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Consumerism is both an economic theory and cultural phenomenon that typically flourishes in a capitalist society. The theory of consumerism states that increased consumption of goods and services by the population will improve the economy. The people in this society, in turn, believe they must consume more goods and services to achieve happiness, fulfillment, and wellbeing.

In this article, you’ll learn more about the history of consumerism, its pros and cons, and how to manage it in your life.

Consumerism Definition

What is consumerism? Consumerism refers to the economic theory that consumer spending on goods and services is crucial to bolstering the economy. It also refers to the cultural phenomenon that has happened in capitalist societies as a result. Specifically, it describes individuals’ feeling that they must partake of goods and services to be happy, often spending more money than they can afford on things that they don’t really need.

History of Consumerism

While many point to the post-World War II era as the beginning of U.S. consumerism, historian William Leach believes it dates back a little further to the turn of the century. In his 1993 book, Land of Desire, Leach argues that this time period marked a surge in department stores, assembly lines, investment bankers, and mail-order catalogs — all of which were early hallmarks of a consumer society.

As businesses headed into the 1920s, their production prowess was unprecedentedly strong — but American consumers were not yet used to the idea of, well, consuming. Economists realized that they needed to persuade consumers (“through advertising and propaganda,” as author Edward Bernays once wrote) that they needed more.

In short, businesses could manufacture plenty of supplies; now they needed to manufacture demand for the items that were being pumped out.

While the Great Depression slowed down the progress of consumerism, the effects of World War II and the rise of mass media fueled consumerism in the decades that followed. By this time, economists agreed that excessive consumption was the best way to improve the economy.

This belief is evidenced by this telling quote from retail analyst Victor Lebow in 1955: “Our enormously productive economy demands that we make consumption our way of life, that we convert the buying and use of goods into rituals, that we seek our spiritual satisfaction, our ego satisfaction, in consumption … We need things consumed, burned up, replaced, and discarded at an ever-accelerating rate.”

Examples of Consumerism

You can find many examples of consumerism in today’s society, including:

•   Huge shopping sales like Black Friday and Cyber Monday.

•   Ads on TV, websites, and social media that encourage you to buy a new product or subscribe to a new service.

•   Holidays built around gift-giving and consuming candy or food.

•   New cars, phones, and other innovative tech being released every year — sometimes with upgrades more than once a year.

•   Services, like streaming platforms and video game systems, built around a subscription model where you must pay every month to retain access to the service.

Recommended: How to Improve Your Money Mindset

Pros and Cons of Consumerism

Consumerism can offer both advantages and disadvantages to society:

Read on to consider these pros and cons of consumerism in more depth.

Consumerism Pros

Consumerism can bestow a number of benefits to a society, such as:

•   Improved economy: The primary tenet of consumerism is that individual spending will drive economic growth. While history has taught us that this is generally true, many opponents may ask, “At what cost?”

•   Job creation: The more that a society spends on goods and services, the more that businesses need to hire people to create those goods and services. And it’s not just a phenomenon that impacts the U.S. Because America relies on raw materials from other parts of the world, consumerism typically creates jobs around the globe.

•   Connected global society: Consumerism now happens on a global scale. America depends on other countries for products and services — and they in turn depend on us. While globalization is itself a nuanced topic, many believe that a more connected global society is a good thing.

•   More creativity and innovation: Advocates of consumerism argue that it encourages and rewards creativity. When consumers vote with their dollars, companies are more likely to push the boundaries to deliver newer, better, safer products and services — and at lower prices. This can be especially important for medical advances.

•   Entrepreneurship: In a consumerism-driven society, if you have an idea for a product or service that others want, you are free to pursue it. Launching your own business or working as a freelancer may mean that you can make money and take care of your family using your creativity and business acumen, as well as doing what you love to do.

Consumerism Cons

Outside of an improved economy, however, critics argue that consumerism can be bad for mental and physical health, as well as the environment. Downsides to consumerism may include:

•   Anxiety and unhappiness: When people feel they always need newer, better things, they may never be satisfied. The pressure to have a new phone or car may lead them to work extra hours, unfairly compare themselves to others, and feel bad about themselves when they can’t afford the next best thing.

