How To Make Money Even With No Job

How to Make Money Even With No Job

If you currently don’t have a job, finding ways to make money is likely at the top of your to-do list. The good news is that there are numerous ways to earn income when you aren’t working a steady gig. Some opportunities require Wifi and a laptop or smartphone; others require little more than your physical presence — and some require that you have a little money that you’d like to multiply into more.

Keep reading even if you have a job, because starting a side hustle can be a great option for making money from home.

How to “Make Money With Money” With No Job

What does it mean to make money with money? In simple terms, it means finding ways to make the money that you already have work for you, without necessarily getting a traditional first or second job.

Learning how to make money with money often involves various ways to earn passive income. Passive income is money that you earn with little to no work involved. That doesn’t mean you don’t do any work at all: Some degree of work is required in the beginning to create passive income streams before you can start making money on autopilot. It’s a good idea to use a free budget app to track how much you spend to set up your income stream and to track the money you make.

If that sounds good to you, then you might consider these passive income ideas.

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Earn Cash Back

When you download cash-back apps, you can link your debit card or credit cards, then earn back a percentage of what you spend at partner retailers.

There are several different cash-back apps to choose from, and they all pay different cash-back reward rates. Some of the apps you might consider for online shopping, grocery shopping, or travel include:

•   Rakuten

•   Ibotta

•   Dosh

•   Mr. Rebates

You can sign up for one or multiple apps to maximize your cash-back earnings potential.

Invest in Real Estate

Real estate can be a great investment, especially when there’s uncertainty in the stock market. Of course, you might have enough cash on hand to buy a rental property, but figuring out how to make money with money in real estate doesn’t have to be that complicated. Investing in a real estate investment trust (REIT), for example, offers the benefits of real estate ownership without the hassles of operating a rental property. You can also invest in real estate mutual funds or exchange-traded funds (ETFs) to gain exposure to a variety of properties in a single investment.

These investment options might be offered through your online brokerage. You may also consider real estate crowdfunding platforms, which allow you to pool your money along with other investors in a variety of property types. You make money through any of these investments in the form of dividends, which is another type of passive income.

Invest in Dividend Stocks

A dividend represents a share of a company’s profits. Some companies pay out dividends to investors who own shares of their stock as a reward for their loyalty. Dividend investing is something that might appeal to you if you’re specifically interested in passive income or residual income, since you can make a one-time investment, then collect dividends as they’re paid out.

When comparing dividend stocks, it helps to familiarize yourself with how the stock has paid out historically. You’ll also want to consider how often dividends are paid out and what kind of tax liability you’ll incur by receiving dividend payments.

Practice Peer-to-Peer Lending

Peer-to-peer (P2P) loans are funded by money pooled from different investors. Those investors make passive income from the loans by collecting interest from borrowers.

You might consider P2P lending as an investor if you’re looking for another idea on how to make money with no job passively. Keep in mind that with peer-to-peer lending, a higher potential rate of return usually equates to higher risk. If the borrower defaults on the loan you’ve helped fund, you won’t be able to collect any remaining interest.

For that reason, you might want to diversify the types of loans you invest in. You can also balance risk by investing in other things, such as real estate, dividend stocks, or even fine art.

More Ways to Make Money Without A Job

Maybe you don’t have a nest egg to invest up front via a making-money-with-money strategy. Never fear — there are still ways to pull in cash without a conventional 9-to-5 schedule.

Sell Your Plasma

Selling plasma can be an easy way to make extra money without a job or without doing any real work. Plasma donation centers pay healthy people real cash to donate their plasma. Depending on where you donate, you can make $1,000 your first month as a new donor.

Keep in mind that there may be a limit on the number of times you can donate plasma each month. You may also want to read up on potential side effects of donating plasma and how the process works.

Get Cash for Your Clutter

If you have things around the house you no longer need or use, you could sell them to make some quick cash. Some of the places you can sell items you don’t need include:

•   Craigslist

•   Facebook Marketplace

•   Facebook bargain groups

•   eBay

•   Etsy (for vintage items)

•   Consignment stores

You can also try selling items through an app like Mercari or Decluttr (for tech products).

Selling items for cash could generate a steady income if you reinvest the money you make clearing your clutter into a flipping business. Flipping simply means taking things you get for one price, then selling them for a higher price. For example, you might be able to find bargains on clothing or accessories at thrift stores and flea markets, then turn around and flip them on Facebook Marketplace or eBay. You might need to spend a little money to purchase your first items to flip, but this can be another great idea for how to make money with money.

Get Paid to Do Market Research

Companies are always interested in figuring out how to gain a competitive edge. One way they do that is by paying everyday consumers to participate in market research. There are numerous apps and websites that pay you cash to complete surveys, share your opinions, or participate in focus groups. The amount you can make largely depends on which apps or sites you’re signing up for. But this can be an easy way to make money from home using your cellphone or laptop.

Recommended: Does Net Worth Include Home Equity?

Start a Blog

Blogging can help you to generate passive income in a variety of ways. For example, you might earn passive income from advertisements on your site, affiliate marketing, or product sales. You can also make a more active income by writing sponsored posts or offering some type of service, like coaching or consulting.

There is a certain amount of work that goes into setting up a blog and growing various income streams. But it’s entirely possible to make a full-time income from home as a blogger, even if you’re starting with no experience and very little money.

Offer Childcare, Senior Care, and Pet Care

If you want to make money offline, consider babysitting, pet sitting, or dog walking within your social circle or local area. You might also branch out to offer help to seniors who need it. For example, if you don’t mind leaving the house, you can hire yourself out to run errands for elderly people who may not have transportation. Or you may earn extra money by sitting with a senior for a few hours a day while their regular caretaker does the grocery shopping or cleaning.

Rent Out a Room on Airbnb

If you’ve got a spare room, you might have an easy solution for how to make money without a job. You can rent out a spare room or part of your home on Airbnb to create passive income. Or you might take on a regular roommate, which can help to reduce your share of monthly expenses.

