The average American has less than $90,000 in retirement savings, as of mid-2023. That’s far below what many people will likely need, and many Americans aren’t really sure what sorts of goalposts or milestones they should be striving for by certain ages when it comes to saving for retirement.
It can be helpful to see how one compares to others in their age range. Averages can help investors see if they are on track to retire when they plan to. While each person is different in terms of their personal retirement goals, lifestyle, ability to save, and projected expenses, setting goals and benchmarks can help an individual figure out how much to save and where to put money for retirement.
Key Points
• The average American has less than $90,000 in retirement savings, which is less than what many people will likely need.
• Retirement savings vary by age group, with average savings increasing as people get older.
• By age 30, it’s generally recommended to save an amount equal to annual salary, and by age 40, three to four times annual salary.
• By age 50, it’s advised to have six times annual salary saved, and by age 60, eight times.
• Most Americans aren’t saving enough for retirement, and it’s important to create a retirement plan and consider personal goals and financial responsibilities.
Average Retirement Savings By Age
Below is a breakdown of retirement savings by age group, ranging from people in their 20s to people in their 70s.
Age Group
Average Retirement Savings
20s
$35,800
30s
$67,400
40s
$77,400
50s
$110,900
60s
$112,500
70s
$113,900
Average Retirement Savings in Your 30s: $67,400
Most Americans in their 20s and 30s haven’t reached their peak earning years, and many might be paying off student loans, and saving up to buy a house or have kids. Retirement isn’t always top of mind. But the earlier people can figure out which retirement plan is right for you and commit to actually starting a retirement savings plan, the more they will benefit from compound interest over time.
Recommended: How to Save for Retirement at 30
Average Retirement Savings in Your 40s: $77,400
Since most people are making more money at this age than they ever have, it can be tempting to spend it on fancy vacations, cars, and other things. Many people also have mortgages, families, and other big-ticket expenses during this time in their lives as well.
But those who put that money towards retirement may be able to reach their goals early and retire relatively young.
For men, these are peak earning years, as they tend to continue increasing their earnings until age 55. Women tend to reach their peak earnings much younger at age 44. Either way, retirement savings should be top of mind for people in this age group.
Average Retirement Savings in Your 50s: $110,900
At this age, some Americans are on track to reach their retirement goals, while others are far off. There are still ways to catch up, such as cutting unnecessary expenses, moving to a smaller home, or putting any additional pay, income, or bonuses into retirement accounts.
Average Retirement Savings in Your 60s: $112,500
Although the goal for many is to retire at around 60, many Americans have to keep working since they don’t have enough savings. In some cases, people plan on working at this stage of life anyway, so it’s not a bad thing. A lot of people work during retirement, although some do so out of necessity.
Ideally, working in later years of life is a choice and not a necessity. After this age, people tend to be spending rather than saving, so the average retirement savings amounts decline.
Retirement contributions tend to increase as people age partly because they are earning more and partly because they are thinking about retirement more.
💡 Quick Tip: How much does it cost to set up an IRA? Often there are no fees to open an IRA, but you typically pay investment costs for the securities in your portfolio.
Boost your retirement contributions with a 1% match.
SoFi IRAs now get a 1% match on every dollar you deposit, up to the annual contribution limits. Open an account today and get started.
Only offers made via ACH are eligible for the match. ACATs, wires, and rollovers are not included. Offer ends 12/31/23.
Ideal Retirement Savings Amounts by Age
Because the cost and standard of living varies so greatly, there aren’t clear dollar figure amounts that each age group should aim to have saved for retirement. But there are suggested guidelines.
• By age 30: It’s generally recommended that people save an amount equal to their annual salary by the time they reach age 30. That may not be a realistic goal for many people, but it can be a general guideline or goal to aspire to.
One way to achieve this is to save 10-15% of one’s gross income starting in their 20s. Some employers will match retirement contributions if employees save a certain amount each month, so it’s a good idea to contribute at least that much to take advantage of what is essentially free money.
• By age 40: It’s recommended that investors have three to four times their annual salary saved by age 40.
• By age 50: Investors are typically advised to have six times their salary saved by age 50.
• By age 60: It’s recommended that investors have eight times their salary saved by age 60.
• By age 67: Investors are typically advised to have ten times their salary saved by age 67. For example, if a 67 year old makes $75,000 per year, they should have $750,000 saved.
Is Anyone Saving Enough for Retirement?
Despite the above recommendations, most Americans don’t have nearly these amounts in their retirement accounts. A significant portion of Americans don’t have any retirement savings at all — and that includes Americans who are near retirement age.
So, while some people are saving enough for retirement, a lot of people aren’t. Social Security may not be enough for a lot of people to make ends meet, either.
Social Security and Your Retirement
It’s more important than ever to create a retirement plan and stick to it, because America is facing a retirement crisis. Social Security was designed to help people pay their expenses during retirement, but it currently pays less than half of the average retiree’s monthly expenses. As of mid-2023, the average Social Security payment is around $1,800 per month.
Best Ways to Save for Retirement
It can be stressful to feel behind on saving for retirement, but it’s never too late to start.
There are several ways to save for retirement — but a good place to start, if you haven’t already, is by creating a budget to track expenses. This allows you to see where your money is going and identify categories of spending that could be reduced, with the money redirected to a retirement savings account.
Some retirement plans also have catch up options for those who start late — typically, individuals older than 50 can contribute extra funds to their retirement accounts.
No matter how much you put aside for retirement, or whether you contribute to a traditional IRA or a Roth IRA, a 401(k) or an after-tax investment account, a good strategy is to automate savings. With automated savings, the money is deducted from your paycheck or your bank account automatically — making it easy to forget that the money was ever in the account in the first place.
The Takeaway
The average American has less than $90,000 in retirement savings, though the number varies depending on age groups and other factors. Knowing how much others in your age group are saving for retirement can help give you a sense of comparison, but it’s important to remember that most Americans aren’t saving enough.
There are a number of different formulas, calculations, and rules of thumb to help individuals figure out how much money they’ll need in retirement. While these figures can be helpful, it’s also important to take personal goals, financial responsibilities, and lifestyle into consideration.
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), and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).
For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.
SoFi Invest® The information provided is not meant to provide investment or financial advice. Also, past performance is no guarantee of future results. Investment decisions should be based on an individual’s specific financial needs, goals, and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below. 1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC registered investment advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
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Welcome to Throwback Thursday, a web series where we revisit the most memorable properties we’ve covered in the past — and see what happened to them. Ranging from architecturally distinct properties to luxury listings with some quite unique features, to unforgettable houses that left us daydreaming about potentially moving in one day, Throwback Thursday revives our past favorites and provides an update on whether or not they’re still on the market, how much they sold for, and, if the information is publicly available, who bought them. This article has been updated to reflect the current status of the property, but all the information about the house itself as well as the property photos date back to our initial coverage (published on October 1, 2020).
Many million-dollar homes often come with name-bragging rights.
Sometimes, it’s because a celebrity once lived in the house, or because a famous designer left its expert touches on the home’s interiors; or maybe the address itself is well-known, for one reason or another.
But there’s a whole other level of name-dropping that comes with owning a home envisioned by one of our generation’s leading architects.
And that’s exactly the case for this modern glass home in Sagaponack, NY, designed by world-renowned architect Shigeru Ban.
In fact, the property is the award-winning Japanese architect’s first and only work in Long Island. And since it spent some time on the market in recent years, we got to take an exclusive look inside.
Famous for blending traditional Japanese elements with modern Western architecture, Shigeru Ban was named to TIME magazine’s shortlist of 21st-century innovators, won the 2014 Pritzker prize (the biggest distinction in the architecture world), and left his imprint on structures like the Aspen Art Museum, Centre-Pompidou-Metz in France, and Tainan Art Museum in Taiwan.
Despite his many accolades, the Japanese architect is most known for being a champion of sustainable architecture and has been instrumental in designing disaster relief housing from Rwanda to Turkey.
His design philosophy is centered around creating uniquely free and open spaces with concrete rationality of structure and construction method, and the Hamptons house is a perfect embodiment of this.
With a design based on Ludwig Mies van der Rohe’s unbuilt Brick Country House (which dates back to 1924), the 8,000-square-foot home boasts unique architectural features, including a row of pillars that line the path to the front door — that can double as hidden storage.
The 5-bedroom, 5.5-bath home features exceptional furnishings by renowned designer Shamir Shah.
It has floor-to-ceiling windows, an oversized living room (with a wood-burning fireplace and wraparound views of the landscaped lawn), and a massive workout room that is more akin to a private high-end gym — complete with oversized mirrors and every piece of equipment you could think of, including a spin bike, elliptical, treadmill, press machines, and more.
See also: This Floating Farmhouse in the Catskills dates back to the 1820s, but you could never tell
The indoors seamlessly open to the outdoor areas, where there’s a heated in-ground pool and a pool-side terrace with multiple lounging areas — adding to the tranquil zen garden area (with a modern stone fountain) which greets visitors as they enter the property.
What happened to this Shigeru Ban-designed home?
When we covered this property back in October 2020, it had just been listed for sale asking $4,995,000.
Listed with Matt Breitenbach of Compass, the architectural property was already marked as ContractSigned on the brokerage’s website mere days after it came to market, which means it’s likely that an architect buff has quickly seized on the opportunity to own a home designed by the Pritzker-prize winner.
As is to be expected for a property of this caliber, the Shigeru Ban-designed home sold for way over its original asking price.
Public records show that the sale closed in March 2021 for $5,250,000. That’s 5% over ask.
>> Follow us on Google News for more stories like this, in real-time
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The average rate of return on 401(k)s is typically between 5% and 8%, depending on specific market conditions in a given year. Keep in mind that returns will vary depending on the individual investor’s portfolio, and that those numbers are a general benchmark.
While not everyone has access to a 401(k) plan, those who do may wonder if it’s an effective investment vehicle that can help them reach their goals. The answer is, generally, yes, but there are a lot of things to take into consideration. There are also alternatives out there, too.
