Thursday, April 22, 2010

College Graduates - Be a Finance Guru with a Few Steps


Graduating with debt? Here's some advice for grads


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Graduating college can be a surreal experience. You finally made your way into the real world. Congratulations! Luckily, you found yourself a good paying job and now comes that thing called “Responsibility”. For those that are eager to invest and get ahead, it can be very overwhelming trying to decide what is the right direction to go. Before you get started, here is a few tips to get you going on the right track to becoming a bona fide investor. Graduating college can be a surreal experience. You finally made your way into the real world. Congratulations! Luckily, you found yourself a good paying job and now comes that thing called “Responsibility”. For those that are eager to invest and get ahead, it can be very overwhelming trying to decide what is the right direction to go. Before you get started, here is a few tips to get you going on the right track to becoming a bona fide investor. 


1. Take inventory. Taking inventory of all your debt is helpful to understand where you are at financially. If you just graduated with a ton of student loan debt, credit card debt, or any other consumer debt, investing might not be the right direction initially. You need to write it down and see it on paper what you actually have to work with and what you need to focus your efforts on. 


2. Don’t start too soon. As I stated earlier, if you have an exorbitant amount of consumer debt, it is probably not the best sense to start investing immediately. One could argue that as long as your student loans that have a low fixed interest rate, those are okay to have. But private loans or any credit cards that have a high interest rate need to be paid off before considering to invest. Once you get your cards paid off, then we can talk about investing. 


3. Stay away from stocks. With every new and eager investor that I run across, they all want to jump in the stock market and start buying individual stocks. I was no different. To truly get ahead in buying stocks, you have got to have a decent amount of cash built up to make a difference. For example, I always recommend buying at least 100 shares of a stock. Well, if you want to buy Microsoft, that would require around $2000 to get going. Even if you have the money to buy 100 shares, chances are you are not fully diversified. One bad pick and you can easily see your entire portfolio disappear overnight. Play it safe, stay away from stocks in the beginning. Consider mutual funds and ETF’s in the beginning. 



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