•   Debt: Consumerism can motivate individuals to overspend on new things in an effort to achieve happiness. Unfortunately, many consumers spend more than they should on everything from cars and vacations to clothing and jewelry — and take on debt in the process. The average American household had approximately $10,767 in credit card debt as of July 2025, according to one study. This can also make it hard to save and build wealth.

Unmanageable debt can leave people without money in their bank accounts, it can destroy families, and it can also be detrimental to the entire economy, as the subprime mortgage crisis of 2008 demonstrated.

•   Environmental impact: Producing, using, and throwing away goods can be harmful to the environment, with studies indicating that consumerism has a large part to play in global greenhouse gas emissions. Not only that, but as the human race grows and likely demands more and more things, the nonstop manufacturing of consumer goods could possibly harm or even destroy animal habitats.

•   Poor physical health: Buying and consuming unhealthy foods, alcohol, and cigarettes can be detrimental to one’s health. But it’s not just what is consumed; as innovators introduce more technologies that make life easier — like robotic vacuums, gutter guards, and apps for grocery delivery — it’s easier for consumers to do less, leading to a more sedentary lifestyle.

•   Spiritual and religious issues: Those whose spiritual or religious beliefs promote minimalism and charitable giving may find those beliefs at odds with the spirit of consumerism, which is about increasing your own wellbeing through the consumption of more goods.

Tips to Combat Consumerism

Consumerism can be a good thing: It creates jobs and bolsters the economy, and it allows opportunities for individuals to create new things. But when consumerism becomes excessive, it can damage an individual’s finances and possibly be harmful to their emotional and physical health.

Here are some ways you can be a more responsible consumer:

Creating a Budget

By creating a line-item budget that prioritizes the things you need, it’s easier to see how much money you can spend on the things you want. It’s unrealistic to think that you’ll completely stop buying goods and services that you enjoy.

Instead, through budgeting, you might gain a better understanding of how much you can afford to splurge without taking on debt or adding anxiety to your life. You’ll be better in touch with the money cycling through your checking account and landing in your savings.

By experimenting with different budget techniques, you can likely find one that suits you and helps you spend wisely and save for the future.

Recommended: 10 Most Common Budgeting Mistakes

Giving Things Away (or Selling Them!)

If your home currently has too much stuff, you might have been a victim to excess consumerism (including impulse buying) at some point.

Some people find it helpful to embrace minimalism. Try giving things away to those less fortunate, or have a garage sale to make some extra cash. Doing so may show you that you can be happy with less.

Thinking About What Really Makes You Happy

It’s easy to see what others have and think you need to buy it too. But is a new phone really going to make you happier? What’s wrong with the one you have? Understanding factors like lifestyle creep and FOMO spending, which can both be about keeping up with a lifestyle you see around you but is too expensive, can be worthwhile.

If you challenge yourself to define what happiness is for you, you may find that having new things isn’t a large part of the equation. In keeping this realization with you at all times, you can cut back on spending money on things you don’t need — and instead focus on the people, places, and hobbies that bring you happiness.

The Takeaway

Consumerism can be good for the economy: It’s probably created more jobs and opportunities for self-employment, and led to better-quality, safer products for a larger number of people. However, consumerism may also be responsible for negative impacts on our environment, physical health, and mental health. Consumerism is a nuanced topic with implications in nearly every aspect of life; it’s wise to be aware of how consumerism can affect you so that you can make smarter financial decisions.

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

FAQ

What is a consumerism example?

There are several examples of consumerism in everyday life, including the seemingly constant release of new smartphone models, yearly mega sales on Black Friday and Cyber Monday, and the constant ads we’re exposed to on TV and the internet.

Is consumerism positive or negative?

Consumerism has pros and cons for society. While consumerism creates jobs, boosts the economy, and leads to better-quality goods and services, it can also lead to debt, anxiety, and even physical health issues. In addition, consumerism can help create a more connected world, but it can also have negative environmental impacts.

What is the simple definition of consumerism?

