If you’re in college, it’s a great time to start investing. You have several advantages over people who wait until they’re out of school to begin investing: you’re young and you have time on your side, you’re probably not supporting a family yet, and you may not have as many expenses. Here are some tips for getting started.
Start investing as soon as possible
The earlier you begin investing, the more time your money has to grow. For example, if you invest $10,000 at age 18 and it earns an average annual return of 7%, by the time you’re ready to retire at age 65, that money will have grown to more than $200,000. If you wait 10 years to start investing, however, even if you contribute the same amount of money and earn the same return each year, that money won’t grow to nearly as much–just over $93,000.
Open up a savings account
Saving money can be challenging, but if you have an easier way to put away small amounts of money for your future, it makes the task a little easier. Consider opening a high-yield savings account or even a certificate of deposit (CD) that grows with interest until you need it.
Look for ways to cut back on everyday expenses
It’s easy to spend money without thinking much of it, but it can add up quickly over the course of a month. Start by tracking your spending and making a budget before finding areas where you can cut back. Try reducing the amount you spend on entertainment or dining out, or eliminate unwanted subscriptions you don’t really need.
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Take advantage of any programs your school offers for investing
Many colleges and universities offer investment programs for their students that are managed by professional money managers. These programs usually charge lower fees than what you would pay if you hired a money manager on your own.
Research the best investment options for your situation
There are a wide variety of different types of investments available to investors, each of which has its own strengths and weaknesses. For example, stocks tend to offer higher returns than other investment vehicles over time, but they also have more risk attached to them.
Bonds are generally safer than stocks because they are less volatile, but they may not offer the same potential for growth. Mutual funds and exchange-traded funds (ETFs) can make it easy to diversify–that is, buy a small piece of many different investments at once. They also tend to have lower fees than individual stocks or bonds.
Start investing even if you aren’t making much money
You don’t necessarily need to be earning a high salary or have a lot of money in the bank to get started investing. Thanks to modern technology, there are now many different low-cost options for investors who want to start with small amounts of capital. For example, some websites allow you to buy stocks for just a few dollars, and there are also low-cost index funds that you can invest in.
Don’t be afraid to experiment with different investment strategies
When it comes to investing, what works for one person may not work as well for you. Be willing to try out different approaches and see which ones might earn you the best returns. If a strategy doesn’t work out, you can always switch to something else. As long as you’re committed to saving and investing for your future, you will be able to build a solid nest egg that will serve you well when it’s time to retire.
Take advantage of financial aid and scholarships
Many students don’t realize that they can get financial aid or other forms of assistance to help them pay for college, from Pell Grants and 529 plans to scholarships based on merit or need. Make sure you understand all the options available to you so that you can get the most out of your education.
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Remember: the sooner you start investing, the better! Follow these tips to begin your investment journey.
