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Jun
20
2024

Savings Calculator

By | Uncategorized | Comments Off on Savings Calculator


High-Yield Savings Account Calculator

By Janet Siroto | Updated Aug 14, 2025

A savings calculator can be a very helpful financial tool as it can let you project your savings account’s performance down to the last penny. By inputting your initial balance, interest rate, and holding period, you can see how your interest rate will work on your behalf. In addition, the calculator can show you how various savings accounts will perform, allowing you to choose the best one.

Among the easiest ways to grow your wealth is to let your savings go to work for you. An online high yield savings account with high interest rates can be safe investments that can help your extra cash or an emergency fund stay ahead of inflation. Here’s what to know about using a savings calculator, a calculator to work with, and details on how to choose the best savings account.

*Actual interest credited by your financial institution may vary based on institution-specific calculation methodology.

Looking for a savings account with a competitive APY?

With a SoFi high yield savings account, get up to 3.60% APY1, no account fees2, and up to $300 with direct deposit†.


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How To Use the Savings Calculator

Using a savings account calculator requires you to provide the following factors: your starting balance, years to save, additional deposits, and rate of return as expressed in APY. Here’s a step-by-step guide on how to use the calculator:

  1. Enter the initial deposit or starting amount you will put into your savings account. It’s the amount you have available to invest or save at the beginning.
  2. There’s also a space to enter how much you’ll deposit into the account over time. For example, you could contribute $50 monthly. This figure could also be zero if you don’t have the budget for it.
  3. Enter the number of years or months you intend to leave your money in the savings account.
  4. Enter the annual percentage yield, the annualized rate of return on your savings. It figures in compounding, so make sure you’re entering the APY, not just the simple interest rate.

Calculator Definitions

  • Initial Deposit: The amount of money you first put into the savings account. It represents the starting point of your savings journey. The larger it is, the more you can earn from interest. In addition, some financial institutions require a specific dollar amount for your first deposit to open the account or secure a higher interest rate.
  • Monthly Contribution: The amount of money you plan to add to your savings regularly, typically on a monthly basis. It represents additional contributions beyond the initial deposit that you make over time. For example, you might set up an automatic transfer of $100 per month from your checking account. Doing so will add to the principal balance, leading to more interest accumulation.
  • Savings Time Period: The number of years or months you plan to leave your money in the account. It’s the duration over which your initial deposit and subsequent contributions will accrue interest. Generally, longer periods generate more earnings.
  • APY (Annual Percentage Yield): APY is the annualized rate of return, taking into account the effect of compounding throughout the time the account grows. Financial institutions provide the APY for the account to show how the interest rate and compounding frequency work together to generate earnings. APY is expressed as a percentage, which you can use to calculate how much your account will grow in one year. Conventional savings accounts currently offer an average APY of 0.57%. However, high-yield savings give more favorable rates and reward your savings habits, providing an APY of over 4.00% at press time.
  • Compound Frequency: Compounding refers to when your deposit earns interest. However, financial products have different compounding rates, affecting how much you earn. For example, an account that compounds twice a year earns less than one that compounds every month (provided they have the same interest rate). The greater the compounding frequency, the more often you earn interest, increasing the account’s APY. Because interest generates returns on both your deposits and past interest earnings, frequent compounding has a snowball effect, allowing your interest to build upon itself.
  • Interest Earned: The total amount of interest that accumulates on your initial deposit and any additional contributions over the specified time period. You can calculate this figure with the APY, the compounding frequency, and the time elapsed. Higher interest rates create more earnings.
  • Total Contributions: Total contributions represent the sum of your initial deposit and all the monthly contributions made over the specified time period. It gives you a clear picture of how much money you have contributed to the savings account.

How Is Interest on a Savings Account Calculated?

You can calculate interest on a savings account using a mathematical formula:

Simple Interest = P * r *t

•   P is the principal amount (initial deposit)

•   r is the annual interest rate (expressed as a decimal)

•   t is the time the money is invested or borrowed for (in years)

This formula calculates interest using the initial principal amount only and doesn’t take into account any interest earned in previous periods (i.e., compounding interest) or monthly deposits. These additional factors complicate the equation. Fortunately, online savings calculators can make this easy to calculate.

That being said, here’s an example of how to calculate how much your savings account will grow with a specific interest rate:

Say you have a savings account with an initial deposit of $1,000, an interest rate of 4%, and you leave it untouched for 5 years. The simple interest would be calculated as follows:

Formula: Simple Interest = (1,000)(0.04)(5)= $200

In other words, you would have $1,000 plus $200 at the end of the term, of $1,200.

