Starting to invest early (when you’re a college student) definitely has plenty of benefits. The power of time and compound interest will be on your side. Investments with slow growth and low risk have time to mature and if the risks you take in your portfolio fail, you have time to recover and bounce back. However, regardless of age, investing should be a carefully considered process, not a headfirst dive into the water. There is no magic in investment; investing always involves risk. Investing during college is not possible for everyone, since more and more students are struggling just to pay for college and student loan debt is at an all-time high. However, don’t get discouraged and stop reading now below you will find a few simple solutions to find money to invest.
- Keep track of your money when you spend cash. Take note of any transactions or use online banking to track debit card purchases. Once you know just how much you spend and exactly what you’re buying with it, saving money becomes a much simpler process.
- Work part-time so that you have money to invest. As a bonus, a job that feeds you, like working at a restaurant or cafeteria, will also help reduce your expenses. You can minimize your transportation costs by working on or near campus, using public transportation, or carpooling. Find a job that also works for you.
- Once you are ready to plant your money where it can grow, determine your level of comfort with risk. If you fear not having access to your money in case of emergency, a savings account would be right for you. The interest earned is minimal, but so is the risk. A money market account is a slightly higher risk but works like a checking account. Although it has its limitations on the number of transactions that can take place and has a slightly higher interest rate that is in a constant fluctuation.
- If jumping into the stock market appeals to you, do your homework first. Understand the company you may be interested in investing in and look for a history of steady growth and profitability. Don’t place your bets on the most hyped new tech company. Today’s college students were only children during the 90s tech bubble, but its lessons are still relevant. When Facebook went public it had 483 million daily users, yet its stock has dropped from its IPO price of $38 rather than achieving the profitability that many expected from the social networking giant. Just because the company may be big, doesn’t make your investment will be too.
If you just can’t spare any extra money, you can still jump on the investing bandwagon sooner than you might think. For most graduates, their first job in their field is the greatest jump in net income they have ever experienced. Wise graduates will begin putting money into savings and retirement accounts before adjusting their lifestyle to match the new level of income. If you get used to spending each paycheck, saving will be a sacrifice and a chore.
Investing, like college, is a journey. You make progress, have setbacks, learn from mistakes, and reap the rewards of a job well done. The beginning may be daunting, but the benefits will appreciate with time. Of course, you can always act as if it were another class in college, but this one you have the possibility to be paid to take.