In CASH MANAGEMENT, Investing

Now more than ever, it is essential to save and invest.  With pensions becoming a thing of the past and individuals are responsible for their financial future.  As such, newly college graduates should start saving and investing from day one.

Here are a few simple ways to get started:

Start small

Recent graduates should consider investment accounts that would allow for small investments. First, always start with your employer’s 401(k) plan if that is an option. Many employers match dollar for dollar, so of course, you should not leave free money on the table. If a 401(k) plan is not an option, consider low cost online brokerage accounts to get started. Lastly, seek out apps that may be helpful when it comes to investing, such as Acorns that allow you to invest smaller amounts.

Start early

For younger investors, time is essential. The magic of compounding is powerful. For instance, if a person starts to save $2,400 (approx. $200 per month) at the age of 20 years old (assuming a rate of 6%), he or she will have approx. $400,000 saved a the age of 60. However, if that same person waits until the age of 40 to start, assuming the same facts, he or she will only accumulate $100,000.

Start now

Parents can help their children start now. Parents can play a significant role in investing, entrepreneurship, spending skills and so much more. As such, parents can opt to open custodial brokerage accounts for their children.  These accounts are held in the name of the parent until the child reaches the majority. Parents can also take the time to educate children about the importance of investing.

Kemcents’ Tip

If children are older and have earned income, they can opt for a Roth IRA, which allows individuals to stash cash away and earnings can grow tax-free. While individuals are not able to get a deduction for taxes, you can contribute up to $6,000 for the year 2019.

Kemberley “Kemcents” Washington is a certified public accountant (CPA) and owner of Washington CPA Services, LLC.  She is the author of several books.  They include The Ten Commandments to a Financial Healing and 21 Days of Powerful Breakthroughs.  Check out Kem on everything social media at @kemcents.

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