If you’ve managed to sock away a little cash in college, congratulations! We don’t know how you did it, but good for you. If you’re considering making that money work a little harder than just sitting in your savings account, it may be that you’re thinking about investment. It might seem like an intimidating venture to begin, but it could really be worth it in the long run. Here are a few ways to get started on the right path.
If you don’t understand this process, seek out help from friends and family members who have done it before. If you don’t know anyone who’s invested at all, seek out help online. Heck, you could probably reach out to a broker you don’t know and they’d probably be happy to give you some advice or at least point you to some good resources. Bottom line? Don’t jump in blind. It’s stupid and unnecessary.
Figure Out Your Risk Tolerance
Before you put your money anywhere, you need to figure out your risk tolerance. This is how much risk you’re willing to shoulder in the hopes of a payoff. Generally, higher risk equals higher yield. If you’re adventurous, you’ll want to look into mutual funds or ETFs. If you’re not, stick to IRAs and CDs. Those are basically savings accounts that yield slightly better returns than regular ones.
Make sure you know everything you possibly can about whatever it is you’re investing in. Remember, if something goes wrong, there are no do-overs. Your money will simply be gone. If you throw money at a mutual fund without knowing about the industry it represents, you could be in for a rude awakening. Plus, their past performance isn’t a great indicator of their future performance, so there’s a lot more to know than you think. Take your time, learn about the investment process and find what’s right for you. The last thing you want to do after having saved all that money is blow it on one bad move.
Pay Off High-Interest Debt
If you’re still carrying a lot of student debt, you need to take care of that before you invest. If you’re taking money you should be using to pay off your debt and sinking it into investments with no guaranteed return, you’re probably losing money on the interest your loan is accruing. Don’t do it. This goes double if the debt you carry is credit card debt. Investing and hoping for a windfall is fiscally irresponsible and almost never works. If you went to Emerson College and hope to someday get your executive MHA from USC online, investing after college could help you pay for that. But it won’t if you get yourself in a worse financial position because of it.