Consumerism is the economic theory that consumer spending on goods and services is key to driving the economy. To that end, businesses create new products and services to market to individuals. Individual consumers may feel like they need those new products and services to improve their wellbeing and happiness. While consumerism creates new jobs and bolsters the economy, critics believe that it can be harmful to our physical and mental health.

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SOBNK-Q325-090

Each year brings new challenges for investors in terms of their investment strategies. Given the level of uncertainty in the U.S. and globally in 2025 so far, investors may want to ensure their portfolio can ride the waves for the coming months and beyond.

While it’s smart to keep an eye on the current economic and market climate — e.g., inflation, interest rates, the impact of certain technologies, tariffs — it’s just as important to anchor your investing strategy in time-tested principles of good investing: by knowing your current financial situation, your goals, time horizon, and risk tolerance.

With those as a base, here are eight investments to consider now, as well as some different types of investment accounts to know about.

Before You Invest Your Money

If you’re wondering where to invest right now, there are several answers and investment opportunities out there. But before you do anything, though, you’ll need to make some key decisions.

Your Current Financial Situation

No one invests in a vacuum, and your current financial situation will not only inform your goals, but potentially your timeline, risk tolerance, and how much money you have to invest.

Your age, your income, how much money you hope to invest each week or each month, whether you’re in debt — these personal factors are important to consider as you begin the self-directed investing process.

Goals

When deciding where to invest your money, the next step is to understand your goals: Whether you hope to earn additional income, or you’re saving for college, or planning for your retirement, it’s essential to know the main purpose of your investment plan.

Knowing your investing goals will help determine your timeline, and from there your risk tolerance — which can help you narrow down the investments you finally choose for your portfolio.

Your Timeline and Risk Tolerance

The time frame in which you hope to accomplish your goal is also important. For example, a longer time horizon might allow you to take on more risk with your investments. A shorter time horizon, where there’s a smaller margin to recover from any volatility, could inspire you to select lower-risk investments.

However, these choices ultimately depend on your personal tolerance for risk. If you can stomach a greater possibility of losing money when you invest, you likely have a higher risk tolerance. If you dread the idea of losses, you may have a lower risk tolerance.

There’s no right or wrong way to make these decisions. It’s important to take each factor into account in order to decide where to invest your money right now.

Learning About Investment Options

Once you’ve identified the main ingredients in your investment plan, you can begin to consider the type of investment account that makes the most sense for you, as well as exploring the various asset classes you can invest in.

A Few Types of Accounts

Your goal will likely help you decide what type of investment account is best for you.

•   If your goal is to earn additional income … you may want to consider an online investing account or taxable brokerage account.

•   If your goal is to save and invest for retirement … you may want to open an IRA, or fund your workplace retirement account, if you have one. Sometimes it’s possible to do both.

•   If you’re thinking about college for your kids … a 529 college savings plan might be the way to go.

Those are just a few of the choices to think about. Again, knowing your personal goals will guide you.

Understanding Asset Classes

Stocks, bonds, cash, money market funds, and real estate are just a few of the asset classes available to investors.

In order to determine the asset classes that might work for your investment plan, it helps to understand the risk profile of a given investment. For example, stocks are generally considered higher-risk assets because they’re more volatile, compared with bonds, CDs, or money market accounts, which are lower risk.

The advantage of higher-risk investments is the potential for seeing bigger returns (a.k.a., profits). The downside, though, is the risk of losing money. Conversely, investing in less risky assets can help minimize potential volatility and losses, but the gains here are typically smaller. As the saying goes: High risk, high reward; low risk, low reward.

8 Ways to Invest Your Money Now

As noted, there are many different assets that investors can add to their portfolio. Some make more sense in certain situations than others — again, depending on your goal, timeline, and risk preference. That said, the following eight investments are worth considering now.

1. Stocks

What it is: Investing in stocks means having shares of ownership in a company or companies. When an investor buys a share in a company, they own a small portion of that company. Shareholders may even receive voting rights. This is why stocks are sometimes referred to as equities; investors now own equity in that company.

How it works: A stock can earn money in two ways. The first way is through the value of shares appreciating over time; this is called capital appreciation. The second is through periodic cash payments made to shareholders, called dividends.

