College, in and of itself, is a journey. However, once you have graduated, you are now ready to take on life’s next challenge and begin planning for your retirement. After all, graduating college is only the first step – you’ll want to set yourself up for success in the long run, as well.
While it may seem difficult to begin investing and saving money when you are fresh out of college, there are multiple ways you can go about opening your own investment accounts. Below, we describe a few of the best types of investment accounts for recent college graduates.
Roth IRA Accounts
Unlike traditional retirement accounts, this particular account has its own advantage – it is an after-tax account. When you first start out, after college, you may be worried about money. Sure, you want to save your money, but you aren’t sure when you might need that money you’ve put away from savings. With a Roth IRA account, you contribute to it after taxes have been taken out of your paycheck. The good news here is that, should you need to, you are able to withdraw the funds at any time with no tax penalties for early withdraw. This option may be perfect for college students who are concerned and potentially unsure of the stability of their futures.
401(k) and Similar Accounts
Many employers offer 401(k) options – an investment and retirement account. This account is contributed to before your employer taxes your paycheck, which, many individuals feel, makes it a worthy investment as they have less taxable income. However, should you need to withdraw the funds early or switch employers without the account rolling over, you may find that you are subjected to tax and fees.
Taxable Investment Brokerage Account
This account, which you contribute to independently, may often be offered by your bank. This is an after-tax, individual investment account. There are a variety of different types of accounts you can choose from, with differing interest rates and early withdrawal penalties.
There are a variety of types of accounts you can utilize, depending upon your personal preferences and needs, but these are often the best for starting out.