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You may think of your income as being your paycheck or your freelance earnings, but there are actually many different types of income. If you have stocks that are generating dividends, that’s income, as is interest you earn on any savings accounts. Do you own a rental property that has rent payments flowing your way? That’s income, too.

Here, you’ll learn about seven common types of income and how they may affect your financial life.

What Is Income?

Simply put, income is money that a person or business earns in return for labor, providing a product or service, or returns on investments. Individuals also often receive income from a pension, a government benefit, or a gift. Most income is taxable, but some is exempt from federal or state taxes.

Another way to think about income types is whether it is active (or earned) or passive (or unearned).

•  Active or earned income is just what it sounds like: money that you work for, whether you are providing goods or a service.

•  Passive or unearned income is money you receive even though you are not actively doing anything to get it. For instance, if you have a high-yield savings account that earns you interest, that is passive income. Government benefits, capital gains, rental income, royalties, and more are also considered passive income. (We’ll go through these variations in more detail in a minute.)

People who are paid a salary may tend to think that their annual paycheck earnings are their income, but in truth, it’s common for people to have multiple income streams. Granted, your salary may be by far the largest stream of income, but when considering your overall financial picture, don’t forget to think about the other ways that money comes to you.

Different Types of Income

Here’s a look at seven common types of income.

1. Earned Income

Earned income is the money you earn for work you do, either in a job or self-employed. Earned income includes wages, salaries, tips, and bonuses.

Earnings are taxed at varying rates by the federal and state governments. Taxes may be withheld by your employer. Self-employed workers often pay quarterly and annual taxes directly to the government. Lower-income workers may be eligible for the earned income tax credit.

2. Business Income

Business income is a term often used in tax reporting; you may sometimes also hear it referred to as profit income. It basically means income received for any products or services your business provides. It is usually considered ordinary income for tax purposes.

Expenses and losses associated with the business can be used to offset business income. Business income can be taxed under different rules, depending on what type of business structure is used, such as sole proprietorship, partnership, corporation, etc.

3. Interest Income

When you put money into various types of interest-bearing financial vehicles, the return is considered interest income. Retirees often rely on interest income to help fund their retirement. You can earn interest from a variety of sources including:

•  Certificates of deposit (CDs)

•  Government bonds

•  Treasury bonds and notes

•  Treasury bills (T-bills)

•  Corporate bonds

•  Interest-bearing checking accounts

•  Savings accounts

Interest income is typically taxed as ordinary income, though some types of interest are tax-exempt.

4. Dividend Income

Some companies pay stockholders dividends as a way of sharing profits. These are usually regular cash payments that investors can take as income or reinvest in the stock. Dividends from stocks held in a taxable brokerage account are considered taxable income. These funds may be taxed at your regular income-tax rate or at a lower long-term capital gains rate, depending on whether they are classified as “ordinary” or “qualified”.

5. Rental Income

Just as it sounds, rental income is income earned from rental payments on property you own. This could be as straightforward as renting a room in your house or as complicated as owning a multi-unit building with several tenants.

Rental income can provide a steady stream of passive vs. active income. It may enhance your livelihood or even be your main income. When your rental property increases in value, you may also gain from that appreciation and increase in equity. In addition, rental income qualifies for several tax advantages, including taking depreciation and some expense write-offs.

But there are downsides. Owning a rental property isn’t for the faint of heart. Unreliable tenants, decreasing property values, the cost of maintaining and repairing properties, as well as fees for rental property managers can all take a bite out of your rental income stream.

6. Capital Gains

Another important income stream can come from capital gains. You incur a capital gain when you sell an asset for more than what you originally paid for it. For the purposes of capital gains, an asset usually means an investment security such as a stock or bond. But it can also encompass possessions such as real estate, vehicles, or boats. You calculate a capital gain by subtracting the price you paid from the sale price.

There are two types of capital gains — short-term and long-term.

•  Short-term capital gains are realized on assets you’ve held for one year or less.

•  Long-term capital gains are earned on assets held for more than a year.

The tax consequences are different for each type of capital gain. Short-term gains are taxed as ordinary income, while long-term capital gains may be taxed at a lower rate.