Stock prices can be influenced by both internal and external factors, such as a new product launch or broader national or global events like a political event or natural disaster. Because the nature of business is highly unpredictable, stock prices can be volatile.

2. Bonds

What it is: When buying a bond, investors essentially loan money to a government, company, or other entity for a set timeframe. The bond guarantees that the investor will get regular interest payments and a return of their principal when the bond matures.

How it works: Investors buy bonds for a specific amount (i.e., the face value) and for a certain time period, called the bond’s maturity. The bond pays a fixed amount of interest, the coupon rate, typically every six months or year, and the principal is repaid at the maturity date.

Bonds are generally categorized as fixed-income investments. And while there are bonds with different levels of risk, bonds are considered conservative because they are less volatile than stocks.

•   Government bonds, also known as Treasury bonds, bills, and notes, are considered lower risk because they’re backed by the full faith and credit of the U.S. government.

•   Municipal bonds, or muni bonds, are a type of local government bond: States, cities, and counties issue munis to finance capital projects like hospitals, schools, and roads.

•   Corporate bonds, which are issued to do research, develop products, and other aims. These can pay higher interest, but corporate bonds can also be higher risk.

Generally, though, bonds are often considered a safer, more stable investment that may be more appropriate for investors who aren’t as comfortable with the volatility of the stock market. That said, bonds are not completely without risk, and it is possible for bonds to lose value.

Recommended: How the Bond Market Works

3. Mutual Funds

What it is: Investing directly in stocks or bonds isn’t the only option available to investors. Mutual funds, which are pooled investments, present another way to invest in certain markets.

How it works: Think of these funds as baskets that hold an assortment of investments, such as stocks, bonds, real estate holdings, and much more. Funds provide investors with a basic level of diversification, and can be more affordable than buying individual securities. That said, mutual funds charge investment fees that can impact returns over time.

Some mutual funds only invest in stocks, or equities. Some only invest in bonds. Some invest in a mix of asset classes. There are thousands of mutual funds, and many brokerages or online investing platforms offer special screening tools to help you find the types of funds that suit your needs.

4. Index Funds

What it is: A common type of mutual fund is something called an index fund. These are investment funds that track an index, which is usually a specific part of the broader market. For example, there are index funds that track the S&P 500 index or the Russell 2000 index of small U.S. companies — and thousands of other indices, as well.

How it works: Because index funds mirror market indices, and aren’t managed by live portfolio managers, they’re usually among the less expensive types of funds. This style is called passive management, and some investors like to include passive investments in their portfolio because, over time, these securities can add to portfolio returns.

That said, there is always a risk of loss, as market indices can also decline, bringing down the corresponding funds.

5. Exchange-Traded Funds (ETFs)

What it is: Exchange-traded funds, or ETFs, are similar to mutual funds in that they’re effectively a basket of different investments, combined into one security. Investors can buy shares of the fund, but unlike mutual funds, it’s possible to trade ETF shares throughout the day.

How it works: ETFs are a type of pooled investment fund, but owing to the way the underlying assets in the fund are created and redeemed, these funds can be more liquid than mutual funds. ETFs tend to be passively managed, and there are thousands of ETFs investors can choose from, encompassing all sorts of different market indexes, sectors, and asset classes.

6. Options

What it is: An option is a derivative contract that’s tied to an underlying asset, such as a stock. An option contract represents the right, but not always the obligation, to buy or sell a security at a fixed price by a specified date.

How it works: Instead of buying actual shares of a stock, trading options allows the investor to potentially profit from price changes in the underlying asset without actually owning it.

Options are used with leverage, and are a more sophisticated type of investment than, say, stocks or bonds. Options are fairly easy to trade, but they are complex and high risk.

You’d likely want to discuss options trading or investing with a financial professional before you get into it.

7. Real Estate

What it is: Real estate investing can include buying and managing physical property — houses, commercial buildings, etc. — or certain real estate-oriented investment vehicles.

