It can be difficult to reduce expenses and save money for tangible investments when you have new friends and challenges as a student at college. However, college is a great place to begin investing. This can be advantageous as you are able to use compound interest for longer periods of time. Additionally, the risk of losing large sums of money is lower since students have limited funds.
Apart from the financial difficulties, the most difficult part of investing as a student involves thinking of yourself as an investor. Many college students view investing as something that is only for the “grown-ups” and those with high incomes. However, there are many low cost options that students can invest in starting at $10 to $50. Before we look at these student investments options for students who are keen to start their investment journey, I want to remind you that the first step to any type of investment is to create a financial plan. To do this, ask the following questions.
How do you plan to invest the money? Is it money earned from a side business while you are studying or a monthly stipend from your parents to pay for school expenses? It is important to know how consistent it is so that you can decide when you should invest.
What are the reasons for investing? How would you use the return of investment to start a new life, establish a business, or possibly further your education by getting a second degree.
What length of time do you plan to invest? Do you want to invest for months or years, or until you reach a specific target for a car or tuition fee, or for vacation spending? You might not achieve your investment goals if you don’t have a set target or a time frame. Once you have the answers, you can start to make the right decision about student investment.
These are some student investment options that you can explore with very little money to start building wealth for your future.
Government bonds
These bonds are safest for students who don’t want to take on risk. They also offer guaranteed interest that can be redeemed at a specific date. The government borrows money directly from the investor (in this instance the student) and issues a certificate, sometimes electronic, to the investor. It identifies the bond’s value, the interest rate and the date the bond matures. This is known as the nominal and par value.
Stocks, shares and Equities
It requires some knowledge in investment. However, a student eager to start investing can find the necessary materials online. Students can purchase shares of companies and receive dividends either quarterly or annually, depending on how they pay their shareholders. When the time is right, or the shares have reached a significant level, the student can decide to sell the shares to make a reasonable profit.
Crypto Assets
Although cryptocurrencies are volatile assets, their value as legitimate currencies has been long debated. Crypto assets can be a great option for student investments because of the unique opportunities offered by cryptocurrencies. There are many exchange platforms, and most offer educational materials for beginners. Coinbase, Paxful, and Nairaload, among others, provide an easy and secure way to purchase and sell Bitcoin and other crypto assets.
Savings accounts with high yield
These accounts offer a better option for students because they pay higher yields than average savings accounts and there is no risk. These accounts offer excellent savings options for emergency funds. You earn interest on your savings and there are no withdrawal fees. However, there may be a limit on the number of withdrawals each month that could result in a penalty.
Real Estate Investments
Real estate investments are expensive and rewarding. You might be wondering, “How can I invest in real estate as an undergraduate?” You can. If you have money saved in a high-yield savings account, you can put it in a fund or form a partnership to invest in real property. If done correctly, real estate investments can help you build wealth. There are many agencies you can partner with.
Summary
Although investing is not a necessity for education, students on a limited budget should avoid high-risk investments. This could lead to financial problems if they lose money. However, there are many benefits to investing. It keeps the student ahead inflation (the rising costs of goods and services in an economic environment), gives the student another source of income, and helps them build wealth for the future. It is possible to make a significant difference in your life by investing early in your life. With the student investment options described here, students can start with small amounts of money and grow their investment knowledge and build their portfolio. It is important to remember that you should not invest money you cannot afford to lose as a student.