Jun
12
2025
Preferred Stock vs. Common Stock
Before you start trading on the market, read our guide to understand the pros and cons of common vs. preferred stock.
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Jun
12
2025
Guide to Mega Cap Stocks
Mega cap, or “megacap,” is a term that describes the largest publicly-traded companies, based on their market capitalization, which is typically $200 billion or more. Mega cap stocks typically include industry-leading companies with highly recognizable brands.
Investing in mega cap stocks, along with companies that have a smaller market capitalization, can help build a diversified investment portfolio. Spreading investment dollars across different market caps may allow investors to minimize potential risks. But like any security, mega cap stocks have both pros and cons that investors should consider. Learning more about how they work and what sets them apart from other types of stocks can help you decide whether there’s a place for them in your portfolio.
Key Points
• Mega cap stocks represent the largest public companies by market capitalization.
• These stocks typically have market caps exceeding $200 billion.
• Examples include NVIDIA, Apple, Microsoft, Alphabet, and Amazon.
• Investing in mega cap stocks may offer stability and potential dividends.
• Mega cap stocks offer limited upside and risks related to perception versus reality are potential drawbacks.
Market Capitalization, Explained
Mega cap stocks sit at one end of the market capitalization spectrum, representing the very largest companies in the public markets. Market capitalization is a commonly used method for categorizing publicly-traded companies. In simple terms, market capitalization or market cap measures a company’s value, as determined by multiplying the current market price of a single share by the total number of shares outstanding.
For example, say a company’s stock is priced at $50 per share and it has 10 million shares outstanding. Following the formula of $50 x 10,000,000, the company would have a total market capitalization of $500 million.
Most often, companies are assigned to one of three categories, based on their market capitalization as follows:
• Micro-cap: Market value of less than $250 million
• Small cap: Market value of $250 million to $2 billion
• Mid-cap: Market value of $2 billion to $10 billion
• Large-cap: Market value above $10 billion to $200 billion
• Mega-cap: Market value of $200 billion or more
While most companies fit into one of these three groups, some outliers exist on either end of the spectrum. The smallest of the small cap stocks are microcap stocks, while the largest companies are the mega caps.
Mega Cap Stock Definition
Mega cap stocks have a market capitalization that’s $200 billion or more. There are a handful of companies with market caps of more than $1 trillion (some with more than $3 trillion), and those companies only passed the trillion-dollar mark in recent years. That said, it’s likely more companies will become mega cap stocks in the years ahead.
10 Companies With the Largest Market Cap
As of June 2025, these are the ten companies with the largest market caps. Note, too, that there isn’t always a direct correlation between market cap and stock price!
1. NVIDIA
NVIDIA makes computer chips, and has a market cap of $3.51 trillion, with share prices of around $143. NVIDIA trades under the NVDA ticker.
2. Microsoft
Microsoft trades under the MSFT ticker, and has a market cap of more than $3.48 trillion. Microsoft is a large tech company that creates software and hardware for businesses and consumers. Microsoft shares trade for nearly $470.
3. Apple
Apple, which trades under the market ticker AAPL, has a market cap of $3.05 trillion, and shares trade at more than $204. Apple is a tech company that produces consumer tech goods and software, including the iPhone.
4. Amazon
Amazon is an ecommerce company that sells just about everything under the sun on its digital platform, as well as offering cloud services to businesses. Amazon trades under the AMZN ticker, and has a market cap of $2.25 trillion, and shares trade for more than $210.
5. Alphabet
Yet another large tech company, specializing in software and ad sales, Alphabet (the parent company of Google) has a market cap of more than $2.07 trillion. Alphabet trades under the GOOG ticker (it has numerous share classes), and shares trade for around $170.
6. Meta
Meta is the parent company of Facebook, and trades under the ticker META. Its market cap is $1.4 trillion, and shares trade for more than $690.
7. Broadcom Inc.
Broadcom is an American company that designs, develops, and manufactures software and semiconductors. Its market cap is $1.24 trillion, with share prices of more than $263.
