After paying student loans dutifully for about 5 years, I one day took a wayward glance at my payoff amount at the bottom of my statement. I was a bit surprised, and a bit excited to see that my four years of juggling Pre-Med and Contemporary Irish Literature were almost half paid for – and in a few short years, I’d be able to be rid of the shackle that the Department of Education blessed me with.
Then, I thought of the money I’d nested away in the summer of 2009, shortly after I’d graduated high school. That money lay in a State Farm Brokerage Account that I’d never added money to – and kind of forgot about. I always knew it was doing its thing as part of my savings portfolio, but really the only time I thought of it was during tax season when I had to claim capital gains tax on the interest.
When I went to access the account, I made the exhilarating discovery that I could be debt free only 5 years after graduating from school.
My investments hadn’t just done well, they’d done GREAT. I’d seen a yearly return that was an average of 30%, and my initial investment had doubled in value four times.
In the investment world, that kind of return is almost unheard of. I received that kind of return because of luck, and a little bit of knowledge from my dad – but it was overwhelmingly luck.
The day I went to deposit my check that comprised of my graduation party gifts and a lot of summer work money, the stock market had fallen 900 points. I purchased shares the next day and benefited from rock bottom stock prices on the mutual funds I’d selected with my financial adviser.
As the market climbed under the Obama Administration, my little nest egg continued to grow without any attention. All the returns were reinvested, and occasionally I had to look at the balance to do my taxes.
The true benefit of the kind of investments I’d made – mainly mutual funds, was that they do their best over time. When I first met with my adviser, we were looking at keeping the investment over 45 years and saving it for retirement. Just letting the account sit for five years, it was able to grow without me worrying or taking the money out prematurely. I have no idea what this account’s balance looked like during stock market wobbles and corrections but when the market recovered, so did my investment.
The second benefit I have is that this was a brokerage account, which meant I had no penalty for taking the money out. I could use it as a high yield savings account if I wanted to. However, the money will serve me much better paying off my student loans, and being an emergency fund moving forward.
You don’t have to have a big check from a graduation party to start successfully investing. I would consider myself very successful, but I didn’t go to school for it, nor do I know very much about trends. Frankly, back when I was 18, my only concern was just getting a better interest rate on my savings. My father suggested speaking to our adviser after I’d noticed The Great Recession had made my checking account interest rate a whopping .01%. I told my dad that at that rate, it’d be better to buy stamps and hide them under my mattress than keep my money in the bank – and curiously asked if there was a better way to use my money.
And really, curiosity is all you need to get started with investing. If you approach the market not with fear, but with curiosity and excitement, you may find something exciting in 5 years too.