Key Points
• The average rate of return on 401(k)s is typically between 5% and 8%, depending on market conditions and individual portfolios.
• 401(k) plans offer benefits such as potential employer matches, tax advantages, and federal protections under ERISA.
• Fees, vesting schedules, and early withdrawal penalties are important considerations for 401(k) investors.
• 401(k) plans offer limited investment options, typically focused on stocks, bonds, and mutual funds.
• Asset allocation and individual risk tolerance play a significant role in determining 401(k) returns and investment strategies.
Some 401(k) Basics
To understand what a 401(k) has to offer, it helps to know exactly what it is. The IRS defines a 401(k) as “a feature of a qualified profit-sharing plan that allows employees to contribute a portion of their wages to individual accounts.”
In other words, employees can choose to delegate a portion of their pay to an investment account set up through their employer. Because participants put the money from their paychecks into their 401(k) account on a pre-tax basis, those contributions reduce their annual taxable income.
Taxes on the contributions and their growth in a 401(k) account are deferred until the money is withdrawn (unless it’s an after-tax Roth 401(k)).
A 401(k) is a “defined-contribution” plan, which means the participant’s balance is determined by regular contributions made to the plan and by the performance of the investments the participant chooses.
This is different from a “defined-benefit” plan, or pension. A defined-benefit plan guarantees the employee a defined monthly income in retirement, putting any investment risk on the plan provider rather than the employee.
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Benefits of a 401(k)
There are a lot of benefits that come with a 401(k) account, and some good reasons to consider using one to save for retirement.
Potential Employer Match
Employers aren’t required to make contributions to employee 401(k) plans, but many do. Typically, an employer might offer to match a certain percentage of an employee’s contributions.
Tax Advantages
As mentioned, most 401(k)s are tax-deferred. This means that the full amount of the contributions can be invested until you’re ready to withdraw funds. And you may be in a lower tax bracket when you do start withdrawing and have to pay taxes on your withdrawals.
Federal Protections
One of the less-talked about benefits of 401(k) plans is that they’re protected by federal law. The Employee Retirement Security Act of 1974 (ERISA) sets minimum standards for any employers that set up retirement plans and for the administrators who manage them.
Those protections include a claims and appeals process to make sure employees get the benefits they have coming. Those include the right to sue for benefits and breaches of fiduciary duty if the plan is mismanaged, that certain benefits are paid if the participant becomes unemployed, and that plan features and funding are properly disclosed. ERISA-qualified accounts are also protected from creditors.
💡 Quick Tip: Before opening an investment account, know your investment objectives, time horizon, and risk tolerance. These fundamentals will help keep your strategy on track and with the aim of meeting your goals.
Boost your retirement contributions with a 1% match.
SoFi IRAs now get a 1% match on every dollar you deposit, up to the annual contribution limits. Open an account today and get started.
Only offers made via ACH are eligible for the match. ACATs, wires, and rollovers are not included. Offer ends 12/31/23.
401(k) Fees, Vesting, and Penalties
There can be some downsides for some 401(k) investors as well. It’s a good idea to be aware of them before you decide whether to open an account.
Fees
The typical 401(k) plan charges a fee of around 1% of assets under management. That means an investor who has $100,000 in a 401(k) could pay $1,000 or more. And as that participant’s savings grow over the years, the fees could add up to thousands of dollars.
Fees eat into your returns and make saving harder — and there are companies that don’t charge management fees on their investment accounts. If you’re unsure about what you’re paying, you should be able to find out from your plan provider or your employer’s HR department, or you can do your own research on various 401(k) plans.
Vesting
Although any contributions you make belong to you 100% from the get-go, that may not be true for your employer’s contributions. In some cases, a vesting schedule may dictate the degree of ownership you have of the money your employer puts in your account.
Early Withdrawal Penalties
Don’t forget, when you start withdrawing retirement funds, some of the money in your tax-deferred retirement account will finally go toward taxes. That means it’s in Uncle Sam’s interest to keep your 401(k) savings growing.
So, if you decide to take money out of a 401(k) account before age 59 ½, in addition to any other taxes due when there’s a withdrawal, you’ll usually have to pay a 10% penalty. (Although there are some exceptions.) And at age 73, you’re required to take minimum distributions from your tax-deferred retirement accounts.
Potentially Limited Investment Options
One more thing to consider when you think about signing up for a 401(k) is what kind of investing you’d like to do. Employers are required to offer at least three basic options: a stock investment option, a bond option, and cash or stable value option. Many offer more than that minimum, but they stick mostly to mutual funds. That’s meant to streamline the decision-making. But if you’re looking to diversify outside the basic asset classes, it can be limiting.
How Do 401(k) Returns Hold Up?
Life might be easier if we could know the average rate of return to expect from a 401(k). But the unsatisfying answer is that it depends.
Several factors contribute to overall performance, including the investments your particular plan offers you to choose from and the individual portfolio you create. And of course, it also depends on what the market is doing from day to day and year to year.
Despite the many variables, you may often hear an annual return that ranges from 5% to 8% cited as what you can expect. But that doesn’t mean an investor will always be in that range. Sometimes you may have double-digit returns. Sometimes your return might drop down to negative numbers.
Issues With Looking Up Average Returns As a Metric
It’s good to keep in mind, too, that looking up average returns can create some issues. Specifically, averages don’t often tell the whole story, and can skew a data set. For instance, if a billionaire walks into a diner with five other people, on average, every single person in the diner would probably be a multi-millionaire — though that wouldn’t necessarily be true.
It can be a good idea to do some reading about averages and medians, and try to determine whether aiming for an average return is feasible or realistic in a given circumstance.
Some Common Approaches to 401(k) Investing
There are many different ways to manage your 401(k) account, and none of them comes with a guaranteed return. But here are a few popular strategies.
60/40 Asset Allocation
One technique sometimes used to try to maintain balance in a portfolio as the market fluctuates is a basic 60/40 mix. That means the account allocates 60% to equities (stocks) and 40% to bonds. The intention is to minimize risk while generating a consistent rate of return over time — even when the market is experiencing periods of volatility.
Target-Date Funds
As a retirement plan participant, you can figure out your preferred mix of investments on your own, with the help of a financial advisor, or by opting for a target-date fund — a mutual fund that bases asset allocations on when you expect to retire.
A 2050 target-date fund will likely be more aggressive. It might have more stocks than bonds, and it will typically have a higher rate of return. A 2025 target-date fund will lean more toward safety. It will likely be designed to protect an investor who’s nearer to retirement, so it might be invested mostly in bonds. (Again, the actual returns an investor will see may be affected by the whims of the market.)
Most 401(k) plans offer target-date funds, and they make investing easy for hands-off investors. But if that’s not what you’re looking for, and your 401(k) plan makes an advisor available to you, you may be able to get more specific advice. Or, if you want more help, you could hire a financial professional to work with you on your overall plan as it relates to your long- and short-term goals.
Multiple Retirement Accounts
Another possibility might be to go with the basic choices in your workplace 401(k), but also open a separate investing account with which you could take a more hands-on approach. You could try a traditional IRA if you’re still looking for tax advantages, a Roth IRA (read more about what Roth IRAs are) if you want to limit your tax burden in retirement, or an account that lets you invest in what you love, one stock at a time.
There are some important things to know, though, before deciding between a 401(k) vs. an IRA. 💡 Quick Tip: Can you save for retirement with an automated investment portfolio? Yes. In fact, automated portfolios, or robo advisors, can be used within taxable accounts as well as tax-advantaged retirement accounts.
How Asset Allocation Can Make a Difference
How an investor allocates their resources can make a difference in terms of their ultimate returns. Generally speaking, riskier investments tend to have higher potential returns — and higher potential losses. Stocks also tend to be riskier investments than bonds, so if an investor were to construct a portfolio that’s stock-heavy relative to bonds, they’d probably have a better chance of seeing bigger returns.
But also, a bigger chance of seeing a negative return.
With that in mind, it’s going to come down to an investor’s individual appetite for risk, and how much time they have to reach their financial goals. While there are seemingly infinite ways to allocate your investments, the chart below offers a very simple look at how asset allocation associates with risks and returns.
Asset Allocations and Associated Risk/Return
Asset Allocation
Risk/Return
75% Stock-25% Bonds
Higher risk, higher potential returns
50% Stock-50% Bonds
Medium risk, variable potential returns
25% Stock-75% Bonds
Lower risk, lower potential returns
Ways to Make the Most of Investment Options
It’s up to you to manage your employer-sponsored 401(k) in a way that makes good use of the options available. Here are some pointers.
Understand the Match
One way to start is by familiarizing yourself with the rules on how to maximize the company match. Is it a dollar-for-dollar match up to a certain percentage of your salary, a 50% match, or some other calculation? It also helps to know the policy regarding vesting and what happens to those matching contributions if you leave your job before you’re fully vested.
Consider Your Investments
With or without help, taking a little time to assess the investments in your plan could boost your bottom line. It may also allow you to tailor your portfolio to better accomplish your financial goals. Checking past returns can provide some information when choosing investments and strategies, but looking to the future also can be useful.
Plan for Your Whole Life
If you have a career plan (will you stay with this employer for years or be out the door in two?) and/or a personal plan (do you want to buy a house, have kids, start your own business?), factor those into your investment plans. Doing so may help you decide how much to invest and where to invest it.
Find Your Lost 401(k)s
Have you lost track of the 401(k) plans or accounts you left behind at past employers? It may make sense to roll them into your current employer’s plan, or to roll them into an IRA separate from your workplace account. You might also want to review and update your portfolio mix, and you might be able to eliminate some fees.
Know the Maximum Contributions for Retirement Accounts
Keep in mind that there are different contribution limits for 401(k)s and IRAs. For those under age 50, the 2023 contribution limit is $22,500 for 401(k)s and $6,500 for IRAs. For those 50 or older, the 2023 contribution limit is $30,000 for 401(k)s and $7,500 for IRAs. Other rules and restrictions may also apply.
