Net Worth Calculator by Age Table with Examples

When it comes to your money, the more you know, the better equipped you are to make informed financial decisions. One piece of your overall financial picture that you may want to understand is how much you’re “worth.” This information can help you understand where you are with your finances now and what you need to do to reach your goals for the future.

Before we look at a net worth growth calculator table that shows you how you compare against other people your age, let’s dive a bit deeper into what net worth is and why it’s important.

Key Points

•   A net worth calculator helps determine your financial health by calculating your assets and liabilities.

•   It provides insights into your overall financial picture and helps track progress over time.

•   Factors such as age, income, and debt impact your net worth.

•   Regularly updating and reviewing your net worth can help with financial planning and goal setting.

•   Use the calculator to assess your financial situation and make informed decisions about saving and investing.

What Is Net Worth?

You may hear this term being batted around in conversations surrounding billionaires, but in reality, everyone has a net worth. It’s simply a total of all your assets minus any debts you have.

Those assets can include cash, real estate, intellectual property, and other items like jewelry, stocks, insurance policies, and bonds. The cash may come from a job you have or from unearned income, such as your Social Security payment

Having a lot of assets does not necessarily mean you have a high net worth, particularly if you also carry a lot of debt. For example, you may have a million-dollar mansion, but if you have debts of $500,000, your net worth dwindles rapidly.

💡 Quick Tip: When you have questions about what you can and can’t afford, a spending tracker app can show you the answer. With no guilt trip or hourly fee.

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How Does a Net Worth Calculator Work?

There are many personal net worth calculators available online, though you don’t need one to calculate your net worth. Just take the total amount of all your assets and subtract the total amount of your liabilities:

Assets – liabilities = net worth

Some calculators will also factor in future growth so you can understand what your net worth will be in the future, as the value of your assets grows.

Recommended: What Is Disposable Income?

How to Calculate for Net Worth

As you can see, it’s fairly easy to calculate your net worth, though it may take time to gather the values of all your assets, such as the current value of a piece of high-end jewelry. But once you do, you can add up all your assets and then subtract your liabilities to calculate your net worth.

What Is the Average American Net Worth?

Knowing your own net worth is one thing, but where does it stand against other people in your age bracket? Generally, people see an increase in their net worth the older they get, and it can be helpful to use a net worth percentile calculator by age to see your percentile rank.

For example, if your net worth was $100,000, you would be in the 46.92 percentile for people between the ages of 18 to 100. The median net worth for this age bracket is $121,760.

Here’s the average net worth by different age groups, according to the most recent data available from the Federal Reserve.

Age Average Net Worth
18-24 $112,104
25-29 $120,183
30-34 $258,075
35-39 $501,295
40-44 $590,710
45-49 $781,936
50-54 $1,132,497
55-59 $1,441,987
60-64 $1,675,294
65-69 $1,836,884
70-74 $1,714,085
75-79 $1,629,275
80+ $1,611,984

Source: Federal Reserve’s 2022 Survey of Consumer Finances

Why Is Net Worth Important?

Calculating your net worth is smart because it can help you understand where you’re strong financially (maybe you have little debt) and where you’re weak (maybe you’ve overextended your credit to buy your home).

It may also help you make plans for the future. For example, if your net worth is high, you might explore strategies for reducing taxable income, such as contributing more to a tax-deductible retirement account. And if your net worth isn’t where you’d like it, you can take steps to improve it.

💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

How to Increase Your Net Worth

If you’ve used a liquid net worth calculator, or compared your net worth to the table above and don’t feel like your numbers are as high as you’d like them to be, you can do a few things to increase your net worth.

If your debt levels are high, you can increase your net worth by decreasing that debt. Get a plan for paying off credit cards, student loans, car loans, and home mortgages. Consider increasing the amount you pay on each slightly to shorten your repayment period and decrease the amount of interest you pay on these loans and credit cards.

Creating a budget is one way to keep tabs on your finances as you’re paying off debt. A money tracker app can help make the job easier.

If you don’t have an abnormally high amount of debt but want to increase your assets, you might explore making more money. If you’re still in the workforce and have the ability to make a career change, you might consider cultivating potential high-income skills that could help you command a higher salary.

If you’re retired, you could take on part-time flexible work.

