exposure.

For example, suppose you are bullish (positive) about the S&P 500. Instead of buying shares of the S&P 500 ETF Trust (SPY), you initiate a short sale of an ETF with a bearish bias on the index, such as the inverse ProShares Short S&P 500 ETF (SH) that moves in the opposite direction of the index. Thus, if you have a short position on the bearish ETF and the S&P 500 gains 1%, your short position should gain 1% as well. However, this is not a long-term strategy.

While puts are generally associated with price declines, you can do a short position in a put—known as “writing” a put—if you are neutral to bullish on a stock. The most common reasons to write a put are to earn premium income and to acquire the stock at a price lower than its present one.

For example, let’s assume XYZ stock trades at $35. You think this price is overvalued, but you would be interested in acquiring it for a buck or two less. One way to do so is to write $35 puts on the stock that expire in two months and receive $1.50 per share in premium for writing the put.

If the stock doesn’t decline below $35 in two months, the put options expire worthless, and the $1.50 premium is your profit. Should the stock move below $35, it would be “assigned” to you—meaning you are obligated to buy it at $35, no matter the present trading price. Thus, your effective stock is $33.50 ($35 – $1.50). Of course, the mathematics of this ignores trading commissions and other fees you would need to account for in any strategy you use.

Short Sale vs. Put Options Example

Let’s use Tesla (TSLA) as an example to illustrate the relative advantages and drawbacks of using short sales versus puts.

Tesla has plenty of supporters who believe the company still has much farther to climb as the world switches to electric vehicles. But it also has its detractors who have questioned whether the company’s market capitalization of over $662 billion—as of August 2024—is justified. Of course, the events of 2020 are still seared in the brains of short sellers who remember the $40 billion those betting against TSLA’s rising price lost that year.

Nevertheless, 2020 was years and a pandemic ago, and we’ll assume for the sake of argument that our trader is still bearish on Tesla and expects it to decline significantly by the end of the year. Here’s how the short-selling versus put-buying alternatives stack up:

Sell Short TSLA Shares

• Assume 100 shares sold short at $220
• Margin required to be deposited (50% of total sale amount) = $11,000
• Maximum theoretical profit—assuming TSLA falls to $0—is $220 x 100 = $22,000
• Maximum theoretical loss = Unlimited

1. Scenario 1: Stock declines to $100 by the end of the year, giving a potential $12,000 profit on the short position ($120 x 100 shares).
2. Scenario 2: Stock is unchanged at $220 at year’s end, with $0 profit or loss.
3. Scenario 3: Stock rises to $500 by year’s end, creating a $28,000 loss ($280 x 100).

Buy Put Options on TSLA

Now instead assume buying one put contract (representing 100 shares) expiring at the end of the year with a 220 strike and a premium of $25.

• The margin required is none.
• Cost of put contract = $25 x 100 = $2,500
• Maximum theoretical profit: Assuming TSLA falls to $0 is $220 x 100, less the cost of the put = $22,000 – $2,500 = $19,500
• The maximum possible loss is the cost of the put contract: $2,500.

1. Scenario 1: Stock declines to $100 by December, there is a $12,000 nominal gain in the option as it expires with $120 in intrinsic value from its strike price (220- 100), worth $12,000 in premium. However, since the option cost $2,500, the net gain is $9,500.
2. Scenario 2: Stock is unchanged; the entire $2,500 is lost.
3. Scenario 3: Stock rises to $500; the entire $2,500 is lost, but no more.

With the short sale, the maximum possible profit of $22,000 would be gained if the stock plummeted to zero. Meanwhile, the maximum loss is potentially infinite should the stock keep rising and rising.

With the put option, the maximum possible profit is cut to $19,500 but the maximum loss is restricted to the price paid for the put.

Note that the above example doesn’t consider the cost of borrowing the stock to short it, as well as the interest payable on the margin account, both of which can be significant. With the put option, there is an upfront cost to buy the puts. However, there are no other ongoing expenses.

In addition, the put options have a finite time to expiry. The short sale can be held open as long as possible, provided the trader can put up more margin if the stock appreciates in value and assuming that the short position is not subject to buy-in because of the large short interest.

Can You Short Sell Options?

Yes, short selling involves the sale of financial instruments, including options, based on the assumption that their price will decline.

Can I Short Sell Put Options?

Yes, a put option allows the contract holder the right, but not the obligation, to sell the underlying asset at a preset price by a specific time. This includes the ability to short sell the put option as well.

What Is Long Put and Short Put?