How it works: While many investors may not have the capital laying around to buy a house for investing purposes, they can buy real estate stocks, mutual funds, ETFs, or consider REITs, or real estate investment trusts to get real estate exposure into their portfolios.

Real estate is sometimes considered an alternative investment, and as such it can be higher risk, but because real estate values don’t move in the same direction as the stock market, investing in real estate can provide diversification and a hedge against inflation.

8. Certificates of Deposit (CDs)

What it is: Certificates of deposit, or CDs, should also be on investors’ radar as part of the cash or cash-equivalent part of their asset allocation. CDs are bank products, and are somewhat like savings accounts, in which investors “lock up” their funds for a predetermined period of time in exchange for interest rate payments.

How it works: Functionally, CDs are similar to bonds in that you get a fixed rate of interest until the CD matures, at which time you get both principal and interest. But you may owe fees if you need to pull your money out of a CD before the maturity date.

On the upside, because these are bank products, when you open a CD at an FDIC-insured bank or NCUA-insured credit union, your deposits are covered up to $250,000, per depositor, for each ownership category (e.g., single, joint, etc.), at each insured institution.

Understanding Cash in Your Portfolio

In some instances, it may make the most sense to keep the money for a particular goal in cash, for easy access, and to minimize risk. Here are some traditional options that are generally available through banks and credit unions.

As such, these accounts are typically FDIC-insured at a bank, or NCUA-insured at a credit union. This means deposits are covered up to $250,000, per depositor, for each ownership category (e.g., single, joint, etc.), at each insured institution.

Savings accounts at a traditional bank or credit union: This is likely the most familiar option. Traditional and commercial banks remain popular for their large geographical footprint. Note that many traditional banks tend to pay a relatively low rate of interest on any cash holdings.

Online-only checking and savings accounts: Online-only banks and banking platforms may offer a slightly higher yield than a savings account at a commercial bank. Additionally, many do not require minimums or charge monthly maintenance or account fees.

Money market accounts (MMAs): A money market account (MMA) is a type of deposit account, like a savings account, typically offered by banks and credit unions. MMAs may offer higher interest rates than standard savings accounts, and they usually include some checking account features, i.e., a debit card or check-writing.

When considering cash as an asset class, consider the risk and reward tradeoff, just as you would for any other investment type. Although cash might not be risky when considered in terms of volatility, it does carry the risk of losing value over the long-term due to the effects of inflation, or prices rising over time.

Beginner-Friendly Places to Invest

If you’re a beginner investor looking for places to put your money, it may be beneficial to revisit some basic investing rules or guidelines. For instance, you’ll likely want to build an emergency savings fund before focusing on your stock portfolio.

But assuming you’re ready to put your money in the market, or otherwise start building your investment portfolio, many beginners start with some basic investment funds. ETFs are a popular choice, as are mutual funds — but your choices will depend on your goals and financial situation.

If you’re not sure where to turn or what to do, consider speaking with a financial professional for advice.

Creating a Goals-Based Strategy

Contrary to the way some new investors are encouraged to think about investing, it rarely makes sense to try to pick “hot” stocks right out of the gates.

Instead, take a step back and consider the bigger picture of your life and finances in order to identify one or more investing goals. Now that you have a better understanding of the investing process and some solid investment choices, you can start to connect the dots to make your own investment plan.

For example, if your goal is to save for retirement, you might want to think about using lower-cost investments like mutual funds or ETFs, and using a mix of equity funds and bond funds in your portfolio. If you have many years until you retire, and you can stomach a little extra risk, you may want to tilt your portfolio toward equities to maximize potential returns.

But if the volatility of such a mix makes you uncomfortable, consider a different balance that includes more fixed-income and/or cash, which could help mitigate the risk of equities.

Risk vs Reward

The asset allocation decision really boils down to an examination of an investment’s risk and reward characteristics in order to determine whether it’s a good fit for you and your goals.

Risk and reward are two sides of the same coin. Investors cannot have one without the other. For more reward potential, an investor will have to take more risk. There is no such thing as an investment that produces returns with no risk.

Let’s consider two hypothetical investment goals: $1,000 for a down payment and $1,000 for retirement. How do goals lead one down the path of where to invest?