Comparing Scenarios Using the Simple Savings Calculator

A simple savings calculator can quickly provide insights on a variety of money scenarios. A few examples:

  • Scenario 1: Say you want to save $2,000 for travel in a year or so. You could put in your opening deposit of, say, $1,000; punch in the best interest rate you have found; and play with how much you’d have to contribute each month to reach your goal. You might see how long it would take if you put in, say, $150 vs. $200 as your monthly contribution.
  • Scenario 2: Or you might want to see how much you could accrue over five years if you were saving $200 or $300 a month vs. your current $100 contribution. The calculator will let you quickly see each of these scenarios with just a few clicks.
  • Scenario 2: You can also use this tool as a simple retirement savings calculator. Simply plug in how much you have set aside so far, how many more years you plan to work, and the expected rate of return. You can then play with your monthly contributions to ensure you’ll be able to meet your retirement savings goal.

Factors to Consider When Choosing a Savings Account

Comparing savings accounts is a crucial step in finding the one that best meets your financial goals and needs. Here are the factors to consider to make a wise decision when comparing savings accounts:

  • APY: Look for the APY rather than the nominal interest rate. APY more accurately reflects the interest you’ll earn because it includes the compounding effect. Higher APY means more interest earned over time. It’s also best to check if different APYs apply to higher balances. For example, some accounts only apply a high APY to your first $1,000 and give the rest of your cash a significantly lower rate. Similarly, the financial institution might offer a promotional rate for opening a new savings account that expires after a specific period.
  • Fees: Check for monthly maintenance fees, transaction fees, and other charges. Look for accounts with minimal or no fees; otherwise, these expenses will eat into your interest earnings.
  • Minimum balance requirements: Some accounts require a minimum balance to avoid fees or to qualify for a higher interest rate. Choose an account with a minimum balance requirement that fits your financial situation. A higher initial deposit can unlock better rates and other perks.
  • Accessibility and convenience: If you regularly withdraw cash at ATMs, consider whether the bank has a widespread ATM network or reimburses ATM fees. In addition, ensure that the bank provides user-friendly online and mobile banking services, such as mobile check deposit, bill pay, and account management. Some financial institutions limit how often you can withdraw cash from the account, so check to make sure the limit (such as six times monthly) fits your needs. Lastly, the ability to set up automatic transfers from your checking to your savings account can help you save consistently.
  • Insurance coverage: Ensure that your savings account is covered by the FDIC (Federal Deposit Insurance Corporation) if you’re using a bank or the NCUA (National Credit Union Administration) if you’re using a credit union. This insurance protects your deposits up to $250,000 per account holder, per account category, per insured institution, in the rare event that a bank or credit union fails.
  • Shop around: Don’t settle for the first account you come across. Compare offerings from different banks or credit unions to find the one that aligns best with your financial goals. Each institution is trying to earn your business, so you have the advantage of picking the best offer you can find.

Strategies and Tips to Help You Save

Even with the best intentions, it’s common to make budgeting mistakes or just plain overspend. The end of the month arrives, and you discover you haven’t socked away as much as you’d planned. To help avoid that scenario, consider these strategies and tips to help you pump up your savings.

  • Get the best rate: The interest rate on your savings account can make a big difference. Consider opening a high-yield savings account to help your money grow faster. You can often find the best rates at credit unions and online banks.
  • Pay down debt: High-interest debt, like credit cards, can drain your finances. Paying down your balances not only saves you money on interest but also frees up cash that can be redirected into your savings. Moving forward, it’s wise to use credit only when necessary and always try to pay the full balance each month.
  • Cut unnecessary expenses: Identify and eliminate monthly expenses you don’t need, such as unused subscriptions or memberships. Any money you free up can then be redirected into your savings account.
  • Track your spending: Understanding where your money goes day in and day out can help you find other opportunities to save. Consider using a budgeting app to monitor and categorize your spending in real time. This can help you identify patterns and can help you make smarter decisions and stay on track with your financial goals.
  • Disable spending on social media: If you have one-click buying enabled, that can make it too easy to snap up the latest thing you see on Instagram or TikTok without thinking, “Do I really need this or am I just caught up in the moment?” When you have to type in your credit card number and other details for each purchase, it slows the process down and gives you time to think twice.
  • Gamify savings: Some people report great success with setting up “no spend” challenges for themselves. For instance, you might commit to not buying anything you don’t absolutely need for the next 30 days. Or, you might choose a smaller goal, like giving up fancy barista-made coffees or swapping yoga classes for jogging in the park. At the end of the challenge, you transfer your unspent funds into savings.
  • Make the most of windfalls: Did you get a spot bonus at work, sell your old laptop, or receive a birthday check from your grandmother? Whenever a money windfall comes your way, stash it in your savings to reach your goal sooner. Or you might get a weekend gig as a rideshare driver or dog walker and funnel those extra earnings right into savings.
  • Maintain your lifestyle: As our earnings grow over time, it’s tempting to let our lifestyle become more extravagant. Avoid lifestyle creep by maintaining your expenses and pocketing your next bump in salary.

FAQ

What’s the average interest on a savings account?

According to the FDIC, the national average interest rate for conventional savings accounts is 0.38% as of July 21, 2025. However, high-yield savings accounts offer APYs of 3.00% or higher; check to see if there are minimum deposit or other requirements.