8. Berkshire Hathaway
Berkshire Hathaway is a conglomerate holding company, meaning that it is involved in many industries, including real estate and insurance. It has many stock classes, but trades under the ticker BRK.A, and its market cap is valued at more than $1.06 trillion.
9. Tesla
Tesla is an electric car company, and has a market cap of roughly $1 trillion. It trades under the ticker TSLA, and its stock price is around $310.
10. Taiwan Semiconductor Manufacturing Company
Taiwan Semiconductor Manufacturing Company, or TSMC, is yet another semiconductor manufacturer, located in Taiwan. It trades under the TSMC symbol, and its share price is around $205 with a market cap of around $1 trillion.
3 Pros of Investing in Mega Cap Stocks
There are several good reasons to consider making mega cap stocks part of your asset allocation strategy.
1. Diversification
Investing across different sectors and market capitalizations spreads out risk, since economic ups and downs may affect smaller, mid-sized and larger companies differently.
2. Stability
Established mega cap companies are among the most stable in the economy and may be better able to withstand a market downturn compared to smaller or newer companies without cash reserves or a solid brand reputation.
3. Dividends
Some mega cap stocks pay dividends to investors since they don’t need to reinvest profits into growth. That can provide an additional stream of income or allow for faster portfolio growth if they’re reinvested.
Cons of Investing in Mega Cap Stocks
While there are some things that make mega cap companies attractive to investors, it’s important to consider the potential downsides:
Limited Upside
Since many mega caps have already done most of their growing, there may be limited space for their share prices to increase.
Perception vs Reality
Market capitalization measures the stock market’s perceived value of a stock, not its intrinsic value. So mega cap status alone shouldn’t be considered a reliable indicator of a company’s fundamentals or financial health.
💡 Quick Tip: How to manage potential risk factors in a self directed investment account? Doing your research and employing strategies like dollar-cost averaging and diversification may help mitigate financial risk when trading stocks.
How to Invest in Mega Caps
If you understand the investment risk and potential rewards that come with mega cap stocks and you’re interested in adding them to your portfolio, there are two ways to do it. You can choose to invest in individual mega cap stocks, or you can put money into an investment fund, such as a mutual fund or an exchange-traded fund (ETF) that holds mega caps.
You can also look at investing in a market index that can give your portfolio exposure to mega cap stocks.
Buying individual stocks allows you to pick and choose which mega caps you want to purchase. But this may require more of a hands-on approach as you’ll need to research individual companies. There are similarities and differences, in that regard, between investing in mega cap and investing in small cap stocks.
Investing in a thematic ETF focused on mega cap stocks may be a simpler way to diversify with larger companies. This allows you to have exposure to more mega cap stocks in your portfolio.
ETFs can be traded on an exchange, just like a stock, allowing for greater liquidity and flexibility than traditional mutual funds. Lower turnover ratios can make ETFs more tax-efficient than regular mutual funds. Depending on which mega cap ETF you choose, you may pay a much lower expense ratio than you would with traditional mutual funds.
The Takeaway
Mega cap stocks refers to stocks that have a market capitalization of more than $200 billion, and in some cases, more than $1 trillion. As of June 2025, there are a few dozen mega cap stocks out there, but several companies may become mega cap stocks in the subsequent years.
Mega cap stocks offer stability and the potential for dividend income, though they may have lower upside than smaller stocks that have more room to grow. The right role for mega cap stocks in your portfolio will depend on your investment goals, risk tolerance, and time horizon.
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.
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FAQ
What are examples of mega caps?
Some examples of mega cap stocks include Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG), and Amazon (AMZN), which have market caps of more than $2 trillion.
How many mega cap stocks are there in the U.S.?
Mega cap stocks are stocks with market caps of vastly more than $200 billion, and as such, there are many on the market – dozens, in fact. But there are only a relative handful with market caps of more than $1 trillion.
What is the difference between a large-cap and mega cap?
While mega cap stocks are typically defined as having market caps of more than $10 billion (often more than $200 billion), large-cap stocks have market caps ranging from $2 billion to $10 billion.