Recommended: How to Negotiate Your Signing Bonus

Examples of Celebrity Net Worths

Not that you need to compare yourself to celebrities when it comes to net worth, but it can be fun to see how the other half lives. Keep in mind that while A-list celebrities often command millions of dollars for their work, they’re usually also smart with their money. They don’t typically blow their money on sports cars and mansions (though certainly some do). Many are financially responsible, investing in multiple income streams and spending responsibly.

Let’s look at the net worth of a few celebrities.

Reese Witherspoon

Reese Witherspoon didn’t limit her career to acting. She also founded a lifestyle brand called Draper James and a media brand called Hello Sunshine. Today her net worth is about $300 million.

J.K. Rowling

The well-known author of the Harry Potter books has an estimated net worth of $1 billion, and she’s the first author in history to reach this height. Before she was published, however, she struggled financially, which makes hers a true rags-to-riches story.

Jay-Z and Beyoncé

Superstar artists Jay-Z and Beyoncé reign supreme when it comes to net worth. Thanks to touring, albums, clothing lines, movies, endorsements, merchandise, and more, the couple’s combined net worth is $3 billion.

The Takeaway

You may not be able to match the likes of Jay-Z and Beyoncé when it comes to net worth, but knowing yours can help you make smart financial decisions for the future. To figure out your net worth, you can subtract the total amount of your liabilities from the total amount of your assets. You can also use a personal net worth calculator; some will even factor in future growth.

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 do I calculate your net worth?

Net worth can be calculated by subtracting all your liabilities from your assets. In other words, subtract everything you owe (debts, loans, credit card debts) from everything you have (cash, property, real estate, jewelry, stocks).

What is a good net worth by age?

A “good” net worth depends on your financial goals and age. For example, the average net worth for 40-44 year-olds is $590,710. Yours may be higher or lower than this.

What net worth is considered rich?

According to a 2023 survey conducted by Charles Schwab, Americans need an average net worth of at least $2.2 million to feel wealthy. However, that amount varies based on where you live.

Photo credit: iStock/Kanatip Chulsomlee


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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.

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

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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The Ultimate College Senior Checklist

Senior year in college is often filled with mixed emotions — excitement for all the fun you’re going to have with your friends, eagerness to be done (a.k.a., senioritis), and anxiety about what you’re going to do after you graduate and what the future holds.

While leaving your college years behind can be bittersweet, it’s important to remember that the fun doesn’t stop after you return your cap and gown. By making the most of your senior year, you’ll have the perfect ending for these incredible four years and be ready to tackle life’s next chapter.

Below are key things to keep in mind as you focus on graduation, next steps in building a career, and finally living out your dreams.

Dotting I’s and Crossing T’s

Early in the fall, it’s a good idea to meet with your college counselor to make sure you have all of your ducks in a row in order to graduate. A lot can happen in three years — switching majors, adding minors, and studying abroad — so it can’t hurt to double-check that all of your requirements will be met by the end of the year.

Failing to earn all your required credits can mean delayed graduation, even adding on an extra semester. The finish line is close, but you’ll want to make sure that you stay on track. Also keep in mind that your last year in college is a last chance to take any out-of-the-box classes you’ve always wanted to take but never had time. You may finally have room in your schedule to add some fun electives.

If you’re planning to attend graduate school, you’ll also need to focus on finishing up any required testing and meeting application deadlines. Much like senior year of high school, you’ll begin an anxious time as you wait for acceptance letters to arrive.


💡 Quick Tip: Ready to refinance your student loan? You could save thousands.

Getting a Jumpstart on a Job Search

Your senior year in high school was all about preparing for college. Your senior year in college is all about preparing for life after college, a.k.a the real world.

It’s no secret that college graduates flood the job market each June, so getting ahead of the pack can make your search a little easier. Applying for jobs as early as the fall can mean less competition and improve your chances of having a job lined up when you graduate.

Even if launching a full-blown job search during school isn’t possible, it’s a good idea to take some steps toward the professional world.

Consider stopping by the career center to see what resources it can provide. Part of your tuition goes to funding your college’s career services center, so why not get your money’s worth? Most career professionals are ready to help students prepare their resumes and perfect their cover letters, and they typically have job postings from companies looking to hire recent graduates.

