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Offloading your used items can do you good on a couple of fronts. You can declutter your home, help fight waste (since you’re not just throwing things out), and you can make money by selling your still-useful stuff.

Whether you are getting rid of clothing, shoes, bags, furniture, housewares, books, electronics, or anything else, you can probably find a platform to help you get the job done. Some ways to sell are online, others aren’t, but all can do their part to connect your items with buyers. And get some additional cash flowing your way.

Here’s a guide to dozens of places that can help you sell your used items.

36 Places Where You Can Sell Your Stuff

If you have items you no longer want or need, and you’re looking to make some extra money, why not kill two birds with one stone? You might do this on a regular basis to keep your place (especially your closets) streamlined, or it could help you out at a moment when you are living paycheck to paycheck.

The following resale apps, sites, and stores may be able to help. Some of these services are free to list and sell, some take a percentage of profits, some pay cash outright, and others consign (meaning they sell your stuff and pay you once it sells).

1. Craigslist

One of the original online marketplaces, Craigslist (Craigslist.org) , is where you can sell used things. You can list all sorts of things, from tools to toys to DVDs to antiques (and much more) for free.

2. Facebook Marketplace

Facebook Marketplace makes it easy to sell items in your local area. It’s free to create a listing that can be seen by anyone on and off Facebook. You can also choose to post your listings to any “Buy and Sell” Groups you’re a member of.

However, a word of caution: Facebook Marketplace and other similar platforms can be used for banking scams. Read up on common ploys and proceed with caution when selling this way.

3. Amazon

While you may think that Amazon is where you can buy new things, there are also a lot of opportunities to list used items, especially books. Current pricing can be $39.99 a month plus selling fees, so you will likely want to be confident you can sell more than that before enrolling.

4. eBay

The original selling platform, eBay can still be a good way to sell your stuff, especially if you want to reach buyers from around the world who are looking to save money daily. Or it can be a huge help if you’re looking to unload an unusual item (there is almost nothing you can’t sell on eBay). But you may want to keep an eye out for selling fees, which may include a listing fee, a percentage of the sales prices, and possibly other fees.

One example of fees: For most categories, you will pay 35 cents per listing and, when an item sells, you will owe 13.255 of the total sales amount up to $7,500. If the item’s price is higher than that, you’ll pay an additional 2.35% on the overage.

5. OfferUp

Developed as a locally-driven platform, OfferUp is another good bet for selling used things. It allows you to sell to someone local, or ship an item to a buyer who lives anywhere in the US. Most items are free to post. When you sell a shipped item on the site, you may be charged a fee that is 12.9% of the sale price, with a minimum of $1.99.

6. Poshmark

Primarily a site for selling used clothing, Poshmark also lets you list home decor, jewelry, and beauty products. For sales you make under $15, Poshmark takes a flat commission of $2.95. If you make a sale that’s worth $15 or more, it takes 20%.

7. Etsy

Etsy may be best known as a platform for artists to sell their handmade goods and launch a low-cost side hustle. But the site also allows you to list some used goods. However, you can only resell in the “Vintage” and “Craft Supplies” categories. There is a listing fee of 20 cents per item, and, when you sell an item, there’s a transaction fee of 6.5% of the price, plus the amount you charge for shipping and gift wrapping.

8. thredUP

An online consignment and thrift store, thredUP sells thousands of major brands. You can send your gently used clothing directly to the service. If they accept (and sell) your clothing, you can choose from cash or credit.

A $2.99 Clean Out Kit fee and a service charge of $14.99 or higher may be assessed when you send in your clothes.

9. eBid

Like eBay, you can sell just about anything on eBid, either for auction or at a fixed price. eBid is organized into three tiers of selling, with different membership costs and selling fees. eBid may or may not wind up costing you less than other selling platforms, depending on how much you will sell and at what price.

10. Bookoo

Another platform for selling stuff locally is Bookoo, which doesn’t charge any listing or selling fees. Bookoo may not be as well known as other sites, but it is available in nearly every state throughout the U.S.

11. Vinted

If you have a lot of gently used clothes, shoes, and accessories to sell, you may want to check out Vinted (Vinted.com), a peer-to-peer online marketplace that focuses on vintage and second-hand fashion. And, for sellers, it’s free. Buyers pay a “protection fee,” typically 5% of the purchase price plus 70 cents.

