If you’re over the age of forty, you most likely have somewhat proud memories of not having any money when you went to college. In fact, the very idea of investing for college students was the last thing that would have crossed your mind. Let’s face it, most students attending places of higher learning are usually more concerned about the present than the future. Who’s having a party or what to have for a snack tend to be more frequent thoughts than how much the potential rate of return is on various investment vehicles.
Maybe there was a bit of pride in being penniless. It somehow made you a part of a large crowd. But more and more of today’s students are looking ahead. A lot of this has to do with how readily available information on investing has become. Younger people tend to be very internet savvy, and can easily see the benefits of investing for college students. They can then (with a few clicks of a mouse) use an investment calculator to see how even a small investment can grow into a large return through the magic of compound interest. They also see how important it is to start early, and how much larger the end result will be if they start as soon as possible.
Of course there are still plenty of college students who do not have a lot of extra money. In this case, the very first step is to create a budget that accounts for every penny coming in and every penny going out. If you have more coming in, then you now have a starting amount to invest. If your expenses are higher than your income, then you need to find a way to get more money. You can reduce expenses or get a job. Keep in mind that the more you can have for investing now, the more you will have later.
One common problem with investing for college students is that the amount they have available tends to be low. This makes it hard to invest through a professional broker, but there are still opportunities for investing. Even something as simple as a CD (Certificate of Deposit) can give you a bit of interest on your money. Starting an IRA (Individual Retirement Account) or a Roth IRA is also a good way to invest small sums of money.
The return on these types of investments may not be the highest, but it’s better than nothing (assuming they out-perform the rate of inflation). The other benefit is that it will get the investment habit started early, and that’s a habit that will pay dividends year after year.
Investing for college students requires nothing more than knowledge and some extra money. The more you have of both, the better off you will be. If there is any way you can do it, then investing while you’re younger is a smart choice that you will look back on fondly.