College students typically love spending their allowance on watching movies, hanging out in cafes, travelling, and other entertaining activities. But if you are a student who does not belong to such spender type and love saving money, congratulations! You have come to the right reading.
Why start investing
If you ever wonder, “Why should I start investing my money at a young age? I still want to live my youth life.” The answer is pretty simple: investing can help you live your life at the fullest while saving for the future.
Let’s say you receive a US$1500 yearly allowance from your parents or you earn more than US$1000 from working part-time during the summer.
Now you choose, if you spend all the money on drinks or foods, you can have fine dining all year long. But if you can spare some money and invest them, by the time you graduate – assuming you do nothing with the initial investment, your money could double to around US$15,000 or so.
Investing, however, never comes at no cost. There are risks and bitter chances that you might lose your money, especially when you have a little knowledge of where and how to invest as a starter. Therefore, read the following article to not get lost in your investment strategy.
How to invest money
Remember, investing money is a big decision. To get started, you must find a broker who is willing to deal with investing small amounts of money. Online media is a good and fastest place to find a broker. After you find a broker, pay attention to the commissions associated with your preferred investments. NerdWallet suggested to pay close attention to these options.
- Individual stocks which require you to pay a per-trade commission of $4 to $7. But some brokerages also offer per-share pricing.
- Options trades which incur the stock trade commission plus a per-contract fee. Yet, there are brokers who charge only a commission or only a contract fee.
- Mutual funds carry internal fees called expense ratios. You can either take it or leave it by selecting a broker that offers no-transaction-fee mutual funds.
- ETFs are like a stock and are purchased for a share price.
- Bonds which might charge you a fee to purchase individual bonds with a minimum and maximum charge. But you can purchase bond mutual funds and ETFs at no charge by using no-transaction-fee mutual funds and commission-free ETFs.
In addition, you should be “sceptical” regarding each information you receive. Why? Because according to Andre Hallam, the author of Millionaire Teacher, only by being sceptical of nearly everything people tell you when they are giving financial advice, you will be educated enough to make a good investment decision. You should not listen to a salesperson or financial advisor who refutes or supports certain advice as well. Find an academic study, something truly impartial, Hallam wrote.
Where to invest
After understanding what investment is, it is time to find a good place to invest your money. For starters, Hallam advised that you can invest in assets that appreciate over time because currencies (except cryptocurrency) don’t rise in value. When you trade currency, there is another person on the other end of that trade that will love to see you fall.
On the contrary, investing in assets will give less risk. For instance, you and your friend traded a stock market tracking fund for as long as stay in college. Both of you will benefit from the rising value of the stock market plus dividends. Moreover, the overall stock and bond markets increase in value over time just like real estate prices.
Hence, if you want to buy an asset and begin today, here are a few recommendations where to open an account.
The platform allows you to invest in stocks and ETFs for free. You can also build a portfolio and invest in your portfolio for free.
Robinhood gives the option to invest in stocks or trade option. It might be hard to use than M1 but their platform is also free. You should be informed that Robinhood does not allow fractional share investing which means without a pile of money, it will be hard for you to register to the app. However, this is one of the awesome apps out there.
Fidelity offers some free investing options, including no minimum IRAs and commission-free ETFs. They charge commissions and have minimums for other products and services.
Ally is a stockbroker that offer commission-free commission trading. They have high-quality ETFs from market leaders that might complement your portfolio and help diversify your investing strategy.
A piece of advice
Now that you know where to invest and the type of investment, it should be noted that this short information is just as a guide, the rest is that you should be more knowledgeable by surrounding yourself with those who know about investment, the real person in the area.
Here are things to consider when contacting a broker. First, because you are a college student, you might not have a million to start, therefore, find a broker who accepts a small amount of cash, for example, $50 dollar. Then, you can increase your overall capital by investing more money on a regular basis. Second, remember that your personality and available funds are two determining factors for any risk happened in future.