Why is interest on a savings account important?

The interest rate is the primary factor driving the earnings of your savings account. The higher the rate, the more you’ll earn per compounding period. As a result, it’s best to open an account with a high interest rate so you can generate more money over time.

Learn more about saving:

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.

1

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at http://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 http://www.sofi.com/legal/banking-rate-sheet

2

No Account Fee

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/.

† †

Who is eligible for a Direct Deposit Bonus?
New and existing SoFi members who have never set up direct deposit with SoFi are eligible for the Direct Deposit Bonus. Bonuses are limited to one bonus per SoFi member. In the case of a joint account, direct deposit activity will only be counted towards the primary account holder’s eligibility for the bonus (the primary account holder is the member who opened the joint account first).

How do I earn the Direct Deposit Bonus?
1. Set up your first Eligible Direct Deposit. SoFi must receive it on or before 1/31/26.
2. Once SoFi receives and recognizes your first Eligible Direct Deposit, we will add up the Total Eligible Direct Deposits received over the next 25 calendar days. This total will determine the bonus amount.

Total Eligible Direct Deposit Bonus Amount Timing
$1.00 - $999.99 $0 To determine your bonus amount, SoFi will add up all your Eligible Direct Deposits received within 25 calendar days of your first Eligible Direct Deposit.
$1,000.00 - $4,999.99 $50
$5,000.00 or more $300

3. You will receive the bonus amount in your SoFi Checking account within 7 business days of completing all requirements listed above. You are only eligible to receive one bonus amount. You must have an open SoFi Checking account in good standing at the time of the bonus payment.

What is an Eligible Direct Deposit?
Eligible: Recurring ACH deposit of regular income to your SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by your employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”)

Not Eligible Deposits that are not from an employer, payroll or benefits provider or government agency and deposits that are non-recurring in nature are not eligible. Examples of deposits that are not eligible include check deposits, peer-to-peer transfers (e.g., transfers from Zelle, PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), bank ACH funds transfers, wire transfers from external accounts, and IRS tax refunds. SoFi Bank shall, in its sole discretion, assess your Eligible Direct Deposit activity to determine eligibility and may require additional documentation to complete this verification.

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. If you have satisfied the Eligible Direct Deposit requirements but have not received a cash bonus in your Checking account, please contact us at 855-456-7634 with the details of your initial Eligible Direct Deposit. After SoFi validates the details of your Eligible Direct Deposit, your Direct Deposit Bonus will be based on the date we received your initial Eligible Direct Deposit.

What else is important to know?
•This promotion is available between 12/7/2023 at 12:01AM ET and 1/31/2026 at 11:59PM ET. SoFi reserves the right to modify or end the promotion at any time without notice. The terms of this promotion take precedence over the terms of any prior Direct Deposit promotion.
•SoFi reserves the right to exclude any members from participating in this promotion for any reason, such as suspected fraud, misuse, or suspicious activity.
•SoFi members with Eligible Direct Deposit activity can earn 3.60% annual percentage yield (APY) on savings balances. Interest rates are variable and subject to change at any time. These rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at http://www.sofi.com/legal/banking-rate-sheet.
•Bonuses are considered miscellaneous income, and may be reportable to the IRS on Form 1099-MISC (or Form 1042-S, if applicable). SoFi is required to do this reporting in compliance with the applicable federal and state reporting requirements. Recipient is responsible for any applicable federal, state or local taxes associated with receiving the bonus offer; consult with your tax advisor to determine applicable tax consequences.
•This promotion is offered by SoFi Bank, N.A, Member FDIC (“SoFi”)

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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Jun
06
2024

Investment Strategy View: Warning Signs

By | | Comments Off on Investment Strategy View: Warning Signs

Is the U.S. economy as strong as it seems? A closer look paints a nuanced picture.

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Jun
05
2024

Is 580 a Good Credit Score?

By | Uncategorized | Comments Off on Is 580 a Good Credit Score?


Is 580 a Good Credit Score?

580 credit score

On this page:

    On this page:

      By Jason Steele

      (Last Updated – 05/2024)

      If you have a 580 credit score, FICO technically considers it to be “Fair.” Scores below 580 are classified as “Poor.” FICO, by the way, is the producer of the most popular credit scoring formulas, whose scores range from 300 to 850.

      On the other hand, scores of 670-739 are considered “Good,” while scores of 740-799 are “Very Good.” Scores of 800 and above are considered “Exceptional.” (Another company, VantageScore, uses a very similar scale for its scores.)

      Here’s a look at what a 580 credit score means and what you can get with it.

      What Does a 580 Credit Score Mean?

      FICO and other credit score companies review your credit history and produce a score that measures the likelihood that you’ll repay a loan. Lenders use these scores to make decisions on whether to approve consumers for a personal loan or other type of loan and on what terms.

