Picture this: Your college years are over and you’ve taken your place in the real world. You bring home a paycheck every two weeks. After paying your monthly bills, you have a little something left over.
What you do with that money could affect your financial future. Investing it could mean the difference between living well and retiring at age 45, or working well into your 60s and hoping for a monthly Social Security check.
Financial adviser and alumnus Dwayne Haugabrook of Northwestern Mutual Financial in Tallahassee said there are benefits to recent grads investing in their futures by entering the real estate or stock market game early.
“Grads should take advantage of the opportunities to invest while they’re young. They have minimal risk involved in terms of family or major financial obligations,” Haugabrook said.
Many grads may not be ready to give part of their income to the investment world.
Tanya Townsend, a graduate student from Fort Lauderdale, said she would like to invest after graduation but doesn’t know if she’ll have the means to do so.
“Right now I don’t have the money to invest, but it is certainly something I hope to do in the future. I don’t plan to rely on Social Security because it’s clear there won’t be anything for me when I’m ready to retire,” Townsend said.
Haugabrook encourages recent graduates to “at least talk to a financial adviser because it will give them a firm understanding of what it takes to reach their financial goals.”
Here are a few questions he advises students to ask before investing:
Where do I stand in terms of debt?
What are my expenses?
How much of my income should I set aside to reach my financial goals?
What do I want my investment to do for me?
What should I invest in?
Do I know the current tax benefits that are available to me?
Where do I see myself three, five, 10 years out of school?
Where do I want to live? What is the cost of living in that area?
There are no right or wrong answers to these questions, Haugabrook said. But how you answer will determine if you should or shouldn’t invest.
Haugabrook said, “There’s no magic number. It all depends on what you have to work with . . . everyone’s situation is different.”