With 44.6% of students paying their student loans and another 12% with no clue of how much they owe. With this in mind, it’s easy to see why college graduates can’t invest.
Where’s the money?
But wait, even with $100,000 in student loans, you can still invest. This is according to several financial experts. They say the only important factor is prioritizing the investment. Even if you start at $45.
Start Out Small
To do this, use mobile applications such as Acorns. This is how this amazing app works. It will assess you spending from both linked debit and credit card purchases and round them to the nearest dollar. The difference or change is then invested in up to 6 varying risk-tolerant funds.
Another method is through online investment platforms including Betterment. In this website, you’ll first have to enter your age after which you’ll enter your investment goals. There’re up to 5 goals including safety net and building wealth.
The website will then invest the money in a cocktail of bonds and stocks which involves up to 12 global asset classes. The best part about this website is the lack of minimum investment and also allows you to make monthly investments through direct deposits.
You can be lucky enough to land a job where the employer matches your 401(k) contributions. This only translates as free money and can be a huge boost in your sunset years. In fact, if you start setting aside $45 every month, you can end up with a million once you hit retirement.
Let’s take a practical example. If at age 20 you start setting aside $45 every month with your employer matching 50% of this, then you’ll end up with a million assuming a pay increase of 3.5% per annum and an 8.5% return on your contributions.
Invest Your Savings
Saving part of your income is necessary if you want to achieve your financial goals. However, investing these savings can be a huge task if your expenses take up a huge chunk of your budget.
Take a look at the rent entry-level workers pay in San Francisco and New York, which stand at 79 and 77 percent of their income. This is a huge piece of the pie considering you haven’t paid your student loans and your taxes among other household items.
You can cut down on the expenses by refinancing you student loans at a lower rate or even get an accountant to take care of your taxes. The latter may get you more in refunds, thus putting more money in your pocket.
Learn About Investments
Perhaps, this is the best advice any college graduate take. In today’s world, technology allows you to access a wealth of information from your smartphone. You can join various investor forums such as Investors hangout or message boards to get the latest in the investment world.
What’s more, the information is free and if you have to pay, it’ll be way cheaper than if you enrolled in a formal school.
Better yet, you can schedule an appointment with a reputable financial advisor to help you go through your current situation and also help you figure out your goals.
While student loans can be a huge burden to students, this doesn’t mean you can’t invest. With the tips outlined in this article, you should be able to start investing even with a small portfolio.