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We’re all familiar with how expensive college is and what students sacrifice to make it through. If they have to eat rice for a month, they do it. They’re willing to ditch their car for public transportation. Or rent a room instead of an entire apartment to save money. Students have had to be extremely thrifty because of limited finances.
Fortunately, students these days are hoping to eliminate the broke college student stereotype with an intense focus on building wealth. Specifically, they’re starting their investment journeys early to secure their financial futures.
Many students choose to take investing seriously, but the wealth of information out there — pun intended — makes acting on that choice overwhelming and intimidating. However, this basic investment guide aims to make investing more digestible and doable for students everywhere. Here are seven tangible tips for investing as a student.
Start Sooner Rather Than Later
The main reason to start investing in college (or before!) is because you benefit from time. In other words, your money will grow greater if you give it time to do so. As a result, you’ll have more room to experiment with different investments and more time to recover from bad ones. Furthermore, even if you invest a small amount consistently for the first few years, you’ll be lightyears ahead of the student who chooses to wait.
Ensure you’re entering investing with a mindset that’s ready for a long-term journey. Don’t expect a life-changing chunk of change to hit your account in the first year. But you can expect a nice nest egg in 40 years if you start now and are consistent in your effort.
Assess your finances
Don’t invest any of your money until you take a thorough look at your financial landscape. Your investments need to fit into your budget as a student. You don’t want to start picking up irresponsible financial habits by choosing to invest money you don’t have.
With this in mind, take an honest look at your finances. Determine whether you’re in a good place to start investing. Do you need to pay off some existing debt before any investments? Is there an amount you can allocate to investments every month if your finances are stable?
Create a Budget and Learn How to Stick to it
You’ll likely already have a budget in place if you’re being proactive about ensuring your financial health, and you’ll simply need to add a line for the amount you’re allocating to investing each month. But, if you don’t have a detailed budget and are ready to start investing, you must create one immediately and learn to stick to it.
Creating a budget will help you get into a habit of setting aside money to invest. Sticking to this budget will make it more likely that investing becomes a lifelong habit. Use a simple budget template online to create yours. Then, stick with it, even if you have to restart your commitment many times.
Do Your Homework
So many students make the mistake of investing on a whim. They don’t take time to educate themselves on what successful investing looks like, let alone continue that education throughout the life of their investment journey. This lack of knowledge can lead to selling at the wrong time or buying low-value stocks at high prices when it should be the opposite.
Instead, do your homework and make informed investment decisions. For instance, cryptocurrency investments are growing in popularity among students. Bitcoin, particularly, has experienced vast periods of growth, attracting hundreds of thousands of new investors. Unfortunately, these spikes have since leveled out, and investors everywhere are concerned about the dangers of investing in cryptocurrency.
So, your research may lead you to invest in more tangible assets like real estate and precious metals. Tangible assets are less risky to invest in with a proven track record of remaining steady in a strained market.
All in all, you want to do thorough research before and after you make any investment decisions. Also, in doing your homework, you’ll likely come across investment apps.
Start With User-Friendly Investment Apps
Technology makes investing a lot more accessible to students. Investment apps, specifically, put opportunities for financial growth in the palms of all students through their mobile devices.
You can access apps like Robinhood, Stash, or Acorns with the touch of a button and begin investing with a few dollars. These user-friendly investment apps not only help you carry out investment transactions, but they educate you on how to do so intelligently.
Additionally, many of these apps come with a community you can join dedicated to helping you invest better, connect with other investors, and use their platforms most efficiently.
Join Online Communities
If we’re being honest, paying a financial advisor or other professional to help you make investment decisions probably won’t be affordable in your early days as a student investor. Still, you should lean on expert advice and study the lessons learned and tips provided by fellow investors.
The easiest way to create a network of people passionate about investing is by joining online communities dedicated to investing. Do your best to join online communities tailored to students investing to apply the things you learn immediately.
Explore Investments Outside of the Stock Market
When people think about investments, most minds go to investing in the stock market. Although this is one of the most popular investment avenues, it isn’t the only one. There are a variety of investments that can help you increase your wealth as a student. You can keep your initial investment budget-friendly also.
For instance, let’s say you aren’t prepared to make any investment decisions yet but want your money to make money in the meantime still. Put it into a high-yield savings account or CD depending on how readily available you need the funds to be. Another low-risk investment option is to purchase global or corporate bonds. You could also invest in real estate for eventual resale or buy an investment property to start an income stream from collecting rent.
Ultimately, you want to create an investment strategy that you’re confident in and comfortable with, whether that means investing 100% in the stock market or diversifying your portfolio with other investment opportunities.
Regardless of our age or economic status, each of us should find a way to leverage investments in our lives. Use this article to start investing wisely as a student and continue investing intelligently after graduation.