It’s never too early to think about investing in your future. But just how do you go about doing this? As a recent graduate, you’re in a unique position in terms of finances. Starting a career in your field means you’ll likely be making more money than ever before. The next step is to think about how to invest your earnings to really maximise their potential. However, with all the investment options out there, it can be difficult to determine just where to put your hard-earned cash. Here are a few suggestions:
Investing in real estate may seem risky to you, especially after the recent economic downturn, but the good news is, the housing market is improving in the United States. As such, now may be a good time to consider purchasing a property or two. Do your research and think about whether you’d live in the property or rent it out, as well as the overall likelihood of being approved for a mortgage. For graduates with good credit and some savings, this could be a fantastic time to get your foot on the property ladder. You don’t have to invest in real estate products on the stock market to benefit from the improving property market, and playing the long game can be a more secure prospect.
It’s important for graduates to consider low risk investment options. For those of you living abroad, think about investments that can be made in the country you’re residing in as well as the US. ISAs, for example, can be a great move for expats living in the United Kingdom. An ISA, or an Independent Savings Account, is a bank account in which the interest on a set amount of money (£5,760) is not taxed.
Another option to this type of account is the stocks and shares ISA, in which the contents, again limited to a certain amount, can be invested in stocks and shares. This is a slightly riskier option than a cash ISA but the investment limit is much higher (£11,520), and with the right investment, could end up earning you more, as profits from any shares will not be taxed. It’s a good idea to read up on the world of share-buying first, and start with a small portfolio of investments when you are new to the game.
Bonds (essentially I.O.U.s) benefit the bond holder, because while the money is “loaned out”, to the bond issuer, be it the government or other agency, it is earning you interest. Investing in bonds is a good option for graduates, as you can see the interest you are making quite quickly. Many bond issuers pay interest twice a year, thus giving you the opportunity to see exactly how your bond is doing in a matter of months. Getting in touch with an investment advisor could help you decide which bonds are right for you as the risk associated with each will vary.
Investing in you
Finally, consider your long-term career plan. If your undergraduate degree does not allow you to enter the field at the salary you want, consider a postgraduate degree. Postgraduate degrees such as MBAs can often help boost you to the next salary level or more; so even if you have to take out loans to go back to school, it can still be worth it in the long run.