a year ago
Investing is no longer just for the wealthy or those planning their retirement days. In fact, anyone can do it. In a time where more college students are working while in school, investing is one of the most popular ways students can make money with minimal effort. Thanks to more low-cost options, as little as $5 can get you started in the world of stock market. Read on to find out why college students should be taking a second look at investing.
What Do I Get Out Of It?
One of the first questions students tend to ask is: Why should I think about investing at such an early age? Well, it's simple. Investing is an income stream. It gets you started on your financial portfolio earlier which means it only gives you more time to build up that nest egg of yours or achieve your goals earlier. Let's face it; college can be expensive. With student loans topping $1.5 trillion in 2018, its safe to say many college kids are turning to credit to finance their education. But what if you could repay that loan faster? Investing can help you do that.
Another benefit of getting into the investment game early comes in the form of taxes. Students report much lower incomes which means they end up paying less taxes. Robo advisors also now come with a minimal fee which means the costs are significantly less while in college. Your returns, however, remain the same.
Where Can I Invest?
One of the easiest ways to get started is to open a brokerage account. The stock market can be a volatile place but there is lots of information out there to get you started. Penny stocks cost less than $5 and investment apps such as Robinhood and Stockpile charge just $0.99 for a trade and require a $5 investment minimum. Robinhood also offers options beyond the traditional stock market like cryptocurrency which is another popular choice for young investors. Some even help you budget your money to ensure you don't go beyond your financial abilities.
Your choices will be influenced by the start amount you are willing to invest. For most college students it is likely to be a smaller amount so roboadvisors are a likely medium. There are also many low-risk long term investment instruments available for college students. Banks offer recurring and fixed deposits for those with regular incomes. In lieu of liquidity, investors benefit from a higher interest rate. Another suggestion is to invest in a Roth IRA. Contributions accumulate and can be withdrawn anytime without a tax penalty attached. It also means you get a headstart on your retirement portfolio in college.
Ok, So How Do I Get Started?
Any investment comes with some degree of risk. So before you make the plunge, make research a priority. Take a look at your budget and decide on the maximum amount you are willing to risk and any monthly contributions you can make. It is also a good time to consider how risk tolerant you wish to be. Finally, make the choice between managed investing and self-directed investing. Managed investing affords the benefit of experience and knowledge. It also reduces the time requirements since all that is required from you is the capital. Popular choices include Betterment and M1 Finance.
Self-directed investing, on the other hand, means you are in charge of all the details of your investment portfolio. This makes background research all the more vital. Lastly, don't be afraid to explore the world of investing. It is all about trial and error.
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