You’ll need to register for an account on Airbnb to start hosting guests in your home. Before you do that, however, it’s important to check the zoning laws where you live to determine whether you need any special permits to act as an Airbnb host.

Rent Out Your Car

Have a car that you rarely drive? You can rent it out to people who need a vehicle short-term through a site like Turo. Renting your car for cash is similar to renting out a room on Airbnb, in that you’re effectively sharing your vehicle with someone else. This can be an easy option for making money with your car passively versus driving for Uber or Lyft.

Recommended: What Credit Score Is Needed to Buy a Car?

Become a Tutor

Tutoring is something you might consider if you’re comfortable helping students learn and you want to be able to make money from home. You might offer tutoring services virtually through a site like Tutor.com or from the comfort of your home if you’re helping students locally. Keep in mind that with tutoring websites, you may be required to pass a skills test or show proof of a college degree in order to get approved.

Freelance Online

You might try freelancing to make money without a job if you have some marketable skills. (Freelancing is also a good option if you’re looking for a good job for an introvert.) Some of the ways you can make money as a freelancer include:

•   Proofreading

•   Virtual assistant services

•   Graphic design services

•   Website design

•   Freelance writing or editing

If you’re not sure where to get started with making money as a freelancer, you might try a site like Fiverr. With Fiverr, you can list your freelance skills and services, along with your preferred rate. Potential clients can browse freelancer profiles and if yours is a good fit, hire you for their project.

Sell Photography

Selling photography online is another way to make money from home. You’ll need a good camera (or smartphone camera) to take pictures, and it’s helpful to have good editing software on hand. Once you have some pictures to sell, you can upload them to a site like Shutterstock or Foap.

These sites allow you to license the rights to your photography. When someone purchases a license, you earn royalty income. Once again, this is another good way to make money passively without leaving home.

Sell eBooks or Low-Content Books

Ebooks and low-content books like blank journals or lined notebooks can be an excellent way to create steady income without a lot of ongoing work. You can create an ebook or low-content book, upload to a self-publishing website like Amazon Kindle Direct Publishing (KDP), and collect income each time you sell a copy.

You typically don’t need much to get started with self-publishing, other than a great idea for a book and some graphic design software to create your covers and interiors. When deciding where to sell your finished books, take time to research the fees each platform charges, since they can eat into your earnings.

How to Make the Most of Extra Income

Figuring out how to make money with money or in another way that doesn’t involve having a job can increase your cash flow, sometimes significantly. But it’s important to think about what to do with extra money that you’re earning from a side hustle or passive income ideas.

Some of the best ways to put extra income to work include:

•   Paying down high-interest debt

•   Increasing your savings

•   Investing money in the market, where it can grow through compounding

•   Reinvesting it into new passive income ideas

Those are just a few ways to make the most of supplemental income, versus simply spending all of the extra cash you’re bringing in.

The Takeaway

Earning money while still having the flexibility that comes from not having a conventional job is an attractive prospect. If you’re testing out different ideas for how to make money with money (or make money even when you don’t have capital to invest), there are plenty of passive income ideas worth trying. A budgeting app can help you track your expenses and revenue to find the method that delivers the biggest rewards.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

How can I make money with no job?

Starting a side hustle or online business, or doing gig work, are great ways to make money without a job. It’s possible to make money online or from home doing things like market research, shopping with cash back apps, mystery shopping, or offering freelance services.

How can I make $100 without a job?

The fastest way to make $100 without a job is to sell something. For example, you might sell items around the house that you no longer need, or resell bargain items that you find on Facebook or at flea markets. If you’d like to make $100 a day or $100 a week consistently, then you might consider pet sitting, dog walking, freelancing, or blogging.

How do I live without a job?

Living well without a job starts with creating a realistic budget and understanding how you spend your money. Having savings to rely on can make it easier to live without a job if you expect to be out of work temporarily. You can also work on finding ways to make money without a job, including passive income ideas, or gig work.


About the author

Rebecca Lake

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.



Photo credit: iStock/Natalia Bodrova

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Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.


Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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How Do You Get a Debit Card?

A debit card offers an easy way to make purchases, pay bills, and withdraw cash at automatic teller machines (ATMs). These cards are issued by banks and credit unions and offer a direct link to your checking account. While they look like credit cards, and offer some of the same benefits, they don’t involve accumulating any debt. If you don’t yet have a debit card, here’s information on what they do and how to get one.

Key Points

•   A debit card allows for convenient purchases, bill payments, and ATM withdrawals directly linked to a checking or savings account without incurring debt.

•   To obtain a debit card, opening a checking account is necessary, which typically requires personal information, proof of address, and identification.

•   After account setup, requesting, activating, and setting a PIN for the debit card are essential steps to start using it for transactions.

•   Debit cards offer benefits such as easy access to funds, budget management, secure transactions, and potential rewards programs, enhancing financial management.

•   Awareness of potential fees, such as ATM charges or monthly maintenance fees, is important when using a debit card to avoid unexpected costs.

What Do Debit Cards Do?

A debit card, also known as a bank card, is a physical card that replaces the need to carry cash. You can use a debit card to make purchases both in person or online using the funds in your bank account. Debit cards are typically associated with checking accounts, though some types of savings accounts (such as money market accounts) offer debit cards. You can also use a debit card to withdraw or deposit cash at ATMs.

When you make a transaction using a debit card, the money is immediately deducted (or debited) from your bank account balance. This makes a debit card different from a credit card, which involves borrowing funds from your card issuer to make purchases. With a debit card, you generally can’t spend more than you have in your bank account, and won’t get a bill at the end of the month.

Every debit card has a unique (typically) 16-digit number and expiration date, which are usually on the front of the card. Your card should also have a three-digit debit card security code, or CSC (also sometimes called a CVV or CVC), which you typically need to enter when making debit card purchases online. Your CSC code is different from your personal identification number (PIN), which you usually need to use to complete purchases at the checkout or withdraw cash at ATMs.

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What Do You Need Before You Get a Debit Card?

