New grads are facing one of the worst job markets in years. Unemployment continues to rise. The financial markets are in the red and few companies are hiring. With so much doom and gloom to worry about what’s a new college grad to do?
You may not be able to get the high-paying job you wanted right off the bat in today’s economy. That’s just a fact of life. But the silver lining is, if you start investing anyway, you might be able to make up the difference on the back end. You may end up with a more moderate income than you expected, but that's no reason to stave of contributing to a retirement account. In fact, now is the best time for new college grads to start investing. If you don’t you’ll really be kicking yourself when it’s time to retire.
Think about the stock market like a supermarket. If suddenly virtually everything in the supermarket went on sale 40%, would people buy more or less food? Well, thanks to the recession, the stock market is on sale right now. So, right now is the time to buy. The time length of an investment is a major contributor to the success of that investment and getting started right out of college can net you hundreds of thousands more dollars in retirement than if you waited 5 or 10 years. Besides, when the market rebounds you’ll end up getting less shares for your investment.
Your first stop should be your employee retirement plan, or 401(k). If your new employer offers matching funds, you should aim to invest in that account up to the maximum matching funds amount. If you don’t contribute up to that limit, you will have missed out on free money your employer provided for your retirement.