College life is associated with a variety of challenges and life changes, but it is also a time of gaining experiences and making the most of incredible opportunities. One such opportunity that unfortunately often gets overlooked is that of making investments. If you are a college student who is looking for the right time and opportunity for you to start making investments, here is how you can get started.
Is It Too Early to Start Investing As a College Student?
There is a common misconception among students, and sometimes even other investor groups, that college is a far too early time to start investments. This cannot be farther than the truth. If anything, starting out your investments during college can give you the ideal headstart you need for long-term wealth creation.
While it is true that the needs of college life do not always present the ideal circumstances for saving up a lot of money, there are still various investment plans for students that can work even with low budgets. At the end of the day, the key is not how much you invest, but how early on and how regularly the students invest in the right investment tools.
Benefits of Investing as a College Student
Apart from getting an early head start in investments, here are the various benefits you, as a college student, can reap from making investments:
- Early Experience: Becoming familiar with investment avenues and starting out your investments early on in life gives you some much-needed experience, even before your graduation has taken place.
- Savings: With the job market being as unpredictable as it is, making investments for students in India can ensure that you are self-sufficient and have a decent amount of money saved up for a rainy day.
- Milestone: Early investments that are done during your college time also serve as a significant step towards one of the most important milestones associated with adulthood – managing and investing your money.
- Opportunity to Learn: It is one thing to read about investments and it is an entirely different thing to make prudent investments in real-life. By making investments in college, there are a number of lessons about finances and markets that you can learn earlier on in life than most people.
- Trial Run: There is no doubt that the budget you will be making investments with during college will be limited by various constraints. However, the investments you make within this limited budget will serve as the perfect practice ground. When you have a full-time income and a much larger budget to work with, this trial run will prove all the more valuable.
How to Start Investing if You are a College Student
Now that you are familiar with the benefits associated with investing as a college student, let us look at the main steps that you need to take to get started with the investment experience. Here is a breakdown, or investing 101 for college students, to get you started off:
In order to have any money to invest, a person must first learn how to accumulate enough money to be able to invest. If you are a college student, this means that in the absence of a traditional income, you have a limited budget to work with. However, this is not so much a constraint as it is an opportunity to develop financial discipline in a few simple steps. Essentially, the processes of saving and investing for students can go hand-in-hand.
After accounting for major monthly expenses, start setting aside a little amount of money at a time. This can mean transferring a few hundred rupees here and there to another account. Over the course of a few months, it will grow into a substantial enough amount to start your investing journey.
As a college student, your main priority is to meet your educational goals and deadlines. However, depending on your schedule, you might also get a spot of occasional free time. In any case, the next step on your investment journey should be to determine how much time you are looking to spend on your investments.
An important decision most investors take at this point is to determine whether they want to go into investment avenues that are managed by professionals or to direct their investments themselves. One of the most useful investment ideas for students
is to opt for managed investment avenues. You will be simply required to fund the investments regularly and the rest will be managed by professional, full-time financial experts.
No two investment avenues are the same. Some offer modest returns over time but are designed to be resilient to market risk. Others carry the promise of greater rewards in a short period of time but carry an immense risk for the investor. But it is exactly for this reason that the investor needs to gauge his or her risk tolerance and then choose the investment tool that best works for them.
After all, no two investors are the same either. That also applies to students who are essentially new players to investment but each of them comes with their own goals and preferences. If you are planning to start investing as a college student, an important step is to research the various investment avenues on offer and see which of them align with your risk appetite.
All in all, starting out investing in college can at first be overwhelming, but it can be quite easy if you know where and how to get started. For a lot of beginner investors, a great place to start is a reliable, low-cost brokerage firm. In today’s time, making investments has become easier than ever before thanks to the research and educational resources readily offered by new-age brokers.
Many of these brokerage firms also offer their own smartphone applications to make investment more convenient and much easier when you are on-the-go. You can get started with just a little amount at first, and the brokerage apps will offer you a variety of options based on your risk, investment time horizon, and other preferences.
As a college student, if you are wondering whether it is too soon to step into the world of investment, rest assured that there is no such thing. If you have the inclination and even the smallest of budgets, there is likely an investment avenue out there for you to get started with.
Remember to inculcate a habit of saving, determine the amount of time you want to put in your investment process, get an idea of your risk appetite and find the right platforms and brokers to help you along.