Get Equity In A Home Or Start Investing In Stocks – But Don’t Just Sit On Cash Forever

When you graduate from college, if you secure a job and have the intention of staying in the same area for at least five years, I suggest you attempt to get your foot in the door on the home equity ladder as soon as possible.  If you think you will move fairly soon, focus instead on investing in stocks.

If you have student loans that aren’t too massive, if the interest rates are above 4 percent, just pay them off as soon as possible.  If your loans are large and the rates are fairly low, I suggest prioritizing investing and/or building equity in a home.

Another plus to purchasing a home (of course it can be a condo, town home, motor home, etc) as early as possible is that you will demystify the purchase process, which can be quite intimidating the first time you go through the experience.

Build Home Equity As Soon As Possible, Or Get Moving With Stocks

This is a lesson a learned the hard way.  I waited and waited and waited to buy a home because I was moving so much.  From graduation from undergrad, I didn’t live anywhere for more than three years until I was in my early 40s.  However, I could have easily started building equity at 23 and simply hired someone to rent it out at break even.  By the time I was ready to finally purchase a home I would have had hundreds of thousands of dollars in home equity.

This is a great example of how strategic decisions (rather than hard work) or a long time horizon can have a dramatic impact on your financial life.

(P.S. There are times when it makes no sense to buy a home under any circumstances if prices get way too out of whack.  You have to run the numbers and compare renting vs. owning in your area.  This rent vs. buy calculator provide by The New York Times should help.)