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My Best Investing Advice for Recent College Graduates


My Best Investing Advice for Recent College GradsLast month, I got an email from a reader who wanted to know how I’d invest if I recently graduated from college. This is an interesting question. On one hand, we are doing pretty well financially so that means I did a lot of things right. However, I also made plenty of mistakes when I was young because I had to learn how to invest by myself through trial and error. It would have been much better if I had someone to teach me about investing. Even a short investing guide like this would have been extremely helpful.  Anyway, I’ll answer the question to the best of my ability and hopefully you can add to it as well. Here is the email.

I really enjoyed reading a few articles on your blog today as I stumbled across it.  I’m 23, married, and a year out of college.  I’ve always been intrigued by the idea of retiring early and having my money work for me.  If you could put yourself in my shoes, what would you do to retire even quicker than 40?  I also like the idea of creating passive income but don’t have the money to “buy” it.  Are there any low investment passive income ideas you have?  I’m not afraid of working hard.

Lots of Potential, but no money

When I was 23, I didn’t have much money to invest. I drove a 15 year old Toyota, lived in a cheap apartment, and didn’t have a partner to help me reach my goals. At that point, the best thing going for me was a steady engineering job. My income was pretty good for a 23 year old guy and I was able to start investing in my company’s 401k plan right away. That was the first time I had any money to invest and it is a good first step to a financially secure future. However, my first advice is a little different.

Invest in yourself first

When you’re 23, the best thing you can invest in is yourself. You probably aren’t making a lot of money and you need to ramp up your income as quickly as possible. Passive income is awesome, but you won’t get it rolling for quite a while. If you have $1,000 to invest in the stock market, you’d make maybe $70 in dividend income and appreciation. That’s peanuts.

At 23, you need to concentrate on building wealth first. For most people, this means making more money from your main job. This can be achieved in many ways.

  • If your career has good earning potential, then work as hard as you can to get raises and promotions.
  • Improve your skill set. You can take classes, get advanced degrees, earn certifications, and/or just learn a lot at work.
  • It’s just as important to make connections and learn how to communicate effectively. Find a mentor who can help you rise. Learn how to make connections and become friends with smart people you admire. Also, figure out how to ask for a raise. (I totally failed at improving my soft skills.) A great resource is your alma mater’s career center. Mrs. RB40 wishes she had taken advantage of the great tools that her university had when she had the chance.
  • Figure out a way to stay interested in your career. If you run into problems, then try moving to another company or changing job within the same field. Some of my friends changed from engineering to technical marketing and it’s working out for them. Don’t stay in a job you hate because of money, it’s toxic. (Another mistake I made.)

However, not all jobs have good earning potential. If you’re a teacher, accountant, paramedic, reporter, or other professional with a relatively low median salary, then you need to think creatively and hustle hard.

  • Start a business on the side. This one is tough, but it can pay off big if you’re lucky. Recently, a reader commented that he started a small business, hired 2 people to run it, and now he is living off the residual income. That’s the way to go if you can figure it out.
  • Change to a more lucrative career. This would be tough, especially if you are in a job you love, but it might be the only way to earn more.
  • Start a blog. I’m very lucky that I started Retire by 40 in 2010. This blog is generating moderate income and it will enable us to put off withdrawal for quite a few years. Not everyone will be able to make money from their blog, but it’s the gateway to the online economy. Many bloggers created courses, wrote books, became freelance writers, started a FBA business, and many other things. Blogging is a great side project and anyone can start blogging. Here is my tutorial on How to Start a Blog and Why You Should.
  • Side hustles. Actually, I’m not too excited with side hustles unless they have the potential to grow into a business. For example, walking a dog might generate a few extra bucks, but you’re just trading time for a little money. I’d invest my time in something that could grow or teach you new skills. Don’t do manual labor just to make a few bucks.
  • Go the extreme frugal I don’t like this because most people won’t be able to sustain extreme frugality for the long haul. It’s an option if you don’t make much money, though.

Basically, you need to make money first before you can invest a meaningful amount. When you’re young, you have a lot of potential, so use your time wisely.

