Millions of recent college graduates are starting careers, qualifying for 401(k) plans and trying to balance student debt with long-term saving needs and grown-up expenses. The new financial dilemmas can be mystifying.
Some rules of the game are pretty well known even among beginners, like the value of saving as much as possible, qualifying for the maximum employer match on the 401(k), building an emergency fund and emphasizing the growth potential of stocks over the safety of bank savings.
But experts offer a variety of tips that aren't quite so obvious, like the value of taking more risk than a beginning investor might be comfortable with at first. Investors in their 20s, for example, are typically urged to put most of their long-term investments into stocks. Simple index funds tracking the Standard & Poor's 500 returned an annual average of about 14 percent over the past five years. Bonds typically pay a fraction of that, and cash savings like bank accounts earn almost nothing.