Online Investing

Establish good credit with online investing

Since graduation frequently coincides with various life changes--including new jobs, moves, and sudden windfalls from generous relatives--it's also a unparalleled time to begin online investing as a recent young graduate. While you will receive plenty of advice and some tips, here are some other ideas for investing as a beginner and getting off to a good financial start.

1. Open a savings account online.

Although most fresh graduates aren't yet pulling down big salaries, the post-college years can indeed be a fair time to create a solid savings foundation. As a recent graduate, you may have received some cash gifts upon graduation; save at least part of the windfall. And if you are ingrained to living on a shoestring budget while at school, you are more accordant to find it fairly easy to save part of each paycheck once you start working, even if your money levels are still relatively low.

2. Investing for a beginner.

Start small, but get started, you might assume you need to have deep pockets to be an investor, but that that's definitely not the case. With online investing, you can find some terrific mutual funds that let you in the door for as little as $500; Morningstar's Fund Screener can help you match low-minimum offerings with other tempting attributes, such as low costs.

Even if market returns are virtually diminutive when you open a savings account online, over the next few decades, the benefits of getting an early start with online investing can be substantial: The 21-year-old who starts saving $1,000 a year and earns an annualized 5% on his money will have more than $150,000 when he turns 65; were he to wait even five years to begin saving, he'd have only $114,000 when it came time to retire.

3. Put online investing on autopilot.

Even investing veterans can attest to the fact that it's challenging to invest with discipline. As much as we all know that the goal is to buy low and sell high, it's a lot more pleasant to be investing for a beginner when everything's going up than when the market's in the toilet. Online investing on a uniform schedule is an especially big challenge for first time investors, who can find plenty of other ways to spend their hard-earned cash.

When you open a savings account online, use automatic investment plans, whereby you agree to invest a set amount every month. As a new graduate who has landed a first job, take part in a 401(k) or any other defined-contribution plan--a familiar type of auto-invest plan. Because the participant's money is deducted from your paycheck on a pretax basis, contributions are particularly painless for beginning investor. Online investing also offers a number of mutual fund companies that allow you into their funds with a relatively low minimum if you sign on for an automatic investment plan.

4. Know the real meaning of prestige.

Whether it's an iPod or an Izod, as a beginner investor, learn early on the value our society places on status symbols. But those status symbols can be illusory: The person driving that expensive car could be on the verge of bankruptcy, while the one in the 17-year-old station wagon could pay cash for 20 shiny new Mercedes.

Some people never learn this lesson, but you're on a slippery slope if you start defining yourself by your material possessions and the illusory "status" they confer. Open a savings account online and set your online investing to autopilot to insure yourself the opportunity to build real wealth.