Learn How to Calculate Your 401(k) Rate of Return
This information can be useful as you assess your retirement saving strategy, and the math isn’t too difficult.
For this calculation, you’ll need to figure out your total contributions and your total gains for a specific period of time (let’s say a calendar year).
You can find your contributions on your 401(k) statements or your pay stubs. Add up the total for the year.
Your gains may be listed on your 401(k) statements as well. If not, you can take the ending balance of your account for the year and subtract the total of your contributions and the account balance at the beginning of the year. That will give you your total gains.
Once you have those factors, divide your gains by your ending balance and multiply by 100 to get your rate of return.
Here’s an example. Let’s say you have a beginning balance of $10,000. Your total contributions for the year are $6,000. Your ending balance is $17,600. So your gains equal $1,600. To get your rate of return, the calculation is:
(Gains / ending balance) X 100 =
($1,600 / $17,600) X 100 = 9%
Savings Potential From a 401(k) Potential by Age
It can be difficult to really get a feel for how your 401(k) savings or investments can grow over time, but using some of the math above, and assuming that you keep making contributions over the years, you’ll very likely end up with a sizable nest egg when you reach retirement age.
This all depends, of course, on when you start, and how the markets trend in the subsequent years. But for an example, we can make some assumptions to see how this might play out. For simplicity’s sake, assume that you start contributing to a 401(k) at age 20, with plans to start taking distributions at age 70. You also contribute $10,000 per year (with no employer match, and no inflation), at an average return of 5% per year.
Here’s how that might look over time:
401(k) Savings Over Time
Age
401(k) Balance
20
$10,000
30
$128,923
40
$338,926
50
$680,998
60
$1,238,198
70
$2,145,817
Using time and investment returns to supercharge your savings, you could end up with more than $2 million through dutiful saving and investing in your 401(k). Again, there are no guarantees, and the chart above makes a lot of oversimplified assumptions, but this should give you an idea of how things can add up.
Alternatives to 401(k) Plans
While 401(k) plans can be powerful financial tools, not everyone has access to them. Or, they may be looking for alternatives for whatever reason. Here are some options.
Roth IRA
Roth IRAs are IRAs that allow for the contribution of after-tax dollars. Accordingly, the money contained within can then be withdrawn tax-free during retirement. They differ from traditional IRAs in a few key ways, the biggest and most notable of which being that traditional IRAs are tax-deferred accounts (contributions are made pre-tax).
Learn more about what IRAs are, and what they are not.
Traditional IRA
As discussed, a traditional IRA is a tax-deferred retirement account. Contributions are made using pre-tax funds, so investors pay taxes on distributions once they retire.
HSA
HSAs, or health savings accounts, are another vehicle that can be used to save or invest money. HSAs have triple tax benefits, in that account holders can contribute pre-tax dollars to them, allow that money to grow tax-free, and then use the holdings on qualified medical expenses — also tax-free.
Retirement Investment
Typical returns on 401(k)s may vary, but looking for an average of between 5% and 8% would likely be a good target range. Of course, that doesn’t mean that there won’t be up or down years, and averages, themselves, can be a bit misleading.
While your annual return on your 401(k) may vary, the good news is that, as an investor, you have options about how you save for the future. The choices you make can be as aggressive or as conservative as you want, as you choose the investment mix that best suits your timeline and financial goals.
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), and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).
For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.
FAQ
What is the typical 401(k) return over 20 years?
The typical return for 401(k)s over 20 years is between 5% and 8%, assuming a portfolio sticks to an asset mix of roughly 60% stocks and 40% bonds. There’s also no guarantee that returns will fall within that range.
What is the typical 401(k) return over 10 years?
Again, the average rate of return for 401(k)s tends to land between 5% and 8%, with some years providing higher returns, and some years providing lower, or even negative returns.
What was the typical 401(k) return for 2022?
The average 401(k) lost roughly 20% of its value during 2022, as increasing interest rates and shifting economic conditions over the course of the year (largely due to increasing inflation) caused the economy to sputter.
SoFi Invest® The information provided is not meant to provide investment or financial advice. Also, past performance is no guarantee of future results. Investment decisions should be based on an individual’s specific financial needs, goals, and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below. 1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC registered investment advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or prequalification for any loan product offered by SoFi Bank, N.A.
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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There once was a time was when retirement meant leaving your job permanently, either when you reached a certain age or you’d accumulated enough wealth to live without working. Today’s retirement definition is changing, and it can vary widely depending on your vision and your individual financial situation.
It’s important for each person to develop their own retirement definition. That can help you establish a roadmap for getting from point A to point B, with the money you have, and in the time frame you’re expecting.
Key Points
• Retirement’s definition may vary based on individual financial situations and personal visions.
• Retirement has both financial and lifestyle aspects that need to be considered in its definition.
• Being retired means relying on savings, investments, and perhaps federal benefits for income instead of a regular paycheck.
• Retirement doesn’t necessarily mean individuals completely leave the labor force, as some retirees may have part-time jobs or pursue new careers.
• Retirement statistics show that a significant portion of retirees rely on Social Security, and savings levels vary among individuals.
Retirement Definition
Retirement’s meaning may shift from person to person, but the bottom line is that retirement has a financial side and a personal or lifestyle side. It’s important to consider both in your definition of retirement.
Retirement and Your Finances
Being retired or living in retirement generally means that you rely on your accumulated savings and investments to cover your expenses rather than counting on a paycheck or salary from employment. Depending upon your retirement age, your income may also include federal retirement benefits, such as Social Security and other options.
Retiring doesn’t necessarily mean you stop working completely. You might have a part-time job or side hustle. You may choose to start a small business once you retire from your career. But the majority of your income may still come from savings or federal benefits.
Retirement and Your Lifestyle
Some people embark on a new life or a new career in retirement, complete with new goals, a new focus, sometimes in a brand-new location. But retirement doesn’t have to be a period of reinvention. It depends on how you view the purpose and meaning of retirement. Many people enjoy this period as a time to slow down and enjoy hobbies or priorities that they couldn’t focus on before.
Consider the notion of moving in retirement. While strolling on sandy, sunlit beaches is depicted as a retirement ideal, many people don’t want to move to get there. In fact, 53% of retirees opt to remain in the house where they were already living, according to a 2022 study by the Center for Retirement Research.
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Qualified Retirement Plan Definition
A qualified retirement plan provides you with money to pay for future expenses once you decide to retire from your job. The Employment Retirement Security Act (ERISA) recognizes two types of retirement plans:
Defined Contribution Plans
In a defined contribution plan, the amount of money you’re able to withdraw in retirement is determined by how much you contribute during your working years, and how much that money grows as it’s invested. A 401(k) plan is the most common type of defined contribution plan that employers can offer to employees.
There are other kinds of retirement plans that fall under the defined contribution umbrella. For example, if you run a small business, you might establish a Simplified Employee Pension (SEP) plan for yourself and your employees. Profit sharing plans, stock bonus plans, and employee stock ownership (ESOP) plans are also defined contribution plans.
A 457 plan is another defined contribution option. They work similar to 401(k) plans, in that you decide how much to contribute, and your employer can make matching contributions. The main difference between 457 and 401(k) retirement accounts is who they’re designed for. Private employers can offer 401(k) plans, while 457 plans are reserved for state and local government employees.
Defined Benefit Plans
A defined benefit plan (typically a pension) pays you a fixed amount in retirement that’s determined by your years of service, your retirement age, and your highest earning years. Cash balance plans are another type of defined benefit plan.
Generally speaking, defined benefit plans have been on the wane in the last couple of decades, with more of the responsibility for saving falling to workers, who must contribute to defined contribution plans.
Retirement Statistics
Retirement statistics can offer some insight into how Americans typically save for the future and when they retire. Here are some key retirement facts and figures to know, according to the Federal Reserve’s Report on the Economic Well-Being of U.S. Households in 2021 – May 2022:
• 27% of adults considered themselves to be retired in 2021, though some were still working in some capacity.
• 49% of adults said they retired to do something else, while 45% said they’d reached their normal retirement age.
• 78% of retirees relied on Social Security for income, increasing to 92% among retirees age 65 or older.
• 55% of non-retired adults had savings in a defined contribution plan, while just 22% had a defined benefit plan.
• 40% of non-retirees felt that they were on track with their retirement savings efforts.
So, how much does the typical household have saved for retirement? According to the Transamerica Center for Retirement Studies, the estimated median retirement savings among American workers is $54,000. Just 27% of adults who are traditionally employed and 24% of self-employed individuals have saved $250,000 or more for retirement.
Retirement Age
In simple terms, your retirement age is the age when you decide to retire. For example, you might set your target retirement date as 62 or 65 or 66 — all of which are related to Social Security benefits in some way.
Social Security has largely shaped how we view retirement age in the U.S. because that monthly payout is what enables the majority of people to leave work. As noted above, some 92% of retirees age 65 and older say they depend on Social Security. While retiring at 62 is the earliest age when you can claim Social Security, that’s not your “full retirement age.”
Your full retirement age depends on the year you were born. If you were born between 1943 and 1954, your full retirement age is 66. If you were born from 1955 to 1960, it increases until it reaches 67. And if you were born in 1960 or later, your full retirement age is 67. Claiming Social Security at your full retirement age gives you a higher monthly benefit vs. starting at age 62, which is considered a reduced benefit.
Every year you delay getting benefits gives you a little bit more — about 8% more — up until age 70. There’s no additional amount for claiming after age 70.
Saving for Retirement
Saving for retirement is an important financial goal. While Social Security may provide you with some income, it’s not likely to be enough to cover all of your expenses in retirement — particularly if you end up needing extensive medical care or long-term care. In 2022, according to the Social Security Administration, the average monthly benefit amount was $1,542.22.