Some career centers may offer mock interviews so students can hone those skills, or they may provide support when issues arise during a job search. Popping by between classes to see what services are offered will only take a few minutes.

In addition to your resume and cover letter, you’ll also want to start working on your LinkedIn profile and, if relevant, a portfolio of work samples. Having these resources in a good place during senior year can make it easy to start applying for jobs during school or right after graduation.

Recommended: Jobs that Pay for Your College Degree

Making Connections

As a student, building a professional network may feel impossible, but you’re likely building one in school without realizing it. One easy way to get a head start on a job search, without doing too much work during a hectic final year of school, is to tap into that network, namely your advisors or mentors.

Professors can be great resources to have as you prepare for the unknown of post-grad life. They can provide insights into what positions are available in your field, what you should look for in an employer, and good questions to ask in an interview. You might also ask a professor to look over your resume.

You might also look for a professional mentor through your college’s alumni network or mentor programs and set up an informational interview. Finding a mentor senior year of college can not only help you find your first job, but it can also pay career dividends for years to come.

Whether you start applying for positions while you’re still in school or right after graduation, you may need to provide a list of at least three references. These can be people like internship managers, your thesis professor, your part-time job supervisor, and others who can speak to your skills and work ethic. Now is a good time to reach out and ask potential referees if they would be willing to serve as references.

You may also want to attend and engage in networking at career fairs, career workshops, and other informational events taking place on campus.

Recommended: How to Get Involved on Campus in College

Paying Back Student Loans

Preparing to navigate life after college can be overwhelming, especially when it comes to finances. No one wants to think about student loan payments, but it can be helpful to start making repayment plans before graduation day.

You can begin the planning process by simply looking up the current balance for each student loan you hold, including both federal and private student loans. Take note of when the lender expects payment. Some or all of your student loans could have a six-month grace period before you need to start repaying. This is ideal because it gives you time to get a job after graduation and make sense of your income before you have a new bill to pay.

Lenders typically provide repayment information during the grace period, including repayment options.

With federal student loans, your servicer will automatically place you on the Standard Repayment Plan (a 10-year fixed payment repayment plan). However, you can request a different repayment plan at any time. Typically, you can pick from repayment plans that base your monthly payment on your income or that give you a fixed monthly payment over a set repayment period.

An income-driven repayment plan may be a smart choice if you’re looking to lower your payment. However, these plans also extend the payoff timeline to 20 or 25 years. The Federal Student Aid website has a loan simulator tool that lets you compare all the available repayment options and helps you choose the best one for your specific situation.

For private student loan repayment, it can be best to speak directly with the loan originator about repayment options. Many private student loans require payments while the borrower is still in school, but some offer deferred repayment. After the grace period, you will need to begin making principal and interest payments. Some lenders offer repayment programs with budget flexibility.

Whether you or your parents chose to take out federal or private student loans (or both) to cover school costs, reviewing all possible payment plan options can help make the transition to repayment easier.


💡 Quick Tip: Federal parent PLUS loans might be a good candidate for refinancing to a lower rate.

One Loan, One Monthly Payment

As you enter the repayment phase of your student loans, you might also consider refinancing or consolidating your student debt.

If you have federal student loans, you may qualify for a federal Direct Consolidation Loan after you graduate, leave school, or drop below half-time enrollment.

Consolidating multiple federal loans into one allows you to make just one loan payment each month. In some cases, the repayment schedule may be extended, resulting in lower payments. Keep in mind, though, that increasing the period of time to repay loans usually means making more payments and paying more total interest.

Refinancing, on the other hand, allows you to convert multiple loans — federal and/or private — into one new private loan with a new interest rate, repayment term, and monthly payment. Refinancing can potentially save you money, but generally only makes sense if you can qualify for a lower interest rate than you currently have. For example, refinancing might be a good solution for working graduates who have higher-interest federal loans, such as unsubsidized Direct Loans and Graduate PLUS loans, or who currently have a high-interest private student loan.

You’ll want to keep in mind, however, that refinancing federal student loans with a private lender means giving up federal protections, such as income-driven repayment plans, loan forgiveness for public service, and deferment options.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.


With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.



SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FOREFEIT YOUR EILIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers.
Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


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

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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Tips For Navigating Life After College

Graduating college is a big deal. The time you spent in school has likely taught you a lot about the subjects you studied, being organized and meeting deadlines, and life in general. Once you have your degree, you’ll put those skills to good use as you embark on your career and independent life. No more dining hall, no more dorms…it’s time to launch adult life and figure out how to make your own way.

To help you deal with some of the basics (like a job and banking), read on. You’ll find valuable tips to help you through the first steps of post-grad life.

Life After College

Congrats on your degree! Now, on to the next challenge after graduating college. It’s time to tackle adulting, which can include such things as getting set up in your new living situation, finding your favorite brunch spot, and making new friends if your college pals have scattered to different places.

In addition, there are some major daily-life tasks to wrangle:

•   Finding and holding a job

•   Taking control of your health and your health insurance

•   Keeping your brain active, which may lead to more studies

•   Managing your money.

Read on to get some helpful advice on these last four topics (you can probably find the best brunch spot in your new neighborhood without too much help).


💡 Quick Tip: Enjoy no hidden fees and special member benefits when you refinance student loans with SoFi.

Getting to Work

Hopefully you enjoyed a few weeks off post-grad to travel or kick back and relax after four years of hard work. But what to do after college for many people is find work.

When you’re ready to begin your job search, it can be a lot to process. Chances are, it’s time to focus on taking steps towards building your career.

First off, don’t let job searching stress you out. New grads are in luck. Unemployment is low, and the labor market is strong. According to a recent survey by the National Association of Colleges and Employers, companies expected to hire almost 4% more class of 2023 grads than they did from the previous class.

Not sure where to look for work or what you should be earning? Research, network, and research some more.

•   Your school’s career services office may provide job leads, and its alumni office may be able to network you with people in your field who can share insights.

•   Search for jobs online. There are many job boards, such as Indeed and ZipRecruiter, to access.

•   Put out the word among friends, families, past internship supervisors, and others.

•   To gain intel on starting salaries, try an online salary calculator. You provide some basic info like your location and experience, and their tool tells you what the average salary for your desired role is. While this tool can only provide an estimate, it may help you determine if you should try to negotiate for a higher salary when you receive a job offer.

Taking Your Health into Your Own Hands

As part of learning how to navigate life on your own, make sure you take the reins of your healthcare. Mom and Dad likely aren’t scheduling those biannual dental checkups for you anymore.

Whether you’re still on your parent’s policy or are buying your own health insurance, getting more familiar with the resources your healthcare plan provides is never a bad idea.

It can help you stay on top of scheduling check ups, dental cleanings, and eye exams. You may also need to learn the ropes of finding in-network doctors as you move to a new place or get your own policy.

And you might want to start saving for any unexpected medical or dental bills that may arise. Having an emergency fund at the ready can be an important step to financial wellness in this new chapter of your life.

Speaking of wellness: You may feel swamped by post-grad life, but it’s such an important time to prioritize your well-being. It might be helpful to make time to go to the gym each week, meditate, cook healthy meals, and get a good night’s sleep. Getting into good health habits is an excellent adulting accomplishment.


💡 Quick Tip: Refinancing could be a great choice for working graduates who have higher-interest graduate PLUS loans, Direct Unsubsidized Loans, and/or private loans.

Continuing Your Learning

It’s normal after college to need a little break from learning. For the first time in your life, there is no one telling you what to read or what classes you have to take. But once the dust has settled and you’ve had a rest from hitting the books, you might try to prioritize learning. Not only does it keep your brain sharp, it can also help boost your career.

For example, you could consider obtaining a professional license related to your career or industry. According to the most recent intel from the Bureau of Labor Statistics, 24% of workers have some sort of professional license or certification. Having one may give you a competitive boost at work or while job searching. You can go the extra mile to develop more skills needed in your career through an online class or professional conference.

What’s more, additional learning and training could lead to a profitable side hustle or gig work. For instance, you might be able to pick up extra cash during tax season supporting professional tax preparers.

Learning-wise, not all of what you do after graduation has to go towards career advancement, of course. Take that cool history of film class at your local community college. Join a book club or just load up your bookshelf with books you’re dying to read. Exploring your passions can help you feel motivated, fulfilled, and inspired. Now is the time in your life to open doors, not close them.

Recommended: What Should I Do After My Master’s Degree?

