One topic that I have become especially passionate about in recent years is finances. I haven’t had many opportunities prior to being a nurse to invest. Before nursing, I was in school and working minimum-wage jobs. I was mostly focused on just trying to survive. Now that I make a more liveable wage for my area and stage in life, I wanted to share how I am investing as a new grad nurse.
This doesn’t just apply to nurses and this is not investing advice. I truly encourage you if you’re interested in investing to do your own research to see what’s best for you. Everyone has a different risk tolerance, goals, and financial situation. You also shouldn’t invest if you’re not okay with losing the money. All investments are risks and you could lose what you put in. If you’re new to investing, it’s okay to experiment for a bit first and figure out what works for you. Anyways, the point of this post is to just show you how I (a normal person, not extremely rich but able to live comfortably with my wage) am investing.
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How I’m Investing as a New Grad Nurse
Right now I am investing about 15% of my income which I feel pretty good about. Ideally, I would like to be investing at least 25%. However, right now I am also saving for a wedding, house, travel, and paying off some debt like my car.
Risk Tolerance
When you have a high-risk tolerance (or are an aggressive investor), you are more willing to amke risky investments that can lose money. High risk can mean high reward. But it can also mean losing money. If you are a conservative or low-risk investor, you tend to gravitate toward investments that are less likely to lose their value. This can also mean that your investments won’t make as much money. Generally, if you are younger you have more room for risk since you have a longer time to gain back your money.
Right now, due to the impending recession and because I have just started investing in the last couple of years, I am on the low-risk side. I am investing in things that I know will pay off and that are less likely for me to lose my money.
Roth IRA
Currently, I am investing most of my money into is a Roth IRA. This year the limit has increased and I plan on maxing out this account. If you are under 50, you can invest $6,500 into a Roth IRA in 2023. With a Roth IRA, your contributions are taxed upfront. This means if you are in a higher tax bracket when you plan on withdrawing the money, you will have paid less in taxes. Your contributions can also grow tax-free. Generally, you make less money earlier in your career so you’re in a lower tax bracket.
Weighing my options for retirement accounts (401k, Traditional IRA, etc.), this is the account that made the most sense for me to open personally. I have my Roth IRA account through Fidelity. When I opened my account and put in $300 within the first month, they added an additional $100 to the account. I also can control where the money is invested versus a 401k through my employer.
401k
My employer does offer a 401k, which I do contribute 3% into. However, there are a couple of reasons why I am not contributing more. The first is that my work does not match my contributions, or add in any additional money. For some 401k accounts, your work will match a certain percentage of contribution, or contribute a certain amount a year. This is essentially free money (which I would have totally taken advantage of if my place of employment offered this). Since it does not, it makes more sense for me to put the bulk of my money in a Roth IRA.
Additionally, when you pull from your 401k, it is taxed as ordinary income. You also can’t pull money out of a 401k before the age of 59.5 or you will be charged a penalty. My 401k is managed through an outside company so there are yearly fees and I also cannot control where the money is invested. Really I am just investing in the 401k because I can stand to lose the money, I was automatically enrolled, and I had to go through a process to decline the account.
If I were to leave my place of employment, my 401k would either be stagnant, need to be transferred, or be cashed out. It’s not my favorite way to invest since it’s not matched, but I did check into it the other day and saw that there was a pretty good chunk of money in there without any work on my part. It’s kind of nice to just set and forget. You don’t see the money enter your account before it’s pulled, so you can’t miss what you don’t see.
Stocks
I invest around 3% of my income into stocks. For stocks, I use Robinhood (which I wouldn’t really recommend, I just haven’t done the work to find a better alternative). I don’t put a lot of weight into stocks and the market is really not great right now. However, in my opinion, that is the best time to invest because when the market is doing better, you will see your money grow. It’s basically on sale if you are confident that they are going to go up at some point again in the future. Since I’m in it for the long haul, I don’t mind that for the next couple of years, I may lose some of my investment or at least watch it remain stagnant.
I mostly invest in the S&P 500 because that is the safest option. When I first got into investing, I got caught up in Twitter and trends and ended up losing a lot more money. When I am not throwing my money into the S&P 500, I will throw it into stronger stocks I know are going to be around for a while like Disney, or Apple.
High Yield Savings Account (HYSA)
I don’t think of this as an investment, but I just wanted to add this here if you are investing but haven’t already moved your savings to a HYSA. In traditional savings, you’re probably getting around .05% interest, which typically ends up being pennies. A high-yield savings account generally has a 1.5% or higher interest rate. I use Ally which I have so far really enjoyed and the current interest rate is 3.3%. This can fluctuate and right now it’s high due to the federal reserve interest rate hikes. You will make so much more money in a HYSA compared to traditional savings. It’s not necessarily an investment, but if your money is sitting in a regular saving account you are losing money due to inflation.
With my Ally HYSA, I can also add buckets to separate my money (even though it’s in the same account). I have a bucket for wedding savings, emergency funds, a honeymoon fund, a house fund, and a vacation fund. You can set goals and timelines for each bucket. Ally also lets you see how your money will grow with the interest rate and recurring investments. It’s pretty cool and I would recommend it if you’re looking for a HYSA!
Overall Thoughts on Investing
I think it’s important for everyone to be investing, especially women. There is a huge gender investing gap. There is a learning curve when it comes to investing and it’s not something that is taught in school. Sharing how you’re investing and having conversations about how to get started is important to help bridge the gap. Not only that, but women generally make less due to the wage gap. This means we are working with less money, to begin with (which makes investing even more important).
If you want to learn more about investing, I recommend some of the basic beginner resources. Some of these resources helped me understand a little more about how to get started:
- Graham Stephans Youtube
- Money Rules: The Simple Path to Lifelong Security by Jean Chatzky
- Broke Millennial: Stop Scraping by and Get Your Financial Life Together by Erin Lowry
- Broke Millennial Takes on Investing: A Beginner’s Guide to Leveling Up Your Money by Erin Lowry
- Worth It: Your Life, Your Money, Your Terms by Amanda Steinberg
Some tips:
- Don’t go into debt just to invest!
- Pay off your high-interest debt before investing.
- Consistency is everything and recurring payments make it easy. Don’t try to time the market.
- Investing a little is better than investing nothing at all. I wish I would’ve invested at least something while in school and earlier in my adulthood when I could. Think about that compounding interest!
I hope this post on how I’m investing as a new grad nurse was useful to see how an “average” person is investing! If you would like to be alerted of future posts, you can follow my Instagram here, or like my Facebook page here. Good luck in your decision and you can always DM me if you have any more questions!
