Investing in college days is the best time to explore your investing options. If you are looking for the best way to invest as a college student, this article is worth your attention.
There is no second thought that you must be a student investor to achieve your big financial goals in the long term. At the same time, you must know how to invest as a college student, so you do not lose money.
In the beginning, all financial markets look appealing, and student investors are too tempted to jump into any available options. Young adults start earning money, get savings accounts, get an all-new credit card, and pass investment advice to each other.
They begin to explore brokerage accounts, investment accounts, and other types of investment to grow their money. It is a positive sign as investing at an early age multiplies the growth potential manifold.
Be sure to investigate your broker before you begin investmenting your money with a brokerage firm. (You can do this by checking FINRA BrokerCheck.)
There are many financial markets in the world, such as forex, commodities, real estate, and many more. These markets require large capital, and students can’t invest in them. Cryptocurrency investment is a new form of investment that appeals to college students the most.
Yet again, the market is new, volatile, and risky, with few guides to help the budding investors.
Does it seem like all options are closed? No, not at all.
There are plenty of other options to explore that offer good profit margins and are a safer option to place your investment.
So are you asking where should I invest my money as a student?
Well, there is no one answer to this question. It varies from person to person and the goals they want to achieve.
Personal Opinion
In my opinion, the best investments for college students must be the one that offers a good return on investment and medium risk level. In the given scenario investing in stocks for college students is one of the best options.
Investing in the stock market is a traditional way of investment for successful investors. It is one of the most practical ways of utilizing your earnings for future use.
The stock market is a lucrative market. If done the right way, stock investment yields great fruits, taking away worries of paying back student loans to building retirement plans for college students.
Therefore, with major burdens like student loan debt out of the way your finances can become more stable.
Getting to Know Stocks
If you want to know how stocks work and how to invest in stocks as a student, keep reading this article.
The article also discusses choices for the best stocks and all other aspects that you need to know as you enter the investment world.
What Are Stocks?
Stocks are a leading financial instrument. It is also known as equity. Stocks represent a fraction or share in the ownership of a corporation.
They are available at stock exchanges and online trading platforms. People purchase stocks as a means of investment. Usually, they purchase different stocks to build a diversified portfolio and sell them at higher prices. It helps them make a profit over their initial investment.
Let us see how stocks work
Companies issue their stocks in the financial market for the public to raise funds in IPOs (Initial Public Offerings). At IPOs, stockholders sell their stocks to the stock markets or private platforms.
These shares are then available for sale in the financial markets. Investors and the public purchase these stocks as a means of investment. The real game begins as investors get hold of stocks.
Investors look at the market value of their stocks and base their trading activity on market expectations. They hold shares until market conditions are expected to grow and sell them at the highest expected value.
However, sometimes investors see a declining trend in stock value and sell it to avoid loss in their investment.
The basic formula is to recover the invested capital and profit over it. Shareholders also increase the profitability window by receiving dividends and through derivatives.
Various types of stocks work differently and possess different risk levels. Investors should build a comprehensive strategy to invest and earn profits from the stock market.
Why Should I Invest in STOCK As A College Student?
Before we jump to know why to invest in the stock, let us explore whether a college student can invest in stocks?
Yes, college students can invest in stocks as they are 18 years old or older. As young adults, they are allowed to make their financial decisions. Students below 18 can also invest in the stock market under minor investment laws.
Investment is a good habit. It is a two-way process for which first, one has to save money. No matter big or small. Later, they have to invest it strategically to make it work.
As college students start it really early, they get a good time to keep investing and growing their finances with time. Investment managers recommend stocks as simple investments for students.
The stock market is flexible. There is no maximum or minimum limit for investment. Traditionally it required a bit sum of money to enter the financial markets. However, thanks to mutual funds no such limitations exist in the current era.
Note: Mutual funds are actually companies that use multiple people’s investments for bonds and stocks etc. Moreover, each investor has a percentage of the combined value of securities.
College students can invest with any amount they want to put aside as capital to enter the stock market. However, it is necessary to choose low-risk stocks to avoid a financial loss at an early stage.
What Are The Best Stocks To Invest In For College Students?
If you are still reading this article, you are probably looking for some options from the stock market to invest in during your college life.