A long put involves buying a put option when you expect the underlying asset’s price to drop. This play is purely speculative. For instance, if Company A’s stock trades at $55, but you believe the price will decline over the next month, you can make money from your speculation by buying a put option. This means you’re going long on a put on Company A’s stock while the seller is said to be short on the put.

What Is a Short Position in a Put Option?

A short position in a put option is called writing a put. Traders who do so are generally neutral to bullish on a particular stock to earn premium income. They also do this to buy a company’s stock at a price lower than its present market price.

The Bottom Line

Short selling and put options are strategies to profit from a decline in a stock’s price, but they differ significantly in their approach and risk profile. Short selling involves borrowing and then selling shares immediately, hoping to repurchase them at a lower price to return to the lender. This strategy offers potentially significant profits should the stock price fall but also carries unlimited risk if the stock price rises. Short sellers are also responsible for paying dividends and may face margin calls or difficulty finding shares to borrow.

Put options, meanwhile, give the buyer the right to sell a stock at a specific price (strike price) within a set time frame. The investor pays a premium for this right, representing their maximum potential loss. Put options offer high leverage and limited risk, making them attractive for bearish investors or those seeking portfolio protection. However, options expire, and their value decays over time. Despite their risks (higher in short selling), both strategies can be effective in a bear market.

Fact checked by Vikki Velasquez

Dry January is not a recent phenomenon. While social media and the rise of wellness culture have likely contributed to the trend of not drinking during the first month of the year, the Federal Reserve has noticed this pattern for several decades. January habitually has the most-pronounced downturn in alcoholic beverage sales, according to data from the U.S. Federal Reserve.

What began as Dry January appears to have staying power, with more and more people making long-term departures from alcohol consumption. Aside from its cancer-causing, sleep-depriving, ex-texting, hangxiety-inducing properties, alcohol is also a drain on your bank account. Removing booze from your rotation can potentially save you a lot of money. In fact, it was the third most popular reason for adults participating in Dry January this year, according to a new report from Morning Consult. But just how much money could you save by cutting out alcohol?

Key Takeaways

• While it gained traction through social media and wellness culture, the Federal Reserve has observed a consistent dip in alcohol sales every January, showing this trend has been around for decades.
• Going dry can save you anywhere from $50 to a few hundred dollars in just one month, depending on your habits and the cost of living in your area.
• Being intentional with your savings can be more motivation to stay dry. Track how much you save and put it into a separate account as a visual reminder.

How Much Can You Save?

In 2021, the most recent year in which data is available, Americans of drinking age consumed an average of 2.51 gallons of ethanol, equivalent to 535.5 standard drinks per year, according to the National Institute on Alcohol Abuse and Alcoholism.

The average price of an alcoholic beverage in the U.S. is about $1.81, according to the Fed; 535.5 of these would run you about $969.25. And that’s assuming you’re not doing the bulk of your drinking in bars and restaurants, where a drink will cost you considerably more than average.

Note

Everyone is different—for some, going dry may only mean skipping that bottle of wine with dinner every few weeks, freeing up some $50 per month. However, for more regular, social drinkers, even a month off can save you upwards of $300. 

There’s also a secondary layer of saving opportunity from the trickle-down spending moments that drinking often yields: rideshares and food orders. You may notice that you’re saving more than you expected by missing the ancillary expenses that come along with partying. 

Tracking—and Utilizing—Your Savings

Following your baseline spending on alcohol is the best way to figure out how much you’ll save while going dry. Some budgeting apps separate food and drink purchases for you; otherwise, a quick search of your favorite haunts in your banking app should yield a solid tally of your monthly alcohol expenditures. Don’t forget to factor in your Ubers and DoorDashes! 

Once you’ve identified how much you can expect to save in a month, you should think of a great way to use it. Perhaps you treat yourself to a nice dinner or pad your emergency savings account a bit more. You could also make an effort to put an equivalent amount into a high-yield savings account or retirement savings account. 

The Bottom Line

Alongside many physical and emotional perks, there are some very enticing financial benefits to cutting out alcohol. Depending on your habits, going dry can save you several hundred dollars over a few weeks. It’s an investment in yourself in many ways. 

Schwab CDs are worth considering if you want a new home for your money

Fact checked by Michael Rosenston
Reviewed by Samantha Silberstein

Schwab’s brokered CDs come with flexible terms and generous rates of up to 4.60%, making them a suitable option for many depositors. Brokered CDs differ slightly from bank CDs, but they offer both the benefits of FDIC insurance and (typically) higher-than-average rates. Learn more about Schwab CD rates as well as how they compare to other CDs with high interest rates.

