How to Invest as a College Student
Hi, my name is Cole Jungwirth and I am a junior Corporate Finance major at Wilkes University. I am also serving as an Intern of Finance for the Allan P. Kirby Center for Free Enterprise and Entrepreneurship. As a student-athlete with a passion for finance, I will be discussing a topic that is relevant for any student regardless of their discipline of study.
Investing. Woah. A scary, time-consuming, and risky subject. And especially for a college student, right? After all, would you have time to monitor investments after completing papers, homework assignments, sports practice, and enjoying time with family and friends? And if an open hour does miraculously appear in your schedule, is it spent by looking over risky and complicated money-grabs sent over an email or internet ad? Many students would answer these questions with a confident NO, and they are right!
If you answered no to either of these questions, you have come to the right blog. We need to sort out these common misconceptions about investing. It isn’t only for the Wall Street brokers, the wealthy mutual funds, or the billionaire sports team owners. Investing is for all of us, even college students. It doesn’t have to be millions of dollars, or even thousands. It can be as little as a few dollars a day.
It also doesn’t mean we’re flipping a coin to see if we make money or not. As college students, we want safe and steady ways to gain profit. Risking the day’s paycheck doing dishes at the Arena Bar and Grill on a roulette spin at the Mohegan Sun is not what we’re doing here. Rather, we’re doing what college students do best, making smart and researched decisions based on the facts that we are given.
Here are a few ways that college students can dip their toes in the water and begin their investing journey early. There are many different paths, and no one takes the same one! Doing something you are comfortable with, and knowing your own financial situation is key. Completing your own research on these methods can prove to be very useful for the future and may even add a little extra “cha-ching” to the pockets for the weekend.
1. Starting with a savings account
Yes, if you have a savings account with your own money in it, you have already started investing! Savings accounts generally have an interest rate that pays a percent of your holdings every year. Great work, you’re an investor!
2. Use a free or low-cost broker
There are many options for investing, all of which have their own perks and benefits. A few examples are Fidelity Investments, Charles Schwab, and Robinhood. They each provide educational tools to help you get started, as well as free and easy-to-use applications and websites. Some will even allow cryptocurrency trades if you want to get a little riskier.
3. Choosing a safe index fund
While choosing specific stocks may be difficult, as well as taking time and money that we college students do not have, index funds are safe ways to get a piece of the action. It’s a great way to learn how the market works and receive a diversified market portfolio.
4. Smart investing
As we get more comfortable with the market, and want to dive further into other options, we must always remember to have a measured approach. Going “all-in” is not the smartest way to invest. It is not a sure thing, but if we invest smartly, it can be profitable.
As it turns out, investing doesn’t have to be the scary monster that college students think it is. Whether you are a finance major, or in any other discipline on campus, investing is a great way to look towards the future. The most powerful machine on planet Earth is compound interest. Starting early will only help in the long run. Finally, make sure to do all your research on your own, everyone’s path is different.
Enjoy your investing journey!