The College Student’s Guide To Investing

The average student loan debt currently stands at $32,731 for each borrower. Making smart investments and building healthy financial habits is key to helping students grow their wealth and paying back those student loans. Although delving into the world of investing can seem daunting when you’re a broke student, there are a number of approachable, low-risk options you can take advantage of.

Invest small amounts every month

There are plenty of free or affordable brokers offering stock and ETF trades, along with helpful tools and resources to help you get started investing. If you choose a commission-free broker, you’ll be in a good position to invest small amounts (like $10, $20 or $30) once a month. Since you won’t have to pay any fees, all your money will go directly into your stocks and funds. Investing small amounts will encourage you to follow the market, conduct research, and analyze your holdings without breaking the bank. Moreover, using a money management tool can help you stay on top of your finances and budget money to set aside for investing: check reviews of each option to choose the best tool for you. For example, rather than reading overviews that cover several fields, narrow it down and look at a Boro review if you’re considering the Borrow money app for college students: this will outline its full range of useful features like automatic expense tracking, personalized spending tips, and monthly budgeting goals.

Look into CDs 

Certificate of deposits (or CDs) are products offered by banks and credit unions. They also double as safe investments, perfect for college students looking to grow their wealth without risk. With a CD, you give the bank a lump-sum deposit and leave it untouched for a set period of time. In return, you’re paid a fixed interest rate (be sure to shop around to find the best one). So, for example, if you’ve saved up money to pay for next year’s tuition fees, leaving it in a CD will keep it safe until you need it — you won’t be leaving it to fluctuate in value on the stock market. Alternately, if you’d prefer the ability to make withdrawals as and when needed while still benefiting from a similar fixed interest rate, you may want to consider opting for a high-yield savings account instead.

Buy an S&P 500 index fund

An index fund is a specific type of investment fund based on an index (a collection of stocks). In particular, Standard & Poor’s 500 index funds (based on major American companies) are some of the most popular investments, returning an average of around 10% every year. Since the stock holdings are highly diversified over a broad range of companies and industry sectors, it’s less risky than owning individual stocks. Even better, buying an S&P 500 index fund is great for newbies — it’s a strategy that doesn’t require much prior knowledge of investing.

Learning to invest can help students work to secure their financial future. Starting to invest small amounts of cash every month, opting for CDs, or buying an S&P 500 index fund are three key ways college students can get started in the world of investing.

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