Investing is best when done early on. Contrary to popular belief, investing is not only for older people with big salaries. Even students who have good control over spending and are willing to make small financial sacrifices for their future.
Since college students have fewer financial resources to invest, they have to think of creative ways to do so. Here are some of the easy and simple methods college students can start doing.
1. Start with high-yield savings accounts
One form of easy investment is to create a savings account with companies that pay higher interest rates than traditional savings or checking accounts. Most of these companies also allow you to withdraw money anytime you want. This will be a win-win situation for you.
Companies that offer these high-yield savings accounts are digital banks. Make sure to check their track record too. Here, you can deposit your next year’s tuition, and your money is growing without you making any effort.
2. Set aside money each month
Saving or investing does not have to involve large sums of money. Investing a little each month is the best way to start and maintain the habit while you are in college. You can set aside around $20 to $30 every month, and you would notice how big your investments are in the long run.
This way of investing also lets you in the market which you can observe and learn about to become smarter in investing. You can assess your holdings and make the necessary next steps to grow your account. Another form of investing little is through commission-free brokers that can offer fractions of shares of stocks for you to buy.
3. Use an investing app
Investing apps on mobile and computer devices can help you at every stage of your investment journey. If you are new to investing and you want to learn more about it, there are apps that are suitable for beginners and are free to use. If you are already familiar with investing, you can use an app to help you track your investments and analyze your holdings.
4. Look for a low-cost broker
As a college student, your budget can be limited. To help you with investing, there are several companies that have free or low-cost brokers. They can get you started with investing by providing you with the necessary information and tools.
5. Purchase an index fund
For investors who want low-risk investments, buying an index fund is a good choice. An index fund contains the shares of various stocks in an index. This means that as an investor, the fund you are buying is highly diversified and has less-volatile returns. You do not have the risk of losing all your money if you have invested in a single stock.
It is recommended that you buy S&P 500 index fund because it has an index of the largest companies in America. Here, you do not need to learn every detail of the stock market because these companies have a proven track record.