Life Stages Archives

Nov

2025

A Beginner’s Guide to Options Trading

By Inyoung Hwang | Growing Wealth, invest, Investing | Comments Off

Editor's Note: Options are not suitable for all investors. Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Please see the Characteristics and Risks of Standardized Options.

Table of Contents

What Is Options Trading?
What Are Puts and Calls?
Options Trading Terminology
“The Greeks” in Options Trading
How to Trade Options
Basic Options Trading Strategies
Pros & Cons of Options Trading
FAQs

An option is a financial instrument whose value is tied to an underlying asset; this is known as a derivative. Instead of buying an asset, such as company stock, outright, an options contract allows the investor to try to benefit from price changes in the underlying asset without actually owning it.

Because options contracts typically cost much less than the option’s underlying asset, trading options can offer investors leverage that may result in potential gains or losses depending on how the market moves. But options are very risky, and also can result in steep losses. That’s why investors must meet certain criteria with their brokerage firm before being able to trade options.

Key Points

• Options trading involves buying or selling options contracts for the right — and for sellers the obligation — to trade assets at a fixed price by a set date.

• Options are derivatives, deriving value from underlying assets, allowing trades based on anticipated price movements.

• Call options offer buyers the right to buy underlying assets at a set price, while put options offer buyers the right to sell assets at a set price.

• Key terms like the put-call ratio and the Greeks are essential for evaluating market sentiment and options behavior.

• Options trading may offer high returns and additional income but also carry significant risks, including the possibility of experiencing rapid losses.

What Is Options Trading?

Knowing how options trading works requires understanding what an option is, as well as its potential advantages, disadvantages, and risks.

What Are Options?

Buying an option is simply purchasing a contract that represents the right, but not the obligation, to buy or sell a security at a fixed price by a specified date.

• The options buyer (or holder) has the right, though not the obligation, to buy or sell a certain asset, like shares of stock, at a certain price by a specific date (the expiration date of the contract). Buyers pay a premium for each options contract; this represents the market price of the option contract at the time of purchase.

• The options seller (or writer), who is on the opposite side of the trade, has the obligation to buy or sell the underlying asset at the agreed-upon price, aka the strike price, if the options holder chooses to exercise their contract.

Options buyers and sellers may use options to attempt to profit if they think an asset’s price will go up (or down), to offset risk elsewhere in their portfolio, or to potentially enhance returns on existing positions. There are many different options trading strategies.

Why Are Options Called Derivatives?

An option is considered a derivative instrument because it is based on the value of the underlying asset: an options holder doesn’t purchase the asset, just the options contract. That way, they can make trades based on anticipated price movements of the underlying asset, without directly owning the asset itself.

In stock options, one options contract typically represents 100 shares.

Other types of derivatives include futures, swaps, and forwards. Options on futures contracts, such as the S&P 500 index or oil futures, are also popular derivatives.

It’s also important to know the difference between trading using margin vs. options? Having a margin account does offer investors leverage for other trades (e.g., trading stocks). But while a brokerage may require you to have a margin account in order to trade options, you can’t purchase options contracts using margin. That said, an options seller (writer) might be able to use margin to sell options contracts.

Recommended: What Are Derivatives?

What Are Puts and Calls?

There are two main types of options: calls vs. puts.

Call Options 101

When purchased, call options give the options holder the right (though not, again, the obligation) to buy an asset at a certain price in the future, typically in anticipation of the asset’s price rising

Here’s how a call option might work. The options buyer purchases a call option tied to Stock A with a strike price of $40 and an expiration three months from now. Stock A is currently trading at $35 per share.

If Stock A appreciates to a value higher than $40 per share, the option holder may choose to exercise the contract to realize a profit, or sell their option for a premium that’s higher than what they initially paid. If the value of Stock A goes up, the value of the call option may, all else being equal, also go up.

The opposite may also occur. If shares of Stock A go down, the value of the call option may go down, and expire worthless.

Assuming the price goes up and the options holder wants to exercise their call option, they would, with an American-style option, have until the expiration date to do so. With European-style options, the option can only be exercised on the expiration date). When they exercise, they would typically buy 100 shares at the strike price.

Put Options 101

Meanwhile, put options give holders the right to sell an asset at a specified price by a certain date, typically with the anticipation that the asset price will fall.

