Thrifty Thinking: Investment Tips for Recent Grads

Starting this week, millions of college grads are morphing from letter-clad students into grown adults with real financial responsibilities, including paying back student debt, house rent, auto insurance, and a new wardrobe! Very few of them would add retirement savings to the short list!

But 401k expert and Founder of 401k Investor, Wayne Connors, says they MUST. Here’s why: (and some tips on how to)

1. Yes, there are several reasons college grads should start investing in their 401k and not delay: 

1. Tip 1: Investing early means you don’t have to invest as much, since your money has more time to grow. A 22 year old only needs to invest $3,000 a year to have $1 million at age 65, while a 40 year old needs to invest $13,000 a year. 

2. Tip 2: Investing at a young age allows to earn a greater rate of return on your money. The more time you have to invest the more you can allocate your money to stocks which can earn you a greater rate of return, meaning a larger nest egg. 

3. Tip 3: Every $1 saved at age 22 is worth $30 at age 65. The earlier you start saving the larger your retirement account will grow.

2. How much should they invest?

1. Tip 1: Invest at least enough to receive your company’s full matching contribution. Your company’s match is free money. By contributing at least 5-6% of your annual income you can earn a 100% gain on your money every year. 

2. Tip 2:  Investing more than 6% of your annual income will allow you to retire earlier. You could retire by age 55 if you contribute 10% annually.

3. Controlling your 401k plan fees will increase your account balance by more than 20% at age 65.

1. Questions to ask about your 401k plan fees so you don’t’ get ripped off.
1. Who is paying the cost of running our 401K plan – me or my employer?
2. If I am, what percentage of my 401K balance is going to those fees?
3. Do I pay more in fees the bigger my account gets?
4. Does my employer offer a brokerage account option?