•   First, the $1,000 for a down payment. If the money is designated for use in the next few years, the risk of losing any money in a volatile investment may outweigh the potential to earn investment returns. Therefore, it might be best to keep this money in a lower-risk investment or cash equivalent.

•   Next, the $1,000 for retirement. Many retirement investors have the goal of seeing growth over the long-term. Because of this longer time horizon, there should be enough time to recover after spates of volatility. Therefore, it may be suitable to create a portfolio that is primarily invested in the stock market or a combination of stocks and bonds.

Retirement investors close to retiring may opt to consider some exposure to bonds for both diversification purposes and to lower the overall volatility of the portfolio.

Ultimately, a person’s comfort level with risk vs. reward will determine their specific allocations. And it’s worth noting that an investing strategy isn’t stagnant. As a person ages, their goals and investing strategy will likely need to evolve, too.

Opening the Right Account

Knowing how to invest your money is one step, knowing where to invest your money is the next.

Retirement Accounts

It is not uncommon to hear someone refer to a 401(k) or an IRA as if one of those is itself an investment. But retirement accounts are not investments — they are tax-advantaged accounts that can hold investments.

You contribute money to a retirement account, and then those funds are used to purchase investments: e.g., stocks, bonds, mutual funds, and so on.

While retirement account holders can select the investments for their account, in a plan sponsored by your employer like a 401(k), the investing might be automated — and your money could be invested by default into a money market fund or a target date fund. Hence the confusion about the 401(k) being an investment itself.

Retirement accounts offer a tax benefit, like tax-free growth on your investments, which make them suitable vehicles for long-term goals. But because they offer a tax benefit, they come with more restrictions. For example, some retirement accounts, like 401(k) and traditional IRAs, levy a 10% penalty on money withdrawn before age 59 ½, with some exceptions.

Also, there are limits to how much money can be contributed annually to retirement accounts.

Brokerage Accounts

It is also possible to invest in an account that is not designated for retirement. At a brokerage firm, these are often simply referred to as brokerage accounts.

Brokerage accounts are considered taxable accounts. You pay taxes on realized capital gains — meaning, when you sell investments and actually reap a gain or loss. Because dividends are typically paid in cash periodically, you would owe tax on the dividend amount.

In contrast, tax-advantaged retirement accounts only involve paying taxes when you make a contribution or withdraw your money, depending on the type of account.

Recommended: How to Open an IRA: Beginners Guide

Weighing Your Options

It all comes down to the individual. You’ll need to look at your risk tolerance, time horizon, and personal preferences to determine the most suitable investing path or accounts.

For short-term goals that require more flexibility, a non-retirement account may be a better choice. Because there are no special taxation benefits, there are generally no rules about when money can be withdrawn or how much can be contributed. Because of this, non-retirement accounts can also be a good place to invest for those who have met their maximum contribution amount for the year in their retirement accounts.

The Takeaway

At any given time, there are a plethora of potential investments for your money. You can invest in stocks, bonds, real estate, commodities — the list is long. But each has its own considerations and risks that must be taken into account. Overall, your goals and financial situation are the most important things to keep in mind when deciding where to invest your money.

As for where to open an account, new investors may want to focus on an institution or platform where they are able to keep costs low. There’s not a lot that investors can control, like investment performance, but how much they pay in fees is one of them.

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.

FAQ

Which investment gives the highest returns?

Higher-risk investments tend to deliver the highest returns, but they can also deliver the biggest losses. These can include certain stocks or investment funds, particularly those focused on market segments that are risky or volatile. It’s important to invest with an eye to how much risk makes sense for you.

Where can you invest your money as a beginner?

Beginners can choose a number of investment vehicles to invest their money. Some choices include investment funds like ETFs or mutual funds, which tend to be lower cost and provide some basic diversification.

Where can you invest money to get good returns?

There are numerous investment vehicles that might provide returns, but those returns are never guaranteed, and can be thwarted by down markets. It might be wiser to consider an overall strategy that can help your money grow, so you can reach your goals, rather than looking for a single investment that might hit the jackpot.