As college students, we think of our finances as something that will get us through the semester. However, it’s so much more than that. So many billionaires have started their career in investing the moment they step into college.
You can start managing and investing your finances as early as eighteen years old. Whatever you have saved up, you can turn that into money you can pay your debts in the future, maybe even the money you’ll use to start your business. Investing as early as now can make fundamental differences in your life. Your first investment will be creating a bank account.
Starting a Bank Account
Before you invest, it’s essential to start a bank account. During the pandemic, you can create a bank account online so that you can keep track of your investments no matter where you go. All you have to do is visit the website of your selected bank, sign up for a bank account, deposit the required amount of money to start your account, and you’re good to go.
Interestingly enough, this is your very first investment because now that you have a bank account, you can gain a minimal interest rate every year, depending on your deposits. So essentially, the more you deposit money, the more you can get out of your account. So if you’re not planning to touch that account anytime soon, consider turning it into a high-yield savings account.
High-yield Savings Account
A high-yield savings account is a low-risk investment tailored for those who are new to investing. Because of its low-risk nature, it’s a significant investment to make while you’re in college.
This kind of savings account pays 20 to 25 times higher if you compare it to other savings account, but it does have its own set of requirements. To start one, you usually need to deposit about $1,000, depending on the bank. You might think that’s a lot of money, but imagine that you can get about $20,000 out of it in a few years. The great returns for little to no risk make this a fantastic choice for many amateur investors.
However, there are some disadvantages to investing in a high-yield savings account. The first disadvantage is that. A high-yield savings account does take some time before you can get a good ROI. If you’re someone who wants to make a profit as early as possible, then this choice is not for you. The second is that you do have to dedicate your savings to this investment. Finally, the more you withdraw from this account, the more likely you’ll lose money.
High-yield savings account that is left to grow, primarily if you’ve invested in it as early as now, can quickly pay off your college debts in the future.
Much like a high-yield savings account, investing in an index fund is a long-term, low-risk investment. It’s also pretty cheap too. You can purchase an index fund for as low as $50 and get yourself set up in the stock market.
An index fund is an accumulated amount of stocks from different companies in the stock market. This makes it a safe investment unless all the companies in your index fund lose money, which is highly unlikely. But much like a high-yield savings account, it’ll take some time before you can get a decent ROI out of it.
Invest in an Investing App
Another option you have is to start investing in stocks through an investing app like Robinhood. Compared to real-life investing, you don’t necessarily need a broker to support you online. For apps like Robinhood, you can invest for as little as $1.
The main problem with investing in apps like this is that the market is volatile. So compared to the options we’ve given you above, you’re going to need to spend a lot of time checking your investments. Sure, this option has the most probability of having the highest ROI in very little time, but it requires some expertise in what you’re doing. But if you’re interested to learn about investing while going to university, then this is the best choice for you.
If you have some money to spend, maybe from a part-time job you’ve worked for a couple of years, then consider investing in a Robo-advisor. It will keep track of your investments in any app, making it a profitable venture for you.
Most millennials want to retire when they reach 30, and this is one way you can achieve that dream. Early investments mean earlier profit. Once you graduate college, you’ll probably have enough money to pay your debts and start a business. With that done, you can easily reach your dream of retiring once you’ve got 30.