Are you a recent college graduate? Do you already have a job? Well congratulations! There aren’t too many people that can answer yes to both of those questions these days. By earning your degree and finding a job after college, you are already one step ahead of most of the field (that is, unless your job is at the burger joint that you worked at in high school).
Let’s talk about something important for your future life, investment, for your retirement. If you are not a recent college graduate, that is OK, you must be knowing someone who just joined the work force after graduating. Pass on this information please.
When I first joined the work force in India, I first invested my money in tax saving funds (a fund category not available in US). Also, I invested in few blue chip stocks. I eventually sold all my fund and stock holding in India as I came over to this country. I made a good profit on my investment.
Thinking of Investing
So, you have a degree and a good entry level job at a quality company. Things are going well for you. So well that you’ve been thinking about investing some money. Well congratulations again! Do you know how huge of a decision this is?
By starting to invest early, you will most likely earn more than a million dollars more than your peers that don’t start until years later. This is another huge step into adulthood. If you choose to invest, you’ve already made one wise decision. Now, make another one and choose the right investments.
The Standard Investments
When you work for a company that offers a 401(k) or a 403(b), it is in your best interest to invest a portion of your money into these accounts, especially if the company matches your investment. If they match say, 100% of your investment up to 3% of your paycheck, then you should most certainly invest that amount.
After all, it’s free money that they’re giving you. However, don’t make the mistake of having this as your only investment.
While the stock market can be an exciting place to make your money, there is definitely a risk that you come out of that investment with a loss and not with a gain. I encourage college students to start out small. Yes, invest a portion of your earnings into your 401(k), but don’t forget to look for the sure-deals either.
These come at the credit union. I know I know, it sounds crazy, but credit unions offer a great interest rate on your checking account. For a little while, I was earning 4% on my money and there were no stipulations. I could deposit as much as I wanted and withdraw as much as I wanted, but every month, they would continue to pay me a yearly interest rate of 4% of my balance.
(Related – 10 Pieces of Financial Advice for young Adults)
Invest In Yourself
If you have obtained a degree, you have already invested in yourself by growing your mind and earning yourself a good job with quality pay. This is a monumental achievement, but there are other ways to invest in yourself and actually get paid with money, not just with knowledge. I’m talking about starting a side business of your own.
It could be as simple as a website or as complex as a mutual fund (starting one, not investing in one). Whatever your idea might be, don’t be afraid to put a little bit of cash into an idea that could earn some major income in the future.
If you have a passion for it and see a market for your idea, then there is a pretty strong chance that you’ll succeed. Don’t be afraid to look beyond those “paper” investments in the market. Sometime the biggest winners are the ones that you create yourself.
I found a few good articles on the web. Investopedia lists few options to choose from. For more information on investments, you can visit the CSS Partners site. Wall street journal has a comprehensive list of investment as well, which I liked.
Readers, what was your first investment after you started earning salary?