      When looking at credit score ranges, you’ll find that 580 is the lowest possible score to be considered “Fair.” Anything below that is labeled as “Poor.” Having a score of 580 or below means that you may have a difficult time qualifying for new loans and that, if approved, you might not receive very favorable terms.

      A FICO score of 580 may signify a limited credit history, serious credit problems, or both. Examples of serious credit problems can include multiple delinquencies or defaults, bankruptcy, and foreclosure.

      Recommended: FICO Score vs. Credit Score

      What Can You Get with a 580 Credit Score?

      Generally speaking, borrowers with a 580 credit score may only be able to qualify for loans designed for those with fair or poor credit profiles. The industry term for these types of loans is subprime, with prime loans being reserved for applicants with good or excellent credit.

      Can I Get a Credit Card with a 580 Credit Score?

      If you have a credit score of 580, you may only be able to qualify for cards designed for those with fair credit. If you can’t qualify for one of those cards, then you may want to explore applying for a subprime credit card or a secured credit card.

      A subprime card is one with much higher interest rates and fees, in order to account for the cardholder’s increased risk of delinquency or default.

      A secured credit card works much like a standard, unsecured card, but it requires the payment of a refundable deposit before your account can be opened. This deposit is only used in the event that you fail to pay your bills and are in default. Otherwise, these credit cards allow you to make purchases and require a monthly payment, just like any other card. There are some secured cards with no annual fee.

      Can I Get an Auto Loan with a 580 Credit Score?

      Borrowers with a 580 credit score might find it a challenge to get a car loan. If you do line up a loan, it may come with very high interest rates and fees. That said, many car dealers work with lenders that offer loans to those with fair or poor credit. Just be sure to understand all of the terms and conditions of these loans before committing.

      Can I Get a Mortgage with a 580 Credit Score?

      The Federal Housing Administration (FHA) backs mortgage loans to borrowers who have a credit score as low as 580, with a 3.5% down payment. Even borrowers with a credit score of 500 can be accepted with a 10% down payment. Other types of loans, including conventional, Veterans Administration (VA) and U.S. Department of Agriculture (USDA), require higher credit scores. Note that you should expect to pay higher interest rates and to incur more fees when you have a credit score of 580.

      Can I Get a Personal Loan with a 580 Credit Score?

      It’s possible to get personal loans, including credit card consolidation loans, with a 580 credit score, as this is on the low end of a “Fair” credit score. As with other loans, you could be offered a loan with a higher interest rate and more fees than you would have qualified for with a good or excellent credit score.

      Recommended: How Much of a Personal Loan Can I Get?

      Takeaway

      A credit score of 580 is on the lowest end of the “Fair” range. Anything below that score is considered “Poor,” and a borrower might have a more difficult time getting approved for a loan. Even with a credit score of 580, you will often have to find specific lenders and types of loans that are designed for your credit profile. By understanding what you can and cannot do with a credit score of 580, you can make the right decisions when it comes time to look for a loan.

      Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.


      SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

      View your rate

      Photo credit: iStock/cnythzl

      SoFi Loan Products
      SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


      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.



      Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

      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.


      SOPL-Q224-1839402-V1

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      May
      28
      2024

      Retirement Planning Guide

      By | Uncategorized | Comments Off on Retirement Planning Guide

      Home > Online Investing > IRA Accounts > Retirement Planning

      4 Step Guide to Retirement Planning

      While the date of your actual retirement may seem far off, the sooner you start planning, the better your retirement will be.

      That’s partly because your money needs time to grow. Time is one of the most important ingredients in a successful retirement strategy. But it’s also because by getting an early start, you can enjoy greater peace of mind, knowing that your financial independence is on track.

      After all, there can be a few twists and turns along the road between now and your goal of retiring happily, healthily, and hopefully wealthily. Using this guide to plan ahead can help keep you headed confidently in the right direction.

      Step 1: Figure Out How Much You’ll Need to Retire

      Retirement is a unique proposition for each person, and for every couple. As such, determining the amount you need to retire comfortably is not only a financial calculation — but also a personal one.

      The first step, even before you think about numbers, is to map out the key factors in your quality of life in retirement. You might want to ask yourself (and your spouse or partner) what your expectations are, such as:

      •   Do you imagine working part-time in retirement, for fun or for income, or both?

      •   Do you intend to pursue specific projects, hobbies, or goals?

      •   What’s your interest in traveling vs. staying close to home?

      •   Do you envision downsizing, moving near family, or perhaps even moving abroad?

      There are no right answers. And your answers may change over time, as you revisit the retirement conversation. You may even want to retire early. But it’s important to start with your current retirement vision so that you can begin to anticipate and save for likely expenses.

      Recommended: Take our Retirement Quiz to see how prepared you are for retirement.

      Common Retirement Expenses to Consider

      You can begin calculating what you’re likely to spend in retirement based on what you spend now.

      Gather any information you generate from your list, to shed light on potential retirement expenditures. You can use the following list to think through which expenses may increase in retirement, which may decrease, and which might go away. (For example, once you’re retired you may not need a line item for retirement savings.)

