How To Invest As A College Student-College life is quite interesting if not the most interesting part of our lives. We have the freedom to make decisions and it is the phase of life that ushers us into life proper. Don’t you think college is a time to plan for your future?
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It quite challenging going to college with the mindset of coming out with good grades besides that is the goals of every college student but do you think it should end there?
Did you know that you can actually plan your life financially even in college? It is the best place to get started in the world of investing as there are a lot of investment opportunities for you as a college and we will be showing you that in this article.
If you start investing in college, you don’t only make money but you also learn some financially skills that will help you excel in life as you become good in taking calculated risk, financial management and discipline.
In this article, we are going to be showing you how to invest as a college student and also what you can invest in.
Without further delay, let’s proceed…
What To Consider Before Investing
Before you enter into the investing game, you will have to consider a few things as these things will help you become a good investor even while in college.
Let’s look at some of the things you should consider before investing:
- Know that risk is your friend
The one thing about investment is that it involves risk and while some have high risk, some others have low risk. That is why it is important to know the type of risk to take.
Also know that risker investment(s) that involves high risk definitely gives high returns. Some people might advise you that college is the best place to try aggressive investments well, in some cases you can but you shouldn’t invest all your money in one investment. Diversify your investments.
- Think about long-term and short-term investments
While short-term investments are only for a short time, maybe months or a year; long-term investments could last for years or even a decade.
In as much as you try investing in short-term investments, you can also try long-term investments like buying stocks in companies or industries that will grow substantially in the future.
- Invest what you can afford
Investment is not a do or die affair and so you should create a budget so that you will know the amount of money to invest each month. As a college student, there are a lot of expenses for you and so you won’t want to invest all your money and be left stranded and unable to meet up with your daily needs or expenses; so don’t invest more than you can afford.
Some investments are illiquid and don’t let you withdraw right away so you might find it difficult to withdraw money when you need it. You wouldn’t want to invest every dollar you have and then stay without money.
Investments are good but you should know when, how and what to invest in.
- Invest early and invest more
You mustn’t wait until you have saved up a large sum of money before you start investing. You now have online brokerage account that will charge you little or nothing for investing and so you can start investing with even small amounts of money and continue to invest more money whenever you have money available.
Also, some micro-investing apps will even invest your spare money for you automatically.
Just don’t wait till you have spare money to invest before you start investing; you should make investing a part of your budget. Just like you budget to save, you should also budget to invest.
How To Invest As A College Student
Here, we will be showing you how to invest as a college student and some of the things you can invest in but on a long and short-term basis.
- Invest with free or low-cost broker
There are some low-cost online brokers that you can actually invest with as they offer free stock and ETF trades and also provide educational and research tools to help you to start investing.
There are a lot of these brokers like Roninhood, Fidelity Investments, Charles Schwab etc. they also have mobile apps with which you can use to trade anywhere.
- Start with a high-yield savings account
One of the easiest ways to help you increase your savings which will in turn increase your ability to invest is opening a high-yield savings account. These accounts pay interest on your deposits at high rates and you still have the opportunity to withdraw at any time.
As a college student, bank products like high-yield savings accounts or Certificate of Deposit (CD) are nice investments and even safer too. The CD pays you a fixed rate of interest in exchange for you committing money to the bank for a specified time frame.
So with this, you can actually keep money that you won’t need anytime soon.
- Buy an S&P 500 index fund
There are many index funds and this is one of the easiest ways for an investor to get started. You can buy stocks across a wide variety of industries as this will reduce the risk of your investment.
Also, you don’t have to know a lot to get started as buying an S&P 500 index fund is like buying the market and you will get the market return.
With this, you will be able to learn about how investing works.
- Invest a little each month
We mentioned something like this when we were talking about things to consider when investing and it is wise to invest what you can actually afford. Try to invest modest amounts but make sure you invest early.
- Turn to an investing app
You can try investing with an investing app as there a lot of investing apps that allow you to buy individual stocks just like the Stash. These apps are easy to use and they make buying of investments easy and faster.
- Open an IRA
It won’t be bad thinking about the IRA while you are in college as it is a great way to build your future savings if you are a working student. It will allow you to defer taxes on any profits or dividends and deduct your contributions from your taxable income and saving you money on taxes.
It is a great way to start investing for retirement.
If you have not started investing today as a college student, you should start now as this will help you plan for your future and become financially stable even after you graduate.
You can begin investing with small amounts of money so that it doesn’t weigh you down and stop you from meeting your essential needs as a college student.
Investment is not your primary aim of being in college but investing will surely prepare you for the future ahead.