Here’s how a put trade might work. A trader buys a put option tied to Stock B with a strike price of $45 and an expiration three months from now. Stock B is currently trading at $50 per share.

If the price of Stock B falls to $44, below the strike price, the options holder can exercise the put to profit from the price difference. Alternatively, the value of the option may also rise in this scenario, giving the option holder the choice of selling the option itself for a potential gain.

Should the price of the underlying asset rise instead of fall, however, the option may expire worthless.

What Is the Put-Call Ratio?

A stock’s put-call ratio is the number of put options traded in the market relative to calls. It is one measure that investors look at to help gauge sentiment toward the shares. A high put-call ratio may indicate bearish market sentiment, whereas a low one may reflect more bullish views.

Quick Tip: How do you decide if a certain online trading platform or app is right for you? Ideally, the online 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.

Options Trading Terminology

• The strike price is the price at which the option holder can exercise the contract. If the holder decides to exercise the option, the seller is obligated to fulfill the contract.

• With American-style options the expiration is the date by which the contract needs to be exercised (meaning it can be exercised up to and on the expiration date). The closer an option is to its expiration, the lower the time value.

• Premiums reflect the value of an option; it’s the current market price for that option contract.

• Call options are considered in the money when the shares of the underlying stock trade above the strike price. Put options are in the money when the underlying shares are trading below the strike price.

• Options are at the money when the strike price is equal to the price of the asset in the market. Contracts that are at the money tend to see more volume or trading activity, as holders may choose to trade or exercise the options.

• Options are out of the money when the underlying security’s price is below the strike price of a call option, or above the strike price of a put option. For example, if shares of Stock C are trading at $50 each and the call option’s strike price is $60, the contracts are out of the money. For an out-of-the-money put option, the shares of Stock C may be trading at $60, while the put’s strike price is $50, so it is not currently exercisable.

“The Greeks” in Options Trading

Traders use a range of Greek letters to gauge the value of options. Here are some of the Greeks to know:

• Delta measures how much the option’s value is expected to change when the underlying asset’s price changes by $1.

• Gamma measures how much Delta is expected to change when the underlying asset’s price changes by $1.

• Theta is the sensitivity of the option to time.

• Vega is the sensitivity of the option to implied volatility.

• Rho is the sensitivity of the option to interest rates.

Finally, user-friendly options trading is here.*

Trade options with SoFi Invest on an easy-to-use, intuitively designed online platform.

*Check out the
OCC Options Disclosure Document.

How to Trade Options

The market for stock options is typically open from 9:30am to 4pm ET, Monday through Friday, while futures options can usually be traded almost 24 hours.

This is how you may get started trading options:

1. Pick a Platform

Log into your investment account with your chosen brokerage.

2. Get Approved

Your brokerage may base your approval on your trading experience. Trading options is riskier than trading stocks because some strategies can expose traders to losses that exceed their initial investment (or result in rapid capital loss). Options trading is for experienced investors who have a higher tolerance for risk.

3. Place Your Trade

Decide on an underlying asset and options strategy, being sure you have a risk management plan and exit strategy in place, should the price of the underlying asset move adversely. Then place your trade.

4. Manage Your Position

Monitor your position to know whether your options are in, at, or out of the money.

Basic Options Trading Strategies

Options offer a way for holders to express their views on the direction or volatility of an asset’s price through a trade. But traders may also use options to hedge or offset risk from other assets that they own. Here are some important options trading strategies to know:

Long Put, Long Call

In simple terms, if the buyer purchases an option — be it a put or a call — they are ‘long’. A long put or long call position means the holder owns a put or call option.

• A holder with a long call strategy may be able to purchase the asset at a lower price than market value if the asset rises above the strike price before expiration.

• A holder with a long put strategy may be able to sell the asset at a higher price than market value if the market price drops below the strike price before expiration.

Covered and Uncovered Calls

If an options writer sells call options on a stock or other underlying security they also own outright, the options are referred to as covered calls. The selling of options may allow the writer to generate an additional stream of income while committing to sell the shares they own for the predetermined price if the option is exercised.

Uncovered calls, or naked calls, also exist, when options writers sell call options without owning the underlying asset. However, this is a much riskier trade since the exercising of the option would oblige the options seller to buy the underlying asset in the open market, in order to sell the stock to the option buyer.