      • Your home (e.g. rent or mortgage; utilities; maintenance)
      • Transportation (e.g. car payments, commuting, insurance, gas)
      • Healthcare (e.g. Medicare and other insurance premiums; prescriptions)
      • Kids (e.g. camps, activities, health)
      • Education (e.g. tuitions and/or saving for college)
      • Food
      • Entertainment
      • Travel
      • Hobbies/projects
      • Pets
      • Wellness

      how much do i need to retire

      How Much Do I Need to Retire?

      typical retirement expenses to prepare for

      Typical Retirement Expenses to Prepare For

      Step 2: Start Saving Now

      The more time you have, the more the money you invest has time to grow. The value of compound returns can’t be underestimated. Compounding means that as your investments gain value, the returns also grow.

      There are no guarantees that your portfolio will always be on an upswing, however. But that’s another reason to put time on your side and start investing sooner rather than later. With enough time, your portfolio can weather the market’s natural ups and downs and, ideally, have time to recover.

      So even if you think you’re late to the game, getting started ASAP is still the smartest strategy. That way when the questions get more serious and you start to wonder, When can I retire?, you’ll be in good shape.

      Saving in the Midst of Competing Priorities

      Saving enough for retirement can be challenging. Everyone is dealing with competing wants and needs. There’s a natural tendency to focus on your immediate goals and deprioritize the future — thinking you’ll catch up at some point.

      In fact, it’s important to assess your current expenses and ask yourself whether you can reduce your cost of living now in order to save more for life in retirement.

      After all, let’s say your retirement portfolio earns a solid 10% over time (the average return of the stock market is about that, but individual portfolios often earn in the 5 to 7% range). That still means a significant amount of your nest egg comes from what you save. To ensure you’re salting away as much as you comfortably can, take these steps:

      •   Double check your current rate of retirement savings. If you’re enrolled in a 401(k), you probably allotted a certain percentage of your salary. Could you increase that amount by even 1%?

      •   If you have an IRA that you’re funding, be sure to set up a regular cadence for your contributions so you can take advantage of dollar cost averaging.

      •   To save more, make all your contributions automatic.

      when should you start saving for retirement

      When Should You Start Saving for Retirement?

      how to save for retirement

      How to Save for Retirement

      Step 3: Choosing a Retirement Plan

      Understanding your different retirement plan options is an important way to leverage your savings, make smart decisions about taxes, and hopefully come out ahead.

      Workplace Retirement Plans

      There are many advantages to contributing to a 401(k) plan (if you work at a for-profit company) or a 403(b) plan (if you work at a nonprofit), or a 457(b) plan (if you work for the government).

      These plans are tax deferred, meaning: Your employer can deduct your contributions from your paycheck, so you don’t pay tax on the money now — in fact, these contributions effectively lower your taxable income. So you may owe less in taxes now. But you will owe tax when you take withdrawals in retirement.

      Many employers deduct your contributions automatically, which can help you save more, effortlessly. And in some cases your employer may offer a matching contribution: e.g. up to 3% of the amount you save.

      Contribution limits for workplace plans for tax year 2024 are $23,000, and $30,500 if you’re 50 and older. Check with your employer about any other factors, investment options, and matching funds.

      Individual Retirement Accounts (IRAs)

      Another retirement savings option, especially if you’re one of the many freelancers or contract workers in the American workforce, is to open an individual retirement account (IRA).

      Like a 401(k), an IRA allows you to put away money for your retirement. However, for tax year 2024 the maximum contribution you can put into your IRA is capped at $7,000 ($8,000 for those 50 and older). The lower savings amount is somewhat made up for by the fact that an IRA usually has a much wider array of investment options.

      Both the traditional IRA and 401(k) offer tax-deductible contributions; again, with tax-deferred accounts, you typically pay tax when you take withdrawals in retirement.

      Roth IRAs are another option: With a Roth IRA, your contributions are made with after tax dollars. Thus, since you’ve already paid tax on those deposits your withdrawals in retirement will be tax free.

      Roth accounts are subject to income limits, however, so it’s best to check with the IRS or a financial professional before opening a Roth IRA.

      For those who can afford to invest money in both an IRA and a 401(k), and who meet the criteria, that’s another way to boost retirement savings. However, bear in mind that the IRS imposes restrictions on combining certain accounts, so it’s important to know the rules.

      different types of retirement plans

      How to Open an IRA: Step-by-Step Guide

      what is an ira

      Roth IRA vs Traditional IRA: Differences and How to Choose

      Step 4: Managing Your Portfolio

      Learning a few of the fundamentals of portfolio management is another key to staying on the path to your goals.

      Asset Allocation

      Asset allocation refers to the practice of investing across asset classes in order to balance potential risks and rewards. The three main asset classes are stocks, bonds, and cash.

