How and Why You Should Invest as a College Student

How and Why You Should Invest as a College Student

With educational expenses increasingly consistently, it seems a bit shocking to suggest that students think about investing. If you barely have enough for school expenses, can you really even think about saving money and investing?

To be honest, college really is the best time to start investing. At this point, it’s very likely that you’re paying for school through a combination of loans and parental assistance. Never again in your life will you have the opportunity to live without paying for rent, utility bills, and other expenses, so you better take the chance and make the most of the money you have.

More importantly, investing isn’t about the amount of money you put in; it’s about how long you have the money invested. Because of compound growth—wherein your original investment plus the interest you earned grow together—there is bigger growth potential the longer you invest. Someone who invests less but does so continuously for ten years will earn more than someone who invests a lot more in a shorter span of time.

A Few Questions

questionsBefore you wade into the investment pool, however, here are three questions to ask yourself to make sure you’re ready.

1.) Do I have emergency savings? The thing about investing is that you’re supposed to think long-term. Withdrawing your money after a few years means you lose out on earnings. Before you invest, make sure you have enough money to cover an emergency or any other unexpected expenses.

2.) Do I have something better to spend on? Don’t think of this as a question that pits frivolities against investing. To consider something a “better” choice for your money, it has to be urgent and financially important. For example, you should pay off your high interest debts first before investing.

3.) What do I want to achieve with this investment? Different people have different goals. Even in college, it’s never too early to start saving up for your golden years. However, you might want this investment to be money for a home, a car, or to pay off your student loans in the future. Knowing what you want to achieve makes things easier because you get motivated.

Getting Started

investing-vehiclesIf you have decided to invest your money, the next step is finding out how to go about investing. A lot of students—not to mention adults—find investing confusing and difficult.

Here are a few tips to remember before you

start investing:

 

Educate yourself. Popular culture has affected the way people view investments. It’s important to clear your mind of these stereotypes before you start investing, because otherwise you might get incorrect expectations. Do your research. There are a lot of instructions and guides online that can help you get started.

Determine the right type of investment for you. There is more than one option, e.g. mutual funds, stocks, etc. By doing research, you should be able to figure out which type of investment can make the most returns for you.

Decide on the level of risk you can live with. Investing can be scary, but only if you invest on risky stocks. They bring in a lot more earnings, true, but the chance of losing everything is bigger, too. Figure out the level of risk you can tolerate and invest accordingly.

Keep on researching. Investing is not easy, but it can be very profitable if you know what you’re doing. Don’t get complacent. Continue to educate yourself by reading books, keeping up with financial news, and joining seminars and lectures.

GWhere to Invest

stocks-bondsThere are a lot of options for college students to choose from, so it’s important to do your research before investing.

Here are a few to consider:

● Roth IRA (Individual Retirement Arrangement)
● Mutual Funds
● Stocks and Bonds

 

What kind of investments have you made or are considering making? Share them with us in the comment box below!

All investments carry some level of risk, and may not be suitable for all investors. Before deciding on any investment, you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. Seek advice from an independent financial advisor if you have any questions or doubts.

 

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