Financial experts often recommend saving 15% of your income for retirement but your personal savings target may be higher or lower, depending on your goals. The longer you have to save for retirement, the longer you have to take advantage of compounding interest. That’s the interest you earn on your interest and it’s one of the keys to building wealth.
Selecting a retirement plan is the first step to getting on track with your financial goals. When saving for retirement, you can start with a defined benefit or defined contribution plan if your employer offers either one. Defined contribution plans can be advantageous because your employer may match a percentage of what you save. That’s free money you can use for retirement.
If you don’t have a 401(k) or a similar plan at work, or you do but you want to supplement your retirement savings, you could open a retirement investment account, otherwise known as an individual retirement account (IRA).
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Retirement Investment Accounts
A retirement investment account is an account that enables you to save money for the future, but it isn’t considered a federally qualified retirement plan, like a 401(k). IRAs are tax-advantaged investment accounts that you can use to purchase mutual funds, exchange-traded funds (ETFs), and other securities.
There are two main types of IRAs you can open: traditional and Roth IRAs. A traditional IRA allows for tax-deductible contributions in the year that you make them. Once you retire and begin withdrawing money, those withdrawals are taxed at your ordinary income tax rate.
Roth IRAs don’t offer a deduction for contributions because you contribute after-tax dollars. You can, however, make 100% tax-free qualified withdrawals in retirement. This might be preferable if you think you’ll be in a higher tax bracket once you retire.
Both traditional and Roth IRAs are subject to annual contribution limits. The annual limit for 2022 is $6,000, or $7,000 if you’re 50 or older (the extra amount is often called a catch-up provision). There’s an increase for 2023 to $6,500 for the base amount; the catch-up provision is still $1,000 more, for a total of $7,500.
You can open an IRA online, or at a brokerage, alongside a taxable investment account for a comprehensive retirement savings picture.
Pros of Retirement Investment Accounts
Opening an IRA could make sense if you’d like to save for retirement while enjoying certain tax benefits.
• If you’re in a higher income bracket during your working years, being able to deduct traditional IRA contributions could reduce your tax liability.
• And not having to pay tax on Roth IRA withdrawals in retirement can ease your tax burden as well if you have income from other sources.
• IRA accounts often give you more flexibility in terms of your investment choices.
Cons of Retirement Investment Accounts
While IRAs can be good savings vehicles for retirement, there are some downsides.
• Both types of accounts have much lower contribution limits compared to a 401(k) or 457 plan. For example, the maximum you can contribute to a 401(k) in 2022 is $20,500, with an additional $6,500 catch-up provision. For 2023, you can contribute $22,500 per year, plus an additional $7,500 if you’re 50 and up.
• With traditional IRAs, you must begin taking required distributions (RMDs) based on your account balance and life expectancy starting at age 72 (401(k)s have a similar rule). If you fail to do so, you could incur a hefty tax penalty.
• Roth IRAs don’t have RMDs, but your ability to contribute to a Roth may be limited based on your income and tax filing status.
Investing for Retirement With SoFi
However you choose to define your retirement, making a financial roadmap will help you get the retirement you want.
SoFi Invest offers traditional and Roth investment accounts to help you build the future you envision. You can also open a SEP IRA if you’re self-employed and want to get a jump on retirement savings. Another way to keep track your retirement savings is to roll over your old accounts to a rollover IRA, so you can manage your money in one place.
SoFi makes the rollover process seamless and straightforward. There are no rollover fees, and you can complete your 401(k) rollover without a lot of time or hassle.
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FAQ
What is the meaning of retirement?
Retirement generally means leaving your job or the workforce, and living off your savings and investments, but that definition is changing for some. Some people may choose to continue working in retirement, though it may not be their primary source of income. Others may shift their work to focus more on lifestyle changes.
How common is retirement?
According to the Federal Reserve, about 27% of adults considered themselves to be retired in 2021, though some were still working in some capacity. Of these, 49% said they had retired to do something else, while 45% said they’d reached their normal retirement age.
How does retirement work?
When someone retires, they stop working at their job. Or, in the case of a business owner, they hand the business over to someone else. At that point, it’s up to them to decide how they want to spend their retirement, which might include taking care of family, traveling, working part-time, or exploring new hobbies. Their sources of income might include savings, investments, a pension, and Social Security benefits.
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After exceeding 8 percent in October, rising mortgage rates overtook “lack of housing inventory” as the top concern for real estate agents, according to the results of the latest monthly Inman Intel Index.
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Approximately one-third of agents and the brokerage executives who lead them believe high mortgage rates are the biggest for concern in the housing market today, surpassing low inventory and fallout from commission lawsuits such as Sitzer | Burnett, according to the results of October’s Inman Intel Index survey, released last week.
After exceeding 8 percent in October, rising mortgage rates overtook “lack of housing inventory” as agents’ top fear after ranking second in the same survey a month earlier. The findings are among hundreds gleaned from the Inman Intel Index, or Triple I, which was conducted Oct. 23-31 and drew 1,269 responses. The 168-page report is available exclusively to Inman Intel subscribers and includes a comprehensive breakdown of all survey responses.
This month’s Inman Intel Index survey is open now.
“I think that homebuyers and real estate agents understand well that the 3 percent mortgage rate is a historic abnormality and is not the norm,” Gay Cororaton, chief economist for the Miami Association of Realtors, told Inman by email. “But the current rate of 8 percent is also not normal, and I expect rates to go further down in 2024.”
Mortgage rates have fallen significantly in November, with the average 30-year fixed mortgage closer to 7 percent than it has been in two months. For homebuyers and sellers, the benefit is clear, but after more than a year of rates in excess of 6 percent, the decline in rates is also a huge morale booster for real estate professionals, according to the survey results.
Only one group surveyed in the Triple-I didn’t rank interest rates as their top business concern in October. Mortgage originators, who did rank them first in September, put them second behind lack of home inventory. With refinance activity down severely, it stands to reason that brokers and bankers are focused on homes coming on the market.
To track industry sentiment, the Triple-I polls real estate agents, loan originators, brokers, industry executives and proptech leaders monthly. November’s survey opened today and can be accessed here.
No one gets a bite at the apple, though, until someone decides to buy a home, and elevated interest rates continue to factor heavily into the homebuying equation for many Americans. A new consumer survey undertaken by Inman, in partnership with Dig Insights, surveyed 3,000 potential homebuyers and found that many need to see a far more dramatic rate drop to move forward.
More than 2 out of 3 Americans surveyed by Dig Insights indicated they were unlikely to buy in the next 12 months, and 35 percent of those said that high interest rates were a factor in their decision. Asked how much mortgage rates would need to decrease for them to become likely to buy, one-third chose “More than 2 percent.”
According to an Inman Intel analysis last month, a mortgage payment that would have been close to $1,175 four years ago now comes to over $2,600 a month. That’s a problem for a lot of homebuyers, first-timers or not.
“With mortgage rates still expected to be elevated at over 5 percent, there’s naturally a higher financial hurdle for existing homeowners to move,” wrote Cororaton, a former senior economist and the director of housing and commercial research at the Research Group of the National Association of Realtors.
With a potential ceiling on rates, real estate agents and loan originators are looking toward 2024 with cautious optimism. While nearly 70 percent of agents indicated their buyer pipeline was either lighter or substantially lighter than it was 12 months ago, less than 30 percent felt that would be the case one year from now. Over one-quarter of them responded “Heavier,” while just under 44 percent said they expected it to be about the same.
Mortgage originators were even more optimistic, with over 37 percent expecting a heavier borrower pipeline in 12 months.
Buying stocks without a broker can be done, typically through the use of a self-administered brokerage service, or one of a couple of different types of investing plans. Buying stocks may help you get started on the path to building wealth. And just like hiring professional movers can help make relocating less stressful, purchasing stocks through a broker can make the process of diversifying your portfolio easier.
That, however, can involve paying commissions and fees to trade stocks and other securities. Potential investors who are trying to curb investment costs might wonder how to buy stocks online without a broker being involved.
How Can I Buy Stocks Without a Broker?
It is possible to buy stocks without a broker. In fact, there are three alternatives to using a full-service broker: opening an online brokerage account, investing in a dividend reinvestment plan, and investing in a direct stock purchase plan. So, the short answer is yes, you can buy stocks without a broker.
But it may be useful to understand why some investors do choose to use a broker when making stock purchases.
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Benefits of Using a Broker to Buy Stocks
As their name implies, stockbrokers can help broker trades of stocks and other securities on behalf of their clients. In return, they may earn commissions for making those trades. But that’s just one thing a full-service broker can do. A stockbroker’s role may also involve:
• Offering trading advice to clients based on their experience with the stock exchange and education.
• Giving their clients additional tips and suggestions, like what investments they should buy and sell or when it makes sense to do so.
• Building relationships with their clients to better understand and inform individual investment strategies.
A stockbroker’s salary is largely dependent on commissions, which means they’ve got to be pretty good at what they do to make a living. Investors can benefit from the education, training, and experience a stockbroker accumulates over the course of their career.
That being said, for most stockbrokers, their payment comes from your trades, which means a client has to pay their stockbroker every time they buy, sell, and trade. For some, the knowledge of a stockbroker is worth the cost of doing business. For others, the idea of DIY investing is more appealing. It all depends on personal preference.
💡 Quick Tip: When you’re actively investing in stocks, it’s important to ask what types of fees you might have to pay. For example, brokers may charge a flat fee for trading stocks, or require some commission for every trade. Taking the time to manage investment costs can be beneficial over the long term.
How to Buy Stocks Online Without a Broker
DIY investors have several options for buying stocks without brokers online. Here’s a closer look at how each one works.
Direct Stock Purchase Plans
Direct Stock Purchase Plans (DSPPs) allow investors to purchase shares of company stock directly from the company itself. Specifically, trades are completed through a transfer agent.That means you could buy stocks without a broker, full-service or online, to complete the transaction.