      In addition to stocks, bonds, and cash, some investors also allocate money into real estate, commodities, or even alternative investments. Determining what kind of asset allocation makes the most sense for you depends on personal goals, time horizon, and risk tolerance.

      Some people use the formula of 100 – [your age] to arrive at your base equity allocation. If you’re 35, 100 – 35 = 65; thus, you could consider putting 65% of your portfolio in equities (stocks), and the remainder into bonds and cash. This is just one formula; people use different ways of determining their asset allocation — especially their tolerance for risk.

      Diversification

      Asset allocation is related to portfolio diversification. Diversification means spreading one’s money across a range of assets. It’s like the age-old advice to not put all your eggs in one basket. An investor can’t avoid risk entirely, but diversification can help mitigate some investment risks.

      Bonds, for instance, can balance stocks as they generally have a lower risk profile. Real estate can be a hedge against inflation, and has low correlation with stocks and bonds, which can provide protection against market downturns. Investors can explore how portfolio diversification might benefit them.

      Investment Funds

      When setting up your portfolio within your IRA or 401(k), or other retirement account, you may want to consider different types of investment funds.

      •   Mutual funds are a type of pooled investment that may hold dozens or hundreds of securities; investors can buy and sell mutual fund shares rather than owning each type of security themselves. Mutual fund shares can be traded once a day.

      •   Exchange-traded funds (ETFs) are similar to mutual funds in that they are also a type of pooled investment fund, but shares of ETFs can be traded throughout the day, like stocks.

      •   Target date funds are similar to mutual funds in that you can buy shares of these funds. But they are designed as more or less complete retirement portfolios, in that they include a mix of asset classes based on your chosen retirement year.

      investing tips and options for retirement

      Investing for Retirement: Tips and Options to Consider

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      How to Rebalance Your 401(k)

      Additional Considerations for Your Retirement

      It’s important to think about your retirement lifestyle, as well as different types of retirement accounts, the need to understand various asset classes, and how diversification works.

      In addition, when planning ahead for a well-rounded retirement it’s also essential to put some thought into other key aspects of retirement.

      Understanding Social Security

      All U.S. workers pay a tax that goes into the Social Security system. When you retire, you are entitled to claim your Social Security benefits starting as early as age 62, but the amount you get will be higher or lower depending on how old you are when you apply.

      For every year you wait after age 62, which is considered an early retirement, you get more money. If you wait until age 70 you will get the maximum amount.

      Social Security is complicated, especially if you’re divorced, disabled, or your spouse is deceased. Be sure to check with SSA.gov to understand the rules for claiming Social Security.

      Healthcare Coverage

      After you retire, having the right healthcare insurance becomes increasingly important. You may want long-term care insurance as well. Most retirees use some combination of Medicare and private insurance.

      The type of coverage you’ll need depends on your health and well-being, and what you can afford. As you’re looking ahead, be sure to plan for this additional expense.

      Downsizing and Debt Management

      How much debt you have can have a big impact on your retirement because it can add to your expenses. If possible, you want to have as many of your debts paid off as you can before you retire. With retirement years away, you can plan to pay off:

      •   Credit cards

      •   Student loans

      •   Vehicle loans

      •   Personal loans

      •   Medical debt

      You may also want to pay off your mortgage before you retire, or move to a smaller home with a smaller mortgage. This is one reason why some retirees choose to downsize. But downsizing in today’s market is complicated, given the tight housing market.

      As with most aspects of your retirement plan, what you decide and the strategies you use to get there will be based on your personal circumstances. It can be tough to find ways to pay off debt when you’re starting a family or a business (or both). When the time comes for you to retire, it may make more sense to downsize versus how things look today.

      FAQ

      What are some common retirement-related mistakes to avoid?

      There are three common mistakes:

      •   The first is procrastinating, telling yourself you’ll start focusing on retirement soon — and then years slip by. Time is almost as important as the money you save, so take advantage of the time you have.

      •   Another misstep is not taking advantage of an employer retirement account. If your employer offers a retirement plan, especially if the plan comes with matching funds, sign up for it.

      •   The last mistake: filing for Social Security at age 62. While 62 is generally the earliest you can claim SS benefits (and some retirees will need to claim Social Security then), it’s also the age at which you’ll get the lowest possible payout. Every year you wait, until age 70, gives you a little more in your check.

      At what age do most people retire?

      The average age of retirement in the U.S. is between 62 and 64, depending on different sources. Perhaps more important is a data point revealed by a survey conducted by the Employee Benefits Research Institute, which found that the average American worker retired about 4.3 years earlier than they’d anticipated.

      In some cases poor health forced people to retire early, in other cases it was a layoff, or some other curveball. This is another reason to start your own retirement plans sooner rather than later, to take advantage of your working years and your ability to save more while you have a steady paycheck.

      How much does the average American have when they retire?

      If you just want to look at some numbers: People aged 55 to 64 have about $408,420 saved; those aged 65 to 74 have $426,070 saved, according to the Federal Reserve Survey of Consumer Finances.

