Investment Tips for College Grads, Part 2, by Trevor Mooney

Read more about Trevor Mooney

4. Contribute to a 401(k) or IRA If your employer offers a 401(k) plan, start contributing right away. A 401(k) is a great way to start investing, and the sooner you start, the better your returns are likely to be on the long run. Some employers offer matching contributions, which means they will contribute a certain amount on top of what you contribute. Even if your employer doesn’t offer matching, your 401(k) contributions are tax deductible, which means you’ll be earning even more through tax savings. Finally, if you don’t have access to a 401(k) program, look into setting up your own IRA, or individual retirement account. A financial planner can help you establish this tax-sheltered investment tool.

5. Make regular investment contributions Regardless of how you decide to invest, the key is to do so consistently. Measured, gradual contributions over a long period traditionally produce the best returns. The difference between starting at age 25 and contributing a $200 per month versus starting at 35 and contributing the same amount can come out to millions of dollars by retirement.

6. Diversify, and match your risk to your timeframe The key to a successful investment portfolio is diversification, so choose a wide range of stocks, funds, and other investment instruments. As a young investor, you’ll want to focus on more aggressive, higher-risk stocks and funds, which will vary more from month to month and day to day but tend to provide higher returns in the long run. As you get older, you should gradually transition your portfolio to a more conservative approach, shifting into blue-chip stocks, growth funds, and bonds.

7. Build up a rainy day fund You never know when financial issues will arise, so set aside a few months’ salary in a rainy day fund, preferably a liquid investment vehicle that will allow you to earn a small amount of interest but withdraw quickly if necessary. This way, if something unexpected happens, you won’t need to pay penalties for dipping into your retirement funds.

— While at the University of Delaware Lerner School of Business, Trevor Mooney participated in the Blue Hen Investment Club, where students make real investment decisions for the university’s endowment fund.


About trevormooney
A longtime resident of Mission Viejo, California, Trevor Mooney is a former Division I ESPN Academic All-Region Student Athlete at the University of Delaware.

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