12. Vestiaire Collective

If you have luxury items you want to sell, you may want to try Vestiaire Collective, a resale website where you can buy and sell high-end clothing, handbags, and accessories. When you sell an item, you can usually keep up to 85% of your money from the sale, minus a payment processing fee (usually 3%).

13. TheRealReal

TheRealReal is a luxury consignment site where you can drop off or ship designer clothing, accessories, and jewelry, as well as fine art and upscale home decor. They sell your items for you in exchange for a percentage of the profit.

Recommended: Ways to Make Money Online

14. Rebag

If you have a designer bag that you no longer want, you might consider selling it on Rebag, a site that’s focused on buying, selling, and trading luxury handbags. The site will let you know how much your bag is worth. If you like the offer, you can send them your bag with no shipping charges. Once it’s received and approved, you’ll get your payment.

15. Bag Borrow or Steal

Another site for selling luxury handbags is Bag Borrow or Steal. You can sell directly to the site (and get paid right away), or you can consign and receive 70% of the sales price after it’s sold.

16. PreOwned Wedding Dresses

If you aren’t sentimental about keeping your wedding dress, bridal party gown, or accessories, then you can list it on PreOwnedWeddingDresses.com, with a $25 listing fee and an 80% payout of the sale price when someone buys it.

17. Garage Sales

If your goal is to unload a large amount of stuff all at once, hosting a garage sale can be a good way to go. You could even get some neighbors together and hold a community garage sale to attract more people.

Just be sure to double-check community guidelines first to see if a permit is required.

18. Flea Markets

Community flea markets can be a great way to sell unwanted things. The owner and operator of the flea market will likely charge you a fee for a booth. If you live in a big city, you may have to register early to get a spot.

19. Buffalo Exchange

Buffalo Exchange is a vintage and used clothing store with locations throughout the U.S. If one of their stores is convenient to you, you can make an appointment to meet with a buyer. If they like your stuff, they will pay 25% of their selling price in cash or 50% in store credit. (Using that store credit could prove to be a good way to save money on clothes.)

20. Crossroads Trading

Crossroads Trading is a second-hand clothing store with brick-and-mortar locations throughout the U.S. If you visit a store, you may be able to receive cash for your clothing on the spot. For higher-end pieces, you can opt to consign. Crossroads also offers mail-in service.

21. Plato’s Closet

You can bring your gently used brand-name clothing and accessories to a Plato’s Closet near you. They’ll review your items and, if accepted, you’ll get paid on the spot.

22. Style Encore

A women’s resale store, you can bring in stylish, gently used clothes, shoes, handbags, and accessories to one of Style Encore’s retail locations. If they (style-encore.com) like your items, you will get paid right away in cash.

23. Once Upon a Child

If you have gently used children’s clothing and shoes, toys, and/or baby gear lying around, you may want to cart it over to Once Upon a Child, which has locations throughout the U.S. An employee will check out your goods and, if they think they sell them, will give you cash in return.

Recommended: Weird Ways to Make Money

24. Play It Again Sports

If you live near Play it Again Sports, you may want to consider bringing in all the no-longer-used sports equipment in your garage. You’ll clear out the space, and may get a nice amount of cash in return.

25. Music Go Round

Live in a musical household? Music Go Round is a resale music shop where you can bring in used instruments and sound equipment (like amps, MIDI equipment, and mixers) and get paid cash in return.

26. Local Thrift Stores

Unlike Goodwill or Salvation Army which accept donations, thrift stores — specifically ones that sell high-end or vintage clothing — might be willing to buy your clothes and other items. Look up local stores, and ask them what they buy and how much they typically pay.

27. Used Book Stores

Your local used book stores may be looking to purchase your books from you. You can call ahead, let them know what you have, and see if they are interested. You might wind up selling your old things for cash.

28. BookScouter

If you’re looking to sell textbooks, you may want to check out BookScouter. The platform simplifies the process by searching sites that buy used textbooks, then displaying the prices from those sites, so you can compare and decide where to sell your books.

29. GoTextbooks

GoTextbooks also allows you to sell your college textbooks and hopefully recoup some of the money you spent on them. When you let the site (sellback.gotextbooks.com/) know about what you have for sale, they will give you an instant quote. You can then ship your books for free and receive your money.