There are many options available in the market. With thorough market research and expertise, we have narrowed down the choices for you.
-
Alphabet INC
Alphabet INC is one of the fanciest multinational technology companies in the world. Everyone knows about it. It is a parent company to big names like Google and related subsidiaries.
The company presents a revenue of 257.6 billion USD in 2021 and is currently one of the most demanding companies where investors want to invest their amount.
The company offers various classes of stocks for investors. The company’s stocks are the safest option to invest in because of a stable company position and expectation to grow in the future.
Their stocks are readily available at stick exchanges and private trading platforms. -
Netflix
Netflix is popular among college students and is the leading and fastest-growing video-streaming market in the world. Most college students are paid subscribers of the service.
They don’t know that they can invest in the company and then get its subscription to watch shows for growing their investment.
In 2021 the value of NFLX shares had increased by 50%, and the current market value observes a new high every day.
With shares outstanding of $443.69 M and revenue per share of $67.01, the company’s stocks are in high demand.
Netflix has 222 million subscribers. The company gets huge investments such as subscription fees that greatly impact the overall economics and value of the company’s share. The company can further multiply its profit ratio by increasing its subscription fees by $1 only. -
Chegg (CHGG)
Chegg started as a company investing in college students by providing physical textbooks for students across America. Now it stands as the best investment plan for college students.
Along with financial security, it is student investment in learning opportunities.
Chegg is growing into a powerful digital subscription business that increases the company’s revenue from 73% to 77%. It added $97.4 million into the company’s account. The former book rental and purchase services contribute 23% to the company’s economy.
The company offers stocks in the open market where investors purchase Chegg’s INC stocks to earn profits. -
Lockheed Martin (LMT)
Lockheed Martin stocks offer solid profits on purchasing and long-term holding of stocks. The company contributes to the defense of the country by introducing innovations in aircraft technology.
As the government continues to invest more in building fighter jet technology, Lockheed Martin continues to receive more investment and grow economically.
The company offers great profits by purchasing and selling shares and also with its dividends. It is included in the list of the seven best blue-chip stocks, so investors look forward to investing in the company as they get financial security.
These stocks are a hedge in the volatile stock market. These stocks are only available at the stock market exchanges.
The market position of LMT stocks draws more capital from the financial market. The company has earned a new high in 2022, and many investors are interested in investing in them.
College students must look out for the available LMT and invest in this blue-chip stock for a better future. -
Berkshire Hathaway
Berkshire Hathaway is a brilliant choice of stocks for college students. The stock provides a good return on long-term investment.
Although its market value fluctuated a little during the pandemic crisis, however, it has a good performance record historically. The company has provided a 20% compounded annual profit to its shareholders.
Berkshire Hathaway stock brings shares from stable companies like Coco cola, GIECO, Heinz, Duracell, and many more. Recently the stock also included shares from the technology company Apple to boost its value.
The stock charms investors by providing a 90/10 asset allocation formula by Warren Buffet. Stocks can be the best investment plan for college students as it has been for retirees and other investors. -
Starbucks (SBUX)
Starbucks is again a famous company on the list. It is popular among college students for offering a good coffee and free WiFi connection for everyone coming to their cafe. At Starbucks outlets near universities, you will always get a jam-packed situation as students are typing or using their devices on free WiFi for long hours.
Of course, the cafe lets its customers use the internet for free as it is making some profits by its WiFi consumption data.
The company offers a unique profitability window for its shareholders. It uses WiFi consumption data and Starbucks reward data to provide updated profitability. -
Amazon
We all know what Amazon is. It is a retail giant in the world. Again, it is a famous name, especially among young adults. Amazon not only offers e-commerce, cloud computing, and several other services but also the best way for college students to invest in their stocks.
The company offers stocks by name of Nasdaq GS. they receive good investment from the public and offer great profits to all its shareholders.
What Are The Benefits Of Investing In Stocks?
As we have come a long way in discussing the investment in stocks, let us see why to consider why to do this. Here are five major benefits that investors gain from investing in stocks:
- It provides an excellent opportunity to grow your wealth with the growing economy.
- It increases the value of your capital and saves your amount from value degradation.
- You can easily encash your stock shares at the time of need.
