There seems to be a popular opinion that the only people who get involved in the stock market are those with a lot of money. While that can apply for some, it certainly doesn’t mean that college students won’t be able to become great investors given some practice.
In fact, college students are a lot younger and more eager to learn than older people who decide to invest. This can mean that they can be a lot better at it too. Here are some ways for you to invest in the stock market if you’re interested in learning something new.
Why should you invest as a college student?
Most people will most likely wait until after their graduation to start investing and this is usually thoughts as the norm. On the other hand, though, there are quite a few perks to getting involved in the investing game early.
First and foremost, if you start investing as a college student, you will know a lot of things about the stock market by the time you graduate. When starting out, it is absolutely normal to not know everything about it and you are highly likely to make some mistakes. But the more experience you gain through your college years, the better you will become at it later on.
On top of that, by the time you graduate, you will already have a small investment which in a few years can prove to be quite profitable. While being a student, your funds will probably be quite limited too, so this process will teach you a lot about saving and handling money correctly.
Last but not least, you should keep in mind that just like with anything else, investing is only difficult in the beginning. Getting started might just be the hardest part and if you begin early you will have overcome this obstacle. If you continue investing after college, you will have a much bigger advantage than those who will just be starting out with it.
Also Read: 7 Steps to become a successful stock market Trader
What is the best way to start investing?
Learning about investing is actually the easiest part of this process. What troubles the most college students who try to get involved with investing is managing to save some money on a very tight budget. Saving money in order to later investing is the best way to start out.
After this step, the very next thing that is crucial to start investing is whether you wish to go with a managed investment account or rather follow self-directed investing. In order to help you get a better understanding, here are a few things you need to know about each.
Managed investments
This type of investing is essentially what the name implies, and that is turning your money over to a manager who will have enough knowledge in order to help you manage all the details of your investment for you.
This is quite an easy step for beginners who don’t know what else they should look out for and what else they will need to take into consideration in order to start investing correctly. A manager will help you not only manage your finances but also create a portfolio allocation, help you choose the right investments depending on your finances and interests and even rebalance your portfolio when and as necessary.
Managed investments are a great choice for anyone who doesn’t want to spend a lot of time handling their own stocks and investments. While this option will definitely not cost you any time, it will definitely cost you some money as you will have to fund the manager you will be working with.
Self-directed investing
This option is the one which will allow you to take everything under your control and know exactly what’s happening with your money and your stocks at any time from your own personal experience. This is pretty much the DIY version of investing and it will require you have quite a bit of knowledge on the field if you wish to not let your money go to waste in the stock market.
Through this method, you will have to create your own portfolio allocation and also do your own research regarding investments which will be worth buying. The problem with this tactic is not only that it will require quite a bit of knowledge from your side but also quite a bit of time as you will have to do research by yourself and also have everything ready in order to get started and make adjustments whenever necessary.
Robo-Advisors
Lastly, another possible way for a college student to get into investing is by using some online managing platforms called robo-advisors. These were specifically created with smaller investors in mind and will truly help you invest your money in something which can turn into profit.
This online platform will take your portfolio, investment money and based on a computer algorithm will help you automatically invest your money in the right place. On top of that, it will also be able to handle any kind of rebalancing if necessary in the future, leaving you with as little work to do as possible.
Also Read: The Complete Algorithmic Trading Bootcamp: Course Bundle
Which is the best option for a college student?
No matter which way you look at it, both investing ways have their advantages. Managed investing is more for beginners who wish to get started quickly and have someone guide them and teach them what they are supposed to do along the way. Self-directed investing is more for those who study something related to this field and who wish to spend some time to learn the basics and then experiment on their own until they get the hang of this market.
What you chose will largely depend on your funds and also your free time. Usually, college students don’t have a lot of time to spend on anything else other than their studies and if you wish to finish your course on time you should probably not trouble yourself with extra hours of research.
On top of that, there is always the chance that with self-directed investing you will make a mistake which at the end of the day might cost you money. It will take you some time, maybe even some years until you are fully capable of managing your investments entirely by yourself.
Probably the best option for college students though has to be the robo-advisors. While they essentially offer the same benefits as the investment managers, they will cost very little money to those who use them when compared to the managers. This alone can help you save money, time and also learn a lot about the stock market in a short amount of time.
Choosing the best way to invest
While there are quite a few ways in which a college student can start trying their luck with investing, it all depends on your own personal funds, time and dedication. If you believe you have enough time to put into learning about investing and you trust your judgment enough to decide for yourself, then you should go ahead and give this a try the DIY way.
Which one of these options do you think will best fit your investing needs?
Author Bio:
Kristin Savage has graduated from Columbia University where she was majoring in Germanic Languages. Besides English as her mother tongue, she also speaks German and Dutch fluently. Currently, Kristin is studying Spanish and planning to obtain her PhD in Applied Linguistics since she is interested in how to use her to some extent practical knowledge of language processes in everyday life. She has been a writer at Pick Writers for a few years and is known for her thorough approach to all the tasks and aspiration to fulfill assignments with flying colors.