Keep in mind, however, that capital losses can happen too. That’s when a capital asset is sold for less than its original purchase price. While it’s never pleasant to experience losses, there can be a small silver lining in this case. You may be able to claim a capital loss deduction from your annual capital gains.

7. Royalty Income

Royalty income comes from an agreement allowing someone to use your property. These payments can come from the use of patents, copyrighted work, franchises, and more.

Some examples: Inventors who license their creations to a third party may receive royalties on the revenue their inventions generate. Celebrities often allow their name to be used to promote a product for royalty payments. Oil and gas companies may pay landowners royalties to extract natural resources from their property. Musicians may earn royalties from music streaming services.

Royalty payments are often a percentage of the revenues earned from the other party using the property. Many things impact how much royalty is paid, including exclusivity, the competition, and market demand. How royalty payments are taxed can also vary, depending on the type of agreement.

Recommended: 10 Personal Finance Basics

The Takeaway

Understanding the seven general income streams (such as earned, dividend, and rental income) can help you make the most of your financial planning. Earning income from any of these sources can provide stability and help you achieve long-term goals, such as saving for retirement. Because some types of income have unique tax implications, it can be important to check with your tax advisor about any tax consequences that may exist.

Aside from earned income, interest is a type of income many people receive. And seeking out the best possible interest rate can be a solid way to enhance your earnings; looking for a high-yield bank account may be a good place to start.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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.

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FAQ

What are the seven common types of income?

The seven common types of income are: earned income (money earned for work); business income (money received for products or services sold); interest income (returns from interest-bearing financial accounts); dividend income (payments from companies to stockholders as a share of profits); rental income (income earned from rental payments on property owned); capital gains (profit incurred when selling an asset for more than its purchase price); and royalty income (payments from licensing property like patents or copyrighted work).

What are the three main types of income?

The three main types of income include: active income (earned from performing a service like a job), passive income (generated from ventures like rental properties where you are not actively involved) and portfolio income (derived from investments such as stocks and bonds). These categories are distinguished by how the money is generated and how the income is taxed.

What are the four main income categories?

From a personal finance perspective, the four main income categories are: active income (money earned directly from a job or services rendered), passive income (recurring income from ventures in which you are not actively involved), portfolio income (earnings from investments like stocks, bonds, and mutual funds), and government income assistance (financial aid from the government for those who qualify).

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When Bitcoin launched in 2009, it was the only digital currency of its kind. By 2011, though, new types of cryptocurrency began to emerge as competitors adopted the blockchain technology Bitcoin was built on to launch their own platforms and currencies. Suddenly, the race to create more crypto was on.

Read on to learn more about the seven main types of cryptocurrency, from proof-of-work to proof-of-stake cryptocurrencies, to utility tokens, stablecoins, and more.

Understanding the Cryptocurrency Landscape: More Than Just Bitcoin

Bitcoin (BTC) may be the most recognized cryptocurrency, but it is one of thousands. It’s difficult to pin down an exact number for how many cryptocurrencies exist, since new coins continue to be developed while others become obsolete.

By some counts, close to 37 million unique cryptocurrencies have been created over time, with more on the way.1 While cryptocurrencies have been largely unregulated for much of their history, that’s been changing in recent years. A regulatory framework has begun to take shape as the Securities and Exchange Commission (SEC), U.S. Congress, and other agencies in the U.S. and abroad have passed crypto-related regulations and laws.

What Is Cryptocurrency and Why Do Different Types Exist?

Cryptocurrency is a type of digital asset that’s created, validated, and exchanged through the blockchain, without the need for any type of central clearing intermediary. What this means is that cryptocurrencies operate on decentralized networks that may be transmitted without having to go through a third party.

Transactions are publicly viewable on the blockchain, but the identities of those exchanging cryptocurrencies are not transparent (though not always untraceable), adding to its appeal for some.

Why are there so many different types of cryptocurrency? Innovation, a push towards decentralized finance, and increased market interest all play a part.

Developers have created different types of cryptocurrencies largely to support and expand the capabilities of blockchain networks. Cryptocurrencies such as Bitcoin and Litecoin were developed to support peer-to-peer payments, for example, while others, such as Ethereum and Solana, were designed to support blockchain-based decentralized apps (dApps).

