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Is investing something that you must wait until you’re out of college and established in a regular job to do? Absolutely not. The good news is that you can participate even if you have just $100 or less set aside. You can begin now, but there are a few things that you need to keep in mind as a student. Get started with the tips below.
Organize Your Finances
Since you’re a student, you’re probably on a tight budget. It’s important that you don’t dip into money that you need for tuition, rent or other necessities to make investments. Even a successful investment can mean that your money is locked up somewhere you can’t access it for a while. Therefore, if you don’t already have a budget, you need to make one because it’s important to know what you can spare and if there are places where you could spend less to free up money you can use.
You might also want to take this opportunity to change or improve some of your habits around money. This is not a bad time to apply for a credit card since they can be easy to get as a college student and can help you start to build a credit history. It’s also handy in emergencies if you need funds fast. You can review a student guide to help you decide which card will be best for you.
Getting the Cash
You may need far less money than you need to begin investing. That said, even coming up with $100 might be something of a challenge, or you may want to invest in something that requires a bigger sum up front. There are a few relatively easy ways to get the cash that you need. As a college student, you probably don’t have a huge amount of free time, but if you can pick up a little gig work here and there.
Then put the whole amount that you make toward your investment savings, you can put together several hundred dollars in just a few weeks. Another option is to simply set aside a little bit every week from your regular budget. If you can come up with just five dollars a week, you’ll have a hundred dollars in a few months. Yet another way to get the money is with a spare change app, which rounds up purchases and invests the difference.
Educating Yourself
These days, you can read a beginner guide and set up an online brokerage account and have roboadvisors do most of the work for you, but if investing has piqued your interest in your college years, chances are you really do want to learn more about the topic and perhaps be a little more hands on. One great thing about being a student is the easy access to resources. Regularly reading the financial news in “The Wall Street Journal” can be a great way to learn more about the stock market, and you can probably access it through your school. Reading books on investing, listening to podcasts, or watching videos, and playing with an online simulator are all excellent ways to teach yourself more.
Taking the Plunge
After you’ve done all the above, you’re ready to set up an online brokerage account and get your feet wet. It can be tough to choose among the many different brokerages and figure out what each has to offer, so look for an online guide that breaks down some of the options for you. When you’re choosing your stocks initially, don’t get overwhelmed with data. You can dig deeper into this later, but for now, choose companies that you’d like to have some ownership in and that are reasonably stable based on your research.
Read company annual reports to get more insight into their finances. Start with just a few stocks. You can build your portfolio slowly over time as you get a better sense of who you are as an investor and what your goals are. If you’ve been educating yourself, you should already know lingo such as spread, limit orders, market orders and stop-limit orders, and if you don’t, learn it now. If you’re feeling overwhelmed, you can still automate the process with a roboadvisor and take a more hands on approach later.