Minimize lifestyle inflation

It’s also just as important to minimize lifestyle inflation. When people make more income, they spend more too. You need to avoid this trap and invest the extra money instead of ratcheting up your lifestyle. One of the best ways to keep your lifestyle in check is to track all your expenses. That way you know how your money is spent. A lot of things people spend money on aren’t adding much to their lives. This paragraph is short, but it is a very important point. Everyone needs to put saving and investing first before spending on unnecessary items.

Become a real estate investor

Once you make more income and have a little savings, then it’s time to start investing in earnest. When I was 23, I had a good income, but not much savings. How should you invest when you have just $1,000 extra per month? (The $1,000 is just an example.) In this situation, the best thing to invest in is a house. Why?

  • You can borrow money to buy a house. If you have good income, a bank will jump at the chance to lend you some money.
  • You can generate some income by renting out a bedroom or two. This might be tough if you’re married, but maybe you can go the AirBnb route. We purchased a house soon after we got married and we had a couple of roommates over the years. They were hard working engineers, so they were never home anyway. Young engineers make great housemates.
  • You can turn this first home into a rental later. That’s the easiest way to start investing in a rental property.

I would go for a starter home and avoid borrowing too much money. I’m not sure about now, but back then, the bank would approve a huge loan. A lot of people will get the biggest house they can and they’ll over extend financially. That is not the right way to invest. If you really want to start generating passive income, then buy a starter home first. You can turn it into a rental when you’re ready to move into a bigger home.

Another really good option is to buy a fixer upper. You’ll learn many essential DIY skills and you can add a lot of sweat equity into the home.

***Readers suggestion***Buy a duplex or a multiplex instead of a house. You can rent a unit out and really become a landlord. It’s harder to get financing, but you might be able to do it. I suggest buying in a good area.

Some people think being a landlord isn’t the right fit for them, but you won’t know until you tried. It’s best to try it early on and see if you can do it. If you don’t like being a landlord, then you can move on to try something else. Many successful real estate investors retired early with their rental income.

Invest in the stock market

The stock market is great once you have a bigger net worth to invest. The stock market is more passive than real estate and it has a great track record over a long investing horizon. Our dividend portfolio is my favorite investment because it pays out regularly and it doesn’t require a lot of maintenance.

When you’re young, you don’t have much money to invest, but it is still very important to start investing in the stock market right away. This is primarily due to 2 reasons.

  1. Compound interest. Basically, you earn more money every year with the investment you made. This is a very powerful tool when you’re young. At 23, your investment will compound for many years. If you invest $1,000, it will turn into over $20,000 after 40 years. (At 8% appreciation.) Invest $1,000 every month and you’ll have over $3 million at 63. The earlier you invest, the more it will grow.
  2. Learn how to invest through experience. We learn best from experience. Everyone needs to go through a few market cycles before they find their investing style. If you’re younger than 30, you don’t even know what a stock market crash is like. Once you go through a few major crashes (50%?), then you’ll learn from the experience and become a better investor.

Even if you don’t have a lot of extra money, you still should invest in the stock market. The easiest way to do this is to invest in your company’s 401k. At least, you should contribute up to the company matching so you don’t leave any money on the table. Then keep increasing your contribution until you maxed out your 401k every year. I can guarantee that you’ll be a millionaire before you retire.

If your employer doesn’t offer a 401k, then investing with Vanguard is a really great start. Vanguard offer many low cost passive funds and you can’t go wrong with them.

Investing when you’re young

To summarize, here are my best investing tips for young 20 something out there.

  1. Invest in yourself and increase your active income.
  2. Invest in a house and turn it into a rental.
  3. Start investing in the stock market so you will become a better investor.

When you’re young and hungry, go for active income. You have a lot of energy and you don’t have a lot of obligations yet. Once you have kids, then it will be a lot harder to put energy into your career or side business. Good luck!

What do you think? What’s your advice to our young readers?

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Joe started Retire by 40 in 2010 to figure out how to retire early. He spent 16 years working in computer design and enjoyed the technical work immensely. However, the job became too stressful and Joe retired from his engineering career to become a stay-at-home dad/blogger at 38. Today, he blogs about financial independence, early retirement, investing, and living a frugal lifestyle.