Utility tokens were developed to provide access to services or functionalities on a blockchain network — governance tokens, for instance, allow users to vote on decisions being made by a certain network.

Blockchain technology is also being actively explored in areas outside of finance, such as health care, supply chain management, real estate, and art.

The Fundamental Difference: Coins vs Tokens

Although some people use the terms crypto, coins, and tokens interchangeably, they’re not the same. To gain a basic understanding of cryptocurrency, it’s important to understand how these terms differ from one another.

Cryptocurrency may broadly refer to coins or tokens, but the two have different meanings:

•   Coins: Crypto coins are native to their own blockchain network, and provide a means of exchange. They’re strings of computer code that can represent an asset, concept, or project — whether tangible, virtual, or digital — intended for various uses and with varying valuations. Examples include Bitcoin and Ethereum.

•   Tokens: Tokens are programmable assets that are created on an existing blockchain network, and allow users to access certain services or features. They’re usually created and distributed through an initial coin offering (ICO), much like an initial public offering (IPO) for stock.

While crypto coins operate on their own independent blockchain and offer a broader medium of exchange for that network, tokens are built on top of an existing blockchain and have any number of uses, such as representing an asset — a stake in a precious metal, for example — or facilitating a transaction on the blockchain. Both could potentially be bought or sold through a crypto exchange.

Crypto coins are created, tracked, and verified by their native blockchain network and essentially power the blockchain by serving as payment for the transactions that create and secure new blocks. While crypto coins are fundamentally different from fiat currencies, like the dollar, euro, or yen — fiat money is tangible, and it’s governed by central authorities — they also have some similarities, since both are designed to be a medium of exchange and a unit of value.

Tokens, meanwhile, can be used as part of a software application, such as granting access to an app, verifying identity, or tracking products moving through a supply chain. They can represent units of value, too, including for real-world items, like real estate, points, or commodities. They can also represent digital art — as with non-fungible tokens (NFTs). There have even been experiments using NFTs to represent physical assets, such as real-life art and real estate.

Numerous crypto coins and tokens have been introduced at a rapid pace since Bitcoin was launched in 2009, and while this can drive innovation, it’s important to remember that cryptocurrencies come with high risk, as well, such as from scammers counterfeiting tokens or from the high level of volatility these assets experience.

Type 1: Proof-of-Work (PoW) Cryptocurrencies – The Originals

Proof-of-work is the original framework Bitcoin was built upon, and it represents the mechanism by which new blocks are added to the blockchain. In a proof-of-work system, “miners” compete to solve complex mathematical puzzles and earn cryptocurrency.3

What Is Proof-of-Work?

Proof-of-work is a consensus mechanism, which is a standard that governs how cryptocurrency transactions are validated and information is added to a blockchain network. It allows crypto miners to compete for an opportunity to add a block to the blockchain, and receive a reward for their efforts.

With proof-of-work, crypto miners use powerful computer systems to race to solve an encryption puzzle. The winner creates a new block that contains transaction information, which is verified by the entire blockchain network as it’s added to the chain.

The rewards earned by winning miners are typically a certain number of newly minted coins, though that number varies between cryptocurrencies.

Examples of PoW Coins

Proof-of-work coins are represented by some of the most well-known types of cryptocurrency. Some of the most popular PoW coins by market cap include:

•   Bitcoin (BTC)

•   Dogecoin (DOGE)

•   Bitcoin Cash (BCH)

•   Litecoin (LTC)

•   Ethereum Classic (ETC)

Bitcoin is the largest PoW coin by market cap, with $2.34 trillion worth of coins in circulation. As of August 2025, there were just over 19 million Bitcoins being held or exchanged, out of a total distribution cap of 21 million. The last Bitcoin is expected to be mined sometime in 2140.5,6

Type 2: Proof-of-Stake (PoS) Cryptocurrencies – The Evolution

Proof-of-stake cryptocurrencies were developed as an alternative to proof-of-work coins, which are viewed as having scalability limitations given the vast amounts of power required to mine them. A proof-of-stake system relies on crypto staking, rather than mining, but it serves a similar function.

What Is Proof-of-Stake?

Proof-of-stake is a consensus mechanism that’s used to reward participants who validate transactions that are added to the blockchain.