Note that the seller wants the option to stay out of the money so that they can keep the premium (which is how the seller may generate income).

Spreads

Option spread trades involve buying and selling a defined number of options for the same underlying asset but at different strikes or expirations.

A bull spread is a strategy in which a trader anticipates a potential increase in the price of an underlying asset..

A bearish spread is a strategy in which a trader anticipates a potential decline in the price of the underlying asset.

Horizontal spreads involve buying and selling options with the same strike prices but different expiration dates.

Vertical spreads are created through the simultaneous buying and selling of options with the same expiration dates but different strike prices.

Straddles and Strangles

Strangles and straddles in options trading allow traders to potentially benefit from a move in the price of the underlying asset, rather than the direction of the move.

In a straddle, a trader buys both calls and puts with the same strike prices and expiration dates to benefit from volatility rather than direction. The options buyer may see a gain if the asset price posts a big move, regardless of whether it rises or falls.

In a strangle, the holder also buys both calls and puts but with different strike prices.

Pros & Cons of Options Trading

Like any other type of investment, or investment strategy, trading options comes with certain advantages and disadvantages that investors should consider before going down this road.

Pros of Options Trading

• Options trading is complex and involves risks, but for experienced investors who understand the fundamentals of the contracts and how to trade them, options can be a useful tool to gain exposure to asset price movements while putting up a smaller amount of money upfront.

• The practice of selling options can also be a way for writers to attempt to earn income by collecting premiums. This was a popular strategy particularly in the years leading up to 2020 as the stock market tended to be quiet and interest rates were low.

• Options can also be a useful way to protect a portfolio. Some investors offset risk with options. For instance, buying a put option while also owning the underlying stock allows the options holder to offset their losses if the security declines in value before that option expires.

Cons of Options Trading

• A key risk in trading options is that losses can be outsized relative to the cost of the contract in some cases — especially for sellers, who may face losses that exceed the initial premium received if the market moves sharply against them. When an option is exercised, the seller of the option is obligated to buy or sell the underlying asset, even if the market is moving against them.

• While premium costs are generally low, they can still add up. The cost of options premiums can eat away at an investor’s profits. For instance, while an investor may net a profit from a stock holding, if they used options to purchase the shares, they’d have to subtract the cost of the premiums when calculating the stock profit.

• Because options expire within a specific time window, there is only a short period of time for an investor’s thesis to play out. Securities like stocks don’t have expiration dates.

Advantages and Disadvantages of Options Trading
Pros	Cons
Additional income	Potential outsized losses
Hedging portfolio risk	Premiums can add up
Less money upfront than owning an asset outright	Limited time for trades to play out

Test your understanding of what you just read.

The Takeaway

Options are derivative contracts on an underlying asset (an options contract for a certain stock is typically worth 100 shares). Options are complex, high-risk instruments, and investors need to understand how they work in order to reduce the risk of seeing steep losses.

When an investor buys a call option, it gives them the right but not the obligation to buy the underlying asset by or on the expiration date. When an investor buys a put option, it gives them the right but not the obligation to sell the underlying asset by or on the expiration date.

The contracts work differently for options sellers/writers.

The seller or writer of a call option has the obligation to sell the underlying asset at the agreed strike price to the options holder, if the holder chooses to exercise the option on or before its expiration. The seller of a put option has the obligation to buy the shares of the underlying asset from the put option holder at the agreed strike price.

SoFi’s options trading platform offers qualified investors the flexibility to pursue income generation, manage risk, and use advanced trading strategies. Investors may buy put and call options or sell covered calls and cash-secured puts to speculate on the price movements of stocks, all through a simple, intuitive interface.

With SoFi Invest® online options trading, there are no contract fees and no commissions. Plus, SoFi offers educational support — including in-app coaching resources, real-time pricing, and other tools to help you make informed decisions, based on your tolerance for risk.

Explore SoFi’s user-friendly options trading platform

FAQs

What is options trading and how does it work?

Options trading involves buying and selling contracts that give the holder the right — but not the obligation — to buy or sell assets at a set price by a certain date. These contracts derive their value from the underlying asset, and are often used for speculation or risk management.

Can you make $1,000 a day trading options?

It may be possible to make $1,000 in a day by trading options, but this depends on market conditions, strategy, capital, and risk tolerance. Most traders do not see consistent high-dollar returns, and losses can exceed the initial investment, meaning this form of trading may require a high risk tolerance.

