Thousands of college graduates are reaching adulthood and may need to think 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 for graduates to be financially successful in the future.
According to NBC10 PhiladelphiaSethi’s advice to graduates to achieve financial success is to invest 10 percent of their salary every year.
‘Increase that by one percent at the end of the year. Do this for as long as you can and you will be a multi-millionaire,” he told CNBC Make It earlier this month.
Sethi, who also starred in the 2023 Netflix docuseries How to Get Rich, has years of professional experience and is the founder of IWT.
Author and self-made millionaire Ramit Sethi suggests that students want to invest 10 percent of their salary every year to be financially successful in the future
Sethi, who starred in the 2023 Netflix docuseries How to Get Rich, is the founder and CEO of IWT – a website that receives over a million readers monthly
According to Sethi’s LinkedIn, his parents immigrated to the US from India in the 1970s.
“With four kids and one income, they couldn’t afford to send me to college, so I built a system to apply for 60+ scholarships,” he wrote in his profile description.
He subsequently 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 received his first scholarship check, invested it in the stock market, and almost immediately lost about half of it.
This incident inspired him to learn about money and that what he learned during his education was ‘irrelevant’.
Today he runs IWT – a website that hosts more than a million readers every month interested in learning more about business, careers, negotiation, psychology and money.
His 2009 New York Times bestseller, I Will Teach You To Be Rich, is a six-week financial program for people ages 20 to 35.
The steps he discussed with NBC 10 Philadelphia on how graduates will be successful may be easier for former students to understand.
Sethi’s 2009 New York Times bestseller, I Will Teach You To Be Rich, is a six-week financing program for individuals between the ages of 20 and 35
The first thing a graduate should do to get started is open their own investment account, traditional IRA, Roth IRA or another type of investment account.
To do this, the graduate must provide information such as a driver’s license and social security number.
Once the account is opened, its owner can start depositing money and selecting what type of funds he wants to invest in.
NBC 10 Philadelphia also suggests that the account holder consider setting it up so that their investment account receives automatic deposits.
The investment will continue to grow and work well for the graduate who wants to be financially successful.
Despite Sethi’s suggestion of investing 10 percent of a salary each year, graduates may not need to start doing so right away.
It’s best for college graduates to start investing early so their money has longer to grow through compound interest.
According to FidelityCompound interest occurs when the interest you earn on a savings or investment account itself earns interest.
This means that the investment account holder can earn interest on their initial balance and the interest 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 their investment growing to $1,070 next year and earning 7 percent of their full balance the following year.
If college graduates started contributing $100 at age 21 to an investment account that generates a 7 percent annual return, their total could be more than $1.4 million by the time they are 65.
“Starting your first job after graduation sets you up for a lifetime of rich living,” Sethi said.