Passive income is the key to early retirement. This year, Joe is increasing his investment in real estate with CrowdStreet. He can invest in projects across the U.S. and diversify his real estate portfolio. There are many interesting projects available so sign up and check them out.

Joe also highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help DIY investors analyze their portfolio and plan for retirement.

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{ 49 comments… add one }
  • Taylor Wright December 2, 2019, 7:57 am

    I like that you said that if you’re under 30 then you can experience market crashes to become a better investor. Since I graduated from college six months ago, I want to start investing some money to have it work for me in the future. Thanks for the tips and I’ll have to find good ways to invest my money now.

    • retirebyforty December 3, 2019, 1:28 am

      You’re very young so you can take some risks. Even if you lose 50% of your investment, it’s not a huge amount. Losing 50% when you’re 55 is a lot worse. Good luck!

  • Dividend Diplomats March 5, 2017, 2:50 pm

    Some solid pieces of advice. In hindsight, I wish I would have bought a house to start building equity at a young age versus renting. Could have rented it out to a roommate and essentially had my mortgage paid for me. Oh well, you live and you learn from that.

    Another great piece of advice is avoiding lifestyle creep. When you are young and surrounded by other employees that are into new, expensive cars, living in flashy apartments, and spending tons of money at the bars, it is hard to remain frugal, save, and continue to pay down student debt/do the things you need to to to set yourself up for success financially in the long run. It is hard, but avoiding this creep is CRUCIAL for success.

    Although I don’t entirely agree that $70 is peanuts in the grand scheme of things for dividend income. You have to start somewhere, right? There were plenty of months my first year of investing where I had single digit dividend income. All that did was motivate me to keep on investing and try to double that amount each quarter. But as you said, each person stumbles into their own investing and passive income strategy. There is no one size fits all approach for each person as each situation is different.

    Thanks for the great read!


  • Tom March 4, 2017, 4:18 am

    Great tips. I wish I knew them when I was 20.

  • Mr. All Things Money March 3, 2017, 12:24 pm

    Good advice! Similar to you Joe, I also started my engineering career at 23. I guess you and I are lucky in a sense that we chose careers that paid us quite handsomely for a starting salary which then allowed us to save more and invest right from the start. But like you, I didn’t know much about investing either at 23 and the best place to invest at the time was in my company’s 401k.

    For the first 10 or so years, I just focused on growing my career and moving up the corporate ladder and earning a bigger paycheck every year while regularly investing in my 401k. And btw, I still drive my 20 year old Toyota with half the dashboard lights dead 🙂

    It takes quite large sums of money (a million plus) and long period of slow and disciplined investment to grow a passive income big enough to cover all one’s expenses. There are simply no shortcuts.

  • Felipe March 3, 2017, 8:19 am

    Great advice indeed. Lifestyle inflation, side gigs, live below your means. Second jobs while you have energy (you won’t as you age). Volunteering is good and you meet others from different industries – networking while putting good energy out there. Roommates, while not always fun, sure help pay the bills. Great post!

  • Mr. Tako @ Mr. Tako Escapes March 3, 2017, 2:11 am

    Lots of great advice here Joe, and I think you’re dead on in your advice!

    The only thing I would add, is to try to avoid “social spending” when you’re young. It can be a significant chunk of a young person’s spending.

    You know — nights out on the town, trips to Las Vegas with your buddies….that kind of thing. It all adds up, and the social pressure to spend on those things is tough.

    I used to spend a heck of a lot more on “social spending”, and I regret it now. It was a huge waste of money! Wish I could have it back now.

    • Harry Bush March 4, 2017, 4:10 pm

      Do you also regret spending money on traveling and other experiences?

  • SavvyFinancialLatina March 2, 2017, 5:04 pm

    I’m 26 and I started reading Joe’s blog when I was 21, going on 22. So here is my take. Max out your tax advantaged accounts as priority 1 (401K, HSA, IRA). Then, if your company offers a good ESPP program, I would do it. My company offered a matching share for every share you bought and held for 3 years. I didn’t max it out and only stepped my foot in that water. Then, savings. Pay of debt. If you want to buy a house, some people do, do buy that starter home. Glad we did because we are now renting it out. Current net worth of $350K (DINKS). So glad I found Joe, and Ninja, and Budgets are Sexy. But I wish I had been even more aggressive my first 8 months out of school. I did make up for it afterwards.