Can I trade options with $100?

Some brokerages may allow you to start trading options with $100, particularly if you’re buying low-cost contracts. Account approval and margin requirements may vary, however. Options trading also carries high risk, even with a small investment.

Is options trading better than stocks?

Options trading is not inherently better or worse than trading stocks. It offers different risk-reward dynamics and may suit experienced traders seeking leverage or hedging strategies. However, options are more complex and can lead to greater losses than stocks

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

SOIN-Q325-014

Nov

2025

Up-close image of the hand of an older man in a blazer holding a briefcase and ready to go to work.

Pros & Cons of Working After Retirement

By Pam O’Brien | invest, Investing, Preparing for Retirement | Comments Off

Many retirees continue working or take on a new job, but working after retirement can have downsides.

Nov

2025

How to Open a Brokerage Account

By Austin Kilham | Growing Wealth, invest, Investing | Comments Off

When you open a brokerage account with a brokerage firm, you transfer money into the account that you can use to start investing. While some brokerage accounts may set an account minimum, there is typically no limit to how much you can deposit or when you can withdraw your money.

With a brokerage account, investors can invest in a variety of securities, including stocks, bonds, ETFs, and more. There are many brokerages, but the steps to open a brokerage account are similar among most of them.

Key Points

Select a brokerage provider that aligns with your investment goals, considering services and fees.
Complete the online account setup by submitting personal and financial information.
Fund the account by transferring money, similar to a bank deposit.
Start trading stocks, bonds, and ETFs once the account is funded.
SIPC insurance protects up to $500,000 in cash and securities if the brokerage fails.^[1] However, if the brokerage firm fails, the account fails, too.

How to Open a Brokerage Account

How to Open a Brokerage Account Step-by-Step

There are a few simple steps to opening your first brokerage account. We’ll dive deep into each one below.

Choose a brokerage provider.
Sign up for an account.
Transfer money.
Start trading.

Step 1: Choose a Brokerage Provider

There are several types of brokerage accounts^[2], and the type you choose will depend on what you’re trying to accomplish.

Full-service brokerage firms not only allow clients to trade securities, they may also offer financial consulting and other services — though the price may be steep, compared to the other options here.
Discount brokerage firms typically charge lower fees than full-service, but as a result clients don’t have access to additional financial consulting or planning services.
Online brokerage firms are typically online-only, allowing clients to sign up, transfer money, and make trades through their website. These firms typically offer the lowest fees.

The accounts above are known as cash accounts: You must buy securities with funds you put in your account ahead of time.

You may also encounter other more complicated types of brokerage accounts known as margin accounts, which allow you to borrow money from your brokerage to make investments, using your case account as collateral. These accounts tend to be for sophisticated investors willing to shoulder the risk that investments bought with borrowed funds will lose value.

Before working with an individual investment advisor or a firm and opening a cash or margin account, it can be a good idea to run a check on their background. The Financial Industry Regulatory Authority (FINRA) offers online broker checks where you can enter a broker’s name, or the name of a firm, to learn whether a broker is registered to sell securities, offer investment advice, or both.^[3]

And you can learn about a broker’s employment history, regulatory actions, and whether there are past or current arbitrations and complaints.

Step 2: Sign Up for a Brokerage Account

Most brokers of all kinds allow you to open and access your brokerage account online. When you open the account, you will likely be asked to provide your Social Security number or taxpayer identification number, your address, date of birth, driver’s license or passport information, employment status, annual income and net worth. You may also be asked about your investment goals and risk tolerance.

For the most part, they should not charge you a fee for opening an account. While some may require account minimums, others allow you to open an account with no minimum deposit. There is no limit on the number of brokerage accounts you can open, and you may be able to hold multiple accounts with multiple brokerage firms.

Step 3: Transfer Money

You will need to fund your new brokerage account before you can purchase any types of securities. You can deposit money in a brokerage account like you would in a traditional bank account.

Step 4: Start Trading

Many brokerage firms will offer a way for you to earn interest on uninvested funds so that your money continues to work for you even when not invested in the market.

How Do Brokerage Accounts Work?

The brokerage firm with which you hold your account maintains the account and acts as the custodian for the assets you hold. In other words, the custodian provides a space for investors to use their account in the way that it was intended.