About the author
Rebecca Lake
Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.
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Read moreJun
11
2025
11 Financial Planning Steps to Take After a Spouse’s Death
The death of a spouse can be one of the hardest things a person ever has to go through. It can be extremely difficult to process how we feel during such a difficult time. In addition, losing a spouse can also cause financial strain.
Depending on the circumstances, it could mean a loss of income or a bigger tax bill. Fortunately, there are certain steps you can take to help avoid the worst impacts of an already precarious situation.
Here are 11 key financial steps to take after a spouse’s death. This insight can help as you move through a deeply challenging time.
Key Points
• Consider a support network — personal and/or professional — that can help you navigate your emotional and financial care.
• Gather and organize essential documents like birth, death, and marriage certificates and any life insurance policies.
• Update all financial accounts, including checking, savings, investments, and credit cards.
• Review estate plans, beneficiary accounts, and Social Security survivor benefits with a financial advisor, where needed, to understand options and tax implications.
• Revise your budget to account for income changes and consider downsizing to manage expenses and reduce financial stress.
The Difficulty of Losing a Spouse
As you navigate this difficult and uncertain time, it’s important to surround yourself with the right people. A spouse can be someone’s biggest source of emotional support, and you may need someone to provide that support where your spouse would have in the past.
Who that person might be won’t be the same for everyone. Perhaps you have a relative or a close friend who will be there for you. If necessary and if you have the means, you could also consider working with a professional therapist. For many people, the best solution will be to talk to a few people.
During this time of tremendous grief and stress, it can be wise to remember to take care of yourself. While there will be a lot to manage during this time, it’s important to get the rest, good nutrition, and the other forms of self-care that you need.
11 Financial Steps to Take After Losing a Spouse
Taking the right steps after losing a spouse can help you avoid financial stress later. You should ensure you have documents in order, update records, and submit applications as necessary.
Here are 11 steps that will help with this endeavor and can provide a form of financial self-care as you get these matters under control.
1. Organize Documents
One of your first steps should be to gather and organize documents. You may need several documents, such as a birth certificate, death certificate, and marriage license. You will likely want to order or make several copies of each, as you might need them multiple times as you work through the steps ahead.
2. Update Financial Accounts
You may have several financial accounts that need updating, especially if you and your spouse had joint finances. For example, you might have personal banking and investment accounts with both names. You might also have credit cards in both names. Contact the financial institution for each account and let them know it needs updating.
3. Review Your Spouse’s Estate and Will
Review your spouse’s estate and will to see how their assets should be handled. Their planning documents, such as a will, are usually filed with an attorney or may be held in a safety deposit box. Contact the attorney with whom your spouse filed the documents to find the paperwork if necessary.
If they didn’t already have a will or estate plan, you can work with an attorney to determine next steps. State law will likely play a role in determining how assets are managed. Working with a lawyer skilled in this area can be an important aspect of financial planning after the death of a spouse.
4. Review Retirement Accounts
Your spouse may have left retirement accounts, such as a 401(k) or individual retirement account (IRA). Check whether you are the beneficiary of your spouse’s retirement accounts. If you are the beneficiary of any of them, you will need to establish that with the institution holding the account. When that’s settled, it will likely be up to you to determine how to handle the funds.
While it is possible to transfer all of the money to your accounts, that isn’t always the best move. For instance, if you roll a 401(k) into your IRA and need the money before age 59½, there will be a 10% penalty on the withdrawal. There may be tax consequences, too.
In some cases, the best choice may be to leave the money where it is until you reach retirement age, if you haven’t already.
5. Consider Your Tax Situation
A spouse’s death can also create tax complications. For example, the tax brackets for individual filers have lower income thresholds than those for married couples filing jointly. A surviving spouse may still file jointly in the year their spouse dies (assuming they don’t remarry in that timeframe), and, in certain circumstances, may also be able to claim the qualifying surviving spouse filing status in the two years following in order to receive the lower tax rate.
Otherwise, if you are still working and filing as a single, you might find yourself in a higher tax bracket, especially if you were the breadwinner. As a result, you might decide to reduce your taxable income by putting more money in a traditional IRA or 401(k).