30. DeCluttr

If you mainly have electronics to sell, you may want to check out DeCluttr, which buys used tech, cell phones, DVDs, and video games. The site will give you an instant valuation. If you like the price, you can ship your item for free. If it meets expectations, you receive payment a few days later.

31. Gazelle

You may be able to turn your old cell phone into some quick cash at Gazelle. The site will give you an instant quote. If you like the numbers, you can ship the phone to them for free, and get paid via Amazon Gift Card, PayPal, or check.

32. Pawn Shop

You may be able to make some quick money selling your old stuff to a local pawn shop. Typically, pawn shops are only interested in things of value, such as jewelry, collectible coins, and electronics. It can be a good idea to bring in proof of purchase so that the owner knows you aren’t trying to sell stolen goods.

33. Facebook Groups

If you’re in any local or niche Facebook groups, you may want to post items that might appeal to members of the group. You simply need to snap a picture, describe your item, set your asking price, and see what offers you get.

34. Nextdoor

Nextdoor is a network of local community websites and can be a good place to post items. You click on the “Sell or give away an item” option when posting and can set your terms. While the number of people who are in a particular area’s community will vary, Nextdoor does have approximately 37 million active users, so you just might find a buyer.

35. Instagram

If you have a fair number of followers on Instagram, you might consider listing items you’re looking to sell there. As with Facebook groups, you simply need to snap a photo, write a brief description, and name your price. Or, you can go the more professional route and integrate Instagram’s shopping tools.

36. A “Raid My Closet” Event

Do you have friends who might be interested in checking out what you have for sale? You may want to consider inviting them over for a “raid my closet” event, or a “raid my garage” party. You can offer food and drinks, and make it a fun celebration to declutter your home.

What Are the Benefits of Selling Your Things?

Selling your things can have several benefits:

•   You can declutter or downsize by selling unwanted items.

•   You can help the environment by passing the item along versus throwing it in the garbage.

•   You can help someone who is looking for a gently used item that you have and wants to get a good deal on it.

•   You can bring in extra income.

However, as mentioned before, there are also downsides of selling your stuff. There is the possibility of being scammed in some direct sales, and there are also income tax implications to doing those kinds of transactions as well. Educate yourself on these situations.

Keeping Your Cash in a SoFi Savings Account

If you’re holding on to clothes, furniture, books, or other items you no longer want or need, you could be sitting on a way to make some extra money while decluttering.

What to do with all the profits that start rolling in? You might want to bank it and earn some interest.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with 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.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall. Enjoy up to 4.60% APY on SoFi Checking and Savings.

The FAQ

What is a good website to sell stuff on?

The right website to sell stuff on will depend on the item you are selling to some extent. If you are selling a piece of furniture or large appliance, you might try Craigslist or Facebook Marketplace. For clothing, there are sites like thredup and Vinted, among others.

How do I sell my stuff online for free?

This will depend on the kind of item you are selling. Craigslist, Facebook Marketplace, and Vinted are some examples of platforms that typically don’t charge the seller any fees.

What is the best app for selling used items?

Among the apps to consider when selling your used items are eBay, OfferUp, and Poshmark. These can reach a large number of potential buyers, though as a seller, you will likely pay some fees.

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Photo credit: iStock/Zinkevych

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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.

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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It can be easy to forget important things: What time is that meeting? Where’s my phone? Did I pay my credit card bill yet?

While all of those examples are significant, forgetting to pay your bills can be the one with considerable financial ramifications.

According to a recent Census Bureau Household Pulse survey, 36% Americans say they have trouble paying all of their bills on time. Granted, some of that may be due to living paycheck to paycheck, but organization is likely also part of the problem.

Signing up for automatic bill payment can be one path to getting bills paid by the due date, avoiding late fees, and protecting your credit. Here, you’ll learn what automatic bill payment is, how it works, how to set it up, plus the pros and cons of this option.

What Is Automatic Bill Payment?

So exactly what is automatic bill payment exactly? Autopaying a bill transfers money to the person you owe on the due date from a connected bank account — as long as there is enough money available to cover the bill, of course. This can usually be facilitated by the company you have an account with or by your bank.

