Get in the game, kid.
It’s no secret that the financial stability of many recent college graduates is hampered by huge student loans. However, certified financial planners agree that the loans’ low interest rates make it possible for graduates to still take advantage of the stock market.
Start Off on the Right Foot
While financial planners agree that entering the market early is the best way to prepare for retirement, investing at the cost of your financial stability today won’t get you ahead later in life. Reducing credit card and other types of high-interest debt may actually have a higher return on investment than stocks. But even before they eliminate their debt, you should focus on saving three to six months of living expenses so you’re not tempted to dip into their investments on a rainy day.
“Before you invest in the market, invest in yourself,” Virginia-based certified financial planner Matthew Gaffey of Corbett Road Investment Management says. “Most recent college graduates do not have an abundant ‘safety net’ to fall into if an unplanned expense, job change, etc. occurs. As such, your first priority out of school should be to create a sufficient emergency fund.”
Take Advantage of Your Employer’s 401(k) Matching Program From Day One
Compounding interest isn’t the only advantage of getting in the stock market early, according to Edward Snyder, certified financial planner and co-founder of Oaktree Financial Advisors in Carmel, Ind. Most employers offer matching programs with their 401(k) options through which they will contribute a percentage of your salary to your account if you do.
“It’s free money,” Snyder said. “Don’t pass it up.”
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