However, you own the investments in the account and can buy and sell them as you wish. The brokerage firm acts as a middleman between you and the markets, matching you with buyers and sellers, and executing trades based on your instructions.

For example, if you place an order with your brokerage to buy a certain number of shares of stock, the brokerage will match you with a seller looking to sell those shares and make the trade for you.

What’s the Difference Between Brokerage Accounts and Retirement Accounts?

Brokerage accounts are also known as taxable accounts, because profits on sales of securities inside the account are potentially subject to capital gains taxes. Generally speaking, these accounts offer no tax advantages for investors.

Retirement accounts, on the other hand, offer a number of tax advantages that may make them preferable to taxable accounts if you’re planning to save for retirement. Retirement accounts place limits on how much money you can contribute and when you can withdraw funds.

If retirement planning is your main concern, you may consider saving as much as you can in both a 401(k) if your employer offers one, and a traditional or Roth IRA. If you have funds left over, you may choose to invest those in your taxable brokerage account.

Is My Money Safe in a Brokerage Account?

The money and securities held in a brokerage account are insured by the Securities Investor Protection Corporation (SIPC). The SIPC protects against the loss of cash and securities held at failing brokerage firms. If your brokerage firm goes bankrupt, the SIPC covers $500,000 worth of losses, including $250,000 in cash losses.

The SIPC only provides protection for the custody function of a brokerage firm. In other words, they work to restore the cash and securities that were in a customer’s account when the brokerage started its liquidation proceedings. The organization does not protect against declines in value of the securities you hold, nor does it protect against receiving and acting upon bad investment advice.

It is important that any investor realizes and accepts that investment comes with a certain amount of risk. While security prices may gain in value, it is also possible that you could lose some or all of your investment.

The Takeaway

Opening a brokerage account is a simple process that allows you to invest in securities. Effectively, you’re depositing money at a brokerage, which will allow you to buy investments such as stocks, bonds, or ETFs. There are numerous brokerages out there, and different types of brokerage accounts.

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.

Opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.¹

FAQ

How do I open a brokerage account?

Broadly speaking, you can open a brokerage account by choosing a broker or brokerage account provider, signing up, transferring money into the account, and then starting to trade or invest.

What are the different types of brokers?

There are several different types of brokerages, and those include full-service brokerage firms, discount brokerage firms, and online brokerage firms. Each type may offer different products and services, or levels of service.

Is money in a brokerage account safe?

While nothing is ever truly safe, money and securities that are held in brokerage accounts are insured by the Securities Investor Protection Corporation, or SIPC, for up to $500,000 in losses.

Article Sources

SIPC. What SIPC Protects.
FINRA. Investment Accounts: Brokerage Accounts.
FINRA. BrokerCheck.

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

SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

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.

Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.

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.

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

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

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

¹Probability of Member receiving $1,000 is a probability of 0.026%; If you don’t make a selection in 45 days, you’ll no longer qualify for the promo. Customer must fund their account with a minimum of $50.00 to qualify. Probability percentage is subject to decrease. See full terms and conditions.
Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOIN-Q225-132

Nov

2025

A young woman with dark hair tied back, wearing a white polka-dot shirt, focuses on a laptop researching student loans.

2026 Top Game Design Schools and Colleges in the U.S.

By Susan Guillory | Going to College, Student Loans, student_loan | Comments Off

Table of Contents

What to Look for in a Game Design School
Top Colleges for Game Design
FAQ

Turn your passion for playing video games into a career by attending one of the top game design colleges in the country.

Game design is an in-demand industry, with new video games for gaming systems, tablets, and phones continually being developed and released. Here, we’re exploring 20 of the best gaming development programs you might want to consider.

What to Look for in a Game Design School

If you’re looking into colleges for video game design, you’ll quickly realize that not all programs are created equally. Some schools only offer a class or two in game design, while others go deep into the field, offering internships and hands-on experiences.

If you’re interested in attending a game design school, it’s important to research schools and programs prior to making your decision. Make sure to look into the specific type of degree you want (undergraduate degree or certificate, for example), the length and commitment of the program, what current and former students have to say about the program, the helpfulness of the faculty and staff, and more.

Fortunately, we’ve done some of the work for you. Here’s a look at some of the best game design programs in the country.