DSPPs can be offered by companies that are publicly traded on a stock exchange, though not all publicly traded companies offer DSPPs. Each company can determine what minimum investment to require for initial and subsequent stock purchases.
Pros of Buying DSPPs
Buying DSPPs comes with its own unique set of advantages:
• Passive investing: Many DSPPs plans allow an investor to invest a set amount on some kind of recurring basis — sort of a “set it and forget it” strategy.
• Lower fees: DSPPs often charge little or no commissions or fees, once the account is set up.
• An investor might get a discount: Depending on the company a person invests in, they might be offered a slight discount, between 1% and 10%, for investing directly.
Cons of Buying DSPPs
While DSPPs have benefits, there are some drawbacks as well:
• Higher upfront costs: There is typically a cost associated with starting a DSPP account, and DSPPs typically require a $250 to $500 initial investment, with no option of purchasing fractional shares.
• It’s another account: DSPPs are held with individual corporations. So if an investor has DSPP holdings with multiple companies, each will live on the company’s individual platform.
• They’re typically long-term investments: DSPPs don’t offer the same flexibility and speed of an online broker. For that reason, they’re typically considered more appropriate for a long term investment.
Dividend Reinvestment Plans
Dividend Reinvestment Plans (DRiPs), share many similarities to DSPPs — in fact, some DSPPs offer DRiP programs. With a DRiP, investors can still buy stock directly from the publicly traded company, but they can also reinvest the dividends earned on the stock directly back into the company to purchase additional stock.
Pros of DRiP Programs
In addition to the benefits of DSPPs, DRiPs have a few to offer on their own if you’d like buy stock without a broker:
• Automated, compounded growth: Reinvesting dividends is not dissimilar to compound interest. DRiPs allow investors to continually reinvest and grow, without having to add funds.
• Fee-free reinvestment, even in fractional shares: Investing the dividends comes fee-free. Investors are also usually offered the opportunity to buy fractions of a share.
Cons of DRiP Programs
DRiPs share many of the same drawbacks as DSPPs, but also have a few specific to them:
• Limited selection: Not all companies that offer DSPPs offer DRiPs, which means you’re selecting from a smaller pool.
• Dividends are still taxable: Although the cash is automatically reinvested in a DRiP, investors will still be taxed on the gains. That means they may want to have liquidity elsewhere to pay the tax.
Online Brokerage Account
Online brokerage accounts offer the convenience of being able to buy stocks online without a traditional full-service broker (and the typical traditional broker fees). Think of it as the difference between dining at a full-service restaurant versus a self-serve buffet.
After opening an account with an online brokerage,an investor can tell their broker what they want to buy, and how much of it. Then the broker completes the order.
Depending on the online broker, there may be low or no fees associated with making a trade.
Pros of Investing with an Online Broker
It might sound pretty easy, but online investing has both pros and cons. Here are a few of the advantages:
• Low fees: When it comes to online investing, people can typically expect to pay lower fees. Many online firms do not charge commissions.
• DIY investing: There’s a lot of freedom that can come with an online brokerage account. An investor gets to choose, creating a customized plan.
• On-demand investing: As long as the markets are open, an investor can ask for trades through their digital brokerage account.
Cons of Investing with an Online Broker
Depending on an investor’s personality and preferences, there may be a few drawbacks to using an online broker:
• It’s all on the investor. Online investing can give investors a lot of choice and freedom, but without the expertise of qualified financial professionals, some investors might be left to research and form a strategy on their own. For some, this might feel stressful.
• It’s for the long term. Since online investing is on-demand, a person can sell whenever they like. That can be a challenge for an investor if patience isn’t their strong suit.
The Takeaway
It’s possible to buy stocks without a full-time broker. For instance, investors can use an online brokerage account to trade stocks on their own, or invest using different types of investment plans. But there can be pros and cons to each.
While there are some advantages to using a traditional full-service broker to purchase stocks, you don’t necessarily need one in order to invest. However, if you don’t feel comfortable doing it yourself, you can speak with a financial professional for guidance.
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), and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).
For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.
SoFi Invest® The information provided is not meant to provide investment or financial advice. Also, past performance is no guarantee of future results. Investment decisions should be based on an individual’s specific financial needs, goals, and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below. 1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC registered investment advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
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For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or prequalification for any loan product offered by SoFi Bank, N.A.
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.
Claw Promotion: Customer must fund their Active Invest account with at least $10 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.
Mortgage rates have soared north of 7% in recent months, driven higher by the Federal Reserve’s war on inflation.
Loans are so expensive that many poorer Americans have been priced out of the housing market.
One-in-three homebuyers are paying all-cash rather than taking out a mortgage, according to data from Redfin.
More than a third of homes are being bought in cash, according to data from Redfin, with low affordability and high mortgage rates pricing poorer Americans out of the housing market.
September saw the highest rate of all-cash transactions – 34.1% – since 2014, the real-estate brokerage found, in an analysis of 40 of the US’s most-populated cities.
That’s a sign that wealthier Americans are making up a greater share of homebuyers with sky-high mortgage rates pricing out the rest of the population, Redfin said.
“All-cash purchases are making up a bigger piece of the homebuying pie for two major reasons,” data journalist Dana Anderson wrote in the brokerage’s report.
“Affluent Americans who can afford to pay cash are more apt to buy homes in such an expensive housing market, when the income necessary to buy a home is higher than ever before, and elevated mortgage rates make buying a home in cash and avoiding interest altogether more attractive,” she added.
US housing affordability fell to the lowest level since 1985 over the third quarter, according to data the National Association of Realtors shared with Business Insider.
Soaring mortgage rates are one factor that’s made buying a home so expensive. The average 30-year fixed-rate mortgage has climbed from 3.2% in January 2021 to 7.4% as of Thursday, per Freddie Mac, driven higher by the Federal Reserve’s war on inflation, which has seen the central bank jack up borrowing costs.
Existing homeowners have also opted to cling to the historically low mortgage rates they locked in over the last 15 years. Just 1% of Americans sold their houses over the first half of 2023, starving the market of supply.
When cityapproval of a proposed $350 million skyscraper in downtown Los Angeles was on the line, project manager Hamid Behdad knew he had to give in to the last-minute demand of a planning commissioner to quadruple the number of electric vehicle charging stations in the condominium tower.
“When you are in the heat of the hearing in the last leg of the proposal, you aren’t going to say no,” Behdad said, even though he thought the requirement was overkill.
Today, with the Perla on Broadway complete and angling for buyers, Behdad said he is “extremely glad that commissioner forced us” to install chargers on 20% of the building’s parking stalls.
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“If we didn’t have these 90 chargers, we would be in real trouble selling units,” he said.
Landlords of apartments, hotels, office buildings and other commercial properties are rushing to avoid similar trouble. And owners of convenience stores, fast food chains, movie theaters and big box retailers are hoping to cash in on EV chargers to lure customers with time to kill as they fill up.
Charging centers are just the first step of commercial landlords scrambling to adjust to a historic burst of change in the world of transportation, with once fantastical notions like autonomous cars and air taxis nearing fruition.
Some companies are building charging centers that are a giant step beyond electrified gas stations. Elon Musk’s Tesla, for instance, is building a whimsical drive-in movie and diner complex in Hollywood where Tesla owners can entertain themselves while loading their batteries.
Fancy L.A. shopping centers such as the Grove and Westfield Century City have chargers, as do the more workaday Walgreens, Walmarts, Subways and 7-Elevens.
The arrival of Tesla’s Model 3 and other more affordable electric vehicles are helping EVs seize market share from gas-powered vehicles, putting more pressure on the historically slow-changing real estate business to get with the times.
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The immediate issue is installing enough chargers to meet growing demand and seize business opportunities. But other advances in transportation technology stand to rewrite centuries-old rules about how buildings are designed and built.
When cars no longer spew toxic fumes and can park and drive themselves, hotel and office lobbies might be designed for cars to drop off people inside and go off and do their own thing. In the not-too-distant future when visitors arrive by electric air taxis, buildings might need a second entrance lobby on the roof for the drones to land. Los Angeles officials are planning for such flying vehicles to be operational by the 2028 Olympics and are looking at how to regulate them.
“What happens when you blur boundaries between automobiles and architecture?” said Dylan Jones, a strategic planner specializing in mobility for architecture firm Gensler. “Do you need a garage in the building? Can you sell your car’s energy” to your landlord?
Such technological shifts could require dramatically different building designs, but few developers are looking that far ahead, he said. It’s the nature of the business that typically operates in five-year cycles of building and selling.
“The real estate industry is funny because developers don’t want to speculate about the far future,” Jones said. Developers “want to be able to just peek around the corner and see what’s coming” and be set up to succeed with technology that will exist when the building opens.
Los Angeles developer Walter N. Marks III sees a lure in new technology for a luxury apartment tower he is planning on Wilshire Boulevard with a mechanized parking system that will whisk cars out of sight and charge them if desired.
Tenants will drive their cars onto a movable metal pallet that will quickly park them underground andpower up electric vehicles if the resident plugs it in.
Marks is already operating a mechanized parking system at Helms Bakery District, a historic collection of shops and restaurants his family owns in Culver City. It doesn’t charge cars, but in the future he wouldn’t install a system that didn’t, he said.
All new automobiles and light trucks sold in California will be required to be zero-emission by 2035. The electric age is here. But the autonomous one is less certain. Marks is skeptical of predictions that consumers will give up their private automobiles in the near future and rely on fleets of robot taxis to ferry them about.
“I do believe that the car culture in Los Angeles is unique and very powerful,” he said. “People take their cars extremely seriously, and I think we need to recognize that and honor it.”
Jones thinks attitudes about driving your own car may change quickly when autonomous vehicles are reliably safe and data show that people are more likely to be killed by human-driven vehicles than autonomous ones.
“Drivers will become the smokers of the future; they’ll be socially shunned,” he said. “People will look at them and say , ‘Oh, you drove to work today? My kids are on the street. What are you doing?’”
