Thousands of college graduates are entering adulthood and may need to start thinking more about money management.
Author, self-made millionaire and host of the I Will Teach You to be Rich podcast, Ramit Sethi, revealed the “simple” step college graduates need to take to become financially successful in the future.
According NBC 10 PhiladelphiaSethi’s advice for college graduates to achieve financial success is to “invest 10 percent” of their salaries each year.
‘At the end of the year, increase that by one percent. Do this as long as you can and you’ll be a multimillionaire,” he told CNBC Make It earlier this month.
Sethi, who also starred in the 2023 Netflix documentary series How to Get Rich, has years of professional experience and is the founder of IWT.
Author and millionaire Ramit Sethi suggests that college students consider investing 10 percent of their salaries each year for future financial success.
Sethi, who starred in the 2023 Netflix documentary series How to Get Rich, is the founder and CEO of IWT, a website that hosts more than a million readers a month.
According to Sethi’s LinkedIn, his parents immigrated to the United States in the 1970s from India.
“With four kids and one income, they couldn’t afford to send me to college, so I built a system to apply for over 60 scholarships,” she wrote in her profile description.
He then received a full scholarship to Stanford University, where he earned bachelor’s and master’s degrees in 2004 and 2005.
However, after graduating, he admitted that he took his first scholarship check, invested it in the stock market, and lost about half of it almost immediately.
This incident inspired him to learn about money and that what he learned during his studies was “irrelevant.”
Today he runs IWT, a website that hosts over a million readers a month interested in learning more about business, careers, trading, psychology and money.
His 2009 New York Times bestseller, I’ll Teach You How to Be Rich, is a six-week financial program for people ages 20 to 35.
However, the steps he discussed with NBC 10 Philadelphia on how college graduates will be successful may be easier for alumni to understand.
Sethi’s 2009 New York Times bestseller, I’ll Teach You How to Be Rich, is a six-week financial program for people ages 20 to 35.
The first thing a college graduate should do to get started is open their own brokerage account, traditional IRA, Roth IRA, or any other type of investment account.
In order to do so, the college graduate must provide information such as a driver’s license and social security number.
Once the account is opened, its owner can begin depositing money and select which types of funds they would like to invest in.
NBC 10 Philadelphia also suggests that the account holder consider setting up their investment account to receive automatic deposits.
The investment will continue to grow and will work well for the college graduate seeking financial success.
Despite Sethi’s suggestion to invest 10 percent of your salary each year, college graduates may not have to start doing so right away.
It’s best for college graduates to start investing early so their money has more time to grow through compound interest.
According FidelityCompound interest is when the interest you earn on a savings or investment account generates interest of its own.
This means that the investment account holder can earn interest on their initial balance and interest that is added to the total amount of money over time.
An example of this would be if a college graduate invested $1,000 and earned an annualized return of 7 percent.
This would result in your investment increasing to $1,070 for the next year and you would earn 7 percent of your total balance the following year.
If college graduates started contributing $100 to an investment account that generates a 7 percent annual rate of return when they are 21, their total could be more than $1.4 million by the time they are 65.
“By starting your first job upon graduating college, you’ll set yourself up to live a rich life,” Sethi said.