Here’s how it works:

•   Stakers agree to lock away some of their cryptocurrency on a blockchain network through a process called staking.

•   The blockchain network can use the holdings to create a new block and validate transactions.

•   The staker with the largest “stake” has a higher probability of being chosen to validate transactions.

•   Validated transactions earn the staker a reward; stakers who violate protocols, however, could face a penalty.

Proof-of-stake is considered by some to be an upgrade from proof-of-work. It requires much less computing power, reducing strain on the energy grid, and it also allows stakers an opportunity to potentially earn passive income while holding cryptocurrency. That said, stakers face the risk that their coins could lose value while they’re locked up for staking.

Examples of PoS Coins

Compared to Bitcoin, proof-of-stake coins claim a smaller share of the market. However, the numbers are growing, and these coins represent some of the biggest movers in terms of market cap:

•   Ethereum (ETH)

•   Solana (SOL)

•   Cardano (ADA)

•   Toncoin (TON)

•   Algorand (ALGO)

Ethereum has the largest market cap overall of these, at $430.88 billion, as of August 2025. This coin has seen a 911% increase in the last five years.

Type 3: Utility Tokens – The Keys to a Network

Utility tokens, or user tokens, are a type of cryptocurrency that serves a specific purpose inside a decentralized network. They’re built on an existing blockchain and grant their holders access to distinct functions, features, or services.

What Are Utility Tokens?

A utility token is a digital asset that grants holders access to a certain product or service for a given cryptocurrency. They’re typically developed using smart contracts and may be programmed for a range of uses, such as to access storage space or to bring external data onto a blockchain network. Or, as with a governance token, they may give holders the option to vote on changes to a blockchain network.

More broadly, utility tokens can help encourage participation in and support of the crypto ecosystem they were designed for. They may serve as a loyalty bonus, for example, provide access to exclusive features, or other incentives for interacting with the network, all of which may help foster the growth of that crypto community.

Unlike other types of tokens that may confer a stake in an asset or a physical entity, utility tokens serve primarily as a key to various features offered by a cryptocurrency.

Examples of Utility Tokens

Utility tokens are designed with specific use-cases in mind. Their value is typically measured more in terms of what they allow you to do, versus what value they represent.

Here are some examples of utility tokens:

•   Ether (ETH): Ether is the native token of Ethereum, which is the second-largest blockchain network. Ether is used to pay the Ethereum “gas fee” required to process transactions on the blockchain. Given its reach, however, it’s sometimes seen as a currency (having a store of value) in its own right.

•   Chainlink (LINK): Chainlink is a decentralized oracle network that acts as a bridge between smart contracts and real-world data. Tokens are used to pay for data services and incentivize the production of accurate data feeds.

•   Basic Attention Token (BAT): BAT is an Ethereum-based token that’s used within the Brave browser ecosystem. Browser users earn tokens by opting into ads; they can use their tokens to unlock premium content.

•   Golem (GLM): Golem is a decentralized supercomputer that lets users rent their computing power to others. Tokens are used to pay for services through the platform.
9,10

•   The Sandbox (SAND): SAND is the utility token for the community-driven blockchain gaming platform, The Sandbox. Players can earn SAND and use it to purchase virtual assets, access exclusive interactions, and take part in governance, among other things.

Type 4: Stablecoins – The Price Stability Anchor

Stablecoins are digital assets whose value is tied or “pegged” to another asset. Of the $250 billion in stablecoins currently in circulation, 99% of them are pegged to the U.S. dollar. Stablecoins are an alternative to Bitcoin and other cryptocurrencies whose value may fluctuate widely due to changes in supply and demand, or market sentiment.11

What Are Stablecoins?

Stablecoins are cryptocurrencies that are stored on the blockchain, but whose value is tied to an underlying currency or commodity. For example, stablecoins may be pegged to the U.S. dollar, the Euro, or gold. Because they’re tied to underlying assets, stablecoins can be redeemed for those assets.^[1]

Stablecoins are designed with the goal of maintaining a stable price relative to the asset they’re pegged to, and in comparison to the high price volatility of cryptocurrencies in general. That said, stablecoin stability may depend on a number of factors, such as the stablecoin’s level of liquidity, market volatility, and transparency around reserves.

