Start Early
The best way to have knowledge and understanding of how to earn and save money is by starting young. As a college student, you’ll probably have a summer job to earn extra cash when you need it. The question is how are you going to spend the money you earn? Will you spend it on things like brand new clothes or use the money as an investment to grow more income?
If you answered the latter, then you’re on the right track to the path of saving money for your future. This is because when you invest your money as early as today, it will be worth more than what you initially put in by the time you retire.
Investing your money is a great way for you to save money for your future. It also offers extra income that can help you with your daily needs. As long as you are responsible and disciplined with investing, then you’ll surely have a successful journey in investing your assets.
Why Should You Begin to Invest in College
The main reason and advantage why you should start to invest while you are in college is Time. The time you have allows you to earn early and be able to save more while you’re still far from your retirement years. Time also allows you to learn and be wise about the decisions and risks you need to take.
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Growing Money with Time
Time is a great way to grow your money hence why the earlier you put your money in an investment, the more time it will have to increase and multiply. However, most college students can be rather impatient especially when it comes to money. This is why you need to look further to see and reap bigger in the future.
Time allows you to have a lead instead of investing when you are already in your 30’s. It allows you to gain more while you are still young and then reap greater rewards during your retirement years.
Open An Account
To start investing, you need to open an account. If you’re worried about the cost of opening an account, don’t. With today’s modern advancements, it is now possible to open one for a low price or even free so that it can be readily available to everyone who wants to open one.
There are now various places and mobile applications that you can invest your money in and buy free stocks. Below are some platforms where you can open an account.
- Robinhood: if you opt to invest in individual stocks or trade options, then this is a great platform to choose. The platform is free to use but may not be ideal for those who are just new to investing as it does not allow fractional share investing.
- M1 Finance: The platform offers free investments in stocks and ETFs. Here you can create a portfolio and automatically invest in it for free. This is an ideal platform to use for beginners as it won’t cost you money.
- Fidelity: This platform is popular amongst brokers. It also provides free various investment options such as no minimum IRAs and commission-free ETFs.
Account Types
There are various accounts that you can choose when you open one. But what you need first is to open a Brokerage account and then take it from there. Below are some account options to consider:
- Cash Account: This is a basic account that allows you to buy any security type you want with your cash on hand. This is perfectly suitable for beginners and those who want to have an option to take their money out before retirement.
- Margin Account: It is quite similar to Cash Account. The only difference is that it can lend you money for investment. It also offers other services such as selling uncovered options and shorting investments.
- Traditional IRA: It also functions the same as a cash account wherein you can buy securities with your available cash. However, it has account limitations in which you cannot withdraw your money until you reach the age of 59.
What to Do
Now that everything is settled and you have opened an account, the only thing to do is to educate yourself and involve some discipline in your time and actions. There will also be times that you can or may lose some money but that’s okay as it comes when you invest.
Also, It is highly recommended that you invest in index funds. Index funds are a type of investment that tracks the market index and typically consists of stocks or bonds and comes as either an ETF or mutual funds. Some of the common and recommended Mutual Funds and ETFs are:
- Vanguard Total Stock ETF (VTI)
- Vanguard Total Stock Market (VTSMX)
- Schwab S&P500 Index (SWPPX)
- Vanguard 500 Index (VFINX)
- iShares S&P500 Index (IVV)