To get a debit card, you generally need to open a checking account. The application process varies by institution, but you will likely need to provide:

•   Your name, date of birth, and Social Security number

•   Proof of address (such as a lease, mortgage statement, or utility bill)

•   A government-issued photo ID (such as a driver’s license or passport)

•   An initial deposit is required by some, but not all, banks

If you’re applying for a new bank account with a joint owner, they’ll need to provide their personal information and identification as well.

How to Get a New Debit Card

Once your account is open, here are the steps on how to apply for a debit card.

1. Request a Debit Card

If the bank doesn’t automatically issue you a new debit card when you open your account, you may need to request one. The bank will typically mail you your card, which can take anywhere from a few days to two weeks. If you need a card sooner you can request expedited delivery (but there may be a fee).

2. Activate Your Card

Once you receive your debit card, you’ll need to follow the instructions provided to activate it. This usually involves calling a phone number, going online, or visiting an ATM. Whatever method you choose, you will likely need to verify the card number, expiration date, and three-digit security code.

3. Set Your PIN

Either during the activation process or at a later date, you’ll need to set up a PIN, which is a (typically) four-digit numeric code used to verify your identity when making transactions. It acts as a password, ensuring that only you can access your funds. You’ll want to choose a PIN that you’ll remember but others can’t easily guess. If you ever forget your PIN, many banks allow customers to change or reset their debit card PIN via their website or mobile app’s debit help center.

The Benefits of Getting a Debit Card

There are several advantages to having a debit card. If you’re not using a debit card yet, here are some of the benefits you might be missing out on.

•   Convenience: Debit cards allow easy access to funds for everyday transactions and online purchases. You can also link debit cards to mobile wallet apps for quick contactless payments when shopping in stores.

•   No debt: With a debit card, you can generally only spend what you have in your account, avoiding credit card debt and interest.

•   Quick access to cash: When you do need cash for payments, debit cards can be used at ATMs to withdraw money. In addition, some retailers allow you to get cash back at the checkout counter when making a purchase.

•   Safe transactions: Debit card technology mirrors that of traditional credit cards and comes with features like chips, PINs, and other safety measures.

•   Manage spending: Using a debit card for purchases and paying bills makes it easy to track your spending. By logging into your bank’s website or app, you can get an overview of what purchases were made, which can help with budgeting and money management.

•   Rewards programs: Some debit cards offer rewards or cashback on purchases.

•   Bill payments: You can often store your debit card information inside payment accounts for recurring monthly bill payments, which can simplify paying bills.

Debit Card Fees

While a debit card may be furnished by your bank at no charge to you, there are some potential fees to be aware of.

•   ATM fees: ATM fees may apply when you use a machine that’s outside of your bank’s approved network. Your bank may charge you an out-of-network ATM fee and the owner of the ATM may also hit you with a fee.

•   Monthly maintenance fees: Some banks charge a monthly fee for maintaining a checking account. This can often be waived with a minimum balance or direct deposit.

•   Foreign transaction fees: If you use your debit card at an ATM or store outside of the U.S., you may need to pay a foreign transaction fee.

•   Overdraft fees: If you have overdraft coverage and use your debit card to spend more than your account balance, your bank may cover the overage and charge you an overdraft fee.

•   Replacement card fees: Losing your card or needing a replacement might result in a fee.

•   Inactivity fees: Some banks charge a fee if your account remains inactive for a certain period.

Can You Get Denied for a Debit Card?

It’s possible to be denied a checking account and, subsequently, a debit card, if you have a negative banking history. While banks don’t typically report your checking and saving account activity to the consumer credit bureaus, any history of bounced checks, unpaid fees, and involuntary account closures may be accessible through ChexSystems, which is a reporting agency for the banking industry.

If you have negative information in your ChexSystems report, such as involuntary bank account closures, frequent overdrafts, or unpaid negative balances, you may get denied for a new bank account.

You may, however, be able to get a debit card with a second chance checking account. Second chance bank accounts are designed for people who may have had trouble with banking in the past and are trying to get back on track. These accounts may have limited features and benefits compared to traditional checking accounts, but they can be a good stepping stone for rebuilding banking history.

The Takeaway

Debit cards provide a convenient and secure way to manage your finances, offering benefits like eliminating the need to carry cash, secure transactions, and budgeting assistance.

Getting a debit card is a relatively simple process that begins with opening a checking account. You can improve your chances of getting approved for a debit card by maintaining a positive banking history, clearing any outstanding issues with previous banks, and ensuring your identification documents are in order.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 3.80% APY on SoFi Checking and Savings.

FAQ

What things can’t you do with a debit card?

While debit cards are versatile, they come with some limitations. You generally can’t use a debit card for activities that require a hold larger than your available balance, such as renting a car or booking a hotel room. In addition, some online subscriptions and services may only accept credit cards. Also keep in mind that credit cards usually offer greater consumer protections on purchases related to fraud than debit cards.

What things can’t you do without a debit card?

Without a debit card, you may face difficulties accessing cash quickly. In addition, you won’t be able to make cashless in-store purchases using the funds in your checking account. Your only option for digital payment will be a credit card, which entails borrowing funds and, if you don’t pay your balance in full, paying interest.

Is the process of getting a debit card hard?

No, the process of getting a debit card is relatively simple. It involves opening a checking account with a bank or credit union. Depending on the institution, you may be able to open an account online or may need to visit a branch. Once your checking account is open, the bank or credit union will typically issue and mail your debit card to your address, which you then need to activate.

If you have a credit card, do you need a debit card?

While a credit card can cover many of your financial needs, it’s still a good idea to have a debit card. Debit cards provide direct access to your funds without incurring debt, which helps with budgeting and avoiding interest charges. You can use a debit card to withdraw cash from ATMs, make everyday purchases in person and online, and manage your expenses in real time. In addition, some merchants and service providers may prefer or require a debit card.


About the author

Rebecca Lake

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.



Photo credit: iStock/Pekic

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.


*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

SoFi members with Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below).

