How To Start Investing In College: A Guide To The Stock Market

Investing from a young age is one of the best economic decisions you can make. Even if you start putting a little money away every month, you can end up with a lot after a few years. The earlier you start investing, the better. That is why college students should really look into investing more seriously.

However, the idea of making investments can be quite daunting if you’ve never done it before but it is important to educate yourselves on the matter. “If you take a little time to learn about trading stocks in college, you can become financially independent much earlier than otherwise.“, says PapersOwl editor, John Russel, in his research paper on the matter of individual stocks. So, if you’re a college student or even a graduate and you are unaware of terms like an investment account, a retirement account, and a brokerage account, don’t worry. Our simple guide will help you start investing without having to worry too much. 

A Little Money Is Enough

Jar full of coins When you think about an investment, you might think that you need to have hundreds of dollars to invest in a stock or other assets. While more capital will help you generate larger amounts, you don’t need too much for investing as a college student as you can begin doing it even with just $5 a month. All you need to know is which way you want to go when it comes to using an online broker, a robo-adviser, or a micro-investing app.

Easy Ways To Invest

1. Online Brokers

In very simple terms, such a broker is the web-based platform of financial companies that you can utilise to put money in mutual funds, bonds, and more. You can manage your portfolio via this platform and get all the information you need to handle your investments. 

2. Robo-Adviser

If you want a more automated process to handle your money, you may want to use a Robo-Adviser. These are apps that utilise various algorithms to find the best options for you based on how much risk you wish to take. Like traditional advisers, these will manage your portfolios for you and charge a small fee to do so. 

3. Micro-Investing Apps

For even more automation, consider using a micro-investing app. Such apps are designed to help you make money while you spend money. They can round off your purchases to the nearest dollar and then send the leftover change to your savings account after a minimum amount is collected. With such options, college-goers can become investors with very little cash. 

What Assets Should You Consider? 

When you want to begin generating wealth from an early time for the betterment of your future, you need to carefully consider which assets you want to put your cash in. You should be aware of the top investment themes in 2022 as well to stay updated on current trends. To keep things simple for students though, here are some of the general options you have that offer various levels of return on your investment.

1. Mutual Funds

This is a very good starting point for any investor as the invested money goes into a pool of capital that is managed by a professional. The manager makes all the decisions regarding how to invest the capital and the people involved don’t have to do anything more. 

2. Index Funds

When you put your income in an Index Fund, you are essentially investing in all of a market index’s stocks. A little knowledge of the stock market goes a long way with this kind and the overall risk and cost are quite low, making it a great option for young people. 

3. Bonds

If you don’t want to worry too much about fees and don’t want to work but rather just put your cash somewhere safe and enjoy life, you might want to buy some bonds. When you do this, you’re essentially loaning your cash to the government or a company. In return for your loan, you get interest when you get your amount back. These are some of the safest investment options out there for college-goers and graduates but they do pay lower returns than other higher-risk options. 

These are three of the most basic and safe ways for paying your cash to someone and getting started with investing. There are many more things you can also consider though, so be sure to do your research before making a choice. These options include ETFs, Target-Date Funds, Certificates of Deposit, etc. You could also use a traditional IRA or savings account for even more safety. 

Some Crucial Things To Remember

If you have never traded before and want to build strong portfolios, here are some things you should keep in mind:

  • Don’t wait too long to get started. Even if you can spare $10 a month, invest it. 
  • Always keep aside the capital that you need in the short term to meet your expenses. Only invest the extra cash you have. 
  • Do some research before you purchase any assets on your own. Brokers can help you put your cash in the right places but if you want to do it yourself, be sure to know what you’re doing. 
  • Don’t put all your cash in one place or one kind of asset. Always diversify so you don’t end up losing all your cash one day. 

Conclusion

As you can see, there are many ways to begin investing even as a college-goer with little cash to spare. There are many open sources that you can utilise to educate yourself about different accounts, exchange markets, assets, and more. And if you want to do as little work as possible, you can always get advice from professionals and share your long-term goals with them to allow them to manage your capital in a better way. 

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