6. Review Social Security Benefits
Another financial step to take after a spouse’s death: Review Social Security benefits if your partner was already receiving them. If you’re working with a funeral director, check if they notified the Social Security Administration of your spouse’s passing; if not, you may take steps to do so by calling 800-772-1213.
If you were both receiving benefits, you might be able to receive a higher benefit in the future. Which option makes the most sense depends on each of your incomes.
For instance, if your spouse made significantly more, you might opt for a survivor benefit.
Recommended: 9 Common Social Security Myths
7. Apply for Survivor Benefits
Survivor benefits let you claim an amount as much as 100% of your spouse’s Social Security benefit. For instance, if you are a widow or widower and are at your full retirement age, you can claim 100% of the deceased worker’s benefit. Another option is to apply for survivor benefits now and receive the other, higher benefit later.
You can learn more about survivors benefits on the Social Security website.
8. Review Your Budget
If you had joint finances with your spouse, you should revise your budget. Chances are, both your expenses and your income have changed. While you may have lost the income your spouse earned, your Social Security benefits may have increased.
Your revised budget should reflect all these changes and reflect how to make ends meet in your new situation. This kind of financial planning after the death of the spouse can be invaluable as you move forward.
9. Downsize if Necessary
As you review your budget, you may realize your living expenses will be too much to cover without your spouse’s income. Maybe you want a fresh start, or maybe you decide the big house you owned together is too much space these days. You might move into a smaller house and sell a car you no longer need.
Whatever the case, downsizing your life can be a way to not only lower costs but also simplify things as you enter this new phase. Financial planning for widows
10. File a Life Insurance Claim
If your spouse had a life insurance policy with you as the beneficiary, now is the time to file a claim. It might include a life insurance death benefit. You can start by contacting your insurance agent or company. Life insurance claims can sometimes take time to process, so it’s best to submit the claim as soon as possible.
Your spouse might have had multiple policies as well, such as an individual policy and a group policy through work. You might have to do some research and file multiple claims as a result. And, once you receive a life insurance benefit, you will need to make a decision about the best place for that money.
11. Meet With a Financial Advisor
These steps might be a lot to process, and you might feel overwhelmed thinking about everything you must do. And you may not know the best way to handle the myriad decisions — benefits, retirement accounts, investments, etc. You likely don’t want to make an unwise decision, nor wind up raising your taxes.
Fortunately, some financial advisors specialize in this very situation. It can be worth meeting with one at this moment in your life, at least for a consultation. They can help you decide how to handle your assets as you move forward and help you do some financial planning for widows. That can help to both reduce your money stress and set you up for a more secure future.
The Takeaway
For many people, there is nothing more emotionally challenging than losing a spouse. It can also be a financially challenging time as well. As you navigate this difficult time, there is no shame in seeking a helping hand. By taking steps like reviewing estate plans, filing a life insurance claim, and applying for survivor benefits, you can take control of your finances as you move into this new stage of life.
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FAQ
Which is the most important financial step to take after a spouse’s death?
There isn’t one single step that is most important. However, filing insurance claims, reviewing your spouse’s will, applying for any survivor benefits, and updating financial accounts are among some of the important moves to make.
How can I help a widow(er) financially?
How you can help a widow depends on your expertise and how long it has been since the widow lost their spouse. If the death happened recently, they might still need help submitting documents and updating accounts. However, they might need emotional support long after that process is done.
Are there any tax breaks for widow(er)s?
Widow(er)s may qualify for certain tax breaks, such as state property tax credits. Check with your state’s department of revenue to find out what tax breaks are available, if any.
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Read moreJun
11
2025
When Does Home Equity Count in Your Net Worth?
If you’re like many people, your home is probably your biggest asset, so you might think it makes sense to include it in your net worth. But this may not always be the best idea.
Here’s why: All your assets usually should be tallied as part of your net worth. But some financial advisers argue that the money you’ve invested in your home is different from other assets. If most people were to sell their home and move, they would have to put the funds from the sale toward buying or renting a new home. The home you live in isn’t easily liquidated if you need money to pay for other things.
