There’s a pervasive myth out there that students – and millennial students in particular – aren’t very good with money. As any student nowadays would be quick to tell you, nothing could be further from the truth.
The fact of the matter is, in the 21st century, young people have to be considerably more savvy with their money than ever before; it’s a dog-eat-dog world out there, and life isn’t as affordable as it was in generations past!
Ask any financial manager or investments expert, and they’ll tell you that – despite such myths – students make outstanding entrepreneurs and investors. Why? Just because they are more imaginative than the average person, they have more precise an idea of the value of the marketplace (because most students have to live hand-to-mouth), they are better at saving, and they are also more willing to take calculated risks. The result is a set of potential investors who, with the right tools and motivation, could end up making a considerable sum of money for themselves, all while also focusing on their studies!
1. Read All You Can
All the information you could want about investing is out there and waiting to be read by you.
Alongside your studies, set aside an hour per day to read up on investment strategies and ideas – either online from a reputable resource, or from your local library.
The more you read, the more you’ll learn, and the clearer your ideas for your approach to investment will be.
The basics of investing are not complicated, but they will be unfamiliar at first. Take the time to put the study hours in, and reap the benefits afterward.
2. Start With a Clean Slate
If you’re planning to get into investing, it’s an excellent idea to start with a clean slate. What do we mean by that? Essentially, ensuring that all of your high-interest debts (e.g., credit card debts) are paid off in full. If you aren’t able to stay out of credit card debt, it’s likely that your first steps into the world of investing are going to have to be very cautious ones indeed!
Your student debt (if you have one) is likely to be from a low-interest government loan, which you won’t necessarily have to worry about too much. Make sure you are eagle-eyed when it comes to your finances, and can stay on top of all the ins and outs. Be aware of your studying as well, ask experts for academic help if you struggling with your assignments. It’s a crucial point as for young entrepreneur, because losing your first investment in education – not the best start of your business career.
3. Buy Your First Investments
When you’re ready to get started, you’ll first have to choose the brokerage which is best for you. There are two options here:
- Online discount brokers – As the name suggests, these are the cheaper options, due to their lack of overhead fees and pared-back nature. However, despite being more reasonable, they can be as useful as any other type, and internet technology has often proven online brokerages to have many advantages, such as the fact they use automated profile tools and do away with much of the human error and vested interests associated with person-led brokerage systems.
- Traditional brokers – The main advantage of traditional brokers is that they offer a personalized, one-on-one service. For newbies, this can be highly advantageous, as a professional will be able to answer all your questions. However, this also means they are often considerably more expensive.
When you’re set to begin buying investments, don’t do what all too many newcomers to investing do and borrow money to purchase your stocks. As a student, you need to be staying out of debt as much as possible. Start small, use the funds you have, and decrease the level of risk involved.
Diversifying your investments is the key to seeing the best returns, and this is as true for new student investors as it is for anybody else. Putting all your savings into one place may well lead to excellent results… but at the same time, it could also be your downfall.
Investing is a risky game, and by diversifying, you’re increasing your chances of success. Spread out your investment choices, put your money into lots of small, carefully considered stocks, and at least some of them are sure to hit the figures you’re looking for.
5. Start as Soon as Possible
Being a young investor gives you loads of advantages. You’re young, you’re carefree, and you’ve got lots of time to learn and master the art of making money from investing.
What’s more, young investors have their ear to the ground when it comes to the latest developments, and you may well be able to spot new opportunities which would pass older investors buy.
On top of this, young investors get the best of compound interest rates, which allow your wealth to grow exponentially year on year… if you kick things off when you’re 21 (as opposed to 81), you’re going to see your money grow a whole lot more!