The regulatory landscape for stablecoins is quickly evolving, such as with the recent passing of the 2025 Genius Act, which provides oversight for issuers of payment stablecoins and rules focused on consumer protection.^[2] The European Union’s Markets in Crypto-Assets (MiCA) regulation also went into effect in 2025. Under MiCA, stablecoins issuers are regulated like financial institutions and must meet certain EU reserve requirements. Some stablecoins are choosing not to seek EU compliance, however, such as Tether (USDT), which keeps much of its reserves in U.S. Treasurys.^[3]

As the industry shifts, there are still risks to be aware of, such as a stablecoin losing its peg value, technology or operational risks, or the potential for scams or fraud.

Common uses for stablecoins include:

•   Paying for goods and services

•   Making cross-border payments

•   Offering potential protection against price instability in cryptocurrency markets

Crypto users may use stablecoins to buy other cryptocurrencies in lieu of cash, and more payment processors are allowing the use of these coins to pay for transactions online.

Examples of Stablecoins

Stablecoins represent a growing share of the total cryptocurrency market. Some of the most well-known stablecoins by market cap include:

•   Tether (USDT)

•   USDC (USDC)

•   USDS (USDS)

•   Dai (DAI)

•   PayPal USD (PYUSD)

The total market cap of stablecoins was $268.27 billion as of August 2025. With a few exceptions, stablecoins have a relatively low price point compared to other types of cryptocurrency.

Type 5: DeFi Service Providers – The Future of Finance

DeFi service providers represent a subset of the cryptocurrency landscape. They operate on decentralized, blockchain-based frameworks in order to offer services that allow individuals to conduct transactions directly. For example, a DeFi coin is similar to a physical coin in that it transfers value, but it does so without going through a central intermediary.

What Is Decentralized Finance (DeFi)?

Decentralized finance, or DeFi, describes financial services that are executed through the blockchain. By allowing for direct, peer-to-peer transactions, DeFi advocates note that it could help reduce barriers to entry for those who traditionally have a harder time accessing financial services, and allow for potentially faster, cheaper transactions.

Some of the top providers building out the decentralized finance landscape are developing decentralized peer-to-peer exchanges, borrowing and lending protocols, data services through decentralized oral networks (DONs), and stablecoins, which may help provide a bridge between blockchain systems and traditional assets.

Most, though not all, DeFi protocols and applications are built on Ethereum. DeFi tokens can be used to access services and goods through decentralized apps. Though DeFi tokens represent a smaller share of the cryptocurrency market, their popularity is growing.

DeFi, of course, is in its early stages, and while the blockchain technology itself helps to safeguard information, the other apps, systems, and entities that interact with the network could pose risks. It’s important to be cautious when considering options, especially as crypto regulations continue to develop.

Examples of DeFi Tokens

Here are some of the largest DeFi tokens by market cap:

•   Stellar (XLM)

•   Hyperliquid (HYPE)

•   Uniswap (UNI)

•   Polkadot (DOT)

•   Aave (AAVE)

The total DeFi token market was valued at $111.94 billion as of August 2025. It’s essential to distinguish between DeFi tokens and DeFi coins. The difference, again, between tokens and coins is how they relate to the blockchain.

Type 6: Privacy Coins – The Anonymous Transactions

Privacy coins offer anonymity by obscuring certain details about their users. These coins can be sent and received anonymously, without disclosing the location of the parties involved in the transaction.

What Are Privacy Coins?

Privacy coins enable the secure transfer of cryptocurrency without revealing either its origin or destination. This is a key departure from the more public nature of transactions conducted on the blockchain. Public blockchains were designed with the idea that information be transparent and immutable, allowing participants to view and validate the data. With Bitcoin, for example, Bitcoin users can access transaction data (though not identity information) through public Bitcoin addresses used to make payments.

A privacy coin blocks certain information from view through the use of different strategies, including:

•   Protocols that generate stealth addresses

•   Mixing of transactions to make the routing of coins more difficult to trace

•   Tools that allow for the validation of transactions without requiring the disclosure of any identifying information

Privacy coins aren’t accessible in every country or crypto market. Some countries have banned them outright, while others have taken steps to remove some of the secrecy surrounding them.15
For example, recent anti-money laundering regulations passed by the European Union will, starting in 2027, ban financial and credit institutions as well as crypto-asset service providers from managing cryptocurrencies that offer anonymous accounts.