Top Colleges for Game Design

There are a number of video game design colleges and programs in the U.S. Here, we’ve created a list of well-regarded programs at all different price points.

Shawnee State University

Shawnee’s Game Design School has made it on The Princeton Review’s Top Undergraduate Schools for Game Design list for 15 consecutive years, and with such low tuition, it might be a great bargain. Located in Portsmouth, OH, you can elect to study Game Programming or Game Arts.

• 1 year of tuition: In-state $10,180.38; Out-of-state $17.248.50

University of Silicon Valley

USV is available on-campus in the heart of Silicon Valley or 100% online. The university offers Bachelor of Arts degrees in both Game Design and Game Art, as well as a Bachelor of Science in Game Engineering. After graduating, students are qualified for roles including animator, modeler, game writer, computer programmer, and more.

• 1 year of tuition: $21,980 (in-person); $16,667 (online)

Arizona State University

ASU’s Bachelor of Arts in Interdisciplinary Studies offers a concentration in Computer Gaming with three tracks to choose from: Programming, Art, or Education. Located in stunning Tempe, AZ, courses in the program include Introduction to Graphics and Game Development, Fundamentals of Game Art, Game Engine Architecture, and 3D Modeling and Texturing.

• 1 year of tuition: In-state $12,975; Out-of-state $35,167

University of Utah

The Utah Division of Games, located in Salt Lake City, is a college for game designing that combines art, humanities, social science, and computational research and practice to prepare students for careers in the field. Students can choose from multiple gaming bachelor’s degrees, a master’s degree, and even a minor in gaming. The Bachelor of Science in Games includes courses like Survey of Games, Ethics in Games, and Alternative Game Development.

• 1 year of tuition: In-state $10,004; Out-of-state $31,748

💡 Quick Tip: Fund your education with a competitive-rate, no-fees-required SoFi private student loan that covers up to 100% of school-certified costs.

University of Southern California

USC’s Interactive Media & Games program offers three undergraduate options: a BFA in Themed Entertainment, a BFA in Game Development and Interaction, and a BFA in Game Art. Located in sunny Los Angeles, the program also offers four graduate degrees and nine minors.

• 1 year of tuition: $75,162

Laguna College of Art and Design

Laguna College of Art and Design Game Art program, located in Laguna Beach, CA, prepares students for employment in any studio or software environment. Students learn the fundamentals of storytelling at every phase of the creation process, how to use a workflow methodology, and how to solve problems in concept challenges.

• 1 year of tuition: $39,376

Full Sail University

Full Sail’s Interactive Technology Bachelor of Science Completion Program in Winter Park, FL, offers a Game Design concentration that includes high-level game design and production courses that prepare students to work in game studios after graduation. Recognized as a Top Game Designs Schools by The Princeton Review, the program offers multiple start dates throughout the year and has an accelerated schedule for students looking to finish early.

• 1 year of tuition: $40,300

Drexel University

Drexel University in Philadelphia offers a Bachelor of Science in Game Design & Production, and is recognized as one of the country’s top undergraduate game design programs. Students learn skills like scripting and storytelling, computer programming, computer graphics, animation, motion capture, and more.

• 1 year of tuition: $64,262

Bradley University

Bradley University in Peoria, IL, offers both a BA and a BS in Game Design. During your studies, you’ll have the opportunity to intern for a design company, participate in competitions, and show your work at an annual exhibit.

• 1 year of tuition: $43,850

Savannah College of Art and Design

SCAD’s Interactive Design and Game Development degrees offer locations in Atlanta and Savannah, GA, with the option to study abroad in Lacoste, France. Students can study at any of the three locations each semester, with the option to switch locations during their time in the program. Courses in the program include Digital Communication, Visual Culture in Context: Pre-Modern Global Perspectives, Aesthetics, and Core Principles: Game Art.

• 1 year of tuition: $42,165

Michigan State University

MSU offers a Game Design and Development Program, a Top 10 Ranked program by The Princeton Review, that was founded in 2005. Students can choose from a Bachelor of Arts in Games and Interactive Media, a Minor in Game Design and Development, or a Serious Games Graduate Certificate. All students get the opportunity to design prototypes and conduct research on the effects of gaming.