The specifics of your situation can also determine whether or not to count your home equity in your net worth. And there is no downside to calculating it both ways. Generally, when using tools to tap your home equity, you may want to include your house as part of your net worth. But when calculating retirement savings and in some other situations, it’s a no-go.
Read on to learn more about when home equity counts in your net worth.
Table of Contents
Key Points
• Home equity is the difference between the market value of your home and the amount you owe on your mortgage.
• Building home equity can increase your net worth and provide financial stability.
• Home equity can be accessed through a home equity loan or a home equity line of credit (HELOC).
• Using home equity wisely, such as for home improvements or debt consolidation, can be a smart financial move.
• It’s important to carefully consider the risks and benefits of using home equity and consult with a financial advisor.
Why Is Knowing Net Worth Important?
Your net worth will fluctuate over time, but it can always be a valuable way to chart how your finances are going. If your net worth is negative, that means you have more debts than assets. This might encourage you to budget differently or focus more on paying off debt, especially high-interest debt.
If, however, your net worth is positive, that can help you see how you are progressing toward financial goals and what funds you will have available for, say, retirement.
Calculating Net Worth
At its most basic, net worth is everything you own minus everything you owe.
To calculate your net worth, tally the value of all or your assets, including bank accounts, investments, and perhaps the value of your home or vacation home. Then subtract all of your debts, including any mortgage, student loans, car loans, and credit card balances.
If the resulting figure is negative, it means that your debts outweigh your assets. If positive, the opposite is true.
There is no one net worth figure that everyone should be aiming for. Your net worth, though, can be a personal benchmark against which you can measure your financial progress.
For example, if your net worth continues to move into negative territory, you know that it is time to tackle debts. Hopefully, you’ll see your net worth grow, which can give you some idea that your savings plan is working or your assets are increasing in value.
Your home may, strangely, function as both an asset and a liability. Your home equity — the part of the home you actually own — can be an asset. But your lender may still own part of your home. In that case, mortgage debt is a liability.
As you track your home value and other assets to take your financial pulse, you may find that your home is simultaneously your biggest asset and biggest liability.
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When to Include Home Equity in Net Worth
Generally speaking, you may want to include your home as part of your total assets and net worth when you want to leverage the value of the equity you have stored there.
You can tap the equity in your home with a number of financial products. Here’s a closer look:
Home Equity Loan
A home equity loan allows you to borrow money that is secured by your home. You may be able to borrow up to 85% of the equity you have built up. For example, if you have $100,000 in home equity, you may have access to an $85,000 loan.
The actual amount you are offered will also be based on factors such as income, credit score (which may differ among the credit bureaus — say, between TransUnion vs. Equifax), and the home’s market value.
You repay the lump-sum loan with fixed monthly payments over a fixed term.
As with home improvement loans, which are personal loans not secured by the property, you can use a home equity loan to pay for home renovations.
Or you can use a home equity loan for goals unrelated to your house, like paying for a child’s college education or consolidating higher-interest debt.
Just remember that if you fail to repay the loan, the lender can foreclose on your home to recoup its money.
Home Equity Line of Credit
A home equity line of credit (HELOC) is not a loan but rather a revolving line of credit. You may be able to open a credit line for up to 85% of your home equity.
How do HELOCs work? You can borrow as much as you need from your HELOC at any time. Accounts will often have checks or credit cards you can use to take out money. You make payments based on the amount you actually borrow, and you cannot exceed your credit limit. HELOCs typically have a variable interest rate, although some lenders may allow you to convert a portion of the balance to a fixed rate.
HELOCs use your home as collateral. If you make late payments or fail to pay at all, your lender may seize your home.
Traditional Refinance
A traditional mortgage refinance replaces your old mortgage with a new loan. People typically choose this path to lower their interest rate or monthly payments.
They may also want to pay off their mortgage faster by changing their 30-year mortgage to a 15-year mortgage, for example, reducing the amount of interest they pay over the life of the loan.