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Eligible Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Eligible Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Eligible Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Eligible Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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How to Invest in Commodities: Ways to Invest, Pros/Cons

Commodities are the raw materials or basic goods that are used to produce many of the things you use every day. Investing in commodities such as crude oil, soybeans, livestock, and wheat can be an effective way to diversify a portfolio, hedge against inflation, and potentially generate returns.

Key Points

•   Investing in commodities can diversify a portfolio, hedge against inflation, and potentially generate returns.

•   Commodities offer a low correlation to traditional asset classes like stocks and bonds, reducing market volatility impact.

•   Different ways to invest in commodities include physical ownership, commodity mutual funds and ETFs, commodity futures contracts, individual stocks, and hedge funds.

•   Commodities can act as an inflationary hedge, as their prices tend to rise with increases in consumer prices.

•   Investing in commodities carries risks, including price volatility, geopolitical factors, and the feasibility of physical ownership for individual investors.

Why Invest in Commodities?

Commodities are alternative investments that offer a low correlation to traditional asset classes like stocks or bonds. Thus, holding commodities in your portfolio can help minimize the impact of market volatility, as commodities prices are driven largely by supply and demand rather than the mood of the market.

Investing in commodities can also be a strategic play for investors who are hoping to counter the effects of rising inflation. As prices for consumer goods rise, the prices of the underlying commodities used to produce them also tend to rise. Stock prices, by comparison, do not always move in tandem with inflation.

Commodities can also be highly liquid assets, depending on how you’re trading them. Liquidity may be of importance to investors who are focused on generating short-term returns, versus a longer-term buy-and-hold approach.

💡 Quick Tip: While investing directly in alternative assets often requires high minimum amounts, investing in alts assets through a mutual fund or ETF generally involves a low minimum requirement, making them accessible to retail investors.

Alternative investments,
now for the rest of us.

Start trading funds that include commodities, private credit, real estate, venture capital, and more.


5 Ways to Invest in Commodities

If you’re considering investing in commodities, there are several options to choose from. The one that makes the most sense for you will depend on your risk tolerance, time frame for investing, and how much capital you have to invest.

1. Physical/Direct Ownership

Physical ownership of commodities may be impractical for most individual investors as it involves taking ownership of the actual commodity. Purchasing and storing two tons of wheat, or maintaining 1,000 live animals likely isn’t realistic if you don’t have the proper facilities.

On the easier end of the spectrum, precious metal investors may hold gold or silver as bullion, or coins inside a secure bank vault. But even then, holding quantities of specific metals also require storage, insurance; and reselling these commodities comes with liquidity issues.

2. Commodity Mutual Funds and Exchange-Traded Funds (ETFs)

Commodity mutual funds and exchange-traded funds can offer exposure to commodities without requiring you to hold anything physically. There are three broad categories of commodity funds you might invest in:

•   Physically backed funds. These funds maintain direct ownership of commodities, specifically, precious metals. A gold commodity ETF, for example, may hold gold bars at a bank.

•   Futures-based funds. Futures-based commodity ETFs invest in futures contracts. We’ll explain those in more detail shortly, but in general, a future contract is an agreement to buy or sell an asset at a predetermined price on a set date.

•   Commodity company funds. Commodity company funds invest in commodity producers. For example, you might buy shares in an oil ETF that invests in oil and gas companies, oilfield servicers, and pipeline companies.

The main difference between a commodity mutual fund and a commodity ETF is how they’re traded. Mutual fund prices are set at the end of the trading day, while ETFs trade on an exchange just like a stock. Both commodity mutual funds and ETFs charge expense ratios, which represent the cost of owning the fund on an annual basis.

3. Commodity Futures Contracts

Commodity futures contracts are an agreement to buy or sell an underlying asset at a future date. The contract includes the price at which commodities will be bought or sold. Futures are derivative investments, meaning their value is determined by the price of another asset, i.e., the commodities you’re agreeing to trade.

Trading commodity futures contracts can be risky, as outcomes rely largely on investors making correct assumptions about which commodity prices will move. It’s possible to lose money on futures contracts if you’re expecting prices to increase but they decline instead.

4. Individual Stocks

Investing in stocks of commodity companies is another way to gain exposure to this asset class. For example, if you’re interested in adding energy sector assets to your portfolio you might buy shares in companies that produce oil, natural gas, solar technology, and so on.

Purchasing individual stocks can ensure that you’re only owning the companies that you want to, unlike a commodity mutual fund or ETF, which can hold dozens of different investments. However, picking individual stocks can be a bit more time-consuming and it may take more capital to buy shares if you’re choosing high dollar stocks.

5. Hedge Funds

Hedge funds are private investments that pool money to buy and sell assets, similar to a mutual fund. The difference is that hedge funds tend to use high-risk strategies like short-selling and may require a higher minimum investment to buy in or limit access to accredited investors only. Under SEC rules, an accredited investor is someone who:

•   Has $200,000 or more in annual income ($300,000 for married couples) for the previous two years and expects the same level of income going forward

•   Has a net worth exceeding $1 million, not including their primary residence

Financial professionals who hold certain securities licenses also qualify for accredited status.

Hedge funds can potentially offer higher returns than other commodity investments, but the risks are greater as well. If you’re considering private investment in commodities through a hedge fund you may want to talk to a professional about the pros and cons.

💡 Quick Tip: All investments come with some degree of risk — and some are riskier than others. Before investing online, decide on your investment goals and how much risk you want to take.

How Do You Open a Commodities Investing Account?

Opening a commodities trading account is no different from opening any other type of brokerage account. You’ll first need to decide which brokerage you want to trade with, then complete the necessary paperwork and funding requirements to start trading.

Personal Information

When you open a brokerage account, you’ll need to provide some basic details about yourself. That includes your:

•   Name

•   Date of birth

•   Social Security number

•   Email and phone number

•   Mailing address

•   Driver’s license number

•   Annual income

•   Net worth

•   Employment status

•   Investment objectives and risk tolerance

You may also be asked about your experience with investing and your citizenship status. You’ll need to disclose whether you’re employed by a brokerage firm.