Getting Your Finances Organized

Once you graduate from college and join the working world, it’s likely time to look at whether your current banking partner suits your needs.

It can be a wise move to look for a bank that offers a good interest rate on your deposits, convenient access, and tools that help you track your money in a quick and convenient way.

As you organize your money (and don’t forget to start that emergency fund mentioned above), you may realize that one expense that may really be bringing you down is your student loan debt payments.

The average federal student loan debt is currently $37,338, according to the Education Data Initiative. Is student loan debt weighing you down? There are a few strategies you can use to help pay off your student loan debt quicker. You might start your journey to a student loan-free life by creating a monthly budget that can help you get out of debt.

•   To create a budget that can assist with paying off debt, you could start by gathering all of your bills and recent receipts. Review exactly what you need to spend on necessary living expenses (rent, food, health insurance, minimum debt payments), how much you are spending on the wants in life (travel, entertainment, clothing), and how much you can save or put toward additional debt payment.

•   There are different budgeting methods, and it’s a good idea to spend a bit of time finding the one that works for you. For instance, you might like the 50/30/20 budget rule, which says to allocate 50% of your take-home pay to necessities, 30% to wants, and 20% to savings and extra debt payoff.

Whichever technique you choose, do compare the cost of your living expenses to your paystubs to see how much you can afford to pay towards debt each month. Creating a budget can help you not only pay off your debt, but avoid accumulating more debt in the future.

Recommended: Which Debt to Pay Off First: Student Loan or Credit Card?

The Takeaway

Once you have your monthly budget under control, you might be considering refinancing your student loans as part of how you navigate life post-college. You may be able to lower your interest rate, lower your monthly payments by extending your repayment term, or release a co-signer from a previous loan.

Do note that lengthening your repayment term can increase the interest you’ll pay throughout the life of your loan.

Refinancing comes with many benefits, but keep in mind that you lose federal benefits and protections when you refinance federal loans with a private lender. But if you are not planning on taking advantage of these benefits, refinancing might be for you.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.


SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FOREFEIT YOUR EILIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers.
Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


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

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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Target Funds vs Index Funds: Key Differences

Target Funds vs Index Funds: Key Differences

Target-date funds and index funds are two common investment vehicles for individuals investing for retirement. Investors may see one or both of these types of investment as options in their 401(k) or other workplace retirement fund. Target-date funds offer a sort of set-it-and-forget-it approach to investing typically tied to an investor’s timeline, while index funds include a basket of investments corresponding to an underlying index.

Understanding the key differences between target date funds and index funds to help investors understand which is right for their portfolio.

Target-Date Funds vs Index Funds: A Comparison

Target-date funds and index funds are both common ways for investors to save for future goals, especially retirement. Target-date funds offer what can feel like a hands-off approach to saving for retirement. In a way, they’re like a retirement plan inside a single investment vehicle. Investors do not have to choose the funds held by target date funds or reallocate the fund as it nears its target date.

Target-date funds may include index funds. Index funds track specific indices and typically perform in line with the broader market.

Here’s a quick look at the main differences between these two types of funds.

Target Date Funds

Index Funds

•   Reallocated automatically. Portfolios typically become more conservative as a target date approaches.

•   A fund of funds that provides investors with diversification and a single set-it-and-forget-it solution to retirement savings.

•   Passive management translates into lower fees.

•   Designed to track an index, such as the S&P 500, and provide returns similar to the movements of the index.

•   Allows investors more flexibility in choosing the funds in their portfolios.

Target-Date Funds

A target date fund is a type of investment that holds a mix of different mutual funds, usually including stock and bond funds. When choosing a target date fund, investors must decide on a target date, often offered in five-year intervals and included in the name of the fund and corresponding with the year in which they want to retire. For example, someone in their early 30s might choose a target date of 2055 with a goal of retiring around age 65.

You could, in theory, use target date funds to save for any point in the future. However, they’re a popular type of financial security for saving for retirement and often appear on the menu of investments available to employees through their 401(k)s.

As an individual nears their target date, the fund automatically rebalances from high-risk, high-reward investments into low-risk, low-reward investments. For example, the rebalancing might include shifting a greater proportion of its holdings into bonds to help preserve accrued increases in a portfolio’s value.

Pros of Target-Date Funds

There are several reasons investors might choose a target date fund.