How do net worth and home equity come into play? One important metric lenders use when deciding whether you qualify for a mortgage refinance is your loan-to-value ratio (LTV), how much you owe on your current mortgage divided by the value of your home.
The more equity you have built in your home, the lower your LTV, which can help you secure a refinanced loan and positively influence the rate of the loan.
Another option: A cash-out refinance vs. a HELOC.
Cash-Out Refinance
A cash-out refinance replaces your mortgage with a new loan for more than the amount of money you still owe on your house.
The difference between what you owe and the new loan amount is given to you in cash, which you can use to pursue a number of financial needs, such as paying off debt or making home renovations.
Your cash-out amount will typically be limited to 80% to 90% of your home equity, and interest rates are typically a little bit higher due to the higher loan amount.
Reverse Mortgage
A home equity conversion mortgage, the most common kind of reverse mortgage, allows homeowners 62 and older to take out a loan secured by their home.
Borrowers do not make monthly payments. Interest and fees are added to the loan each month, and the loan is repaid when the homeowner no longer lives there, usually when the homeowner sells the house or dies, at which point the loan must be paid off by the person’s estate.
When You Should Not Count Home Equity as Part of Your Net Worth
There are a few instances when it doesn’t make sense to include your home in your net worth, or you aren’t allowed to.
When Calculating Your Retirement Savings
If you’re using your net worth to get a sense of your retirement savings, it may not make sense to include your home, especially if you plan to live there when you retire.
Your retirement savings represent potential income you will draw on to cover your living expenses. Your home does not produce a stream of income on its own, unless you tap your equity using one of the methods above.
If You’re Applying for Student Aid
A family’s net worth can have an impact on eligibility for federal student aid. The more assets a family has, the more that need-based aid may be reduced.
However, the equity in a family’s primary residence is a nonreportable asset on the Free Application for Federal Student Aid (FAFSA®). Most colleges use only the FAFSA to decide aid.
Several hundred colleges, usually selective private ones, use a form called the CSS Profile, which does ask applicants to report home equity, though a number of schools, such as Stanford, USC, and MIT, have moved to exclude home equity from their considerations for aid.
When Becoming an Accredited Investor
An accredited investor may participate in certain securities offerings that the average investor may not, such as private equity or hedge funds. Accredited investors are seen to be financially sophisticated enough, or wealthy enough, to shoulder the risk involved with such investments.
To become an accredited investor, you must have earned more than $200,000 (or $300,000 together with a spouse or spousal equivalent) in each of the prior two years, or you have a net worth over $1 million. However, you cannot include the value of your primary residence in your net worth in most cases. (An exception worth noting: There are certain FINRA licenses that allow a person to become an accredited investor independently of one’s finances.)
Tips for Improving Net Worth
If you are looking to build your net worth, you might try these tips:
• Rein in your spending. If your net worth is not rising as you would like, you might assess if you are spending too much. You might be shopping out of boredom, trying to keep up with your peers (aka, FOMO or Fear of Missing Out), or be experiencing what is known as lifestyle creep, when your expenses rise along with your income.
• Deal with your debt. Having debt, especially high-interest debt like the kind you can incur with credit cards, can make it hard to grow your net worth. If you are struggling to get on top of debt, you might look into debt consolidation options or working with a low-cost or free credit counselor.
• Consider automating your savings. Many financial experts advise that you “pay yourself first” and immediately transfer some funds into savings when you get paid. In one popular budgeting method, the 50/30/20 Rule, it’s recommended that 20% of your take-home pay go toward savings and debt. In addition, you would probably want that money to grow, whether that means putting it in a high-yield savings account or investing in the market.
The Takeaway
Whether or not you include your home in your net worth will depend largely on what you’re trying to accomplish. If you plan to tap your equity, then it is an important figure to include. But it’s not always included when it comes to things like student aid or retirement income.
Having a handle on your home equity and keeping it growing is always worth the effort and hard work. The more it grows, the more it can contribute to your long-term financial goals.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
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†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
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All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.