- Offers multiple opportunities to increase profitability through dividends and price appreciation.
- Stocks are readily available and do not require large investments.
All these aspects make stocks a favorable mode of investment for college students.
Are There Any Disadvantages Of Stock Investment As A College Student?
There are two sides to every coin. Hence, there are always some disadvantages along with the benefits. It is better to flip and cover all sides of the story before making the final decision.
Here are some disadvantages of stock investment:
- Government imposes huge taxes on profitable stocks.
- Stock investment requires proper understanding and knowledge of the financial market and this requires a lot of time.
- The market is highly volatile, and there is a risk of losing all investments.
- Brokerages charge commission on investment and sales of shares.
- There is no fixed return over investment.
Bonus: Six Reasons to Learn the Art of Investment
Investing your money can be a risky as well as an intimidating venture. However, it is a skill that every capable enough adult should know. Unfortunately, many young adults don’t have fruitful investments in their financial goals.
Moreover, most millennials don’t realize that the right investments can give them financial perks in the long run. Therefore, in this section, we shall discuss the significance of investment. Moreover, we will see how student investments can help create a better future.
Now, the most crucial thing in investment is timing. Thus, at the right timing, all investing options can be fruitful. Further, here are six reasons to motivate your investment goals.
Rewarding in Monetary Terms
You might believe that a savings account is a safe option. At least that way, what’s yours will be safe with you. However, we can’t ignore the fact that money devalues over time.
Therefore, even though your savings account is looking loaded right now, things will be different in the long run. This is especially true when you think of returns.
Moreover, we can’t deny that investing has its fair share of risks. However, you will still get a better payback than your savings account.
Diverse Finances
You’ve likely heard the expression “don’t put all your eggs inside one basket.” Hence, investing is a similar phenomenon. Nevertheless, it should just be one aspect of your overall strategy. Moreover, you shouldn’t store all of your monetary assets in cash or your house or car.
Instead, you must diversify your holdings.
Additionally, investment should only be a small component of your overall financial picture. You should have a good pile of cash, for example:
- a rainy day fund
- property investment (your home)
- physical assets (your vehicle and other belongings)
Not Learning Investment Could Cost You Hefty Sums
You risk losing all of your money if you never grasp the fundamentals of investing. Thus, are you willing to risk losing big bucks? The critical thing to remember is that learning to invest is straightforward and may help avoid costly blunders.
Moreover, new technology like an investing app is also a convenient and helpful way to start your investment journey.
The Populars Are Doing It
Most of you have probably already copied a handful of famous people’s styles, sayings, and more? Bottom line: we consider others our role models for lifestyle changes, so why not do the same with money?
Furthermore. have you noticed that most top investors globally are famous personalities? Moreover, the majority of them didn’t have much to begin with. For example, Warren Buffett started to invest a few hundred bucks when he was young. Also, yes, that’d be roughly $1,000 in today’s money, but it’s still not plenty of funds to grow into $50 billion!
Exceptional Tax Rewards
Were you aware that investing your money rather than working with it saves you capital in the long run? Additionally, it’s the rich’s secret, and they attempt to take advantage of it as much as feasible.
Working people must give
- Federal taxes
- State taxes
- Social Assistance
- Medicare
- Municipal taxes (depending on where they live)
On the other hand, your long-term capital gains tax rate is either 15% or 20%, depending on how long you invest. Thus, that’s just a fraction of what you’d pay if you worked in any case.
No Hourly Paying Jobs As An Investor
You’ll want to relax and cease exchanging time for bucks at some point. Plus, only by investing throughout your working life will this be possible. Moreover, indeed, you’ll get some revenue from State Pensions, but it won’t be enough to cover all of your retirement expenses.
Therefore, the only way you’ll have enough is to spend throughout your life and accumulate a sizable nest egg from which you can start living.
Of course, the idea is to transform your savings into assets that provide you with a monthly income. However, you won’t have to labor for your money since your investments will give it! Jackpot!
Final Words
Investment at an adult age brings many opportunities for investors. College students must invest to secure their future. The stock market offers a substantial return over investment while offering feasibility and many options to choose from.
Although the benefits of investing in the stocks market outpass the disadvantages, college students must carefully select the best stocks for college students to invest in.