• 1 year of tuition: In-state $17,374; Out-of-state $44,758

Recommended: How to Complete the FAFSA Application

University of California – Irvine

The Bachelor of Science degree in Game Design & Interactive Media at UC Irvine includes coursework in game programming, game design and development, visual design, interactive storytelling, data science, and game studies. Students graduate the program well-prepared for a career as a designer, developer, and industry leader. Students also get access to well-respected industry mentors.

• 1 year of tuition: In-state $19,268; Out-of-state $56,870

Champlain College

Champlain’s Bachelor of Science in Game Programming provides hands-on experience, with students collaborating to create and complete game projects. Located in gorgeous Burlington, VT, Champlain was named a “Most Innovative School” by U.S. News & World Report in 2022. Upon graduation, students are well-prepared to work in gaming studios.

• 1 year of tuition: $48,800

Quinnipiac University

Level up your creativity with Quinnipiac University’s Game Design & Development Program. Ranked as one of The Princeton Review’s Top Game Design Programs, students can choose a concentration to focus on, including programming, technology, design process, art, game studies, and more. Located in Hamden, CT, the program also gives students the chance to collaborate with partners both within and outside the community.

• 1 year of tuition: $57,700

Rochester Institute of Technology

The Game Design, Development, and Arts program at RIT has been rated one of the best programs in this field of study by many organizations, including U.S. News & World Report. Degree options include 3D Digital Design, Film & Animation, Illustration, New Media Interactive Development, and more.

• 1 year of tuition: $61,204

💡 Quick Tip: Need a private student loan to cover your school bills? Because approval for a private student loan is based on creditworthiness, a cosigner may help a student get loan approval and a lower rate.

Worcester Polytechnic Institute

The Interactive Media and Game Development (IMGD) program at WPI dives into different aspects of gaming design, including digital painting, 3D modeling, writing for games, game audio, artificial intelligence, and virtual reality. Located in Worcester, MA, the program is recognized as one of the oldest gaming programs in the country.

• 1 year of tuition: $62,266

New York University

New York University’s BFA in Game Design has three primary areas of study: Game Studies, Game Design, and Game Development. You can also choose from one the following Production Areas: Programming, Video Design, Audio Design, and Game Business. Though tuition here is a bit higher than at some of the other schools, you can pay for it with a federal or private student loan.

• 1 year of tuition: $65,622

Carnegie Mellon

The Game Design undergraduate program at Carnegie Mellon in Pittsburgh, PA, will give you a solid foundation in game systems and mechanics design, interactive narrative and character development, visual and audio asset creation, game programming, interface design and user testing, and collaboration and the iterative design process.

• 1 year of tuition: $68,096

University of California – Santa Cruz

In USC Santa Cruz’s Bachelor of Science in Computer Science: Computer Game Design, you’ll learn about the construction and design of interactive computer games. In your final year of study, you’ll be immersed in an intensive year-long game project sequence.

• 1 year of tuition: In-state: $16,785; Out-of-state: $37,602

Recommended: Student Debt Guide

Cornell University

Cornell, another of the best game design colleges, is located in Ithaca, NY. It offers a minor in Game Design that includes classes like Intro to Computer Game Architecture, Advanced Computer Game Architecture, Analytics-Driven Game Design, Graphics and Art, the Psychology of Gaming, and Human-Computer Interaction.

• 1 year of tuition: $71,266

The Takeaway

With so many game design colleges available, it might be hard to make a decision. Factors to keep in mind include the type of program, the location, the faculty and staff, and the cost.

However, don’t let a high sticker price keep you from applying to your top choice. Many colleges offer generous financial aid packages — which may include grants, scholarships, work-study, and federal student loans — that can make your education more affordable.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

What’s the most affordable game design program?

Shawnee State University offers a nationally acclaimed game design program with low tuition. Tuition for in-state residents is $10,180 per year.

What’s the most expensive game design program?

Cornell University has one of the most expensive game design programs in the U.S. at over $71,000 per year.

How much does game design school cost?

Game design schools can range anywhere from $10,180 to more than $70,000 per year.

Photo credit: iStock/fizkes

SoFi Private Student Loans
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Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Bank, N.A. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.

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Nov

2025

A man sitting on his couch and working on his computer, tracking the funds in his online investment account.

Target Funds vs Index Funds: Key Differences

By Austin Kilham | Growing Wealth, invest, Investing | Comments Off

Table of Contents

Target-Date Funds vs Index Funds: A Comparison
Target-Date Funds
Index Funds
Index Funds for Retirement
FAQ

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 investments 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 market index.

