4 answers

Learn about investing

Asked Branchburg, New Jersey

I'm a mechanical engineering university student with 2 more years of school. I started reading Rich Dad Poor Dad and I am interested in investing and increasing my financial knowledge.

For those with insight and experience, what is a good way to start investing after I graduate or maybe even before?
What laws and regulations should I be aware of when it comes to investing? (I am particularly interested in understanding how taxes work)
#business #finance #investing #beginner #college #advice #money

4 answers

Katy’s Answer

Updated Minneapolis, Minnesota
401K - start right away and watch it grow. In addition, a Roth is never a bad way to go. The other thing you should do is eliminate high interest debt. Student debt is okay as it usually carries a low interest rate. The same applies for home owner debt. It's also a good idea to watch your investment options within your 401K plan. When you are young, typically you will want a higher risk/return portfolio then when you are older. If you can, and are comfortable with it, stay away from the managed funds. They tend to have higher fees. Also, if you are healthy enough, invest in the HSA. It has a triple tax savings. Don't lease, buy your car and fix it instead of getting a new one. The best advise with the most impact both long term and near term though is not to pay interest on anything.

Claudio S’s Answer

Updated New York, New York

Based on my experience, the best way to learn about investing is by "doing" or investing your personal money. I remember the day, I first saved $1k, then $10k at a local bank. Then, I realized that bank savings is not going to make me a millionaire. I started looking into other options, where I can put my money to work at a higher return than what I am getting at a bank which is literally nothing. In the process, I learned about the concept of risk and return (i.e you have to take some risk in exchange for better returns). When I had $100k, I learned about "diversification" (i.e. you have to invest in stocks, bonds, real estate, domestic vs. international, mutual funds vs. ETFs, etc). If you are diversified, the market's ups and downs are less painful (i.e some investments will go up and some will go down but taken as a whole, you may come out positive). Reading about investing will help you understand the concepts while actually doing it will help you understand what works and does not given your goals, appetite for risk, age, health, family situation, etc.  

So, start saving now and then slowly use what you learned in textbooks/books by investing personally. I can assure you that this approach worked for me and a good dose of discipline. I was featured in CNN Money Magazine a while back under the "How I Saved $1m " series.  

Willy’s Answer

Updated Katy, Texas

Hi Joi!

It’s nice to hear that you are already thinking about investing at such a young age ! I suggests that you start contributing to a retirement account such as an IRA but there is maximum limit on how much you can contribute in a year. Since you are less than 50 y/o , you can contribute to a maximum of $5500 each year then after you turn 51 y/o you can contribute to a maximum of $6500 each year. Secondly, once you get a job and working for a company, you can enroll in their retirement plan such as 401K etc that can be automatically deducted from your paycheck . Be mindful that your IRA and 401k are not taxed by the IRS but once you make a withdrawal from these accounts before you reached the age of 59 1/2, you will get a penalty. Thus, it is taxable. Also, there are different types of IRA that you can choose from depending on your situation. I would recommend visiting some websites that may be useful to you. One is www.bankrate.com for either savings, credit or retirement planning you may need. Also, try to go to different retirement companies that offer IRAs such as fidelity, t Rowe price, vanguard etc. . But, my best advice to you is finished you studies first and think of contributing for your retirement once you have your career in place. Hope this answer your question!

Jimmy’s Answer

Updated Rockville, Maryland

I am not a professional in finance/ economics/ risk management so I am just giving my best advice here. 

You can start with the free investing app like Robinhood, Stash and Acorn(Minimal monthly fee with free 1 month trial) to get your feet on the ground first.

With Stash and Acorn, you will be introduced to those ETFs which you can start to explore your view and research into all companies that you are interested in. You can use Auto Stash (or Acorn's feature to put in your money weekly/ monthly, which only requires $5 to start your account and $5 for each deposit into your account). 

I was using Stash and Robinhood to start personally what I would do is introduce these apps to a newbie. It works well for me to get into the investing world. 

You still have to report for tax for your earnings but that will happen for annual tax filing season. Those apps will send you the required documents that you need for tax filing. 

Jimmy recommends the following next steps:

  • Explore Stash, Acorn, Robinhood and etc......