Your first adult job sprouts a new round of firsts: first couch that isn’t a futon, first bed that isn’t a futon, first kitchen table that isn’t a futon. And then, of course, there’s your first adult paycheck.

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Ideally, that paycheck will sprout your first investment account. Because while investing may not be top of mind right out of college, it should be: Even small amounts add up big over time.

The trouble — aside from actually finding money in your budget to save and invest — is figuring out where to put it. Here are five options, in very particular order.

1. A 401(k) with matching dollars

Contributions to a traditional 401(k) come out of your paycheck pretax, which means you don’t pay taxes on that money … now. You’ll be taxed instead when you take distributions from the account in retirement.

Tax perks like this are common in retirement plans, but there are two unique factors that land the 401(k) in the top spot: a high annual contribution limit of $18,500, and employer matching dollars.

You’re unlikely to hit that limit when you’re just starting out, so let’s focus on the matching dollars here, which are just what they sound like: Many — though not all — companies that offer a 401(k) plan also offer to match participant contributions. That means when you contribute to your 401(k), your employer may contribute as well, up to a cap.

The details of matching programs vary — your company might throw in 50 cents for every dollar you do, or a full dollar on every dollar, or some other arrangement — but the facts don’t: This is free money. Contribute at least enough to your 401(k) to earn your full match.

2. An emergency fund

This is cheating: An emergency fund isn’t technically an investment. But let’s call it an investment in yourself — it’s pretty key to financial stability, which makes it worth a mention here.

You might or might not have heard this rule: Keep three to six months’ worth of expenses stashed in a savings account. That’s great, if you can swing it. But many new grads can’t, and if they can, it will be at the expense of other financial goals. So, new rule: $500 or $1,000 will float you through most emergencies. You can add more once you’re steadily investing elsewhere.

 

Your first adult job sprouts a new round of firsts: first couch that isn’t a futon, first bed that isn’t a futon, first kitchen table that isn’t a futon. And then, of course, there’s your first adult paycheck. Even small amounts add up big over time. The trouble — aside from actually finding money in your budget to save and invest — is figuring out where to put it. Here are five options, in very particular order.

1. A 401(k) with matching dollars

Contributions to a traditional 401(k) come out of your paycheck pretax, which means you don’t pay taxes on that money … now. You’ll be taxed instead when you take distributions from the account in retirement.

Tax perks like this are common in retirement plans, but there are two unique factors that land the 401(k) in the top spot: a high annual contribution limit of $18,500, and employer matching dollars.

You’re unlikely to hit that limit when you’re just starting out, so let’s focus on the matching dollars here, which are just what they sound like: Many — though not all — companies that offer a 401(k) plan also offer to match participant contributions. That means when you contribute to your 401(k), your employer may contribute as well, up to a cap.

The details of matching programs vary — your company might throw in 50 cents for every dollar you do, or a full dollar on every dollar, or some other arrangement — but the facts don’t: This is free money. Contribute at least enough to your 401(k) to earn your full match.

2. An emergency fund

This is cheating: An emergency fund isn’t technically an investment. But let’s call it an investment in yourself — it’s pretty key to financial stability, which makes it worth a mention here.

You might or might not have heard this rule: Keep three to six months’ worth of expenses stashed in a savings account. That’s great, if you can swing it. But many new grads can’t, and if they can, it will be at the expense of other financial goals. So, new rule: $500 or $1,000 will float you through most emergencies. You can add more once you’re steadily investing elsewhere.

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