I was going back through some old photos recently and noticed a huge change in my clothing between the end of my college life and the start of my career. It wasn’t so much that my style changed, but my financial situation had. Of course, I spent more than I saved in my first year working. After my first year at my first job, I had a short period of time where I was down to hard pan. I ended up with a single dollar to my name. While most of my instincts had been to spend it on something just for the sake of spending it, I decided to keep it. That same dollar still sits in the packaging of my Smashing Pumpkins’ The Aeroplane Flies High box set. I smiled when I saw it in the background of an episode of New Girl.
Of course, now that I’ve been working for many years, I know better places to keep my money than my physical music collection. Or maybe I should put a little into vinyl sleeves? The key is to diversify, after all.
Roth IRA
If you’re beginning to get serious about your future, this is one of the most stable investments you can make. A Roth IRA is primarily intended for retirement funds, but these funds can be withdrawn, tax-free, after a certain number of years. (This is because Roth IRAs are funded with after-tax dollars.) Many investors agree that this is one of the most stable investments you can make while working.
Financial CDs
Rather than pinning my hopes on The Smashing Pumpkins (which would have been a terrible investment in the late 90s), it’s often better to invest in a Certificate of Deposit. When you make money from real estate, this can be a good option for ensuring that money stays put. Also, a CD can earn you about 2.20% APY, which works, especially over a shorter number of years.
High Yield Savings Account
For absolute beginners in the world of savings, this can be the best bet. High yield savings accounts usually require a rather small initial deposit, and give a bit more back than a traditional savings account.
529 College Savings Plan
If you are looking to start a family, the 529 is a terrific plan to fund a future college education. Student debt is one of the biggest obstacles to financial freedom for so many young people, so why not set the next generation up for success? Talk to your financial adviser or local credit union to get one set up.
Money Market Account
The money market account can be the high risk, high reward. A money market account requires a rather large initial deposit and minimum balance. They also limit withdrawals. Because they are not insured by the FDIC, it is possible to lose out in a money market account. That being said, they can also bring in more interest than other savings accounts. As mentioned earlier, it’s about diversifying your savings.
As mentioned before, it’s about diversifying. Having some amount of money in different savings accounts is usually a good solution. Diversifying helps your money go further. Do your research and pick a couple of solutions that work best for you. And maybe even for sentimental reasons, you can keep a buck or two in the albums of your old favorite band.