Compare Charles Schwab CD Rates

Schwab CDs often have attractive rates, but brokered CDs aren’t for everyone, and it always pays to shop around. Explore more high-yield accounts below before making a decision.

Charles Schwab CDs: Key Features

Schwab CDs are brokered CDs, not bank CDs. Brokered CDs are similar to bank CDs, but they’re purchased through an intermediary (Schwab, in this case) instead of directly from the bank. Buying brokered CDs allows you to invest in CDs from several banks, instead of just one, and you’ll get FDIC insurance up to $250,000 from each bank.

Brokered CDs are generally more flexible than bank CDs, with wider term ranges. They can also be sold on the secondary CD market, which gives investors a way to get their money back (or at least some money back) without paying a withdrawal penalty.

Minimum deposits for brokered CDs may be higher than what you’d see with certain bank CDs. If you have a small sum of money to deposit, shopping around for CDs with a low minimum deposit requirement is a good strategy.

Pros and Cons of Charles Schwab CDs

Pros

• High APYs on short terms

• Access to higher FDIC insurance coverage limits

• No early withdrawal penalty

Cons

• Selling before maturity could result in a loss

• Long-term CDs not always available

• Minimum deposit is higher compared to some bank CDs

Pros Explained

• High APYs on short terms: Many banks and credit unions offer higher rates on longer CD terms, and Charles Schwab’s brokered CDs are no exception. However, Charles Schwab CD rates are often high even on the broker’s shortest terms, which can be helpful if you can’t afford to lock in funds for a year or longer.
• Access to higher FDIC insurance coverage limits: Schwab offers brokered CDs from multiple banks, so if you have more than $250,000 to save, you can buy multiple CDs and take advantage of a separate FDIC coverage limit for each account.
• No early withdrawal penalty: Brokered CDs can be sold on the secondary market before they mature, and there’s no early withdrawal penalty.

Cons Explained

• Selling before maturity could result in a loss: While there’s no penalty for selling your brokered CD before it matures, the price you’ll get depends on market conditions, and you may not get your original investment back.
• Long-term CDs not always available: Schwab doesn’t always offer long CDs. If you want to lock in a high APY for several years, you’ll need to look elsewhere. See our picks for the best 2-year CDs, 3-year CDs, and 5-year CDs.
• Minimum deposit is higher than some bank CDs: Schwab’s $1,000 minimum for CDs is lower than what some firms require, but it may still be too high for many. Some banks and credit unions, like Capital One, often offer CDs with no minimum deposit requirement.

How to Open a Charles Schwab CD

1. Open an eligible account: To open a Schwab CD, you first need to open a Schwab account, such as an individual brokerage, joint brokerage, Roth IRA, Traditional IRA, or Rollover IRA account. 
2. Enter your details: Enter your Social Security number or taxpayer identification number, your employer’s name and mailing address, your email address, and your mobile phone number. 
3. Fund your account: Schwab requires you to deposit at least $1,000 to open a CD. You can link your new account to an existing checking or savings account to fund the CD. 
4. Review available CDs: Once your account is open, log in to your online portal. Select the “Trade” button, and select “CDs.” The platform will list the available CDs, including their rates and terms. When you find one that fits your needs, select it and then select the “Buy” button.
5. Place order: Enter how much money you want to invest in the CD, which must be in multiples of $1,000, and select the “Place order” button.

Other Schwab Savings Options

While it’s best known for its investment products and services, Charles Schwab also offers banking products like savings accounts, checking accounts, and loans.

Schwab’s brokered CDs come with some impressive rates, making them worth considering if you have an existing account or want to create a new one. Schwab investors can also purchase shares of stock, ETFs, mutual funds, index funds, bonds, and cryptocurrency through their investment accounts.

You can deposit money in a bank CD directly with an online bank, local bank, or credit union. Brokered CDs aren’t available through these channels. Instead, you can invest in a brokered CD through an investment account at a brokerage.

About Charles Schwab

Charles Schwab is a savings and loan holding company. Through its subsidiaries, it also offers wealth management and financial advisory services. As of the end of 2023, Schwab had nearly 35 million client brokerage accounts and nearly 2 million banking accounts.

The company is based in Texas, and it operates over 400 branches and operation centers throughout the country. It also has over 1,200 financial consultants to assist customers.

Schwab is known for its satisfaction guarantee. If you’re unhappy with your investment experience with Schwab, it will refund any eligible fees or commissions related to the issues you experienced.