After the initial set up, automatic bill payment can help pay recurring bills with minimum effort. Simply put, automatic bill payments, once they are in place, allow someone to transfer money from their own account to a creditor, like for a credit card company or service provider, like for a utility bill, without needing to actually initiate a payment every time. In other words, payments can happen automatically, without any effort on your part, such as writing and mailing a check.

💡 Quick Tip: Make money easy. Enjoy the convenience of managing bills, deposits, and transfers from one bank account with SoFi.

Advantages of Automatic Bill Payment

Automatic bill payment has a number of benefits to consider.

It’s Convenient

Automatic bill payment is an easy way to cross off one more “to do” from the list. First, it’s simply more convenient for a lot of people. Instead of remembering specific bill due dates and having to log in to different websites or sending paper checks through the mail, automating personal finances simplifies the experience.

Once payments are set up, some people can adopt a “set it and forget it” mentality, meaning they don’t have to worry about due dates. While it’s still important to be aware of when money will be leaving the bank, sometimes the reduced stress of not worrying about due dates every month is worth it.

Recommended: When All Your Money Goes to Bills

Automatic Bill Pay Is Secure

Automatic bill payment is also secure. According to Experian, online payments can be safer than traditional paper checks and statements because they are digitized and encrypted. Avoiding those physical bills and mailing in checks can help reduce exposure to fraud.

Plus, a digital transaction can be much easier to track in real-time and make sure the correct amount for each bill went to the right place, rather than waiting weeks to see if the company cashes a check.

Putting bills on autopay can help avoid the worry about whether a bill got paid, of course, but it could even give finances an eco-friendly boost and reduce the number of paper bills mailed out.

Impacting Your Credit Score

Here’s another benefit of automatic bill payment: Not only can it help you avoid late fees in the short term, it could also help protect your credit score. In fact, payment history affects 35% of someone’s FICO® credit score. (FICO reports that negative marks on credit history can fade over time with consistent on-time payments.) Autopay can help you avoid those late payments.

Saving Money with Automatic Bill Pay

One big advantage of automatic bill payments: Doing so can help you avoid late fees that could be incurred by failing to pay on time or missing a payment. Those fees can add up quickly.

Plus, some creditors, such as federal student loan servicers, offer a discount for setting up automatic payments. In some cases, this is an interest rate reduction, which could help reduce the total amount of debt paid overtime.

Disadvantages of Automatic Bill Payment

Now that you know the benefits of automatic bill payments, consider the potential downsides.

Overdraft Fees

One major downside to putting bills on autopay is the fact that, well, the payments will be automatic. If there is not enough money in the connected bank account to cover the cost of the bill, there is a risk of overdraft and NSF fees from your financial institution.

If there is not enough money to cover the bill, there is a risk of overdraft fees.

Some payment amounts change month to month, such as utility bills. Without checking ahead of time how much the bill will be, it’s possible for the utility company to simply withdraw what is owed, causing the account to be overdrawn. Overdraft fees depend on the bank, but the average is around $35, according to the Federal Deposit Insurance Corporation (FDIC).

Forgetting about automatic withdrawals from financial accounts could lead to overspending, pushing account balances lower than the amount needed to cover those pre-set bill payments.

One possible solution to such cash flow issues: Spread out bill payment dates throughout the month, rather than having them all grouped together. Bills might be scheduled for the beginning or the end of the month, but it’s simple to change the date of automatic payments, with enough notice. You can contact the payee about moving a bill due date and then double-check when the change will go into effect to avoid any late payments.

The Consumer Financial Protection Bureau offers a helpful worksheet to help visualize which weeks every month are the most hard-hit.

💡 Quick Tip: Fees can be a real drag when you’re trying to save money. SoFi’s online checking account has no account fees, including overdraft coverage up to $50.

Potential Late Fees

In addition to your financial institution charging you for an overdraft, if an automatic payment doesn’t go through, the payee (the company you were trying to send funds to) may also assess a late fee.

When these fees add up, especially on an interest-charging account, you can wind up having your debt increase.

Forgotten Subscriptions Can Be Costly

Another disadvantage of automatic bill pay is that it reduces your control over what money is going out at certain times. You might wind up with more money flowing out of your account than you realize.

