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If you have recently graduated from school, you might feel overwhelmed by your adult responsibilities. Those could range from moving out of your parents’ home, getting your first “real” job, or coming up with a budget. But you’ll also want to consider investing since the sooner you begin, the better.
Balance Debt with Investing
When you’re out of college, the last thing you may want to think about is your student loans. However, you do not want to wait several years to start paying them off. Strike a balance between repayment and saving. If you have student loans, it’s a good idea to begin by researching the do’s and don’ts before your student loan grace period ends.
For example, that might start by listing all your loans and creating a plan to repay them. Or it could include taking advantage of any student loan repayment assistance programs sponsored by your employer. You can still invest while paying off loans. Create a budget that leaves room for both investing and debt. Even if you are only putting a little money each month aside, it is a great way to get in the habit. And if you are paying down your debt, you’ll eventually be able to more into your investments that could lead to buying and selling real estate as part of your portfolio to generate income to fund your nest egg down the road.
Start Investing Now
Even if you don’t have a lot to put away now, there are several advantages of beginning now. One of the biggest benefits is that you have time on your side. That’s because of compound interest and the fact that over time, your money will grow. For instance, let’s say you are 21 and put as much as you can in your Roth IRA for the next decade. If you put aside $5,500 every year and get 8 percent on that, you might have gotten over a million dollars by the time you are 65. On the other hand, if you do not begin until you are 27 but still invest the same amount over the same time, you will only have $800,000 once you reach the age of 65.
Starting to set aside money now develops an important habit. Since it is an integral part of building wealth, you should save for long-term expenses. And if you are investing in the stock market, you can learn now the best way to deal with the ups and downs.
Look at Your Investing Fees
Financial services often come at a price in the form of fees that might include annual fees, transaction fees, or expense ratios. With real estate investing, you can research realtor fees and commissions so you know what you’re paying to avoid eating into your profits. Don’t be afraid to ask questions before you choose a service and be sure to negotiate with your agent in order to save the most money in the short-term that will eventually lead to long-term financial success.