Examples of Privacy Coins

The market for privacy coins is smaller than other types of cryptocurrencies, and your ability to buy them may depend on where you live. Examples of popular privacy coins include:

•   Monero (XMR)

•   Zcash (ZEC)

•   Beldex (BDX)

•   Decred (DCR)

•   Dash (DASH)

As of August 2025, the privacy coin market was valued at $7.16 billion. A glance at pricing charts shows that privacy coins have the potential to be exceptionally volatile.

Type 7: Meme Coins – The High Risk, High Reward Speculation

Meme coins are a type of cryptocurrency whose popularity is driven by memes or trends.

What Are Meme Coins?

Meme coins are coins that gain attention because they align with a trend or newsworthy event. Any coin can become a meme coin if someone or something pushes it into the spotlight. Some of the most popular meme coins can develop cult-like followings, which can help drive demand.

Compared to other types of cryptocurrency, meme coins tend to be more volatile because their value is often tied to their popularity. A coin that’s hot today may not be tomorrow, and its value could quickly fizzle if the trend dies down, or the meme that the coin is associated with loses popularity.

Examples of Meme Coins

Meme coins can sometimes be some of the most recognizable cryptocurrencies if they grab the attention of the broader population. Examples of popular meme coins include:

•   Dogecoin (DOGE)

•   Shiba Inu (SHIB)

•   Pepe (PEPE)

•   Pudgy Penguins (PENGU)

•   Bonk (BONK)

Meme coins often have lower prices than other cryptocurrencies. As of August 2025, meme coins had a market cap of $76.2 billion.

The Critical Impact of Tax Treatment

The IRS treats cryptocurrency and other digital assets as property, meaning that any gains you generate from them are taxable. If you have digital asset transactions during the year, you’re required to report them on your tax return.

The sale of digital assets, including cryptocurrency, can trigger capital gains if you sell at a profit, or capital losses if you sell for less than the original purchase price. Selling off crypto assets after seeing huge gains in value could significantly increase your tax liability for the year.

You can offset gains with losses through a process known as tax loss harvesting. That can reduce what you owe in federal taxes for the current year.

Income earned through cryptocurrency activities, such as from mining rewards, is considered ordinary income. Depending on your circumstances, the tax rules applying to your digital assets could get complicated. You may want to talk to a certified public accountant (CPA) or another tax professional about how crypto assets could affect your overall tax picture.^[4]

The Takeaway

Cryptocurrencies are all digital assets built upon a distributed network and, likewise, upon the principle of decentralization. It’s important to remember, however, that there are several types of cryptocurrencies, and each one — be it proof-of-work, proof-of-stake, stablecoins, DeFi, or utility tokens — has myriad options within it.

Different cryptocurrencies have different goals, functionalities, markets, and prospects. By the same measure, cryptocurrencies are also not created equally in terms of risk, both in their own right, and in terms of how they may align with your financial goals. Understanding the different types of cryptocurrencies can help you better understand the role they may play in crypto markets and potentially in your portfolio.

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FAQ

How many types of cryptocurrencies are there?

Broadly speaking, cryptocurrencies can be grouped into coins and tokens. Beyond those two main types, there are millions of different types of crypto being exchanged, with new currencies entering the market regularly.

What is the most common type of cryptocurrency?

Bitcoin is likely the most common type of cryptocurrency, or at least the one people are most familiar with. It’s also the crypto asset that holds the lion’s share of market capitalization. As the first blockchain coin, Bitcoin opened the door for the introduction of other cryptocurrencies, including Ethereum and Litecoin.

What is the difference between a coin and a token?

The main difference between a coin and a token is their relationship to the blockchain. Coins are the native digital currency of their blockchain, while tokens sit on top of an existing blockchain. Tokens are often associated with digital currencies, but they can also represent other digital assets, like NFTs, or something intangible, like voting rights.

Are NFTs a type of cryptocurrency?