For instance, you might sign up for a one-week free trial of a streaming service with every intention of canceling it after you binge-watch a series. But then you forget and autopay kicks in, which could lead to overdrafting your account over time.

Another scenario: You might move from one home to another and be so busy that you forget to cancel an automatic payment related to your former home or neighborhood. Perhaps you had signed up for one of those “all you can drink” monthly coffee deals at a cafe around the corner from your old place. Review your monthly statements to be sure you catch unwanted charges.

Vendors May Overcharge or Make Mistakes

Another downside of automatic bill payments is that a payee could overcharge you or charge you twice, and you might not be aware of the problem until you review your account or overdraft it. For this reason, it’s wise to check your bank account regularly and scan automatic bill payment transactions to be sure everything looks in good shape.

Whatever the case, whether paying bills manually or using automatic withdrawals, it’s important to still be intentional about making and keeping a budget.

How to Set Up Automatic Bill Payment

Here are the step-by-steps to setting up automatic bill payment for, say, a credit card by selecting the service offered by your card provider.

1.   Log into your credit card account online or in the app.

2.   Select the “recurring payment” or “autopay” option.

3.   Choose how much you want to pay. You may be given such options as minimum payment, a specific amount that you designate, or the total amount of your bill.

4.   You’ll then connect your credit card account to your bank account for payment.

5.   This typically involves adding your account number and routing number.
You will need to approve the autopay set-up, often by agreeing to terms and conditions.

Another option is to set up automatic bill pay directly with a financial institution. One advantage of this is that you don’t need to share your account information with the payee, which can make some people feel more secure about their financial accounts.

1.   Log into your bank account online or in its app.

2.   Find the link for automatic recurring payments; it is often labeled “Bill pay,” “Pay bills,” or something similar.

3.   Then add a payee and follow the prompts to set up a recurring or future payment. Have a recent bill on hand, since the bank will need information like the payee’s bank account numbers, addresses, due dates, and other important information.

Example of Automatic Bill Payment

Here’s an example of how automatic bill payment might work. Say you sign up for a gym membership on a monthly basis at $65 per month. However, the gym will lower that to $60 a month if you sign up for autopay on their site and save them the trouble of billing you.

If you take advantage of this offer, you would likely go to their website or app, log in, and head to your account details, and find the payment or billing section. There, you would opt into autopay and share your banking details or your credit card details (paying by debit card usually isn’t recommended; you have less protection if there’s a problem). You may be informed of what date funds will be deducted or you might be able to select a date.

You should be all set to have your gym membership payments automatically paid every month. It’s a good idea to verify this when you check your bank account. And, of course, if you decide to end your membership, be sure to cancel the automatic payment.

💡 Quick Tip: When you feel the urge to buy something that isn’t in your budget, try the 30-day rule. Make a note of the item in your calendar for 30 days into the future. When the date rolls around, there’s a good chance the “gotta have it” feeling will have subsided.

The Takeaway

Automatic bill payments can be a major convenience as you manage your personal finances. However, like most things in life, there are pros and cons. You can gain convenience and the ability to avoid late charges, but you also have less control over your money. By educating yourself about how this process works, you can decide whether it’s right for you, and, if so, for which payments.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with 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.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall. Enjoy up to 4.60% APY on SoFi Checking and Savings.

FAQ

Do automatic payments hurt your credit?

Automatic payments, like manual payments, could hurt your credit if you pay your bills late or experience insufficient funds.

What is the difference between bill pay and ACH?

Bill pay usually refers to sending funds electronically. One common way that funds may be transferred (but not the only way) is via the Automated Clearing House network, which is known as ACH.

What is the safest way to set up automatic payments?

The safest way to set up automatic payments is to do so through your bank or credit card; it’s not recommended that you use your debit card as you’ll have less protection if there’s a problem. Also, check your balance and statements carefully to make sure you have enough money in the bank to cover your autopayments and also scan for any incorrect or fraudulent transactions.

Should I use autopay for utilities?

Whether you should use autopay for utilities depends on your situation and financial habits. If you know you’ll be able to cover the amount every month, it could be a real convenience. However, utility costs can sometimes fluctuate greatly, like the cost of heating a home in winter, which might cause pricing spikes and lead to your overdrafting. You want to be sure you can always afford to cover bills that are on automatic bill payment.

