If you suggest to college students that this is the best time to begin their investment journeys, many will laugh. College students aren’t known to have a lot of extra cash. But financial experts say this is the best time to learn about investing and begin exploring investment opportunities.
Start by setting aside time each day to learn about the basics. Some colleges may even offer coursework, or you can access websites that provide investing courses. And when you need help with college courseworks, try Studybay coursework assignment help service for coursework help online.
Let’s look at how investing as a student can prepare you for a healthier financial future. Starting now can help you build wealth, gain financial independence early, and increase future opportunities.
Establishing a Foundation for Financial Literacy
There are apps and websites that make investing more accessible. The key is understanding where and how to invest to get the most out of what you set aside. Take the time to learn investing lingo and how different products work. Thoroughly research apps and websites that offer brokerage services. And avoid the ones that promise huge returns or don’t disclose what they want you to invest in.
One area many young people are exploring is cryptocurrencies. There are many opportunities for students who want to invest in crypto. It’s crucial to study how it works and learn about protecting yourself online. Many students find studying for a career in cybersecurity helps with their online and crypto investments.
Even if you only have a little to invest right now, you’ll still benefit from acquiring financial literacy. This knowledge will help when you need to make big financial decisions later on, like investing in a retirement fund. Research and practice as much as you can now, and you’ll have a firm financial foundation.
The Power of Compounding
Some students shy away from investing because they fear losing the little money they have. Others want to start but also want access to the money in case of an emergency. High-yield savings accounts and certificates of deposit (CDs) are good options to begin. Your money typically won’t grow at the same rate as the stock market’s historical average. But CDs and high-yield savings accounts come with low risk, and you can calculate what you will earn within a period of time.
A helpful example of the power of compounding interest is to think about retirement. Maybe you hope to retire with $1 million. As a student, you can achieve your goal by investing only around $190 a month into stocks. The stock market historically has delivered returns of around 10 percent. If you waited until your 40s to start, you’d need to invest around $1,500 a month to reach the same goal.
Investing for the Risk-Averse
High-yield savings accounts are low-risk accounts offering higher-than-average interest rates. Your student savings account may only pay a fraction of a percentage of the money you leave in the account. But a high-yield account may have an interest rate of 10 to 15 times the national average. Often, internet banks provide this type of savings account. But these banks don’t usually have a brick-and-mortar presence. You may have limited access to ATMs or only be able to deposit or transfer money electronically.
A CD is a financial product that most credit unions and banks offer. You agree to deposit a set amount of money and leave it for a specific period of time. CD terms can be as short or long. Usually, you will earn a bigger return for longer terms. You might be able to open a CD for very little money, and if you do not touch it, you’ll know exactly how much you will make by the end of the term. One risk of CDs is that you may pay a penalty if you have to withdraw the money before the end of the term.
Investing Now for Financial Independence Later
If you ask older people, most will say they wish they’d started investing sooner. Starting your investment strategy as a student can allow you to take advantage of compound interest and reinvestment. Your money has a longer time to grow. And as your money and knowledge grow, the results of your investments could help you achieve financial independence.
Recall the example about how much you’d need to invest to reach a $1 million goal by retirement. Even if you can’t manage $190 a month now as a student, financial experts say the most important thing is to start. You can increase the amount as you progress in your career to stay on track with your goal.
Meeting your financial goals for retirement may seem unimportant when you’re 18. But think about being able to travel and live comfortably when you are ready to stop working. Many older adults who did not achieve their goals must continue working well past retirement age to pay for their basic needs. And investment returns and dividends could pay off for you even before retirement. If you start early and are diligent, you could supplement your income with investment returns.
Steps to Start Investing As a Student
You can open an account with some investing apps even if you only have $5. Robo-advisors are another affordable choice for people.
To get started investing, you should:
- Do some research or take a class. Learn the basic terms, the types of investing, and the risks involved with each type.
- Decide why you want to invest. Knowing why and what you’re working toward will help you decide what to invest in and how much.
- Know your risk tolerance. If you can tolerate some volatility, working with a broker or robo-advisor to buy stocks is the way to go. But if you are nervous or unwilling to risk your funds, try safer products like CDs or high-yield savings.
- Consider ways to diversify. One way to protect yourself is to develop a mix of investment products with different risk and liquidity levels over time. You may only begin with one or two things when you’re just starting. As you become more comfortable, slowly add other investments. A more balanced portfolio can weather financial ups and downs much better.
- Don’t wait. Putting off your investment planning can mean you’ll have to work much harder to close the gap between what you have and what you need later. Starting now is your most powerful tool for securing financial freedom.
You Have More Power Than You Think
Your financial goals can seem a long way off or even unimportant when you’re a student. Maybe you’re learning how to be on your own, work on your courses or enjoy college life. But you have the power to achieve your financial goals early by building healthy investing habits now. And once you begin, keep going. Regular contributions are crucial to building on compound interest and keeping the ball rolling.
Kenny Trinh is a seasoned expert in the field of laptops and technology, boasting an extensive background enriched by years of hands-on experience and in-depth research. With a keen eye for innovation and a passion for staying ahead of the technological curve, Kenny has established himself as a trusted voice in the tech community. Holding a prestigious degree in Computer Science, he combines his academic insights with practical expertise to deliver valuable insights and recommendations to his readers and followers. Through his work, Kenny aims to demystify complex tech concepts, empowering individuals to make informed decisions and optimize their digital experiences.