8 Top Tips on How Fresh Grads Can Start Investing Now

April 12, 2023

Embarking on your investment journey as a fresh graduate can be daunting, especially when you’re grappling with a low initial pay and the rising cost of living.

However, it is important to start investing early in your career as it will provide a significant long-term advantage.

Here are eight great strategies that new graduates can use to explore starting investing, managing their finances, and setting up a good foundation for future financial success.

1. Create a budget and establish financial goals

The first step in managing your finances as a fresh graduate is to create a budget that outlines your income, expenses, and savings goals.

By tracking your spending habits, you can identify areas where you can cut back, allowing you to allocate more funds towards investing.

Set clear, realistic financial goals that align with your investment objectives, such as saving for a down payment on a home, building an emergency fund, or planning for retirement.

2. Prioritise paying off high-interest debt

Before you start investing, focus on eliminating high-interest debt, such as credit card balances and personal loans.

The interest rates on these debts can significantly hinder your ability to save and invest. By paying off these debts first, you’ll free up more money to allocate towards your investment goals.

Of course, ideally, you wouldn’t have any high-interest or interest-bearing debt to pay off in the first place.

3. Establish an emergency fund

Having an emergency fund is crucial for managing unexpected expenses without relying on high-interest debt.

Personally, I suggest you aim to save about three to six months’ worth of living expenses in a high-yield savings account.

Once you’ve established your emergency fund, you can then shift your focus to investing.

4. Explore low-cost investment options

While it is tempting to go after the next big investment asset idea or hot tip, a fresh graduate with limited funds will find it more rewarding to minimise the investment fees incurred.

This is why I encourage fresh graduates to consider low-cost investment options, such as index funds, exchange-traded funds (ETFs), and robo-advisors.

These options often have lower fees and minimum investment requirements compared to traditional mutual funds, making them more accessible for new investors.

5. Take advantage of employer-sponsored retirement plans

If your employer offers a retirement plan, take full advantage of it.

Not only do these plans provide tax benefits, but many employers also offer matching contributions, essentially providing “free money” for your retirement savings.

Contribute at least enough to receive the full employer match and consider increasing your contributions as your income rises.

6. Embrace the power of compound interest

As a young investor, you have time on your side.

By starting early, you can harness the power of compound interest, which allows your investments to grow exponentially over time.

Even small contributions can grow into a substantial nest egg when you invest consistently with a long-term perspective.

7. Maintain a disciplined and long-term approach

Investing is a marathon, not a sprint. As a fresh graduate, it is essential to adopt a disciplined, long-term approach to investing.

While I believe that there are trading opportunities that arise on occasion, a new investor should avoid acting on impulse decisions, news and rumours.

Rather, they should stick to a long-term investment strategy with regular reviews.

8. Stay informed and continue learning

The investment world continues to evolve and rapidly expand.

It is vital for investors to keep informed of the latest updates for long-term success.

I think that it is important for you to read financial news regularly, attend seminars or webinars and consider consulting with a financial advisor if you need further guidance.

This will help you to be better equipped to make informed decisions about your investments.

Start your investment journey today

Starting your investment journey as a fresh graduate may be challenging, but with careful planning, budgeting, and a long-term perspective, you can set yourself up for financial success.

By prioritising debt repayments, establishing an emergency fund, and exploring low-cost investment options, you can begin building wealth and achieving your financial goals.

Disclaimer: ProsperUs Investment Coach Billy Toh doesn’t own shares of any companies mentioned.


Billy Toh

Billy is deeply committed to making investment accessible and understandable to everyone, a principle that drives his engagement with the capital markets and his long-term investment strategies. He is currently the Head of Content & Investment Lead for Prosperus and a SGX Academy Trainer. His extensive experience spans roles as an economist at RHB Investment Bank, focusing on the Thailand and Philippines markets, and as a financial journalist at The Edge Malaysia. Additionally, his background includes valuable time spent in an asset management firm. Outside of finance, Billy enjoys meaningful conversations over coffee, keeps fit as a fitness enthusiast, and has a keen interest in technology.

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