NFTs or non-fungible tokens are not a type of cryptocurrency, but they share space with crypto on the blockchain. An NFT represents ownership of a unique digital or physical asset, such as a drawing, image, or piece of artwork.

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About the author

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Article Sources

1. U.S. Securities and Exchange Commission. Statement on Stablecoins.
2. Congress.gov. S.1582 – GENIUS Act.
3. World Economic Forum. The GENIUS Act is designed to regulate stablecoins in the US, but how will it work?.
4. Intuit Turbotax. Your Crypto Tax Guide.

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Due to advances in artificial intelligence (AI) technology, as well as significant economic shifts and demographic changes, there are five top investing trends to know about in 2025.

These include the proliferation of AI and digital infrastructure; the impact of longevity on health care and other sectors; a continued interest in alternative assets; the importance of risk management; and renewed signs of life in the real estate sector.

As the 2025 SoFi Investor survey reveals, investors may or may not follow these specific trends, but respondents seem optimistic about investing overall, and interested in developing aspects of their own long-term strategies.

Investor Sentiment in 2025: A Shift in Strategy

In the last few years, investors have faced geopolitical turmoil, higher-than-average inflation and interest rates — and more recently, global trade and tariff issues. Nonetheless, the investors who responded to the 2025 SoFi Investor survey revealed a sense of optimism, and an ability to manage stress in light of these volatile times.

Investor Confidence

Of the 1,000 individuals surveyed, over two-thirds (68%) plan to expand or shift their investing strategies in the coming months, and 65% feel optimistic or content about their strategies — both signals of investor confidence.

In a similar spirit, although inflation has been at historic highs, only 19% of investors said they were investing less in their portfolios — and 82% either wanted to invest more or maintain their holdings.

And a striking 40% said they didn’t experience stress in relation to market ups and downs.

Following are some of the leading investment trends that investors may be watching as 2025 draws to a close and 2026 comes into focus.

1. The Rapid Advance of Artificial Intelligence

As artificial intelligence technology has continued to skyrocket, the impact of these innovations and the widespread adoption of AI across industries has presented opportunities for investors, as well as challenges.

While global assets in AI funds reached a record $5.5 billion in Q2 of 2025, according to Morningstar, this rapid growth has also been met with concerns about capacity, energy needs, and the possibility of a bubble.

Nonetheless, AI has a strong appeal for investors, owing to its potential for growth. Investors must also consider the volatility in this industry, as well. This may be one reason investors seem to favor U.S. AI-focused ETFs than, say, stocks, according to Morningstar — given that AI ETFs may provide greater diversification as well as access to thematic investing.

2. A Renewed Focus on Alternative Investments

Investors were pursuing alternative assets at a record pace throughout 2024 and into early 2025, according to Morningstar. This trend is echoed by the sentiment reflected in the SoFi Investor Survey, where some 47% of respondents said that they invest in alternatives.

The Accessibility of Alts

Alternatives tend not to be correlated with traditional assets like stocks and bonds, and as such they can offer some portfolio diversification. Alternative assets were once restricted to qualified investors, but are increasingly available to ordinary investors through certain types of ETFs and other instruments.

Examples of alternative investments include tangible assets like real estate and commodities, as well as collectibles like art and antiques.

But alternative assets may also refer to the use of specific strategies: e.g., hedge funds, derivatives, and venture capital, as well as private market investments.

These assets may deliver higher returns when compared with conventional assets, but they are considered higher risk, owing to the lack of transparency, lower levels of regulation, lack of liquidity, and other risk factors investors may want to consider.

3. The Implications of Greater Longevity

People are living longer, with adults over age 65 projected to reach nearly a quarter (23%) of the U.S. population in the coming 30 years, according to the Pew Research Center. The result of this increased longevity has been a steady expansion of the science, technology, and business of living longer — with some estimates putting the global longevity market at $600 billion by the end of 2025.

While many investors are aware of advances in health care and medicine, the longevity market has expanded to include consumer goods, travel, computer and mobile technologies, caregiving services, housing developments, and more. Investing in longevity has obvious societal benefits, many of which may enable people to live longer as well as healthier and more rewarding lives.

That said, for all its focus on aging, the longevity sector itself is young — and from an investing perspective, it may be difficult to predict the winners and losers in the years to come. Nonetheless, this is a trend that’s unlikely to reverse, and investors may want to keep an eye on the opportunities emerging here.