That era is yet to come. At this point, the push is on among housing developers to provide charging stations to the growing number of tenants demanding them.
Socially conscious housing developer Cityview is rushing to add them to its existing apartments, including a building with only eight units, Chief Executive Sean Burton said.
Cityview usually adds as many stations as existing buildings’ electrical systems can handle, he said. Properties that weren’t constructed with charging in mind are often limited in how much power they can supply to chargers.
“In general I think building owners are adopting more slowly than they should,” Burton said. “We try to be more leading edge on sustainability issues.”
An apartment management company that manages 76,000 units for various owners is racing to meet rising demand in part by retrofitting garage electrical outlets to handle 210 volts for Level 2 charging, said Jackie Impellitier, vice president of operations for ZRS Management. That is the common commercial system for charging that takes about three to eight hours. The price of charging is added to tenants’ electrical bills.
“The thing we are all acknowledging is having charging stations is no longer an amenity, it’s a necessity” to attract and keep tenants, she said. “We are going to start losing renters if we don’t have easy and convenient access” to charging.
Most apartment developers and owners “weren’t even paying attention to EV drivers” as a category of tenants five years ago, Impellitier said, when Tesla stood practically alone as the provider of electric vehicles. “Now, every carmaker has an electric model.”
Charging stations are commonly installed and operated by third-party vendors. The big expense for landlords is getting sufficient electricity to garages and parking lots to support Level 2 charging. (The lower Level 1, plugging into a common 120-volt electrical outlet, can take more than a day if you’re charging from empty).
Level 3 chargers that can charge a car sufficiently in as little as 20 minutes run on at least 400 volts. They are expensive to set up and require electrical infrastructure not typically found in residential buildings
Automotive data provider S&P Global Mobility estimated in January that there are about 126,500 Level 2 and 13,487 Level 3 commercial charging stations in the United States today, plus another 16,822 Tesla Superchargers and Tesla destination chargers. The number of chargers grew more in 2022 than in the preceding three years combined, S&P said.
Among them are chargers at fast-food and other convenience businesses that hope customers buy things while their cars charge. Earlier this year 7-Eleven Inc. said it intends to build one of the largest fast-charging networks of any retailer in North America and already has chargers in four states, including California. Drivers pay through a phone app.
“7-Eleven will have the ability to grow its network to match consumer demand and make EV charging available to neighborhoods that have, until now, lacked access,” the company said in a statement.
Sandwich maker Subway is rolling out a variation on the theme — charging “parks” with multiple charging stations that also happen to have restaurants. These Subway Oasis charging parks will have picnic tables, Wi-Fi, restrooms, green space and playgrounds, the company said. They’ll be rolled out across the country at new or newly remodeled locations
Drug store chain Walgreens claims to be “the nation’s largest retail host” of chargers with more than 430 locations offering them. Other household-name retailers installing chargers include Ikea, Kohl’s, Walmart, Starbucks, Whole Foods, Taco Bell and theater chain Cinemark.
Additional concepts for charging stations with retail services intended to attract customers with time to kill are emerging.
Tesla, the giant of the EV industry with a growing network of fast chargers, is rolling out what it calls a supercharger diner and drive-in theater in Hollywood that promises an “American Graffiti” style pit stop for Tesla drivers perhaps running 24 hours a day.
Tesla is constructing the charging and entertainment complex on Santa Monica Boulevard — historic Route 66 — near a trendy stretch of Sycamore Avenue that has celebrity-favored restaurants, upscale shops and art galleries.
The car maker paid $16.7 million last year for a corner lot at Orange Drive where a shuttered Shakey’s Pizza Parlor was demolished to make way for the two-story project that could become an iconic venture for Tesla. The plan calls for a restaurant and two movie screens showing features that last half an hour, roughly the time it takes to charge a vehicle.
The complex is to have 29 fast superchargers and five Level 2 chargers available around the clock, while the theaters, visible from both cars and rooftop seating, would operate from 7 a.m. to 11 p.m. A screen of bamboo would shield Tesla’s movies from the street.
On the I-15 freeway between L.A. and Las Vegas, the developers of a charging station set to open in January expect to charge around 10,000 vehicles per month. The 24-hour outpost will have 40 fast charging station around a yet-to-be-announced nationally known coffee seller, said Lester Ciudad Real, co-founder of StackCharge, which is developing the project near a freeway exit in Baker.
The opportunity to charge while parked at the office has also emerged as a must for tenants. A recent survey by real estate brokerage JLL found that tenant-demanded clauses calling for charging were among the least likely to be included in existing office space leases signed in years past but would be the top priority in future negotiations.
But office building owners are stuck trying to strike the right balance. They must keep up with growing demands without overspending on chargers that aren’t needed yet, said Rex Hamre, national director of sustainability for JLL. It’s usually easy to add up to 10 stations, but trying to make even 20% of the spaces charge-ready in a 600-car parking facility could incur steep costs for electrical infrastructure.
“We are still at the cutting edge of this transition,” Hamre said. “Innovative companies are taking advantage of it as an opportunity.”
EV refueling could lead to changes in how cities look in ways that have yet to be fully imagined, architect Jones said. Gas stations in prime urban locations could give way to hybrid buildings with coffee bars, co-working offices and meeting rooms, built around indoor charging points.
“Word Perfect made typing easier, and then computers became more ingrained and it did things a typewriter could never do,” Jones said. “We’re in the early stages where the first EV charging infrastructure we’re seeing is a replication of what we understand is a refueling station. But in the future they’re going to look and feel much different.”
Are you searching for high-paying jobs that require no prior job experience? If you’re looking for high-paying jobs with no experience, it is possible to find them. There are many entry level jobs that you can start if you want to make a good income. Starting a new career path or entering the workforce for…
Are you searching for high-paying jobs that require no prior job experience?
If you’re looking for high-paying jobs with no experience, it is possible to find them. There are many entry level jobs that you can start if you want to make a good income.
Starting a new career path or entering the workforce for the first time doesn’t have to mean taking a low-paying job. In fact, there are many high-paying jobs that don’t require a ton of experience or an advanced degree.
26 Best High Paying Jobs With No Experience
There are 26 high-paying jobs with no experience listed below. If you want to skip the list, here are some jobs that you may want to start learning more about first:
Flexible way to freelance from home – Proofreading
Work from home as your own boss – Blogging
Make passive income – Sell printables
High paying customer-oriented job idea – Car salesperson
High paying travel job idea – Flight attendant
Is it really possible to land high paying jobs with no experience?
Yes, it is possible to find high-paying jobs even without prior experience.
So, you’re on the hunt for high-paying jobs but haven’t yet gathered a ton of experience? You’re not alone! Many people find themselves in this very situation, and the good news is, there are opportunities out there to make income even if you are brand new.
However, just because a job doesn’t require experience doesn’t mean it’s a walk in the park. In fact, it might be quite the opposite. These roles usually demand a quick learning curve and a can-do attitude.
So, while the entry requirements might be minimal and you may be able to learn as you go, the effort you put in can still be a lot.
Below are high-paying jobs with no experience.*
1. Bookkeeper
Degree or education requirements: High school diploma or equivalent
Training requirements: There is a free workshop from Bookkeeper Launch that can help you get started with becoming an online bookkeeper.
Salary: $45,860 per year
You can become a bookkeeper with little to no experience. A bookkeeper is a person who tracks the finances of a business, handles billing and payments, makes spreadsheets, etc., but that doesn’t mean you need to be an accountant or have any related experience.
Recommended reading: How To Find Online Bookkeeping Jobs
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This free training will teach you what you need to know to become a virtual bookkeeper and make money from home.
2. Blogger
Degree or education requirements: None
Training requirements: On-the-job training and How To Start A Blog FREE Course
Salary: There is no average. I have earned over $5,000,000 blogging over the years, but I also know others who have not earned income.
Blogging can be a fun way to make money from home, and you don’t need any previous experience. In fact, this is one of my favorite top-paying jobs with no experience.
When I started my blog, I had no idea what I was doing and simply learned as I went.
As a blogger, you have the freedom to write creatively and share your thoughts or expertise on any given subject. Your income will depend on blog traffic, advertising, and sponsored content.
Recommended reading: How To Monetize A Blog: How I Grew A $5 Million Blog
3. Proofreader
Degree or education requirements: High school diploma or equivalent
Training requirements: Proofread Anywhere has a free training on How To Become A Proofreader
Salary: $45,410 per year
As a proofreader, your job is to scrutinize written materials and correct typos, grammar, and punctuation errors.
Not even the best writers are perfect. They still make grammar, punctuation, and spelling errors, and that’s why professional proofreaders are such a huge help.
Proofreaders proofread books, articles, blog posts, student papers, emails, advertising content, medical documents, and more.
Recommended reading: 20 Best Online Proofreading Jobs For Beginners
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This free 76-minute workshop answers all of the most common questions about how to become a proofreader, and even talks about the 5 signs that proofreading could be a perfect fit for you.
4. Freelance writer
Degree or education requirements: High school diploma or equivalent
Training requirements: On-the-job training
Salary: $73,150 per year
I know many, many people who have found freelance writing jobs with no experience (myself included!). You don’t need a background in writing or a degree in English or creative writing. I, myself, was a freelance writer for many years, and I enjoyed it a lot. This is one of the best high income jobs with no experience out there.
A freelance writer is someone who writes for a number of different clients and across different types of content. They may write articles for magazines or blog posts, web copy, resumes, technical manuals, social media posts, books, and much more.
Freelance writers write blog posts, content for a company’s sales page, press releases, SEO content for a business, ebooks, essays, emails, newsletters, and more.
Recommended reading: 14 Places To Find Freelance Writing Jobs – (Start With No Experience!)
5. Virtual assistant
Degree or education requirements: High school diploma or equivalent
Training requirements: I recommend taking an online workshop such as Free workshop 5 Steps To Become a Virtual Assistant.