First, they essentially provide a ready-made portfolio of diversified stock and bond funds, making it easy to save for retirement. This may appeal to beginner investors or those who don’t want to design their own portfolios or those who find a hand-on approach to researching and choosing investments difficult.

Additionally, target-date funds provide automatic rebalancing. As the market shifts up and down, different investments may move off track from their initial allocations. When that happens, the fund will rebalance itself so that the allocation remains in line with its original allocation plan. The target date fund also automatically shifts its allocation to more conservative investments as the target date approaches.

Recommended: When Can I Retire? This Formula Will Help You Know

Cons of Target-Date Funds

Investors who want more control over their portfolios may not like target-date funds, which don’t allow investors any control over their mix of investments or when and how rebalancing takes place.

Target-date funds build portfolios using a variety of investments. Some may use index mutual funds that come with relatively low fees. Others might use managed mutual funds, which may come with higher fees. It’s important to look closely at target-date fund holdings to understand what types of fees they might charge.

Here are the pros and cons of target date funds at a glance.

Pros

Cons

•   Ready-made portfolio.

•   Diversification through a basket of mutual funds.

•   Automatic rebalancing, including a shift to more conservative assets over time.

•   Lack of control over investments and when portfolio is rebalanced.

•   Potentially higher fees for funds that hold managed mutual funds.



💡 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.

Index Funds

An index fund is a type of mutual fund or exchange-traded fund (ETF). It’s built to follow the returns of a market index, of which there are many.

These indexes track a basket of securities meant to represent the market as a whole or certain sectors. For example, the S&P 500 is a market capitalization weighted index that tracks the top 500 U.S. stocks.

An index fund may follow a market index using several strategies. Some index funds may hold all of the securities included in the index. Others may include only a portion of the securities held by an index, and they may have the leeway to include some investments not tracked by the index.

Because index funds are attempting to follow an index rather than beat it, they don’t require as much active management as fully managed funds. As a result, they may charge lower fees, making them a low-cost option for investors.

Index funds are popular choices for retirement savings accounts. They offer diversification through exposure to a wide range of securities, they’re easy to manage, and they offer the potential for steady long-term growth.

Pros of Index Funds

Low fees and full transparency are among the benefits of holding index funds. Investors can review all of the securities held by the fund, which can help them identify and weigh risk. Also, because they track an index, which updates its numbers constantly, it is unlikely fund managers will be blindsided by something they were unable to anticipate.

Index funds also potentially offer better returns than their actively managed counterparts, especially after factoring in fees.

Recommended: Index Funds vs Managed Funds: Key Differences

Cons of Index Funds

Some of the drawbacks to index funds include the fact that they are often fairly inflexible. If they follow an index that requires them to hold a certain mix of stocks, fund managers will hang on to them even if they are performing poorly. In actively managed funds, fund managers can swap out slumping securities in favor of those that are outperforming. In fact, by design, index funds rarely beat the market.

Here’s a look at the pros and cons of index funds at a glance.

Pros

Cons

•   Diversification through a basket of securities that tracks an index.

•   Transparency.

•   Lower fees. Passive management makes it cheaper to operate funds, which results in lower management fees passed on to investors.

•   Steady gains and potentially better returns than actively managed funds.

•   Lack of flexibility. Index fund managers follow stricture mandates about what can and can’t be included in the fund.

•   Index funds do not typically outperform the market.

Index Funds for Retirement

You can use index funds to build a retirement portfolio as well as to save for other goals. If you’re using them for retirement, you may want a mix of index funds covering a range of asset classes that can provide some diversity within your overall portfolio. Unlike a target-date fund, if that allocation strays from your goals, you’ll need to handle the rebalancing on your own.

Recommended: Are Mutual Funds Good for Retirement?

The Takeaway

Index funds and target-date funds are funds used by retail investors for different purposes. Investors choosing between the two will need to consider their personal financial circumstance and needs. Index funds may be an option for investors looking for passive, long-term investments that they can choose based on their own goals, risk tolerance, and time horizon. They may also be right for beginners who are looking for simple, low-cost investment options.

Target date funds, on the other hand, may be another option for long-term investors who do not want to have to rethink their portfolio allocations on a regular basis. These investors may not want to or know how to pick funds themselves.

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.