Understanding the key differences between target date funds and index funds can help investors understand which option may be a fit for their portfolio.

Key Points

• Target-date funds provide a set-it-and-forget-it investment strategy, ideal for investors looking for a more hands-off approach.

• These funds automatically reallocate assets to become more conservative as the investor’s retirement date nears.

• Index funds offer broad market exposure and are generally passively managed, resulting in lower fees.

• Investors in index funds may benefit from simplicity and cost-effectiveness, which may make them suitable for beginners.

• Key considerations when choosing between a target-date fund and an index fund include personal financial goals, risk tolerance, and the trade-off between control and convenience.

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. Investors choose a target fund with a date that’s closest to the year they plan to retire.

Over time, these funds automatically adjust their asset allocation, typically becoming more conservative as the investor gets closer to retirement. Investors do not have to choose the assets 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 market 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
• A fund that provides investors with a set-it-and-forget-it option to retirement savings. • Reallocates automatically. Portfolios typically become more conservative as a target date approaches. • May have higher fees if they are actively managed.	• Designed to track an index, such as the S&P 500, and seek to achieve returns similar to the movements of the index. • Allows investors more flexibility in choosing the funds in their portfolios. • Passive management typically translates into lower fees.

Target Date Funds

Index Funds

• A fund that provides investors with a set-it-and-forget-it option to retirement savings.

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

• May have higher fees if they are actively managed.

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

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

• Passive management typically translates into lower fees.

Target-Date Funds

A target date fund is a type of investment that holds a mix of different funds, which may include mutual funds, such as 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 vehicle 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 higher-risk, higher-reward investments into lower-risk, lower-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, those who don’t want to design their own portfolios, or those who find a hands-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?

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. • A basket of mutual funds may help provide some diversification. • 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.

Pros

Cons

• Ready-made portfolio.

• A basket of mutual funds may help provide some diversification.

• 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.

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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 are designed to 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.

Historically, index funds have also potentially offered better returns over the long term than their actively managed counterparts, especially after factoring in fees.

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, they decline in value when the market does.

In addition, because many index funds use market capitalization weighting, the funds can be concentrated in a few large companies with a higher market capitalization. If those few companies don’t perform well, it can affect the entire fund’s performance.

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

Pros	Cons
• Designed to offer broad exposure through a basket of securities that tracks an index. • Transparency. Investors can review the holdings in the fund. • Lower fees. Passive management typically makes it cheaper to operate funds, which results in lower management fees passed on to investors. • Potentially better returns than actively managed funds.	• Lack of flexibility. There may be strict mandates about what can and can’t be included in the fund. • A few companies with a higher market capitalization may have a significant impact on a fund’s performance.

Pros

Cons

• Designed to offer broad exposure through a basket of securities that tracks an index.

• Transparency. Investors can review the holdings in the fund.

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

• Potentially better returns than actively managed funds.

• Lack of flexibility. There may be strict mandates about what can and can’t be included in the fund.

• A few companies with a higher market capitalization may have a significant impact on a fund’s performance.

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 to consider 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.

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 circumstances 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 a choice 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.

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

FAQ

Are target-date funds or index funds better?

Whether index funds or target-date funds are better depends on an investor’s circumstances and goals. Index funds track a market index, offer broad market exposure, and are generally simple, low-cost investments. Target-date funds, frequently used for retirement savings, offer a hands-off investment approach tied to an investor’s timeline, automatically adjusting the asset allocation. An investor can weigh the pros and cons of both options to determine which is right for them.

What is the downside to target-date funds?

A downside to target-date funds is that investors don’t have control over the mix of investments in the funds or when rebalancing takes place. These funds may also come with higher fees.

Are index funds good for beginners?

Index funds can be a good option for beginners because they are a simple, low-cost way to hold a mix of securities that track a particular market index, such as the S&P 500.

Photo credit: iStock/Ridofranz

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

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S&P 500 Index: The S&P 500 Index is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S. It is not an investment product, but a measure of U.S. equity performance. Historical performance of the S&P 500 Index does not guarantee similar results in the future. The historical return of the S&P 500 Index shown does not include the reinvestment of dividends or account for investment fees, expenses, or taxes, which would reduce actual returns.
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