Salary: $44,080 per year
Several years back, I worked as a virtual assistant. I didn’t have any experience before, but I learned as I went along. That’s why I believe it’s one of the best jobs to start with because it was my first job too!
A virtual assistant helps businesses and entrepreneurs with tasks like managing an email inbox, data entry, scheduling appointments, and customer service.
A virtual assistant is someone who works for a person, company, or business owner doing administrative and business tasks to help the business run smoothly. Think of VAs as the online version of an in-person assistant. You work online from home rather than inside someone’s physical business.
Recommended reading: Best Ways To Find Virtual Assistant Jobs
This free training shows you how to become a virtual assistant and work from home.
6. Flight attendant
Degree or education requirements: High school diploma or equivalent
Training requirements: Flight attendants get on-the-job training from the airline they work for.
Salary: $63,760 per year
If you want to travel and work, then this is one of the most fun high-earning jobs with no experience (as an employee of an airline, you typically get free or very discounted flights too!).
As a flight attendant, you have the opportunity to travel and assist passengers during flights. Flight attendants have two main jobs: they do regular tasks like serving food and drinks, and they also know what to do if something goes wrong, to keep passengers safe and comfortable during a flight.
No experience is usually required, but you will need to complete a training program with the airline.
Learn more at How To Become A Flight Attendant.
7. Insurance claims adjuster
Degree or education requirements: High school diploma or equivalent
Training requirements: On-the-job training which can last several months
Salary: $72,040 per year
An insurance claims adjuster investigates and settles insurance claims in the insurance industry. Claims adjusters are like investigators for insurance. They check if an insurance company should give money for a claim, and, if they should, they decide how much.
They determine whether the insurance policy covers the loss claimed, decide the appropriate amount the insurance company should pay, make sure that claims are not fraudulent, and more.
8. Construction worker
Degree or education requirements: None
Training requirements: On-the-job training
Salary: $39,520 per year
Construction laborers have a hands-on role on construction sites. They do physically demanding tasks like cleaning up and getting sites ready, putting up structures, and moving construction materials, among other things.
There is a lot of job growth expected for this career too!
9. Police officer
Degree or education requirements: Ranges from a high school diploma to a college degree (such as a degree in criminal justice or law enforcement)
Training requirements: Training academy as well as on-the-job training
Salary: $69,160 per year (the average annual salary depends on many things, such as the city in which you work)
As a police officer, your duty is to protect and serve communities. This is a job that you will definitely need training for, but you can start with no experience.
Police officers do a variety of important tasks. They go to both urgent and less urgent calls, drive around neighborhoods to watch them, stop vehicles for checks, and even carry out warrants, among other duties.
10. Graphic designer
Degree or education requirements: High school diploma or bachelor’s degree
Training requirements: On-the-job training
Salary: $57,990 per year
Graphic designers many times learn as they go while on the job.
Graphic designers create visual concepts for branding, advertising, and other projects. Graphic designers use digital illustration and editing software to create designs, such as logos, images, brochures, advertising, and more.
Recommended reading: How To Make Money As A Digital Designer
11. Web developer and web designer
Degree or education requirements: Bachelor’s degree
Training requirements: On-the-job training
Salary: $80,730 per year
Web developers design and create websites. This includes making sure the website loads fast and can handle a lot of visitors. They also take care of the technical parts to keep the website running smoothly.
12. Dental laboratory technician
Degree or education requirements: High school diploma or equivalent
Training requirements: On-the-job training
Salary: $41,180 per year
Dental lab technicians create dental prosthetics like crowns and dentures.
Dental laboratory technicians receive work orders from dentists and form material for dental prosthetics. They also may repair damaged prosthetics.
13. Bartender
Degree or education requirements: None
Training requirements: On-the-job training
Salary: $29,380 per year
Bartenders mix and serve drinks while providing excellent customer service. While, yes, you may have to work your way up through a restaurant before you can become a bartender, this is a job that you mostly learn through on-the-job training.
Bartenders have jobs in places like restaurants, hotels, and places where people eat and drink. When it’s really busy, they need to work fast and get drinks to customers as quickly as possible.
Depending on where you bartend, you can make a lot more money too. For example, bartenders in touristy areas may make $10,000+ each month.
14. Roofer
Degree or education requirements: None
Training requirements: On-the-job training
Salary: $47,920 per year
Roofers install and repair roofs on buildings, and this is a job that you learn as you do it. A roofer’s responsibilities may also include inspecting roofs, installing ventilation, cutting roofing materials, and more.
15. Plumber
Degree or education requirements: High school diploma or equivalent
Training requirements: Apprenticeship
Salary: $60,090 per year
Plumbers install and repair water and gas pipes in buildings. They also prepare estimates, read blueprints, follow building codes, inspect and test systems, and more.
16. Car salesperson
Degree or education requirements: High school diploma or equivalent
Training requirements: On-the-job training
Salary: $72,782 per year
Car salespeople help customers find the perfect car while earning a commission. They talk with customers, follow up with leads, go on test drives, and handle paperwork.
This is a job that you can start with no experience. In fact, my husband was randomly offered a job as a car salesman and took the job. He saw lots of success with it!
17. Sell printables
Degree or education requirements: None
Training requirements: There is a free workshop: Earn Money Selling Printables
Salary: There is no average salary, but you may be able to make a couple hundred to several thousand a month.
Selling printables online can be a great way to make money without needing any prior experience.
Creating printables can also be quite passive because you just need to create one digital file per product, which you can then sell an unlimited number of times. Because you only need a laptop or computer and an internet connection, it can be quite affordable to start.
Printables are digital products that customers can download and print at home. Some examples are bridal shower games, grocery shopping checklists, budget planners, invitations, printable quotes for wall art, and patterns.
Recommended reading: How I Make Money Selling Printables On Etsy
Do you want to make money selling printables online? This free training will give you great ideas on what you can sell, how to get started, the costs, and how to make sales.
18. Commercial truck driver
Degree or education requirements: High school diploma, professional truck driving school training, and commercial driver’s license
Training requirements: On-the-job training
Salary: $49,920 per year
A commercial truck driver transports goods across the country. Tractor-trailer drivers usually do long-distance driving. They handle trucks that weigh more than 26,000 pounds when you count the vehicle, passengers, and cargo. These drivers transport goods on routes that can stretch across multiple states.
19. Tree trimmer
Degree or education requirements: High school diploma or equivalent
Training requirements: On-the-job training
Salary: $47,080 per year
Tree trimmers prune and cut trees, maintaining their appearance and safety. This is a job that you will learn by watching others and through on-the-job training.
20. Real estate agent
Degree or education requirements: High school diploma or equivalent
Training requirements: On-the-job training, as well as pass real estate courses and a licensing exam.
Salary: $52,030 per year
Real estate agents assist clients with buying, selling, and renting properties. Their tasks may also include advising on market conditions, making a list of properties for sale or rent for their clients, hosting open houses, presenting purchase offers, managing negotiations between a buyer and seller, and more.
This role may require you to pass a licensing exam, but it doesn’t necessarily need prior experience. With an average salary range starting at a decent scale, real estate brokerage is one of the high-income jobs available with little-to-no initial experience.
21. Sales representative
Degree or education requirements: None
Training requirements: On-the-job training
Salary: Depends on what you’re selling. Could be anywhere from $30,000 to $100,000+ per year
Sales representatives sell products or services to clients, and you usually learn through on-the-job training after you are hired.
Successful salespeople come from various backgrounds and often start their careers with no relevant experience. What matters most is your ability to communicate, negotiate, and build relationships. The high earning potential makes it an appealing career choice for many.
22. Travel agent
Degree or education requirements: High school diploma or equivalent
Training requirements: On-the-job training
Salary: $46,400 per year
As a travel agent, you help plan vacations for clients. Travel agents help people choose where to go, plan out the details of the trip, and take care of all the travel bookings for their clients.
Travel agents figure out what customers want and book a trip that matches their preferences and budget. They may plan honeymoons, day trips, family vacations, cruises, find flights, and more.
23. Masonry worker
Degree or education requirements: High school diploma or equivalent
Training requirements: Learn masonry either through an apprenticeship or on the job, working with experienced masons
Salary: $49,490 per year median pay
Masonry workers build structures with bricks, stones, and concrete, and they typically learn the job through an apprenticeship with no prior work experience needed.
24. Tutor
Degree or education requirements: Depends on the topic you are tutoring on
Training requirements: On-the-job training
Salary: $36,680 per year if done as a full-time job
With tutoring jobs, you can start if you don’t have any prior experience. You will need to be knowledgeable on the topic, though, and many people on your job search may even want to see a bachelor’s degree.
There are many different kinds of tutoring jobs, from tutoring students with their homework to helping a college student pass a major exam. Tutors might spend 30 minutes teaching a lesson, a few minutes answering questions online, or work one-on-one with a student in a video lesson.
Recommended reading: 11 Best Places To Find Online Tutoring Jobs (Make $100+ an hour)
25. Bake dog treats
Degree or education requirements: None
Training requirements: On-the-job training
Salary: Depends on if it’s part time or full time
Dog treat bakers make dog treats, cupcakes, cookies, cakes, and more.
With a dog treat bakery business, you may be able to earn an extra $500 to $1,000 a month or more on the side. Or, you can turn it into a full-time business and make much more.
Recommended reading: How I Earned Up to $4,000 Per Month Baking Dog Treats (With Zero Baking Experience!)
26. Hazmat removal worker
Degree or education requirements: High school diploma or equivalent
Training requirements: On-the-job training
Salary: $46,690 per year
Hazmat removal workers clean up hazardous materials like asbestos, mold, and lead.
Training for hazmat removal workers usually involves two parts: learning in a classroom and working in the field. In the classroom, they learn about safety rules and how to use protective gear. When they’re on a job site, they get hands-on experience with tools and materials, and they’re guided by someone who has a lot of experience.