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11
2025
Savings Goals by Age: Smart Financial Targets by Age Group
Mapping out your financial future can be daunting, especially if you only have a vague sense of what you want to accomplish.
It can be useful to consider financial milestones to help you chart your journey from college graduation through retirement. Here’s a look at some common savings goals by age to help you orient yourself and build a plan.
Key Points
• In your 20s, consider prioritizing paying off high-interest debt, building an emergency fund with three to six months’ expenses, and starting to save for retirement.
• In your 30s, you may prioritize saving for a home down payment, increasing retirement contributions, and setting up a 529 college plan for children.
• In your 40s, think about growing your emergency fund, protecting assets with insurance, and continuing to save for retirement.
• In your 50s, take advantage of catch-up contributions to increase retirement savings and consider paying off or refinancing your mortgage.
• In your 60s, you may continue to fund retirement accounts, assess savings, and plan a retirement income strategy.
Savings Goals for Your 20s
In your 20s, people are often just out of school, starting a career, and getting their life in order. As if that weren’t enough, they may face challenges like student loan debt or credit debt. Now is the time to set financial goals, consider an investment strategy, and start building healthy financial habits.
Paying Off High Interest Debt
If you have any high-interest debt — typically debts close to 8% or more — you might focus on paying it off. High-interest payments can cost you a lot over the life of a loan.
Credit cards, which often allow minimum payments that are much less than the total balance due, can be particularly costly as interest on the balance accrues. The more money going toward high-interest debt, the less you can focus on your savings goals.
Building Emergency Savings
At this age, people are often just getting on their own feet and might not have a lot of extra cash to stock away. Establishing a rainy day fund can be a useful savings goal. Generally, emergency funds contain at least three to six months’ worth of living expenses.
This fund can help cover emergencies like unexpectedly needing to replace a car transmission, a trip to urgent care, or losing your income. Since you never know when you’ll need to access your emergency fund, consider saving it in an easily accessible vehicle, such as a high-yield savings account.
Putting your money into interest-bearing accounts can help your money grow exponentially over time through the power of compound interest. Compound interest allows you to earn interest on the interest you earn as well as the principal, so higher interest rates can translate into higher savings over time.
Recommended: Planning your emergency fund? Our emergency fund calculator can assist you in setting the right target.
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Saving for Retirement
The earlier you start investing for retirement, the longer you can take advantage of the returns you may earn on your investments.
Compound returns refers to the gains investors may see on both their initial investments and any profits they may generate, assuming they’re reinvested. Unlike compound interest, the rate of return on investments can vary significantly depending on market performance, and investors may experience losses on their initial principal, as well. Over the long-term, however, a well-diversified portfolio has the potential to see substantial growth, and this is true of investments in retirement plans, as well.
Consider taking advantage of any retirement accounts your employers offer, such as a 401(k). If your employer doesn’t offer a retirement plan, there are other options, such as setting up an individual retirement account (IRA), where you can save for retirement in a tax-advantaged way on your own.
Savings Goals for Your 30s
In your 30s, people are often more settled into a career path and may be thinking about other goals, such as purchasing a house or having kids.
More Saving for Retirement
As your income grows and retirement gets a little bit closer, consider increasing the amount you’re setting aside for retirement. If your employer offers a match to your 401(k) contributions, taking advantage of the match can be a wise move, since this is essentially free money.
Buying a Home
If you’re thinking about buying a home, you’ll want to focus on saving for a down payment. The amount you will need to save will depend on housing prices in the area where you’re looking to buy. A larger down payment can make it easier to secure a mortgage, and can also mean that you pay less interest over the life of the loan.
Also, lenders may require borrowers to have mortgage insurance if they’re making a down payment smaller than 20%, which is an added expense to the home-buying process.
Setting up College Funds
If you have children, another consideration is saving for their college education. One way you can do this is to open a 529 college savings plan that helps you save for your child’s tuition and other education-related expenses. Just be sure not to neglect other long-term goals, such as retirement, while saving for your child’s college education.
