If you’re like a lot of recent college graduates, you are probably wondering what to do with all of your newfound free time and worldly knowledge. Whether you went to USC or Tufts University, one of the best steps you can make as a college graduate is taking the steps necessary to learn about investing. Doing so will enable you to fortify your finances for the future, and will teach you a lot about the world. Here to assist you with that are four investing tips for recent college graduates.
1. Make Sure Your Debts with the Highest Interest are Paid Off First
There is no sense in investing if you have one (or several) demanding loans or high-interest credit card payments plaguing your financial resources. Investing with this kind of baggage will open you up to a lot of financial volatility, which could potentially increase your debt. Be sure to check your interest rates before making a final decision. An interest rate of 3% or lower (especially if it is subsidized by the government) will not prove to be too much of a burden on your resources.
2. Utilize Your Resources
There is a wealth of information online and in the various investing literature that will point you in a fruitful direction or at least provide some food for thought. Focus your efforts on one specific area you would like to learn, such as accounting (Maryville offers a bachelors in accounting online) or analyzing stocks. Then, incrementally spreading it to other areas (bonds, mutual funds, etc.) is a great way to expand your knowledge. Plus, it gives you a tactical advantage when the time comes to make an investment decision.
3. Start Investing as Soon as Possible
Investing while you are young will gives you a huge advantage over any potential competition. This is because investing smaller amounts now could potentially yield larger returns later simply by the nature of investments. Consider the concept of compound interest. This means that the amount of interest you accrue on an annual basis is added to the principal amount so that your balance is consistently increasing. If you are interested in how to use interest strategically, check out the many compound interest calculators available online.
Ever heard the saying “don’t put all of your eggs in one basket?” That certainly applies to investing. As a new investor, it is wise to invest smaller amounts of money into a broader array of investments. This is known as diversification. Spreading your potential choices across several different investments mitigates a large amount of risk that a narrower investment strategy would expose you to. Diversification is a great way to minimize the impact of market volatility on your portfolio.