It?s no secret that the average college student doesn?t have a lot of disposable income. In fact, most are up to their eyeballs in debt long before graduation day comes.
Despite having debt, some college students have the desire to start investing early for their futures. Considering the bleak outlook for social security benefits it shouldn?t come as a surprise to the rest of us.
Nevertheless, investing may seem complicated and it can be intimidating to some. Fortunately, there are four easy ways college students can invest.
1. Micro Investing
One of the easy ways college students can invest is by micro investing. Since they lack money in general, micro investing is a way they can start with very little cash.
Stash Invest has an app that allows them to essentially invest spare change. It links to their bank account you can start investing with as little as $5.
You get to select from a grouping of ETFs and stocks and invest based on your goals and tolerance for risk.
2. Fractional Investing
Another easy way college students can invest is through fractional investing. Some stocks they may want to invest in are thousands per share. In the past this has made investing in them a dream for college students on a limited budget.
But with apps like Stockpile, they can sign up free and start investing in their favorite choices with as little as $5.00. What?s more there are no monthly fees or minimums beyond that. It?s a fast, easy, and fun way to start investing.
3. 401(k)
There are employers that offer a 401(k) retirement plan to their employees. If a college student is lucky enough to have a job where this is offered they should sign up.
Most likely a percentage of their pay will need to be contributed. However, this is deducted before taxes are withheld. Then, the employer may offer to add funds as well if the student matches the same percentage.
College students who take advantage of this option can choose which funds to invest in. They can also place money in faster growing funds or some with lower risks.
4. Robo-advisors
Robo-advisors should be counted as one of the easy ways college students can invest. The trading fees are low and they do most of the work for their investors. This makes them a perfect choice for busy college students.
Most robo-advisors have very low minimum investment requirements. In fact, you can invest with Betterment with no minimum balance required.
Students can access their investment accounts easily and on the go from an app right on their phones. This lets them check on their investments whenever they have a few free minutes.
Additional Thoughts
While it?s true that college students should begin investing as soon as possible, they also need to learn to manage their money responsibly.
If they do not already have budgeting skills they should talk to a peer, take a class, or research about budgeting methods. Then, they should set up their own budget and continue tweaking it until they have a system that works for their needs.
Furthermore, they need to control their spending and keep their debt as low as possible. They should set financial goals that are achievable and can also be re-evaluated as time passes.
Investing for retirement in any market while still in school is not a bad idea for college students. However, they should know it needs to be a life-long process and done in coordination with other money management tactics.
Do you feel it is wise for college students to start investing? How else can college students invest?
Photo courtesy of: freestocks-photos
Wise Dollar
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