Frequently Asked Questions About High Paying Jobs With No Experience
Below are answers to common questions about how to find high-paying jobs with no experience.
What entry-level jobs pay the most?
Some of the highest-paying entry-level jobs include positions such as web developer, car salesperson, and bookkeeper.
How can I find a job that pays well without prior experience?
To find a good-paying job without any prior experience, you may want to focus on skills that can be used in different jobs and highlight your personal strengths, like communication, problem-solving, or adaptability. Use job search websites that are designed for beginners, and look for job listings that mention “no previous experience needed.”
Are there any fun, well-paying entry-level positions?
Yes, definitely! Many on the list above can be considered fun. My most favorite is becoming a blogger.
What careers offer high pay with short training periods?
Some careers that have high pay with short training periods include bookkeeper, insurance claims adjuster, bartender, car salesperson, and more. These roles may require specialized training or certifications.
How can I make a good income without a degree?
There are many jobs that pay well without requiring a college degree, such as being a construction worker, freelancer, and real estate agent.
How can I make $20 an hour without a degree?
Jobs that pay around $20 an hour without requiring a degree include proofreading, bookkeeping, plumbing, and more. Many on the list above do not require a college degree.
What jobs pay $80,000 with no experience?
Though a little more difficult to find, some jobs that may pay $80,000 or more with no prior experience include positions in sales and real estate.
How to make $150,000 a year without a degree?
Earning $150,000 a year without a degree can be challenging but is achievable in certain fields, such as running your own business, working as a real estate agent, and in sales.
What should I include in my CV when I have no experience?
Even without prior job experience, you can still make a good resume. You should put in any skills you have that are relevant to the job you are applying for, like things you learned in classes or volunteering. Also, remember that skills you use in everyday life, like solving problems, working on a team, or talking with others are important too.
Should I consider additional form of education for these jobs?
Getting more education can be helpful, but it’s not always a must. For some jobs, taking classes, getting certifications, or attending workshops can make you stand out.
How To Find High Paying Jobs With No Experience – Summary
I hope you enjoyed this article on how to find high-paying jobs with no experience.
Some high-paying jobs with no experience may surprise you, while others may seem more attainable. But one thing they all have in common is that they value different skill sets and backgrounds. So don’t worry if your resume is lacking in years of experience or a specialized degree, because these opportunities are out there waiting for someone like you to apply for them.
I hope you are able to find a high paying job that requires no previous experience that works best for you.
What high paying jobs with no experience would you add to the list above?
*Salary and data for the jobs is from the U.S. Bureau of Labor Statistics (BLS).
Since investors don’t have (functional) crystal balls, figuring out how to know when to buy a stock, in an effort to time the market and generate the biggest return, is difficult. While you shouldn’t necessarily try to time the market, if you are trading and incorporating some knowledge and tactics around when to buy a stock as a part of your larger financial plan, you’ll want to do what you can to fine-tune your strategy.
Trading stocks, of course, is fairly risky, and investors will want to keep that in mind. But with some practice and knowledge, you may be able to figure out the best time to buy stocks, and other variables, to help you try to boost your portfolio.
The Best Times to Buy Stocks
As noted, it’s generally not a good idea to try and time the market. But that’s not to say that there are larger market forces at work that result in certain trends. With that in mind, there can be good times of the day, days of the week, and even months to buy stocks that could generate bigger returns – though nothing is guaranteed.
The Best Time of Day to Buy Stocks
First and foremost, remember when the stock market is open and when trading is occurring. The New York Stock Exchange and Nasdaq, two of the largest and most active stock exchanges, are open 9:30 a.m. to 4:30 p.m. ET, Monday through Friday.
With that, the best time of the day, in terms of price action, is usually in the morning, in the hours immediately after the market opens up until around 11:30 a.m. ET, or so. That’s generally when most trading happens, leading to the biggest price fluctuations and chances for investors to take advantage.
The Best Day of the Week to Buy Stocks
If investors are aiming to trade during times of relative volatility, then they’ll want to utilize a trading strategy that aims to crowd their activity near the beginning and end of the week. Monday is probably the best day to trade stocks, since there is likely considerable volatility pent up over the weekend.
That said, Friday can also be a good day to trade, as investors make moves to prepare their portfolios for a couple of days off. The middle of the week tends to be the least volatile.
The Best Month to Buy Stocks
When thinking about the best months to buy stocks, examining historic performance can be helpful. For instance, looking at monthly returns from 2000 to 2020, the best months to buy are usually April, October, and November. Conversely, the month with the worst historic performance is September.
Again, these “best times to buy stocks” in terms of times, days, and months aren’t guarantees of anything, but are merely based on historical performance. That can be good to keep in mind.
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When Should You Buy Stocks
There’s a difference between “can” and “should” – and investors trying to discern when they should buy stocks should really consider their personal preferences, risk tolerance, and investment strategies. The right time to buy a stock is when an investor has done their research and feels confident that a stock price will rise in the short or long term, and that they’re willing to hold onto it until it does.
It helps to be informed when considering whether to buy stocks, and one way to do that is to learn about the company itself. Interested investors can find many company’s financial reports and earnings reports from government databases or private company research reports.
While ultimately it may be a good idea to buy stocks across different industries in order to diversify, it sometimes helps to start with a business or industry one is familiar with. Knowing about the company can help put the earnings reports into context.
Understanding the value of stocks is often, if not always tied to understanding the business those stocks represent a share in. Is the company a good investment? Does it have sound financials and growth potential? Here are helpful questions to consider when contemplating buying a stock:
What is the price range at which you’re willing to buy? If an investor has a company in mind, setting a price range at which they would want to buy stock in that company may help inform their decision. One can do this through analysts’ reports and consensus price targets, which average all analyst opinions.
Does the stock appear undervalued? There are different ways to determine value. The most common valuation metric is a price-earnings ratio (or P/E), which takes the price per share and divides it by earnings per share. The lower the number, the less the value. Generally for U.S. companies, a P/E below 15 is considered a good value and a P/E over 20 is considered a bad value. You can also compare the company’s P/E to others in the industry.
Another way to look at value is a discounted cash flow (DCF) analysis, which takes projected cash values and discounts them back to the present. This ultimately gives an investor a theoretical price target; if the actual price is below the target, then in theory, it’s undervalued and a good buy. 💡 Quick Tip: Did you know that opening a brokerage account typically doesn’t come with any setup costs? Often, the only requirement to open a brokerage account — aside from providing personal details — is making an initial deposit.
When Is the Worst Time to Buy Stocks?
Just as there are the purported best times to buy stocks, there are also the worst times to buy stocks, too. Given that investors may be looking for relatively volatile times in the market to buy stocks, relatively calm periods during the trading day may be the worst times to buy. Those hours would be during the middle of the day, perhaps from 11:30 a.m. ET until 3 p.m. ET.
In terms of days of the week? Tuesdays, Wednesdays, and Thursdays may be worse than Mondays or Fridays, barring any market-moving news or other volatility-inducing events. Finally, September, February, and May tend to be the weakest-performing months for the stock market, dating back nearly a century. 💡 Quick Tip: How do you decide if a certain trading platform or app is right for you? Ideally, the investment platform you choose offers the features that you need for your investment goals or strategy, e.g., an easy-to-use interface, data analysis, educational tools.
How Do You Know When to Hold Stocks?
Knowing when to hold a stock often comes down to one’s investment strategy. With a passive investment approach, investors invest in various stocks with the intention of holding them for an indefinite amount of time. This is also known as a buy and hold investment strategy.
With this type of investing, investors attempt to match a market index such as the S&P 500 and the Dow Jones Industrial Average. So, they select stocks in that market index coinciding with the same percentages in that index.
One benefit of the buy and hold strategy is that the tax rate on long-term capital gains (from stocks that an investor has owned for more than one year) are much lower than that of short-term capital gains.
For many, if not most investors, if you’re going to buy a stock, it may be a good strategy to hold onto it for a while. When an investor buys an undervalued stock, it could take a few years for it to reach its “correct” valuation. And of course, there’s always a risk it will never reach what the investor has determined is the correct valuation.
Not everyone holds onto their stocks for a long time, but there are risks to day trading that may inspire some to become buy-and-holders.
How Do You Know When to Sell a Stock?
Just like how a decision to hold a stock largely depends on an individual investor’s specific strategy, so does the choice as to whether or not to sell.
Some investors rely on a rule of thumb that states that the stock market reaches a high point in May or June and then goes down over the summer until September or October. While that can sometimes be observed in overall market behavior — partially because traders (just like lots of people) go on vacation in the summer and partially because it’s a bit of a self-fulfilling prophecy — it doesn’t mean an individual stock will definitely go down over the summer.
Taking this advice, however, — and other, similar types of advice – should be taken with a grain of salt. Again, the choice of whether to sell a stock is up to you, and the research you’ve put into making the decision.
The Takeaway
Knowing when to buy, sell, and hold stocks can be less confusing when an investor does the research into company health, overall market conditions, and their own financial needs as relates to personal short-term and long-term goals.
One of the easiest ways to buy and sell stocks or manage any investment portfolio is to open an online taxable brokerage account. This is often appealing to investors who want to take more of an active investing approach and buy and sell stocks. Investors would typically pay fees based on the account and the number of trades they make.
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), and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).
For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.
FAQ
Is it best to buy stocks when they are down?
The best time to buy a stock is when an investor has done their research and due diligence, and decided that the investment fits their overall strategy. With that in mind, buying a stock when it is down may be a good idea – and better than buying a stock when it is high. But there are always risks to take into consideration.
Should I buy stocks at night?
Investors can engage in after-hours trading, but there are unique risks to doing so, and orders won’t execute until the market opens. Interested investors may want to try after-hours trading to get a feel for it before fully incorporating it into their strategy.
What are the worst months for the stock market?
Based on past performance, the worst months for the stock market tend to be in the early fall and summer. September is usually the worst, but October, June, and August can be bad as well.
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