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Invest Early and Often

There's a reason why the phrase "interest compounding" is repeated over and over again in class after class and in infomercial after infomercial:  Unlike most other schemes, it actually works.  Plus, it's one of the keys to transition from having a decent salary to having sound assets that are not subject to the whims of the market.  In other words, it's how the wealthy become wealthy.

The key to taking advantage of interest compounding is to start an investment so that compounding can start.  Think of it as starting a garden:  once you get that first seed planted, it's official, and future growth can start to take hold.  Plus, your first investment provides a reference point for making future investments.  You can see what works, and what doesn't, and it allows you to develop a portfolio that has diversity and that meets your needs.

The particular types of investments and how much you participate in each will vary based on how much you plan to invest, your goals, your timeline, and your taste or distaste for uncertainty.  The 3 primary classes of investment:

• Principal-Focused
• Return-Focused
• Timing-Focused

Web sites like Young Money are particularly geared toward people who have just left college and provide good guides on your first investments.  Student Loan Chaperone can also help with balancing the payments you need to make on your loans and debts with the investments you'd like to make.  BankRate.com also lists several investment options.

Regardless of how you do it, do it now, even if it's for a marginal amount.  If you simply put $500 in a 3% interest CD, it will grow to $672 in 10 years, $903 in 20, $1,214 in 30, and $1,631 in 40.  Just think what you can do if you invest $10,000 in your first 3 years out of school.

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