Being a college student and having extra money invested in stocks or deposits in the bank is certainly a rare case. Usually, college students are preoccupied with learning for exams and throwing out memorable parties. They don’t think too much of how their future is going to look like, especially from a financial point of view. However, the college years won’t last forever which means that once they graduate, they will have to find solutions to pay the next month’s rent. Thus, why not do things in advance and start investing while in college? If you are a student who wants to secure his financial future after graduation and invest safe money, then this article is for you.
How to Start Investing While in College?
- Read as much as possible
College is one of the perfect moments in a students’ life when he doesn’t have too many problems, and he can read as many books as he wants and can. Therefore, the reading list is mandatory to include investing books and articles to gain the necessary knowledge for successful investments. There are many books on the market which will show you how to analyze stocks and mutual funds and help you develop a successful investment strategy. What is more, if you are already studying finance in college, then this extra study will help you a lot in obtaining top grades, and you can easily make connections with what you learn in real life as well. On the other hand, when you are in college, you don’t have to pay too much on books as you can find most of them in the college’s library. In addition, there are many online sites full of useful information where you will discover how to analyze and understand the performance of top-rated stocks. Even though it might be difficult in the beginning, you should always keep in mind that no one was born an expert. All the investors that you admire nowadays didn’t know anything about financial investments when they were young. They spent many hours studying and experimenting until they got to today’s success. So, use the college years to read as much as possible and find the best investment methods and areas.
- Forget all the fears to start investing
There are many fears that a student has in mind when he thinks to start investing while in college. One of the biggest thoughts that stop students to start investing is that this is an activity for rich people. But, all those rich people that every college student admires didn’t build their wealth because they had a 9 to 5 job and didn’t do anything else. They got rich because they studied how to become savvy investors and took the risk to do something different. Another fear that blocks many college students is that they don’t have enough money. None of the millionaires of today didn’t have millions from the beginning. They took it step-by-step and learned how to make a little bit of money. Once they found the recipe that works, they started investing more and got to the fortune they have today. Furthermore, some students can get discouraged by the variety of investment options available on the market. But, you need to start somewhere. For example, you can try picking a mutual or an index fund. Thus, you can safely and quickly diversify your money and have a lower risk.
- Get rid of high-interest debts
When you are determined to start investing, you need to clear up all your outstanding loans and focus all your energy and finances into this new path. Therefore, if you have any credit cards, you should first close them. Usually, credit cards have a high-interest rate which will make it difficult for you to save money to invest in stock funds. Thus, one of the wisest decisions you could make is to pay off all your debts first. On the other hand, if you have a loan with a low-interest rate, like 1% or 2%, then you can start investing even though you didn’t close that loan. The main lesson here is that you should get rid of all the debts and loans that “eat” all your spare dollars and find efficient investment methods to multiply them.
- Create a mock portfolio
When you want to learn about investing and how to become successful in the stock market, creating a mock portfolio can be an excellent option to make money. You can build a portfolio and execute mock trades. Therefore, you won’t have to deal with the risk of losing the money you invested. A mock portfolio is a very effective method to help you track your investments. Thus, instead of choosing an online broker and discover which is the best investment strategy for you, you can select a mock portfolio. Google Finance has an interesting mock portfolio feature where you will find more about this investing tool and decide which are going to be your next steps.
- Choose a brokerage
If you are not so sure about the mock portfolio, you can go the traditional way and open a brokerage account. You can have two options in this case. You can either go for an online discount broker where you will use a computerized system and do all your online trades automatically. Or, you can choose the traditional brokerages. However, as you are new on the market, the online discount broker is the best option as it will cost you less. Usually, traditional brokerages ask for a generous amount upfront, which is difficult to obtain especially when you are a college student. As you are just beginning your investment path, when you choose the broker you want to work with, you can choose the one who offers educational tools which will help you also in the future. On the other hand, you can also buy the stocks directly from companies. Therefore, you won’t have to pay any brokerage fees or commissions.
When you are a young investor, you have a magnificent advantage on your side, and that is time. What is more, you don’t have to start big. You can invest a small amount today and grow your investments based on your earnings. Moreover, before you jump into the world of investments, you need to clear all your credit cards and student loans. On top of that, it is always good to keep an emergency fund which you can use in case your investment strategy doesn’t go the way you planned. Once you have secured all these, you can consider investing in mutual funds, stocks, ETFs, or bonds. In the end, you can pick any investment method. What really matters is to find the right balance for you between risk and reward.
Daniela McVicker is a blogger for Top Writers Review. She’s an experienced writer who specializes in a variety of topics. These include hiring and recruiting, education, personal branding, and technology. Daniela enjoys binge-watching funny shows on Netflix, creating art projects with her friends, and has recently picked up Brazilian Jujitsu.