      But that doesn’t tell you how much the average American had in the bank when they actually retired, and whether that amount (whatever it was) matched their goals and covered their expenses.

      It’s much more important to do your own personal calculation of where you’re at and where you need to be — and what you need to do to close the gap (if there is one) — to achieve peace of mind for your later years.

      How do you know when you’re ready to retire?

      This is the most personal calculation of all, because so many factors come into play. You may want to retire when you’re ready to leave your job or you’re ready for something new; your health may dictate when you retire; you may want to accommodate your spouse or partner, or other loved ones.

      One thing you can do is make a list of all the factors you deem most important when it comes to making the decision to retire, and sharing it with an advisor who can help you think through all the angles relevant to your situation.


      Open a SoFi IRA and start saving for your dream retirement.

      Interested in opening an IRA online? If you want to take charge of your retirement planning yourself or have us provide assistance, we are here to support you in the process. Choose between a traditional, Roth, or SEP IRA.


      Open an IRA

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      May
      24
      2024

      APY Calculator

      By | Uncategorized | Comments Off on APY Calculator


      APY Calculator

      By Ashley Kilroy | Updated May 24, 2024

      An annual percentage yield or APY calculator can be a very useful tool when you want to know an accurate rate of return for a savings account, certificate of deposit, and other interest-bearing asset. Interest rates don’t always give the full picture because of the compounding frequency. That frequency indicates how often your interest gets added in with the principal so it too can earn interest. By factoring in compounding, you can get a better idea of how quickly your balance grows in one year.

      An APY calculator, like the one below, can give you crucial information to determine the account’s profitability, without your having to do a lot of math. Within seconds, this tool can show you how an account performs, so you can make an educated decision about what is best for your needs.

      *Actual interest credited by your financial institution may vary based on institution-specific calculation methodology.

      Calculator Definitions

      • Initial Deposit: The amount of money you first deposit into a financial account (you may hear it refers to as the principal). Typically, the financial institution requires this amount at a minimum for you to open the account. In addition, it becomes the basis for your interest earnings, with larger deposits receiving better rates. The APY will multiply your initial deposit to create a new, higher balance.

      • Monthly Contribution: You add money to your account by making a deposit. Your initial deposit funds the account, while subsequent deposits increase that principal amount upon which interest rate compounds.

      • Savings Time Period: The period (usually expressed in years) over which your initial deposit or investment will grow. This figure is a key factor for an APY calculator because it determines how long your account will earn interest.

      For instance, a $500 savings account compounding monthly with a 5% APY will earn $25.00 in interest after one year. On the other hand, letting the account sit for five years results in earnings of $138.14.

      • APY (Annual Percentage Yield): When considering APY vs. APR, know that the APR is an annualized representation of how compounding interest grows your savings. Whether a savings account, CD, or other financial vehicle, your account will typically compound daily, weekly, monthly, or bimonthly.

      Regardless of the frequency, APY vs. interest rate alone lets you see how much your account will increase over one year. The more your account compounds, the more your balance grows. As a result, more compounding creates a higher APY. Remember, APY provides a more accurate measure than the interest rate of your account’s rate of return because it calculates the effect of compounding.

      • Compound Frequency: Compounding refers to when your deposit earns interest. However, financial products have different compounding rates, affecting how much you earn. For example, an account that compounds twice a year earns less than one that compounds every month (provided they have the same interest rate).

      The greater the compounding frequency, the more often you earn interest, increasing the account’s APY. Because interest generates returns on both your deposits and past interest earnings, frequent compounding has a snowball effect, allowing your interest to build upon itself.

      • Interest Earned: This expresses the interest earned by your initial deposit and any subsequent deposits over a specific period. APY calculators use the interest on the initial amount and any previously earned interest to project your total earnings per year.

      • Total Contributions: The sum of all the subsequent deposits made into the account. Financial institutions may limit your total contributions by account type (such as a CD allowing only the initial contribution) or by amount (such as a $1 million balance limit for savings accounts).

      What Is APY?

      As mentioned above, the APY (or Annual Percentage Yield), is a standardized measure that reflects the total amount of interest earned on an investment, savings account, or CD over one year. To add a little more detail:

      •   It demonstrates the outcome of compounding interest after holding the account for one year.

      •   It is expressed as a percentage and provides a more accurate representation of the potential return on investment than the interest rate, which expresses the percentage multiplier per compounding period.

      Because it involves multiple factors interacting over a one-year period, calculating APY can be challenging. In fact, those who are not fans of math may be really reluctant to delve into APYs too deeply.

      Fortunately, an APY calculator makes understanding your account’s potential growth as easy as punching in some numbers.

      How Do You Calculate APY?

      For those who are not math-phobic and actually enjoy some good, complex calculations, yes, you can calculate APY.

      Here’s the formula:

      APY = [1 + (i / n)]n – 1

      You plug in your interest (i) and compounding frequency (n). Then, you follow the order of operations to get your rate.