Savings Goals for Your 40s
As you enter your forties, you are likely entering your highest earning years. If you have your high-interest debts behind you, you can devote your attention to building your net worth.
Keeping an Eye on Your Emergency Fund
The amount of money you needed to cover six months’ worth of expenses in your 20s is likely far less than what you need now, especially if you have a mortgage to pay and children to support. You’ll want to make sure that your emergency fund grows with you.
Protecting Your Assets
Now that you may have a more substantial income and own some valuable things, such as a home and a car, you’ll want to make sure you protect those assets with adequate insurance. Home and auto insurance protect you in the event that something happens to your house or your car.
You may also want to consider getting life insurance if you haven’t already. This can provide a cash cushion to help your family replace your income or cover other expenses should you die. The younger you are when you purchase life insurance, generally the less expensive it will be.
Savings Goals for Your 50s
In your 50s, you’re likely still in your top earning years. You may still be paying off your mortgage, and your kids may now be preparing for college or out of the house.
Taking a Closer Look at Retirement Savings
As retirement age approaches, you’ll want to continue contributing as much as you can to your retirement account. When you turn 50, you are eligible to make catch-up contributions to your 401(k) and IRAs.
These contributions provide an opportunity to boost your retirement savings if you haven’t been able to save as much as you hoped up to this point. Even if you have been meeting your savings goals, the contributions allow you to throw some weight behind your savings and take full advantage of tax-advantaged accounts in the decade before you may retire.
Continuing to Pay Off a Mortgage
If you think your monthly mortgage payments may be too high to manage on a fixed income, you might consider paying off or refinancing your mortgage before you retire.
Goals for Your 60s
As you enter your 60s, you may be nearing your retirement. However, when it comes to saving, you don’t have to slow down. As long as you are earning income, you might want to keep funding your retirement accounts.
Thinking Long-Term
Now is a good time to assess how much you have saved for retirement and perhaps adjust what you are contributing (based on how much you’ve already put aside and how much you can afford). At the same time, you may want to plan out a retirement income strategy to determine when you’ll start withdrawing funds and how much you’ll take each month or year. You’ll also want to decide when to take Social Security retirement benefits. Delaying benefits until age 70 could increase the monthly payments you receive.
The Takeaway
Everyone’s personal timeline is different. The milestones you hit and when you hit them may vary depending on your personal situation. For example, someone graduating from college with $50,000 in student loan debt is at a very different starting point than someone who graduates with no debt. And while someone might be able to buy a house in their early 30s, others may live in a more expensive area and need more time to save.
No matter your starting point and situation, a simple way to manage your finances at any age is to open a checking and savings account where you can spend, save, and earn all in one product.
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 primary savings goal should I focus on in my 20s?
The top priority in your 20s is building a solid financial foundation. This may mean creating a plan to pay off high-interest debt, establishing an emergency fund that can cover three to six months of living expenses if a financial emergency arises, and starting to save for retirement.
What are the benefits of starting to save for retirement early?
Starting to save for retirement early allows you to take full advantage of compound returns. While all investments are subject to the risk of loss, compound returns may lead to substantial growth over the long term. Even small contributions can grow significantly over decades, making it easier to meet your retirement goals.
Besides retirement, what other major savings goals should I consider?
Beyond retirement, important financial goals include building an emergency fund to cover unexpected expenses, saving for a down payment on a home, and setting aside funds for children’s college education. It’s also wise to regularly review insurance coverage to help protect your assets.
What should I consider when planning my retirement income strategy?
The first step in planning your retirement income strategy is to assess how much you have saved. You may need to adjust your contributions to your retirement accounts or other investments to help you reach your goals. You should also decide when you want to start withdrawing money from your accounts, along with when you want to start taking Social Security benefits.
SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
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.
Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet
Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.
Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.
Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.
See additional details at https://www.sofi.com/legal/banking-rate-sheet.
We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
1SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per depositor per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $3M through participation in the program. See full terms at SoFi.com/banking/fdic/sidpterms. See list of participating banks at SoFi.com/banking/fdic/participatingbanks.
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.
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*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.
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