Recommended: Investing in Commodities

4. New Approaches to Portfolio Risk Management

In the face of market swings, the majority of investors surveyed by SoFi (73%) chose to hold onto their assets rather than sell. This focus on staying the course is an important component of overall portfolio risk management, especially in light of ongoing volatility in many sectors.

Some tried-and-true strategies for managing portfolio risk factors include diversification, using dollar-cost averaging, and lowering overall portfolio volatility by rebalancing and similar approaches.

It’s also possible to gain a deeper understanding of one’s actual risk tolerance by seeking out a professional portfolio risk analysis, which can stress-test the holdings in your portfolio, and may provide insights about ways to adjust your investments.

5. Navigating a Shifting Real Estate Market

The real estate market will continue to be an area of focus for investors and potential homebuyers in 2025 and into 2026, largely owing to pent up demand while interest rates were high.

If interest rates continue to decrease as anticipated, the real estate and home building markets may see renewed growth — although the ongoing impact of tariffs on sector supplies such lumber, appliances, metals, and other goods could be significant.

As the SoFi Investor Survey revealed, some investors are intrigued by real estate opportunities, with 15% saying they have real estate investments, and 11% specifically invested in real estate investment trusts (REITs).

Recommended: Pros & Cons of Investing in REITs

How to Approach These Investing Trends

As noted above, investing trends are not a guarantee of success; they’re simply broader market movements that a wider swath of investors may be participating in at the moment. But as with trends in fashion or music or politics, investors must decide for themselves whether an investment trend is worth considering.

Do Your Own Research

One important way to evaluate investment trends is by doing your own research. Basic reading helps to keep investors informed about relevant news and industry factors that could impact a trend.

It’s also wise to compare a current trend in light of a company’s or fund’s actual performance and fundamentals. Some investments are poised to benefit from a trend, whereas others are not.

Align Trends With Your Long-Term Goals and Risk Tolerance

Above all, investing in a certain trend only makes sense when it aligns with your overall goals, your financial circumstances, and your risk tolerance.

By their very nature, trends are not necessarily going to last. There may be short-term opportunities investors can consider, or a trend may evolve in such a way that an investor may find it worthwhile to stick with it. That will depend on the trend and on the individual.

The Takeaway

Putting hard-earned dollars into any investment — whether it’s trendy or traditional — requires careful thought and due diligence. Investors should be aware that, while momentum can feed investment fads for long periods, some market trends can become vulnerable because of frothy valuations and turn on a dime.

Invest in what matters most to you with SoFi Active Invest. In a self-directed account provided by SoFi Securities, you can trade stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, options, and more — all while paying $0 commission on every trade. Other fees may apply. Whether you want to trade after-hours or manage your portfolio using real-time stock insights and analyst ratings, you can invest your way in SoFi's easy-to-use mobile app.

Invest with as little as $5 with a SoFi Active Investing account.

FAQ

How can I add AI exposure to my portfolio?

There are many ways to invest in artificial intelligence, including individual stocks as well as ETFs. Investors may also want to consider the range of industries involved in AI and/or using this technology, from big data analysis to large language models to sectors such as media and healthcare, which are integrating AI technology.

What are the risks of investing in trends?

Trends can be higher risk in many cases, simply because most trends are driven by investor emotion, not company financials.

How are investors coping with market stress?

According to the SoFi Investor Survey, while 40% of investors say the markets don’t stress them out, others have multiple coping strategies, including talking to their broker, doing market research, and not checking their account balances.

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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 emailing customer service at [email protected]. Please read the prospectus carefully prior to investing.

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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.

Dollar Cost Averaging (DCA): Dollar cost averaging is an investment strategy that involves regularly investing a fixed amount of money, regardless of market conditions. This approach can help reduce the impact of market volatility and lower the average cost per share over time. However, it does not guarantee a profit or protect against losses in declining markets. Investors should consider their financial goals, risk tolerance, and market conditions when deciding whether to use dollar cost averaging. Past performance is not indicative of future results. You should consult with a financial advisor to determine if this strategy is appropriate for your individual circumstances.

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

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.

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.

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