All of this information is required to verify your identity, meet FINRA’s suitability requirements, and comply with anti-money laundering regulations. Net worth and income information may also be used to determine whether you meet the standards for an accredited investor.

Minimum Funds

The minimum amount of money you’ll need to invest in commodities through your brokerage can depend on what you’re investing in. If you’re buying individual commodities stocks, then the stock’s share price will determine how much you’ll need based on the number of shares you plan to buy.

With commodity mutual funds minimums are typically determined by the brokerage. So you might need $1,000, $3,000, or $5,000 to get started, depending on what you’re buying. Commodity ETFs sell on a per-share basis, similar to stocks.

Some brokerages offer fractional share trading, which allows you to buy shares of mutual funds, ETFs, or stocks in increments. The minimum investment may be as low as $1, though it’s important to keep in mind that it can take time to build up the commodity portfolio of your portfolio when investing in such small amounts.

Trading futures can be a little trickier as you may need to meet a minimum investment requirement and margin requirements. Margin is a set amount of money you’re required to deposit with the brokerage as a condition of trading futures contracts.

Margin is typically calculated as a percentage of the contract but it can easily run into the thousands of dollars.

Pros and Cons of Investing in Commodities

Investing in commodities has advantages and disadvantages, and it may not be right for every investor. Examining the pros and cons can help you make a more informed decision about whether it’s something you should pursue.

Pros

•   Commodities can help you diversify your portfolio beyond traditional stocks and bonds.

•   Investing in commodities can act as an inflationary hedge since commodity prices usually move in sync with increases in consumer prices.

•   Commodity ETFs and mutual funds offer a lower barrier to entry versus direct investment or hedge funds, making commodities more accessible to a wider range of investors.

•   Returns may potentially outstrip stocks, bonds, and other investments.

•   Commodity trading may generate short-term profits

Cons

•   Commodity prices can be volatile, as they may be affected by natural disasters, geopolitical conditions, and other factors.

•   Investing in commodities is generally riskier than other types of investments since supply and demand can impact trading.

•   Holding physical ownership of commodities may not be feasible for every investor.

•   Futures trading in commodities is highly speculative and while there may be potential for higher returns, there’s also more risk involved.

Is Investing in Commodities Right for Me?

Whether commodity trading makes sense for you can depend on your preferences concerning risk and your time horizon for investing. You might consider commodities if you are:

•   Comfortable trading the potential for higher returns against higher risk

•   Looking for short-term gains versus a long-term, buy-and-hold investment

•   Savvy about futures contracts (if you plan to trade futures)

•   Have sufficient capital to meet minimum investment requirements

Before investing in commodities, it’s helpful to learn more about the different types and their associated return profiles. It’s also wise to consider any costs you might pay to trade commodity ETFs, mutual funds, and stocks or the margin requirements for commodity futures trading.

The Takeaway

Although the commodities market is complex, commodities themselves are tangible products that are relatively easy to understand. Investing in commodities can take many forms, including direct or cash investment via the spot market, or by investing in commodity-related funds.

Although trading commodities comes with its own set of risks, commodities may offer some protection against inflation and traditional market movements, because these products are driven by supply and demand.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).


Invest in alts to take your portfolio beyond stocks and bonds.

FAQ

Are there IRA accounts that specialize in commodity trading?

Some brokerages offer an IRA that’s designed for trading commodity futures contracts. You may also be able to gain exposure to commodity ETFs or mutual funds with a regular traditional or Roth IRA.

How much money do I need to invest in commodities?

The amount of money you’ll need to invest in commodities will depend on which vehicle you’re using. With a commodity stock or ETF, the amount of money required would depend on the share price and the number of shares you plan to purchase. Direct investment, hedge fund investments, or commodity futures contracts may require a larger financial commitment.

Can you make money with commodities?

Investors can make money with commodities through capital appreciation or by trading futures contracts. Returns may be higher than traditional assets but you may need to accept a greater degree of risk when trading commodities.

What is the risk profile for someone investing in commodities?

Investing in commodities often means being comfortable with more risk, as commodity prices can fluctuate quickly. You may want to limit your commodities allocation to 5%-10% of your portfolio to minimize your risk exposure.


About the author

Rebecca Lake

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.



Photo credit: iStock/filadendron

SoFi Invest®

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.
For a full listing of the fees associated with Sofi Invest please view our fee schedule.


An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. This and other important information are contained in the Fund’s prospectus. For a current prospectus, please click the Prospectus link on the Fund’s respective page. The prospectus should be read carefully prior to investing.
Alternative investments, including funds that invest in alternative investments, are risky and may not be suitable for all investors. Alternative investments often employ leveraging and other speculative practices that increase an investor's risk of loss to include complete loss of investment, often charge high fees, and can be highly illiquid and volatile. Alternative investments may lack diversification, involve complex tax structures and have delays in reporting important tax information. Registered and unregistered alternative investments are not subject to the same regulatory requirements as mutual funds.
Please note that Interval Funds are illiquid instruments, hence the ability to trade on your timeline may be restricted. Investors should review the fee schedule for Interval Funds via the prospectus.



Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

Exchange Traded Funds (ETFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or by email customer service at https://sofi.app.link/investchat. Please read the prospectus carefully prior to investing.
Shares of ETFs must be bought and sold at market price, which can vary significantly from the Fund’s net asset value (NAV). Investment returns are subject to market volatility and shares may be worth more or less their original value when redeemed. The diversification of an ETF will not protect against loss. An ETF may not achieve its stated investment objective. Rebalancing and other activities within the fund may be subject to tax consequences.

*Borrow at 11%. Utilizing a margin loan is generally considered more appropriate for experienced investors as there are additional costs and risks associated. It is possible to lose more than your initial investment when using margin. Please see SoFi.com/wealth/assets/documents/brokerage-margin-disclosure-statement.pdf for detailed disclosure information.