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SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

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Asset allocation is an investment strategy that helps you decide the ratio of different asset classes in your portfolio to ensure that your investments align with your risk tolerance, time horizon, and goals.

In other words, the way you allocate, or divide up the assets in your portfolio helps to balance risk, while aiming for the highest return within the time period you have to achieve your investment goals.

How do you set your portfolio to get the best asset allocation by age? Here’s what you need to know about asset-based asset allocation.

What Is Age-Based Asset Allocation?

The mix of assets you hold will likely shift with age. When you’re younger and have a longer time horizon, you might want to hold more stocks, which offer the most growth potential. Also, that longer time horizon gives you plenty of years to help ride out volatility in the market.

You will likely want to shift your asset allocation as you get older, though. As retirement age approaches, and the point at which you’ll need to tap your savings draws near, you may want to shift your retirement asset allocation into less risky assets like bonds and cash equivalents to help protect your money from downturns.

In the past, investment advisors recommended a rule of thumb whereby an investor would subtract their age from 100 to know how much of their portfolio to hold in stocks. What is an asset allocation that follows that rule? A 30-year-old might allocate 70% of their portfolio to stocks, while a 60-year-old would allocate 40%.

However, as life expectancy continues to increase — especially for women — and people rely on their retirement savings to cover the cost of longer lifespans (and potential healthcare expenses), some industry experts and advisors now recommend that investors keep a more aggressive asset allocation for a longer period.

The new thinking has shifted the formula to subtracting your age from 110 or 120 to maintain a more aggressive allocation to stocks.

In that case, a 30-year-old might allocate 80% of their portfolio to stocks (110 – 30 = 80), and a 60-year-old might have a portfolio allocation that’s 50% stocks (110 – 60 = 50) — which is a bit more aggressive than the previous 40% allocation.

These are not hard-and-fast rules, but general guidelines for thinking about your own asset allocation strategy. Each person’s financial situation is different, so each portfolio allocation will vary.

💡 Quick Tip: All investments come with some degree of risk — and some are riskier than others. Before investing online, decide on your investment goals and how much risk you want to take.

Asset Allocation Models by Age

As stated, age is a very important consideration when it comes to strategic asset allocation. Here are some asset allocation examples for different age groups.

Asset Allocation in Your 20s and 30s

For younger investors, the conventional wisdom suggests they may want to hold most of their portfolio in stocks to help save for long-term financial goals like retirement.

That said, when you’re young, your financial footing may not be very secure. You probably haven’t built much of a nest egg, you may change jobs relatively frequently, and you may have debt, such as student loans, to worry about. Setting up a potentially volatile, stock-focused allocation might feel nerve-wracking.

If you have a 401(k) at work, this might be your primary investment vehicle — or you may have set up an IRA. In either account you can invest in mutual funds or exchange-traded funds (ETFs) that hold a mix of stocks, providing some low-cost diversification without sacrificing the potential for long-term growth.

You could also invest in a target date fund, which is designed to help to manage your asset allocation over time (more on these funds below).

When choosing funds, it’s important to consider both potential performance and fees. Index funds, which simply mirror the performance of a certain market index, may carry lower expense ratios but they may generate lower returns compared to, say, a growth fund that’s more expensive.

Remember that the younger you are, the longer you have to recover from market downturns or losses. So allocating a bigger chunk of your investments to growth funds or funds that use an active management strategy could make sense if you feel their fees are justified by the potential for higher returns — and the higher risk that comes along with it.

And of course, you can counterbalance higher-risk/higher-reward investments with bonds or bond funds (as a cushion against volatility), index funds (to help manage costs) or target date funds (which can do a bit of both). Just be aware that the holdings within some funds can overlap, which could hamper your diversification strategy and require you to choose investment carefully.

Asset Allocation in Your 40s and 50s

As you enter middle age you are potentially entering your peak earning years. You may also have more financial obligations, such as mortgage payments, and bigger savings goals, such as sending your kids to college, than you did when you were younger. On the upside, you may also have 20 years or more before you’re thinking about retiring.

In the early part of these decades, one approach is to consider keeping a hefty portion of your portfolio still allocated to stocks. This may be useful if you haven’t yet been able to save much for your retirement because you’d be able to add potential growth to your portfolio, and still have some years to ride out any volatility.

