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.
(Related – Are Young Adults to Be Blamed for Not Having Retirement Savings?)
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 Wall street journal, which has a comprehensive list of investment as well, which I liked.
Readers, what was your first investment after you started earning salary?
Jenny @ Frugal Guru Guide says
For someone not making much, 401(k) to company match, then Roth IRA. Maximize the Roth is humanly possible since you can use the principle without penalty for a house down payment or similar.
David @my2centopinion says
Good tips for a recent grad. 401ks and 403bs are the easiest way to get started and often the most overlooked.
Mark Ross @ ThinkRichBeFree says
I’ll say save some money first, build up your emergency fund and start investing your money in stocks. When something go wrong, it’s okay, you’re still young and you have the time to make up for your mistakes. Am I right?
The College Investor says
Good article! I agree, it is very important to invest early, since we tend to be more of a risk taker when we’re young, giving us better opportunity to learn more about the market from first hand experience and starting young means we won’t be able to invest huge sum of money, so we do not need to worry about losing our life savings on our investments.
[email protected] says
While this may not have been smart, I invested in a friend’s start-up which about broke even before I was able to cash out.
Investing in oneself is a good sign of a big leap. My aunt introduced me to binary options and she said this is a kind of investment that never requires a big amount and I can get a return in just a very little time frame, I don’t want to believe but when I read on about it on binary broker optionbit optionbitsreview.com I realized how easy it could be to invest, earn and earn more. But questions still runs in my head, does binary options a good option to invest?
financial planning association says
First of all let me tell you, you have got a great blog. I am interested in looking for more of such topics and would like to have further information. Hope to see the next blog soon.
Anton Ivanov says
Absolutely agree that the earlier you start to invest, the more wealth you can accumulate. Younger people who are nowhere near retirement should have a portfolio consisting mostly of high-risk investments. So long as they maintain their discipline and not withdraw funds, they will achieve great long-term returns.
I’m not sure if I agree with your suggestion about depositing money in a bank account, even if it’s yielding 4%. It’s a good kicker to your every-day checking account, but not a substitute for an investment portfolio.