So you want to get started in investing early but feel like you don’t have what it takes since you’re still young and studying. Fret not. Here are a few ways that can help you get started in your investment journey.
5 Ways to Get Started in Investing as a College Student
1. Start with a higher savings rate compared to others.
According to Marketwatch, Americans on average only save around 3% of their income which means we’re not saving enough. With a savings rate that low, how do you expect to build wealth?
Don’t be like the average American and do better. Start by creating a monthly budget and do your best to stick to it. Don’t complicate things. Keep it as simple as you can so that it’s easier to sustain. Just make sure that you set aside part of your regular income and start building your emergency fund.
2. Take advantage of technology and automate your savings.
One of the best ways to ensure that you’re building your emergency fund, and eventually a savings fund, is to automate your savings. Even if you think you’re a very disciplined person and you have good control over your spending, there will be circumstances that your discipline will fail you.
At this point, you would want to have a foolproof plan of putting money into your savings even if there are times you don’t want to. You can set up regular automated money transfers to your savings if you have a regular income. Another way to do this is to utilize apps that allow you to save money automatically.
3. Start simple and choose stocks.
When you’re starting out with investments, keep things simple and don’t over-complicate it. A good starting point for you is to invest in stocks. Stocks may seem overwhelming, especially when you’re new at it but despite its high-volatility, it brings strong returns over time. Just follow the basic steps and trust the process. Don’t get too clever and try to beat the market.
4. Consider house hacking.
For most of us, our biggest expense in life will be the acquisition of a house. If there’s a way for you to live in a home for free, that will allow you to redirect money intended for your home mortgage into even more investments.
You can look into buying a small multifamily property and renting out a unit while you live in the other. By doing so, your tenant’s rent will already cover your mortgage while you get to live for free as you build equity on property investment.
If you can’t buy a property yet, perhaps you can partner with your parents and have them co-sign the mortgage for you to qualify.
If you’re not ready to invest in a property but interested in real estate investments, consider looking into crowdfunding websites that provide loans for investors.
5. Think of a side hustle you can get into.
To invest more money, you need to start making more money. Look for a side hustle you can do to earn some extra money on top of what you’re getting regularly. You can use whatever amount you get from your side gig to speed up building your emergency fund or to channel into other investments. There are a lot of great side business ideas for students to do. You just need to find the one that’s right for you.
Getting started while you’re young will put you ahead of the game. Just remember to always be wise with your money and not be reckless with your investments.