Depending on when you plan to retire, adding stability to your portfolio with bonds as you approach the latter part of these decades might be a wise choice. For example, you may want to begin by shifting more of your IRA assets to bonds or bond funds at this stage. These investments may produce lower returns in the short term compared to mutual funds or ETFs. But they can be useful for generating income once you’re ready to begin making withdrawals from your accounts in retirement.

Asset Allocation in Your 60s

Once you hit your 60s and you’re nearing retirement age, your allocation will likely shift toward fixed-income assets like bonds, and maybe even cash. A shift like this can help prepare you for the possibility that markets may be down when you retire.

If that’s the case, you might be able to use these fixed-income investments to provide income during the downturn, so you can avoid selling stocks while the markets are down since doing so would lock in losses and might curtail future growth in your portfolio. Thus, leaning on the fixed-income portion of your portfolio allows time for the market to recover before you need to tap into stocks.

If you haven’t retired yet, you can continue making contributions to your 401(k) to grow your nest egg and take advantage of any employer match.

If you chose to invest in a target date fund within your retirement account when you were younger, it’s likely that fund’s allocation would now be tilting toward fixed-income assets as well.

Retirement Asset Allocation

Once you’ve retired it may seem like you can kick back and relax with all of your asset allocation worries behind you. Yet, your portfolio allocation is as important to consider now as it was in your 20s.

When you retire, you’ll likely be on a fixed income — and you won’t be adding to your savings with earned wages. Your retirement could last 20 to 30 years or more, so consider holding a mix of assets that includes stocks that might provide some growth. Keeping a modest stock allocation might help you avoid outliving your savings and preserve your spending power.

While that may sound contrary to the suggestion above for pre-retirees to keep more of their assets allocated to fixed-income, the difference is the level of protection you might want just prior to retirement. Now as an official retiree, and thinking about the potential decades ahead, you may want to inject a little growth potential into your portfolio.

It might also make sense to hold assets that grow faster than the rate of inflation or are inflation-protected, such as Treasury Inflation-Protected Securities, or TIPS, which can help your nest egg hold its value.

These are highly personal decisions that, again, go back to the three intersecting factors that drive asset allocation: your goals, risk tolerance, and time horizon. There’s no right answer; the task is arriving at the right answer for you.

Understanding Assets and Asset Classes

At its heart, a financial asset is anything of value that you own, whether that’s a piece of property or a single stock. When you invest, you’re typically looking to buy an asset that will increase in value.

The three broad groups, or asset classes, that are generally held in investment accounts are stocks, bonds, and cash. When you invest, you will likely hold different proportions of these asset classes.

Asset Allocation Examples

What are some asset allocation examples? Well, your portfolio might hold 60% stocks, 40% bonds, and no cash — or 70% stocks, 20% bonds, and 10% in cash or cash equivalents. But how you decide that ratio gets into the nuts and bolts of your actual asset allocation strategy, because each of these asset types behaves differently over time and has a different level of risk and return associated with it.

•   Stocks. Stocks typically offer the highest rates of return. However, with the potential for greater reward comes higher risk. Typically, stocks are the most volatile of these three categories, especially in the short term. But over the long term, the return on equities (aka stocks) has generally been positive. In fact, the S&P 500 index, a proxy for the U.S. stock market, has historically returned an average of 10% annually.

•   Bonds. Bonds are traditionally less risky than stocks and offer steadier returns. A general rule of thumb is that bond prices move in the opposite direction of stocks.

When you buy a bond, you are essentially loaning money to a company or a government. You receive regular interest on the money you loan, and the principal you paid for the bond is returned to you when the bond’s term is up. When buying bonds, investors generally accept smaller returns in exchange for the security they offer.

•   Cash. Cash, or cash equivalents, such as certificates of deposit (CDs) or money market accounts, are the least volatile investments. But they typically offer very low returns.

💡 Quick Tip: Are self-directed brokerage accounts cost efficient? They can be, because they offer the convenience of being able to buy stocks online without using a traditional full-service broker (and the typical broker fees).

How Do Diversification and Rebalancing Fit In?

The old adage, “Don’t put all your eggs in one basket,” is apt for a number of concepts in investing.

