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Whenever I host & play in Terraria I get to keep all my stuff when I die, but my friends don't... How can I make it so they keep their inventory as well?

I've been searching on the interwebs, but everything is all about softcore mode or something, but I don't have that option. I'm just playing on normal, on a large world with a couple of friends. Hope you can help :)

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This is actually your friends fault. If you don't want to lose items on death you need to set your character to softcore while creating them. Your friends must have accidentally set theirs to mediumcore without thinking about it.

Sadly there is no way to set a character to softcore after creating them so your friends will need to make new characters if they want to keep their items after they die. They can put any items they have on their current character in a chest and then pick them all back up when they make a new character.

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    +1, but I think this answer would be perfect if you mentioned that they can store their things in chests in the shared world (assuming it's private/trustworthy) and pick them up with their new characters to avoid losing progress – BThompson Apr 14 at 17:01
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    There is some progress lost anyway because you can't pass along health and mana unless you have plenty of leftovers. – DH. Apr 14 at 19:24
  • There's a reddit thread that says you can use a save editor (like Terrasavr) to change the mode. Don't have time to test it out right now, might try it out later if I have a chance. – mbrig Apr 16 at 17:33
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    @BThompson Thanks for pointing that out. I added it to my answer. – Robbie Apr 17 at 5:04
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Why?

When you create a character, you can select difficulty, which impact your losses upon death:

  1. Softcore: Softcore characters drop half (3/4 on Expert mode) of their coins when killed by an enemy.
  2. Mediumcore: Mediumcore characters drop all of their items upon death, including all coins and ammo.
  3. Hardcore: Hardcore characters die permanently, and drop all of their items upon death, including coins and ammo, which other players can then collect in multiplayer.

So it's because of your friend character settings, not your host/world settings.

Solution

Keep your items in chests/bank, only bring the necessaries on the character. Better, bring a Piggy Bank or a Money Trough and store items in it frequently.

If your friends accept cheating, they can set the character type to Softcore by edit their save file using some save editor like Terrasavr (remember to backup, it can break your saves).

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    +1 for the explanation of the various -cores, and for discussing storage. As a note for OP though, piggy bank storage is unique per character, meaning it can't be used to transfer items from one character to another like OP's friends will need to do (unless they go the save-hacking route) – BThompson Apr 14 at 17:05

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