After high school, college students have to make big changes. It’s hard to believe that anyone has the time or energy to invest in this new group.
It is surprising that college is one of the best places to get started in investing. Even those who have very little money can start to build a portfolio. This is because you will be learning how to invest and deal with inevitable losses without having to lose a lot of money. In this area, it is better to figure it out yourself. In matters of study, you can delegate, hire someone to take my online exam, and in the matter of investments, you risk private property.
College is the best time to invest
College can be a difficult time to save up enough money to pay for the things that you want. It doesn’t cost much to get started in the investment game. All the low-cost or free options today can get you started in investing. A modest $20 to $30 will get you there. It also encourages you to think about investing.
The hardest thing about investing is thinking of yourself as an investor, whether you are a shareholder in publicly traded companies or a holder for various cryptocurrencies. As for students, there are websites that help with homework, and for investments, there are a lot of sites that help in investment education.
It’s important to have a long-term view of your holdings. You should analyze the market regularly and make moves that seem likely to pay off. These lessons are valuable, especially if they are not expensive.
Although we tend to think that investing is reserved for the wealthy and well-off, it doesn’t necessarily have to be this way. Even before students start building their careers, they should think about how investing can help them create and secure their financial future.
These are seven steps for college students interested in investing. They can choose from the safest to the riskiest.
1. You can get a head start on your peers with a high savings rate
The majority of Americans have a terrible record when it comes to saving money. MarketWatch reports that the average American saves only 3% of their income. You won’t be able to create wealth with a savings rate that is even close to this.
Start by setting up a budget. We recommend using Tiller. You don’t have to make it complicated or elaborate. Keep it simple at the beginning. You should also map out your monthly expenses as well as your irregular expenses. Your income as a student may also be irregular, with a lot of your income coming in the summer months. You can set aside some of your income to fund an emergency fund and divide the rest among expenses and investments.
These financial tips are specifically designed for students. Don’t complicate things at this stage of your life. Spend less and save more. Resist the temptation to show off your friends by buying a car or showing your generosity with drink-buying.
2. Automate your savings
My firm belief is in the importance of systematically implementing good habits like working out and saving money. You will eventually lose discipline, so it is important to have more willpower and less discipline.
Automated money transfers can be set up if your income is consistent. You can also ask your employer to split your direct deposits between your brokerage account and your savings account.
There are many other options available. You have a growing list of apps that will help you save money. Acorns, for example, will automatically round up debit and credit card purchases to the nearest dollar. The difference will then be transferred to your brokerage account. A broker such as SoFi can help you set up automatic investments and create an IRA/Roth IRA. Chime is another option that offers similar automated savings services.
No matter how you do it – automate your savings and investment, so you don’t have to work every month building wealth.
3. Purchase an S&P 500 index fund
An index fund is a great way to start investing. Many index funds are based upon the Standard & Poor’s 500 indexes of large American corporations. An index fund contains shares of all stocks within the index. In the case of the S&P 500, it may even contain hundreds of them. The fund holds stocks from a variety of industries and offers more diversification than individual stocks.
An index fund’s advantage is that you don’t need to be an expert to start investing. An S&P 500 index fund can be compared to buying the market. You’ll receive the market return. It’s an excellent way to learn about investing and the strategy Warren Buffett, a legendary investor, and billionaire recommends.
4. House hack
House hacking is a great way to save money on real estate and live comfortably.
House hacking can be done in a traditional way. You buy a small multi-family property and move into one unit. Then you rent out the other units. You get to live in a property while earning equity by renting out the other units.
The largest expense that most people incur is housing. If you can afford to live in a home, it will allow you to free up a lot of money for other investments. It is important to save that money and invest it, not spend it. Tip No. Tip No. 2: Automating savings and not depending on the discipline.
Your parents may be able to help you if you are unsure how to afford to purchase a property. They can help you qualify for the mortgage by being your partner in your first real estate investment. They might also be able to help with the down payment. You can volunteer to manage the property, from screening tenants to collecting rents to handling repairs.
Remember that real estate ownership can have sporadic but real costs. You should budget for vacant properties, repairs, and occasional evictions.
5. Crowdfunding: Invest
Crowdfunding websites are a great option if you don’t want to purchase a property but still like the idea and potential returns on your investment. You provide the funding, and they provide loans to other real estate investors.
Crowdfunding websites accept only money from accredited investors. These investors typically have to be over $1,000,000 in net worth or make $250,000 per year. You are not an accredited investor if you have limited funds. There are some real estate crowdfunding sites that are available to all. These are some options for students just starting out.
Fundrise. Fundrise has been paying investors returns between 8.7% and 12.4% since its inception. You can invest as little as $500, and you can choose from income- or growth-oriented investments.
RealtyMogul. RealtyMogul offers several investment options and accepts investments as low as $1,000. Since its inception, the MogulREIT 1 fund, which has returned 8% per annum, has been paid out monthly in distributions.
Groundfloor. Groundfloor allows you to dip your toes in crowdfunding without exposing yourself to too much. Groundfloor offers investment returns of 5% to 25% depending on the property’s grade and lock-in period. To balance risk and return, investors can choose the types of properties that they want to invest in.