Putting all of your money in one investment may expose you to too much risk. When it comes to asset allocation, you can help manage risk by spreading money out over different asset classes that are then weighted differently within a portfolio.

Here is a possible asset allocation example: If your stock allocation was 100%, and the stock market hit a speed bump, your entire portfolio could lose value. But if your allocation were divided among stocks, bonds, and cash, a drop in the value of your stock allocation wouldn’t have the same impact. It would be mitigated to a degree, because the bonds and cash allocation of your portfolio likely wouldn’t suffer similar losses (remember: bond prices generally move in the opposite direction of stocks, and cash/cash equivalents rarely react to market turmoil).

Diversification

Portfolio diversification is a separate, yet related, concept. Simple diversification can be achieved with the broader asset classes of stocks, bonds, and cash. But within each asset class you could also consider holding many different assets for additional diversification and risk protection.

For example, allocating the stock portion of your portfolio to a single stock may not be a great idea, as noted above. Instead, you might invest in a basket of stocks. If you hold a single stock and it drops, your whole stock portfolio falls with it. But if you hold 25 different stocks — when one stock falls, the effect on your overall portfolio is relatively small.

On an even deeper level, you may want to diversify across many types of stock — for example, varying by company size, geography, or sector. One way some investors choose to diversify is by holding mutual funds, index funds, or ETFs that themselves hold a diverse basket of stocks.

Rebalancing

What is rebalancing? As assets gain and lose value, the proportion of your portfolio they represent also changes. For example, say you have a portfolio allocation that includes 60% stocks and the stock market ticks upward. The stocks you hold might have appreciated and now represent 70% or even 80% of your overall portfolio.

In order to realign your portfolio to your desired 60% allocation, you might rebalance it by selling some stocks and buying bonds. Why sell securities that are gaining value? Again, it’s with an eye toward managing the potential risk of future losses.

If your equity allocation was 60%, but has grown to 70% or 80% in a bull market, you’re exposed to more volatility. Rebalancing back to 60% helps to mitigate that risk.

The idea of rebalancing works on the level of asset allocation and on the level of asset classes. For example, if your domestic stocks do really well, you may sell a portion to rebalance your dometic allocation and buy international stocks.

You can rebalance your portfolio at any time, but you may want to set regular check-ins, whether quarterly or annually. There may be no need to rebalance if your asset allocation hasn’t really shifted. One general rule to consider is the suggestion that you rebalance your portfolio whenever an asset allocation changes by 5% or more.

What’s the Deal with Target Date Funds?

One tool that some investors find useful to help them set appropriate allocations is a target date fund. These funds, which were described briefly above, are primarily for retirement, and they are typically geared toward a specific retirement year (such as 2030, 2045, 2050, and so on).

Target funds hold a diverse mix of stocks and fixed-income investments. As the fund’s target date approaches, the mix of stocks and bonds the fund automatically adjusts to a more conservative allocation — aka the fund’s “glide path.”

For example, if you’re 35 and plan to retire at 65, you could purchase shares in a target-date fund with a target date 30 years in the future. While the fund’s stock allocation may be fairly substantial at the outset, as you approach retirement the fund will gradually increase the proportion of fixed-income assets that it holds.

Target-date funds theoretically offer investors a way to set it and forget it. However, they also present some limitations. For one, you don’t have control over the assets in the fund, nor do you control how the fund’s allocation adjusts over time.

Target funds are typically one-size-fits-all, and that doesn’t always work with an individual’s unique retirement goals. For example, someone aggressively trying to save may want to hold more stocks for longer than a particular target date fund offers. Also, as actively managed funds, they often come with fees that can take a bite out of how much you are ultimately able to save.

The Takeaway

While many investors spend time researching complex issues like bond yields and options trading, understanding and executing a successful asset allocation strategy — one that works for you now, and that you can adjust over the long term — can be more challenging than it seems.

Although asset allocation is a fairly simple idea — it’s basically how you divide up different asset classes in your portfolio to help manage risk — it has enormous strategic implications for your investments as a whole. The three main factors that influence your asset allocation (goals, risk tolerance, and time horizon) seem straightforward enough as separate ideas, yet there is an art and a science to combining them into an asset allocation that makes sense for you. Like so many other things, arriving at the right asset allocation is a learning process.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

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

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Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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