ANALYSIS: Proud parents across the land are beaming with pride this spring as their young graduates walk across the convocation stage to start a new life.
The challenge can be daunting, but wise graduates understand the real lessons that set their course for the future have only just begun.
KCM Wealth Management financial advisor Adrian Mastracci has been pointing investors in the right direction for four decades. Here are his five money tips for new graduates:
1. Convert your passion to financial capital
Life is short and much of most people’s lives are spent working. Master something that inspires passion. While that’s not new advice, Mastracci says over time you need to convert that passion to “financial capital” to earn a living.
That could mean starting a business, maintaining a household or building a financial foundation.
2. Pay yourself first
As soon as you start bringing in money he suggests saving five to 10 per cent of gross income for the future.
The key is discipline and the best way to force yourself to save is through automatic withdrawals through your financial institution.
3. Avoid debt traps
Debt is a necessary part of life for most Canadians who want a higher education or a home to call their own. Mastracci advises graduates to create a repayment plan for existing debt and any other debt before it is acquired.
He advises young Canadians to live within their means and avoid borrowing for consumer goods with high-rate interest – especially credit cards.
4. Learn how to invest
The best investment lessons don’t come from success, according to Mastracci. They come from failure. He says the emotional reaction from the first loss or bear market reveals plenty about you.
Stick to the basics and manage your finances following time-tested concepts, and not the latest trends, Mastracci says. “Remember that boring is beautiful for your long run portfolio,” he adds.
5. Join an investment club
Mastracci says collaborating on research and making individual presentations at meetings can open up new opportunities to young investors. It can also help explain the logic behind investing as opposed to performance.
Investors can take what they learn from investment clubs and apply it to their own portfolios.
Dale Jackson is BNN's Personal Investor. Follow him on Twitter @DaleJacksonPI