Fund Fees
If you invest in Exchange Traded Funds (ETFs) through SoFi Invest (either by buying them yourself or via investing in SoFi Invest’s automated investments, formerly SoFi Wealth), these funds will have their own management fees. These fees are not paid directly by you, but rather by the fund itself. these fees do reduce the fund’s returns. Check out each fund’s prospectus for details. SoFi Invest does not receive sales commissions, 12b-1 fees, or other fees from ETFs for investing such funds on behalf of advisory clients, though if SoFi Invest creates its own funds, it could earn management fees there.
SoFi Invest may waive all, or part of any of these fees, permanently or for a period of time, at its sole discretion for any reason. Fees are subject to change at any time. The current fee schedule will always be available in your Account Documents section of SoFi Invest.


Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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What Is a Pension Plan & How Does It Work?

While pension plans are less common today than they once were, many workers still receive a pension — a type of retirement plan that provides guaranteed income throughout retirement (or a lump sum at retirement).

Pension plans are known as defined-benefit plans because the benefits the worker will receive during retirement are predictable (i.e., defined). A 401(k) plan or IRA account, on the other hand, is called a defined-contribution plan — because workers typically contribute a defined amount each month.

Pensions are employer-provided benefits; an individual can’t set up a pension as they would an IRA account — a key aspect of what a pension is and how it works.

Key Points

•   A pension is a defined-benefit plan that gives employees a regular paycheck throughout retirement, or in some cases a lump sum upon retirement (i.e. the payment is defined).

•   Defined contribution plans, like 401(k)s, rely on worker savings but don’t provide a guaranteed payout like defined benefit plans.

•   A pension is an employer-provided plan; workers cannot set up a pension plan.

•   Pension plans are less common today; about 19% of U.S. private sector and government workers were eligible for a pension in 2024.

•   While workers can choose their investments in a defined contribution plan like a 401(k) or 403(b), workers in pension plans cannot.

How to Get a Pension Plan

Unlike other types of retirement plans, such as IRAs, an investor who wants to save for retirement can’t simply fund a pension on their own. Like 401(k) plans, pension plans must be offered by an employer.

While pension plans were once a mainstay of how companies took care of their workers, they’ve become rare in recent decades. Only a small percentage of private sector and government employers — about 19% — offered some form of pension to their employees as of 2024.

The main reason many companies no longer offer pensions is that it’s cheaper for them to offer defined-contribution plans, such as 401(k) or 403(b) plans. That said, if an individual works for the federal, state, or local government, they may be offered a pension.

Among state and local government workers who participate in a retirement savings plan, a majority are in a pension plan.

Recommended: A 4-Step Guide to Planning Retirement

Pension Plans vs. Other Retirement Accounts

The key difference between pension plans and other retirement plans comes down to the difference between a “defined benefit” plan and a “defined contribution” plan.

•   With a defined benefit plan, such as a pension, the amount workers will receive in retirement is predictable: e.g., $2,000 per month, which is valuable when you’re living in retirement.

•   With a defined contribution plan, such as a 401(k) or similar, employees’ contributions, or savings, are defined: e.g., $500 per month. Unlike a pension, a defined contribution plan doesn’t guarantee a fixed benefit amount once the employee retires.

401(k) vs. Pension Plan

Although 401(k) plans and pension plans are both types of tax-deferred accounts that aim to provide workers with income in retirement, they differ in a few ways.

•   Funding and contribution limits

While the employer provides the bulk of funding for a pension plan, 401(k) plans are primarily funded by the employee. In some cases, an employer has the option to contribute to the 401(k) through matching funds. (Employers are not, however, required to provide an employer match.)

Another key difference is the annual contribution limit for each type of account.

For tax year 2025, employee contributions to a 401(k) plan are capped at $23,500 per year ($31,000, if you’re 50 and older), with a total limit of $70,000, including employer contributions.

The maximum total annual contribution to a pension plan for 2025 is $280,000.

•   Roth designation

There are other points of distinction between pension plans and 401(k) plans. For example, a 401(k) plan may offer a Roth feature (i.e., a Roth 401(k) account), which allows workers to contribute after-tax funds, and take tax-free withdrawals in retirement. Pensions generally do not offer a Roth option.

•   Income and Taxes

As noted, the income from a pension plan is guaranteed, and thus a defined benefit.

But the income from a 401(k), 403(b), Roth or traditional IRA, or other defined contribution plan depends on the amount the employee has saved over time, and the investments they selected for their portfolio, and how those investments performed.

Also, because a pension provides a guaranteed payout (typically monthly), these plans do not come with required minimum distributions (RMDs), as 401(k) plans do.

The income from both a pension and a regular 401(k) is considered taxable income, however.

Pension Plan vs. IRAs

Individuals can also contribute to tax-advantaged IRAs and Roth IRA accounts. These are also quite different from pension plans. First, IRAs are Individual Retirement Arrangements, and they are a type of defined contribution plan that only an individual can set up (employers generally cannot offer IRAs, although small businesses may offer a SEP IRA or SIMPLE IRA to employees)

•   Funding and contribution limits

The annual contribution limits for traditional and Roth IRAs for tax year 2025 is $7,000 per individual, with an extra $1,000 catch-up contribution for those 50 and older, for a total of $8,000.

Since standard traditional and Roth IRA plans are self-funded, there is no employer match. Small-business IRAs, like SEP and SIMPLE accounts, may offer an employer match.

•   Roth accounts

The Roth designation refers to the use of after-tax money to fund a retirement account, such as with a Roth IRA. Roth IRA account holders invest after-tax funds, and qualified withdrawals are tax-free in retirement.

However, pension plans are tax-deferred accounts; the employee pays tax on their pension income in retirement. Typically, defined-benefit plans don’t offer a Roth option.

•   Income

Like other defined contribution accounts, IRA investors can choose the investments in their portfolio. As a result, the ultimate payout from these plans depends on the amount saved and the performance, or returns of the investments in the plan.

Traditional IRAs are tax-deferred accounts, so withdrawals are subject to ordinary income tax. And traditional IRA holders must take RMDs, starting at age 73 (which is older than social security retirement age). Roth IRAs are not subject to RMD rules.