    • retirebyforty March 2, 2017, 10:30 pm

      You guys are doing so well. Great job so far!
      You’re so much better off than I was at 26. 🙂

      • SavvyFinancialLatina March 3, 2017, 7:41 pm

        Thanks. It feels like slow progress compared to other bloggers who have made it to FI. Thank you for blogging 🙂

  • Diva Q March 2, 2017, 2:16 pm

    “If you’re a teacher, accountant, paramedic, reporter, or other professional with a relatively low median salary…”

    I’m an accountant with a CPA license. My 1st job’s salary in 2008 was $26K. I worked at a small accounting firm owned by 4 Jewish partners. They didn’t offer me medical benefits nor 401K. I stayed there for 2.5 years to get my license and since it was a small firm, I didn’t have to spend long hours during tax or audit season, so I had time to study for my CPA exams. I considered the low pay, no benefits was my tuition/fee to obtain my experience and license. I left after I got my license after 2.5 years, they tried to counteroffered and was shock that they didn’t provide any benefits to me. I thanked them and left. I doubled that salary 5 years later, and reached 6 figure income after 10 years of working, and today, after 19 years, I’m making $200K+ as an Accountant.

    From my personal experience, be persistent about your goal, pick the right industry, in my case, that accounting firm serve clients in the real estate industry, I then moved on to work in the property management industry as a property accountant, then moved on to work for private equity real estate funds as a fund accountant. These industries/positions require certain accounting skills that not all regular accountants have.

    Spend less than what you make. If possible, live with your parents for as long as you can to save on rent. I lived with my parents in a small 2-bedroom apartment that allow me to save 50% of my $26K income until 10 years later, when I can afford to buy a 2 bedroom condo which I let my parents live in now and was able to pay down a $320K mortgage in 7 years.

    If you can make good money, allow yourself to enjoy life a little. I allow my lifestyle inflation to go along with my salary because I know I can always save more than 50% of my gross salary (over $100k of saving a year from my $200k+ of salary after reaching FI in 16 years of working).

    • retirebyforty March 2, 2017, 10:29 pm

      That’s an amazing career. Congrats!
      Thank you for sharing your advice.

  • FinancePatriot March 2, 2017, 12:41 pm

    I think you gave this guy some great advice. From my own mistakes, this is the advice I would give him.

    1. Don’t buy any work life insurance, insure yourself instead with lots of investments
    2. Don’t buy your work short term disability policy. This is a total waste of money, especially for a male who can’t take maternity leave.
    3. Don’t pay for parking, if that is your situation. Even if you have to bike or walk a mile to work, do that instead of paying for parking (eventually when I found free on street parking when I was 25, I had to walk a mile each way to get to work, it was fantastic exercise and saved money at the same time. A win win).
    4. Start investing right away in your workplace retirement account. If it’s a 401k, invest at least up to the match, even if you have debt. This money will grow and motivate you to invest even more and cut even further back on your expenses.

  • Mark March 2, 2017, 12:27 pm

    All good suggestions except buying a house. Gosh, the current housing prices are not sustainable. Don’t do that ! Follow the example of millennial-revolution.com
    They do not spent their money in a house and were able to retire at 31

    • retirebyforty March 2, 2017, 10:23 pm

      Real estate is a proven way to build wealth. Being a landlord might not be for everyone, but you can’t deny that it works really well for a lot of people.

  • David Michael March 2, 2017, 11:20 am

    I’ll focus on the first step…get a job, a great job that pays well, offers a challenge, and makes a contribution to society, yourself, and your family. That means getting a decent education either in a trade school or a college degree with an M.A. these days. The simple act of paying for and obtaining training for a college degree now is a major challenge. Thus the hundreds of thousands who will be paying off their degrees, like a mortgage, for the rest of their lives. It’s different now, as compared to 40-60 years ago. I could work three jobs a summer, earn and save enough to pay for an Ivy League College degree in four years, that was $2000 a year for everything (1950’s and early 1960’s). Community college in California was free. Everything!