Overall, Schwab has a strong reputation in the industry. It was established in 1971 and is a leading investment firm in the U.S. Account holders benefit from 24/7 customer service via live chat and accessible phone support. If you’re looking for the convenience of all-in-one banking and investing, Schwab may provide exactly what you need.

Alternatives to Charles Schwab CDs

A brokered CD from Charles Schwab may or may not be a good fit for you. Here are some alternatives to consider.

• Other CDs: Some banks offer CDs with longer terms than Schwab CDs or with no minimum deposit requirement. See the best CD rates available today to explore your other CD options.
• High-yield savings: The interest rates with savings accounts usually aren’t as high as CDs, and they can change at any time. But savings accounts offer more liquidity. Consider the top high-yield savings accounts for more returns.
• Money market accounts: Like with savings accounts, money market accounts may offer lower rates but you will have easier access to your funds.
• I bonds: If your goal of saving money is to make up for inflation, I Bonds offered by the U.S. government are specifically designed to accomplish that objective. However, current rates may be better or worse than CD rates. 
• U.S. Treasuries: U.S. Treasury bills, known as T-bills, are often considered to be risk-free because they’re fully backed by the U.S. government. Terms are for one year or less.

Warning

I Bonds don’t allow withdrawals within the first 12 months, even with a penalty.

Schwab CDs vs. Edward Jones CDs

Both Charles Schwab and Edward Jones offer brokered CDs, which are investments purchased through a securities account. You don’t earn interest until the settlement date of the trade.

Schwab may have higher rates than Edward Jones for some terms, but it has fewer CD term options. The maximum term for Schwab is 24 months, while Edward Jones has CDs with terms as long as 60 months.

Frequently Asked Questions (FAQs)

Does Charles Schwab Offer CD Accounts?

Yes, Schwab offers brokered CDs to its customers. You can open a CD with a minimum of $1,000 (or higher amounts in increments of $1,000) and choose a term from 3 to 24 months.

Are Schwab CDs Brokered?

Yes, Schwab CDs are brokered CDs. At the time of publication, the company did not offer bank CDs. You can invest in brokered CDs from multiple banks through Schwab, and sell them on the secondary market if you decide not to wait for them to mature.

Can You Withdraw Your Money Early From a Schwab CD Account?

It’s possible to withdraw your money early from a Schwab CD account, but doing so may result in a loss. If you’d like to withdraw your funds ahead of maturity, Schwab will sell your brokered CDs at the current market rate (which includes a transaction fee). If the current market rate is lower than your initial rate, you will likely take a loss. But if the current market rate is higher, it may result in a gain.

What Is the Minimum Deposit for a Schwab CD Account?

The minimum deposit for a Schwab CD account is $1,000. Schwab doesn’t mention a maximum deposit, though its brokered CDs are insured up to $250,000 per bank by the FDIC, which is important to keep in mind when you invest.

Are Schwab CDs FDIC-Insured?

Yes, Schwab CDs have FDIC insurance. Its brokered CDs are insured up to $250,000 per bank, which means if you get CDs from multiple banks, each bank will offer its own insurance. If you have more than $250,000 to deposit, splitting up your money this way—by getting multiple brokered CDs through a single brokerage—can be simpler and easier than opening accounts at multiple banks.

Does Schwab Charge Fees on CDs?

When buying a new-issue CD, selling concessions are included in the offering price. If you decide to sell your CD on the secondary market before it matures, there’s a transaction fee of $1 per bond, with a $10 minimum and a $250 maximum.

Why Does My Schwab CD Show a Loss?

Brokered CDs, such as Schwab offers, can be resold through the brokerage on the secondary market. If you want to sell your CD before it reaches its maturity date, the available price may be lower than the original price, causing you to lose money.

Are Schwab CDs Callable?

Some Schwab CDs are callable, meaning the CD issuer can redeem or “call” in the CD before its maturity date. The issuer may call the CD early if interest rates drop and it would be advantageous for the issuer to end the CD.

Your Guide to CDs

• What Is a Certificate of Deposit (CD)?
• What Is a Brokered CD?
• What Is a CD Ladder?
• Pros and Cons of CDs
• How to Invest With CDs
• How to Open a CD
• How to Close a CD
• CDs vs. Annuities
• CDs vs. Stocks
• CDs vs. Mutual Funds
• CDs vs. ETFs
• CDs vs. Savings Accounts
• Short-Term vs. Long-Term CDs
• CD Rates News
• Best 1-Year CD Rates
• Best 18-Month CDs
• Best Jumbo CD Rates
• Best 6-Month CD Rates
• Best 3-Month CD Rates
• Best Bank CD Rates

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