Studying in college may be a great time to start investing. Why? Because you have a chance to learn without spending large sums of money. Then you can use this experience to achieve significant results in the future.
Yes, it can be difficult sometimes to find extra money. But it doesn’t take much to start investing. Even $20 or $50 can already bring you results. In this article, we will analyze different types of investments for college students and give some tips to help you start.
In general, this topic has been discussed for a long time, there are many experts who know how to invest money profitably. The important resource for students here is not only money but also time invested in studying the field of investing. If you are short of time, then seek help to write research proposal, free up a few days and immerse yourself in the subject of investing as deeply as possible. Be sure it will pay off, even if your starting capital is minimal.
How to start investing?
First, choose your broker. It can be:
- Inexpensive online broker
- Micro-Investing Apps
Which one to select, and what is the best way to invest money? Let’s find out.
1. Online Broker
This is a platform where you can find everything you need to invest. There are free options, but usually, it takes a tiny donation. There you will find tools to start spending and running your funds. The program allows you to advance in stocks, different types of funds, as well as bonds.
This is an investment management service that uses algorithms to help you make smart investment decisions. You tell it the criteria by which you want to invest, and it will select opportunities and for a small fee will manage all your investments.
3. Micro-Investing Apps
Similar to the previous ones, their main goal is to help you invest little sums. For example, you can link your credit or debit card and transfer the rounded balance. When you collect the required amount, the program automatically invests it for you.
Where to invest?
The main types of investment are:
- Certificates of Deposit (CDs)
- Mutual Funds
- Index Funds
- Target-Date Funds
- Exchange-Traded Funds (ETFs)
1. Certificates of Deposit (CDs)
A low-risk investment. You lend funds to a bank for a certain period of time. It can be 9 months or 15 years. After this time, you will receive your sum, plus interest.
Also considered low-risk investments. Only here, do you lend your savings to a company or even the government? At the end of the term, you also receive a principal amount with interest.
Here the risk increases because the stock is essentially part of the company. If you choose successfully, then with the growth of the business, the value of your investments will also grow. But companies may also fall in price. Yes, deciding on the right business is not easy. But if you do it right, you can make the most money.
4. Mutual Funds
For a beginner, this is a nice option where to invest money. By buying mutual funds, you deposit money together with other investors, which the manager of this fund then invests in various assets. Here the manager makes all investment decisions. That is, you get a kind of balance between the riskiest stocks and less risky deposits or bonds.
5. Index Funds
When you buy index funds, you invest in all the stocks of a market index, such as the S&P 500. It is the most popular, so many experts recommend starting there.
6. Exchange-Traded Funds (ETFs)
Same as the index funds, you buy shares of a certain market index. But in ETFs, the price may vary depending on the market.
Not a bad option for a beginner, but you need to do a little more research than the others.
The most common mistakes in investing
- Investing short term. Short-term investments do not always pay off, on the contrary, you may lose money if the market falls. So be patient and don’t invest the money you need soon.
- Not doing research. Be sure to research companies before buying stocks. It will help you manage money wisely.
- Not diversifying your investment portfolio. Don’t invest all your money in one company. Why? Because if it sinks, you will lose all your savings. Invest in different types of investments. This can be done gradually.
- Withdrawing funds when the market drops. Markets are constantly collapsing and growing. So do not rush to withdraw your investment if the situation looks bad. Here are some tips on how to invest properly from CNBC to help you understand investing better. The main thing is not to panic, but to let the money be where it is.
If you want to make money on investments, you will need to learn a lot. But also, you don’t need to know everything. The main advice — start now. The sooner you start, the more experience and skills you will have.