MoneySmartsU

How Should I Invest

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Episode 8: How Do I Invest?

Pete and Alex are back to you to talk about one of the most frequently asked questions we get: how do I invest my money?  While there's no perfect answer, Pete and Alex give you lots of options to help you watch your money grow.

No matter what age a person is, they always have questions about investing.  What’s surprising to us is the number of students who ask us about investing rather than savings, because it seems like people forget that they need to build an emergency fund.  Technically they’re the same thing…but at the same time we know that nobody has even talked about getting rich off of their savings account.

Alex and Pete spent this episode talking about what you can do with your money once you invest.  We wanted to focus our few words on one specific investment account that you should have the moment you get your first post-college job: your retirement account.

Like your savings account, we get that retirement isn’t fun to talk about.  After all, who wants to talk about an event that’s around 40 years away.  The problem is that your retirement account needs to start building the moment you graduate from college.  The reason why is pretty simple: you are using 40 years of your life to fund 60.  Your retirement account is your ticket to live the life you want from age 65 to 85, but in order to make it work you have start investing in it early.

What do we mean by early?  We mean that the most important years of your retirement are your first 10 after you graduate from college.  The reason why is because by putting money in early, it has the chance to accumulate more interest (average historical rate/year 7 – 8%) over the course of 40 years and grow into a nice chunk of change for you.  If you delay the start of your retirement fund, you’re missing out on all of the free interest that will help your money grow.

What this also means is that as you are reviewing your employment offers, stop focusing on just the salary and instead look to see what the company is going to do for you for your retirement.  You’re looking for an employer that is willing to match a certain percentage of your contribution so that you get an extra dollar for every dollar you contribute towards your retirement.  Why is this so awesome?  Think about it…in what other situation can your dollar actually be two dollars?

The bottom line is that we want you to start thinking about your retirement.  Start doing some research and find out what your potential employers offer and what that could mean for you.  If you have any questions, feel free to reach out to us and we’ll be happy to answer.