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How to Work Abroad After College

College graduates who have been bit by the travel bug but don’t have the funds to see the world might still have the opportunity to travel by working abroad after college. Living and working in a new country may have its challenges, but the experience may also transform graduates in ways that are likely to be impressive to future employers.

The Pros and Cons of Working Abroad

Though it can be an enjoyable experience, working abroad can also have challenges. Considering both the pros and cons is recommended before making this life-changing decision.

Pro: Making Money While Traveling

Working abroad allows graduates to start their career while also having the opportunity to travel. This can be a popular post-graduation choice for students who want to travel but don’t have the funds. Moving to a new country generally makes it easier to truly explore and get to know a country better.

Traveling to nearby countries may be easy, as well. Instead of visiting a single country during a one-week vacation, traveling workers might be able to experience multiple countries and cultures.

Recommended: Ways to Be a Frugal Traveler

Pro: Learning the Language

Living abroad gives people a great opportunity to learn a new language or sharpen their skills in one they already speak. Every situation, from ordering breakfast to figuring out transportation, will give recent grads an opportunity to improve their language skills. The ability to speak more than one language might also open more doors in the job market. Being multilingual has become an increasingly desired skill, and learning a language while abroad could pay off in the future.

Con: Culture Shock

Unfamiliar surroundings. A different culture. Moving to a new country means making adjustments. People will communicate differently, eat differently, work differently. Every part of life will be new, which can be both exciting and stressful. Adjustment to life in a new place may be experienced in a range of stages, beginning with excitement and enthusiasm, with maybe some frustration in the middle, to feeling at home in new surroundings and building relationships.

Con: Language Barrier

Dealing with a language barrier can be stressful and scary. Not only can a language barrier make daily activities difficult, it can also make building relationships slow-going. This can feel isolating for people who don’t understand the local language.

Finding Jobs

Finding an international job isn’t all that different from finding one here in the states. Recent grads might consider looking on well-known job search sites or those specific to finding opportunities in other countries. Some overseas job opportunities might be found on websites for international humanitarian organizations, travel magazines, or even the United Nations.

Requirements to Work Abroad

Getting a passport or travel visa and an employment visa are important parts of preparing to work in a foreign country. Most countries grant specific work visas to international workers, but the requirements and processes for getting the visa will vary by country.

It’s also important to know whether or not fluency in the language is required. People who are not fluent in a language other than English and do not want to learn before moving may want to consider countries where English is the official language.

Employment Abroad

Graduates who like to think long term may want to consider applying for jobs with global companies that have positions in multiple countries, including the United States. This may open up opportunities to move back to the U.S. in the future.

One popular choice for working abroad is teaching English. A teaching degree may or may not be required, so make sure to check the requirements in the country you are considering.

Another popular option is to look for seasonal work, such as jobs in the tourism industry. This can include working at a ski resort, a hostel, or bartending at a local restaurant. People who enjoy caring for children might be interested in working as an au pair, which typically includes room and board in addition to a salary.

Other Post-Graduation Decisions

Finding a job isn’t the only task that begins after graduation. Once a student graduates, drops below half-time enrollment, or withdraws from school, the task of paying back student loans begins. Direct Subsidized, Direct Unsubsidized, and Federal Family Education Loan borrowers have a six-month grace period before they’re required to start making payments. Students who took out a Perkins loan have a nine-month grace period.

Refinancing student loans into one new loan may offer borrowers a lower interest rate or different terms than their existing loans. Both federal and private student loans can be refinanced, but when federal student loans are refinanced by a private lender, the borrower loses federal benefits, such as income-driven repayment plans, loan forgiveness programs, deferment, and forbearance.

The Takeaway

Whether your future employment is in the U.S. or in a foreign country, there are many options to consider. Pros of working abroad after college include gaining new work and life experiences, learning a new language, and making money while traveling. Cons of working abroad include experiencing culture shock and language barriers, and possibly missing out on events back at home.

However, no matter where your future employment takes you, if you have a student loan, repayment will follow.

If refinancing a student loan is something you’re considering, SoFi has options that may work for your situation. Saving money is simple with SoFi’s online application process, low fixed or variable rates, and flexible terms.

See if you prequalify for student loan refinancing with SoFi.


SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FOREFEIT YOUR EILIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers.
Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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

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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