One advantage that pensions have over defined contribution plans is that pensions are guaranteed by the federal government through the Pension Benefit Guaranty Corporation (PBGC). It effectively guarantees the benefits of pension-plan participants. But the PBGC does not cover people with defined contribution plans.

Recommended: What Is a Money Purchase Pension Plan (MPPP)?

Managing Your Pension Plan

Workers with pension plans should talk to a representative in their human resources department and find out what the plan offers. Every pension plan is unique. An employee may benefit from looking into the specifics such as:

•   The pension benefit amount

•   Whether it includes health and medical benefits

•   What kind of benefits the pension will offer a surviving spouse or family members.

Someone just starting in their career may also want to ask when their pension benefits vest. In many plans, the benefits vest immediately, while others vest in stages, over the course of as many as seven years, which could affect their plans to move on to a new job or company.

One way to get a better handle on what a pension may pay over time is to inquire about the unit benefit formula. Utilizing that formula is how an employer tallies up its eventual contribution to a pension plan based on years of service.

Most often, the formula will use a percentage of the worker’s average annual earnings, and multiply it by their years of service to determine how much the employee will receive. But an employee can use it themselves to see how much they might expect to receive after 20 or 30 years of service.

Pros of a Pension Plan

Perhaps the biggest advantage of a defined-benefit plan is the guarantee of predictable income from the day a worker retires until the day they die. That’s the core promise that the PBGC protects.

Many pension plans also include related medical and other benefits for the employee, as well as related benefits for surviving spouses. Those benefits vary widely from plan to plan and are important to investigate.

A defined-benefit plan enables workers to predict the amount they’ll have to live on after they retire, and when they can retire. This can help workers plan for other needs, such as supplemental medical insurance or long-term care insurance, in order to better protect themselves down the road.

Cons of a Pension Plan

The downside of knowing that a pension will provide guaranteed income is that it can give would-be retirees a false sense of security.

A pension, with its promise of steady income, can lead people to ignore important questions, and avoid budgeting for basic living expenses.

That flat monthly income might also lead people to believe that their expenses will be the same each month — which is rarely the case.

And that can lead retirees to avoid planning for increased overall living expenses due to the effects of inflation or sudden, unexpected expenses that may crop up.

There’s also the likelihood that their expenses later in life could be significantly higher, as they’re able to accomplish fewer daily necessities themselves.

That’s why, regardless of how thorough a pension plan is, it can pay to save for retirement in other ways, including through a 401(k), IRA or Roth IRA. Just because a worker has a pension, that doesn’t mean that it’s the only retirement plan that’s right for them. And employees will benefit from preparing for retirement early.

The Takeaway

Pension plans are a type of savings plan that are offered by employers, guaranteeing a certain amount of income to workers after they retire. Pension plans are defined-benefit plans, and differ in some key ways from IRAs or 401(k)s. Pensions have become less common in recent decades, and they have their pros and cons, like any other financial product or service.

Ready to invest for your retirement? It’s easy to get started when you open a traditional or Roth IRA with SoFi. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

Easily manage your retirement savings with a SoFi IRA.

FAQ

What is a pension plan?

A pension plan is a type of defined-benefit retirement plan offered by employers. Pensions are known for providing a guaranteed amount of income to retired workers. But pensions today are uncommon, and have largely been replaced by defined contribution plans like IRAs and 401(k)s.

How do pension plans work?

Generally, an employer maintains a pension fund that will pay workers’ income benefits when they retire; in some cases, workers may also contribute to their pensions. At retirement, the employee receives a guaranteed amount of income, often monthly. Because pension benefits are paid regularly, these accounts don’t have RMDs. Pension income is taxed at ordinary income rates.

What are the different types of pension plans?

Pension plans vary, so it’s important to know what the rules and restrictions are. For example, a defined-benefit plan uses a basic formula to calculate the amount the employee will receive. A cash-balance plan bases a worker’s payout on the account balance, while still providing a guaranteed income. In addition, some pensions may include insurance or spousal benefits (or not). Be sure to know the terms.

How do pension plans compare to 401(k)s and IRAs?

While there are several differences between these accounts, the most important distinction is that pension plans are defined-benefit plans that provide guaranteed income throughout retirement (or a lump sum) for the employee. Defined-contribution plans, like 401(k)s and IRAs, do not provide guaranteed income; rather, the account holder takes withdrawals in retirement.

Another important point is that an individual can set up a defined contribution plan and select the investments in their portfolio, but they cannot join a pension unless they work for a company that offers one.


SoFi Invest®

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.
For a full listing of the fees associated with Sofi Invest please view our fee schedule.


Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Learn 7 Strategies to Double Your Money

Learn 7 Strategies to Double Your Money

Figuring out how to double your money with investments often hinges on striking the right balance between risk and reward. Your personal risk tolerance and goals can influence how you invest and the returns your portfolio generates.

However, doubling your money is a reasonable goal, especially if you’re willing to wait for your money to grow. And that’s a big variable to keep in mind: Time. If you’re interested in doubling your money and growing wealth for the long-term, there are several investing strategies to consider.

Investing Strategies to Double Your Money

1. Get to Know the Rule of 72

The rule of 72 can be a helpful guideline for answering this question: How long to double your money?

If you’re not familiar with this investing rule, it’s not complicated. It uses a simple formula to estimate how long doubling your money might take, based on your annual rate of return. You divide 72 by your annual return to get the number of years you’ll need to wait for your investment to double.

So, for example, if you have an investment that generates a 5% annual return, it would take around 14.5 years to double it. On the other hand, an investment that’s generating a 12% annual return would double in about six years.

The rule of 72 doesn’t predict how an investment will perform. But it can give you an idea of how quickly (or slowly) you can double your money, based on the returns you’re getting each year. Just keep in mind that the rule’s accuracy tends to decrease as the rate of return increases, so it’s more of a guideline than a hard-and-fast rule.


💡 Quick Tip: How do you decide if a certain trading platform or app is right for you? Ideally, the investment platform you choose offers the features that you need for your investment goals or strategy, e.g., an easy-to-use interface, data analysis, educational tools.