    Once you have a great paying job, save as much as you can to establish an emergency fund and then invest in something like a Retirement Fund from Vanguard, buy a house as soon as possible, then rent it out after you have purchased a second one. Then …dividend paying stocks for life so money just keep pouring in forever. Yes! Side hustles can accelerate everything, but it’s the 30-40-50 year compound interest that makes the difference. Time makes up for so many investing mistakes. But first…get a good, down-to-earth education that helps insure you a great paying job. Good luck!

  • Dave in Sunny FL March 2, 2017, 10:33 am

    1. Don’t “max out” your 401K beyond any employer match, until you have maxed out your Roth IRA. Would you rather pay tax on the seed, or on your eventual crop?
    2. Don’t “buy a house.” Buy a duplex; this is an even easier way to become a landlord than eventually renting out your first home. The person who wrote specifically wanted to jumpstart receiving passive income.

    • retirebyforty March 2, 2017, 10:21 pm

      Duplex is a good idea. I’ll add it to the main post. Thanks!

  • Fiscally Free March 2, 2017, 8:04 am

    I think it’s very important to keep your expenses low. Like you said, lifestyle inflation will wreak havoc on your financial goals.

    If you don’t spend too much, you will be able to save more and retire earlier. It’s a virtuous cycle.

  • K. McGarrett March 2, 2017, 7:55 am

    Learn all the D.I.Y. skills you can.

  • Lazy Man and Money March 2, 2017, 7:45 am

    Ironically, I was reading this while getting paid to walk a dog.

    I have a side hustle of boarding dogs which is certainly some work, but I wouldn’t consider it manual labor. Normally there’s very little time-trading as feeding and picking up poop doesn’t take too much time. Today, I picked up a client’s dog while I was walking my own dog. Usually, I don’t do too much dog walking… the dogs play together. It even saves me from having to walk my dog as much.

    However, dog walking has some great benefits. Walking is great exercise that almost everyone can do. Few people (if any) are going to pay you to go to the gym. Also, you can listen to your favorite podcast or some mind-clearing music. I think it’s a rare triple win activity. Earn money getting exercise and learning some business tips? Why not?

    That minor point aside. This is a great guide. The only thing I might change is that if you don’t have 401k do the investing in a Roth IRA.

    Some people in the comments mentioned buying a house and renting out the other units. If that’s possible, look into a tiny home as your starter home. At 23, you shouldn’t have too much stuff and you might be used to living in a small area (a college dorm) anyway. Keeping the mortgages low will allow you plow more money into savings and invest it. Similarly a condo can be a wise choice too.

    • retirebyforty March 2, 2017, 10:20 pm

      Thanks for your input about dog walking. 🙂
      I think that’s a great side hustle at this point in your life. However, would you recommend it for someone younger?
      I left out the Roth IRA because I didn’t want to make it too complicated.

  • freebird March 2, 2017, 7:36 am

    My top tip comes from my biggest regret– “don’t wait to invest”. I started contributing to my 401k plan two years after I became eligible, and while it may not seem like a big deal after almost three decades, it still stings to think about the lost time because the power of compounding makes it much more expensive than it appears.

    The rest I think depends on the individual’s personality. I was (and still am) an engineer as well, but I never put my full attention into my career path. Maybe because I was naturally more interested in finance? Over the years I’ve put almost as much time on the learning curve for parsing financial statements as I have in all my job-related work. My feeling is income diversification makes sense even when your primary stream is very lucrative.

    Also I probably was (and maybe still am) in the extreme frugal camp. While procrastination is a no-no on the saving/investing front, it’s been useful on the spending side. I remember when I was your age, I was mentally pricing purchases in future retirement dollars. So the “few bucks” for a coffee effectively balloons up to something that was “obviously unaffordable” in future terms. That same math today gives me prices that seem more reasonable so I can and do splash out on occasion.

  • Mike H. March 2, 2017, 7:04 am

    1. I agree with everyone else here: you’ll see your friends buying cars, going out and living the life, redecorating with designer furniture, getting new name brand clothes and accessories, etc. And for a married couple, the nesting instinct is a hard one to fight. But fight it you must.

