A graduation cap is sailing into the air.
Maybe you’re watching your children, siblings, or nieces and nephews graduate. Maybe you’re finishing graduate school yourself.
Regardless: You wonder what comes next – either for you, or for them.
This year’s crop of newly-minted graduates – just like the generations that came before them — will start repaying student loans, saving for a house, preparing for retirement, and eventually saving for their own childrens’ education.
What advice do they need?
In honor of Father’s Day, let’s hear investing advice your Dad should have told you.
Tip #1: Time is on Your Side. Start Now.
You’re young and living in the moment. It seems surreal that you might have kids and a house someday. Retirement seems far-away and distant.
Yet life sneaks up on you. Don’t wait. Start investing now.
Thanks to compounding, every dollar you invest today will multiply upon itself, year after year.
It’s hard to manage money as a recent graduate. You have lots of expenses, from a deposit on your apartment, to new furnishings, to an upcoming wedding. It’s easy to procrastinate planning for far-away events like retirement.
But it’s important to start saving early. You will never get this time back.
Put aside some savings every month. Even if it’s only a small amount, the dollars will start adding up.
Tip #2: Rule with Your Mind, Not Your Heart
Most people are more afraid of losses than they are of missing opportunities for gains.
We saw this play out several years ago. The fall of 2008 was a stomach-churning rollercoaster. Many investors saw their portfolios get slashed in half.
If you caved to fear and sold your holdings from September ‘08 – March ‘09, you turned paper losses into actual losses.
Stocks eventually recovered, and by spring 2013 the stock market reached new all-time highs. Moral of the story: Don’t let emotions dictate your investing choices.
Rule with your head, not your heart.
Easier said than done? The best way to achieve “rule with your head” is to follow a plan. This can either be a plan that you develop yourself, or that you discover from an objective third party.
Tip #3: Diversify
“If only I’d bought Tesla, back when it was trading for $40 per share …”
How many times have you imagined riches?
It’s tempting to think that we can pick “one right stock” and that this will save our financial futures.
In reality, though, your best chance at having a solid financial future is by diversifying among a healthy mix of different types of investments.
Don’t bet the house. Rather, be the house.
Instead, invest across a range of asset classes, such as domestic stock funds, international funds, bonds, and more.
Use Jemstep.com to help you pick the right asset classes and the right funds. Your mix should reflect your long-term goals and your risk tolerance.
Tip #4: Don’t Pay Too Much
Every time you invest, you pay a fee or an an ongoing expense which is silently taken out of your investment each and every year.
You might not “feel” that you’re paying this money, because you won’t get a bill in the mail. The expenses will quietly get taken from your portfolio.
But that doesn’t make them any less real.
Fees and expenses add up: a 5% sales load here, a 1.5% fund management fee there. Just like returns, the impact of fees compound in a bad way each and every year. A dollar saved in fees today means many more dollars in the future for you to spend.
Unfortunately, it’s not easy to keep track of all the fees. But if you’re serious about your future, you need to know this information.
Find out how much you’re paying, and learn how to compare your fees with other funds to see if your costs are reasonable.
Use a service like Jemstep to get unbiased recommendations on low-fee, high-qualify funds.
Tip #5: Ask for Help
You might not like to ask for directions when you’re lost. You prefer to read a map and figure out the road ahead.
But when it comes to investing, ask for help. Or at a minimum, get a second opinion. You may not know what you are missing.
There is a wealth of information that can help guide you through the in’s and out’s of investing. Learn how to diversify your portfolio, optimize for taxes, and plan for retirement.
Services like Jemstep can provide you with step-by-step action plans that can help you create a solid financial future.
Remember — your future starts today.
So throw your graduation cap in the air. Throw it high. And embrace the future … on secure financial footing.
Prepare for a more secure retirement with Jemstep.com, an online service that can help you diversify your investments.