Investing your life’s savings can be an intimidating task. Especially when you are a college student and have a very limited amount of money. Believe it or not your twenties are the best time to invest your money. It is when you have the least amount of risk, no spouse or children to support. The best way to combat the intimidation factor in investing is educating yourself.
I came up with some questions and answers to get you all started!
What type of investment it best for college students?
– Some of the best advice I got from a professional is that the best thing you can do to start investing in college is to set up a mutual fund.
What is a mutual fund?
– A mutual fund is a portfolio of different investments such as stocks, bonds and other investment opportunities. A risk with a mutual fund is higher but the potential gain is higher as well. A mutual fund is something that will be saving for the long run you shouldn’t plan on touching this money until retirement. The best thing to do its to buy one on a website like Vanguard or Fidelity.
What is a certificate of deposit (CD)?
– Buying a CD gives you the ability to invest an amount of money you want for a short period of time. It is beneficial because CD’s have a higher interest rate than your money just sitting in a savings account. The risk is that you can’t take your money out before the CD ends. A typical length is around 2 to 5 years. Look into the different interest rates a local banks and find the best one for you. YOU WILL NOT MAKE A LOT WITH A CD. Don’t get me wrong a CD is better than your money sitting in the bank. It is important to remember less risk means less potential gain.
How much should I invest?
– It is important to invest only as much as you feel comfortable. Think way ahead, you won’t be getting this money back for awhile so you only invest what you don’t need in the near future.
What if I don’t think I have enough to invest?
– Every little bit counts! Something is better than nothing. If you really don’t have any money to invest, get a summer job save up and then invest that money and watch it grow.
What if I want to invest in stock?
– That is perfectly fine it is just time consuming going all out trading stocks. I wouldn’t recommend planning on trading your way up to riches, work your way up to that point. Buy a stock and have fun with it, I suggest something that is notoriously successful and a big established company. Again investing in stock without having the money to pay a professional is more for fun than for a get rich quick scheme.