    2. Avoid adviser fees for the investing you do. The worst thing in the world when you’re poor is paying high fees. Investing for basically free is doable: Vanguard, Betterment, Robinhood, etc. are your friends.

    3. Use your company 401k/457/403b. Free money in the form of a matching contribution. Also, at your age and tax bracket I’d highly consider using Roth (you won’t decrease your taxes, but it’ll pay off in the long term).

    4. Start small and simple. When I was 24, it was $100/month into a total market index fund.

  • Roseanne March 2, 2017, 7:03 am

    Great topic, and one I’m going to share with my young adult nephews. The only point I would add is to make sure he isn’t missing any employee match for his 401k – basically free money. Many others have made great suggestions above, but I also love the live within your means suggestion. Good luck!!

  • Mrs. Picky Pincher March 2, 2017, 6:58 am

    I would also add that avoiding debt is a great way to invest in yourself. It’s extremely difficult to build positive net worth if you’re already in the red with car loans, student loans, etc.

  • Mike Drak March 2, 2017, 5:53 am

    Stay in your parent’s basement and save most of what you earn. Start off using a cheap robo advisor until you build a stake and then consider becoming a DIY investor provided you know what you are doing.

    • retirebyforty March 2, 2017, 10:16 pm

      I still think it’s better to just jump into DIY investing. Young investors will make mistakes, but they won’t lose too much money. They don’t have much to invest anyway. It’s best to learn your lessons early.

  • FullTimeFinance March 2, 2017, 5:40 am

    You kind of hit on it already, but my biggest advice is keep your expenditures at their current level as long as possible. If you can live on a low amount in college you can do so once your employed. Chances are good you still enjoyed yourself in college at that level. As such you still will when working. Your 30-40 year old self will thank you.

    • retirebyforty March 2, 2017, 10:14 pm

      That’s what I think too. I enjoyed the college student lifestyle and I didn’t feel the need to spend so much right away. The longer you can put off lifestyle inflation, the better.

  • TPOHappiness March 2, 2017, 5:31 am

    Totally agree, I wish I could tell my younger self all of this.

    It really doesn’t get any easier than it is when you are single and have fewer obligations.

  • Al March 2, 2017, 5:26 am

    Follow the 50/15/5 rule and live on 80% of what you make. First and foremost develop a budget and emergency fund.
    Do not start investing until you have done this. Remember life happens to you or you happen to life. It’s a choice! Be prepared!

    Recognize good and bad debt. Stay away from bad debt and don’t be afraid of good debt understanding that the end goal is no debt.

    Learn to live on a cash basis and use credit cards responsibly, smartly, and only when you have to. Pay them off every month if possible.

    If you have a student loan, pay it before credit cards and as fast as possible so you can own your future.

    Do not start investing in stocks or real estate unless in an employer match situation until you get these things done.

    Be aggressive, obsessive, and bold in paying out debt and using a budget.

    Finally remember, if you fail to plan, you plan to fail. Success is a scheduled, not a chance event.

  • Apathy Ends March 2, 2017, 4:52 am

    100% agree Joe, especially on income driving wealth early on. We have seen way more progress driving up our income without inflating lifestyle than anything else (and it’s not even close)

    • retirebyforty March 2, 2017, 10:15 am

      Exactly! Increasing your income is the key when you’re starting out.

  • Go Finance Yourself! March 2, 2017, 4:50 am

    Good advice. Starting your investment portfolio as soon as possible is key. Even if it’s just a little bit, compounding will turn it into a lot more over time. And you really don’t need a whole lot of knowledge to start investing. Start by investing in a simple 2 or 3 fund portfolio made up of low cost index funds.

    Investing in yourself is also great advice. We are our biggest asset. Increasing your earnings allows you to invest more and become financially independent sooner. And it all starts in college with picking the right career. It doesn’t have to be the top paying career but one that allows for a lot of growth and a good salary.

    • retirebyforty March 2, 2017, 10:14 am

      Thanks! When you’re 23, the biggest asset is your future earning.
      Investing young is really good because you can make some mistakes and it won’t be a big deal. If you wait until you’re 40, then your mistakes will be a lot more costly.

