We’re onto part two of our three-day Retirement Power-Up Challenge. In part one, you identified the amount you’ll need to retire, reviewed the amount you’re on pace to save, and found the gap in between. Today’s challenge is about making your money work for you, because that’s when the real magic happens.

Part 2: Making Money Magic

One tool for building wealth – and reaching your savings goal – is investing. The engine behind it is called compound growth.

When investment returns begin to generate their own returns, that’s the power of compounding in action. Picture a snowball rolling downhill; as it rolls, it gathers more snow, building both size and speed.

Retirement accounts are one of the best ways to take advantage of compounding. They’re built for long-term growth and offer tax advantages that can help your money grow more effectively over time through your investments. Don’t forget that all investing also bears risk.

The most common types are workplace 401(k) plans, where you save pre-tax dollars from your paycheck, and individual retirement accounts (IRAs), which may also offer tax benefits. (There are two types of IRAs; find out which one is right for you with this quiz.)

Hot Tip: You can have a 401(k) and an IRA. While a 401(k) has a higher annual contribution limit and a potential match from your employer, an IRA can give you access to more investment choices, such as individual stocks, ETFs, or alternative investments like real estate. Greater flexibility means more control, and even more ways to potentially build wealth over time.

Your SoFi Toolkit

When you open a SoFi IRA¹, we’ll match 1% of your contributions to give you an extra boost from day one. Don’t forget that contributions are not automatically invested — you’ll need to choose a mutual fund, ETF, or another investment that aligns with your goals.

Today’s Challenge: Start Investing

It’s time to take action. Choose one path to boost your savings and invest.

•  If you already have a 401(k), increase your contribution by 1%. Extra points if your employer is matching your contribution.

  Great for: making an impact with little effort, especially if you aren't taking full advantage of your employer match yet. If you increase your contribution, it will likely automatically be invested.

•  Open an IRA, or fund an existing one. Then make your investment choices.

  Great for: investors who want more control and a wider range of choices over their investments. Check out SoFi’s Investing 101 library to make more informed decisions.

•  Explore robo-investing in your IRA for an automated service that picks and manages investments for you.

•  Great for: investors looking to optimize their investments but lacking time and resources to do all the heavy-lifting

Make sure your investment choices reflect your financial goals and risk tolerance. We talk more about this in part three of this challenge.

In Short

Good Habit of the Day

A bonus, tax refund, or unexpected gift can fuel your retirement journey. Resist the urge to spend it and optimize your windfalls by funneling them directly into your investments.

Coming Up

You’re two-thirds done with the Retirement Power-Up Challenge! Today was about the power of investing, and we only just touched on retirement plans — you can learn more about all of the different types of plans and tools here.

In the third and final part, we’ll cover one of the greatest challenges of all: staying the course and playing the long game, even when the market gets bumpy. Check out part three to learn how resilience can make all the difference.

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.

¹Terms and conditions apply. For 401(k) rollovers, existing SoFi IRA members must complete 401(k) rollovers via this link. For SoFi members without a SoFi IRA, a SoFi IRA must first be opened, and 401(k) rollover must be completed utilizing Capitalize via this link. SoFi and Capitalize will charge no additional fees to process a 401(k) rollover to a SoFi IRA. SoFi is not liable for any costs incurred from the existing 401k provider for rollover. Please check with your 401(k) provider for any fees or costs associated with the rollover.

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:

•  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.

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For a full listing of the fees associated with Sofi Invest please view our fee schedule.

Advisory services are offered by SoFi Wealth LLC, an SEC-registered investment adviser. Information about SoFi Wealth’s advisory operations, services, and fees is set forth in SoFi Wealth’s current Form ADV Part 2 (Brochure), a copy of which is available upon request and at www.adviserinfo.sec.gov.

Terms and conditions apply*. For 401k rollovers, existing SoFi IRA members must complete 401k rollovers via this link For SoFi members without a SoFi IRA, a SoFi IRA must first be opened, and 401k rollover must be completed utilizing Capitalize via this link. SoFi and Capitalize will charge no additional fees to process a 401(k) rollover to a SoFi IRA. SoFi is not liable for any costs incurred from the existing 401k provider for rollover. Please check with your 401k provider for any fees or costs associated with the rollover. For IRA contributions, only deposits made via ACH and cash transfer from SoFi Bank accounts are eligible for the match. Click here for the 1% Match terms and conditions.

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