      Here’s an example showing how:

      Suppose you find a CD with a 5% interest rate compounding monthly. You use the APY formula to calculate your annual rate of return:

      Formula: APY = [1 + (i / n)]n – 1

      Step 1: [1+(.05/12)]12 – 1

      Step 2: [1+.00416667]12 – 1

      Step 3: 1.0041666712 – 1

      Step 4: 1.05116 – 1 = 0.05116, or 5.116%

      Therefore, your APY is 5.116%. This number is slightly higher than the 5% interest rate thanks to the monthly compounding frequency.

      FAQ

      Is APY compounded daily, monthly, or yearly?

      APY measures your interest rate per year, taking into account the compounding frequency. Whether your account compounds daily or monthly, the APY shows the rate at which your account will grow every year. You can read the fine print on an account to learn what the compounding frequency is.

      What’s the difference between APY and APR?

      APY, or annual percentage yield, expresses the rate of interest an asset would earn over a full year, thanks to compounding interest. APR (annual percentage rate), on the other hand, is the total rate of interest you would pay on a loan or a credit card, taking into account the interest rate and any other fees.

      What is 5% APY on $1000?

      An account holding $1,000 with a 5% APY will yield different amounts based on the compounding period. For example, an account that compounds monthly will yield $50.00 at the end of the year for a total balance of $1,050.00.

      Learn more about APY:

      Looking for a savings account with a competitive APY?

      With a high-yield savings account from SoFi, get up to 3.60% APY1, no account fees2, and up to $300 with direct deposit†.


      Get started

      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.

      1

      Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at http://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 http://www.sofi.com/legal/banking-rate-sheet

      2

      No Account Fee

      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/.

      † †

      Who is eligible for a Direct Deposit Bonus?
      New and existing SoFi members who have never set up direct deposit with SoFi are eligible for the Direct Deposit Bonus. Bonuses are limited to one bonus per SoFi member. In the case of a joint account, direct deposit activity will only be counted towards the primary account holder’s eligibility for the bonus (the primary account holder is the member who opened the joint account first).

      How do I earn the Direct Deposit Bonus?
      1. Set up your first Eligible Direct Deposit. SoFi must receive it on or before 1/31/26.
      2. Once SoFi receives and recognizes your first Eligible Direct Deposit, we will add up the Total Eligible Direct Deposits received over the next 25 calendar days. This total will determine the bonus amount.

      Total Eligible Direct Deposit Bonus Amount Timing
      $1.00 - $999.99 $0 To determine your bonus amount, SoFi will add up all your Eligible Direct Deposits received within 25 calendar days of your first Eligible Direct Deposit.
      $1,000.00 - $4,999.99 $50
      $5,000.00 or more $300

      3. You will receive the bonus amount in your SoFi Checking account within 7 business days of completing all requirements listed above. You are only eligible to receive one bonus amount. You must have an open SoFi Checking account in good standing at the time of the bonus payment.

      What is an Eligible Direct Deposit?
      Eligible: Recurring ACH deposit of regular income to your SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by your employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”)

      Not Eligible Deposits that are not from an employer, payroll or benefits provider or government agency and deposits that are non-recurring in nature are not eligible. Examples of deposits that are not eligible include check deposits, peer-to-peer transfers (e.g., transfers from Zelle, PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), bank ACH funds transfers, wire transfers from external accounts, and IRS tax refunds. SoFi Bank shall, in its sole discretion, assess your Eligible Direct Deposit activity to determine eligibility and may require additional documentation to complete this verification.

      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. If you have satisfied the Eligible Direct Deposit requirements but have not received a cash bonus in your Checking account, please contact us at 855-456-7634 with the details of your initial Eligible Direct Deposit. After SoFi validates the details of your Eligible Direct Deposit, your Direct Deposit Bonus will be based on the date we received your initial Eligible Direct Deposit.

      What else is important to know?
      •This promotion is available between 12/7/2023 at 12:01AM ET and 1/31/2026 at 11:59PM ET. SoFi reserves the right to modify or end the promotion at any time without notice. The terms of this promotion take precedence over the terms of any prior Direct Deposit promotion.
      •SoFi reserves the right to exclude any members from participating in this promotion for any reason, such as suspected fraud, misuse, or suspicious activity.
      •SoFi members with Eligible Direct Deposit activity can earn 3.60% annual percentage yield (APY) on savings balances. Interest rates are variable and subject to change at any time. These rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at http://www.sofi.com/legal/banking-rate-sheet.
      •Bonuses are considered miscellaneous income, and may be reportable to the IRS on Form 1099-MISC (or Form 1042-S, if applicable). SoFi is required to do this reporting in compliance with the applicable federal and state reporting requirements. Recipient is responsible for any applicable federal, state or local taxes associated with receiving the bonus offer; consult with your tax advisor to determine applicable tax consequences.
      •This promotion is offered by SoFi Bank, N.A, Member FDIC (“SoFi”)

      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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