  • Sandy T March 2, 2017, 4:32 am

    I think one big one is living well within your means, and then as you are paid more, continue at the more modest level. When I bought my second house so many people asked me why I was buying such a small house in a starter area. And it was because it was WELL within my means, and a good rental property. It worked out really well for me. And invest, invest, invest. But I’ve been a big believer in that since I was a little kid.

    • retirebyforty March 2, 2017, 10:12 am

      Great job! Our first house was nicer than a starter house. It worked out well enough, but if I could go back, I’d buy a smaller house in an area with good rental potential. Invest before spend. 🙂

  • [email protected] March 2, 2017, 3:36 am

    One tip I read before for people just starting out is to buy a modest multi-family home, live in one unit, and rent out the others. Use the income from the rents to live for “free” and take that money and plow it into your goals. If I was to go back to my 20 year old self, I would have advised doing that. Also, don’t worry if it seems like you’re making what feels like huge efforts and not seeing much return in the early years. You will see those returns down the line. Your efforts compound over time, just like money does. Numerous small and steady efforts over a period of years add up to huge results over time

    • Jack @ Enwealthen March 2, 2017, 5:51 am


      I was thinking the exact thing. I wish I’d known more about real estate in my 20s and bought a duplex. I knew I was paying my landlord’s mortgage for him, but hadn’t thought any further than that.

      Given my strong career but low net worth and high real estate prices here in Silicon Valley, I would have had to get my parents to cosign. But it would have been worth it!

    • retirebyforty March 2, 2017, 10:11 am

      That’s a really good tip if you can find the right property. I think it’s harder to get a loan for multi-units, though. In some location, it can be difficult to find a multiplex in the good area.

      • Joshua Daniels April 5, 2017, 9:12 am

        I just want to clarify that getting a loan on a property form 1-4 units is exactly the same process in the secondary lending market. Once you go over 5 units things get harder (and much simpler ). You can get a FHA loan on a 4 unit property with 3.5 % down and have the same eligibility as a Single family house. The only difference is that you need to still qualify for the loan. But as you already said, if you qualify for a 400k loan, that dose NOT mean you should buy a 400k house. Might want to look for the starter home first OR… buy a 400k 4 plex with $3,000 a month in rental income AND a place to live.
        Then you can move out in a year or so and collect $4000 in rent roll.
        After 2 years of proven rental income you can use the rents to help you qualify for your next one.
        Much better than just buying a house for your first purchase in my opinion.
        Thanks for your inspiration to all of us!

  • Physician on FIRE March 2, 2017, 2:57 am

    “When people make more income, they spend more too. You need to avoid this trap and invest the extra money instead of ratcheting up your lifestyle.”

    This is especially important for the new college grads. You will see your friends making major upgrades in terms of what they drive, where they live, dine, and play, etc… Pay yourself first and make any upgrades gradual and deliberate.


    • retirebyforty March 2, 2017, 10:09 am

      I bet that’s especially true for physicians. They don’t make much for a very long time and the sudden increase in income must be a shock to the system. It’s tough to be frugal if all your friends are carefree with money.

  • Smart Provisions March 2, 2017, 2:14 am

    I agree with all the points you made, Joe.

    I would also add that when investing, it’s important to stay the course and keep chugging along. Don’t worry when the market crashes and just keep investing, cause we’re going for the long haul.

    • retirebyforty March 2, 2017, 10:07 am

      I think it’s important to stay the course too. A lot of new investors panic too easily. I think they’ll learn from experience as they go through a few cycles. I was very stressed out when the dot com crash hit, but I was a lot more relaxed with the financial crisis. We all learn from experience.

  • Ernie Zelinski March 2, 2017, 1:34 am

    For what it’s worth, here is an article for millennials published today, not about retiring by 30 or 40, but retiring by 65. There may be some advice that applies to retiring by 30 or 40.

    50 Smart Moves for Millennials Now — So They Can Actually Retire at 65


    • retirebyforty March 2, 2017, 10:05 am

      That’s just too much information. I don’t think a young person would follow many of these. Retirement is just too far off for them. The list is too big.

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