2. Leverage Your Employer’s Retirement Plan

One way to attempt to double your money through investing may be through your workplace retirement plan. If your employer offers a matching contribution to the money you’re deferring from your paychecks, that’s essentially free money for you.

Employer matching contributions are low-hanging fruit, in that you don’t need to change your investment strategy to take advantage of them. All that’s required is contributing enough of your salary to your employer’s retirement plan to qualify for the match.

The matching formula that companies use varies, but some companies offer a dollar-for-dollar match, meaning that the money you put into a 401(k) would automatically double when you receive your match. Keep in mind that some companies use a vesting schedule, meaning that you have to work at the company for a certain period of time before you get to keep all the employer contributions.

Aside from potentially helping to double your money, investing your 401(k) or a similar qualified retirement plan can also yield tax benefits. Contributions made with pre-tax dollars are deducted from your taxable income, which could lower your annual tax bill.

3. Diversify Strategically

Diversification means spreading your money across different investments to create a portfolio that will meet your needs for both risk and return.

As a general rule of thumb, riskier investments like stocks have the potential to generate higher returns. More conservative investments, such as bonds, tend to generate lower returns but there’s less risk that you’ll lose money on the investment.

If you want to double your money, then it’s important to pay attention to diversification and what that means for your return on investment. For instance, if you’re investing heavily in stocks then you could see greater returns but you might experience deeper losses if the market takes a hit. Playing it too safe, on the other hand, could cause your portfolio to underperform.

Also, keep in mind that there are many types of investments besides stocks, mutual funds and bonds. Real estate, stock options, futures, precious metals and hedge funds are just some stock and bond alternatives you could use to build a portfolio. Understanding their risk/reward profiles can help you decide what to invest in if you’re focused on doubling your money.


💡 Quick Tip: Distributing your money across a range of assets — also known as diversification — can be beneficial for long-term investors. When you put your eggs in many baskets, it may be beneficial if a single asset class goes down.

4. Consider Buying When Others Are Selling

The stock market is cyclical and you’re guaranteed to experience ups and downs during your investing career. How you approach the down periods can impact your ability to double your money when the market goes up again.

When the market drops, some investors start selling off stocks or other investments to avoid losses. But if you’re comfortable taking risks, the sell-off could present an opportunity to buy the dip.

If you can purchase stocks at a discount during periods of volatility when other investors are selling, you could double your money when those same stocks increase in value again. But again, making this strategy work for you comes down to knowing how much risk is acceptable to you.

5. Commit for the Long Term

There are different investment philosophies you can adopt. For example, traders regularly buy and sell investments to try and get quick wins from the market. A buy-and-hold strategy takes a different approach, but it could pay off if you’re trying to double your money.

Buy-and-hold investing involves buying an investment and holding onto it for the long-term. The idea is that during that holding period, the investment will grow in value so you can sell it at a sizable profit later.

This is a passive investment strategy that relies on patience and time to increase your portfolio’s value. The longer you have to invest, the more you can capitalize on the power of compounding gains, or gains you earn on your gains.

If you’re using a buy-and-hold strategy with a value investing strategy, you could potentially double your money or more if your investments meet your expectations. Value investing means investing in companies that you believe the market has undervalued.

This strategy takes a little work since you have to learn how to understand the difference between a stock’s market value and its intrinsic value. But if you can find one of these bargain hidden gems and hold onto it, you could reap major return rewards later when you’re ready to sell.

6. Step Up Your Investment Contributions

Another simple strategy to double your money is to invest more. Assuming your portfolio is performing the way you want and need it to to reach your goals, doubling your investment contributions could be a relatively easy way to boost your returns.

If you can’t afford to put big chunks of money into the market all at once, there are ways to increase your investments gradually. For instance, you could start building a portfolio with fractional shares and increase your contributions by a few dollars each month.

If you’re investing your 401(k) at work, you could ask your plan administrator about raising your contribution rate annually. For example, you might be able to automatically bump up salary deferrals by one or two percent each year. And if that coincides with a pay raise you may not even miss the extra money you’re contributing.

7. Focus on Tax Efficiency

Minimizing tax liability is another opportunity to stretch your investment dollars. There are different ways to do that inside your portfolio.

Investing in your retirement plan at work is an obvious one, so if you aren’t doing that yet you may want to consider getting started. Remember, the longer you have to invest, the more time your money has to grow.

If you don’t have a 401(k) or a similar plan at work, you could open a traditional or Roth Individual Retirement Account (IRA) instead. A traditional IRA allows for tax-deductible contributions, meaning you get an upfront tax break. Then, you pay ordinary income tax on that money when you withdraw it in retirement.

Roth IRAs aren’t tax-deductible, since you fund them with after-tax dollars. The upside of that, however, is that qualified withdrawals in retirement are 100% tax-free.

A taxable brokerage account is another way to invest, without being subject to annual contribution limits the way you would with a 401(k) or IRA. The difference is that you’ll pay capital gains tax on your investment growth.

Paying attention to asset location can help with maximizing tax efficiency across different investment accounts. For example, exchange-traded funds can sometimes be more tax-efficient than other types of mutual funds because they have lower turnover. That means the assets in the fund aren’t bought or sold as frequently, so there are fewer taxable events.

Keeping ETFs in a taxable account while putting less tax-efficient investments into a tax-advantaged account, such as a 401(k) or IRA, could help with doubling your money if it means reducing the taxes you pay on investment gains.

The Takeaway

Learning how to double your money can mean taking a slow route or a quicker one, but it all comes down to how much risk you’re comfortable with and how much time you have to invest. One of the keys to growing your investments is being consistent and that’s where automated investing can help.

There are numerous strategies and tactics that you can try to leverage to your advantage. But ultimately, whether you’re able to double your money will likely come down to how much you’re willing to risk, how much time you have on your side, and probably a little bit of luck.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.

Photo credit: iStock/South_agency


About the author

Rebecca Lake

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.



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